Functions of supply chain logistics integ rator by case study.docx
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Functions of supply chain logistics integ rator by case study.docx
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Functionsofsupplychainlogisticsintegratorbycasestudy
Functionsofsupplychainlogisticsintegrationbycasestudy
Introduction:
Researchtopic:
Functionsofsupplychainlogisticsintegrationandintegrator.
ResearchObjective:
Toprovideaconclusionoffunctionsofsupplychainintegrationandintegratoranditschangesthroughsearchingrelatedup-to-dateinformation.Acase‘Supply-chainintegration:
LessonsfromHyundaiMotorCompany’willbeanalyzedtoexplaintheconclusion.
Background:
Thesupplychainisaworld-widenetworkofsuppliers,factories,warehouses,distributioncentersandretailersthroughwhichrawmaterialsareacquired,transformedanddeliveredtocustomers.MartinChristopherinhisbook‘LogisticsandsupplychainManagement’definesthesupplychainas:
Anetworkofconnectedandinterdependentorganizationsmutuallyandco-operativelyworkingtogethertocontrol,manageandimprovetheflowofmaterialsandinformationfromsupplierstoendusers.
Inordertooptimizeperformance,supplychainfunctionsmustoperateinacoordinatedmanner----beintegrated.Integratingsupplychainbeginswithsystemconceptsthatseemtobelittlemorethanwishfulthinkingandendswhentheybecomecommonpractice.Itisnowwidelyacceptedthatthesupplychainshouldbeintegratednotjustwithintheorganizationbutupstreamwithsuppliersanddownstreamwithdistributorsandcustomers.MartinChristopherbelievesSupplychainintegrationimpliesprocessintegration(bothupstreamanddownstream),collaborativeworkingbetweenbuyersandsuppliers,jointproductdevelopment,commonsystemsandsharedinformation.Theaimofintegrationistogaincompetitiveadvantage(includedifferentiationadvantageandcostadvantage)throughcreatingseamless,‘end–to–end’processesbyoutsourcingofnon-corecompetenciesbusiness.JamesR.StockandDouglasM.LambertbelievetheimplementationofsupplychainintegrationincludefollowSteps:
1.Supplychaindesign
2.Supplychainperformancemeasurement
3.ReengineeringImprovementintothesupplychain
4.Implementingintegratedsupplychain
Andtheyillustratehowcanwecombinesixtypicalfunctions(suchasmarketing,purchasing….)inoneorganizationtogetherthroughinformationsystem.
Theintegratorsaresomeonewhoareinchargeof,controlandcoordinatetheprocessofintegration.Thisintegratorsmaycomefromthethirdpartylogistics、otherorganizations,thedistributorsoranyothermembersofthesupplychain.ProfessorMingkeHesetforthhisviewsabouttheresponsibilityofintegratorinthebook‘logisticssystem’:
(1)Logisticsmarketresearchandforecast.
(2)Logisticssystemanalysis.
(3)Masterdesignoflogisticssystem.
(4)Logisticsresourcedevelopment.
(5)Logisticsoutsourcingandresourcepurchasing.
(6)Logisticsoperationandresourcepurchasing.
(7)Logisticssystemintegration.
(8)Valueaddedlogisticsservicesprovision.
Casestudies
Supply-chainintegration:
LessonsfromHyundaiMotorCompany
Oneofthechallengesofsupply-chainmanagementisdevelopingwaystoeffectivelyintegrateactivitiesacrossorganizationsonthesupplychain.HyundaiMotorCompanydevelopedmechanismstocoordinateproductionplanningandschedulingactivitiesamongsupply-chainmembers.HyundaiMotor'sproduction-and-sales-control(P/SC)departmentusesregularlyscheduledcross-functionalmeetingsandschedulingpoliciestocoordinatesupply-chainactivities.Throughimplementingthisprocess,theP/SCdepartmentovercamestructural,environmental,andbehavioralproblems.Communicationamongsupply-chainmembershasimproved,andtheP/SCgrouphassuccessfullypromotedmutualunderstandingandrespectamongfunctionalareas.Theprimarybenefit,ultimately,isimprovedcustomersatisfactionthroughbetterintegrationoffunctionalactivities.
Thesupplychaintypicallyincludesmanyorganizations,startingfromrawmaterialssuppliersandincludingcomponentsuppliers,subassemblers,finalassembler,thedistributionchannel,andendingwiththeconsumers.SCMfocusesonmanagingtheflowofmaterialsandinformationwithinthesupplychaintomakeitmoreresponsivetocustomerneedswhileloweringitstotalcosts.Supply-chainmanagerstrytocoordinateandintegratethediverseactivitiesofsupply-chainmemberstosynchronizetheseflows.
Althoughtheiremphasismaydiffer,mostresearchersagreethatSCMconcernsdiverseactivitiesthatwereformerlyconsideredtherealmsofseparatefunctionalgroups,suchasmarketing,engineering,production,purchasing,distribution,andlogistics.WithSCM,theperspectivemustshiftfromfunctionalspecializationtohorizontalintegrationofallfunctionalactivitiesacrossorganizationsinthesupplychain.
Withfunctionalspecialization,eachfunctionisexpectedtoperformspecificvalue-addingactivitiesrequiredtoachieveorganizationalgoals.However,suchspecializationleadstodifferencesingoalsandininterpersonalrelationships.Suchdifferencescancreatebarrierstothecoordinationofactivitiesamongfunctionalareas.
SCMextendsfunctionalintegrationbeyondorganizationalboundariestoincludesuchexternalorganizationsasdistributorsandsuppliers.Thecompetitivestrengthofaproductinthemarketplaceisdeterminedbythecombinedcapabilitiesofallmembersofthesupply-chainteamratherthanbythemanufacturingcompany'scapabilitiesalone.Theiractivitiesmustbesynchronizedtoachievethemaximumbenefits.
Synchronizationrequiresclosecoordinationandtimingamongthedifferentmembersofthesupplychain,andthatisamajorproblemformanycompanies.Incasestudiesoffivecompanies,LeeandKhumawala[1996]foundsynchronizationtobeaproblemandfoundfivecommoncausesofmisalignment:
(1)functionalorganizationsaremanagedindependently;
(2)functionalobjectivesoften,conflict;(3)informationsystemsdonotprovideeffectivesupply-chaininformation;(4)customerfocusislackingintheinteriorofthesupplychain;and(5)thedifferentneedsofcustomersarenotrecognizedwithinthesupplychain.
Effectivecommunicationandcoordinationamongallelementsofthesupplychainareessential.Fraser[1997]statedthatfourmajorfactorscharacterizesynchronizedoperations:
(1)aconsistentsetofshareddata;
(2)asystemwideperspective;(3)rapidcommunicationtoallrelevantparties;and(4)proactiveresponsetoevents,changes,orexceptions.Theelementsofthesupplychainshouldfunctionasaunifiedcompetitiveentityfocusedonrespondingquicklyandefficientlytothechangingrequirementsofthemarketplace.
Althoughsynchronizationisanissueinallorganizations,fewindustriesofferasmanychallengesoropportunitiesforsupply-chainsynchronizationastheautomotiveindustry.Atypicalsupplychainintheautomobileindustryismadeupofthousandsofcompaniesengagedinrawmaterialssupply,partsmanufacturing,subassembly,finalassembly,anddistribution.Theautomobileindustryintheworldwidemarketisahighlycompetitivematureindustry,andautomobilesaremass-producedcommoditiesmanufacturedwithwidelyavailablestandardtechnology.Inthissituation,traditionalproductionandinventorytheoriesrecommendamake-to-stockproductionsystemthatreliesonahighleveloffinished-goodsinventoryforfastdelivery.
However,theautomobileindustryhastraditionallyallowedcustomerstochoosefromdifferentmodels,colors,andotheroptions.Thismeansthatitmustaccommodatealargenumberofvariationsinvehiclespecifications.Theautomobileindustry'sproblemofsimultaneouslycombiningalarge-volume-productionrequirementwithalargevarietyofsmall-lotmake-to-orderrequirementsinvolvingthousandsofsuppliersanddealerscanbeviewedasamassivesupply-chainsynchronizationproblem.
Intheautomotiveindustry,differingfunctionalobjectivesandanextremelycomplexsupplychainimpedesynchronization.Forinstance,generallysalesdepartmentswanttomakemanyoptionpackagesavailablewithshortdeliverytimesandcompetitiveprices.Manufacturingfrequentlycountersthatincreasingproductvarietymeansdecreasingefficiencyandqualityanddeliveryperformance.Tofurthercomplicatetheproblem,automobilemanufacturersoftenpurchaseover10,000partsandsubassembliesfromoutsidesuppliers.Thismeansthattheymustcoordinateinformationandactivitiesamongahugenumberofdomesticandforeignpartssuppliers.Inaddition,manyfinalmanufacturersdonotknowthedepthorconfigurationofthesupplychainbeyondthefirst-andsecond-tierlinkages
HyundaiMotorCompany
HyundaiMotorCompanywasestablishedinDecember1967asapartoftheHyundaiGroup,oneofthelargestbusinessgroupsinKorea.Hyundaistarteditspassenger-carproductionin1968byassemblingimportedknockdowns(partsandsubassemblies)fromFordMotorCompany.By1975,HyundaibecamethefirstKoreanautomakerwithintegratedmanufacturingfacilities,andKoreabecamethe16thcountryintheworldtoproduceitsownmodelofautomobile.HyundaiMotornowhasproductionfacilitiesinKoreaandin13othercountrieswithatotalcapacityofover1.8millioncarsannually,anditplanstoopenothermanufacturingfacilitiesinKoreaandinothercountries.Thecompanyproducedaround1.3millionunitsperyearforthelastthreeyears,makingitoneofthetop10automobilecompaniesintheworldintermsofvolume.
Asistypicalintheautoindustry,theupstreamportionofHyundai'ssupplychainisverycomplex.Hyundaihasapproximately400first-tiersuppliers,2,500second-tiersuppliers,andanunknownnumberofthird-orhigher-tiersuppliers.AlthoughdomesticsourcesinKoreaaccountforthevastmajorityofthesuppliers,Hyundaialsore
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