《供应链系统设计与管理》课程授课教案（讲义）Chapter 08（Lecture 10）Strategic Alliances and VMI

全英文课《DesigningandManagingSupplyChainSystem》授课教案Chapter 8 (Lecture 10) Strategic Alliances and VMIOBJECTIVES() Understand the framework and three types of strategic alliances.(2)Understand the several types of retailer-supplier partnerships(3)Grasp theadvantages and disadvantages of third-partylogistics and VMITEACHINGCONTENT8.1introductionFour basic ways to ensurelogistics function are completed:(1) Internal activities: Activities that are core strengths may be the best way toperform the activity.(2)Acquisitions:Gives the acquiring firm full control over the way theparticular business function is performed.Can be difficult and expensive.(Cultureconflict/Competitors)(3)Arm's-length transactions:Most business transactions are of this typeShort-term arrangement that fulfills a particular business need but doesn't lead tolong-term strategic advantages.(4) Strategic alliances:Multifaceted, goal-oriented, long-term partnershipsRisks are pooled and rewards are shared.Typically lead to long-term strategic benefitsfor partners.8.2Framework for Strategic AlliancesThere are many difficult strategic issues that play a part in the selection ofappropriate strategic alliances.To determine whether a particular strategic alliance isappropriate for your firm, consider how the alliance will help address the followingissues:Adding value to products.A partnership with the appropriate firm can help addvalue to existing products.Improving market access.Partnerships that lead to better advertising orincreased access to newmarket channels can bebeneficial.Strengthening operations. Alliances between appropriate firms can help toimprove operations by lowering system costs and cycle times.Facilities and resourcescan be used more efficiently and effectively.Adding technological strength.Partnerships in which technology is shared canhelp add to the skills base of both partners. Also, the difficult transitions between oldandnewtechnologiescanbefacilitatedbytheexpertiseofoneofthepartnersEnhancing strategic growth.Many new opportunities have high entry barriersPartnershipsmight enablefirmstopool expertiseand resourcestoovercomethesebarriers and explore newopportunities.Enhancing organizational skills.Alliances provide a tremendous opportunity

全英文课《Designing and Managin1g Supply Chain System》 授课教案 Chapter 8 (Lecture 10) Strategic Alliances and VMI OBJECTIVES (1) Understand the framework and three types of strategic alliances. (2) Understand the several types of retailer - supplier partnerships. (3)Grasp the advantages and disadvantages of third-party logistics and VMI TEACHING CONTENT 8.1 introduction Four basic ways to ensure logistics function are completed: (1) Internal activities: Activities that are core strengths may be the best way to perform the activity. (2) Acquisitions: Gives the acquiring firm full control over the way the particular business function is performed. Can be difficult and expensive. (Culture conflict/Competitors) (3) Arm’s-length transactions: Most business transactions are of this type. Short-term arrangement that fulfills a particular business need but doesn’t lead to long-term strategic advantages. (4) Strategic alliances: Multifaceted, goal-oriented, long-term partnerships. Risks are pooled and rewards are shared. Typically lead to long-term strategic benefits for partners. 8.2 Framework for Strategic Alliances There are many difficult strategic issues that play a part in the selection of appropriate strategic alliances. To determine whether a particular strategic alliance is appropriate for your firm, consider how the alliance will help address the following issues: Adding value to products. A partnership with the appropriate firm can help add value to existing products. Improving market access. Partnerships that lead to better advertising or increased access to new market channels can be beneficial. Strengthening operations. Alliances between appropriate firms can help to improve operations by lowering system costs and cycle times. Facilities and resources can be used more efficiently and effectively. Adding technological strength. Partnerships in which technology is shared can help add to the skills base of both partners. Also, the difficult transitions between old and new technologies can be facilitated by the expertise of one of the partners. Enhancing strategic growth. Many new opportunities have high entry barriers. Partnerships might enable firms to pool expertise and resources to overcome these barriers and explore new opportunities. Enhancing organizational skills. Alliances provide a tremendous opportunity

全英文课《DesigningandManagingSupplyChainSystem》授课教案for organizational learning. In addition to learning from one another, partners areforced to learn more about themselves and to become more flexible so that theseallianceswork.Building financial strength. In addition to addressing these competitive issuesalliances can help to build financial strength. Income canbe increased andadministrativecosts can be shared between partners or even reduced owingto theexpertise of one or both of thepartners.Of course,alliancesalsolimitinvestmentexposurebysharingrisk.8.3Third-partylogistics8.3.1theConceptof3PLThird-party logistics is simply the use of an outside company to perform all orpart of the firm's materials management and product distribution functions. 3PLrelationships are typically more complex than traditional logistics supplierrelationships:theyaretruestrategicalliances.Although companies have used outsidefirms to provide particular services, suchas trucking and warehousing,for many years, these relationships had two typicalcharacteristics:they were transaction based and the companies hired were oftensingle-function specific,Modern 3PL arrangements involvelong-term commitmentsand oftenmultiplefunctions orprocessmanagement.3PLproviderscomein all sizesand shapes,fromsmall companieswithafewmillion dollars in revenues to huge companies with revenues in the billions. Most ofthese companies can manage many stages of the supply chain. Some third-partylogistics providers ownassets such astrucks and warehouses,others may providecoordination services but not own assets on their own.Non-asset-owning third-partylogistics firms are sometimes called fourth-party logistics providers (4PL).8.3.2Advantages andDisadvantages of 3PL(1)Advantagesof3PL:Focus on Core Strengths.The most frequently cited benefit of using 3PLproviders is that it allows a company to focus on its core competencies. Withcorporate resources becoming increasingly limited, it is often difficult to be an expertin every facetof thebusiness,Logisticsoutsourcers provideacompany with theopportunity to focus on that company's particular area of expertise,leaving thelogistics expertise to the logistics companies.(Of course,if logistics is one of thecompany's areas of expertise, then outsourcing may not make sense.)

全英文课《Designing and Managin2g Supply Chain System》 授课教案 for organizational learning. In addition to learning from one another, partners are forced to learn more about themselves and to become more flexible so that these alliances work. Building financial strength. In addition to addressing these competitive issues, alliances can help to build financial strength. Income can be increased and administrative costs can be shared between partners or even reduced owing to the expertise of one or both of the partners. Of course, alliances also limit investment exposure by sharing risk. 8.3 Third-party logistics 8.3.1 the Concept of 3PL Third-party logistics is simply the use of an outside company to perform all or part of the firm's materials management and product distribution functions. 3PL relationships are typically more complex than traditional logistics supplier relationships: they are true strategic alliances. Although companies have used outside firms to provide particular services, such as trucking and warehousing, for many years, these relationships had two typical characteristics: they were transaction based and the companies hired were often single-function specific. Modern 3PL arrangements involve long-term commitments and often multiple functions or process management. 3PL providers come in all sizes and shapes, from small companies with a few million dollars in revenues to huge companies with revenues in the billions. Most of these companies can manage many stages of the supply chain. Some third-party logistics providers own assets such as trucks and warehouses; others may provide coordination services but not own assets on their own. Non-asset-owning third-party logistics firms are sometimes called fourth-party logistics providers (4PL). 8.3.2 Advantages and Disadvantages of 3PL (1) Advantages of 3PL: Focus on Core Strengths. The most frequently cited benefit of using 3PL providers is that it allows a company to focus on its core competencies. With corporate resources becoming increasingly limited, it is often difficult to be an expert in every facet of the business. Logistics outsourcers provide a company with the opportunity to focus on that company's particular area of expertise, leaving the logistics expertise to the logistics companies. (Of course, if logistics is one of the company's areas of expertise, then outsourcing may not make sense.)

全英文课《DesigningandManagingSupplyChainSystem》授课教案A主机企业SPSplitting,repackaging,mixedRoute planningloading and shipment,and deliveryLoadingplanningtoproductionlineaccordingtoproductionplanningProvide Technological Flexibility. As requirements change and technologyadvances,and technology becomes more prevalent, thebetter 3PL providersconstantly update their information technology and equipment. Often individualcompanies do not have the time, resources, or expertise to constantly update theirtechnology. Different retailers may have different, and changing,delivery andinformation technology requirements,and meeting these requirements may beessentialtoacompany's survival.Third-partylogistics providers often canmeet theserequirements in a quicker, more cost-effective way. Also, third-party providers alreadymay have the capability tomeet the needs of afirm's potential customers,allowing thefirmaccesstocertainretailersthatmightnototherwisebepossibleorcost-effective.Provide Other Flexibilities.Third parties also may provide greater flexibility toacompany.Oneexampleisflexibilityingeographiclocations.Increasingly,suppliersare requiring rapid replenishment, which in turn may require regional warehousingBy utilizingthird-partyprovidersforthis warehousing,a companycan meet customerrequirements without committing capital and limiting flexibility by constructing anew facility or committing to a long-term lease.Also, flexibility in service offeringsmay be achieved through the use of third parties, which may be equipped to offerretail customersamuchlargervariety of servicesthanthehiringfirm.Insomecases,thevolumeofcustomersdemandingtheseservicesmaybelowtothefirm,buthigherto the 3PL provider,who may be working for several different firms across differentindustries.In addition,flexibilityin resource and workforce size can be achievedthrough outsourcing. Managers can change what would be fixed costs into variablecosts, in order to react more quickly to changingbusiness conditions.(2)Disadvantages of 3PL:The most obvious disadvantage of the use of 3PLproviders is the loss of control inherent in outsourcing a particular function. This isespeciallytrue for outbound logistics where3PL company employees themselvesmight interact with a firm's customers. Many third-party logistics firms work veryhardtoaddresstheseconcerns.Also,if logisticsisoneof thecorecompetenciesofafirm,itmakesno senseto outsourcethese activities to a supplier who may notbeascapable as the firm's in-house expertise. In particular, if certain logistics activities arewithin the core competencies of the firm and others are not, it might be wise toemploy 3PL providers for only those areas that outside providers can handle betterthan the hiring firm

全英文课《Designing and Managin3g Supply Chain System》 授课教案 Provide Technological Flexibility. As requirements change and technology advances, and technology becomes more prevalent, the better 3PL providers constantly update their information technology and equipment. Often individual companies do not have the time, resources, or expertise to constantly update their technology. Different retailers may have different, and changing, delivery and information technology requirements, and meeting these requirements may be essential to a company's survival. Third-party logistics providers often can meet these requirements in a quicker, more cost-effective way. Also, third-party providers already may have the capability to meet the needs of a firm's potential customers, allowing the firm access to certain retailers that might not otherwise be possible or cost-effective. Provide Other Flexibilities. Third parties also may provide greater flexibility to a company. One example is flexibility in geographic locations. Increasingly, suppliers are requiring rapid replenishment, which in turn may require regional warehousing. By utilizing third-party providers for this warehousing, a company can meet customer requirements without committing capital and limiting flexibility by constructing a new facility or committing to a long-term lease. Also, flexibility in service offerings may be achieved through the use of third parties, which may be equipped to offer retail customers a much larger variety of services than the hiring firm. In some cases, the volume of customers demanding these services may be low to the firm, but higher to the 3PL provider, who may be working for several different firms across different industries. In addition, flexibility in resource and workforce size can be achieved through outsourcing. Managers can change what would be fixed costs into variable costs, in order to react more quickly to changing business conditions. (2) Disadvantages of 3PL: The most obvious disadvantage of the use of 3PL providers is the loss of control inherent in outsourcing a particular function. This is especially true for outbound logistics where 3PL company employees themselves might interact with a firm's customers. Many third-party logistics firms work very hard to address these concerns. Also, if logistics is one of the core competencies of a firm, it makes no sense to outsource these activities to a supplier who may not be as capable as the firm's in-house expertise. In particular, if certain logistics activities are within the core competencies of the firm and others are not, it might be wise to employ 3PL providers for only those areas that outside providers can handle better than the hiring firm

全英文课《DesigningandManagingSupplyChainSystem》授课教案8.4Retailer-Supplier Relationships8.4.1TypesofRSPIn a basic quick response strategy, suppliers receive POs data from retailersandusethisinformationtosynchronizetheirproductionandinventoryactivitieswithactual sales at the retailer. In this strategy, the retailer still prepares individual orders,but thePOS data are usedby the supplierto improve forecasting and scheduling andtoreduceleadtimeIn a continuous replenishment strategy, sometimes called rapid replenishment,vendors receive POS data and use these data to prepare shipments at previouslyagreed-upon intervals to maintain specific levels of inventory.In an advanced form ofcontinuous replenishment, suppliers may gradually decrease inventory levels at theretail store or distribution center as long as service levels are met. Thus, in astructured way,inventorylevels are continuously improved.In addition,the inventorylevels need not be simple levels,but could bebased on sophisticated models thatchange the appropriate level based on seasonal demand,promotions, and changingconsumerdemandInavendor-managedinventory(VM)system,sometimescalledavendor-managed replenishment (VMR) system, the supplier decides on theappropriate inventory levels of each of the products (within previously agreed-uponbounds)and theappropriate inventory policies to maintain theselevels.In the initialstages,vendor suggestions must be approvedby theretailer,but eventually thegoal ofmanyVMI programs is to eliminate retaileroversighton specific orders.Delivery GoodsPf-VENDORDeliveryNoticeFigureIthesystemofVMIThis type of relationship is perhaps most famously exemplified by Wal-Mart andProcter&Gamblewhosepartnership.begunin1985,hasdramaticallyimprovedP&G's on time deliveries to Wal-Mart while increasing inventory turns [31]. Otherdiscount storesfollowedsuit.includingKmart.whichby1992haddeveloped ove200 VMI partners.These VMI projects have in general been successful:projects atDillardDepartment Stores,JCPenney,andWal-Marthaveshownsalesincreasesof20to25percent, and 30percent inventory turnover improvements

全英文课《Designing and Managin4g Supply Chain System》 授课教案 8.4 Retailer-Supplier Relationships 8.4.1 Types of RSP In a basic quick response strategy, suppliers receive POS data from retailers and use this information to synchronize their production and inventory activities with actual sales at the retailer. In this strategy, the retailer still prepares individual orders, but the POS data are used by the supplier to improve forecasting and scheduling and to reduce lead time. In a continuous replenishment strategy, sometimes called rapid replenishment, vendors receive POS data and use these data to prepare shipments at previously agreed-upon intervals to maintain specific levels of inventory. In an advanced form of continuous replenishment, suppliers may gradually decrease inventory levels at the retail store or distribution center as long as service levels are met. Thus, in a structured way, inventory levels are continuously improved. In addition, the inventory levels need not be simple levels, but could be based on sophisticated models that change the appropriate level based on seasonal demand, promotions, and changing consumer demand. In a vendor-managed inventory (VMI) system, sometimes called a vendor-managed replenishment (VMR) system, the supplier decides on the appropriate inventory levels of each of the products (within previously agreed-upon bounds) and the appropriate inventory policies to maintain these levels. In the initial stages, vendor suggestions must be approved by the retailer, but eventually the goal of many VMI programs is to eliminate retailer oversight on specific orders. Figure 1 the system of VMI This type of relationship is perhaps most famously exemplified by Wal-Mart and Procter & Gamble, whose partnership, begun in 1985, has dramatically improved P&G's on time deliveries to Wal-Mart while increasing inventory turns [31]. Other discount stores followed suit, including Kmart, which by 1992 had developed over 200 VMI partners. These VMI projects have in general been successful: projects at Dillard Department Stores, JCPenney, and Wal-Mart have shown sales increases of 20 to 25 percent, and 30 percent inventory turnover improvements

全英文课《DesigningandManaginSupplyChainSystem》授课教案CustomerVendorSend stock and sales datausingEDLReceivesstockandsalesretailerP&GPlareplenishmetsfocustomer.Creates sales orderCreatepurchaseorderfandtranstersanorderpurchaseorderacknowledgemertusingEDiacknowedgementreceived byEDLOptional:ConfimnunberfortheorderursingED!Optional:Enter thepuchase ordernumber inthe sales orderFigure2theprocessbetweenWal-MartandP&G8.4.2Advantages of VMIBy using VMI, suppliers become active players and take on responsibility for thestocks of their customers. They can view current stocks, supply within fixed andagreed maximum and minimum stock limits and thereby better plan their ownproduction.Thebenefitsfor suppliers and retailers are:more transparency,lower stock levelshigher inventoryturns, reduced costs.8.4.3 Steps in RSP Implementation(1) Initially, the contractual terms of the agreement must be negotiated.Theseinclude decisions concerning ownership and when it is to be transferred, credit terms,ordering responsibilities, and performance measures such as service or inventorylevels, when appropriate.(2) Next, the following three tasks must be executed:If theydo not exist, integrated information systems must be developed for bothsupplier and retailer.These information systems must provide easy access to bothparties.Effective forecasting techniques to be used by the vendor and the retailer mustbedeveloped.·Atactical decision supporttool to assistin coordinating inventorymanagementandtransportationpoliciesmustbedeveloped.Thesystemsdeveloped,ofcourse,willdepend on the particularnature of the partnership.The above points can be summarized as the following"VMI" implementationsteps:Communicate.Customers and suppliers mustmakethe effortto sit down anddiscussthe goals and objectives of implementingVMI.Both partieshardware andsoftware requirements must be identified, and an understanding must be reached interms of how both companies'systems will communicate.Then a plan forimplementation must be mapped, specifically identifying each party's financial and

全英文课《Designing and Managin5g Supply Chain System》 授课教案 Figure 2 the process between Wal-Mart and P&G 8.4.2 Advantages of VMI By using VMI, suppliers become active players and take on responsibility for the stocks of their customers. They can view current stocks, supply within fixed and agreed maximum and minimum stock limits and thereby better plan their own production. The benefits for suppliers and retailers are: more transparency, lower stock levels, higher inventory turns, reduced costs. 8.4.3 Steps in RSP Implementation (1) Initially, the contractual terms of the agreement must be negotiated. These include decisions concerning ownership and when it is to be transferred, credit terms, ordering responsibilities, and performance measures such as service or inventory levels, when appropriate. (2) Next, the following three tasks must be executed: • If they do not exist, integrated information systems must be developed for both supplier and retailer. These information systems must provide easy access to both parties. • Effective forecasting techniques to be used by the vendor and the retailer must be developed. • A tactical decision support tool to assist in coordinating inventory management and transportation policies must be developed. The systems developed, of course, will depend on the particular nature of the partnership. The above points can be summarized as the following "VMI" implementation steps: Communicate. Customers and suppliers must make the effort to sit down and discuss the goals and objectives of implementing VMI. Both parties’ hardware and software requirements must be identified, and an understanding must be reached in terms of how both companies’ systems will communicate. Then a plan for implementation must be mapped, specifically identifying each party’s financial and

全英文课《DesigningandManagingSupplyChainSystem》授课教案otherresponsibilities.Sharing precise information. Suppliers must have visibility into the customer'sinternal sales and inventory information. Without accurate data, ability to quicklymeetdemand willbeimpaired.Reliable transmission, receipt, and use of information. To facilitate step 2, thesupplier must be ableto guarantee that the customer's trusted information will becommunicated,received,and utilized securely and thoroughly to meet thedesignated needs. Time should be spent during the planning phase discussinginformationprecisionandreliabilitySufficiently test systems before going live. As with any new system, testingwill uncover any bugs or inefficiencies and can help to avoid future headachesExpect implementation to be a process not a project.Remember that there isno on/off switch.Adjustments will have to be made as demand levels fluctuate, andno system will beperfect 100%of the time.Plan to spend sufficient time and money to make it work.Most successfulVMI systems we've read about took 2-2.5years to put into operation, and costhundreds of thousands of dollars for IT and training. Spending (or finding) the time tocreate a comprehensive system can be a challenge.OUESTIONS1.Consider a managerdevelopinga logistics strategy.Discuss specific situations forwhich the best approach would betoa.Employ internal logistics expertiseb.Acquirea companywiththis expertisec. Develop a strategy, and then employ specific suppliers to carry outwell-defined portions of the strategy.d.Develop the strategy with a third-party logistics provider.2. Why is the third-party logistics industry growing so rapidly?3.In this chapter, we discuss three types of retailer supplier partnerships:quickresponse, continuous replenishment, and vendor-managed inventory (VMI).For eachtype, discuss situations where that type would be preferred over the other two.Forinstance,comparequickresponsetocontinuousreplenishment:underwhatconditionsisonepreferredovertheother?4.Considerthequick responsepartnership.Supposetheretailerplacesanorder atthebeginningof eachmonthbuttransfersPOSdatatothesupplier everyweek.Whatisthe impact of the manufacturer'sweekly production capacity on the benefit frominformation sharing? That is, under what situations is information sharing mostbeneficial:high weeklyproductioncapacityorlowcapacity?How should the supplierusetheweeklydemanddatareceivedfromtheretailer?5.Discuss the various possibilities for inventory ownership policies in a VMIarrangement. What are the advantages and disadvantages of each of these policies?

全英文课《Designing and Managin6g Supply Chain System》 授课教案 other responsibilities. Sharing precise information. Suppliers must have visibility into the customer’s internal sales and inventory information. Without accurate data, ability to quickly meet demand will be impaired. Reliable transmission, receipt, and use of information. To facilitate step 2, the supplier must be able to guarantee that the customer’s trusted information will be communicated, received, and utilized securely and thoroughly to meet the designated needs. Time should be spent during the planning phase discussing information precision and reliability. Sufficiently test systems before going live. As with any new system, testing will uncover any bugs or inefficiencies and can help to avoid future headaches. Expect implementation to be a process not a project. Remember that there is no on/off switch. Adjustments will have to be made as demand levels fluctuate, and no system will be perfect 100% of the time. Plan to spend sufficient time and money to make it work. Most successful VMI systems we’ve read about took 2-2.5 years to put into operation, and cost hundreds of thousands of dollars for IT and training. Spending (or finding) the time to create a comprehensive system can be a challenge. QUESTIONS 1. Consider a manager developing a logistics strategy. Discuss specific situations for which the best approach would be to a. Employ internal logistics expertise. b. Acquire a company with this expertise. c. Develop a strategy, and then employ specific suppliers to carry out well-defined portions of the strategy. d. Develop the strategy with a third-party logistics provider. 2. Why is the third-party logistics industry growing so rapidly? 3. In this chapter, we discuss three types of retailer supplier partnerships: quick response, continuous replenishment, and vendor-managed inventory (VMI). For each type, discuss situations where that type would be preferred over the other two. For instance, compare quick response to continuous replenishment: under what conditions is one preferred over the other? 4. Consider the quick response partnership. Suppose the retailer places an order at the beginning of each month but transfers POS data to the supplier every week. What is the impact of the manufacturer's weekly production capacity on the benefit from information sharing? That is, under what situations is information sharing most beneficial: high weekly production capacity or low capacity? How should the supplier use the weekly demand data received from the retailer? 5. Discuss the various possibilities for inventory ownership policies in a VMI arrangement. What are the advantages and disadvantages of each of these policies?