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Polo Ralph Lauren and Luen Thai

1. Develop the framework of a Collaborative supply chain issues between the three partners. Framework for SCM Collaboration: D2S Polo would outsource the key areas design and logistics processes to Luen Thai and would involve horizontal integration among the 3 partners. Product Design & Development Vendor Compliance Material Sourcing Factory Sourcing & Evaluation Production Management Quality Assurance Logistic Consolidation. Three Dimensions to Supply Chain Collaborations Issues: Strategic Process Organizational

Strategic Need to align their strategic philosophies

Is it a platform that can allow all three partners to take advantage of future market opportunities. Intra-organization to Inter-organization perspectives require real time information exchange across all business processes of the three partners. Reconsider the value they add to the supply chain Revenue Sharing Model

Process Need to consolidate different business processes as compared to business functions. What integrative Mechanisms should they use What Performance measures should they adopt

Organizational Need to decide how to build the collaboration infrastructure Example: Oshkosh, VF, Supply Chain City Current use of technology and integration is fragmented Current supply chain is asset based and designed for mass manufacturing and collaboration would involve a serious resource and financial commitment.

2. Differentiate between Traditional supply chain and Collaborative supply chain in context of Luen Thai and Polo.

Traditional SCM: Firms operated as separate entities / loose alliances: Hard to effectively gather and update information. Typically failed to address the strategic, processual, organizational dimensions of SC integration.

Limited use of technology: The supply flow bottleneck was high Technology was either limited or fragmented

SC Collaboration: D2S Strategy: Design to Store Tighter collaboration to improve efficiencies.

Deeper participation of partners: Empowered with product and market information Better inventory management and goods deliveries

Technology: Extensive use of IT Consolidated partnership


Traditional Supply Chains usually operate through temporary co-operation, rather than act as organized and integrated clusters. Limited and fragmented technology result in inefficient information exchange. The D2S Strategy allows partners to share information, better manage inventory, and thus significantly reduce costs.

3. Examine how technology will enable collaboration amongst Luen Thai and its partners and the effect of such collaboration ?

Current use of Technology: Ruentex: Supporting collaborative SC Adopted the SAP system to restructure corporate resources Built a database for information query and knowledge accumulation Instant order checking, 3D display, won international quality certification. Quickly response to customer needs

Luen Thai: The interdependency between Polo is driving Luen Tai transform from an OEM to a service-oriented, D2S provider In 1980s Automation of Support functions In 1990s Brought in IT system EDI & ERP Since 1998 Transforming into D2S provider

Ralph Lauren: Building collaboration: Introduced Internet based Electronic Data Interchange (EDI) -> helped partners to design common interfaces and build a common platform Vendor Managed Inventory (VMI): will help Po;o automatically create purchase orders based on warehouse or store demand levels in real time. Effects of Technology: One key element in SC collaboration is real-time / near real-time information exchange, including design, sourcing, manufacturing. The Internet acts as a platform for information management and address the Bullwhip effect. The collaboration leads to growing interdependency: decreases mutual audits and inspection of incoming materials reducing cost. Create visibility of Luen Thais logistics process

Product Design -Standardized tools used during design process, Transfer of digital designs faster than traditional delivery system.

Demand Management-Integrated systems allowing real-time information sharing across entire supply chain

Logistics- Advanced shipping notice (ASN) used to track shipments, notified retailers of delays, Scan and Pack order fulfillment solution eliminated manual preparation of documents

4. Examine how Polos relationship with Luen-Thai has evolved and examine the impact of collaboration on Polos

Business Model ? Three players within the strategic collaboration A few important concerns: - Sharing information would be critical - Fulfill the market gap for shorter lead times - Post-quota environment - Using the old IT tool such as CAD, the transferring information between designers and manufacturers was still difficult. - Mismanagement of inventory, production and delivery. Their relationship gradually development since the mid 1990s Initial involvement (1996) Upstream and downstream activities Five major processes Three major problems Polo, Luen Thai, Ruentex

Second involvement (1998) Partner relationship with tier-one partners Critical -> three major industry factors Still not enough

Third involvement: Implemented a number of initiatives ASNx / FGA However, fragmented

Fourth involvement: Strengthen their supply chain collaboration across each dyad as well as the whole traid D2S supply chain model a collective view of relationship

Conclusion: Collaboration is essential in the future development for all the parties.

5. How does supply chain city initiative complement the D2S initiative ? What are the synergies? The SCC is a hub where suppliers and partners were all in one place for more efficient orders. Integrated supply chain functions by shortening the supply chain for more control.

The Supply Chain City: D2S is Luen Thais business model that will provide customers with a one-stop shop of supply chain services ranging from design and development; material management; manufacturing and logistics. Supply Chain City is one location solution all supply operations from design to development to sample making. D2S customers are looking for suppliers that can provide more products and services, perform faster but still offer a competitive cost. Supply chain city provides access to all technical support enabling Luen Thai to take up additional processes. Close to major hubs like HK and Guangzhou to help Luen Thai provide logistical services 30 upstream partners on site (Vendors & Customers) Standardizes work procedures across partners Through D2S, achieve speed to market solutions that will help our clients bring the right apparel with the right volume, to the right place and right time. Supply chain city provides instant communication and information exchange helping to achieve speed to market and flexibility Fast product turnaround Substitutes information for inventory Reduced lead time.