Chapter6

SupplyChainIntegration

6.1IntroductionEffectiveSCMimplies:Efficientintegrationofsuppliers,manufacturers,warehouses,andstores.CoordinateactivitiesacrossthesupplychainImproveperformance:reducecost,increaseservicelevel,reducethebullwhipeffect,betterutilizeresources,andeffectivelyrespondtochangesinthemarketplace.Challengescanbemetbyintegrating:thefront-end,customerdemand,totheback-end,productionandmanufacturingportionofthesupplychain.Varioussupplychainintegrationstrategies:Push,pull,push–pullstrategy.Matchingproductsandindustrieswithsupplychainstrategies.Demand-drivensupplychainstrategies.TheimpactoftheInternetonsupplychainintegration.

6.2Push,Pull,Push-PullSystemsPushandPulltraditionalcategoriesofmanufacturingoperationsMorerecenthybridstrategyofcombiningthetwo,Push-Pullsystems

Push-BasedSupplyChainsProductionanddistributiondecisionsbasedonlong-termforecasts.Manufacturerdemandforecastsbasedonordersreceivedfromtheretailer’swarehouses.Longerreactiontimetochangingmarketplace:Inabilitytomeetchangingdemandpatterns.Obsolescenceofsupplychaininventoryasdemandforcertainproductsdisappears.Variabilityofordersreceivedmuchlargerthanthevariabilityincustomerdemandduetothebullwhipeffect.ExcessiveinventoriesduetotheneedforlargesafetystocksLargerandmorevariableproductionbatchesUnacceptableservicelevelsProductobsolescence

BullwhipEffectinPush-BasedSupplyChainsLeadstoinefficientresourceutilizationPlanningandmanagingaremuchmoredifficult.Notclearhowamanufacturershoulddetermineproductioncapacity?Transportationcapacity?Peakdemand?Averagedemand?Results:HighertransportationcostsHigherinventorylevelsand/orhighermanufacturingcostsmoreemergencyproductionchangeovers

Pull-BasedSupplyChainsProductionanddistributiondemanddrivenCoordinatedwithtruecustomerdema