全英文课《DesigningandManagingSupplyChainSystem》授课教案Chapter6(lecture9)Supply chain integrationOBJECTIVES() Understand the supply chain strategy: push strategy, pull strategy andpush-pull strategy.(2)Learn when the company should adopt the push strategy,pull strategy,push-pull strategy and the key factors for choosing the right strategy.(3) Know what it take to implement a push-pull strategy, the impact and cost ofthe method.TEACHINGCONTENT6.1IntroductionThe challenge in supply chain integration, of course, is to coordinate activitiesacross the supply chain so that the enterprise can improve performance: reduce cost,increase service level, reduce the bullwhip effect, better utilize resources, andeffectively respond to changes in the marketplace.As many companies have recentlyrealized, these challenges are met not only by coordinating production, transportation,and inventory decisions, but, more generally, by integrating the front end of thesupply chain, customer demand, to the back end of the supply chain, the productionand manufacturing portion of the supply chain. The objective of this chapter is toillustrate the opportunities and the challenges associated with supply chain integration.Weconsider(1)Various supply chain strategies, including push, pull, and a relatively newparadigm, the push-pull strategy.(2)A framework for matching products and industries with supply chainstrategies(3)Demand-driven supply chain strategies(4)The impact of the Internet on supply chain integration.Obviously,the availability of information plays an important role in supply chainintegration. In some cases, the supply chain must be designed to make thisinformation available. In other cases, the supply chain strategy must be designed totake advantage of information that is already available.And, in many cases, anexpensivenetworkmustbedesigned to compensateforthelackofinformation.6.2 Push, Pull, Push-Pull SystemsTraditional categories of manufacturing operations: Push and PullPush-Pull systems --- more recent hybrid strategy of combining the two6.2.1 Push-Based Supply ChainsProduction and distribution decisions
全英文课《Designing and Managing Supply Chain System》 授课教案 Chapter 6 (lecture 9) Supply chain integration OBJECTIVES (1) Understand the supply chain strategy: push strategy, pull strategy and push-pull strategy. (2) Learn when the company should adopt the push strategy, pull strategy, push-pull strategy and the key factors for choosing the right strategy. (3) Know what it take to implement a push-pull strategy, the impact and cost of the method. TEACHING CONTENT 6.1 Introduction The challenge in supply chain integration, of course, is to coordinate activities across the supply chain so that the enterprise can improve performance: reduce cost, increase service level, reduce the bullwhip effect, better utilize resources, and effectively respond to changes in the marketplace. As many companies have recently realized, these challenges are met not only by coordinating production, transportation, and inventory decisions, but, more generally, by integrating the front end of the supply chain, customer demand, to the back end of the supply chain, the production and manufacturing portion of the supply chain. The objective of this chapter is to illustrate the opportunities and the challenges associated with supply chain integration. We consider (1)Various supply chain strategies, including push, pull, and a relatively new paradigm, the push–pull strategy. (2)A framework for matching products and industries with supply chain strategies. (3)Demand-driven supply chain strategies. (4)The impact of the Internet on supply chain integration. Obviously, the availability of information plays an important role in supply chain integration. In some cases, the supply chain must be designed to make this information available. In other cases, the supply chain strategy must be designed to take advantage of information that is already available. And, in many cases, an expensive network must be designed to compensate for the lack of information. 6.2 Push, Pull, Push-Pull Systems Traditional categories of manufacturing operations: Push and Pull Push-Pull systems - more recent hybrid strategy of combining the two 6.2.1 Push-Based Supply Chains Production and distribution decisions
全英文课《DesigningandManagingSupplyChainSystem》授课教案-long-term forecastsManufacturer demand forecasts based on orders received from the retailer'swarehouses+forecasts &stockPredictedSource&WarehouseSelldemandProduce&shipmentIn a push-based supply chain, production and distribution decisions are based onlong-term forecasts.Typically,the manufacturer bases demand forecasts on ordersreceived from the retailer's warehouses. It therefore takes much longer for apush-based supply chain to react to the changing marketplace,which can lead to(U)The inability to meet changing demand patterns.(2)The obsolescence of supply chain inventory as demand for certain productsdisappears.In addition, we saw in Chapter 5 that the variability of orders received from theretailers and the warehouses is much larger than the variability in customer demand,due to the bullwhip effect. This increase in variability leads to(1)Excessive inventories due to the need for large safety stocks (see Chapter 2)(2)Largerandmorevariableproductionbatches(3)Unacceptable service levels(4)Product obsolescence6.2.2 Pull-Based Supply ChainsIn a pull-based supply chain, production and distribution are demand driven sothattheyarecoordinated withtruecustomerdemand ratherthanforecastdemand.In apure pull system, the firm does not hold any inventory and only responds to specificorders. This is enabled by fast information flow mechanisms to transfer informationabout customer demand (e.g., POS data) to the various supply chain participants. Pullsystems are intuitively attractive since they lead to(U)A decrease in lead times achieved through the ability to better anticipateincoming ordersfromtheretailers.(2)A decrease in inventory at the retailers since inventory levels at these facilitiesincrease with lead times.(3)A decrease in variability in the system and, in particular, variability faced bymanufacturers dueto lead-time reduction.(4)Decreased inventory at the manufacturer due to the reduction in variability
全英文课《Designing and Managing Supply Chain System》 授课教案 →long-term forecasts. Manufacturer demand forecasts based on orders received from the retailer’s warehouses. →forecasts & stock Push-strategy weakness In a push-based supply chain, production and distribution decisions are based on long-term forecasts. Typically, the manufacturer bases demand forecasts on orders received from the retailer's warehouses. It therefore takes much longer for a push-based supply chain to react to the changing marketplace, which can lead to (1)The inability to meet changing demand patterns. (2)The obsolescence of supply chain inventory as demand for certain products disappears. In addition, we saw in Chapter 5 that the variability of orders received from the retailers and the warehouses is much larger than the variability in customer demand, due to the bullwhip effect. This increase in variability leads to (1)Excessive inventories due to the need for large safety stocks (see Chapter 2). (2)Larger and more variable production batches. (3)Unacceptable service levels. (4)Product obsolescence. 6.2.2 Pull-Based Supply Chains In a pull-based supply chain, production and distribution are demand driven so that they are coordinated with true customer demand rather than forecast demand. In a pure pull system, the firm does not hold any inventory and only responds to specific orders. This is enabled by fast information flow mechanisms to transfer information about customer demand (e.g., POS data) to the various supply chain participants. Pull systems are intuitively attractive since they lead to (1)A decrease in lead times achieved through the ability to better anticipate incoming orders from the retailers. (2)A decrease in inventory at the retailers since inventory levels at these facilities increase with lead times. (3)A decrease in variability in the system and, in particular, variability faced by manufacturers due to lead-time reduction. (4)Decreased inventory at the manufacturer due to the reduction in variability. Predicted demand Source & Produce Warehouse &shipment Sell
全英文课《DesigningandManagingSupplyChainSystem》授课教案6.2.3 Push-Pull Supply ChainsThe Supply ChainTime LineSuppliersCustomersPUSH STRATEGYPULLSTRATEGY1Push-Pll BoundarHigh UncertaintyLowUncertaintyPush-Pull Strategy福Initial portion of the supply chain is replenished based on long-term forecastsE.g.parts inventory may be replenished based on forecastsFinalSCstagesbasedonactualcustomerdemandE.g., assembly may be based on actual orders.Interface between the push-based stages and the pull-based stages is the push-pullboundary.Consider Two PC Manufacturers*Build to Stock*Build to order*Forecast demand*Forecast demand*Buys components*Buys components*Assembles computers*Observes demand*Observesdemandand*Assembles computersmeets demand if possible*MeetsdemandApushsystemApush-pull systemKey points for Push-Pull Strategy中Makeapartoftheproducttostock-genericproductThe point where differentiation has to be introduced is the push-pull boundaryBased on extent of customization, the position of the boundary on the timeline isdecided6.2.4Selecting theBest SCStrategy?Basic principles:- Higher demand uncertainty suggests pull,- Higher importance of EOS suggests push;
全英文课《Designing and Managing Supply Chain System》 授课教案 6.2.3 Push-Pull Supply Chains Push-Pull Strategy Initial portion of the supply chain is replenished based on long-term forecasts E.g. parts inventory may be replenished based on forecasts Final SC stages based on actual customer demand. E.g., assembly may be based on actual orders. Interface between the push-based stages and the pull-based stages is the push–pull boundary. Consider Two PC Manufacturers Key points for Push-Pull Strategy Make a part of the product to stock – generic product The point where differentiation has to be introduced is the push-pull boundary Based on extent of customization, the position of the boundary on the timeline is decided 6.2.4 Selecting the Best SC Strategy Basic principles: - Higher demand uncertainty suggests pull; - Higher importance of EOS suggests push;
全英文课《DesigningandManagingSupplyChainSystem》授课教案DemanduncertaintyPullHII1ComputerFurnitureIVDelivery costIIIUnitpriceBooks&GroceryPushCDsEconomiesof scaleLH(EOS)PullPushI: High uncertainty/ EOS not important such as the computer industry implies pullIII: Low uncertainty/ EOS important such as groceries implies pushDemand is stableTransportation cost reduction is criticalIV: Low uncertainty but EOS not important ( books and cd's )push or push/pull strategiesmight be most appropriateV: High uncertainty and high value of EOS,(furniture industry)production be pulled but delivery is pushed? How?a“pull-push"system?determine position of the boundaryRawBufferCustomersMaterialinventoryPullPushLow UncertaintyHigh UncertaintyLong Lead TimesShort Cycle TimesCost Minimization (EOS)Service LevelResource AllocationResponsivenessReacting to realized demandFlexible and responsiveapproachesManagement based on forecastsOrder fulfillmentSupply chain planningprocessesLong term strategiesCRM6.2.5ImplementingaPush-Pull StrategySummary: Characteristics of the Push and Pull Portions of the Supply ChainPortionPushPullObjectiveMinimize costMaximizeservicelevelHighComplexityLowFocusResourceallocationResponsivenessLead timeLongShortProcessesSupply chain planningOrderfulfllment
全英文课《Designing and Managing Supply Chain System》 授课教案 I: High uncertainty/ EOS not important such as the computer industry implies pull III: Low uncertainty/ EOS important such as groceries implies push Demand is stable Transportation cost reduction is critical IV: Low uncertainty but EOS not important ( books and cd’s ) push or push/pull strategies might be most appropriate V: High uncertainty and high value of EOS,( furniture industry) production be pulled but delivery is pushed? How? a “pull—push” system determine position of the boundary 6.2.5 Implementing a Push-Pull Strategy Summary: Characteristics of the Push and Pull Portions of the Supply Chain
全英文课《DesigningandManagingSupplyChainSystem》授课教案Implementation of push-pull strategies and demand-driven strategies have helpedmanycompaniestoimproveperformance,reducecosts,increaseservicelevelsQUESTIONS1. Discuss the advantages of a push-based supply chain. What about a pull-basedsupplychain?2. What is an example of a product with a primarily push-based supply chain? Aproduct with a primarily pull-based supply chain?3. What are the advantages of moving the push-pull boundary earlier in a supplychain? What about later?4. Amazon.com, Peapod, Dell, and many furniture manufacturers use push-pullsupply chain strategies.Describehow each of these companies takes advantage of therisk-pooling concept.5.Explain Amazon's strategy for slow-moving, low-volume products and fast-moving,high-volume items.6.Discuss someadditional examples of each of thefourcategories inFigure6-97. Is it possible for the appropriate supply chain (push, pull, or push-pull) to changeduring a product's life cycle? If not, explain why? If it is possible, what are somespecific examples of products for which the appropriate supply chain changed?8. Is e-fulfillment a new concept? What is the difference between online and catalogselling? Consider, for instance, Land's End, a company that has both channels.9. Explain how demand for a product like televisions can be shaped? How does thiscompare to the ways in which demand for a product like canned soup can be shaped?10. Other than the examples listed in Section 6.5, what are some more examples offailed Internet supply chain strategies? Successful Internet supply chain strategies?1l. Answer the questions at the end of the case study "Dell Inc.: Improving theFlexibility of the Desktop PC Supply Chain
全英文课《Designing and Managing Supply Chain System》 授课教案 Implementation of push-pull strategies and demand-driven strategies have helped many companies to improve performance, reduce costs, increase service levels. QUESTIONS 1. Discuss the advantages of a push-based supply chain. What about a pull-based supply chain? 2. What is an example of a product with a primarily push-based supply chain? A product with a primarily pull-based supply chain? 3. What are the advantages of moving the push–pull boundary earlier in a supply chain? What about later? 4. Amazon.com, Peapod, Dell, and many furniture manufacturers use push–pull supply chain strategies. Describe how each of these companies takes advantage of the risk-pooling concept. 5. Explain Amazon's strategy for slow-moving, low-volume products and fast-moving, high-volume items. 6. Discuss some additional examples of each of the four categories in Figure 6-9. 7. Is it possible for the appropriate supply chain (push, pull, or push–pull) to change during a product's life cycle? If not, explain why? If it is possible, what are some specific examples of products for which the appropriate supply chain changed? 8. Is e-fulfillment a new concept? What is the difference between online and catalog selling? Consider, for instance, Land's End, a company that has both channels. 9. Explain how demand for a product like televisions can be shaped? How does this compare to the ways in which demand for a product like canned soup can be shaped? 10. Other than the examples listed in Section 6.5, what are some more examples of failed Internet supply chain strategies? Successful Internet supply chain strategies? 11. Answer the questions at the end of the case study “Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain