Strategic alliances with suppliers

Several international businesses have try to reap some benefits of

vertical integration without the associated organizational problems
by entering strategic alliances with essential suppliers

Builds

Builds

Builds
Strategic alliances works:

• It builds trust between the firm and its

suppliers.

• Trust is built when a firm makes a credible

commitment to continue purchasing from a
supplier on reasonable terms.
MANAGING A GLOBAL
SUPPLY CHAIN
1. THE ROLE OF JUST-IN-TIME
INVENTORY

2. THE ROLE OF INFORMATION

TECHNOLOGY AND THE
INTERNET
Logistics : encompasses the activities necessary
to get materials from suppliers to manufacturing
facility, through the manufacturing process, and out
through a distribution system to the end user.
 In international business, logistics is
complicated by

• Efficient logistics can have a major

impact upon a firm's bottom line
 The twin objectives of logistics :

• Managing a firm’s global supply

chain at the lowest possible cost
and best serves to customer needs.

• Helping the firm establish

a competitive advantage
through superior customer
service.
The potential for reducing costs through more
efficient logistics is enormous
Question:

How can a Just-In-Time

inventory process help a firm?
 1. THE ROLE OF JUST-IN-TIME INVENTORY

systems
A. Just-in-time (JIT) is to
economize on inventory
holding costs by having
materials arrive at a
manufacturing plant just in
time to enter the
production process not
before.
B. The major of Just-in-time systems:

+ Saving costs
from speeding up
inventory turnover.

Boosting the company’s profitability

+ Helping the
firm improve
product quality.

Defective inputs to be spotted

right away
 C. The drawback of JIT systems
disadvantage
• World Trade Center
was attacked.
• International air travel
and shipping shutdown.
• Many firms that
relied upon globally
dispersed suppliers
and managed JIT
supply chain are…

Left
Buffer stocks are expensive to
store, they can help the firm
respond quickly to increases in WITHOUT A BUFFER
demand and tide a firm over
shortages brought about disruption STOCK OF INVENTORY
• Outbreak in April 2003 in
China.
• The temporary shutdown
of several plants operated
by foreign companies and
disrupted their global supply
chains.
D. Reducing the risks associated with a global
supply chain

- The firm should source these important inputs

from several suppliers located in different
countries.
- Maintaining a JIT system by using real-time
information to adjust product pricing.

Responding quickly to increasing in

customer demand.

BRINGING DEMAND AND SUPPLY IN TO

CLOSER ALIGNMENT
 2. THE ROLE OF INFORMATION
TECHNOLOGY AND THE INTERNET

A. Electronic Data Interchange

to (EDI)
coordinate the flow of
materials into manufacturing, through manufacturing,
and out to customers.
EDI in use:

• Facilitates the tracking of inputs

• Allows the firm to optimize its

production schedule

• Allows the firm and its suppliers

to communicate in real time

• Eliminates the flow of paperwork

between a firm and its suppliers
 Consequence of EDI:
Suppliers, shippers, and the purchasing firm can
communicate with each other with no time delay,
increasing the flexibility and responsiveness of
whole global supply system.

Good EDI systems can help a firm

decentralize materials management
decisions to the plant level by giving
cooperate-level managers the information
they need for coordinating or controlling.
 B. The ubiquity of the Internet

The existence all over

• Theavailabilitythe
ofworld
Web-based
at the same applications
time.
have easily installed and managed, dominate
the market for global supply chain management.

• These Web-based systems are rapidly

transforming the management of globally
dispersed supply chain, reducing inventory
and reaping the associated economy
benefits.
 Reference
• http://www.youtube.com/watch?v=mRAHa_P
o0Kg
• http://www.thefreedictionary.com
• http://www.investorwords.com
• http://vi.oldict.com