Surviving Supply Chain Integration Strategies for Small Manufacturers (2000) / Chapter Skim
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4 Integration Process
4 Integration Process
Pages 34-42
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From page 34... ...
SUPPLIER SELECTION AND DEVELOPMENT Supplier selection, development, and integration is a strategic initiative that is undertaken as a part of a company's overall competitive strategy. This strategic approach to outsourcing combines internal core competencies with externally available capabilities and technologies in an attempt to maximize overall corporate and supply chain 34
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From page 35... ...
Although some suppliers are selected over other qualified suppliers based on the need to fill government-mandated quotas, most are selected based on combinations of the following factors: · a track record of demonstrated cost competitiveness and on-time delivery · possession of proprietary capabilities · demonstrated management capabilities · customer support and logistics capabilities · in-depth quality performance · willingness to develop jointly seamless processes and eliminate non-value-added activities at the interfaces between customer and supplier · compatible corporate cultures · demonstrated financial strength and profitability · competitive technology and process capabilities · demonstrated compliance with government regulations · senior management interest in achieving a sustainable competitive advantage for the supply chain · willingness to share benefits achieved through supply chain integration After the pool of potential suppliers has been reduced by a preliminary assessment, the remaining candidates should be subjected to indepth, on-site risk assessments conducted by a cross-functional team to identify strengths, weaknesses, and deficiencies. Following the final selection, a joint program should be initiated to solve supplier problems, eliminate deficiencies, and establish an open relationship that includes timely feedback and information sharing.
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From page 36... ...
With increased reliance on sole-source suppliers and expanded levels of supply chain integration, the pressure on each supply chain participant to consistently meet its commitments increases. Replacing unreliable members of highly integrated supply chains and rebuilding required levels of trust and knowledge can be an expensive and painful process.
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From page 37... ...
CRITICAL SUCCESS FACTORS The following factors are critical for successful supply chain integration (Agility Reports, 1997~: · organizational buy-in, including full commitment by management · a clear understanding and articulation of identifiable benefits for all parties · adaptability and openness to changes in work design and organizational structure, consistent with agreed-upon levels of process integration · effective use of appropriate technologies for communications, data exchange, and product development · compatibility with the strategic vision of the enterprise One of the most critical factors is organizational buy-in. Employee responses to integration efforts often range from indifference to antagonism Managers may attempt to "protect their turf," and organizational in-fighting is not uncommon.
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From page 38... ...
Although specific metrics must be tailored to the circumstances, the following metrics can be used for high-level assessments: · profitability · total sales · decision response time (the time required to make and implement key decisions throughout the chain) · return on investment · return on assets · technology (the status of and ability to deploy value-enhancing technologies)
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From page 39... ...
· replanning cycle (time required to create and implement modified production plans)
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From page 40... ...
· ship-to-invoice cycle (delay in billing customer after product shipment) Standards developed by associations and governing bodies provide a common language for communications, which can be used to increase awareness of supply chain performance.
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From page 41... ...
However, because collecting, reporting, and analyzing data is expensive, supply chain participants should select only the metrics required to meet their needs, monitor and analyze the data carefully, and, most importantly, follow through with appropriate action to improve performance.
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