STRATEGIC LOGISTICS MANAGEMENT LOG 404 AYSU GER COMPETITIVENESS

STRATEGIC LOGISTICS MANAGEMENT LOG 404 AYSU GÖÇER

COMPETITIVENESS STRATEGIES IN SCM IMPACT OF E-BUSINESS DEVELOPMENTS ON SUPPLY CHAIN STRATEGIES üB 2 B üB 2 C e-Supply Chain Opportunities Areas of which e-business developments facilitated opportunities for better SCM; ØCollaborative demand planning ØSyncronized production planning ØJoint product development ØBetter logistics planning Øe-Procurement ØAuctions / reverse auctions Øe-Marketplaces ØBar coding and EDI ØIntranets / extranets and VPNs

COMPETITIVENESS STRATEGIES IN SCM IMPACT OF E-BUSINESS DEVELOPMENTS ON SUPPLY CHAIN STRATEGIES CUSTOMER RELATIONSHIP MANAGEMENT ü is a business philosophy, a set of strategies, programmes and enabling systems that focus upon identifying and building customer loyalty with the prime objective being to squeeze additional value from higher spenders – the retailer’s most valued customers ØTo match a product or a service with the needs of the customer (creating a single cohesive view of the customer) ØData warehouses / Data mining ØUsed to develop sales, build long term relationship ØMakes mass customization a reality • How customers interact with the organization? • What they purchase? • How often they purchase? • When they purchase? • How they pay? DEVELOP LOYALTY THROUGH TRUST AND IDENTIFY PROFITABLE CUSTOMER SEGMENTS !!!

COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers q The Freight Transportation Industry is Ideally Suited e-commerce High Fragmentation of Shippers and Carriers Many Intermediaries Complex Supply Chains High Search Costs Significant Opportunities for Economies of Scale q Several Models Emerging

COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers Ø Online Freight Marketplaces ØSpot market ØAuction and RFQ ØExchange ØMeta-marketplaces Ø Application Service Providers (ASPs) Ø Purchasing Consolidation Market Ø Infomediaries

COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers SPOT MARKET üCash market üGoods are sold in cash and delivered immediately üPlayers: individuals, industry organizations and governments, speculators üEnergy spot market üNatural gas market in Europe: Title Transfer Facility in Netherlands, National Balancing Point in UK

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COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers REQUEST FOR QUOTATION üA request for quotation (RFQ) is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. üAn RFQ typically involves more than the price per item. Information like payment terms, quality level per item or contract length are possible to be requested during the bidding process. ü The suppliers have to return the bidding by a set date and time to be considered for an award. üDiscussions may be held on the bids. The bid does not have to mean the end of the bidding. Multiple rounds can follow or even a Reverse auction can follow to generate the best market price. üRFQ's are best suited to products and services that are as standardized and as commoditized as possible, as this makes each suppliers’ quotes comparable. üAn RFQ allows different contractors to provide a quotation, among which the best will be selected

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COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers EXCHANGE

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COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers META MARKETPLACES üMeta Market is a web-based market centered around an event or an industry, rather than a single product. üThe web allows to match producers' desire for economies of scale, and consumers' desire for variety of choice to satisfy a set of needs. üMeta market for an entire industry (for example chemical industry) where the industry can trade excess inventory, source new suppliers and find new vendors.

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COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers APPLICATION SERVICE PROVIDERS (ASP) üAn application service provider (ASP) is a business that provides computer-based services to customers over a network. üSoftware offered using an ASP model is also sometimes called Ondemand software or software as a service (Saa. S). üThe need for ASPs has evolved from the increasing costs of specialized software that have far exceeded the price range of small to medium sized businesses. üup-to-date services, 24 x 7 technical support, physical and electronic security

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COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers PURCHASING CONSOLIDATION MARKET

COMPETITIVENESS STRATEGIES IN SCM Niche Markets - Online Logistics Providers INFOMEDIARIES

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER Terry Hill argues that the criteria required in the marketplace can be divided into two groups: order qualifiers and order winners. An order qualifier is a characteristic of a product or service that is required in order for the product/service to even be considered by a customer. An order winner is a characteristic that will win the bid or customer's purchase. To provide qualifiers, they need only to be as good as their competitors. Failure to do so may result in lost sales. However, to provide order winners, firms must be better than their competitors. It is important to note that order qualifiers are not less important than order winners; they are just different. Firms must also exercise some caution when making decisions based on order winners and qualifiers.

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER A firm producing a high quality product (where high quality is the order-winning criteria). If the cost of producing at such a high level of quality forces the cost of the product to exceed a certain price level (which is an order-qualifying criteria), the end result may be lost sales, thereby making "quality" an order-losing attribute. Order winners and qualifiers are both market-specific and time-specific. They work in different combinations in different ways on different markets and with different customers. While, some general trends exist across markets, these may not be stable over time. For example, in the late 1990 s delivery speed and product customization were frequent order winners, while product quality and price, which previously were frequent order winners, tended to be order qualifiers.

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER Also, since customers' stated needs do not always reflect their buying habits, Hill recommends that firms study how customers behave, not what they say. When a firm's perception of order winners and qualifiers matches the customer's perception of the same, there exists a "fit" between the two perspectives. A substantial gap exists between managers' and customers' opinions on why they did business together- favorable sales performance resulted when there was a good fit between a firm's perception of the strengths of a product and customer perception of the product.

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER 5 key performance areas

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER Different logistics performance objectives Order winners are factors that directly and significantly help products to win orders in the marketplace. Customers regard such factors as key reasons for buying that product or services. Order qualifiers are factors that are regarded by the market as an ‘entry ticket’. Unless the product or service meets basic performance standards, it will not be taken seriously.

COMPETITIVENESS STRATEGIES IN SCM ORDER QUALIFIER AND ORDER WINNER BENCHMARK to measure; üOrder cycle times üDelivery reliability üFrequency of delivery üStock availability üDocumentation quality üOrder completeness üTechnical support

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL Process Reference Model ØStandard description of management processes ØFramework of relations among standard processes ØStandard metrics to measure process performance ØStandard alignment to software functions and features

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL In SCM, Operational and Design side clear BUT Strategic side is MISSING…. So, SCOR Model is to achieve a better STRATEGIC decision making !!!

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL SCOR links Process Elements Process Metrics Best Practice Technology Cross Processes & Vertical View

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL SCOR allows *Companies to communicate using common technology *Standard description of process elements *Best practices yielding optimal overall performance

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL SCOR integrates Re-engineering Benchmarking Process Measurement concepts into a cross-functional framework

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL SCOR captures AS IS… SCOR derives TO BE…

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL 5 Management Processes of SCOR Model ü Plan (demand supply planning) ü Source (procurement) ü Make (production) ü Deliver (to the customer) ü Return (reverse flow)

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL The SCOR Model (Source: : http: //www. supply-chain. org)

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL (PROCESS LEVELS)

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL (PROCESS LEVELS) SCOR model level I performance metrics Delivery reliability Delivery performance Fill rates Perfect order fulfillment Responsiveness Order fulfillment lead times Flexibility Supply chain response time Production flexibility Cost of goods sold Total supply chain management cost Value-added employee productivity Warranty/return processing costs Assets Cash-to-cash cycle time Inventory days of supply Asset turns

COMPETITIVENESS STRATEGIES IN SCM SCOR MODEL BENEFITS OF SCOR MODEL ü Cost Reduction and Customer Service Improvement ü ROI (improvement) ü ROA (improvement) ü Use of Standard features of Information Technology Systems ü Profit due to improvements in Supply Chain Management

COMPETITIVENESS STRATEGIES IN SCM SUPPLY CHAIN MANAGEMENT MATURITY MODEL Supply Chain Management Maturity Model (Source: Lockamy/Mc. Cormack 2004)

COMPETITIVENESS STRATEGIES IN SCM CLASS WORKSHOP IV Vs. Compare the details for characteristics of both household appliance and mobile phone’s product lines Go on to identify the principal order winners and qualifiers for each product

COMPETITIVENESS STRATEGIES IN SCM LEVELS OF IMPLIED DEMAND UNCERTAINTY Detergent High Fashion Customer Need Price Responsiveness Low High Implied Demand Uncertainty

COMPETITIVENESS STRATEGIES IN SCM Different product ranges have different logistics performance objectives

COMPETITIVENESS STRATEGIES IN SCM PORTFOLIO ANALYSIS FOR COMPETITIVENESS: BOSTON CONSULTING GROUP APPROACH BCG MATRIX Relative Market Share Low Market Growth Rate High Stars • High growth & share • Profit potential • May need heavy investment to grow Cash Cows • Low growth, high share • Established, successful SBU’s • Produce cash Low Question Marks ? • High growth, low share • Build into Stars or phase out • Require cash to hold market share Dogs • Low growth & share • Low profit potential

COMPETITIVENESS STRATEGIES IN SCM POWER STRATEGIES WHEN CUSTOMERS ARE DOMINANT Purchasing, co-ordination: combining volumes Multiple sourcing Competitive bidding Cost down programmes “open cost” or “open book” costing Consortium buying POWER STRATEGIES WHEN SUPPLIERS ARE DOMINANT Technological innovation Value-added services Takeover customer tasks Offer technical support

COMPETITIVENESS STRATEGIES IN SCM MAKE OR BUY? ? ØIf an organization produces goods, it incurs the full cost of owning plant and manufacturing capacity ØIt could choose to buy-in those goods from another supplier and dispose of assets, resources and competencies it owns ØThe organization will need to carefully evaluate the risks in taking this course of action ØMake or buy decisions must ensure that the resources and competencies can be better applied elsewhere or disposed of if the organization stops making and buys in products instead

COMPETITIVENESS STRATEGIES IN SCM SUPPLY CHAIN PARTNERING Partnerships or co-operative relationships have some or all of the following attributes; üInformation sharing üTrust üCo-ordinated planning arrangements üShared risks üMutual benefits üRecognition of independence üShared goals üIntegrated prosseses üShared culture, compatibility and understanding üOpen book accounting

COMPETITIVENESS STRATEGIES IN SCM SUPPLY CHAIN PARTNERING

COMPETITIVENESS STRATEGIES IN SCM SUPPLY CHAIN PARTNERING

COMPETITIVENESS STRATEGIES IN SCM INVENTORY MANAGEMENT ABC / Pareto Analysis (80/20 Rule) EOQ VMI Collaborative Planning JIT Pull vs Push System (HW) Kanban System (GAME) Lean vs Agile (HW) DRPII ERPII

COMPETITIVENESS STRATEGIES IN SCM LOGISTICS AND FULLFILMENT STRATEGIES Who should do it (the company or 3 rd party)? Where to locate facilities? (GIS. . ) How many facilities to locate? How big to locate? How to plan for increasing or reducing capacities?

COMPETITIVENESS STRATEGIES IN SCM LOGISTICS AND FULLFILMENT STRATEGIES Issues related to; ü Stores centralization and decentralization ü Types of building ü Layout ü Storage methods ü Handling equipment ü Warehousing