Logistics & Supply Chain Management ( all inclusive)
FHNW BIT Logistic & supply chain management
FHNW BIT Logistic & supply chain management
What are Key questions when demanding sustainability from suppliers to integrating sustainability into procurement?
Questions in supplier selection
- Does the supplier have a publicly accessible sustainability strategy?
- Is the supplier certified (e.g. for environmental management according to ISO 14001)?
- Does the supplier offer transparency with regard to sustainability (e.g. reporting on the website)?
Measures before entering into a supply relationship
- Examination of sustainability promises through a document review, inspection / interviews
- Preparation of a deviation and initial audit report as a basis for decision-making
Measures in existing supplier management
- Constant dialogue (e.g. through annual meetings, suitable KPIs as part of the supplier scorecard)
- Permanent internal or external controls, inspections and questionnaires (e.g. through audits)
- Use of service providers such as https://www.riskmethods.net/
What are Key criteria's when demanding sustainability from suppliers to integrating sustainability into procurement?
The following criteria are usually checked or evaluated by auditors:
- Implementation of the requirements of the respective management system, e.g. ISO 26000 (document review, KPI / reporting)
- Implementation of the requirements in everyday life (interviews, inspections)
- Review the role of management (control of management processes)
- Awareness of all employees (interviews, inspections)
- Ability to adapt and improve the management system with respect to sustainability (e.g. through the PDCA cycle).
The following criteria can, but do not have to be, checked (depending upon the standard):
- Occupational safety (separate Health & Safety Audit), environmental protection (separate environmental audit)
The following criteria are usually not checked or evaluated by auditors:
- General Quality level of the supplier
What is linear economy (disposal vs. Recycling economy (recycling and/or reuse
Disposal
- Disposal characterizes the elimination of substances.
- In business terms, disposal usually means the final disposal of waste (rather landfilling, incineration and composting of waste).
- In the supply chain, disposal always means a redistribution from the point of origin of the materials to be disposed of (source) to disposal (sink).
- Cost-intensive processes often have to be carried out as scope of disposal:
- Collection and sorting (especially for non-hazardous substances)
- Separation (disassembly, filtration, magnetic/optical separation, often manual)
- Conversion (drained, crushing, solidification)
- Storage (hazardous substances!, thresholds for hazardous goods, observation, safety zones)
- Transport (dangerous goods!, safety regulations, transport restrictions)
Recycling
- Recycling refers to the return of materials and energy to the production process through use or recovery.
- Basic principle: «Avoidance before recycling (reuse or recovery) before disposal»
- Waste may only be disposed of if its reuse or recovery has been excluded.
- Waste includes:
- solid wastes (e.g. metal shavings, packaging)
- liquid wastes (e.g. from rinsing baths)
- gaseous wastes (e.g. exhausts), light, heat or sound
Illustration of the principle "avoidance before recycling before disposal"
Give an example for a checklist for creating a disposal and recycling concept
- Inventory of material, goods and waste flows
- Clarification of the legal and organisational responsibility for recycling and waste disposal
- Composition of waste materials and quantity determination
- Determination of cost and revenue potential (today and in the future)
- Development of alternatives and their financial evaluation (e.g. new technologies, new materials, new processes, new suppliers)
- Integration into existing processes (e.g. product development, production, customer communication)
- Agreement of deposit and return concepts with customers
- Supplier obligations for returns
- Use of recycling exchanges
- Continuous, systematic review of procedures and processes for further improvement potential
What is the strategic scope for action in the field of waste management?
- Product design to avoid disposal problems (e.g. longevity)
- Defining and procuring suitable materials and reducing the use of materials
- Avoidance of waste generation (e.g. secondary packaging)
- Systematic minimization of waste (e.g. in processes)
- Use of resource-saving alternatives (e.g. noise reduction)
- Re-use (e.g. reusable packaging)
- Continued use (e.g. use for new purposes such as Friday bags)
- Re-utilization (Recovery) (e.g. cans in tinplate production)
- Continued utilization (e.g. production of car parts from plastic waste)
- Energy recovery from processes that generate heat
Note: Savings potential generally increases over time (scarcity of resources).
Why does Packaging is a two sided system when it comes to sustainablity?
Packaging
- Special case: Packaging
- Packaging serves to protect goods and the outside world (new product and disposal).
- Packaging can exist as disposable or reusable systems.
- Single-use systems
- Pro: low production costs, low weight, not cleanable, customizable
- Con: Environmental pollution, disposable mentality
- Multiple use systems (e.g. certified wooden pallets, plastic pallets and collis)
- Pro: robust and reusable, standardized in handling, cost-efficient when used in a pool shared between several parties
- Con: high investment costs, higher administrative expenditure, cleaning and maintenance costs
What is the evaluation process of product carbon footprint?
Evaluation of the "CO2 footprint" of products and processes
- Step 1: Identify all greenhouse gas emissions along the (a) life cycle of products and processes in (b) each life cycle phase.
- Step 2: Convert all greenhouse gas emissions into CO2 equivalents.
- Step 3: Disclose, respectively report, in product or process specifications.
- Recalculation when there are changes in the supply chain (procurement, production, sales, ...)
- Provides companies a new KPI to be minimized in sustainable SCM
- Footprinting standards: ISO 14067, ISO 14026, GHG Protocol
Describe the Life cycle assessment in the supply chain
- The life cycle assessment examines all elements in the life cycle of a product for possible ecological risks and weak points, to identify optimization potential and options for actions.
- The life cycle assessment examines various criteria (land use, water pollution, health, ...)
- Standards: ISO 14040, ISO 14044
- Schematic approach:
What are requirements for the life cycle assessment?
- Compliance with accounting principles (completeness and clarity).
- Data collection in physical units: Kilograms (substances) and kilowatts (energy), if necessary with supplementary data (e.g. pieces or cubic metres).
- Standardisation and documentation of measurement and survey data (for comparability, location and time).
- Early entry of substance and energy data into an IT system (e.g. hazardous substance database).
- Clear definition of system boundaries (e.g. handling of data from corporate holdings and materials provided).
- Fix survey period and time (based on fiscal year, stock surveys are linked to physical inventory)
Video: What is "sustainable development"? Which three areas must interact?
- Three pillar model is based on
- Environmental,
- Clima protection,
- protection of resources
- Protection of biodiversity
- Food should be grown organically
- Use natural resources with caution
- Economic
- Business and industry
- Only find products which are in season on the shortes way possible (no flights)
- Social considerations
- Better education and training opportunities
- Equal right to men and women
- Fighting poverty
- Prosperity for the whole of humanity
- Environmental,
Video: What are the five critical elements respectively "Ps" of sustainable development?
- People: end poverty and hunger in all forms and ensure dignity and equality
- Prosperity: ensure prosperous and fulfilling lives in harmony with nature
- Peace: foster peacful just and inclusive societies
- Partnership: implement the agenda through a solid global partnership
- Planet: protect our planet's natural resourced and climate for future generation
What does sustainability mean in the context of supply chain management and digital business?
The three target dimensions need to be taken into account (ecolomic, ecological, social) in intercompany collaboration and in the management of material, information and financial flows so that actors in the supply chain must meet a minimum ecological and social standards.
What are the drivers of sustainability in supply chains?
- Social and governmental . Changing value in society and new laws and regulation
- Market significance. Customer demand for sustainability
- Company-related increased costs for disposal and recycling
- External drivers
- Market pressure
- Social pressure
- Regulatory pressure
- Internal drivers
- Corporate strategy
- Corporate culture
- Corporate resoources
What are the typical sustainability problems in supply chains?
The problem areas are economy (cost, quality), ecology (emission, clima) and social (child labor, occupational safety)
Most company's and customer first need to understand what sustainability menas in the supply chain. Then they need to firue out where and when problems with sustainability occur in the supply chain. Further actors in the supply chain have different perspective, motivations and possibilities and need to understand the whole concept and there are different powers that can make problems with influence and control when running through the suply chain to be sustainable.
What are the methods and instruments of sustainable supply chain management?
- Avoidance: elimination of root causes, generally do not act as first-mover (reactive approach)
- Deferment: reduction of root causes, posponement of logistics proesses (reactive approach)
- Hedging: limitation of main causes, currency hedging (preventive approach)
- Diversification: reduction of dependency, dual or triple sourcing (preventive approach)
- Transfer: risk-sharing, multiple user warehouse, aliances (proactive approach)
- Acceptance: Incur (but monitor) risks, accept fluctations in demand (proactive approach)
What perspectives are there on sustainability in supply chain management?
When a product is economically feasable, socially acceptable and environmental friendly then it is sustainable. The perspectives are Economy (cost reduction through), Ecology(reducing use of resources) and Soiety (minimum standards in occupational safety).
How can sustainability initiatives be classified in supply chains?
- Reactive strategy, damage containment upon occurrence of loss
- Defensive strategy
- Adapted strategy
- Proactive strategy, mitigation throuugh continuous risk management
What is meant by recycling management and how does it change SCM?
Recycling management does look at the waste produced by the supply chain, this waste includes solid wastes, liquid wastes and gaseous waste. Now the recyling managment tries to avoid as much waste as possible, if not avoidable tries to recycle waste and only if there is no further use, then dispose the waste. It concerns the supply chain management on every level. From product design to avoid disposal problems to packaging and enery recovery from generated heat.
Why is supply chain management predestined to take responsibility for sustainability?
Cause when using sustainabl techniques and resources, you also increase efficiency of buildings, vehicles and machinery at a significant cost saving over a longer timepreriod.
SCM decides on all the steps in a production and by choosing sustainable methods the product itself can get sustainable.
What is a Supply Chain
Supply Chain is a complex system of people, processes, and technologies engineered to deliver value to a customer
Supply Chain suggests that it covers all processes throughout the product lifecycle, including the physical, informational, financial and knowledge-based processes for moving products and services (from suppliers through to end users).
Includes all components that flow through the supply chain.
Goods and services, mainly to customers
Payments, mainly to suppliers
Data and information in both directions
What is the goal of Supply Chain?
The goal of every supply chain is to deliver the right product or service, to the right customer, at the right place, at the right time, to the right conditions for the lowest total cost
What is Supply Chain Management (SCM)
SCM represents an integrative functional area which is primarily responsible for the connection of the main business functions and processes within an organization, as well as those of other businesses that are involved in the supply chain, in oder to form a concept in the shape of a consisten and high-performing business model
In order to increase the efficiency of a supply chain, and thus added value, the entire flow of materials, services, information and financial resources must be monitored, measured and steered → Supply Chain Management
Give a few examples for digitalization within Supply Chain Management
- 3D printing
with 3D printing, production processes can be simplified and accelerated. It can also be used to produce personalized products for customer at lower cost. Complex shapes can be produced that could hardly be produced using conventional methods in the past.- Medical, printed titanium implants
- Mechanical engineering, printed castings
- Robotics automation
in production, robots on the assembly line have already greatly replaced humans. Now robots are beginning to take on more complex tasks and also also making decistion. Be it finding the fasttest route or reacting to human expressions.- Warehousing
- Care of elderly people
- Industry 4.0
the central aspect is the complete networking between the machines, the products manufactured or services offered and the environment and people- Completely flexible and networked manufacturing at FESTO
- Fully-networked railway infrastucture belonging to SBB, BLS, RHB
- Wokring and Fighting Machines
UAVs exand the possibities. Drones can be used as meaqns of transport, bus also as decision support. UAVs are particularly suitable for transporting short distances and time-critical goods. But they also can help in decision making by collectiong data from the air.- Transport drones employed by the Swiss Post
- Agricultural drones for soil analysis
What are the typical element of the supply chain?
Define Supply chain
from the supplier- & customer centric approach
Supplier-centric approach: Supply chain as a network of suppliers producing goods.
Customer-centric approach: a supply chain consists of all the levels required (direct or indirect) to fulfil a customer request.
Combining these approaches leads to more comprehensive approach: Systematic coordination between all required parties.
- to balance supply and demand
- to supply the market with products and services
- Operational goal: lowest possible costs and highest possible speed
- Ultimate goal: Satisfying customer needs
Define supply chain from the demand-side approach
Category management
Usually heavy on inventory
Demand chain focused on the marked demand towards suppliers, the supply chain is steered by demand pull from the customer. Translates a customer goal into instructions for the suppliers.
Decision-making process in four steps.
1. definition of the purpose of the demand chain
- Planning, e.g. in the form of a category plan
- Control of consumption and requirements (e.g. inventory management)
- Purchasing transactions, e.g. a call-off from a frame agreement
What is a frame agreement
You make a frame contract and put everything in it.
e.g. (Rahmenvertrag)
you order a machine and then call off or change something. You make a deal for packages instead so you pay not for the service or parts but for the packages send.
Define supply chain from the organization-related consideration.
Syloorganisations
Organization-related consideration of the supply chain: Supply chain as a series of organizational units both within a company as well as in other companies (intra- and interorganizational) that produce and deliver goods for and provide services to customers.
Define supply chain from the single-side and the multi-stage approach
How far into depth can I go?
how far into depth do I actually need to go?
Single-stage supply chain: Reflects only direct relationships between suppliers and customers.
Multi-stage supply chain: In extreme cases, it maps all stages, from raw materials through to the disposal or recycling of end-of-life products:
– complexity increases disproportionately with an increasing number of stages
– companies have neither the means nor the resources to monitor all stages.
– companies usually limit themselves to one or two levels
Define supply chain from the market-driven approach
Market decisions determine the nature of the supply chain. Within a supply chain with many supply chain partners, a large number of decisions are made:
– Decisions on investments, strategies for coordination and cooperation with partners, customer service, profit maximization strategies, etc.
– Many market decisions increase complexity and dynamics.
– Market dynamics increase uncertainty about the impact of decisions (numerous variables have to be taken into account).
Define supply chain from the functional approach
Functional Supply Chain: Analysis according to the main activity of the operational functional areas
- Purchasing activities: raw materials, components, resources and services
- Manufacturing activities: creation of products and services, repair and maintenance
- Movement activities: transport of material and persons
- Warehousing activities: raw materials, intermediates ("Work in Process", WIP), finished products
- Sales activities: market-oriented activities such as marketing and distribution
Alternative now upcomming is process oriented approach. Cause if you loose a function this function is gone, if you loose a process you can fix it..
What are different supply chain approaches?
- Supplier-centric
- Customer-centric
- Demand-side
- Organization-related
- Single-stage
- Multi-stage
- Market-driven
- Functional-side
Centric supply chain
You have the product and the disposal in one
What are drivers of change for supply chain strategies in the digital age
Material, payment and information flows along the supply chain used to be considered linear and coupled. The use of networked digital technologies such as the Internet has sustainably changed this:
- acceleration of information flows,
- decoupling of information flows from material and payment flows,
- development of traditional supply chains into networked, dynamic supply chains,
- dynamic integration (or exclusion) of partners according to e.g. customer preferences, technological advantages or product life cycle
What are the interactions between supply chain strategy, supply chain processes and information technology?
Information technology enables integrated supply chain processes and new supply chain strategies.
It is always the question as a leader how much freedom you will give your team in the process. The golden line lies in the middle of Top-down and Bottom-up.
Top-down:
1. Required processes are derived from the strategy and implemented.
2. Information systems are designed according to the requirements of the processes.
Bottom-up:
3. Networked information systems enable innovative integrated processes.
4. New integrated processes lead to innovative networked business models
What are dynamic supply chains
Dynamic supply chains are a network of organizations that:
–are linked together in both forward and backward directions
–create value within different processes and activities Dynamic supply chains or a network of organizations must place value creation in the center.
–Value creation must be seen both in internal and cross-company terms.
–Values are ultimately reflected in the products and services delivered to customers.
What is value co-creation?
You have all the different stages and when one part falls out all of the other suffer. So they exchange services.
Compare the traditional value creation (goods-dominant) vs. Value Co-Creation (Service-Dominant)
Goods-Dominant Logic (GDL):
- Value is generated in manufacturing.
- Value is provided to customers in transactions (Value-in-Exchange).
- Value is consumed by customers (Consumption).
- Goal: Standardize Products, Services and Processes in order to reduce cost.
Service-Dominant Logic (SDL)
- Providers generate value offers with products.
- Value is provided to customers in use (Value-in-Use).
- Value is continuously generated by customers (Service).
- Goal: Establish processes to integrate the resources from providers and customers to create value.
Draw a GDL
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- 1 / 461
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Cartes-fiches
What are returns and why is it a challenge for companies?
Retuns are items customer ordered but did not want to keep.
It requires lots of logistics to order items, check them, repac them, send them to retail again or dispose/let repair them. If items are just dirty and not damaged they get cleaned and repacked.
if an item is send back too often it cannot be sold as new again. For each item category experts are needed to check if the product was not tampered with.
How can e-commerce be defined? What aspects do these definitions include?
E-commerce is the support of a company and ist relationships and processes with customers through a networked information technology. It involves different transaction phases
What is the current market development in Switzerland with regard to the different categories and industries? Do B2B and B2C differ?
E-business is on the rise. Including automated electronic business transactions between companies, the volume of e-commerce between companies (B2B) is much higher than that with private households (B2C).
What types of providers are there in e-commerce? What are the differences between them?
Many provider focus primarily on B2C
- Pure online (amazon)
- Mail-order company with print and online shop
- Stationary dealers with online sales (coop@home)
- Multi-channel provider with cross-channel services e.g. digitec
- Manufacutrer with online direct sales e.g. nespresso (B2B)
- Electronic marketplaces
- Flash-sale providers
What is the respective starting point for a transaction phase?
The stimulation of potential customers is the starting point. This is done by engaging customers while they surf the web with advertising, offline with advertising and online by engaging potential customers with the topic by posting it on blogs, influencers or open discussions about product on different platforms.
What questions does a provider have to ask himself about a transaction phase?
If the payment process is clear, what infomrmation the customer needs, how delivery takes place, track & trace of the order and how returns are managed.
What value does supply chain management in e-commerce provide for companies and customers?
For the stimulation phase = better customer acces
Information phase = compelling offering
Agreement phase = good terms and conditions
Settlement phase = reliable and efficient processing
Loyalty phase = accompany the customer as long as possible.
Why is the product configurator of practice relevance?
- Customer measure the value and benefit of a product or service by how well the product can be adapted to their own ideas and needs
- Many products and services can be configured online during the transaction process, usually by way of a "configurator".
- A "configuration" can also simply be a necessity, without which the product or service has virtually no value or benefit for the customer.
You must understand…
- How a product configurator can be designed to create value for the customer.
- How a product configurator can affect supply chain processes
What are success factors for product configurators?
The success factors are..
- Fulfilling a real customer need
- Customizable design or feature set (or both) possible
- Understandable and simple configuration steps
- Production processes and infrastructure designed for this
- Few preliminary and semi-finished products on stock
- Direct and quick dispatch to the customers
- Operating and integrated information system
Which questions does a company have to ask ab out the success factors in the product configurator sections Customers, Design and function, and Production?
- Customers
- What is the added value resp. Benefit for the customer?
- Which need is being met? Are the customers satisfied( to do this, google for customer reviews)?
- Design and function
- Which parts of the product can the customer configure and in what form?
- How many, and which, steps must the customer go through during configuration?
- Production
- What type of mass customization is it?
- How are the processes and the infrastructure arranged (make reasonable assumptions, if required)?
- Which production equipment and facilities are required?
Which questions does a company have to ask ab out the success factors in the product configurator section Inventories, Sales and returns, and Information system?
- Inventories
- Which materials (prefabricated products) and products (semi-finished products) must be held in stock to enable the quick execution of customer orders?
- How do the stock of pre-fabricated and semi-finished goods differ compared to normal production?
- Sales and returns
- How must the distribution and handling of returns be organized?
- Are returns possible at all? How could customers justify returns?
- Information system
- What information systems are required and for which activities? (online shop, design systems, production control, ERP systems, etc.)
- Which data must be exchanged with partners?
- What data must the customer provide so that the configuration can be completed?
What is the area of activity called business models? And what are the central questions
The area of activity “business models" deals with the integration of the different strategic orientations and business models of suppliers, own companies and customers. Central questions are:
- Which overarching strategies influence joint value creation?
- Which aspects drive digitization and innovation among business partners as a whole?
- How does digitization and innovation change the share and type of value creation of individual business partners?
What is the practical relevance of business models in a networked world?
- The economy is networked. But what exactly does that mean? Supply chain networks can serve various purposes. They can be short-term or permanent.
- The networking of supply chains takes place at different levels. Each of these levels has a purpose. The levels of the networks are not isolated but interact with each other.
You must understand…
- how networks can be described and structured in order to analyse them.
- what positive and negative effects digitalization can have on supply chain networks.
- how suppliers and customers interact with each other and create benefits.
What is a corperation strategie? And what types of cooperation strategies are there?
Cooperation strategies support the functions of supply, disposal and recycling within contemporary supply chains.
- Vertical cooperation strategies are carried out with upstream or downstream value creation partners. The first relate to supplier integration, the latter to customer involvement.
- Customer Cooperation
- Supplier Cooperation
- Horizontal cooperation strategies are geared towards the same level of added value. They take place between competing partners, often in the form of strategic alliances
- Strategic Alliance
- Coopetition
Describe the Vertical Cooperation Strategies
Vertical Cooperation is split into Customer Cooperation and supplier cooperation
Customer cooperation: the focus in on recognizing the customer wishes:
- Expressed expectations: wishes that are expressed, e.g. Like new sneakers on social media
- Unspoken requirements: Of course, negatively assessed in the absence of a property or functionality, e.g. camera in the smartphone
- Unspoken expectations: not self understood, positively assessed, if available, e.g. Internet usage on television
Supplier cooperation: the approach of suppliers to the manufacturers is distinguished by:
- Level of commitment
- System suppliers (first tier suppliers): direct suppliers, partially responsible for development, high level of commitment (see preparatory video for SMART automobile production)
- Sub-suppliers (Tier 2 to n suppliers): indirect supplier to manufacturer, direct supplier to system supplier, low level of commitment
- Performance potential
- Black box suppliers: early involvement in product development, high performance potential
- Detailed specification suppliers: Strict instructions, conditions based upon the producer
- Catalog suppliers: standard products, no specific adaptations, low performance potential
Describe the Horizontal cooperation strategies
Horizontal cooperation strategies are split into two. Strategic alliances and coopetition
Strategic Alliances: Cooperation between competitors in order to gain competitive advantages
- Star-Alliance: Airline industry
- Merck and Pfizer: Pharma
Coopetition: Cooperation and Competition
- Renault-Nissan and Daimler cooperate on small vehicles (Twingo and Smart); however, they are in fierce competition in other segments
In your opinion, which primary cooperation strategy is being pursued by the retailer Coop, the large bank UBS or the machine builder Schindler? Are multiple strategies being pursued at the same time?
Coop - Vertical
- Detailed specification suppliers
- Catalog suppliers
UBS - Vertical
- Black Box Supplier
- Detailed specification suppliers
Schindler - Vertical
- We don't know
- Coopetition for the lifts maybe?
- Detailed specification suppliers
What is a Network as seen form a business perspective?
- Network as metaphor
- Network as reconstruction technique (modelling, reduction of the complexity) and for analysis purposes
- Network as type of organization
- Organization with relatively autonomous members who are linked together in the long term by common goals and who work together in a coordinated manner.
- Network as an innovative, superior organizational form
- Rapid adaption to market, "value network" or "value net", "virtual companies" (see Block 1)
- Networking as a natural organizational form
- Transport and communication networks, banks and insurance companies, health care, etc.
What are characteristics of Supply chain networks?
Supply chain networks fulfil the following criteria:
- An exchange (transaction) takes place between the actors (individuals or organizations).
- The partners are interdependent across dyads (a dyad is a relationship of two).
- Decision-making processes are subject to a double reflexivity: they are derived from both the individual goals of an organisation and from the network itself.
- Within the network, the actors are prepared to provide multi-level compensation (balance between investment and subjective benefit).
What network types are there from a supply chain perspective?
Five network types from a supply chain perspective
- Reproduction networks: focus on production
- Innovation networks: focus on projects
- Intermediary networkds: focus on the position within the network
- Multiplication networks: focus on products and brands
- Transport networks: focus on the distribution of goods
Describe the network type reproduction network from a supply chain perspective
Reproduction networks: focus on production
- Usually contain the processes of the supply chain
- Routine production of tangible and intangible objects
- Firm and long-term linkage of actors in processes
- Success factor: Process integration of the network
Examples
- Migros or coop (retail)
- Production of own brands (also contract manufacturing)
- Cantonal banks, UBS or Credit suisse (banking)
- Services (processing of indirect goods)
- No or very few direct goods
- REMAX (real estate)
- n/a
- Burger King, Starbucks (fast food)
- Not applicable to franchisors
- The franchisee production of fast food
- SBB or BLS (public transport)
- Services (processing of indirect goods)
- No or very few direct goods
Describe the network type innovation network from a supply chain perspective
Innovation networks: focus on projects
- Research and development alliances (high-tech industry), consulting projects
- One-off cooperation of actors with focus on division of labor, know-how transfer and cost splitting
- Success factor: problem-oriented reconfiguration of the network
Examples
- Migros or coop (retail)
- Research projects with universities and other companies on the subject of industry 4.0
- Cantonal banks, UBS or Credit suisse (banking)
- Mobile payment (TWINT, SwatchPay)
- REMAX (real estate)
- n/a
- Burger King, Starbucks (fast food)
- n/a
- SBB or BLS (public transport)
- Development of billing systems and mobile apps (SwissPass, Lezzgo)
Describe the network type intermediary network from a supply chain perspective
Intermediary networks: focus on the position within the network
- Processing of supply and demand information
- Establishing contacts between actors (also in trade)
- Success factor: size of the network
Examples
- Migros or coop (retail)
- Relaying the offer from brand manufacturers to customers
- Cantonal banks, UBS or Credit suisse (banking)
- Stock exchange transactions (shares and bonds)
- REMAX (real estate)
- Buyers and sellers of real estate
- Burger King, Starbucks (fast food)
- n/a
- SBB or BLS (public transport)
- City and adventure travel (hotels, other, transport service providers)
Describe the network type transport network from a supply chain perspective
Transport networks: focus on the distribution of goods
- Classical logistics, bridging time and space
- Success factor: network utilization
Examples
- Migros or coop (retail)
- Own storage and transport systems for goods
- Cantonal banks, UBS or Credit suisse (banking)
- n/a
- REMAX (real estate)
- n/a
- Burger King, Starbucks (fast food)
- Organization of storage and transport
- SBB or BLS (public transport)
- SBb Cargo
- BLS Cargo
What are the three basic approaches of systematization of networks? Describe them
Structure-related approaches
- Size: Number of actors, spatial extension
- Characteristics of the actors: specialization, network experience, willingness to cooperate
- Social criteria: Power relations, basis of trust, network culture, conflict potentials
- Business relationships: Type and frequency of transactions, stability
- IT Relationship: Integration and Data Exchange (Online Shop, EDI
Level-related approaches
- Meta-logistics: Cross-company logistics (supply chain management) between macro- (macroeconomic) and micro-logistics (organization internal)
- SCOR model: four levels (top, configuration, process element and implementation level)
Phase-related approaches
- Differentiation according to development stage of the supply chain (initializing, processing and reconfiguration)
"Small cars, big problems" What problems does the article identify? What types of networks are addressed in the article? How can these networks be systematized?
Many carmakers are cutting their small cars from the range. The complex exhaust gas purification systems and fuel-saving technologies made these vehicles unprofitable, is the reason. Manufacturers actually need small, lightweight cars to meet their climate targets. A strategy to save the segment could be comprehensive cooperation between the manufacturers - this would significantly reduce costs.
Problem
- Small cars are unprofitable for manufacturers, but represent an entry into the brand world for new customer
- Margin too low to negative
- Costs for safety and environmental protection systems too expensive for small cars
- Take into account in the CO2 exchange mix of a manufacturer and are, therefore, necessary to meet legal requirements
Network types:
- Reproductio nnetworks: production of small cars.
- Innovation networks: Cooperation in development, in order to reduce costs.
Systematization:
- Structure related:
- Size: few players on the manufacturer side, worldwide expansion
- Characteristics of the actors: a lot of network experience and great willingness to cooperate
- Social criteria: Equally powerful actors, competitors
- Business relationships: "one-off transactions in development, onging in joint produciton
- IT relationship: especially in production with EDI
- Level-related: Meta-logistics to macro-logistics
- Phase-related: "initializing" for new cooperations (Daimler), processing for existing cooperations (PSA)
What are the three classical network levels from a supply chain management perspective?
- Goods networks: core logistics activities such as transport, handling, picking, sorting, storing, packing and signing
- Information networks: Communication networks (basic media such as mail, fax, telephone) and information networks or data networks (all IT systems, collaborative solutions with EDI)
- Financial networks: three perspectives
- Functional: Logistics interfaces (logistics for procurement, production, distribution, information and disposal) are extended to include accounting, controlling or treasury.
- Institutional: Partners of the supply chain (including its service providers) in interaction with finance and accounting/controlling
- Financial: Networks take into account effects of logistics activities on process costs, fixed assets (asset management, fleet management) and current assets (cash flow calculations).
Are there more than three network levels from a supply chain management perspective?
Yes there are two further levels (middle levels)
- Institutional networks: legal, shareholding and cooperative linkages
- Cooperation agreements with rights and obligations of supply chain actors
- Shareholdings (e.g. mutual shareholdings) and "Director Interlock" (e.g. exchange of board members)
- Lower level of commitment in cooperative mergers (strategic alliance, joint venture, cartel, BGB company, virtual organization or cooperative)
- Social networks: People ensure the structure and cohesion of a supply chain
- Professional and personal relationships of the actors involved
- Emotional attachments and feelings. Extreme case: Dissolution of the supply chain through personal tensions (stress ratio)
- An essential component of social networks is the trust of partners (see Block 6 on electronic markets)
How do the network levels from a supply chain managment perscpective interact?
The five network levels or partial levels of the supply chain are in constant interaction with each other.
- On the basis of the goods network, the optimization of the financial results (network) is targeted.
- The other three networks are indispensable and are a means to an end. They enable the planning and control of the production process for products and services.
Initial Sitation:
You have recently established a start-up for universal charging stations for electric cars. You are still fully engaged in product development and already have the first fully functional prototypes being piloted in cooperation with power companies. You are now faced with the task of planning and implementing a first series production. But first you have to find a suitable production partner (who also supports your idea) and conclude contracts, because you do not have the resources to produce the charging stations yourself. You are still faced with the task of finding investors, because your capital is not sufficient to really get started. Investors usually expect you to provide them with information on possible locations and commitments regarding cooperation with power companies and automobile manufacturers. The investors also want to know how you want to earn money in the long term and what the exact yield model will look like. You are still considering whether to sell the charging stations via a usage model or sell them and offer maintenance contracts (in cooperation with a partner).
- Which of the five network levels can be assigned to the described initial situation?
- Where do the network levels possibly influence each other?
All network levels are addressed.
- Goods networks: Production and delivery of charging stations
- Information networks: Finding partners and investors. Data exchane for a possible billing model or maintenance, data exhange with partners (suppliers).
- Financial networks: delayed settlement with customers and suppliers, institutional settlement with investors
- Social networks: finding suitable partners and investors, including power stations and car manufacturers, building trust
- Institutional networks: concluding contracts and cooperation agreements with business partners
In some places, these influence each other.
Gaining trust leads to cooperation agreements (social network institutional network)
Cooperation agreement with power stations and suppliers lead to willing investors (institutional network social network)
Functioning information networks enable the charging stations to be put into operation (goods network information network)
What are advantages and disadvantages of supply chain network digitalization?
Advantages:
- Automated linking of different network levels (efficiency gains)
- Acceleration of flows in information and financial networks (efficiency gains)
- Increased transparency in goods networks (e.g. through tracking & tracing)
- Faster product developmetn and pull principle through callaborative planning (e.g. APS systems)
- Flexibility through the use of standardized interfaces (e.g. communication standards EDI, use of electronic marketplaces)
Disadvantages
- Social networks for development and cohesion play virtually no role any more
- Errors in information can have a greater impact due to acceleration
- Dependence on delivery reliability increases, e.g. with tightly calculated inventories
- The market cannot always absorb new products faster. Slow-moving goods are created more quickly
- Lock-in by using proprietary interfaces (e.g. if large customers or suppliers prescribe theri own standards)
What are opportunities and risks of supply chain network digitalization?
Opportunities
- New networked business models become possible through intermediation in the supply chain
- Digitalization of products and services can create added value (gains in effectiveness)
- Digitalization of products and services can create added value (gains in effectiveness)
- Virtual organizations with the best companies worldwide (institutional network level) can be set up and dismantled more quickly
Risks
- Exclusion of existing business partners in the supply chain through disintermediation
- Extensive data collection in information and financial networks increases the risk of data misuse
- Few large companies determine market success (e.g. Google, Amazon)
- Competitive pressure is increasing, you have to be one of the best companies to be part of virtual organizations
What can digitalization enhance in network effects?
- Economies of Scope (synergies)
- Companies act together with partners in the supply chain to generate synergies and cost advantages.
- Conditional early supplier integration (e.g. via APS systems or ECR)
- E.g. BASF " amultple of network effect strenghtens our protfolio)
- Economies of Scale
- The fixed costs of the partners in the supply chain are spread over large production quantities.
- Reduction of ICT infrastructure fixed costs through cloud computing (e.g. Amazon AWS)
- Economies of Density
- Each additional partner in a network makes the network denser!
- Bundling advantages through geographical concentration of business partners (brokerage platforms such as Eat.ch, bundling of delivery by distribution service providers such as the Post)
- Density advantages can occur as a subset of Economies of Scope and Economies of Scale
- E.g. Migros PickMup
What is Intermediation in the supply chain?
«Economic transactions on markets are often characterised by intermediaries. Their function is to make transactions between economic actors as expedient as possible and to reduce transaction costs during the individual phases. –Bringing supply and demand together at a central point increases market transparency.
- The provision of trust-creating instances prevents opportunistic behavior on both sides of the market.
- The availability of information, e.g. on prices and the condition of goods, reduces the "search costs".
- The use of ICT technologies leads directly to a reduction of transaction costs, especially if several phases of a transaction are supported
- E.g
- Reservation and booking systems: Ticketcorner, Booking.com
- E-Logistics/Returns: Amazon, Rhenus
- E-payment: PayPal, Twint
- Online auctions: ricard, ebay
What are the Transaction cost of the intermediation in the supply chain?
There are Three Transaction phases / Transaction costs
- Information phase
- Related to product search effort (comparison), measurement problems (quality), verification of information; Related to market participants verification of identity, assessment of trustworthiness
- Information retrieval
- Sales promotion, procurement support
- Buyer search, contracting
- Reducing information asymmetries and building confidence
- Agreement phase
- Negotiation effort, contract drafting, contract safeguarding.
- Negotiations
- Matching (of demand and supply)
- Settlement phase
- Monitoring implementation during regular execution
- Physical distribution
- Financing, payments
- Assumption of risk
What is Disintermediation in the supply chain?
Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transaction
Intermediation only makes sense, if the costs of direct transactions between supplier and customer (T1) are higher than the cumulative costs of transactions between supplier and intermediary (T2), intermediary and buyer (T3) and the trading margin (H) of the intermediary. Transaction costs can be reduced through the Internet and digitalization.
- Costs for product search and product comparison are often lower than in real markets
- Information can be retrieved at any time and from any location
- Conditions can be compared directly
- Especially for products that do not require advice or do not need to be viewed and evaluated in reality (e.g. physically)
The risk of disintermediation is rather low for companies that handle high flows of goods and at the same time process complex information. The more specialized a company's services are in the supply chain, the lower the risk of disintermediation by an upstream or downstream business partner. So if low volume of goods flow and low information complexity the risk is high. When high volume of goods flow and low information complexity the risk is medium. If there is a high information complexity the risk i in general low, independent of the volume of goods flow
Compare the traditional value creation (goods dominant) with the co-value creation (service dominant) based on some distinguishing features.
Goods-Dominant Logic = GDL
Service Dominant Logic = SDL
Distinguishing features
- Basis of exchange
- GDL: Goods and services
- SDL: Service (no s!)
- Role of goods and services
- GDL: Finished product
- SDL: Distribution mechanism for service provision
- Role of the customer
- GDL: Buyers of goods
- SDL: Co-creator of value
- Value creation
- GDL: Through the production of goods
- SDL: Through co-creation with customers
- Relationship orientation
- GDL: Low
- SDL: High
- Soruce of economic growth
- GDL: Ownership and use of narual resources (operand)
- SDL: Application of knolwedge and skills (operant)
Define Co-creation and the five axioms of co-creation
Co-creation (also known as «Service-Dominant Logic»)
Definition of co-creation
Co-creation of is an approach to explain value creation through the exchange of service in networks. The basic idea is that all actors use their competences to the benefit of others and mutually benefit from each other's applied competences through the exchange of service. Co-creation of value thus represents the theoretical foundation of modern SCM.
The five axioms of co-creation:
- Service is the fundamental basis of exchange (embedded in goods and services).
- Value is co-created through the targeted interaction of several actors.
- All actors are resource integrators.
- The resulting value can only be assessed by the beneficiary.
- The coordination of value co-creation occurs through structures defined by the actors involved
Compare the term "Service" vs. "Services"
The Service Dominant Logic (SDL) distinguishes between the term «service» in the singular and the term «services» in the plural form.
- «Service» as the application of competences (knowledge and skills, SDL)
- In the form of actions, processes and services
- Creating benefits for another unit or the unit itself
- «Services» as a form of output (from the Goods-Dominant Logic, GDL)
- intangible asset (usually a service).
- Applications for increasing the value of tangible goods (e.g. services as "add-ons").
- SDL does not distinguish between immaterial services and tangible goods, but unites the two concepts in the «service»
Compare the term Operand resources vs. Operant resources
Paradigm shift from GDL to SDL in resource management.
- Operand – tangible – resources are no longer the focus of efforts.
- The focus is rather increasingly on operant – intangible – resources
Operand resources are inactive resources
- Must be transformed into a useful form by human action.
- Changes in operand resources can only be brought about by the use of operant resources. Typical examples of operand resources are raw materials or machines.
Operant resources have various and diverse appearances
- Human nature (knowledge, skills)
- Organisational nature (controls, routines)
- Informal in nature (knowledge about competitors or market structures)
- Relational nature (relations between a company and its stakeholders)
