Serena | Jason | Sam Supply Chain Management Case : Polo Ralph Lauren & Luen Thai - Using Collaborative Supply Chain Integration in the Apparel Chain Dr. Benjamin Yen SCM Case Agenda Introduction Relationship Among the 3 Partners Framework for SCM Collaboration Traditional SCM Vs. Collaborative SCM Use of Technology The Supply Chain City
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Serena | Jason | Sam
Supply Chain Management Case : Polo Ralph Lauren & Luen Thai -Using Collaborative Supply Chain Integration in the Apparel Chain
Dr. Benjamin Yen SCM Case
AgendaIntroduction
Relationship Among the 3 Partners
Framework for SCM Collaboration
Traditional SCM Vs. Collaborative SCM
Use of Technology
The Supply Chain City
Dr. Benjamin Yen SCM Case
Introduction
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Discussion
Examine how Polo’s relationship with Luen-Thai has evolved and examine the impact of collaboration on Polo’s business model?
Dr. Benjamin Yen SCM Case
Relationship
Dr. Benjamin Yen SCM Case
RelationshipThree players within the strategic collaboration
• Polo, Luen Thai, Ruentex
A few important concerns:• Sharing information would be critical• fulfill the market gap for shorter lead times• post-quota environment…• Using the old IT tool such as CAD, the transferring
information between designers and manufacturers was still difficult
• mismanagement of inventory, production and delivery.
Dr. Benjamin Yen SCM Case
Their relationship gradually development since the mid-1990s
Initial involvement (1996)• upstream and downstream activities• five major processes• three major problems
Second involvement (1998)• “partner relationship” with tier-one partners• critical three major industry factors• still not enough…
Relationship
Dr. Benjamin Yen SCM Case
Third involvement • implemented a number of initiatives• ASNx/FGA• However, fragmented…
Fourth involvement• strengthen their supply chain collaboration across each
dyad as well as the whole triad• D2S supply chain model• a “collective” view of relationship…
Conclusion: collaboration is essential in the future development for all the parties.
Relationship
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Discussion
Develop a framework to understand the collaborative supply chain issues between the three partners.
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Framework for SCM Collaboration
D2S –Polo would outsource the key areas design and logistics processes to Luen Thai and would involve horizontal integration among the 3 partners
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Three Dimensions to Supply Chain Collaborations Issues
Strategic ProcessualOrganisational
Framework for SCM Collaboration
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Strategic – Need to align their strategic philosophies
Is it a platform that can allow all 3 partners to take advantageof future market opportunities
Intra-organisation to inter-organisation perspectives – require real time information exchange across all business processes of the 3 partners
Reconsider the value they add to the supply chain
Revenue Sharing Model
Framework for SCM Collaboration
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Processual - Need to consolidate different business processes as compared to business functions
What Integrative Mechanisms should they use
What Performance measures should they adopt
Organisational – Need to decide how to build the collaboration infrastructure e.g. Oshkosh, VF, Supply Chain City
Current use of technology & integration is fragmented
Current supply chain is asset based and designed for mass manufacturing and collaboration would involve a serious resource & financial commitment
Framework for SCM Collaboration
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Discussion
Highlight supply chain conceptual underpinnings and differentiate between traditional supply chain management and supply-chain collaboration in the context of Luen Thai and Polo.
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Traditional SCM vs. SC Collaboration
Traditional SCM
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Traditional SCM vs SC CollaborationSC Collaboration
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Traditional SCM vs SC Collaboration
Summary• Traditional Supply Chains usually operate through
temporary cooperation, rather than act as organized & integrated clusters
• Limited & fragmented technology result in inefficient information exchange
• The “D2S” Strategy allows partners to share information, better manage inventory, and thus significantly reduce costs
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Discussion
Examine how technology will enable collaboration amongst Luen Thai and its partners, and the effect of such collaboration?
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Current Use of Technology
Ruentex: supporting collaborative SC• Adopted the SAP system to restructure corporate
resources• Built a database for information query and
knowledge accumulation
• Instant order checking, 3D display, won international quality certification...
• Quickly response to customer needs
Dr. Benjamin Yen SCM Case
Current Use of Technology
Luen Tai: The interdependency between Polo is driving LuenTai to transform from an OEM to a service-oriented, D2S provider
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Current Use of Technology
Ralph Lauren: building collaboration• Introduced Internet-based Electronic Data
Interchange (EDI) helped partners to design common interfaces and build a common platform
• Vendor Managed Inventory(VMI): will help Polo automatically create purchase orders based on warehouse or store demand levels in real time.
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TechnologyEffects of Technology
One key element in SC collaboration is real-time/near real-time information exchange, including design, sourcing, manufacturing
The Internet acts as a platform for information management and address the “Bullwhip” Effect
The collaboration leads to growing interdependency: decreases mutual audits & inspection of incoming materials reducing costCreate visibility of Luen Thai’s logistics process
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Discussion
How does Supply Chain City initiative complement the D2S initiative? What are the synergies?
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The Supply Chain City
D2S is Luen Thai's business model that will provide customers with a one-stop shop of supply chain services ranging from design and development; material management; manufacturing and logistics.
• Supply Chain City is “One location” solution – all supply operations from design to development to sample making
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The Supply Chain City
D2S customers are looking for suppliers that can provide more products and services, perform faster but still offer a competitive cost.
• Supply Chain City provides access to all technical support enabling Luen Thai to take up additional processes
• Close to major hubs like HK and Guangzhou to help Luen Thai provide logistical services
• 30 upstream partners on site (Vendors & Customers)• Standardises work procedures across partners
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The Supply Chain City
Through D2S, achieve speed-to-market solutions that will help our clients bring the right apparel with the right volume, to the right place and right time.
• Supply Chain City provides instant communication and information exchange helping to achieve speed to market & flexibility
• Fast product turnaround• Substitutes information for inventory • Reduced lead time
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The Supply Chain City
The first Supply Chain City in China is located in Dongguan, 30 minutes away from the Hong Kong border. Another one is currently being developed in Qing Yuan, 30 minutes away from Guangzhou.