Lecture 13: Redesign Supply Chain Processes

Lecture 13: Redesign Supply Chain Processes

Source/Reference:

http://en.wikipedia.org/wiki/Johnson_%26_Johnson

http://www.supplychainshaman.com/supply-chain-2/supply-chain-excellence/it-will-take-more-than-a-band-aid/
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Response:

In this lecture, we learnt about the Supply Chain Challenges, Partner Interface Processes (PIPs) and the steps of redesigning the supply chain processes.

Supply Chain Challenges

There are three supply chain challenges:

1.      Plug-and-play e-process misalignments

The e-Process which two computer applications talk to each other through Internet misaligns between two enterprises. This may cause by different interface for each process. Also, it may become difficult in communication. It is slow to add new products or services.

2.      Information coordination misalignments

It is mainly caused by non-automated and non-standard interfaces, or lack of standardized electronic interfaces.

Information flows are not easily integrated and are not synchronized lead to delay of supply chain process.

3. Knowledge sharing misalignments

Knowledge sharing among enterprises in a supply chain:

l   Sharing of market knowledge and trends

l   Sharing knowledge for joint market programs

l   Sharing expertise around product and service design

To prevent knowledge sharing misalignments, we should prevent the intelligent management of knowledge around supply chain processes.

Partner Interface Process (PIP)

A Partner Interface Process (PIP) defines business processes between trading partners. PIPs fit into seven clusters, or groups of core business processes, that represent the backbone of the trading network. Each cluster is broken down into segments which are cross-enterprise processes involving more than one type of trading partner. Within each segment are individual PIPs. 

Example: RosettaNet

Cluster 1: Partner Product and Service Review 
Allows information collection, maintenance and distribution for the development of trading-partner profiles and product-information subscriptions.
Segment 1A: Partner Review. Provides the ability to share information, such as locations and contacts, and send and receive acknowledgement of receipt
Segment 1B: Product and Service Review. Enables suppliers to manage product information available to partners using a subscription process as well as establish and maintain lists of products that given partners are authorized to sell and lists of partners that sell given products 

Cluster 2: Product Information 
Enables distribution and periodic update of product and detailed design information, including product change notices and product technical specifications.
Segment 2A: Preparation for Distribution. Enables distribution of product resources, including sales catalog and basic technical information, and obtainment of extended product information.
Segment 2B: Product Change Notification. Enables update of product resources.
Segment 2C: Product Design Information. Enables release and update of product engineering design information.

Cluster 3: Order Management 
Supports full order management business area from price and delivery quoting through purchase order initiation, status reporting, and management. Order invoicing, payment and discrepancy notification also managed using this Cluster of processes.
Segment 3A: Quote and Order Entry. Allows partners to exchange price and availability information, quotes, purchase orders and order status, and enables partners to send requested orders, or shopping carts, to other partners.
Segment 3B: Transportation and Distribution. Enables communication of shipping- and delivery-related information with the ability to make changes and handle exceptions and claims.
Segment 3C: Returns and Finance. Provides for issuance of billing, payment and reconciliation of debits, credits and invoices between partners as well as supports product return and its financial impact.

Cluster 4: Inventory Management 
Enables inventory management, including collaboration, replenishment, price protection, reporting and allocation of constrained product.
Segment 4A: Collaborative Forecasting. Enables standardization of collaborative order and sales forecasting between supply-chain partners.
Segment 4B: Inventory Allocation. Lets sellers inform buyers of product allocation determined through the evaluation of preset criteria, such as demand forecast and availability, and allows buyers to respond manually if negotiation is needed.
Segment 4C: Inventory Reporting. Lets buyers provide daily inventory reports to sellers, allows sellers to notify buyers when reports are reflected in their records and enables sending of discrepancy reports.
Segment 4D: Inventory Replenishment. Facilitates inventory replenishment managed by buyer, seller or both -- via a pull signal from the buyer or push notification from the seller that triggers an order, change, ship or return.
Segment 4E: Sales Reporting. Lets buyers provide periodic sales reports to product providers, allows providers to notify buyers when reports are reflected in their records and enables sending of discrepancy reports.

Cluster 5: Marketing Information Management 
Enables communication of marketing information, including campaign plans, lead information and design registration.
Segment 5C: Design Win Management (EC). Enables design registration with suppliers, including requests for design-win registration at different phases of the design cycle and award of win based on predefined criteria.
Segment 5D: Ship from Stock and Debit (EC). Supports creation and use of marketing programs and distribution of pricing incentives to product distributors.

Cluster 6: Service and Support 
Provides post-sales technical support, service warranty and asset management capabilities.
Segment 6A: Provide and Administer Warranties, Service Packages, and Contract Services. Enables registration and product warranty support.
Segment 6C: Technical Support and Service Management. Enables support requesters to submit request for support and provides the ability for an authorized service provider to submit a claim to the warranty provider for a completed request for support.

Cluster 7: Manufacturing 
Enables the exchange of design, configuration, process, quality and other manufacturing floor information to support the "Virtual Manufacturing" environment.
Segment 7B: Manage Manufacturing WO & WIP. Enables the release, management and the exchange of factory production information.
Segment 7C: Distributed Manufacturing Information. Distributed manufacturing information to support product improvements, Quality and warrantee entitlement. 

Case Study:

Johnson & Johnson is an American multinational pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. It consistently ranks at the top of Harris Interactive's National Corporate Reputation Survey and was the first corporation awarded the Benjamin Franklin Award for Public Diplomacy by the U.S.

It was realized that Johnson & Johnson suffered from strained resources, so process should be improved for the coming challenges. A study revealed that the functionally-structured operations environment in which purchasing, manufacturing, demand planning, logistics, design and quality were disconnected.

Then it went through six steps.

Step 1: Reviewing the current supplier quality documentation and procedures. Only a few procedures and audit forms were retained.

Step 2: Design policies, objectives, procedures, tools and techniques to support the strategy to strengthen the relationship with main suppliers.

Step 3: Communicate to 20 suppliers at a 2-day supplier conference day. Suppliers’ feedback was supportive and positive.

Step 4: A cross-functional team handled scoring and supplier categorization. The team gained insight and documented new knowledge regarding process area and opportunity.

Step 5: A system was developed to monitor on-going delivery and quality performance against requirements.

Step 6: Training in lean thinking and continuous quality improvement was set into place.

After redesigning the supply chain process, Johnson & Johnson company achieved great improvements in quality, reporting and data collection and materials.