Supply Chain Management In Japan November 2003 Akiko
Supply Chain Management In Japan November, 2003 Akiko Cho
Topics to be discussed • Vendor Management Inventory • Third Party Logistics • SCM Finance 2
Subcontract System • Subcontractor = ‘shita-uke-gaisha’ • More than contractual • Stable and constant - reliability in quality assurance - high reliability in timely delivery • Rationalization= ‘gori-ka’ - Cooperation among participants
Reason for Subcontracting Subcontractors % Parent Companies % Steady amount of orders 59. 1 Specialized know-how not held by oneself 57. 6 Difficult to design and develop product by oneself 45. 8 Concentration on best suited work 48. 2 Difficult to obtain orders by oneself 42. 4 Past business relation and reliability 46. 5 Efforts concentrated on production 38. 7 Increased flexibility for order size 37. 1 No worry of default on debt 27. 7 Lower personnel and unit costs 36. 5 Improved reputation 26. 2 Efficiency in small lots 30. 6 Supply of raw materials, etc 21. 7 Control size of own company 9. 4 Technical Guidance 17. 4 Competition ensures high quality and lower unit Cost 8. 8 Source: METI
Just-in-Time • ‘Kan-ban’ System • Toyota Production System 1950’s-60’s • Materials, Parts, and Components are produced and delivered just before they are needed
Information Technology • 1993:commercial utilization of internet • Information = Visibility • Supply Chain Management
Vendor Managed Inventory (1) • Vendor manage buyer’s inventory in order to optimize supply chain management • Buyer : disclose the level of inventory • Vendor: forecast the level of production Level of inventory Pick-up information Buyer vendor Optimize supply chain ©Hitachi Research Institute, 2003 7
Vendor Managed Inventory (2) • Buyer-oriented • Vendor’s inventory until ‘picking’ • Postpone the payment Supplier (1) shipped Supplier’s warehouse Buyer VMI ©Hitachi Research Institute, 2003 (4)picking Buyer’s Order Buyer’s warehouse (3) warehouse (2) delivery Supplier’s Order Buyer’s Order
VMI: Buyer’s advantage • Reduction: inventory risk • Reduction: price • Real time management of inventory
VMI: Impact on supplier • Postponement of collection of A/R • Increase: inventory risk • Increase: shipment cost
‘Sogo-Shousya’ vs direct marketing • General Trading Companies = Distributor • Provision of channels into foreign markets • Build the logistical and sales channels for exports Production Local Office Warehouse Time Logistics Warehouse
Third Party Logistics(3 PL) • Visibility • Information Technology • Outsourcing services
3 PL : Asset vs. Non Asset • Physical transportation: trucks, ships, airplanes • IT solutions
3 PL: Services • • Consulting IT Solution Real Estate Outsourcing Transportation management Distributor Cost, Service and Quality Control Financial Service 14
3 PL: Fees • Actual fees • Performance based fees Target
Warehouse Management • Kitting • Pool Distribution • Sub-Assembly • Temperature Controlled
WM systems Buyer order Order Conf. billing Pay ment Supplier order Order Conf. Billing Logistics Companies Order Pay ment Conf. Billing 3 PL A/R Reconciliation Order/ fulfillment A/R Reconciliation Inventory Bank ©Hitachi Research Institute, 2003 Logistics
Transport Management • Consolidation • Custom Brokerage • Sub-Assembly
Milk-run Suppliers A Buyer B C ©Hitachi Research Institute, 2003
Cross-Docking Supplier Buyer A (X) G C+B(Z) A (Y ) H B (×) A+B (×) J B (Z) A(Y)+B(×) C (Z) ©Hitachi Research Institute, 2003
Bill Payment Services ©Schneider Logistics, 2003
Issues to be solved • Global operation • Flexibility and speed • Management of diversified portfolio • Logistic finance
Lead Logistics Party(4 PL ) TM xxx Toyota Other auto 4 PL 3 PL Truck 3 PL mid-sized ©Hitachi Research Institute, 2003 3 PL Bus 3 PL Hino 3 PL small 3 PL
SCM Finance
SCM Finance • Flooring • Factoring • Invoice discounting • Inventory finance
Factoring Suppliers (1)Bill Buyer Disputes ©Hitachi Research Institute, 2003 (2)Confirmation (3)Payment Financial Institution
Invoice Discounting (3)Cash Payment: 80-90% Financial Corporation (7)Cash Payment: 10 -20% (2)Delivery Confirmation (1)Shipment Supplier (4) Collection of A/C Bank (5) Payment (6)Transfer A/C ©Hitachi Research Institute, 2003 Buyer
Future Scheme? ? ©Hitachi Research Institute, 2003
VMI factoring Based on ‘Picking’ data ファイナンス企業 3 PL Supplier Buyer (1) shipped (2) delivery (3) warehouse (4) picking VMI Supplier’s A/R VMI factoring Supplier’s Cash ©Hitachi Research Institute, 2003 Cash: 60 days
Inventory Finance Based on ‘movement’ of goods Financial Corp 3 PL Supplier Buyer (1) shipped (2) delivery VMI inventory finance (3) warehouse Supplier’s A/R ©Hitachi Research Institute, 2003 Financial Corporation (4) picking A/R ) Buyer’s
- Slides: 30