Even when they have a strong desire to cooperate, conflict can result from different perceptions of the facts. Ideological Differences Are similar to those resulting from differences in perceived roles and expected behaviours. Can result from big-business and small-business perceptions of the appropriate role of management. Resolution of Channel Conflict Various methods of resolving channel conflict. Problem Solving. Persuasion Negotiation Politics Withdrawal Problem Solving: Two techniques Superordinate Goals : Essentially a goal that all channel members desire but that cannot be achieved by anybody acting alone.. Development of a superordinate goal overrides individual member goals. Communication Processes : Seeks to alleviate communication noise in distribution channels. More efficient communications in the channel will permit channel members to find solutions to their problems based on common objectives. Meetings and trade publications allow members to develop solutions to common problems and reinforce relationships. Persuasion Emphasis is on influencing behaviour through persuasion rather than only sharing information. Specifically, it seeks to reduce conflict about domain. Negotiation The objective is to halt a conflict, no attempt is made to fully satisfy a channel member. Could lead to a compromise, once basic reason for stress is arrested. Politics Refers to the resolution of conflict by the involvement of new parties in the process of reaching an agreement. 3 solutions exist: Coalition formation : Refers to formation of trade bodies. This is an attempt to alter channel power structure. Mediation & Arbitration : In mediation, the 3rd party may suggest a solution to the conflict but the channel members are not bound to accept that solution, whereas in arbitration the solution suggested is binding upon the conflicting parties. Lobbying & Judicial Appeal : Channel members may resort to the Govt. process to resolve conflicts. Attempts to influence the legislative process through lobbying activities are frequent. Court litigation is another means. Withdrawal If all other methods fail, then the last option for the termination of conflict is for one firm to withdraw from the relationship.
Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize systemwide costs while satisfying service level requirements. Simchi-Levi, Kaminsky and Simchi-Levi Designing and Managing the Supply Chain, 3nd Ed).
4. Customers:
Short order lead time. Higher levels in stock. Enormous variety of products. Low prices. 5. Transportation: Fast delivery. Delivery on-time. 6. Information and Communication Technologies: Platform Compatibility. Security. Access to database. Sharing information with suppliers and customers. A strong desire to move towards paperless systems to integrate and exchange information among supply chain partners. Demand-driven information: Proctor & Gamble and Wal-Mart Partnership: Vendor Managed Inventory (VMI). Manufacture-driven knowledge. Order Processing. Invoicing, and Payment, etc. Increasing demands on purchasing, manufacturing and distribution functions to operate across functions within the organization (Intra-organizational), across several organizations (Inter-organizational), and across national boundaries. Spiraling inventories mounting into billions of dollars: - What are the Inventories? - Why inventories exist? Impact of Inventories: US GNP and Inventories (in $ Billions) ________________________________________________ Time GNP Inventories Inventories Period as a % of GNP ________________________________________________ 1950s 1,203.7 278.1 23.1 1960s 1,665.3 370.0 22.2 1970s 2,416.2 571.1 23.6 1980s 3,187.1 769.1 24.1 1990s 4,155.8 908.1 21.9 _________________________________________________
Excessive inventories would result in: Higher capital costs. Higher operating costs, and Decreased production efficiency. Too low inventories would result in: - More stoppages of order processing. - More occurrences of not meeting the order promising dates: Boeing aircraft, one of America's leading capital goods producers, was forced to announce write downs of $2.6 billion in October 1997, due to Raw material shortages, internal and supplier parts shortages. - Lost sales: Compaq computer estimates it lost $500 million to $1 billion in sales in 1995 because its laptops and desktops were not available when and where customers were ready to buy them. - More unsatisfied customers.
Process View of a SC
A supply chain is considered to be a sequence of processes and flows that take place within and between different stages. Chopra and Meindl defined two different views of these processes: Cycle view: The processes in a SC are divided into a series of cycles, each performed at the interface between two successive stages of a SC. Push/Pull view: The processes in a SC are divided into two categories depending on whether they are executed in response to a customer order, or in anticipation of customer orders. Chopra, S., and Meindl, P. (2007): Supply Chain Management, Strategy, Planning, and Operation, 3rd Edition, Prentice Hall.
Push/Pull View: Push Process: With push process, execution is initiated in anticipation of customer orders. Demand for products is not known and therefore, it is forecasted. Push processes are also referred to as Speculative Processes because they respond to speculated or forecasted demand rather than actual demand. Pull Process: With pull process, execution is initiated in response to a customer order. Demand for products is known with certainty. Pull processes are also referred to as Reactive Processes because they react to customer demand. Push/Pull Boundary: The push/pull boundary in a supply chain separates push processes from pull processes.
2. Lack of trust and partnering with suppliers. 3. Setting clear guidelines for creating or terminating alliances with their supply chain partners. 4. Failure to develop and implement appropriate supply chain performance measures including those for monitoring alliances. 5. Lack of effective use of information and communications technologies throughout the entire supply chain. 6. Lack of accurate and valid data to support supply chain performance measures. 7. Organizational structures and turf issues. Benefits of Using SCM Reduced operating costs. Reduced inventory levels. Improved asset productivity. Reduced order cycle times. Reduced paperwork. Increased customer service levels. Increased customer satisfaction. Increased market share. Improved relationships with upstream and downstream partners of the entire supply chain. Improved teamwork and cooperation among employees.
Consists of all parties involved, directly or indirectly, in fulfilling a customer request OBJECTIVE: Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost.
Bull Whip Effect Each organisation seek to solve the problem from its own perspective
Small changes in consumer demand result in large variations in orders placed upstream Dramatic order size variation Amplification of order size variation as one moves up the supply chain
Causes: Little or no communication between supply chain partners. Delay times between order processing, demand, and receipt of products. Over reacting to the backlog orders. Inaccurate demand forecasts. http://www.supplychainonline.com/previews/SCM101/3.html
Managing Logistics
Logistics is the flow of material, information and money between consumers and suppliers (Frazelle 2002). It incorporates the planning and execution of activities to move products from origin to destination. Logistics is often called supply chain management because a chain of partners, products, money, and information ultimately delivers the food (supply) to the patron (customer). Figure 1, a distribution plan or pipeline for a typical supply chain, shows the many partners, facilities, and shipments that can make up a supply chain. Products arrive at a destination port by an ocean vessel, plane, or truck carrier; then a customs broker clears them through customs. Depending on the terms and service of the transportation, which defines who is responsible for what, another carrier transports the goods to a central warehouse, also called a distribution center. From there, products move through the distribution system until they reach the client. Even before the shipment reaches the port, many transactions; negotiations; and steps that include product selection, forecasting, financing, and procuring the products; must be completed efficiently.
system should impact customer service by increasing the availability of affordable, highquality health products at the service delivery level; this, in turn, will have an impact on health program outcomes. Management Information Systems To effectively evaluate a system, a manager needs relevant information. Information drives the logistics cycle; without it, the logistics system cannot run smoothly. Managers gather information about each activity in the system and then analyze that information to make decisions. For example, information about inventory levels and consumption must be collected to ensure that a manager knows how much product to procure. See the Information Systems section for more detail on this subject. Organization and Staffing A logistics system can only work when the staff are well-trained and operate in a supportive environment. They must have the right tools to do their jobs, whether they place orders, coordinate shipments, oversee deliveries, or keep a warehouse functioning effectively to ensure that the right product, in the right quantity, is shipped to the client. To ensure that goods are available for clients, all tasks are important. Health programs must be organized to provide the appropriate resources (for example, supervision authority and technical knowledge) to complete logistics activities. Organization and staffing, therefore, are an important part of the cycle. All staff involved in logistics functions must understand the six rights and make them a top priority. Supervision If the logistics system is carefully watched, it will run smoothly and staff will anticipate any needed changes. The effective supervision of logistics activities minimizes problems and/or resolves them quickly before any one problem becomes a crisis. Budget Budgeting affects the product selection, quantity of products procured, amount of storage space available, transport, and number of staff working in logistics. To have the entire system operating effectively, logistics activities must be included in operational planning and receive sufficient funds. Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers requirements.