Supplier integration
Under the supplier integration refers to the integration of suppliers into the company's structures and processes of the company, so that processes and systems are synchronized to be able to more effectively and work more successful.
Basics
Processes such as globalization , technological innovations as well as increasing customer requirements and competitive pressure are forcing companies to abandon traditional competitive strategies and introduce new business strategies. In order to meet the new competitive challenges successfully, the new environment requires companies to be able to work with suitable market partners. This enables companies to generate and transfer essential resources, skills, knowledge, experience and know-how.
Supplier integration as a form of cooperation only developed with Japanese automakers such as Honda and Toyota. This has given both companies better quality and more competitive products. Western companies have long believed that this keiretsu structure would not work in their markets. Thomas Stallkamp was the first to refute the skeptics in Western companies and, as Chief Purchasing Officer at Chrysler, introduced this program. In the end, he got impressive results: $ 5 billion in savings over that time. The savings were achieved by using the research and development opportunities of the suppliers. The product development cycle could also be reduced by more than two years and more products were brought onto the market.
definition
Supplier integration can be described as collaboration, in which a combination of the consumer's resources with the resources and skills of the supplier and a joint implementation of activities take place. Or supplier integration is the inclusion of the supplier in the product development process in the case of external procurement. In business administration, supplier integration is viewed as a design field for strategic supplier management.
According to Wagner, a distinction must be made between the knowledge phase and the industrialization phase when it comes to integration. In the knowledge phase, the inclusion in the customer-side development processes is particularly meant. This also includes innovations that are part of the supplier's core competence . In the industrialization phase, in particular processes of product and production process improvement are meant as design fields.
Essential success factors for supplier integration
There is a lot of talk about the advantages of supplier integration, but as it turns out, switching from working alone to working with suppliers is easier said than done. The following are the factors that are required for long-term relationships between companies and their suppliers.
Sharing of information
The division of information must be bi- or multidirectional, i.e. H. both sides need to share their information. This concerns general information such as stock levels, forecasts, sales and marketing strategies in order to be able to carry out everyday services. In addition to everyday information, strategic information may also be necessary for successful long-term cooperation, such as market strategies, financial and technology information or new products. In order to be able to share all information quickly and on time, technologies play a major role. Faster access to information and thus faster decisions are particularly important when a decision on one side influences the subsequent decisions on the other.
Matching goals
Target correspondence relates to the intensity of the target agreement between the partners and is used to measure the quality between the participants in the supply chain . The goal matching involves understanding the need for joint agreements along the value chain to reduce opportunism, clarify expectations from partners, and understand partners goals and help achieve them. Also to understand needs and abilities of one another in order to define a clear idea of the strategy for the parties involved.
Decision synchronization
In decision synchronization, both operational activities and joint planning are coordinated by the partners in order to optimize the benefits along the value chain . To make a quality decision, companies and their suppliers should combine their plans and information, overcome conflicts, establish procedures, rules and procedures. During planning, it is determined how common resources can be used effectively to achieve the goals, activities and capacities must be adapted to all partners.
Incentive alignment
The incentive orientation refers to the even distribution of costs, risks and advantages among the partners in the supply chain and also includes the calculation and development of incentive systems. Successful use of the supply chain partnership requires that the losses and profits, as well as the results of the joint work, are distributed fairly among the partners. Each member of the collaboration should receive or give as much as they have contributed.
Sharing of resources
Resource sharing refers to the processes of asset leverage and the composition of asset investments along the value chain. Equipment, facilities, and technologies are part of asset leverage; For example, a supplier invests in equipment that is needed for a specific customer or a company invests in equipment that is used by the supplier. The asset investments include both financial and non-financial investments such as time, money, training, etc. and are very important for a successful collaboration.
Joint generation of knowledge
Joint generation of knowledge refers to the processes with which the partners develop a better understanding and a faster reaction to the market and competitive environment when working together. The generation and transfer of knowledge between companies and suppliers enables new product developments, better and faster reactions to customer requests and the creation of innovations.
Common communication
Common communication is understood to mean the transfer of information along the supply chain partner in terms of frequency, direction, method and type of influence. Common communication can be imagined as a transmission channel in which information is shared, goals agreed, decisions synchronized, incentives aligned, resources coordinated and shared knowledge generated.
Fields of activity
“The collaboration between suppliers and buyers in the supply chain usually takes place in a wide variety of areas. Those that are mentioned most often include procurement , inventory management , research and development, and production and sales ”.
procurement
A collaboration in procurement is usually realized in connection with considerations for reducing the vertical range of manufacture or in connection with efforts to optimize procurement or to develop additional potentials and synergies . For example, selected production functions are outsourced to collaboration partners, who can then be planned and monitored together. In the focal company, tasks are being shifted from production to the area of responsibility of procurement. In the focal company, tasks are being shifted from production to the area of responsibility of procurement.
Reduction of the vertical range of manufacture through 1st tier suppliers
According to the supplier pyramid , the suppliers who are closest to the OEM are called module suppliers and system integrators . The module supplier (1st tier) has the task of assembling the parts and components (aggregation) or producing ready-to-assemble modules and supplying them to the OEM as well as offering logistical responsibility. This service is known as modular sourcing and plays a minor role in development. The system integrator (1st tier) takes on the tasks that used to be part of the core business of OEMs; systems are created that consist of several modules. The term system sourcing is used for such services. Examples of such systems include a complete engine, a car seat including the substructure or the steering system. In contrast to modular sourcing, system sourcing also takes on services in research and development . The module supplier and system integrator must also bear logistical responsibility in order to guarantee the timely delivery of the systems or modules for further processing. The system integrators are often located close to the manufacturer, such as For example, all major automobile manufacturers have supplier parks directly in front of the production halls, so they can also deliver just-in-time and just-in-sequence production deliveries.
example
Closer cooperation between the OEM and their suppliers in the automotive industry within the framework of modular or system sourcing leads to a reduction in vertical integration. BMW produces only 33% and the Cayenne off-road vehicle only about 10%.
Warehouse management
“Similar to the procurement collaboration, the considerations for the realization of a collaboration in the supply chain, in the area of warehousing, aim to uncover optimization potential. The background is the reduction of stocks with the resulting cost reductions (space costs, inventory costs, capital tie-up costs, internal transport costs, etc.) ". In addition to the concepts of warehousing that reduce inventory, concepts from other areas of the supply chain also have a direct impact on inventory. Such concepts include e.g. B. Procurement - JIT , Modular and System Sourcing etc .; in production - JIT delivery, Kanban principle, etc. If a company works with these concepts, the inventory is reduced by the low delivery quantity, later point of the transfer of ownership, shifting of inventory to suppliers. In the case of other concepts such as Vendor Managed Inventory and Continuous Replenishment , where the supplier is responsible for the inventory of the customer's warehouse, the supplier bears all costs and full responsibility for the warehouse.
Research and Development
In the case of collaborations in the field of research and development (R&D), experiences, facilities and specialized workers are gathered. In addition to rationalization and cost-cutting effects, the advantages for companies include a reduction in the capital risk. The use of synergy effects and increases in efficiency also offers the opportunity to gain a lead over the competition when introducing a product (time-to-market). In addition, the supply chain companies can exchange additional know-how that can be used not only in development but also in their own production. It is important to determine the point in time and the degree of supplier involvement, since from this point the supplier is responsible for development activities. How high the responsibility of the suppliers is and how strongly they are integrated depends on the R&D phase in which they are involved and how extensive their part is. The earlier and the greater their share, the greater the responsibility and the deeper the integration.
production
The collaboration between suppliers and buyers in the area of production refers to their cooperation in production processes and the resulting logistics processes in order to reduce production costs as well as overall process costs and to increase capacity utilization. Coordinated production programs can be the content of a collaboration, within which the partners specialize in the manufacture of certain product groups and from this a product range or the assembly of which a salable product is created. A second option is the collaborative use of resources and production facilities, e.g. B. with very expensive production processes that could not be borne alone for the individual companies. The distribution of the tasks (outsourcing of assembly steps, mutual specialization on one product each, etc.) is divided among the partners according to core competencies. Logistics plays a very important role in connecting value-added activities that are distributed over time and space. There are z. B. the jointly produced components and modules or outsourced parts of the various logistics concepts are required: JIT, JIS, Kanban, etc. These in turn are required by the selected suppliers, who are closer to the manufacturers, in order to deliver their parts or modules to the assembly lines in a precise sequence ( JIT, JIS) or to ensure the continuous flow of the Kanban system.
Individual evidence
- ^ A b Günter Hofbauer , Tarek Mashhour , Michael Fischer : Supplier management: The value-oriented design of the supply relationship . Oldenbourg Verlag Munich, Munich 2009, p. 104 .
- ↑ Nils Daecke : Actor-based management of supply chain relationships : Framework for action for supplier management based on success factors . Springer Gabler, Wiesbaden 2013, ISBN 978-3-8349-4003-2 .
- ↑ a b Jim Tarabori: Supplier Collaboration. (PDF) 2011, accessed on November 22, 2017 (English).
- ↑ Wagner, SM: Strategic supplier management in industrial companies: an empirical investigation of design concepts. Frankfurt / Main et al. Zugl. St. Gallen, Univ., Diss., 2000, pp. 222-237
- ↑ Mei Cao , Qingyu Zhang : Supply Chain Collaboration: Roles of Interorganizational Systems, Trust, and Collaborative Culture . Springer, London 2013, p. 59-67 .
- ↑ a b c d Rainer Völker , Jens Neu : Supply Chain Collaboration: Collaborative logistics concepts for third and fourth tier suppliers . Physica-Verlag, Heidelberg 2008, ISBN 978-3-7908-1954-0 , p. 59-60 .
- ↑ a b Wieland Appelfeller , Wolfgang Buchholz : Supplier Relationship Management: Strategy, organization and IT of modern procurement management . 2., completely revised and exp. Edition. Gabler, Wiesbaden 2011, p. 124 .
- ↑ Thomas Andreßen : System Sourcing - Potential for Success in System Procurement . Wiesbaden 2006, ISBN 978-3-8350-9181-8 , pp. 21 .
- ↑ Helmut Wannenwetsch : Integrated materials management and logistics: procurement, logistics, materials management and production . 3rd, updated edition. Springer, Berlin 2007, ISBN 978-3-8349-4003-2 , pp. 157, 259-264 .
- ↑ Helmut Wannenwetsch : Integrated materials management and logistics: procurement, logistics, materials management and production . 3rd, updated edition. Springer, Berlin 2007, ISBN 978-3-8349-4003-2 .
- ↑ Rainer Völker , Jens Neu : Supply Chain Collaboration: Collaborative logistics concepts for third and fourth tier suppliers . Physica-Verlag, Heidelberg 2008, ISBN 978-3-7908-1954-0 , p. 36 .
- ↑ Günter Hofbauer , Tarek Mashhour , Michael Fischer : Supplier Management: Value-based design of the supply relationship . Oldenbourg, Munich 2009, p. 108 .
- ^ A b c Hans-Christian Pfohl , Petra Häusler : Logistic interfaces in production networks: Concepts for improving cross-company logistics . Verlag Praxiswissen, Dortmund 2000.