“Demand information sharing and supply visibility are two essential elements that build trust between supply partners and form the foundation of supplier integration.” - Edward FRAZELLE (2002, 161)
Visibility systems become incrementally important for medium sized companies. COMPANY as a Third Party Logistics Provider (3PLs) acknowledged the trend and has developed a web-based visibility system for all sizes of companies. Visibility systems facilitate companies in optimising their links with external supply chain partners in order to gain distinctive visibility into information and product flow. In other words, visibility systems facilitate information sharing between supply chain partners in order to enhance supply chain visibility (SCV) and thus improving supply chain performance. In cooperation with COMPANY a selection model is designed and developed to identify and segment client and non-client companies with the need for better SCV (Figure 1). The foregoing identification is necessary to filter companies with insufficient SCV. The affiliating segmentation allows categorising the clients for additional service offered by COMPANY to enhance the SCV. The selection model analyses and benchmarks the demand variation and its effect
on safety stock in order to identify a SCV gap.
[…]
The selection model is developed for a mid-sized manufacturing company based in Western Australia. The company expressed concerns about insufficient visibility in its supply chain processes towards COMPANY earlier. The concerns are based on growing safety stock levels due to variation in received customer demand in previous years. Analyses of the client company’s customer demand and inventory data provide insides into SCV performance and conclude about the need of a visibility system.
To sum up, the overall objectives of the thesis are:
• Developing a selection model prototype to identify SCV gaps,
• Using demand and inventory data for the analysis,
• IT resource determination of client’s company,
• Including a sub-module for customer segmentation, and
• Application for one specific sample case company.
Companies using Visibility System of COMPANY as their visibility technology are tied closely to COMPANY, resulting in a thoroughly collaboration yielding in enhancement of the overall supply chain performance.
Table of Contents
1. Introduction
1.1. Objectives and Problem Definition
1.2. Structure of the Thesis
1.3. Scope and Delimitations of the Thesis
2. Literature Review
2.1. Introduction to Supply Chain Management
2.1.1. The Supply Chain as a Competitive Advantage
2.1.2. Supply Chain Challenges
2.1.3. Major Supply Chain Drivers
2.1.3.1. Production
2.1.3.2. Inventory
2.1.3.3. Location
2.1.3.4. Transportation
2.1.3.5. Information
2.2. Supply Chain Visibility
2.2.1. Benefits of Supply Chain Visibility
2.2.1.1. Bullwhip-Effect
2.2.1.2. Demand Uncertainty
2.2.1.3. Safety Stock
2.2.2. Obstacles in Achieving Supply Chain Visibility
2.2.3. Technology Landscape
2.3. Key Performance Indicators (KPIs)
2.3.1. The Fundamentals of KPIs
2.3.2. KPIs for Supply Chains
2.4. Introduction to Outsourcing
2.4.1. Outsourcing Benefits and Risks
2.4.2. Outsourcing in the Logistics/Supply Chain Industry
2.4.3. Third Party Logistics (3PL)
2.4.4. A Framework for Make/Buy Decisions
2.5. Customer Segmentation
3. Company Overview
3.1. Company Profile
3.2. Visibility System of COMPANY
4. AS-IS Analysis
4.1. Methodology
4.1.1. Research Methods
4.1.2. Strategy and Data Analysis
4.1.3. Assessment of Method Alternatives
4.1.4. Wrap-up of the Methods
4.2. Elicitation and Analysis
4.2.1. Demand Aggregation and Analysis
4.2.1.1. Stock Turnover
4.2.1.2. Stock Availability
4.2.1.3. Forecast Accuracy
4.2.1.4. Inventory Obsolescence
4.2.1.5. Finished Goods Inventory
4.2.1.6. Stock Outs
4.2.1.7. Ratio: Safety Stock/Demand
4.2.1.8. Safety Stock/Inventory
4.2.2. Inventory Costs Analysis
4.2.2.1. Best Case/Worst Case Scenario
4.2.2.2. Safety Stock Cost Calculation
4.2.2.3. Opportunity Costs
4.2.3. IT Resources Decision Matrix
4.2.3.1. Core Competence Questionnaire
4.2.3.2. Capacity/Knowledge Matrix
4.2.3.3. Make/Buy Decision
4.2.4. Customer Segmentation
4.2.4.1. New Customer
4.2.4.2. Short-Term Service
4.2.4.3. Permanent Service
4.2.4.4. Entire SCM
4.2.5. Vulnerability Analysis
5. TO-BE Concept
5.1. Selection Model Concept
5.1.1. General Information
5.1.2. Reduction of Complexity
5.1.3. Structure and Development of the Selection Model
5.1.4. Sample Case: Metal Stamp Manufacturer
5.2. Pre-requisites for the Selection Model
5.3. Selection Model Sub-Modules
5.3.1. Identifying the Supply Chain Visibility Gap
5.3.2. Inventory Costs
5.3.3. Opportunity Costs Calculator
5.3.4. Make/Buy Decision for the Visibility System
5.3.5. Value-based Customer Segmentation
5.4. Sensitivity Analysis of the Customer Segmentation
5.5. Summary of the Sample Case Company
5.6. General Application of the Selection Model
5.7. Recommendation for Implementation
6. Conclusion and Future Aspects
Objectives & Core Themes
The primary objective of this thesis is the design and development of a selection model prototype to identify and segment client and non-client companies based on their need for enhanced supply chain visibility (SCV). By analyzing demand and inventory data, the model determines whether companies face an SCV gap and recommends appropriate service tiers to improve their supply chain performance.
- Development of a prototype selection model to identify SCV gaps.
- Analysis of demand and inventory data to evaluate performance.
- IT resource determination to inform make/buy decisions for visibility systems.
- Customer segmentation into four distinct categories for tailored service offerings.
- Practical application of the model to a specific sample case manufacturer.
Excerpt from the Book
2.1. Introduction to Supply Chain Management
In today’s global markets, supply chain management (SCM) is becoming an eminent issue for many organisations. Globalisation and mature information technology enable all sizes of organisations to operate globally. Some mid-sized companies who have been national operations with lucid supply chains turned into global operating organisations with enormous supply chain networks. Companies with distinctive supply chains provide their products and services to customers faster, cheaper, and better than the competitors. These companies recognised SCM as a core competence strategy (HANDFIELD and NICHOLS 2002, 3). SCM is a cross-functional and inter-organisational process, implying that companies are no longer competing as single entities, but rather within supply chains (LAMBERT 2008, 1). Regarding to AYERS (2006) supply chain management is more than the physical movement of goods; it includes the flow of information, money, and knowledge as well as service.
HANDFIELD and NICHOLS (2002, 8) define SCM as “[…] the integration and management of supply chain organisations and activities through cooperative organisational relationships, effective business processes, and high levels of information sharing to create high-performing value systems that provide member organisations a sustainable competitive advantage.”
The definition contains three important aspects about SCM. Firstly, supply chain members need to be integrated through collaboration and organisational relationships. Secondly, the definition emphasises the importance of information sharing to create a high-performing value chain. Moreover, information sharing leads to visibility across supply chains argue BARRATT and OKE (2007) and hence competitive advantage can be achieved for the members.
Summary of Chapters
1. Introduction: Defines the thesis objectives, focusing on the development of a selection model for supply chain visibility (SCV) to help companies improve their performance through better information sharing.
2. Literature Review: Provides a theoretical foundation covering supply chain management, SCV, key performance indicators (KPIs), outsourcing strategies, and customer segmentation.
3. Company Overview: Outlines the profile of the supporting company and its proprietary web-based visibility system designed to provide real-time end-to-end supply chain data.
4. AS-IS Analysis: Details the empirical-inductive methodology used for data elicitation and analysis, including the statistical methods for evaluating demand and inventory data to identify SCV needs.
5. TO-BE Concept: Describes the design and application of the selection model prototype, including its sub-modules for cost calculation, IT resource evaluation, and the segmentation of a sample metal stamp manufacturer.
6. Conclusion and Future Aspects: Summarizes the thesis findings, confirming the prototype's effectiveness in identifying SCV gaps and proposing future expansions for the model.
Keywords
Supply Chain Management, SCM, Supply Chain Visibility, SCV, Selection Model, KPIs, Inventory Management, Outsourcing, Make/Buy Decision, Customer Segmentation, Demand Variability, Safety Stock, Logistics, Information Sharing, Business Intelligence
Frequently Asked Questions
What is the core purpose of this thesis?
The thesis aims to develop a structured selection model prototype that helps companies identify gaps in their supply chain visibility and provides a basis for offering targeted logistics services.
What are the primary fields of study involved?
The research primarily covers Supply Chain Management (SCM), Supply Chain Visibility (SCV), IT resource management, and various performance measurement techniques like KPIs.
What is the main research question or goal?
The goal is to design a model that uses empirical demand and inventory data to segment companies and determine the necessity for implementing a supply chain visibility system.
Which scientific methodology is applied?
The work employs an empirical-inductive research method, utilizing data provided by a third-party logistics provider and applying statistical benchmarks to analyze company performance.
What topics are covered in the main body?
The main body examines SCM basics, the importance of SCV, the role of KPIs, outsourcing strategies, and detailed methods for aggregating and analyzing inventory and demand data.
Which keywords define this work?
Core keywords include Supply Chain Visibility, SCV, Selection Model, Key Performance Indicators, and Customer Segmentation.
How is the sample company analyzed within the model?
The sample company—a metal stamp manufacturer—is analyzed using historical demand and inventory data, which is then benchmarked against "Best-in-Class," "Median," and "Laggard" performance categories to quantify the potential for improvement.
What role does the IT Resource Decision Matrix play?
This matrix determines if a company possesses the internal capacity and knowledge to develop its own visibility solution or if it should outsource this function to a logistics provider.
- Citar trabajo
- Jan Borsdow (Autor), 2008, Third Party Logistics – Development of a selection model to enhance supply chain visibility, Múnich, GRIN Verlag, https://www.grin.com/document/121384
