Chapter 7 Conclusions and Suggestions
7.2 Managerial Implications and Suggestions
In the global notebook-computer market, Taiwanese contract manufacturers are focused on supporting the global operations of multinational Brands. It is extremely difficult to continue generating benefits from brand companies in the long-run.
Tendencies in short product lifecycle, low price, quick technology innovation and changeable customer preferences cause the vibrations in market demand as well as the exigency to supply chain redesign. Recently, low profits and intense competition have increased the need for manufacturers to adjust strategies to focus on innovation, flexibility, efficiency, quality and cost control and cooperate more closely with Brands.
This research focuses on exploring the characteristics in operational models for Taiwanese notebook-computer contract manufacturers. And then proposes a conceptual framework of simultaneously strategic and operational planning in supply chain design. Based on the analysis, the managerial implications and suggestions to notebook-computer industry are presented below:
1. Uncertainty is one of the most challenging but important problem in supply chain management. Indeed, it is a primary difficulty in the practical analysis of SC performance. In the absence of randomness, the problems of material and product supply are eliminated; all demands, production, and distribution behavior would be completely fixed, and therefore, exactly predictable. Nevertheless, it is unrealistic and insufficient in practical global operations. Contact manufacturers need to precisely identify their SC performance for keeping stable and closer cooperation with Brands. That is, decisions in strategic-level planning must be integrated with operational-level planning of a SC. To make sure they could exactly support Brands’ global operations based on flexible SC management and excellent SC performance.
2. SC operates in an uncertain environment. Uncertainty is associated with customer demand, internal and external supply deliveries throughout the SC. There exists extensive integration and coordination from upstream to downstream supply chain echelons. Any impact in each echelon may cause enormous fluctuating effect and
may not be controllable. It is essential to keep flexibility, such as volume flexibility in assembly plant and configuration hub as well as delivery flexibility, for easing the impacts from uncertainty. Therefore, contract manufacturers can take quick-responding strategies and satisfy the requirements from Brands.
3. This supply chain design model incorporates production and delivery uncertainty, and reduces complexity via reasonable assumptions. The interactive relationships are well-defined and analyzed in component module control, bare-bone assembly control, bare-bone stockpile control, and full-set configuration control subsystems.
Fill rate (service level) and replenishment lead-time in upstream control subsystem have direct impacts in operational performance of downstream control subsystem.
The conceptual model developed here aids in the design of efficient, effective, and flexible supply chains, and in the evaluation of competing SC networks for notebook-computer manufacturers.
4. Analytical process is performed in operational-level planning model. It could be more practical based on cost functions calibration in each echelon. Collecting and using the real operation parameters to calibrate the cost function of each control sub-model, it will be very useful for comprehensive supply chain performance measurement.
5. Volume flexibility and delivery flexibility are incorporated in supply chain design modeling for the purpose that proactive supply chains will be more responsive than those which are merely reactive. It is necessary that networks should be design with both flexibility and reduced uncertainty. The decision of supply chain flexibility is decided by the decision maker’s experience, there exists different definitions and scopes in different scenarios. It could be further discussed and modeled in the aspects of operational level (flexibility in machine, automation, labor, routing etc.), strategic level (flexibility in volume, delivery, production, product design and expansion etc.) and network level (flexibility in robustness, relationship and re-configuration etc.).
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Appendix A : Questionnaire
The questionnaire of investing factors affecting the supply chain operations in notebook-computer industry
Part A：General Information and Operational Characteristics of your company 1. Company’s name：
2. Your name： Phone：
E-mail：
3. Experience in Logistics
□below 1year □1~3years□3~5 years□5~10 years□10 years above 4. Your position：
5. Total capital of your company
□$5 billions or less
□MORE than $5 billions, up to $10 billions
□MORE than $10 billions, up to $15 billions
□MORE than $15 billions, up to $20 billions
□MORE than $20 billions 6. Total number of employees
□below 1000 □1001~2000 □2001~3000 □3001~4000 □4000 above
7. The average annual revenues ： 8. The types of main products：
9. What is the relationship type of supply chain cooperations between your company and major cooperative company?
□Global supply chain cooperations
□Domestic supply chain cooperations
□Simply manufacturing and delivering relationship
□Others：
10. Where are the major markets of your company’s product?
□Europe □North America □South America □North-Eastern Asia
□South-Eastern Asia □Mainland China □ Taiwan
□Others：
11. What are the facilities located in the major markets?
□Logistics center □Assembly center □Factory □Distribution center
□Customer service center □Warehouse □Branch company
□Others:
12. BTF（Build To Forecast）, BTO（Build To Order） and CTO (Configure To Order) are different types of production. What is the proportion of each type in your company?
□BTF（ ％）□BTO（ ％） □CTO（ ％）
□others: （ ％）
13. OEM（Original Equipment Manufactures）, ODM（Original Design Manufactures）
and OBM（Original Brand Manufactures） are major business models. What is the proportion of each type in your company? Who is your cooperation manufacturer?
□OEM（ ％）cooperation manufacturer:
□ODM（ ％）cooperation manufacturer:
□OBM（ ％）cooperation manufacturer:
□Others: （ ％）cooperation manufacturer:
14. What is the proportion of different type of products distribution?
□Fleet owned by your company （ ％）
□Outsourcing （ ％）
□Others: （ ％）
15. What is the objective of your company?
□Cost down □Quick response □Flexibility
□Others:
Part B：
The survey of significance in different indices for supply chain targets
Please indicate the extent to which you agree with the survey statements by choosing your responses using the following scale.
Not at all Very little Somewhat A significant amount To a great extent
1 2 3 4 5
A. The significance in different dimensions of supply chain targets (please tick “3”) 1. Major dimensions of performance
Significance level Dimension 1 2 3 4 5
Time Cost
Quality
Flexibility
2. Attributes in each dimension
Significance level
Dimension Attributes 1 2 3 4 5
Decrease purchasing time
Decrease production time
Time
Decrease delivery time
Reduce purchasing cost
Reduce production cost
Reduce inventory cost
Cost
Reduce transportation cost
Increase purchasing quality
Increase good rate of production Quality
Improve logistics channel
Flexibility in production
Flexibility
Variety of product design
B. The significance in different aspects of supply chain operations 1. Major dimensions of supply chain management efficiency
Significance level
Dimension 1 2 3 4 5 Purchase
Manufacture
Inventory management
IT application
Transportation
Customer service
2. Attributes in each dimension
Significance level
Dimension Attributes 1 2 3 4 5
Purchasing cost
Purchasing quality
Purchase
Purchasing cycle
Production cost
Production cycle
Adopt new technology
Manufacture
Inferior goods ratio
Inventory cost
Safety stock Inventory
management
Adopt JIT
Significance level Dimension Attributes 1 2 3 4 5
Adopt cargo tracking system
Adopt EDI system
ICT application
Set ERP system
Transportation cost
Transportation time
Transportation
Outsourcing
Provide customization service
Develop international service
Mechanism of after-sales service
Customer Service
Response time to customer
C. The significance of different aspects of deciding logistics facilities location 1. Major dimensions
Significance level
Dimension 1 2 3 4 5
Government policy
Labor force
Logistics support capability
Developing opportunities
Financial support
Market demand
2. Attributes in each dimension
Significance level
Dimension Attributes 1 2 3 4 5
Stable politics climate
Relax restriction of logistics investment Government
policy
Simplify process of customs clearance
Low labor costs
Professional logistics operations
Labor force
Stable labor supply
Plentiful resources
Set up logistics park
Superiority of transshipment location Logistics
support capability
Transportation cost
Developing opportunities
Good logistics infrastructures
Significance level
Dimension Attributes 1 2 3 4 5
Integrated condition of the same industry (horizontal integration) Integrated condition of the different industry (vertical integration)
Free capital flow
Facility construction cost
Regulation fee
Financial market
Exchange rate of international finance
Potential of local market
Market potential of globalization
Market demand
Close to major consumer market
D. The significance in partner choice of strategical alliance 1. Major dimensions
Significance level Dimension 1 2 3 4 5
Complementary Resources Organization Culture
Market power
2. Attributes in each dimension
Significance level
Dimension Attributes 1 2 3 4 5
Complementary manufacture
Complementary distribution and after-sale service
Complementary land and factory
Complementary Resources
Complementary finance
Past alliance experience Compatibility of strategies
Commitment
Organization Culture
Compatibility of manpower
Relative scale between partners
Intangible assets
Competition advantages
Market power
Polical and social relationship
Operation Model Analysis and Supply Chain Design for Notebook-Computer Industry
Advisor: Cheng-Min Feng
Presenter : Chi-Hwa Chen
09.27.2008
Appendix B : Briefing
Outline
Introduction Introduction
Characteristics in NB- Characteristics in NB -computer Industry computer Industry
Key Factors of Different Operational Model Key Factors of Different Operational Model
Conceptual Framework in Supply Chain Design Conceptual Framework in Supply Chain Design
Modeling and Applications in Supply Chain Design Modeling and Applications in Supply Chain Design
Conclusions and Suggestions Conclusions and Suggestions
Introduction Introduction
Global competition
Short product life cycle
Quick response
Demand diversification
Changing in operational model
Trends in NB manufacturers
Adjustments in global logistics infrastructure
BTF ÆÆÆÆÆ BTOÆÆÆÆÆ CTO
Brands companies Brands companies
Zero touch
One-stopping shopping
Contract manufacturers Contract manufacturers
Final configuration Full-set distribution
A multi
A multi- -objective integrated supply chain model objective integrated supply chain model
Simultaneous strategic and operational planning
Performance measurement system that includes cost,
service level (fill rate) and flexibility
Research Issues
Issue 1: To explorer and analyze the key factors emphasized by different operation
Issue 1: To explorer and analyze the key factors emphasized by different operation