Supply Chain Management

Case Study
„ Raw Materials – Shoes Manufacture

„ Fi i h d Goods
Finished G d – Chemical
Ch i l Manufacture
M f t
 Case - 1
Objectives

Objectives:

• Reduce time to market from 185 days to 90 days

• Increase
I flexibility
fl ibilit tot meett Customer
C t Demand
D d
Strategy:

• Implement Lean Manufacturing Model

• Create visibility in Supply Chain
• An Integrated Logistics Platform
 Scope for 3RD Party

T1 Contract
C t t
Manufacturers
Customer Principal Principal Customer

T2 Suppliers

Scope :
Manage Raw Materials Flow in Supply Chain
 Scope
Lean Manufacturing Model
Lead Time in number of days

Order Processing Manufacturing Distribution

Raw Raw
Global PO Global material material Ex factory DC to
Retail order entry planning ordering delivery Production to DC Retail Total
Current 30 2 3 12 33 45 30 30 185

Yr end 2001 30 0 1 3 23 33 30 15 135

Yr end 2002 14 0 1 3 23 33 30 15 119

Yr end 2003 7 0 1 1 16 20 30 15 90

3rd Partyy
 Proposed Solutions
1. Physical Solution
• Re-engineering Supply Chain
Introduce Supplier Hubs to:
# reduce lead times and
# iincrease costt efficiencies
ffi i i

• Introduce Suppliers Collection (milk runs)

in Korea
Korea, Taiwan and China

2. Electronic Solution

• Re-engineer Information Flow

Introduce I.P
I P based visibility platform :
# reduce process time
# achieve total visibility
 T1 Contract Manufacturers

Vietnam

T1 Contract Manufacturers
Southern China 7
Indonesia
Vietnam 5
Indonesia 5
 T2 Suppliers

Korea
China 38 suppliers
78 suppliers

Taiwan
52 suppliers

Key Suppliers
Korea
Taiwan
China
 Current Flow

Korea
China

Taiwan

Vietnam

T1 contract manufacturers
Indonesia
T2 suppliers
 Physical Solution

Korea
China

Taiwan
H
Hong K
Kong

Vietnam

T1 Contract Manufacturers
Indonesia
T2 Suppliers
Logistics platform
 Electronic Solution

e-solution – 3rd Party Electronic

•Design e-
Gateway

•Create full visibility in the entire supply chain

- Interface with :
™ Warehouse Management System
™ Multiple
M lti l Freight
F i ht Forwarders/Transporters
F d /T t
™ Shipping companies

™ T1 Contract Manufacturers

™ T2 Suppliers

™ Principal
 Current Electronic Flow

2. Manual delivery
schedule entry into OMS
Principal OMS/IB

3. Final PO from
1. Pre-PO Principal to T1 via EDI
& confirmation
via email ESC
(web based
communication
platform)

6. Manual
3. Final PO order entry

CM Supplier
S li
systems 5. New PO from T1 to systems
T2 via email / fax

• Manual processes at multiple stages of the order process

• No visibility of order status to players
 Proposed Electronic Flow

printers
banks
Principal OMS/IB
customs subsidiary
agent export license
declaration

ESC
SC Limited
(web based
communication connectivity
platform)
Tier 1 Tier 2
Tier 1
systems Tier 2
systems
CM
systems Supplier
systems
systems systems
3rd Party
Integration & Full connectivity
visibility platform

3rd Freight
Shipping Transport
WMS’s forwarders

• Reduce lead times by automating transactions

• Provide full visibility to all players
• Expandable to support additional product lines and outbound logistics
 Electronic Solution
The p
proposed
p solution - cont.

Visibility defined:
• low threshold to access all critical information
- web browser access
- downloading / uploading flat-
flat-files

• reporting facilities (KPI, performance measurement,

statistics etc
etc.))

• alert mechanisms to a variety of devices:

- pager, hand
hand--phone, fax etc.
- exception reporting, pre-
pre-alerts etc.

• Optional: facilitating electronic RFQ process between

Contract Manufacturers and Suppliers
 Case - 2
Objectives

Objectives:

• Reduce time to market from 2- 2-3 months to < 3 days

• Increase flexibility to meet Customer Demand
S
Strategy:

• Implement
p Regional
g Distribution Centres Model
• Dedicated Ships
• A Bonded-
Bonded-type Logistics Platform
 Previous Situation
KEY FACTS:
* 3 Smelters in Australia
* Historic lead times of up to 90 days
* 1,000 Customers
* 400,000 Tons p.a.
Hong Kong 14%
Taiwan 33%

Malaysia 34%

Indonesia 19%
 Solutions

Taiwan 33%
Hong Kong 14%

Malaysia 34%

Solutions: Indonesia 19%

* 4 key distribution centres
* 3 Dedicated ships on continuous circuit
* One ship scheduled in each key port
every 15 days Adelaide
* Delivery to 80% of customers within 2
Newcastle
days Hobart
 Conclusions

„ Supply Chain Management is a strategy/

process to make closer the market(demand)
and the supply
pp y
„ Speed, Closer, Visible, Agile are key drivers to
SCM
„ Think SCM as Global (Cross Border) but act
as local