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SupplyChainManagementChapter2ChapterOutlineDevelopmentoftheConceptDefinitionofSupplyChainManagementStrategicRoleofSupplyChainManagementInternalSupplyChainManagementPartIRoleofSupplyChainManagementPartIIStrategiesforSupplyChainManagement

FiveSupplyChainStrategiesManySuppliersFewSuppliersVerticalIntegrationKeiretsuNetworksVirtualCompaniesPartIIISupplementaryReading

RedesignSupplyChaininVolkswagenofAmericaTheFormerDistributionSupplyChaininVolkswagenofAmericaDesignPrinciplefortheNewDistributionSystemInnovationofManufacturingSupplyChainManagementPartI

RoleofSupplyChainManagementDevelopmentoftheconceptSCMisanextensionoflogistics:Theconceptofsupplychainmanagementisrelativelynew.Itisinfactthethirdphaseofanevolutionthatstartedinthe1960swiththedevelopmentofthephysicaldistributionconcept,whichfocusedontheoutboundsideofafirm’slogisticssystem.Logisticsmanagementisbasicallyconcernedwithoptimizingflowswithintheorganization,whilesupplychainmanagementextendssuchinternalintegrationtotheoutsideoftheorganization.Theinitialfocusonphysicaldistributionoroutboundlogisticswaslogicalsincefinishedgoodswereusuallyhigherinvalue,whichmeantthattheirinventory,warehousing,materials-handling,andpackagingcostswererelativelyhigherthantheirrawmaterialsinputs.InU.S.A.,anationalorganization,theNationalCouncilofPhysicalDistributionManagement(NCPDM),wasorganizedtofosterleadership,education,research,andinterestintheareaofphysicaldistributionmanagement.Supplychainmanagementcameintovogueduringthe1990sandcontinuestobeafocalpointformakingorganizationsmorecompetitiveintheglobalmarketplace.Supplychainmanagementcanbeviewedasapipelinefortheefficientandeffectiveflowofproducts/materials,services,information,andfinancialsfromthesupplier’ssuppliersthroughthevariousintermediateorganizations/companiesouttothecustomer’scustomers(seeFig.2-1)orthesystemofconnectednetworksbetweentheoriginalsuppliersandtheultimatefinalconsumer.

Fig.2-1AnintegratedsupplychainDefinitionofSupplyChainManagement

DefinitionofSCM:

Supplychainmanagement(SCM)isviewedbysomeindividualstobenarrowlyfocusedand/orfocuseduponsuppliesandmaterials,notdemandforfinishedproducts.Broadlyandcomprehensively,SCMistheartandscienceofintegratingtheflowsofproductsandmaterials,information(asorderandschedules),andfinancials(ascreditandcash)throughtheentiresupplypipelinefromthesupplier’ssuppliertothecustomer’scustomer.Itcouldbearguedthatsupplychain,demandchain,valuenetwork,valuechains,etc.,canbeusedassynonyms.Practically,Supplychainmanagementistheintegrationoftheactivitiesthatprocurematerialsandservices,transformthemintointermediategoodsandfinalproducts,anddeliverthemtocustomers.Theseactivitiesincludepurchasingandoutsourcingactivities,plusmanyotherfunctionsthatareimportanttotherelationshipwithsuppliersanddistributors.StrategicRoleofSupplyChainManagement

RoleofSCM:Theconceptofsupplychainmanagementprovidesaperspectivetoviewthetotalsystemofinterrelatedcompaniesforincreasedefficiencyandeffectiveness.Thesupplychainarrangementlinksafirmanditsdistributiveandsuppliernetworktoendcustomers.Theintegratedvalue-creationprocessmustbemanagedfrommaterialprocurementtoend-customerproductdelivery.

Theintegratedsupplychainmanagementshiftstraditionalchannelarrangementsfromlooselylinkedgroupsofindependentbusinessesthatbuyandsellinventorytoeachothertowardacoordinatedinitiativetoincreasemarketimpact,overallefficiency,continuousimprovement,andcompetitiveness.

Competitionbetweensupplychains

Nowadays,asupplychainbecomesthebasicunitofcompetition.Theleadingcompanieshaverealizedthattherealcompetitionisnotcompanyagainstcompanybutrathersupplychain.SCMfocusonthechannelrelationshipmanagement:

Thusthefocusofsupplychainmanagementisuponthemanagementofrelationshipsinordertoachieveamoreprofitableoutcomeforallpartiesinthechain.Thisbringswithitsomedifficultiessincetheremaybeoccasionswhenthenarrowself-interestofonepartyhastobeincludedforthebenefitofthechainasawhole.

Thecontextofanintegratedsupplychainisthefirms’relationshipmanagementwithinaframeworkascapacitylimitations,information,corecompetencies,capital,andhumanresourceproblems.

InternalSupplyChainManagement12processesoftheinternalsupplychain:

Electro-CoatingsLtdelectroplatespartsfortheautomotiveindustry.Customerswerebecomingincreasinglydemanding,resultinginElectro-Coatings’undertakingareviewofitsinternalsupplychain.Theinitialanalysisbywalkingtheprocessidentified12keyprocesses,showninFig.2-2.Fig.2-2Walktheprocess(12steps)

Analysisthevalue-addingtimeofprocess:

Oncethisinitialmaphasbeenproduced,eachstepwasmappedindetail,andsome60stepswereidentified.Thesestepshavebeensummarizedasaflowdiagram,showingeveryprocessstep.

Aninitialanalysisofvalue-addingandnon-value-addingtimewasundertaken,summarizingthetotaltime,wastedtimeandvalue-addingtimeforeachofthe12steps.Thesedatawerethenusedtoproduceamapwiththevalue-adding(activity)timeandnon-value-adding(wasted)timeshownastheseriesof12stepsagainsttotalelapsedtimeinhours.Thetotalprocesstookapproximately70hours.

Theprojectteamheldanafternoonmeetingwiththoseinvolvedintheprocess,andtheresultsofthisbrainstormingsessionproducedacause-and-effectdiagram.Thiswasthenusedtoidentifyopportunitiesforimprovingtheprocess.Forexample,theanalysisrevealedthatjobsarrivinggoodsinwardsat9:00ammightnotbeinputintothesystemuntil5:00pmbecausetheoperatorwouldundertakethecomputerinputtingattheendoftheday.Thisresultedinmanufacturingnothavingvisibilityoftheupdatedorderbookuntil9:00amthefollowingmorning.Thiswaseasilyaddressedbycombiningthebooking-inprocesswiththegoodinwardsprocess,removingafurtherleadtime,depictsthere-engineeringprocess.Thesimpleactionsundertakenbythecompanyresultedinthetotalprocesstaking37hours.Thisledtoamoreresponsiveservicebeingofferedtoitscustomers,andincreasedbusiness.NewWordsandExpressionsfoster/ˈfɒstə/v.vogue/vəʊɡ/n.intermediate/ˌɪntəˈmiːdiət/adj.procure/prəˈkjʊə/v.prominent/ˈprɒmɪnənt/adj.capability/ˌkeɪpəˈbɪləti/n.ubiquitous/juːˈbɪkwɪtəs/adj.agile/ˈædʒaɪl/adj.nimbly/ˈnɪmbəli/adj.premium/ˈpriːmiəm/n.offering/ˈɒfərɪŋ/n.培养,促进时尚,流行样式中间的,中级的取得,获得突出的,显著的能做某事的素质;能力普遍存在的;无处不在的灵活的,机敏的灵活的,敏捷的保险费,奖金提供PartIIStrategiesforSupplyChainManagementFiveSupplyChainStrategies

Forthoseitemstobepurchased,companiesmustdecideuponasupply-chainstrategy.Onesuchstrategyisthetraditionalapproachofnegotiatingwithmanysuppliersandplayingonesupplieragainstanother.Asecondstrategyistodeveloplong-term,“partnering”relationshipswithafewsuppliers.Athirdstrategyisverticalintegration,wherefirmsmaybuythesupplier.Afourthstrategyiskeiretsu,inwhichsuppliersbecomepartofacompanycoalition.Finally,afifthstrategyisvirtualcompanies.Wewilldiscusseachofthesestrategies.ManySuppliersWiththemany-supplierstrategy,thesupplierrespondstothedemandsandspecificationsofa“requestforquotation”,withtheorderusuallygoingtothelowbidder.Thisstrategyplaysonesupplieragainstanotherandplacestheburdenofmeetingthebuyer’sdemandsonthesupplier.Suppliersaggressivelycompetewithoneanother.Althoughmanyapproachestonegotiationscanbeusedwiththisstrategy,long-term“partnering”relationshipsarenotthegoal.Thisapproachholdsthesupplierresponsibleformaintainingthenecessarytechnology,expertise,andforecastingabilities,aswellascost,quality,anddeliverycompetencies.FewSuppliersAstrategyoffewsuppliersimpliesthatratherthanlookingforshort-termattributes,suchaslowcost,abuyerisbetteroffformingalong-termrelationshipwithafewdedicatedsuppliers.Long-termsuppliersaremorelikelytounderstandthebroadobjectivesoftheprocuringfirmandtheendcustomer.Usingfewsupplierscancreatevaluebyallowingsupplierstohaveeconomiesofscalethatyieldsbothlowertransactioncostsandlowerproductioncosts.Advantagesoffew-suppliersstrategy:

Fewsuppliers,eachwithalargecommitmenttothebuyer,mayalsobemorewillingtoparticipateinJITsystems,aswellasprovideinnovationsandtechnologicalexpertise.However,themostimportantfactormaybethetrustthatcomeswithcompatibleorganizationcultures.Achampionwithinoneofthefirmsoftenpromotesapositiverelationshipbetweenpurchaseandsupplierorganizationsbycommittingresourcestowardadvancingtherelationship,furtherstrengthenthepartnership.Australia,Austria,Belgium,Canada,Chile,CzechRepublic,DaimlerChrysler’sfew-suppliersstrategy:Manyfirmshavemovedaggressivelytoincorporatesuppliersintotheirsupplysystem.DaimlerChrysler,forone,nowseekstochoosesuppliersevenbeforepartsaredesigned.Motorolaalsoevaluatessuppliersonrigorouscriteria,butinmanyinstanceshaseliminatedtraditionalsupplierbidding,placingaddedemphasisonqualityandreliability.Downsidesoffew-suppliersstrategy:

Likeallstrategies,adownsideexists.Withfewsuppliers,thecostofchangingpartnersishuge,sobothbuyerandsupplierruntheriskofbecomingcaptivesoftheother.Poorsupplierperformanceisonlyoneriskthepurchaserfaces.Thepurchasermustalsobeconcernedabouttradesecretsandsuppliersthatmakeotheralliancesorventureoutontheirown.VerticalIntegrationPurchasingcantaketheformofverticalintegration.Byverticalintegration,wemeandevelopingtheabilitytoproducegoodsorservicespreviouslypurchasedoractuallybuyingasupplieroradistributor.AsshowninFig.2-3,verticalintegrationcantaketheformofforwardrobackwardintegration.Fig.2-3VerticalIntegrationCanBeForwardorBackward

Backwardintegration:

Backwardintegrationsuggestsafirmpurchaseitssuppliers,asinthecaseofFordMotorCompanydecidingtomanufactureitsowncarradios.

Forwardintegration:

Forwardintegration,ontheotherhand,suggeststhatamanufacturerofcomponentsmakethefinishedproduct.AnexampleisTexasInstruments,amanufacturerofintegratedcircuitsthatalsomakescalculatorsandcomputerscontainingintegratedcircuits.Advantageofverticalintegration:

Verticalintegrationcanofferastrategicopportunityfortheoperationsmanager.Forfirmswiththenecessarycapital,managerialtalent,andrequireddemand,verticalintegrationmayprovidesubstantialopportunitiesforcostreduction.Otheradvantagesininventoryreductionandschedulingcanaccruetothecompanythateffectivelymanagesverticalintegrationorclose,mutuallybeneficialrelationshipswithsuppliers.Manyorganizationsfindinterestinverticalintegrationnowadays.Verticalintegrationcanyieldcostreduction,qualityadherence,andtimelydelivery.Verticalintegrationappearstoworkbestwhentheorganizationhaslargemarketshareorthemanagementtalenttooperateanacquiredvendorsuccessfully.However,backwardintegrationmaybeparticularlydangerousforfirmsinindustriesundergoingtechnologicalchangeifmanagementcannotkeepabreastofthosechangesorinvestthefinancialresourcesnecessaryforthenextwaveoftechnology.KeiretsuNetworksKeiretsuisJapanesetermtodescribesupplierswhobecomepartofacompanycoalition:ManylargeJapanesemanufacturershavefoundamiddlegroundbetweenpurchasingfromfewsuppliersandverticalintegration.Thesemanufacturersareoftenfinancialsupportersofsuppliersthroughownershiporloans.Thesupplierthenbecomespartofacompanycoalitionknownasakeiretsu.Membersofthekeiretsuareassuredlong-termrelationshipsandarethereforeexpectedtofunctionaspartners,providingtechnicalexpertiseandstablequalityproductiontothemanufacturer.Membersofthekeiretsucanalsohavesuppliersfurtherdownthechain,makingsecond-andeventhird-tiersupplierspartofthecoalition.VirtualCompanies

Virtualcompaniesrelyonavarietyofsupplierrelationshipstoprovideservicesondemand:Virtualcompaniesrelyonavarietyofsupplierrelationshipstoprovideservicesondemand.Suppliersmayprovideavarietyofservicesthatincludedoingthepayroll,hiringpersonnel,designingproducts,providingconsultingservices,manufacturingcomponents,conductingtest,ordistributingproducts.Therelationshipsmaybeshort-termorlong-termandmayincludetruepartners,orsimplyablesuppliers.Whatevertheformalrelationship,theresultcanbeexceptionallyleanperformance.Theadvantagesofvirtualcompaniesincludespecializedmanagementexpertise,lowcapitalinvestment,flexibility,andspeed.Theresultisefficiency.Theapparelbusinessprovidesatraditionalexampleofvirtualorganizations.Thedesignersofclothesseldommanufacturetheirdesigns;rather,theylicensethemanufacture.Themanufacturermaythenrentrooms,leasesewingmachines,andcontractforlabor.Theresultisanorganizationremainsflexible,andcanrespondrapidlytothemarket.NewWordsandPhrases

vertical/ˈvɜːtɪkəl/adj.integration/ˌɪntɪˈɡreɪʃən/

n.backward/ˈbækwəd/adj.coalition/ˌkəʊəˈlɪʃən/n.virtual/ˈvɜːtʃuəl/adj.quotation/kwəʊˈteɪʃən/n.bidder/ˈbɪdə/n.aggressive/əˈɡresɪv/adj.attribute/əˈtrɪbjuːt/n.economyofscale/skeɪl/foster/ˈfɒstə/v.alignment/əˈlaɪnmənt/n.incorporate/ɪnˈkɔːpəreɪt/v.rigorous/ˈrɪɡərəs/adj.downside/ˈdaʊnsaɪd/n.alliance/əˈlaɪəns/n.forward/ˈfɔːwəd/adv.adj.integratedcircuit/ˌɪntɪɡreɪtɪdˈsɜːkɪt/substantial/səbˈstænʃəl/adj.undergo/ˌʌndəˈɡəʊ/v.keepabreast/əˈbrest/offluid/ˈfluːɪd/adj.payroll/ˈpeɪrəʊl/n.lean/liːn/adj.apparel/əˈpærəl/n.垂直的,纵向的集成,整合后向的,倒向的联盟,联合虚拟的报价,行情投标者激进地特性,属性规模经济培养结盟把……合并严密的,严格的缺陷联盟,同盟向前地;向前的,早的,迅速的集成电路大量的,可观的经历,遭受与……并进,跟上,不落后不固定的,易变的工资单精益的,精细的服装

PartIIISupplementaryReadingRedesignSupplyChaininVolkswagenofAmericaTheFormerDistributionSupplyChaininVolkswagenofAmericaVolkswagenofAmerica(VoA),awhollyownedsubsidiaryofVolkswagenAG

,imports,marketsanddistributesVolkswagenandAudivehiclesintheUnitedStates.ThevehiclesareassembledinMexicoorGermanyanddistributedtoanetworkofapproximately750dealersitesacrosstheUnitedStates.Atthebeginningofthe21stcentury,VoAmanagementappointedaprojectteamtoreviewvehicledistributionprocessanddevelopnewconceptsorsupplychainmanagement.Theexistingvehicledistributionsystemhadservedtheorganizationoveranumberofyears,andwasdevelopedaroundtwoimplicitassumptions.Thefirstisthatthedealer(retailoperator)isthe“customer”oftheVoAdistributionprocess,nottheenduser.ThelogicwasthatVolkswagenofAmericadistributestothedealerandthedealerdistributestotheenduser.Thesecondassumptionwasthat,significantvehicleinventory(60-90daysofsales)carriedbythedealeroperatorcreatesanincentive(financingcostavoidance)toincreasetherateofsales.Thusthedistributionsystemoperatedasa“push”system.Efficiencywasthekeyperformancecriteria.Theseassumptions,infact,reflectthedominantlogicofvehicledistributiontheU.S.autoindustry.Thepushsystemdoeshavesignificantlimitations.Oneisthatnotallcustomersareabletopurchasetheirfirstchoiceconfigurationofvehiclecolorandoptionalequipment.Manymanufacturersoffermanymorevehicleconfigurationsthanindividualdealersareabletoinventory(evencarrying60-90daysofsales).Dealers,whoareinterestedincompletingsalestransactionsasquicklyaspossiblegenerallyoffercustomerstheselectionvehiclesfromtheircurrentinventory.Ifthecurrentinventorydoesnotcontainthecustomer’sfirstchoiceconfiguration,thedealermayofferapricediscountasincentiveforthecustomertoacceptanonfirstchoicevehicle.Althoughthisprocessoftendoesresultinaconsumerpurchasingavehicle,thetransactionisinefficient.Bothpartieshavecompromisedtoacommondateofaninventoryshortfall.Theenduserhasnotreceivedhischoiceofvehicleandthedealerhasunnecessarilydiscountedtheprice.Asecondlimitationofthepushsystemisthehighsystem(importer+dealer)costsoftransportation,financingandstorage.Vehiclesareinventoriedatpointofsale,themostexpensivelocationintheentiredistributionchain.Inshort,thepushsystemisonlycoincidentallyresponsivetocustomerchoicesanditmaintainslargeinventoriesatpointofsale.DesignPrinciplefortheNewDistributionSystem

TheprojectteamatVoAwassearchingforameanstodealwiththelimitationsofcurrentpushsystem.Asadesignprincipleforthenewdistributionsystem,theprojectteamhadrejectedbothoftheabovementionedassumptions.Thenewsystemhadtoservetheenduser’srequirementsasitskeyperformancemeasure.Thenewsystemwouldhavetobe,firstandforemost,responsivetoenduserchoicesandsimultaneouslymoreefficientthanthecurrentsystem.Fromthesenewprinciplesthefollowingperformancecriteriawereestablishedthatthereengineeredprocesswouldhavetomeet:1.Maximizethepercentageofcustomerswhoreceivedtheirfirstchoiceofvehicles.

2.Ifacustomer’sfirstchoicewasnotinadealer’sinventory,afirstchoicevehiclewouldbedeliveredtothedealerfromVoAinventorywithin48hours.

3.Significantlyreducethetotalsystem(dealersandVoA)costsassociatedwithtransportation,financingandstorageprimarilythroughinventoryreduction.

Theprojectteamdevelopedanumberoflogisticsconceptsthatalternativelymanagedwhereinventorymightbeaggregatedandhowitmightbetransported.However,theydidnothaveaneffectivemeansoftestingtheconcepts.Thecomplexityandscopeofthesystemmadestaticanalysisoflimitedvalue.Simulationwasidentifiedasapotentiallyeffectivemeansoftestingtheconceptandvariousscenariosofimplementation.InnovationofManufacturingSupplyChainManagementInitsnewBrazilianplant100milesnorthwestofRiodeJaneiro,Volkswagenisalteringitssupplychain.Withthisexperimentaltruckfactory,Volkswagenissurethatithasfoundasystemthatwillreducethenumberofdefectiveparts,cutlaborcosts,andimproveefficiency.BecauseVW’spotentialmarketissmall,thisisarelativelysmallplant,withscheduledproductionofonly100trucksperdaywithonly1,000workers.WorkersinaVW’splantconsistofemployeesofitsownanditssuppliersHowever,only200ofthe1,000workforVolkswagen.TheVWemployeesareresponsibleforoverquality,marketing,research,anddesign.Theother800,whoworkforsupplierssuchasRockwellInternational,CumminsEngines,DelgaAutomotiva,Remon,andVDO,dotheassemblywork.Volkswagen’sinnovativesupplychainwill,ithopes,improvequalityanddrivedowncosts,aseachsubcontractoracceptsresponsibilityforitsunitsandworkercompensation.Withthisstrategy,Volkswagensubcontractorsacceptmoreofthedirectcostsandrisks.TheobjectiveofthenewsupplychainAstheschematicshows,atthefirststopintheassemblyprocess,workersfromLochpe-Maxionmountthegastank,transmissionlines,andsteeringblocks.Asthechassismovesdowntheline,employeesfromRockwellmountaxlesandbrakes.ThenworkersfromRemonputonwheelsandadjust

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