21st Century Supply

Chains
MEMBER OF THE GROUP
1.
2.
3.
4.
5.

Nova Cahaya Putri 224114016

Cintya Dwi Lestari 224114102
Ivan Audi Fajar 224114141
Afifah Tesmalia T
224114274
Aulya Puspitasari 224114365
CLASS OF ZU 2014

1.
The Supply
Chain Revolution
7.
Issues in Supply
Chain
Management

6.
Globalization

2. Generalized
Supply Chain
Model

21st
Century
Supply
Chains

5.
Financial
Sophisticati-on

3.
Integrated
Management

4.
Responsive
-ness

The Supply Chain Revolution

Supply chain (sometimes called the value chain or demand chain)
management consists of firms collaborating to leverage strategic
positioning and to improve operating eficiency. For each firm
involved, the supply chain relationship reflects strategic choice. A supply
chain strategy is a channel arrangement based on acknowledged
dependency and relationship management. Supply chain operations
require managerial processes that span across functional areas within
individual firms and link trading partners and customers across
organizational boundaries.
During the last decade of the 20th century, channel strategy and structure
began to shift radically. Traditional distribution channel arrangements
moved toward more collaborative practice that began with the rapid
advancement of computers and information transfer technology and then
accelerated with the Internet and World Wide Web explosion. The
connectivity of the World Wide Web served to create a new vision.

Generalized Supply Chain Model

Generalized Supply Chain Model

The context of an integrated supply chain is multifirm relationship management
within a framework characterized by capacity limitations, information, core competencies,
capital, and human resource constraints. Within this context, supply chain structure
and strategy results from efforts to operationally link an enterprise with customers
as well as the supporting distributive and supplier networks to gain competitive
advantage.
Business operations are therefore integrated from initial material purchase to delivery
of products and services to end customers.
Value results from the synergy among firms comprising the supply chain with respect
to five critical flows: information, product, service, financial, and knowledge
(see the bidirectional arrow at the top of the figure). Logistics is the primary conduit of
product and service flow within a supply chain arrangement. Each firm engaged in a
supply chain is involved in performing logistics. Such logistical activity may or may
not be integrated within that firm and within overall supply chain performance.
Achievement of logistical integration is the focus of this text.

Integrated Management
Across all aspects of business operations, attention is focused
on achieving integrated management. The challenge to
achieving integrated management results from the longstanding tradition of performing and measuring work on a
functional basis. Since the industrial revolution, achieving best
practice has focused managerial attention on functional
specialization. The prevailing belief was the better the
performance of a specific function, the greater the efficiency
of the overall process. For well over a century, this
fundamental commitment to functional efficiency drove best
practice in organization structure, performance measurement,
and accountability.
Three important facets of supply chain logic resulted from
increased attention to integrated management:
(1) collaboration,

1. Collaboration
As discussed earlier, the history of business has been dominated by a
desire to cooperate but always couched within a competitive
framework. Whereas competition remains the dominant model
guiding free market economies, the increasing importance of
collaboration has positioned the supply chain as a primary unit of
competition. In today's global economy, supply chain arrangements
compete with each other for customer loyalty.
While all forms of price collusion remain illegal, the collaborative
legislation served to facilitate cross-organizational sharing of
operating information, technology, and risk as ways to increase
competitiveness. The response was a wide variety of new and
innovative operating arrangements. One such development was the
growing vision of the extended enterprise.

2. Enterprise Extension
The central thrust of enterprise extension expanded
managerial influence and control beyond the ownership
boundaries of a single enterprise to facilitate joint planning and
operations with customers and suppliers. The fundamental belief
is that collaborative behavior between firms that integrate
processes will maximize customer impact, reduce overall risk, and
greatly improve efficiency. Enterprise extension builds on two
basic paradigms: information sharing and process specialization.
Firms participating in a supply chain have specific roles and share
strategic goals. Sharing information and joint planning can reduce
risk related to inventory positioning and increase movement
velocity. Collaboration can eliminate duplicative or redundant
work, such as repetitive quality inspection, by designating and
empowering a specified member of the supply chain to be fully
responsible and accountable

3. Integrated Service Providers

As noted earlier, the origins of contemporary business were grounded
in functional specialization. It is not surprising that firms developed
the practice of outsourcing work to businesses that are specialists in
the performance of specific functions. The two traditional logistics
service providers are transportation and warehousing specialists.
The for-hire transportation industry consists of thousands of carriers
who specialize in product movement between geographic locations.
The value proposition of for-hire transportation is based on
specialization, efficiency, and scale economies.
Traditionally called public warehouses, these firms provide product
storage supplemented with other specialized services. Two significant
benefits are gained when shippers use public warehouses. First is
elimination of capital investment in warehouse buildings. The second
is the ability to consolidate small shipments for combined delivery
with products of other firms who use the same public warehouse.

Responsiveness
One could argue that the challenges and benefits of
integrative management offered sufficient reason for the
supply chain revolution. However, other basic drivers
continue to make supply chain arrangements,even more
appealing.
So, responsiveness is about trying to identification the
changes as fast as we can give the respon.
To elaborate the far-reaching implications of this major
development, it is useful to contrast traditional anticipatory
business
practice
to
the
emerging
time-based
responsiveness business model.

Anticipatory - Based Business Model

In industrial revolution we provide what customer wants or
the customer requirements. So, basically we anticipate what
customer wants. Because the information of purchase behaviour
wasnt readily available, business operations were driven by
forecast.
Here comes trouble, in forecasting we all know its high in
risk and cost because so many variables there.

1. Forecasting is the main thing in Anticipatory-Based Business

Model because it helps you to plan what will you do effectively and
efficiently.
2. After we plan about what will we do, we have to buy
components and the material we need.
3. Then we Manufacture the product from the material we
bought.
4. Finally the product is done, we store it in the warehouse and it
will be delivered to the customer by the order.

Response - Based Business Model

As we know in the Anticipatory-based business model the
main activity is in forecasting. And in Response-based business
model we wont use forecasting as a main activity. Because it
wants to reduce the time and cost

1. Sell , the activity in this topic is offering the services to

make a deal with the customer.
2. After dealing is made, the company begins to buy
components and materials and then manufacture and start to
deliver it to customer.
So we can conclude that activity will begin if the customer and
the company make a deal.

Postponement
Postponement is a concept in supply chain
management where the manufacturer produces a
generic product, which can be modified at the
later stages before the final transport to the
customer.

There are two types of postponement:

They are ;
(1) manufacturing or form postponement;
and
(2) geographic or logistics postponement.

1. Manufacturing or form postponement

The vision of manufacturing or form
postponement is one of products being
manufactured with no preparatory work or
component procurement until exact customer
specifications are fully known and customer
commitment is received.
The company is freed from forecast-driven
anticipatory operations.
Example: :
The umbrella company product the same color first,
then the company research what customers want and after
the customer specification are fully known (example the
customer likes polkadot pattern).
So, the company start to continue produce polkadot pattern as
a customer want.

2. Geographic Postponement
In many ways geographic or logistics
postponement is the exact opposite of
manufacturing postponement.
The basic notion of geographic postponement is to
build and stock a full-line inventory at one or a few
strategic locations.
Example :
A furniture company has two retail stores located in
Tangerang and Cipinang. It produce a full-line inventory of
product A. The company stocks it at strategic location store
(for example) in Tangerang. But once in Cipinang, product A
has many orders from customer, the company transfers the
product from store in Tangerang to customer in Cipinang.

Barriers and the Future

A barrier to adopting response based arrangements is the need for publicly help
corporation to maintain expected quarterly profits.

A second barrier to implementing response-based operations is the need to

establish collaborative relationships.
For the foreseeable future, most firms will continue to
implement strategies that combine anticipatory and responsebased supply chain arrangements. The trend toward increased
involvement in response-based arrangements with specific
customers and suppliers will continue to expand.

Financial Sophistication

The financial benefits of timely response are

straightforward. Fast direct delivery translates to less
inventory and reduced need for distribution facilities.
Faster to customers means less working capital is
required to support supply chain operations. Three
aspects of financial sophistication are cash-to-cash
conversion, dwell time minimization,and cash spin.

Cash to Cash Conversion

Cash-to-cash conversion refers to the time required
to convert raw material or inventory purchases into sales
revenue. Cash conversion is generally related to
inventory turn: the higher the inventory turn, the quicker
the cash conversion. A goal of supply chain design is to
reduce and control order receipt-to-delivery time in an
effort to accelerate inventory turns.

Dwell Time Minimization

Dwell time is the ratio of time that an asset sits idle to the time required to
satisfy its designated supply chain mission. For example, dwell time would
be the ratio of the time a unit of inventory is in storage to the time that it is
moving or otherwise contributing to achieving a supply chain's objectives.
To reduce dwell time, firms collaborating in a supply chain need to be willing
to eliminate duplicate and non-value-adding work. For example, if three
different tirms perform identical processes as a product flows along a
supply chain, dwell times will accumulate. Designating a specific firm to
perform and be accountable for the valueadded work can serve to reduce
overall dwell.

Cash Spin
A popular term for describing the potential benefits of reducing
assets across a supply chain is cash spin, sometimes referred to as
free cash spin. The concept is to reduce overall assets committed
to supply chain performance. Thus, a dollar of inventory or the
investment in a warehouse, if eliminated by a reengineered supply
chain, spins cash for redeployment. Such free capital can be
reinvested in projects that might otherwise have been considered
too risky.
The potential to spin cash applies to all areas of a firm. What
makes the potential of supply chain cash spin so attractive is the
opportunity to collaborate between firms.

Globalization
The logistics of internationalization involves four
significant differences in comparison
to national or even regional operations

The logistics of internationalization involves four significant

differences in comparison to national or even regional
operations:
1. The distance of typical order-to delivery operations is
significantly longer in international as contrasted to domestic
business.
2. To accommodate the law and regulations of all
governing bodies. The required documentation of business
transaction is significantly more complex.
3. International logistics operations must be designed to
deal with significant diversity in work practices and local
operating environment.
4. Accommodation in cultural variation in how consumer
demand product and services is essential for successful
logistical operation.

Issues in Supply
Chain Management
Issues and risks that have been identified
by those critical of supply chain
arrangements are based on
implementation and social challenges.

Limited Success

Antitrust
Concern
s

Consumer
Value
Concerns

Social
Challenges

Issues in Supply Chain

Management
1. Implementation Challenges
Such changed behavior requires new practices related to internal
integration as well as direction of operations across the supply chain. To
make integrated supply chain practice a reality, at least four operational
challenges must be resolved :
a. Leadership
Leadership is a process that can be effect by the leaders to the
followers to
got the goals of the organization.
b. Loyalty and Confidentially
The issues of how to maintain focused loyalty and confidentiality in
organizations. that simultaneously participate in competitive
supply chains are of critical importance.
c. Measurement
It is clear that the measurement of supply chain operations requires a
unique set of metrics that identifies and shares performance and cost
information between participating members.
d. Risk Reward Sharing
The challenge in success or failure is how to share the benefits or

2. Limited Success
The mechanics of how to make such complex relationships work on a dayto-day basis are not well understood.

3. Social Challenges
The critics of supply chain collaboration offer at least two lines of attackantitrust and consumer value.

a. Antitrust Concern
The antitrust challenge to supply chain collaboration rests on the doctrines
of free market competition.

b. Consumer Value Concern

In terms of economic growth, initiatives aimed at reducing costs by
elimination of waste, redundancy, and non-value-adding efforts remain
appealing because they offer the potential to improve efficiency. The most
serious concern may be the inability to effectively implement and manage
comprehensive supply chain initiatives.

ANY

QUESTIONS?

Questions List
1st Session
1. What is the benefit between cash to cash conversion, dwell time
minimization, and cash spin? (From Nindya Sara Kintana 2241-14-155).
2. What is the goal of supply chain design?(From Ranumi Wijaya 2241-14009)
3. Why demand product and services is essential for successful logistical
operation? (From Nurul Oktaviani 2241-14-355)

2ND SESSION
4. What is the fundamental challenges of integrated? (From Purnama
Anjasmara 2241-14-342)
5. Why in the anticipatory based business model high risk and cost? (From
Elvira Tiana 224-114-314)
6. What is the difference between anticipatory based business model and
response based business model? (From Mira Pradana 2241-14-113)