3. Strategic alliance Flashcards
Why not just performing all business functions internally?
–May not be effective: Scarcity of financial and managerial resources
–Even they have all: There can be someone who can do it better (or/and) cheaper
What are the four ways of doing logistics or SCM functions?
- Internal activities
- Acquisitions
- Arm’s-length transactions
- Strategic alliance
1) How can strategic alliances help?
2) What is extremely important when evaluating a strategic alliance?
1) (the first three are most important to remember)
- –Adding value to products
- –Improving market access
- –Strengthening operations
- –Adding technological strength
- –Enhancing strategic growth
- –Enhancing organizational skills
- –Building financial strength
2) Make sure your core competence is intact, if not strategic alliances can be more harm than benefits
What does 3PL stand for?
Third-party logistics
What is 3PL?
–Outside firms perform logistics functions
–Long term commitments and multiple functions
What are the advantages of 3PL?
- Focus on core strengths
- Provides technological flexibility
- Provides flexibility in
- geography
- workforce size
- additional services
- resource flexibility
What are the four types of Retailer-Supplier-Partnerships?
Quick Response
Continuous Replenishment
Advanced Continuous Replenishment
Vendor Managed Inventory
How does the Quick Response work?
–Vendors receive POS (Point of Sale) data from retailers, and use this information to synchronize production and inventory activities at the supplier.
–The retailer still prepares individual orders, but the POS data is used by the supplier to improve forecasting and scheduling.
How does the Continuous Replenishment and Advanced Continuous Replenishment work?
Continuous Replenishment:
–Vendors receive POS data and use it prepare shipments at previously agreed upon intervals to maintain agreed to levels of inventory.
Advanced Continuous Replenishment:
–Suppliers may gradually decrease inventory levels at the retailer’s store or distribution centre as long as service levels are met. Inventory levels are thus continuously improved in a structured way.
How does Vendor Managed Inventory (VMI) work?
- JITD (Just In Time Distribution)
- Supplier decide on the appropriate level of inventory levels of each of the products (within previously agreed-upon bounds) and the appropriate inventory policies to maintain these level.
- VMI between Coca-Cola and Tesco
- In 2003, Britain experienced the hottest summer
- The average availability for soft drinks in Tesco was 67%
- Coca-Cola was at 98% availability due to VMI
What are the requirements for effective RSP?
- Advanced information systems
- Top management commitment
- Information must be shared
- Power and responsibility within an organization might change (for example, contact with customers switches from sales and marketing to logistics)
- Mutual trust
- Information sharing
- Management of the entire supply chain
- Initial loss of revenues
What are some issues in regard to RSP?
- Inventory ownership:
- Retailer owns inventory, or
- Supplier owns the goods until they are sold (consignment)
- Why would a firm do this?
- Confidentiality
- Communication and cooperation
- When First Brands started partnering with Kmart, Kmart often claimed that its supplier was not living up to its agreement to keep two weeks of inventory at all times. It turned out that this was due to the fact that the two companies employed different forecasting methods.
Summarise the four RSP’s
What are the advantages of RSP, and for who?
- Decrease required inventory levels (Supplier and retailer)
- Improve service levels (Supplier and retailer)
- Decrease work duplication (retailer)
- Improve forecasts (Supplier)
What are the disadvantages of RSP?
- Expensive, advanced technology is required.
- Supplier/retailer trust must be developed.
- Supplier responsibility increases.
•Expenses at the supplier often increase.
–Why? How can this be addressed?
