Download Supply Chain decentralizzata

ENEA line of research on
the Integrated Supply Chain
BAS – direzione
Ing. R. Tononi 0630486151 [email protected]
Ing. R. Raimondi 0630483089 [email protected]
Ing. G. Spagna 08359743411 [email protected]
Supply Chain Mgm:
a critical problem

Supply Chains made up of independent SMEs, usually, exhibit
unsatisfactory levels of coordination.

Effective and authoritative managerial hubs difficult to be found.

A problem studied for years by Research and academy institutions.

Interesting proposals:
Methods of Decentralized Coordination
Basics of decentralized coordination

Such methods consist of collaboration rules devised so that to align the
specific interests of any SC member enterprise with the interests of
the SC taken as a whole, as a System.

Alignment  any member free to pursue maximization of its own interest
 implicit higher level of collaboration
For these methods to be adopted, two are the criteria to be met:

Through the higher collaboration levels, supply chain extra profits
higher than the related alignment costs.

Costs of alignment of the single enterprise to be more than off set ,
through appropriate rules of sharing profits among SC members.
rationale for a management model

Within a European project (SSA - eMensa), ENEA has developed and
proposed a management model for SCs made of independent SMEs:
SMEC (Small Medium Enterprise Chain)
http://gecoserver.casaccia.enea.it:80/download/Ricerca_su_Catene_di_PMI/ENEA_Catene_di_PMI.wmv

SMEC objectives:
- close the gap between research and industrial practice;
- tailor the decentralized methods to SMEs features;
- experiment with actual chains of SMEs in agro-food;
- set up a Virtual Demo Center: to allow SME chains to measure the
potential benefits provided by the model
Components of SMEC model
6 lines of intervention and a technology proposal:

Supply contracts

Optimization of the supply chain operation

Unified management of logistics

Alignment of product quality features

Support to process and product innovation

Strategic plan for the whole supply chain

An ICT platform to automate the collaboration processes
aim of each component
6 lines of intervention and a technology proposal:

Supply contracts

Optimization of the SC operation

Unified management of logistics

Alignment of product quality features

Process and product innovation

Strategic plan for the whole SC

ICT platform
increase market offer
decrease SC costs
increase capability to meet
consumer expectations
ease business model adoption
Supply contracts



They rule the exchange of resources among member enterprises
With the traditional contract (“wholesale contract”) resources are
bought and sold at prices higher than costs
Easy to manage. But choke the chain supply to the market below the
level that maximizes profits.
€/q
The vertically integrated chain
Demand (price)
Supply (marginal cost) of the
vertically integrated chain
optimum supply
(max chain profit)
quantity of
product
Supply contracts
Chain of independent SMEs
€/q
Supply (marginal cost) of chain of
independent SMEs
Demand (price)
Supply (marginal cost) of
vertically integrated chain
Decrease of supply
due to wholesale
contract
quantity of
product
Supply contracts


A potential countermeasure is behaving as a vertically integrated chain:
exchanging resources at cost value.
A supply contract of different nature is required, such as:
- revenue sharing contract
- buy back contract
-...........
different details but same basic principle

A disadvantage of these contracts: higher administrative complexity.

Successful examples of application:
- Blockbuster which has increased its market share from 24% to 40%
- various chains built on franchising contracts (McDonald, Benetton,
Tecnocasa……)
Optimization of SC operation

Focus on minimization of operational costs of the whole supply chain.

Not the same as minimizing costs of single enterprise members.

Linear programming approaches.

Sinergy with with supply contracts (costs need to be known).

With no revenue sharing contract the price paid by retailers would be
minimized rather than SC costs.

Spur internal (horizontal) competition
Unified management of logistics

Inventories of single enterprises managed as components of the
inventory system of the whole supply chain  inventory pooling
(average and safety stocks);

Sincronization and coordination of trasportation of resources among
members to lower total cost of the supply chain.

Large potential savings in logistics.

Further savings allowed by the “flowcasting” approach to hold safety
stocks only at the retailer.

A successful practice: Barilla  reduction of logistics cost by 50%
alignment of quality features of SC product

Higher product quality levels imply higher number of quality features
that contribute to quality.

Those quality features are to be consistent with each other, but are under
the control of different enterprise members.

Weak managerial hub does not grant that consistency.

SMEC approach:
- estimate market value of necessary alignments  go if values higher
than costs.
- revenue sharing rules must ensure that alignment costs are paid back
to single members before distributing profits.
Support to process and product innovation

Two different problems.

For process innovation too slow adoption.

For product innovation too low adoption.

SMEC proposal for process innovation : collaborative financing of all
SC members (Chain Business Plan).

For product innovation: a methodology of new product development
aimed at reducing financial risk.
Strategic plan for the whole chain

Itself an innovation for chains of SMEs.

SMEC proposes two methodologies to define the plan with the
collaboration of all members.

QFD (Quality function Deployment), to define:
- identikit of consumer target groups;
- best marketing mix the chain can deliver to target groups.

SCOR (Supply Chain Operation Reference model):
- identify market position of chain (according to standard parameters)
with respect to competitors:
- change that position if necessary.

Beyond these specific objectives, enhances the collaboration among
members and the perception of membership within the system/chain.
Technology proposal

SMEC requires the enterprise members to be engaged in more complex
or numerous activities.

To get around this inconvenience the collaboration processes are
automated as much as possible, so that process complexity becomes
transparent to the implementer enterprise.

The ICT adopted includes, as a building block, a Business Process
Management System (BPM).

The platform is the system which implements SMEC Virtual Demo
Center, to allow chains of SMEs to measure the benefits of the model.
Technology proposal
Portal Server interface
Process
Monitor
WEB
Process
Simulation
Process
Modeling
Process execution
engine
DBMS
Application Server
OS
SMEC ICT Platform – Basic Architecture
Optimization
applications