Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

2.3.4 Middle Management Level: Working Out Collaborative Processes in the Supply Chain

Intended learning outcomes: Present cooperative processes in the supply chain. Produce an overview on Collaborative processes in participative design/engineering. Describe contract issues for a partnership relationship.

At the middle management level, the task is to work out collaborative processes that fulfill the required objectives outlined in Figure

A collaborative process is a process in which supply chain trading partners collaborate.

Figure shows processes in the supply chain in the company (value-adding entity) view. To optimize the entire supply chain, the processes have to be worked out jointly with the supply chain partners: that is, the customer chain — the customer and the customer’s customers, and the supplier chain — the supplier and the supplier’s suppliers.

Fig.       Cooperative processes in the supply chain.

  • Supply chain design comprises the selection of partners in the network and location planning. Defining the controlling processes in the supply chain serves evaluation of the degree of fulfillment of the postulated value. These processes can work out performance indica­tors of the kind introduced in Section 1.4. Both the design and controlling of the supply chain are processes that determine strategically the subsequent planning and operations processes all along the chain.
  • SC Plan means processes for comprehensive planning of demand and the resources in the network, in particular long-term planning. Also belonging here are processes for cooperatively billing. SC Source, SC Make, SC Deliver, and SC Return describe the specific planning and execution tasks in the value-adding entities. Also a part of these tasks is the influence and impact on the adjoining areas of the supply chain, on the side of the network of suppliers and the network of custo­mers. Also compare here the Supply Chain Operations Reference model, SCOR (see Section 1.1.8).
  • Processes integrated across the entire network in the area of IT support are a further key to successful supply chains. In addition, education and training of employees at all levels is funda­men­tal, and includes both specialist competencies in the field and social competency. Both of these categories of processes are support pro­cesses that determine what the customer views as the value-adding planning and operations processes along the entire supply chain.

Figure takes the example of concurrent engineering, or participati­ve design/engineering, and shows how the increased demands for speed result in special challenges for cooperative processes.

Fig.        Collaborative processes in participative design/engineering.

“Early supplier (or customer) involvement” means involving suppliers (or customers) early in product design, drawing on their expertise, insights, and knowledge to generate better designs in less time and designs that are easier to manufacture with high quality [ASCM22].

Suppliers in particular have to possess know-how of the logistics processes in temporally coordinated design, and production and delivery of components. The transparency of planning and control systems is crucial. All necessary information must be freely exchangeable among the partners. See also the Figure example of concurrent engineering is the Boeing Company in Seattle, Washington. For some time now, Boeing has worked with partners in the Pacific area, in particular in Japan. These companies manufacture the greater part of the airplane bodies. The cooperation was undertaken with an explicit view to the Asian market. Potential customers are airline companies that belong for the most part to national governments. For decision makers, it is crucial that a part of the value-added chain take place in their own countries. Initial cooperation experience gained with the B747 was then applied to the successful and cost-effective manufacture of the B777. This airplane design was conceived from the start according to the principle of concurrent engineering.

With a view to long-term win–win collaboration, the processes as well as all further agree­ments should be documented in writing. Here, contracts should be drawn up that address the points outlined in Figure

Fig.        Contract issues for a partnership relationship.

For the selection of suppliers, the steps and evaluation criteria in Figure are again useful. Supplier selection often takes place in steps:

  • A first call for tenders can define the detailed product requirement specifications as well as the rules for detailed cooperation. (Here see Section 2.3.4). The result serves as the basis for the contractual details in the further requests for quotations.
  • The next request can be a request for design and production of a prototype, or the first conducting of a service. Especially for service products or for software production, this can allow for testing the feasibility as well as the validity of the rules and agreements.
  • In the case of repetitive services or for large batch production of tangible goods, there may be one more selection process. Here the supplier that was responsible for the prototype will not auto­matically be selected again.

Course section 2.3: Subsections and their intended learning outcomes

  • 2.3.7 The Virtual Enterprise and Other Forms of Coordination among Companies

    Intended learning outcomes: Produce an overview on the virtual enterprise and underlying long-term network of potential partners. Present target area strategies for a virtual enterprise and disclose possible supply chain risks entailed. Describe some other forms of cooperation in relation to the virtual enterprise.