MODELS OF COLLABORATIO I THE SUPPLY CHAI PT-2007-039-13ICSS Fecha 30-12-2009 Principal Researcher: Aitor Urzelai Inza Version: 1 (English) Date: 30-12-2009 Compliance of the legal representative: Lander Beloki Mendizabal
EXECUTIVE SUMMARY Integrated supply chain management is a phenomenon that companies are currently trying to apply in their everyday activities. Indeed, it is considered to be a key factor in obtaining competitive advantages, either through a reduction in costs and/or by offering customers better service1. Obtaining a sustainable competitive advantage through the integration of the supply chain will require a continual flow of information between the links and agents in the chain. In this way, the activities will not be carried out in an isolated way, but in a coordinated fashion, which will enable the organisation to achieve a series of benefits of a logistical nature. From an integrated supply chain management point of view, it is vital to have the right information at the right time to make decision-making easier, so that information management becomes one of the cornerstones of the organisation. Nowadays, due to the large amount of information generated by any logistics process, it is essential to resort to computing to ensure an efficient flow of information, and goods. Faced with this situation, as pointed out by Michael E. Porter2, logistics software has clearly come a long way, backed by the constant developments in computing tools and ICTs. Then we show some results over the project, which occur in response to the planned tasks. RESULTS RELATED WITH TASK 1.1. STATE OF THE ART I SUPPLY CHAI MAAGEMET: To describe the most reliable way possible the state of the art of supply chain management worldwide, the research team focused on analyzing the current situation of 1
PORTER, M. E.: Competitive Advantage. Creating and sustaining superior performance, New York, 1985, The Free Press, chaps. 3-4
2
PORTER, M. E.: Competitive Advantage. Creating and sustaining superior performance, New York, 1985, The Free Press, p. 166
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each country in managing the logistics, building on the indicator known as Logistics Performance Index The “Indice de Desarrollo Logístico” or Logistics Performance Index is a very clear indicator of the degree of development of each country or region based on the following seven indicators: 1. Efficiency and effectiveness of clearance of customs and other border control agencies. 2. Quality of transport and ICTs infrastructure for logistics. 3. Ease and accessibility of the hiring of transport. 4. Competition in the local logistics industry (eg transport operators, customs agents ...). 5. Ability to track and tracing (traceability). 6. Domestic logistics costs (eg local transport, handling facilities, storage). 7. Timeliness of shipments in reaching destination. The Logistics Performance Index is based on surveys of the major logistics and transportation, providing information on logistics and management of the supply chain of countries in which they operate and with which they trade. The opinion of the operators is supplemented with objective data on the performance of the main components of the supply chain in the country of origin. The Logistics Performance Index, therefore, is composed both of subjective and objective information from each country. As a result, they came to reflect on a world map colored the situation that each country in terms of degree of development of logistics or supply chain management. One of the most interesting results and taking into account the average of these seven variables, was that Spain holds the 26th place worldwide in terms of the degree of logistical performance is concerned. In turn, we analyzed the global top ten most developed countries in each of the seven variables as well as the situation in Spain in each of the charts. RESULTS RELATED WITH TAS 1.2. STATE OF THE ART I ICT´S I RELATIO WITH SUPPLY CHAI MAAGEMET A good management of the supply chain would not be possible without good information management along the entire chain. Speed, timeliness, transparency, reliability ... of data and information managed by different actors in the supply chain is the key to the chain works in a synchronized manner.
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In the XXI century, as discussed in the previous paragraph would be absolutely impossible without some ICTs to facilitate the collection, storage and distribution of all information maintained in a fairly complex supply chain Next, mentioning some of the techniques, philosophies and ICT's best known, most used and most innovative in the world of logistics and management of the supply chain, which have been analyzed at this stage: • ERP (Enterprise Resource Planning) • CRM (Customer Relationship Management) • SCM (Supply Chain Mangement) • EDI (Electronic Data Interchange) • CRP-VMI (Continuous Replenismente Program-Vendor Manager Inventory) • ECR (Efficient Customer Response) • CPFR (Collaborative Planning, Forecasting and Replenishment) However, and regardless of the previous tools using their revenge by some of the leading companies, the development of research and the rapid development of ICT's, has been leading the research team's interest towards a new concept that is beginning to appear strongly: Web 2.0. In this regard, it analyzes the following concepts: WEB 2.0: This is a topic of great interest to the research team. The term Web 2.0 was coined by Tim O'Reilly in 2004 to refer to a second generation of Web-based communities of users and a special range of services such as social networks, blogs, wikis or Folksonomies, which promote cooperation and swift exchange of information between users. A social network is a social structure that can be represented in the form of one or more graphs in which nodes represent individuals (sometimes referred to as actors) and edges relationships between them. A blog, or in Spanish is also a “bitácora”, is a regularly updated website that collects chronological texts or articles from one or more authors, the most recent appearing first, where the author always retains the freedom to stop creating relevant published. A wiki is a web site whose pages can be edited by multiple volunteers through the web browser. Users can create, modify or delete a single text they share. Folksonomy is a social indexing, ie collaborative classification through simple tags in a flat namespace, without hierarchy or kinship default. This is a practice that occurs in social software environments whose best exponents are shared sites such as del.icio.us (bookmarks), Flickr (photos), Tagzania (places), flof (places) or 43 Things (desires ). The research team believes that those in the lines above are a tool that will give a lot to talk about in the coming years in the management of the supply chain. A supply chain may well be a social network, and the relationships established between actors that Con la Subvención del Centro de Estudios y Experimentación de Obras Públicas (Ministerio de Fomento)
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make up the group or network, may tend to vary from hand tools such as blog, wikis or Folksonomies. Surely, over the next few years, the exchange of information along the supply chain will remain as important as today, but will lead to new tools to facilitate it in a more transparent, collaborative and social. In a few years, not be ruled out that the term SCM 2.0 or Chain Management 2.0 Suministos extending in the logistics community and is a concept used by health professionals. RESULTS RELATED WITH TASK 2. IDETIFICATIO OF GAPS AD AREAS OF IMPROVEMET The results of this phase have focused on discovering the main shortcomings in Spanish companies when managing their supply chains. To summarize, these have been some major shortcomings: • Lack of holistic view of the supply chain. • Poor use of metrics. • Lack of proper strategic planning. • Lack of skilled human resources. • Little use of technological developments. • Lack of specialized and differentiated logistics services. • Infrastructure improvement. RESULTS RELATED PRACTICES:
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The results obtained in task nº 2 showed the need to specify better practices applied to supply chain management worldwide; likewise excellent cases acted as example and support for the relation model design. For this reason, we analyzed the following practices: • Collaborative Planning • GRAI methodology to redesign the process of decision making • Incorporation of ICTs in managing the supply chain • Transparency and automation • Just-in-Time and Lean Manufacturing
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RESULTADOS RELACIOADOS CO LA TAREA 4. IDETIFICACIÓ DE CASOS EXCELETES: In order to complement the data collected so far, we proceeded to identify and analyze success stories in managing the supply chain, so that would illustrate and support the design of the relational model. The cases studied are the following: • Dell Computer Corporation • TESCO Supermarket • Mercedez Benz and Carlsberg Dinamarca • Chrysler and Volkswagen • Honda América • Automotive Industry • Famosa Toys • The Gap • Kimberly-Clark • Caja Navarra • Mondragon Group Companies Proceeds from this analysis, it came to the conclusion that all cases agree on three basic factors: The Integral Vision of the Supply Chain, Use of TIC's and the Alliance Constitution. RESULTADOS RELACIOADOS CO LA TAREA 5. UEVOS MODELOS DE RELACIÓ: The beginning of this step was the analysis of existing management models, in order to compare them. Subsequently, the model was developed. This process led to the conclusion that integral supply chain management can be put into practice effectively by applying the Collaborative Planning, Forecasting and Replenishment (CPFR) model, based on the following principles: •
The collaboration framework is centered on the consumers and attempts to guide operational procedures towards a successful supply chain.
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The partners in the chain reach agreements on a single forecast for demand, which guides the planning throughout the supply chain.
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The partners in the chain have mutual confidence in a common forecast, based on sharing the risks to eliminate bottlenecks.
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For a better understanding of the model in question, a manual with detailed steps to follow for the implementation of the proposed model has been prepared. Nowadays, supply chain management can not be carried out in an isolated manner. On the contrary, the efficiency of the process requires the use of other tools, which, in this case, are a complement to the model chosen (i.e., the CPFR). It is therefore essential that companies adapt Web 2.0 tools to strengthen collaboration ties generated by the model; this allows for fast and agile exchange of the information between the participants. The primary conclusion reached by developing this project is that the supply chain must be a social network. The relations between the agents within the network take place using so-called Web 2.0 tools, such as blogs, wikis and so on. The application of this proposal can be an invaluable source of information, of great worth for the entire organization, a tool to be used to practice “open innovation”. This term, of ever-increasing importance in the business sector, refers to the search for ideas outside the organization which, in conjunction with ideas from company personnel, become a starting point for specific projects that provide added value to the client and, as a result, favor competitiveness. Open innovation can be applied under various models, but for the case in question and assuming that the CPFR model is compatible, we have chosen the proposal by Chesbrough y Schwartz (2007: 55): Open Innovation by establishing Co-Development Partnerships. This model is based on four essential steps: 1. Definition of business objectives. 2. Evaluation of the capacities required to attain the chosen objectives. 3. Defining how to align the business model with the partner: 4. Identification of future mid-term and long-term collaborations In sum, the proposal is a combination of both models, taking into account Web 2.0 tools to support mutual relations; thus, an attempt is made to carry out integrated management of the supply chain while using the information generated as a source of innovation which, in turn, responds to the need to coordinate the company’s network of relationships in order to improve its competitive position. RESULTS RELATED WITH TASK 6. COTRAST WITH COMPAIES: The objective of this stage is to validate the SCM 2.0 model by choosing a tool that generates exchange of ideas: Knowledge Coffee, makers involved in logistics and experts from different companies: Ernesto Orueta (Eroski Group Logistic Director). Oscar Royuela (Managing Director of the Basque Institute of Logistics) Con la Subvención del Centro de Estudios y Experimentación de Obras Públicas (Ministerio de Fomento)
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Iñaki Arriola (Ulma Handling Systems Director) Mikel Mauleón (Managing Partner of Consulgesa) Mikel Mesonero (ETEO Partner, marketing expert) Aitor Urzelai (ETEO Partner, logistics expert) David Sánchez (ETEO Partner, Web 2.0 tools expert) Aitor Bediaga (ETEO Partner, Web 2.0 tools expert) The Knowledge Coffe technique provided very interesting conclusions concerning the model and its application. 1. The participants considered that implementing the proposed model implied a significant commitment by the participants that had to be based on trust, coresponsibility and continuous communication. 2. The use of Web 2.0 tools is an important challenge for the business sector 3. The coordination of relations must center on the customer. 4. The co-development relations must include an analysis of subjects such as intellectual property of the development obtained, risk and costs associated with collaboration. 5. Finally, more than a management model, the formulated proposal must be a company attitude to face the challenges derived from its participation in an increasingly complex and competitive market.
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