Bull whip effect 3

The supplier hub is located close to the apple plant

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Unformatted text preview: e provider. The supplier hub is located close to the Apple plant and serves as a shared warehouse for these suppliers. Each supplier is expected to carry a prescribed days’ of supply of the parts at the hub, and maintains title to the inventory. Apple shares multiple weeks of demand forecasts with these suppliers. Fritz manages the entire inbound logistics for Apple by assuming the responsibility of(i) consolidating freight between Asia and the supplier hub, (ii) clearing customs, (iii) managing the hub, and (iv) managing the local transportation to Apple. The supplier hub maintains a very elaborate 3 information system called FLEX. It provides the visibility of pipeline inventory in different stages of the entire supply chain: requested by purchase orders from Apple, reserved but not shipped at the supplier, shipped from the supplier with customs entry not yet filed, in customs clearing, picked up at port of entry and en route to the plant, in stock at the hub, and pulled for delivery to Apple’ plant. Using FLEX, Apple and its partners s can keep track of inventories of hub materials in the supply chain. Fritz ensures accurate data entry in every step of the pipeline. Cl Recently, even the possibility of sharing inventory information among competitors is under discussion. For example, Japan’ semiconductor makers proposed a s system under which chip makers from Japan, Korea, the United States and Europe jointly survey their inventory levels [8]. The benefit of this horizontal information sharing is to mitigate the chronic problems associated with volatile business cycle. DRAM businesses, being at the farthest upstream in the computer supply chain, experience an extreme form of volatility. It is caused by multiple factors including business cycle, double forecasting, shortage gaming, and third-party speculation (see [9] and [10]). As a result, industry sales data and market prices are so noisy that estimating the real market demand becomes a major challenge. Information sharing among key manufacturers, if properly implemented, can at least mitigate this information distortion, and each manufacturer can better estimate the market demand and make better production, capacity and inventory pla...
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