<a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 E-Commerce Strategic Issues INFS3002 Strategic Issues in E-Commerce INFS7043 SCM Case Examples Nigel Martin 2007 Dennis Hart 2002-2006 1 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Learning Objectives Understand some of the key issues and challenges facing automotive manufacturing organizations in relation to SCM Know, in outline, how these issues and challenges have been and are being tackled Nigel Martin 2007 Dennis Hart 2002-2006 2 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Joint study by IBM Business Consulting Services and the University of Michigan Transportation Research Institute. For a copy of the full report: http://www-935.ibm.com/services/us/imc/pdf/ge510-362 Nigel Martin 2007 Dennis Hart 2002-2006 3 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain SCM touches many parts of an organisation, and many external parties also. Nigel Martin 2007 Dennis Hart 2002-2006 4 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Three critical issues from the research: Differing manufacturer and supplier relationship models can potentially define which supply chains are more efficient and cost effective. Globalization, from the dual perspective of developing a global manufacturing footprint and a global sourcing capability, will challenge even the most sophisticated and well financed companies. Nigel Martin 2007 Dennis Hart 2002-2006 5 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Three critical issues from the research (cont d): Complexity, ranging from company cultures and product designs to multiple sourcing and pricing paradigms will create extremely difficult supply chain management requirements. Nigel Martin 2007 Dennis Hart 2002-2006 6 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Identified supplier difficulties: Increased complexity of manufacturer orders. Costs and pricing issues. Risk management in the supply chain. Collaboration and relationship management in the supply chain. Nigel Martin 2007 Dennis Hart 2002-2006 7 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain SCM should help to: Collaborate to develop capabilities and solve problems especially in the areas of inventory, scheduling, capacity and performance visibility. Optimize inventories across the supply chain. Manage order complexity and schedule variation. Nigel Martin 2007 Dennis Hart 2002-2006 8 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Two models of manufacturer-supplier relationships: Selection model switch suppliers to meet shifting pricing, innovation or quality targets, and market opportunities. Development model evolutionary change by requiring that suppliers continually take part in processes that lead to cost reduction and productivity improvements. Nigel Martin 2007 Dennis Hart 2002-2006 9 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Cost pressures force Ford, GM and others down the selection model path. Toyota and Honda have maintained the development model in the face of tough competitive pressures. Manufacturers did not give a clear indication in which direction they would move. Nigel Martin 2007 Dennis Hart 2002-2006 10 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Manufacturers have inconsistent purchasing models: Source, quote and award individual components. Source and quote complete system. Source and quote complete system, award individual components. Nigel Martin 2007 Dennis Hart 2002-2006 11 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain SCM wraps across many functions Nigel Martin 2007 Dennis Hart 2002-2006 12 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Models of manufacturer behaviour: PUSH model for utilizing plant capacity and investment. PULL model for manufacture for customer demand. Use the Internet to search for dealership inventory. Nigel Martin 2007 Dennis Hart 2002-2006 13 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Extant SCM issues: Inventory is still a large cost and rising. Standardisation of inventory management nomenclature, data formats is a key. Complexity, technology, organizational issues make SCM integration difficult. Portals are being used for collaboration. Nigel Martin 2007 Dennis Hart 2002-2006 14 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Extant SCM issues cont d: Systems security is an issue. Manufacturers push technology benefits more than suppliers. Suppliers use technology as an enabler of cost reduction and improved competition. Nigel Martin 2007 Dennis Hart 2002-2006 15 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Portals link SCM BPs in real-time in: Product development. Sourcing. Supply chain operations. Manufacturing Nigel Martin 2007 Dennis Hart 2002-2006 16 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Portals enable real-time WF processes Nigel Martin 2007 Dennis Hart 2002-2006 17 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Manufacturer-supplier relationships requires trust that is not there due to: Short term relationships. Lack of supplier business understanding. Changing manufacturer strategies. Short term cost pressures Few relationship-building incentives Expensive one-off systems Nigel Martin 2007 Dennis Hart 2002-2006 18 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Supplier-supply chain relationships are difficult: Many smaller suppliers. Hierarchical systems manager controls. Goes beyond electronic collaboration. Nigel Martin 2007 Dennis Hart 2002-2006 19 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Global sourcing: The world becomes smaller and riskier!!! Global models with global coordination are complicated. Our global organization is trying to coordinate these activities. We are now coordinating manufacturing worldwide, and we need to create joint global strategies with suppliers. Nigel Martin 2007 Dennis Hart 2002-2006 20 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Significant rush to Asia: Thailand build over 500,000 vehicles per annum. China built 4.6 million vehicles in 2003. China is seen as very attractive for vehicle industry investment. Nigel Martin 2007 Dennis Hart 2002-2006 21 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Risks and challenges: Strategic decisions about global sourcing are complicated by company structures (eg, ownership integration, politics). Balancing price versus total cost of components continues to be a challenge (eg, global sourcing masks true costs). Nigel Martin 2007 Dennis Hart 2002-2006 22 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Risks and challenges cont d: Global sourcing has led to increased complexity in logistics (eg, delivery, shipping, customs). Long lead times in shipping and delivery hinder a company s ability to make engineering changes late in a development program or once production has commenced. Nigel Martin 2007 Dennis Hart 2002-2006 23 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Risks and challenges cont d: Increased inventory is required to buffer disruptions in the supply chain. An unknown Tier N supply base creates uncertainty when sourcing from companies in other countries (eg, need for buffer stock). Nigel Martin 2007 Dennis Hart 2002-2006 24 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Risks and challenges cont d: Communications and geographical challenges cannot be overestimated. Some sourcing tradeoffs are unique to North American manufacturers and suppliers (eg, industry development minorities) Nigel Martin 2007 Dennis Hart 2002-2006 25 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Successful manufacturer-supplier relationships will see manufacturers: Match customers/suppliers with common corporate behaviours. Balance product variations with the need to control inventory costs. Understand the value of strategic suppliers. Nigel Martin 2007 Dennis Hart 2002-2006 26 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Successful manufacturer-supplier relationships will see manufacturers: Treat suppliers well with trust building behaviours. Not shop supplier designs and build trust with innovation. Understand the value of supplier switching costs. Nigel Martin 2007 Dennis Hart 2002-2006 27 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Successful manufacturer-supplier relationships will see manufacturers: Work with suppliers to reduce costs. Nigel Martin 2007 Dennis Hart 2002-2006 28 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Successful SCM driven companies will: Make better efforts to link material forecasts and requests. Integrate functions across SCM. Use portal technology for integration. Rationalise supply bases for improved integration. Combine business changes and tech. tools. Nigel Martin 2007 Dennis Hart 2002-2006 29 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Successful global companies will: Make plant strategy decisions based on balanced local conditions and export potential. Integrate global purchasing functions. Understand the risks of global sourcing. Use internet based tracking systems. Engage quality Tier N suppliers to avoid supply issues. Prioritise company goals (incl. conflicting goals). Nigel Martin 2007 Dennis Hart 2002-2006 30 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Case 1 SCM New Competitive realities in the automotive value chain Concluding comments All levels of manufacturer-supplier value chains can shape future SCM. Stronger collaborative gains are required for future industry prosperity. Suppliers have an important and active role to play. Increasing complexity must be managed and handled well for success. Nigel Martin 2007 Dennis Hart 2002-2006 31 <a href="/keyword/electronic-commerce/" >electronic commerce</a> Strategic Issues INFS3002 / Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> BUSN7043 Strategic <a href="/keyword/electronic-commerce/" >electronic commerce</a> INFS7043 Questions? ? Nigel Martin 2007 Dennis Hart 2002-2006 32