Management Supply Chain: Hartmut Werner

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Hartmut Werner
supply chain
management
basics, strategies,
instruments and controls
7th edition
supply chain management

Hartmut Werner
supply chain
management
basics, strategies,
instruments and controls
7th, completely revised and expanded edition
Hartmut Werner
Wiesbaden Business School
RheinMain University of Applied Sciences
Wiesbaden, Germany
ISBN 978-3-658-32428-5 ISBN 978-3-658-32429-2 (eBook) https://doi.org/

10.1007/978-3-658-32429-2
The German National Library lists this publication in the Deutsche Nationalbibliografe; detailed bibliographic
data can be accessed on the Internet at http://dnb.d-nb.de .
© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2000, 2002, 2008, 2010, 2013, 2017,
2020
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Mrs. Gabriele Gebauer
for the 80th birthday
V
foreword
foreword
Foreword to the seventh edition
"Everything will be fine in the end - and if it's not fine yet,
then it is not over yet.”
(Oscar Wilde, Irish writer, 1854 – 1900)
The seventh edition was written in a rather turbulent time: in the middle
of the Corona crisis. A small virus keeps the world in suspense. Our view
of things has changed. Covidÿ19 casts long shadows, also on the supply
chain. Where efficiency reigned yesterday, today there is a desire for
resilience. Established and proven supply chain strategies are suddenly
being questioned. Global sourcing, just-in-time or outsourcing appear in
a new light in times of crisis. This book takes up these ideas. It contains
some reflections on the impact of Covidÿ19, specifically from a logistics
perspective.
But not only because of Corona it was time to write this seventh edition.
Digitization does not stop at the supply chain either.
A functioning cognitive supply chain would be unthinkable without
concepts such as the Internet of Things, big data, blockchain technology
or machine learning. Supply Chain 4.0 paves the way to the smart factory
and smart city. These considerations are also taken up in this edition.
The previous content was also expanded to include logistical
considerations regarding the last mile and the importance of hub-and-
spoke systems. The rest of the font has been completely revised, and
the examples have been substantially updated.
Several people have made invaluable contributions to the success of this
book. I would like to thank my tutor, Mr. Marc Luyckx. He helped me with
the creation of some illustrations and literature research. I would also like
to thank the students
vii
foreword
the Wiesbaden Business School (degrees “Bachelor of Arts in Business

Administration” and “Master of Arts in Controlling and Finance”). I received valuable
content-related suggestions from discussions with the students in lectures, seminars
and presentations. On behalf of Gabler Verlag, I would like to thank Ms. Susanne
Kramer and Ms. Renate Schilling for the uncomplicated and always pleasant
cooperation.
However, my greatest thanks go to my family, who have given me a lot of time over
the last few weeks. This was also necessary in order to tackle the new edition of the
book, which had meanwhile become quite extensive. My wife Brigitte had my back
during the hot phase. Fortunately, our sons Constantin, Frederik and Adrian spared
me most of the "inconveniences" - of whatever kind.
It has almost become a good tradition to make a small reference to football with
every new edition. A passion I've had since childhood. My self-confessed affection
for Borussia Mönchengladbach is obviously of particular interest to the students. In
any case, they ask me about it very often, and I get comments on black-white-green
defeats. The students should be told that I don't blame them for these little taunts.
I dedicate this seventh edition in a special way to Ms. Gabriele Gebauer on her 80th
cradle party. With her husband, Rolf Beisse, she built up the company MEWA Textilÿ
Management into one of the leading service providers in the textile service branch in
Europe. Mrs. Gebauer and Mr. Beisse live the intention of a family-run company and
always seek to be close to their employees. Which is sometimes not so easy, as
they give almost 5,700 people a job. I have had the privilege of working very closely
with Ms. Gebauer over the past 10 years through my position on the supervisory
board. I learned to appreciate her humane and always pleasant manner. Ms.
Gebauer, I wish you all the best on your 80th birthday. Stay healthy: Happy birthday!
I am at the readers' disposal for a discussion about supply chain management. You
can preferably reach me at:
hartmut.werner@hsÿ rm.de
Hartmut Werner ÿ
ÿ
Wiesbaden, October 2020
viii
foreword
Foreword to the first edition

Hardly any term in business administration has caused such a furore in
recent years as that of supply chain management. More and more
companies are trying to exploit potential for rationalization as part of their
interface optimization. Competitors are abandoning traditional thought
patterns and adopting the philosophy of integrating business processes.
The topic of supply chain management is currently omnipresent in

practice. When walking through the halls of manufacturing companies, in
trade and with service providers, the term appears above all when it
comes to initiating programs to reduce costs. The literature is also
increasingly concerned with supply chain management.
The topic has meanwhile established itself, especially in the Anglo-
American-speaking world. In Germany, on the other hand, supply chain
management has so far only been hesitantly included in scientific
publications. However, the differences between supply chain management
and related concepts such as logistics, purchasing, procurement or
materials management are usually hardly clear.
This book fills this gap. Designed as a textbook, it is of particular interest
to students of economics and engineering. On the other hand, the
practitioner will find numerous and concretely described suggestions for
the implementation of supply chain management in his company. The
focus of the explanations relates to the industrial sector. A number of
examples of the utilization of supply chain management are also given
for other sectors.
The book is divided into five chapters. Chapter A explains the basic
terms. Section B deals with the general influence of management
concepts on the design of supply chain management. In order to
implement these meta-management approaches, strategies for supply,
disposal and recycling must be introduced in supply chain management.
These strategies are discussed in Chapter C. Section D describes various
instruments of supply chain management. They serve to implement the
strategies identified under point C. These include tools for inventory and
freight cost reduction, information gathering, quality assurance and IT
support. Finally, in Chapter E, the possible uses of new controlling tools
in supply chain management are characterized by way of example.
IX
foreword
I would like to take this opportunity to express my heartfelt thanks to everyone

who supported me in the writing of this book. Most of the illustrations were
created by my tutors, Messrs . Ingo Becker and Jörg Dallmann . Mr. Becker
showed the patience of an angel by conscientiously integrating my (quite
numerous) change requests into the print format template. I would like to
thank my good friend Dr. Wolfgang Buchholz. Mr. Dallmann 's parents , Mrs.
Erika Dallmann and Dr. Hermann Dallmann, were kind enough to proofread
the book as well. I would like to thank the students of procurement / production
and corporate planning at the Wiesbaden University of Applied Sciences for
their suggestions on supply chain management. Finally, I would like to thank
Ms. Ulrike Lörcher from Gabler Verlag for the good cooperation.
I dedicate the book to my mother, Emmi Werner, and my father, Ernst Werner,
who unfortunately passed away much too young. They gave my sister,
Carmen Kopka, and me a very loving and secure childhood and youth.
I would be very happy to continue the topic of supply chain management

together with the readers of this book. I am available for a lively discussion on
supply chain management.
Hartmut Werner ÿ
Wiesbaden, August 2000
X
Table of contents
Table of contents
Foreword................................................. .................................................. ........ vii
List of Figures................................................. ....................... XXI
List of Example Blocks ..................................................... ...................XXV
List of terminology blocks ................................................ ................ XXVII
List of abbreviations and acronyms ..................................................... ...XXIX
A Basics ..................................................... .................................................. 1
A.1 Learning objectives and procedure................................................. .............. 1 A.2 Supply chain management: history
and term......................... .3 A.2.1 General characterization ............................................ .......3 A.2.2 Typification options
and development stages of supply chain management................................. ...............8th
A.2.2.1 Types of supply chain management ........................................................ ......9

ÿ ÿÿÿ
A.2.2.1.1 Typology according to Bechtel/Jayaram................................. .9 A.2.2.1.2 Typology according to
Otto ........................................ .......... 10 A.2.2.1.3 Typology according to Göpfert......................... ............... 12 A.2.2.2
Development stages of supply chain management......... .................... 13 A.3 Distinction from related
concepts.................... .................. 15 A.3.1 Differentiation from traditional terms ........................ ...... 16 A.3.2 Distinction from
related management approaches......... 17
A.3.2.1 Value chain ............................................ ............ 17 A.3.2.2 Logistics chain....................... ........................................ 18
A.3.2.3 Demand Chain Management. .......................................... 19 A.3.2.4 Customer Relationship Management............................
19 A.3.2.5 Supplier Relationship Management.......... .................... 21 A.3.2.6 Relationship
management ....................... ........................... 21 A.3.2.7 Supply Chain Relationship Management ............. ......... 22 A.3.2.8
Summary of the results ........................................ 23 A.4 Structuring of the supply chain ........................................ .......... 25
A.4.1 Hierarchically Pyramidal Supply Chains ........................ 26 A.4.2 Polycentric Supply Chains ............................................
27 .....
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Table of contents
A.5 Tasks and goals of supply chain management .................. 29 A.5.1 General
characterization .................. ................................ 29 A.5.2 Conflicting goals of a supply
chain............. ................................ 33 A.6 Motives for the emergence of supply
chains ........ ..................... 36 A.6.1 Total Cost of
Ownership ..................... ..................................... 36 A.6.1.1 General
characterization ..... ................................... 36 A.6.1.2 Interlocking with Maverick
Buying .... ............................. 41 A.6.1.2.1 Maverick Buying: Basic Considerations .
41
A.6.1.2.2 Containment of Maverick Buying via Purchasing

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Cards ..................................... ........ 43 A.6.2 Transaction

costs..................................... ................................ 46
A.6.3 Bullwhip Effect................................................ ................................ 47 A.6.4

Globalization and increased customer requirements ........ 50 A.7 Primary strategy types of
Supply chains ................................ 51 A.7.1 Cost leadership in the supply
chain ..... .......................... 51 A.7.2 Innovation leadership in the supply chain.................. ........
52 A.7.3 Service leadership in the supply chain......................... 53 A .7.4 Quality leadership
in the supply chain ........................ 54 A.8 Network coordination in supply
chains........ ................................ 57 A.8.1 Modeling and systematization of networks.........
57 A. 8.2 Network levels................................................ ................................ 60
A.8.3 Network competency................................................. ........................... 61 A.9 Material

flow analysis in supply chains .................. ........................ 62 A.9.1 Motives for material
flow analyses.................. ........................ 63 A.9.1.1 System
definition ................... ............................................ 63 A.9.1.2 Material flow
recording .................................................. .... 64 A.9.1.2.1 Direct material flow
recording .................................. 65 A.9.1.2.2 Indirect Material flow recording ............................
65 A.9.1.3 Material flow analysis and visualization......... ........... 66 A.9.2 Critical
appraisal................................. ................................ 68 A.10 Design models of supply chain
management ........ .... 70 A.10.1 SCOR model....................................... ....................................
70
A.10.1.1 Basics................................................ .......................... 70

A.10.1.2 Process stages................................................. ....................... 71
A.10.1.2.1 Top level (level 1) ........................................ .......... 71 A.10.1.2.2 Configuration

level (level 2) ............................ ... 72 A.10.1.2.3 Process Element Level (Level
3) ........................ 75
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Table of contents
A.10.1.2.4 Implementation level (level 4) ........................ 77 A.10.1.3 Measurement via SCOR.. .................................................. ... 78 A.10.1.4 Critical appraisal ........................................ ............... 85 A.10.2 Task model for supply chain software ........................ 86 A.10.2 .1 Basics ..................................................... ....................... 86 A.10.2.2
Supply chain design.................. ..................................... 88 A.10.2.3 Supply Chain Planning..... ..................................... 88 A.10.2 .3.1 Requirements planning................................................. ......... 89 A.10.2.3.2 Network planning .................................. ................. 89 A.10.2.3.3 Procurement, production and distribution planning.................... ..................
90 A.10.2.3.4 Order Promising........................ ............................ .. 91 A.10.2.3.5 Procurement, production and distribution detailed planning ........................ 91 A.10.2 .3.6 Collaborative Planning ............................................ 92 A .10.2.4 Supply Chain Execution................................................. ...... 92 A.10.2.5 Critical
appraisal ..................................... .................. 94 A.11 Questions for understanding ........................ ................................................ 95
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ÿ ÿÿÿ
B Influence of management concepts on the design of the supply chain ........................................ ................................................ 97
B.1 Learning objectives and procedure ........................................ ............ 97 B.2 Market and resource focus................................. ................ 98 B.2.1 Characterization ............................ ....................................... 98 B.2.1.1 Isolated market focus . ............................................ 98 B.2.1.2 Isolated resource focus .....................................................
101 B.2.1.3 Integrated market and resource focus... ...... 103 B.2.2 Effects on Supply Chain Management........... 106 B.3 Total Quality Management................ ................................................ 107 B.3.1 Characterization .................................................. .................. 107 B.3.2 Effects on Supply Chain Management......... 112 B.4 Business
Reengineering ..... .................................................. ........... 113 B.4.1 Characterization ....... .................................................. ........... 113 B.4.2 Effects on Supply Chain Management........... 115 B.5 Time Based Competition........... .................................................. .... 117 B.5.1 Characterization ............................................ .......................
117 B.5.2 Acceleration management................. ................................ 119
XIII
Table of contents
B.5.2.1 Simultaneous engineering ............................................ .. 119 B.5.2.2 Rapid
prototyping ........................................ ................... 122 B.5.3 Deceleration
management ........................ ................... 124 B.5.4 Supply chain
engineering ........................ ....................... 125

B.5.4.1 Diversity of variants ........................................ ............ 125
B.5.4.2 Configuration of parts................................................ ......... 126 B.5.4.3 Effects on
procurement planning......... 126 B.5.4.4 Conditions for storage and transport....... ........... 127
B.5.4.5 Components of the packaging............................. ........ 127 B.5.4.6 Composition of the
products ........................ 128 B.5.5 Effects on supply chain management......... 129 B.6
Questions for understanding............................. ................................................ 131
C Strategies of Supply Chain Management........................................ 133
C.1 Learning objectives and procedure................................................. .......... 133 C.2
Basics........................................ .................................................. 133 C.2.1 Vertical
cooperation strategies................................................. 134 C.2.1.1 Supplier
cooperation ............................................ ...... 134 C.2.1.2 Customer
cooperation..................................... ................... 138 C.2.2 Horizontal cooperation
strategies......................... ............ 139 C.3 Supply strategies ................................ ..............................
140 C.3.1 Efficient Consumer Response............. ................................... 141 C.3.1.1
Components of logistics ...... ...................................... 143 C.3.1.1.1 Vendor Managed
Inventory... ................................ 143 C.3.1.1.2 Cross Docking.......... ................................................
152 C.3.1.1.3 Synchronized Production................................. 156 C. 3.1.2 Components of
marketing ........................................ 157 C.3.1.3 Components of Information Technology.................
158 C.3.2 Customer Relationship Management
ÿÿ
and Mass Customization................................................ ........ 159
C.3.2.1 Customer Relationship Management.......................... 159 C.3.2.1.1
Components ........ .................................................. 161 C.3.2.1.2 Further development to
Enterprise Relationship Management.................. 162

ÿÿ ÿÿÿ
C.3.2.2 Mass customization ............................................ ............ 164
C.3.2.2.1 Soft Customization........................................ ....... 166
C.3.2.2.2 Hard customization ........................................... .... 167
XIV
Table of contents
C.3.3 Postponement ..................................... ............................ 169 C.3.3.1
Basics .............. .................................................. ..... 169 C.3.3.2 Types........................................ ............................................
172
C.3.3.2.1 Postponement form ........................................ ..... 172 C.3.3.2.2 Time
Postponement..................................... ............ 173 C.3.4 Sourcing strategies................................. ..................................
175 C.3.4.1 Sourcing concepts differentiated according to the number of suppliers... .......................................
177
C.3.4.2 Sourcing concepts differentiated according to the complexity of
goods......................................... ...... 179 C.3.4.3 Sourcing concepts differentiated according to the organizational
form ........................ ........... 182 C.3.4.4 Sourcing concepts differentiated
according to the place of value creation......... ......... 183 C.3.4.5 Sourcing concepts differentiated according to the
procurement area ............................ ............. 184 C.3.5 Supplier
management................................. ....................... 187 C.3.5.1 Pre-selection of suppliers.... ....................... 188
C.3.5.1.1 Supplier identification........................................ 188
C.3.5.1.2 Vendor limitation................................................. 189 C .3.5.2 Controlling the supplier
relationship........................ 189 C.3.5.2.1 Supplier evaluation........ ..................................... 189 C.3.5.2.2 Supplier
selection...... ....................................... 190
C.3.5.3 Intensifying the supplier relationship..................... 192 C.3.5.3.1 Supplier
integration .................. ................................ 192 C.3.5.3.2 Supplier development............... ............................ 193
C.3.6 Procurement strategies ................. .......................................... 195 C.3.6.1
Kanban. .................................................. ....................... 195
C.3.6.2 Cumulative figures ............................................ ................ 202
C.3.6.3 Load-based order release ........................ 205 C.3.6.4 Retrograde scheduling ........ .....................................
207 C.3.7 Spare parts management ......... .................................................. .209
C.3.7.1 Inventory management ............................................ ......... 211 C.3.7.2 Process
management................................. ...................... 212 C.3.7.3 Storage and infrastructure.................... .......................
214 C.3.7.4 Cooperations............ .................................................. .... 215 C.3.8 Risk management in the supply
chain ........................ 216 C.3.8.1 Supply Chain risks in selected areas..... 217
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Table of contents
C.3.8.2 Risk management process in the supply chain......... 219 C.3.8.2.1 Risk
identification......................... ........................ 219
C.3.8.2.2 Risk analysis ............................................ ............... 220 C.3.8.2.3 Risk
assessment ............................ ....................... 221 C.3.8.2.4 Risk

mitigation................. .................................... 222
C.3.8.2.5 Risk control........................................ ............. 223
C.3.8.3 Supply chains in times of crisis: Corona example......... 224 C.3.8.3.1 Effects on the
value chain...... 225 C.3.8.3.2 Resilience instead of efficiency in the supply chain ...... 227
C.3.9 E-Supply Chains.................................... .................................. 229 C.3.9.1
Basics ......... .................................................. ........... 229
C.3.9.2 Electronic commerce........................................ ........... 235
C.3.9.2.1 Electronic marketplaces ..................................... 236 C.3.9.2.2 Collaborative

processes ....................................... 238
C.3.9.2.3 Virtual freight exchanges ........................................ .240
C.3.9.2.4 Electronic invitations to tender and

ÿÿ ÿÿÿ
auctions ........................................ ............... 242
C.3.9.2.5 Tracking and tracing .......................................... .... 244 C.3.9.3 Future fields of
application and dangers ........................ 245 C.3.10 Supply Chain 4.0: Cognitive value-added
network .. 249 C .3.10.1 General considerations regarding Supply Chain 4.0......... 249
C.3.10.2 Importance of Smart Factory and Smart City......... 250 C.3.10.3 Technologies in the
cognitive supply Chain ......... 256 C.3.10.3.1 Internet of Things and Digital Twins .................
257 C.3.10.3.2 Big Data ... .................................................. ............. 258
C.3.10.3.3 Blockchain ............................................ .................. 261
C.3.10.3.4 Machine Learning ............................................ ...... 264 C.3.10.4 Cognitive supply
chain .................................... ............ 266 C.4 Disposal and recycling
strategies................................. .... 271 C.4.1 Disposal strategies ........................................ ..............
274 C.4.2 Recycling strategies ................................ .......................... 277 C.4.3 Green Supply
Chains: Sustainability............... ..................... 281 C.4.3.1 General
characterization ..................... ................. 281 C.4.3.2 Product carbon
footprint........................ ...................... 282 C.4.3.3 Life Cycle Assessment in the Green

Supply Chain .................. ......... 284 C.4.3.4 Sustainability and Lifecycle Costing ........................
285 C.5 Comprehension questions .................................................. ....................... 288
XVI
Table of contents
D Instruments of supply chain management ..................................... 293
D.1 Learning objectives and procedure................................................. .......... 293 D.2 Inventory reduction tools................................. ........ 294 D.2.1 Decomposition of stocks................................. .............. 296 D.2.2
Marketability analysis ................................ .................................. 301 D.2.3 Range monitoring ............ ....................................... 306 D 2.4 Consignment analysis................................................ ............. 310 D.2.5 Existing
financing ................................ ................................ 316 D.2.6 Throughput time analysis................. .......................................... 321 D.2.7 Set-up time analysis... .................................................. ............... 322 D.3 Instruments
for reducing freight costs............................. ...... 323 D.3.1 Automatic determination of freight costs ........................ ......... 326 D.3.2 Standardization of packaging.................................. 328 D.3.3 Milk
run................................................. ........................................ 328
D.3.4 Last mile........................................ ................................. 329
D.3.4.1 Framework conditions on the last mile......... 331 D.3.4.2 Technical innovations on the last mile......... 331
D.3.4.3 Clever delivery methods on the last mile......... 333
D.3.5 Hub-and-spoke system........................................ .................. 335 D.3.5.1 General characterization ........................ .............. 335 D.3.5.2 Hub-and-spoke in air traffic......................... ............. 338 D.3.5.3 Hub-and-spoke
versus point-to-point.................... ...... 339 D.4 Instruments for gathering information ........................................ 341 D .4.1 Benchmarking..................................... ........................... 342 D.4.2 Reverse
engineering ................. ................................................ 347 D.5 Quality assurance tools...................................................... 348 D .5.1 Quality Function Deployment........................................ .. 351 D.5.2 Failure Mode and Effects
Analysis ....................................... 356 D.5.3 Bottleneck engineering............................................ ............... 359 D.6 Instruments for IT support................................................ 360 D.6.1 Electronic Data Interchange (EDI) and Webÿ
EDI ............... 361 D.6.2 Barcode ............... .................................................. ................... 363
D.6.3 Radio Frequency Identification (RFID) ................................ 364
D.6.4 Data Warehouse................................................. .......................... 374
D.6.5 Computer Integrated Manufacturing................................... 377 D.6.5.1 Production planning and control (PPS)................. 378 D.6.5.2 Computer Aided Design (CAD)................. ................... 380
ÿ
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Table of contents
D.6.5.3 Computer Aided Planning (CAP)................................. 381 D.6.5.4 Computer Aided Manufacturing
(CAM) ..................... 382 D.6.5.5 Computer Aided Quality Assurance (CAQ) .......... ..... 384 D.6.6 Enterprise
Resource Planning and Advanced Planning and Scheduling .................................. ... 384 D.7 Questions for
comprehension........................................ ................................. 391

ÿÿ
E Controlling of the supply chain ..................................... .................. 393
E.1 Learning objectives and procedure................................................. .......... 393 E.2 Business basics and
cost tracking............. 394 E.2.1 Business basics............. ....................... 394 E.2.2 Cost
Tracking ................... .................................................. ...... 396 E.2.2.1 Cost tracking of material prices ........................
396 E. 2.2.2 Cost tracking of freight costs ..................................... 399 E.2.2.3 Cost Inventory
tracking................................................. 401 E.3 Key figure management in of the supply chain ...................... 403
E.3.1 General principles .................. ....................................... 403 E.3.2 Types of
indicators .................................................. .......... 404
E.3.2.1 Absolute and relative key figures................................. 404
E.3.2.2 Success, liquidity and value increase key
figures ........................................ .... 405 E.3.2.3 Strategic and operational indicators ........................ 411 E.3.2.4
Performance and cost indicators... ....................................... 411 E.3.3 Key figure typology of the supply
chain ............ ................. 412 E.3.3.1 Input: Procurement key figures........................ ........ 414 E.3.3.1.1 Generic
key figures .................................. ........ 415
E.3.3.1.2 Productivity and
ÿÿ ÿÿÿ
Profitability indicators ..................................... 416
E.3.3.1.3 Quality and service indicators........................ 417 E.3.3.2 Throughput: Indicators of storage, order
picking and the Production................. 418 E.3.3.2.1 Generic key
figures ........................ ................ 419
ÿÿ ÿÿÿ
Profitability indicators ........................ 425
E.3.3.2.3 Quality and service key figures........................ 428 E.3.3.3 Output: Key figures of
distribution..... ...................... 431 E.3.3.3.1 Generic indicators .................... ...................... 432
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Table of contents
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Profitability indicators ........................ 434
E.3.3.3.3 Quality and service indicators........................ 435 E.3.3.4 Payment: Indicators of the financial processes..... .............. 436
E.3.3.4.1 Generic key figures................................................. 437
ÿ ÿÿÿ
Profitability indicators ..................................... 441
E.3.3.4.3 Quality and service key figures........................ 442 E.3.3.5 Key figure typology at a glance......... ........................ 444
E.3.4 Selected forms of visualization of key figure management......................................... ...........

ÿ
446 E.3.4.1 Value Driver Tree......................... .446

ÿ
E.3.4.1.1 Value driver tree via the EVA node.................... 448
E.3.4.1.2 Value driver tree via the ROCE node............. 452
E.3.4.2 Key figure radar......................................... .................. 458
E.3.5 Limits of key figure management in a supply chain ........................................ ........................

ÿ
462 E.4 Tools of Controlling in Supply Chain Management..... 463 E.4.1 Hard-(Soft)- Analysis ................................................ ...............
ÿ
463 E.4.1.1 Characterization ............................ ................................ 463 E.4.1.2 Example for supply chain management....... ..........
464 E.4.1.3 Critical appraisal................................. ....................... 466 E.4.2 Target costing ..................... .................................................. ...
ÿ
468 E.4.2.1 Characterization ........................................ .................... 468 E.4.2.2 Determination of the target costs via market-into-
company............. ..................................... 469 E.4.2.3 Decomposition of product-related target costs .... ........ 471 E.4.2.4 Further target
costing ÿProcedure at a glance .........
472
E.4.2.5 Example of supply chain management.................... 473 E.4.2.6 Critical appraisal.................. ........................................ 476 E.4.3
Activity-based costing ..... .................................................. ... 477 E.4.3.1 Characterization ........................................ .................... 478
E.4.3.2 Example for supply chain management................. 480 E .4.3.3 Critical appraisal................................................. ...........484
ÿ
E.4.4 Economic Value Added................................ ....................... 485
E.4.4.1 Characterization ............................................ ................ 485 E.4.4.2 Example of supply chain management ................ 487 E.4.4.3
Critical appraisal................................................ ....... 489
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Table of contents
E.4.5 Working capital management................................................. ... 490 E.4.5.1

Characterization........................................ .................... 490 E.4.5.2 Particular importance of
the cash-to-cash cycle......... 491 E. 4.5.3 Example of supply chain management....................
492 E.4.5.4 Critical appraisal.................... ...................................... 493 E.4.6 Supply chain
performance and scorecard ... ....................... 494 E.4.6.1
Characterization.................... ........................................ 494 E.4.6.2 Alternative Supply Chain
Scorecards in discussion ..................................................... ............. 500
E.4.6.2.1 Brewer/ Speh approach ........................................ 500 E.4.6.2.2 Approach according

to Stölzle/ Heusler/ Karrer........................ 503
E.4.6.2.3 Approach according to Weber/Bacher/Groll........................ 504
E.4.6.2.4 Approach according to Richert........................................ ........ 506
E.4.6.2.5 Approach according to Werner ........................................ ....... 507
E.4.6.3 Supply Chain Scorecard Perspectives ..................... 508 E.4.6.3.1 Financial

Perspective .............. ..................................... 508 E.4.6.3.2 Customer
perspective ...... ....................................... 510 E.4.6.3.3 Process
perspective .................................................. 513 E.4.6.3.4 Supplier
perspective ........................................ 516 E.4.6.3.5 Integration
perspective ........................................ 519 E.4.6.3.6 Overview of the supply chain
scorecard................. 521 E.4.6.4 From the scorecard to the strategy map .......... ..................
525 E.4.6.4.1 General implications of the strategy map.... 526 E.4.6.4.2 Strategy map of the
supply chain ... ............................ 528 E.4.6.4.3 Combination of scorecard and strategy
map .. 532 E.4.6.5 Critical appraisal... .................................................. .. 536 E.5
Comprehension questions.. .................................................. ........................ 537
Glossary................................................. .................................................. ......... 539
Bibliography................................................. ..................................... 557
Index ................................................................ .................................... 593
XX
List of Figures
List of Figures
Figure A.1 Structure of the writing ........................................ .............. 4
Figure A.2 Order-to-Payment-S in the Supply Chain .................. 9
Figure A.3 Development stages of supply chain

management ........................................ ...................... 15
Figure A.4 Overview of supply chain management and related

concepts........................................ .......... 24
Figure A.5 Hierarchical pyramidal supply chain.................... 26
Figure A.6 Polycentric Supply Chain ..................................... 28
Figure A.7 Total Cost of Ownership ............................................ ... 40
Figure A.8 Purchasing Cards ............................................ ............. 44
Figure A.9 Bullwhip Effect................................................ ................. 49
Figure A.10 Supply chain risks of quality leadership .... 55
Figure A.11 Material flow matrix and Sankey diagram......... 68
Figure A.12 SCOR Toolbox (Level 2) ........................................ ...... 74
Figure A.13 Causal chain (level 3) ........................................ ......... 76
Figure A.14 Control chart (level 3)......................................... ........... 77
Figure A.15 SCOR key figures ................................................ 79
Figure A.16 Task model for SCM software systems .......... 87
Figure B.1 Business area attractiveness-core competences-

portfolio (GEKKO)........................................ ............... 106
Figure B.2 Paradigm shift through TQM ................................ 109
Figure B.3 Three-level model of quality........................................ 111
Figure B.4 Components of Business Reengineering .......... 115
Figure C.1 Vertical and horizontal integration........................ 134
Figure C.2 Components of Efficient Consumer Response. 142
Figure C.3 VMI at Twentieth Century Fox........................................ 152
XXI
List of Figures
Figure C.4 Two-Step Cross-Docking........................................154
Figure C.5 Hybrid competitive strategies ........................................164
Figure C.6 Types of mass customization ................................169
Figure C.7 Cost growth curve ..................................................... ..170
Figure C.8 Time Postponement Strategies........................................175
Figure C.9 Sourcing toolbox................................................. .............177
Figure C.10 Modular sourcing............................................ ...........181
Figure C.11 Process for Realizing Global Sourcing........186
Figure C.12 Supplier Evaluation Matrix ........................................191
Figure C.13 Supplier development objectives ................................193
Figure C.14 Kanban ............................................ ............................197
Figure C.15 Example of a production Kanban ................................198
Figure C.16 Example of determining cumulative counts...204
Figure C.17 Load-based order release ........................207
Figure C.18 Supply chain heat map.................................................222
Figure C.19 Supply chain mitigation........................................ ..223
Figure C.20 E-commerce overview ........................................................232
Figure C.21 B2B in purchasing................................................. .................233
Figure C.22 Components of the Cognitive Supply Chain.........256
Figure C.23 Types of offshoring at a glance........................279
Figure D.1 Total cost of stockpiling ........................................296
Figure D.2 ABC and XYZ analysis integrated with types of material
procurement................................................. ................301
Figure D.3 Classification of marketability ........................................302
Figure D.4 Marketability of stocks.................................................304
Figure D.5 Reduction measures

slow-moving stocks................................................ ..305
Figure D.6 Range monitoring................................................. .309
Figure D.7 Consignment process ..................................................... ...316
Figure D.8 Inventory financing process.................................318
XXII
List of Figures
Figure D.9 Uÿproblem between freight costs and inventory

costs......................................... ............ 324
Figure D.10 Freight cost inventory cost portfolio (FREDI)... 326
Figure D.11 Modern last mile delivery methods. 333
Figure D.12 Hourglass Hub and Hinterland Hub ........................ 337
Figure D.13 Point-to-Point versus Hub-and-Spoke........................ 341
Figure D.14 Types of benchmarking........................................ 344
Figure D.15 Quality Function Deployment................................. 355
Figure D.16 Form of an FMEA (Incoming

Goods Inspection)........................................ .358
Figure D.17 Components of an RFID system ........................................ 365
Figure D.18 CIM architecture ............................................ ............. 378
Figure E.1 Cost tracking of material prices........................................ 398
Figure E.2 Cost tracking of freight costs................................. 400
Figure E.3 Cost Tracking of Inventory ........................................ 402
Figure E.4 Typology of relative ratios......................................... 405
Figure E.5 Example of Return Calculation

on investment................................................ ............. 408
Figure E.6 Improving ROI by reducing inventory .... 409
Figure E.7 Strategic and operational metrics................................. 411
Figure E.8 Performance and cost metrics ........................................ 412
Figure E.9 Structure of the key figure typology of a supply

chain......................................... ...................... 414
Figure E.10 Indicators of the key figure typology of a supply

chain ........................................ ............ 445
Figure E.11 Value driver tree over the

Economic Value Added............................................. 452
Figure E.12 Value driver tree on Return on

Capital Employed.................................................... 458
Figure E.13 Key figure radar of a supply chain......................... 461
Figure E.14 Hard (soft) analysis ........................................ ........... 467
XXIII
List of Figures
Figure E.15 Determination of the total target costs.................................470
Figure E.16 Target Cost Control Diagram ........................................476
Figure E.17 Activity-based costing ................................................ 483
Figure E.18 Dimensions of firm performance.........495
Figure E.19 Performance Management in Supply Chains.........498
Figure E.20 Supply chain scorecard according to Brewer/ Speh ..............502
Figure E.21 Supply Chain Scorecard

according to Stölzle/ Heusler/ Karrer ............................................503
Figure E.22 Supply Chain Scorecard

according to Weber/Bacher/Groll............................................ ..505
Figure E.23 Supply Chain Scorecard according to Richert.......................507
Figure E.24 Financial Perspective Strategic

Objectives and KPIs........................................ ........510
Figure E.25 Strategic objectives and KPIs from

the customer perspective ........................................ .....513
Figure E.26 Strategic goals and KPIs of the

process perspective ........................................ ......516
Figure E.27 Supplier Perspective Strategic

Objectives and KPIs ........................................518
Figure E.28 Strategic goals and KPIs of the

integration perspective ........................................521
Figure E.29 Supply Chain Scorecard according to Werner ........................522
Figure E.30 Supply chain scorecard strategic objectives and

metrics................................................. .......523
Figure E.31 Causal chain of a supply chain scorecard ............525
Figure E.32 Strategy map of a supply chain ............................533
Figure E.33 Interlocking of Scorecard and

Strategy Map in the Supply Chain.................................535
XXIV
sample blocks
List of example blocks
Example block a.1 Supply chain management in practice................. 31
Example block a.2 Total cost of ownership and maverick buying.... 43
Example block a.3 Bullwhip Effect................................................ ........... 49
Example block b.1 Shortening the time-to-market ........................ 119
example block b.2 Simultaneous Engineering...................................... 120
example block c.1 Supplier integration in Hambach ........................ 135
example block c.2 Resident Engineering ..................................... 137
example block c.3 Customer integration ................................................ .139
Example block c.4 Mass customization via the Internet......... 166
example block c.5 Postponement Example................................................ 171
example block c.6 Problematic Front-

End-Back-End Relationships........................ 231
example block c.7 Opportunities in B2C business ............................ 235
example block c.8 Specialist portal ................................................ ................ 237
example block c.9 Collaborative planning, forecasting and

replenishment......................................... ...... 240
Example block c.10 Virtual freight exchange ............................................ ... 241
Example block c.11 Tracking and tracing via GPS ................................ 245
example block c.12 Fourth-Party-Logistics-Provider............................ 246
Example block c.13 Courier, express and parcel services ........................ 247
Example block c.14 EÿFulfillment........................................ .................. 248
Sample Block c.15 Oil Rig “Deepwater Horizon”............................ 274
Example block c.16 Recycling in the network......................................... 278
Example block c.17 Recycling via Computer Aided Dispatching..... 279
Example block c.18 Recycling in the automotive industry ..................... 280
Example block c.19 Optimization of the utilization of means of transport......... 282
XXV
List of example blocks
Example block c.20 Example of Lifecycle Costing ................................ 287
Example block d.1 Decomposition of stocks................................. 297
Example block d.2 ABC analysis (example percentages) ...... 298
example block d.3 Supplier logistics center ..................................... 315
example block d.4 Reduction of set-up times................................. 323
example block d.5 Benchmarking................................................ ......... 345
example block d.6 Examples of Quality Function Deployment......... 351
Example block d.7 Quo Vadis RFID? .................................................. ... 374
Example block d.8 Advanced Planning and Scheduling..................... 388
example block e.1 Calculation of Net Operating Profit After Tax. 488
example block e.2 Calculation of Capital................................................ 488
example block e.3 Calculation of Economic Value Added ..................... 489
XXVI
term blocks
Index of the blocks of terms
Concept block AI Definition of Supply Chain Management ..........6
Term block A.II Areas in the Order-to-Payment-S ................................8
Term block A.III effectiveness and efficiency as well

Harmony of objectives of success factors ........................ 30
Concept block BI Four "Re's" of Business Reengineering......... 114
Block B.II Pioneer and follower management ..................... 118
Term block B.III Selected techniques of

Rapid prototyping................................................ .. 123
Concept block CI Possibilities of supplier connection............ 136
Block of terms C.II VMI and related terms....................................... 144
Block of terms C.III Customer relationship management and related

concepts........................................ 159
Block of terms C.IV Types of retrievals................................................. ........ 202
Block of terms CV Types of electronic marketplaces........................................ 236
Block of terms C.VI Strategies of recycling........................................ 277
Block of terms DI XYZ analysis ................................................ ............... 299
Terminology block D.II Types of material procurement......................... 300
Term block D.III Definition of the range of storage ........................ 306
Term block D.IV Reasons for carrying out consignment..... 311
Block of terms DP work plan ................................................ ................ 322
Block of terms D.VI Quality terms ................................................ ......... 349
Block of terms D.VII EDIFACT and ODETTE......................................... 361
Block of terms D.VIII EAN code and Global Commerce Initiative ....... 364
Block of terms D.IX MRP systems ........................................ ................ 385
XXVII
Index of the blocks of terms
Concept block EI Design to cost ................................................ ............ 469
Block of terms E.II Value Engineering and Value Analysis ................ 471
Term block E.III Basic formula of the Economic Value Added.............. 486
XXVIII
List of abbreviations and acronyms
abbreviation and
Acronym Directory
2PL .......................Second Party Logistics Provider
3PL .......................Third Party Logistics Provider
4PL .......................Fourth Party Logistics Provider

A2A......................Administration-to-administration ÿ
A2B......................Administration to Business
A2C ......................Administration to Customer
ABS.......................Anti-lock braking system

Act........................Actual
AEI .......................Automatic Equipment Identification
AFZ ......................initial cumulative quantity

AM .......................After Market
AMR.....................Advanced Manufacturing Research
APO......................Advanced Planner and Optimizer
APS......................Advanced Planning and Scheduling
AR........................Augmented Reality
Athena ................Applied Theories Enabling Network Excellence

ATP......................Available-to-Promise
B2A......................Business to administration
B2B .......................Business to Business
B2C......................Business to Customer
BDE ......................Production data acquisition
BGB ......................Civil Code
Bit ..........................Binary Digit
BMI......................Buyer Managed Inventory
BOA......................Load-based order approval
XXIX
BSE...................... Bovine spongiform encephalopathy

BTO...................... Built to order
Bud....................... Budget
C2A...................... Customer to Administration
C2B....................... Customer to Business
C2C ...................... Customer to Customer
c*........................... cost of capital

cd........................ Air resistance
CAD..................... Computer Aided Design

CADIS.................. Computer Aided Dispatching
CAE...................... Computer Aided Engineering
CAM ................... Computer Aided Manufacturing
CAP...................... Computer Aided Planning
CAO..................... Computer Assisted Ordering
CAQ..................... Computer Aided Quality Assurance
CH4 .....................Methane
CIM...................... Computer Integrated Manufacturing

CMI...................... CoÿManaged Inventory
CNC..................... Computerized numerical control
CO2 .....................Carbon dioxide
CPFR.................... Collaborative Planning, Forecasting and Replenishment

CPL ...................... Collaborative Planning
CPPS .................... Cyber-Physical-Production-System
CPS.......................Cyber-Physical-System
CR ........................ Continuous Replenishment
CRM.....................Customer Relationship Management
CRP...................... Capacity Requirement Planning
CSCW .................. Computer Supported Cooperative Work
CTP ...................... Capable-to-Promise
DCM .................... Demand Chain Management
Demantra ............ Demand Management
XXX
DESADV..............Despatch Advice
DFMA..................Design-for-Manufacturing-and-Assembling
EDI..................... .Remote data transmission

DIN ......................German industry standard
DNC.....................Direct Numerical Control
DRP......................Distribution Requirement Planning
DVD .....................Digital Versatile
EAN .....................European article number

EAS......................Electronic Article Surveillance
EBIS......................European Business Information Systems
EBIT......................Earnings before interest and taxes
ECR ......................Efficient Consumer Response
EDI .......................Electronic Data Interchange
EDIFACT.............Electronic Data Interchange for Administration,

Commerce and Transport
EDIT....................Dynamic Interoperal Track and Trace

EDL ......................External service provider
EEPROM .............Electrical Erasable Programmable Read Only Memory
EFQM...................European Foundation for Quality Management
EFZ......................Incoming cumulative quantity
ECG......................Electrocardiogram
ERM .....................Enterprise Relationship Management
ERP.......................Enterprise Resource Planning
ESP .......................Electronic Stability Program

EST .......................Electronic Sell Thru
EUL ......................Efficient Unit Loads
EVA ......................Economic Value Added
FAB.......................JIT call-off
CFC ..................chlorofluorocarbon
FOX ......................cf. TCFHE
FMAE...................Failure Mode and Effects Analysis
XXXI
R & D ..................... Research and Development
FREDI .................. Freight cost inventory cost portfolio
AGV...................... Driverless transport vehicles
P&L.................... Profit and Loss Account
GEKKO................ Business field attractiveness-core competencies-portfolio
GHz...................... gigahertz
GoB ...................... Principles of proper accounting
GPS ...................... Global Positioning System
HGB..................... Commercial Code
HRL ..................... High-bay warehouse
IFRS......................International Financial Reporting Standards
Incoterms............ International Commercial Terms
INVRPT............... Inventory Report
IoT........................ Internet of Things
ISO ....................... International Standardization Organization
IT.......................... Information technology
ITS........................ Internet Transaction Server
JiT......................... Just-in-Time
JiS ............................ Just-in-Sequence
KB........................ kilobytes
KEP ...................... Courier, express and parcel service
KHz...................... Kilohertz
AI.......................... Artificial intelligence
KLT ...................... Small load carrier
SMEs .................... Small and medium-sized companies
KPI ....................... Key Performance Indicators
KrW/AbfG........... Circular Economy and Waste Management Act
CIP...................... Continuous improvement process
LAB...................... delivery call-off
LCD......................Liquid Crystal Display
LLZ ...................... Supplier logistics center
XXXII
lmi ........................Performance menu induced
lmn .......................Service quantity neutral
LOM.....................Laminated Object Manufacturing

M€ ........................Million euros
MA .......................employees
MHz .....................megahertz
MIDAS.................Maintenance of Item, Display and Store Relationship
MIRS ....................Modular Integrated Robotized System
MIS.......................Management information system
MIT.......................Massachusetts Institute of Technology
MITI .....................Japanese Ministry of International Trade and Industry
MPA .....................Material price variance
MPS......................Master Production Scheduling
MRO.....................Maintenance, Repair and Overhaul (Operations)
MRP I....................Material Requirements Planning
MRP II.................Manufacturing Resource Planning
MTE......................Make to Engineer
MTO.....................Make to Order
MTS......................Make to stock
N2O..................... chlorofluorocarbon
NASA....................National Aeronautics and Space Administration
NC........................Numerical Control
NIAT ....................Net Income after Tax
NOPAT ................Net operating profit after tax
NOPBT.................Net operating profit before tax

NVE......................Number of the loading unit
ODETTE ..............Organization for Data Exchange by Teletransmission in

Europe
OEM.....................Original Equipment Manufactured Part
OES......................Original Equipment Spare Part
OLAP ...................Online Analytical Processing
XXXIII
Olk ....................... Outlook
OP ........................Operating Profit
ORDRSP.............. Pegged Orders
OSP ...................... On Screen Programming
P-3 analysis......... Position-3 analysis
PCF ...................... Product Carbon Footprint

PDF ......................Portable Data File
PMG..................... Performance Measurement Group
POP...................... Payment on production

POS ...................... Point of Sale
PPE....................... Property, Plant & Equipment
PPM ..................... Parts per million
PPS....................... Production planning and control
PRTM................... Pittiglio Rabin Todd & McGrath

PZK...................... Process costs
QFD ..................... Quality Function Deployment
sqm ........................ square meters
QM....................... Quality management
QR........................Quick Response
R&D ...................Research and Development
RAM ....................Random access memory
RAP...................... Prepaid expenses
RCO ..................... Real cost of ownership
RCS ...................... Roll cage sequencing
RECADV............. Receiving Advice
RFID.....................Radio Frequency Identification
RKW .................... Rationalization Board of the German Economy

ROA.....................Return on Assets
ROCE...................Return on capital employed
ROE......................Return on Equity
ROI......................Return on investment
XXXIV
ROM.....................Read Only Memory
ROTC ...................Return on Total Capital

ROS ......................Return on Sales
RPN ......................Risk Priority Number
SC ............................Supply Chain
SCC ......................Supply Chain Council
SCEM...................Supply Chain Event Management
SCM......................Supply Chain Management
SCOR Model......Supply Chain Operations Reference Model
SCRM...................Supply Chain Relationship Management
SF6 ....................... Sulfur hexafluoride

SILS ......................Supply-in-Line-Sequence
SLSRPT................Sales Report
SMI.......................Supplier Managed Inventory
SNP ......................Supply Network Planning

SPC......................Statistical Process Control
SRM......................Supplier Relationship Management

T€..........................thousand euros
TBO ......................Total benefit of ownership
TCO......................Total Cost of Ownership
TCFHE.................Twentieth Century Fox Home Entertainment
TQM.....................Total Quality Management

TV........................Television
UHF......................Ultra High Frequency

USA......................United States of America
US GAAP ............United Stated General Accepted Accounting Principles
VDI.......................Association of German Engineers

VDA .....................Association of the Automotive Industry
VfW......................Association for material recycling

VIA.......................Group Initiative Automobile
VMI ......................Vendor Managed Inventory
XXXV
VOD..................... Video on Demand
VTW..................... Distribution channels
WACC.................. Weighted Average Cost of Capital
WIP ...................... Work in Process
WM ...................... Warehouse Management
WWF..................... World Wildlife Fund
XML..................... Extensible Markup Language
YE........................Year End
YTD......................Year to Date
XXXVI
Learning objectives and approach

A.1
A Basics
A.1 Learning objectives and approach
Supply chain management (SCM) has been ubiquitous in theory and "It's a hot thing
practice for quite some time. More and more organizations are trying and it's getting
hotter..."
to introduce supply chain management, primarily because of the high
potential for rationalization attributed to the concept. IBM, for example,
was evidently able to achieve cost savings of around seven within
one fiscal year by sustainably streamlining value-added activities
achieve billions of US dollars (cf. Wannenwetsch 2005, p. 1). Wal-
Mart, the world's largest department store group, sees opportunities
to reduce costs by around 25% by optimizing the supply chain.
Furthermore, the consulting company PRTM assumes that supply
chain management has the following potential for improvement (cf.
Becker 2004, p. 86; similar to Poluha 2016, p. 87):
criteria potential for improvement
stocks 50% to 80%
delivery reliability 10% to 25%
Decrease in overdue orders 70% to 90%
Reduction of order processing time 40% to 75%
overhead reduction 10% to 30%
Shortening of the manufacturing cycles 30% to 90%
Even if such figures should always be treated with great caution, The money is in the
process!
because these values only apply ceteris paribus (how can it be
determined with certainty that these improvements are exclusively
attributable to supply chain management?), it seems certain:
© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 H. 1

Werner, Supply Chain Management,
https://doi.org/10.1007/978-3-658-32429-2_1
basics
A
The approach owes immense optimization potential. Apparently, the
money is no longer in purchasing (according to a long-established
thesis of business administration), but in process improvement and
in the forced management of internal and network-oriented interfaces
of companies.
With the pole in In its wake, supply chain management pulls a number of other
poking fog approaches with it. However, it is seldom clear what is behind the
buzzwords. The references to a concrete application of the concepts
also remain mostly nebulous. The present document addresses this
problem. This book attempts to provide an answer to the question of
how companies can leverage the potential for improvement that is
inherent in supply chain management. A large number of examples
are used, which help to better understand the following explanations.
Structure of the First of all , the basics of supply chain management are to be
text in five sections presented in this chapter A. Section B describes the influence of
modern management concepts on the design of the supply chain. In
this regard, market and resource focus, total quality management,
business reengineering and time-based competition are described.
Strategies must be formulated for the use of these concepts. In
Chapter C , a dedicated identification of strategies that are important
for supply chain management is made. These can be divided into two
groups: on the one hand in supply strategies such as Efficient
Consumer Response, sourcing approaches or newer procurement
concepts. On the other hand in strategies of disposal and recycling.
Various instruments are required to implement these strategies,
which are described under the main section D. Possible supply
chain management tools include measures to reduce inventory and
freight costs, instruments for improved information gathering and
forced quality assurance. Section D also makes it clear which IT
systems and digital solutions support supply chain management.
Finally , section E contains essential aspects of controlling modern
supply chains. This chapter refers to newer controlling approaches.
Figure 1 reflects the structure of this document.
To deal with the In the following, each chapter is preceded by its learning objectives
book and the processing procedure . In marginalia the weÿ
2
Supply chain management: history and concept

A.2
essential content highlighted. The central terms used are clearly
summarized in a glossary. Many examples from practice underline
the theoretical elaborations. At the end of the outline sections there
are also respective comprehension questions.
The learning objective and the procedure of chapter A consists in learning goals and
distinguishing the supply chain management from different supply method

approaches (purchasing, materials management and logistics) as
well as modern management concepts. First, the historical
development of supply chain management is described. Then the key
terms of the approach need to be clarified. Furthermore, typification
possibilities and development stages of supply chains are to be
discussed as well as their origin motives. Finally, this chapter contains
primary strategy types, network types, material flow analyzes and
design models within the supply chain.
A.2 Supply chain management: history

and concept
A.2.1 General characterization

The roots of supply chain management lie in the USA. Anglo-American SCM: A
consultants coined the term in the early 1980s (cf. Houlihan 1985; practical term
Jones/Riley 1985). Especially Oliver and Webber (cf.
Oliver/ Webber 1992) are to be mentioned as practice-oriented
protagonists of supply chain management. Theory took up the
concept in the late 1980s, again initially in the United States. Among
the pioneers of a theoretical consolidation of the term are Bothe
1989, Copra/ Meidl 2008, Christopher 2004, Davis 1993, Ellram/
Cooper 1990 and 1993, Fawcett et al. 2006, Fisher 1997, Hewitt
1994, Macbeth/ Ferguson 1993, SimchiÿLevi et al. 2007, Stevens
1989 and Towill 1996. In Germany, supply chain management was
established in theory and practice in the mid-1990s. In Germany,
scientific work in this field has increased in recent years.
3
basics
A
Figure A.1 structure of the script
Chapter A
basics
figures/
key
Performance
SC
Chapter B
Influence of management concepts on supply

capital
Working
chain management
Market/ Business Time based

TQM
EVA
resources reengineering Competition
Chapter C
Supply chain management strategies
litigation
costs
Strategies for
strategies of care
Controlling
supply
chain
the
of
disposal and
recycling
costing
target Chapter D
Supply chain management tools
Instruments for
stand reduction
Instruments for reducing Instruments for gathering

analysis
(soft)
hard freight costs information
Chapter
E
Quality assurance tools Instruments for IT

Support
4

A.2
Within the framework of a conceptual clarification of supply chain From the source of
management, the above-mentioned authors sometimes differ Supply by
significantly (cf. on the definition of the term Otto/ Kotzrab 2001, p. Point of
157ff. and section A.2.2 of the present publication). For example, for consumption
Towill (cf. Towill 1996, p. 15ff.), supply chain management means the
linking of systems for order processing. Fisher (cf. Fisher 1997, p.
105ff.), on the other hand, sees a supply chain primarily as a sales
channel that connects the production sites with their customers.
Harrington is quite different (cf. Harrington 1995, p. 30ff.): He
describes supply chain management as a structure for processing
combined material and information flows. For Stevens (cf. Stevens
1989, p. 3ff.), the supply chain extends from the "source of supply" to the "point of consumption".
Finally, for Ellram and Cooper (cf. Ellram/Cooper 1990, p. 1ff.), supply
chain management means the linking of value-added processes.
Regardless of the differing conceptual clarifications, it seems generally value chain as

accepted that in supply chain management, based on Michael E. original
Porter ’s value chain (cf. Porter 2006; Porter 2013; Porter 2014), the jump source
idea of integrating corporate activities is picked up. In principle, the
added value measures the services provided by a company less any
preliminary and third-party services rendered. While the individual
areas have so far been largely detached from each other, in supply
chain management the potential for improvement at the interfaces –
both within the company and via networks – is revealed.
A supply chain management extends over complete company lowering of

networks. The cooperative network of partners spans several vertical transaction costs
levels, understood as a "supplier-manufacturer-customer association". in networks
A large number of activities take place in this value chain. An
important goal is to reduce the transaction costs within the entire
supply chain through a comprehensive cost analysis. Transaction
costs are incurred for consecutive activities (see p. 46 for details on
transaction costs).
In order to coordinate the processes, institutional regulations for the
exchange of goods and services are specified between the partners
involved. When it comes to minimizing transaction costs, the choice
of organizational form, the specification of the processes and the
degree of uncertainty are relevant levers. In particular by the
rapid developments in the field of information technology
5
basics
A
(IT), the exploitation of cost reduction potentials is promoted via
optimized transactions.
Interactions A uniform understanding of supply chain management has not yet
between the prevailed. This may be due in particular to the fact that the approach
actors
has its roots in corporate practice. However, it seems generally
accepted to use all goals and derived actions of the supply chain to
secure and improve the flow of goods and values in competition.
The components within a supply chain do not represent an

unconnected juxtaposition . Rather, they relate to the entire value
chain: from delivery, through production and sale, to disposal or
recycling. In addition, the interpersonal relationship between the
partners involved plays a special role in the handling of cooperative
business processes. Bonding, trust, transparency and loyalty are
important factors to improve the relationships between the actors
(social level of the supply chain).
SCM explicitly The accompanying cash flows are also taken into account. These
considers are cash flows, such as invoicing as part of order processing or
financial flows
customer and vendor payments. In principle, the longer the payment
period, the greater the need for financing. In the case of a payment
on target, pre-financing has to be carried out, which leads to
opportunity costs because the tied-up money cannot be used
profitably.
Explanation of terms The explanation of terms used in this document is derived from the
of the present elementary content of supply chain management described above .
Writing This essentially refers to the definitions by Ellram and Cooper (cf.
Ellram/Cooper 1990, p. 1ff.) and by Harrington (cf. Harrington 1995,
p. 30ff.), but extends them considerably. The definition is deliberately
granular and is reproduced in block AI.
Concept block AI Definition of supply chain management
Supply chain management extends from the source of supply to the point of consumption.
It includes material, information and money flows along the entire value chain (supply,
disposal, recycling) and also takes into account the relationships between the actors (social
level of the supply chain).
6

A.2
Colloquially, supply chain activities can be understood as the management Modern supply
of modern supply chains . As has become clear, according to Stevens chain management
(cf. Stevens 1989, p. 3ff.), they range from the “source of supply” to the
“point of consumption”. On the one hand, supply chain management refers
to the processes within a company (internal supply chain). On the other
hand, supply chain management extends to the interlocking of this
organization with its environment (supply chain network). Figure A.2
underscores this connection.
ÿ Internal company supply chain: The reference point of the internal supply chain Example of
depends on the vertical integration of a company. an internal supply
In Figure A.2, the supply chain refers to an assembly company. For a Chain
manufacturing organization or a service provider, the elements of the chain would
have to be modified with regard to their specifics. In this example, the internal
supply chain includes the following stages: incoming goods, high-bay warehouse,
order picking, pre-assembly, interim storage, final assembly and shipping. An
upstream area supplies its downstream one. The physical flow of goods runs in
this direction. The added value increases in stages from left to right.
ÿ Company-integrated supply chain: An integrated (network-oriented) supply chain supply chain in

is positioned at the external interfaces of a company. In the entrance area network
(“inbound”), this organization is dovetailed with its suppliers. The company is
connected to its customers in the goods issue (outbound). The "suppliers of the
suppliers" and the "customers of the customers" are also included in this network.
In other words, an integrated supply chain encompasses all activities in the
network of actors. It ranges from the last tier supplier to the ultimate end user.
The process within supply chain management follows an “order-to- representation about that
payment-S” (cf. Klaus 2012, p. 457ff.; Werner 2013a, p. 10). Figure A.2 Order-to-Payment-S
shows the basic principle of the concept. There are three different areas
within the chain. Both the internal and the integrated supply chain are
included in the order-to-payment-S (cf.
block of terms A.II).
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basics
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Block A.II Areas in Order-to-Payment-S
ÿ Area 1: The first area runs upstream, from right to left. A customer submits
an order to the company (pull orientation). The interfaces between the
partners are ensured by the planners, with the delivery (LAB) and JIT
call-offs (FAB) regulating the process. The construction numbers to be
manufactured are determined via the call-offs . The dispatcher makes
his information available to the purchasing department, which ensures
that the goods are replenished.
ÿ Zone 2: The physical flow of material is left to right (downstream). The

fulfillment of the customer order is the focus. The delivered parts are
accepted in goods receipt. After they have been stored and commissioned,
they are assembled. An upstream location supplies its respective
downstream location.
The added value increases step by step until the finished goods are
delivered to the customer.
ÿ Area 3: The goods are ultimately to be paid for by the customer (upstream
payment). This area describes the cash flow. In addition, disposal and
recycling proceed from right to left. The last two components are
becoming increasingly important, particularly due to ecological and legal
aspects (cf. Green Supply Chains on p. 271).
A.2.2 Types and stages of development

of supply chain management
Systematization Some options for typifying different approaches to supply chain

of supply chains management are discussed below.
In this regard, the concept according to Bechtel and Jayaram (cf.
Bechtel/ Jayaram 1997, p. 15ff.) that knows four different schools of
thought of supply chain management. Then the typologies according
to Otto (cf. Otto 2002, p. 89ff.) and Göpfert (cf. Göpfert 2004, p. 25ff.)
are characterized. Furthermore, the formative four development
stages of supply chain management are to be described in more
detail.
8th

A.2
Order-to-Payment-S in the supply chain Figure A.2
External External
Internal supply chain
supplies supplies
(throughput)
Chain Chain
(inputs) (Output)
order
WE HRL KOZ VM ZL EM VS
payments
procurement logistics
Delivery Customers
production logistics
distribution logistics
Disposal/recycling logistics
information logistics
logistics controlling
Legend: WE = incoming goods ZL = interim storage

ÿ ÿ
HRL = high-bay warehouse EM = final assembly

ÿ ÿ
KOZ = picking zone VS = shipping
VM = pre-assembly
A.2.2.1 Types of Supply Chain Management
A.2.2.2 Bechtel/ Jayaram typology
According to Bechtel/ Jayaram (cf. Bechtel/ Jayaram 1997, p. 15ff.), schools of thought of
attempts to explain supply chain management can be classified into supply chains
four different schools of thought . In this regard, you name Chain
Awareness, Linkage School, Information School and Integration School.
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Approaches to ÿ Chain awareness: The chain awareness approach is broad.
Consciousness According to this concept, the network includes all activities from the
extraction of raw materials to the ultimate end user.
Stevens, for example, belongs to the chain awareness school of thought (cf.
Stevens 1989, p. 3ff.). As shown above, for him a supply chain extends from
the “source of supply” to the “point of consumption”.
"One step ÿ Linkage School: According to the Linkage School, supply chains represent
before, more logistical relationships and connections between the organizations involved.
after: Make the The focus of these considerations relates to transport decisions. Simchi-Levi
is one of the best-known representatives of this school : “The supply chain,
connection..." (The Stars) which is also referred to as the logistics network, consists of suppliers,
manufacturing centers, warehouses, distribution centers and retail outlets,
as well as raw materials, work -in-process inventory, and finished products
that flow between the facilities." (SimchiÿLevi et al. 2007, p. 1).
Bidirectional ÿ Information School: This third way of classifying supply chain management
flow of information approaches emphasizes a bidirectional flow of information between the
actors. The Information School
belongs to Bowersox , for example: "Supply chain management is a
collaborative-based strategy to link cross-enterprise business information to
achieve a shared vision of market opportunity." (Bowersox 1998, p. 181).
Business ÿ Integration School: Finally, the Integration School relates supply chain
integration management to a process and system view. Cooper et al. represent important
representatives of this school of thought: "The integration of business
processes across the supply chain is what we are calling supply chain
management." (Cooper/Lambert/ Pagh 1997, p. 2).
A.2.2.3 Otto 's typology

typing according to A second typification alternative of supply chain management goes
Otto back to Otto (cf. Otto 2002, p. 89ff.). The author differentiates
according to value creation process, group of companies, network of
vertically allied partners and super organization. The supply chain
typology according to Otto is characterized in more detail below.
value networks First of all, supply chain management can be identified as a value-
added process . This includes any form of work-sharing creation of
material products. "The term supply chain is used to the chain linking
each element of the production and the supply proÿ
10

A.2
cess from materials through to the end customer. Typically such a chain
will cross several organizational boundaries.” (Scott/Westbrook 1991, p.
23). The individual partners in this chain act largely independently of
one another. The value chain can be internal or generic (cf. Otto 2002,
p. 92ff.).
ÿ On the one hand, supply chain management will extend to the internal intra company
value-added process . Then the supply chain includes all value- Consideration
adding activities within an organization (“intra-company”): “The supply
chain management is a business process.” (Hewitt 1994, p. 2).
ÿ On the other hand, supply chain management aims at generic value Network-oriented
creation processes. This means generally applicable, modular, value chain
reconfigurable supply activities of organizations. The Order-to-
Payment-S, which serves to clarify the concept of this document, is
also assigned to this segment, as is the SCOR model (see p. 70).
The group of companies forms a further frame of reference for the Handle actions in
typology of supply chain management . "A supply chain ... comprises all the group of
companies that participate in transforming, selling and distributing the companies
product from raw material to final customer." (Chow et al. 1994, p. 22).
The actors within this chain usually take over clearly defined value
creation content (so-called business functions), which are characterized
by their functional difference: "Supply chain management extends this
concept of functional integration beyond the firm to all the firms in the
supply chain.” (Ellram/Cooper 1990, p. 1).
According to Otto (cf. Otto 2002, p. 96), supply chain management is to Vertical allies
be understood as a network of vertically allied companies if the partner
individual actors have certain attributes within the framework of their
cooperation. These features include "common strategies", "cooperative
cooperation" or "shared responsibility": "A network of connected and
interdependent organizations mutually and cooperatively working
together to control, manage and improve the flow of materials and
information from suppliers to end-users .” (Christopher 1999, p. 19).
Another representative of this point of view is Swaminathan: "Supply
Chain Management ... as a network of autonomous or semiautonomous
business entities collectively responsible for procurement, manufacturing
and distribution activities associated with one or more families or related
products." (Swaminathan et al. 1998, p. 607).
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basics
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“This is the new Finally, supply chains can be described as super organizations when they are
game. It's 'all no longer legally independent entities, but unitary organizations ("Extended
against all'…” Enterprise" or "Extra Corporate Organization"): "We are now entering the era of
supply chain competition. … real competition is not company against company
(German American
but rather supply chain against supply chain” (Christopher 1999, p. 28).
friendship)
A.2.2.4 Typology according to Göpfert

Two groups of The typification of explanatory approaches to supply chain management
supply chains according to Göpfert (cf. Göpfert 2004, p. 25ff.) assigns these to two generic
groups. The differentiation criterion according to Göpfert is the direct connection
to logistics (first group) and the indirect connection to logistics (second group).
SCM as advanced The first group of the typology according to Göpfert (cf. Göpfert 2004, p. 28)
logistic function derives the term "supply chain management" with explicit reference to
operational logistics . The terms “supply chain”, “supply chain” and “logistics
chain”, which are used synonymously for supply chain management, can be
found in this segment. Some authors even equate the terms supply chain
management and logistics, according to Simchiÿ Levi: we do not distinguish
between logistics and supply chain management.” (SimchiÿLevi et al. 2007, p.
"...
3). Handfield/Nichols also fall into this category of attempts to explain supply
chain management : “Supply chain management … all activities associated with
the flow and transformation of goods from raw materials stage … through the
end user, as well as the associated information flows.” (Handfield/Nichols 1999,
p. 2).
SCM in the Zero In the second group of conceptual clarification approaches to supply chain
Based variant management, there is no direct reference to logistics . A supply chain is
equated with “management of business processes”, “cooperation management”
or “relationship management”: “The integration of all key business processes
across the supply chain is what we are calling supply chain management.” (Cooper
et al . 1997, p. 2). According to Göpfert , some of these approaches are quite
far removed from the actual core content of supply chain management. In
addition, in this second group, supply chain management is closely linked to the
development process of logistics (cf.
Göpfert 2004, p. 30).
12

A.2
A.2.2.5 Development stages of supply chain management
According to Baumgarten, supply chain management has gone Historical
through four elementary stages of development (cf. Baumgarten development
2012, p. 54ff.). These range from the integration of the functions of
internal supply chains (level 1), an exchange of information between
customers, suppliers and logistics service providers (level 2), the
collaborative management of complete networks (level 3), to the
synchronization and reduction of internal or external ones Supply
Chains (Tier 4). Below is a description of the content of this phase
model (cf. Baumgarten 2012, p. 55ff.). Figure A.3 shows these
development stages in a clear manner.
ÿ Stage 1: Integration of internal supply chain functions. At the beginning of integrations in

the 1990s, attempts were made to interlink the different internal functional areas partner network
(purchasing, sales, technology, finance or production). For example, it was the
task of the sales department to pass on change requests from customers to the
other functional units without delay.
For this purpose, process chains were set up, which resulted from the
company's internal activities.
ÿ Level 2: Exchange of information between customers, suppliers and service value networks
providers. In the mid-1990s, organizations intensified their exchange of
information with customers, suppliers and service providers. To do this, they
used the possibilities of modern IT (e.g. web solutions). The actors forged value
creation alliances to exploit synergetic potential . System suppliers stood out
from this network of relationships (cf. Modular Sourcing, p. 180). A new era
also began for logistics service providers. You have been given far more
responsibility. They managed supplier logistics centers (LLZ) or consignment
warehouses. They were also integrated into electronic credit memo procedures
or purchasing card systems. Many of today's observable supply chain processes
in corporate practice are in this stage.
ÿ Stage 3: Collaborative management of complete networks. Based on the Simultaneous planning

results of the second phase, attempts have been made since the beginning of replaces successive
this millennium to channel information in real time through the network of actors planning
involved. For example, there were short-term and unforeseeable changes in
customer call-offs. These had an immediate effect on capacity and resource
planning in production (the shifting of
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order sequences). To solve this problem, systems in the sense of Advanced
Planning and Scheduling (see p. 386 for details) were used. This includes
simultaneous planning concepts that ensure the continuity of the information
flow. A number of organizations are currently attempting to implement these
systems.
Fit for Supply ÿ Stage 4: Synchronization and reduction of internal and external supply
Chain Future! chains. Best practices have already reached the fourth level of supply chain
management. E-business plays a central role in this context. In some cases
there are huge networks in which thousands of actors are involved. These
supply chains are characterized by a high level of complexity, complexity and
lack of transparency. In terms of the virtual community, customer requests
are forwarded to suitable development partners at an early stage (see "Resident
Engineering" on p. 137). Electronic procurement (e-procurement) and electronic
inventory management (e-fulfilment) are important levers of these networks. IT-
supported congestion management has gained in importance, as has electronic
after-sales service. The coupling systems for procurement, production and
sales are of particular importance. The forecasting of the production program
is triggered via different digital platforms that work with huge amounts of data
(big data). Customer orders are entered online by networked dealers in order
to receive an automatic update of the sales forecast. Predictive analytics
provides important services here by comparing historical figures and trends
with current orders. The production program is derived directly from this
information. The available capacities are compared in the intelligent factory
(“Smart Factory”, cf. p. 250 of this publication) without human intervention.
Customer orders are entered online in the order calendars of the actors. The
consequences are direct production planning in the connected plants. Customer
requirements are promptly passed on to upstream stages of the supply chain.
This gives suppliers the opportunity to adapt their value-added activities as

early as possible. Finally, availability planning takes place in the spirit of
“capable-to-promise”. This is an elementary requirement in order to be able to
inform the customer of a binding delivery date ("available-to-promise").
14
Distinction from related concepts

A.3
Development stages of supply chain management Figure A.3
Synchronization of internal
and external supply chains
Collaborative management
of complex processes
Exchange of information
(customers, manufacturers, suppliers)
Functional integration
of internal supply chains
1990 1994 1998 2002 2006 2010 2014 2018 ...
A.3 Differentiation from related concepts

In recent years, the terms network sourcing, value stream Conceptual
management or supply pipeline management have been coined consolidation
as synonyms for supply chain management (cf. on these terms

Croom et al. 2000, p. 67). However, these additional designations do
not create any real added value for supply chain management. On
the contrary, they tend to add to the confusion and are therefore not
considered in more detail below.
A demarcation of supply chain management from neighboring Traditional and
modern approaches
concepts can still be made. This differentiation initially extends to the
traditional terms purchasing, materials management and logistics.
Then the supply chain management is differentiated from modern
approaches.
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basics
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A.3.1 Distinction from traditional terms
conventional The demarcation of supply chain management from purchasing,
Deployment materials management and logistics is fluid. All terms correlate with
Approaches
the management of modern supply chains and include the provision
of goods (cf. Hess 2017, p. 51). The activities and objects between
purchasing, materials management and logistics partially overlap (cf.
Arnolds et al. 2016; Hess/ Laschinger 2019; Large 2013).
Strategic and ÿ Purchasing: Purchasing can be divided into a strategic and an operational area, whereby
operational purchasing the transitions are not clearly defined. The activities of operational purchasing are of a
processing nature and geared towards increasing purchasing efficiency . An ideal-
typical operational purchasing process includes the work steps of disposition
notification, determination of requirements, order processing, deadline tracking, invoice
comparison as well as deadline, quantity and quality monitoring. Strategic purchasing,
on the other hand, aims to optimize purchasing effectiveness. Thus, the activities of
strategic purchasing are primarily long-term. Such a process includes the phases of
supply identification, procurement market research, inquiry and tender, price negotiation
and offer evaluation, contract conclusion and performance measurement (purchasing
performance). Purchasing in general is also equated with the term "supply
management", strategic purchasing in particular with "procurement management".
Materials ÿ Materials management: Materials management includes the economical handling of

management as a subsystem goods and is broader than purchasing. It includes warehouse management, internal
supply chain transport and material supply, which extends to provision in production. Supply chain
management performs the same activities as materials management. However, it is
significantly more extensive because the company's internal chain covers all areas –
from goods receipt to shipping. In addition, supply chain management takes into
account the external interfaces (suppliers and customers) as well as money and
information flows.
Physical space and ÿ Logistics: Logistics primarily deals with the physical flow of materials (the availability of
time bridging goods) within the company and between an organization and its environment. The
function of functions of space and time bridging are the focus. Supply chain management uses
logistics traditional logistics for physical transaction processing, but goes well beyond that (cf.
section A.3.2.2).
16

A.3
A.3.2 Differentiation from related
management approaches
In recent years, a number of related concepts have developed Modern
around supply chain management. The following related approaches management concepts
are to be distinguished from supply chain management: value chain,

logistics chain, demand chain management, customer relationship
management, supplier relationship management, relationship
management and supply chain relationship management. Below is a
brief description of these approaches.
A.3.2.1 Value chain

Due to its integration concept, supply chain management is based on Porter as driving
Michael E. Porter ’s value chain (synonymously called value chain ) power of the market
Based View
(cf. Porter 2006; Porter 2013; Porter 2014).
According to Porter, organizational processes are to be understood
as the result of value-adding activities. The primary activities of the
internal value chain include inbound logistics, operations, marketing
and sales, outbound logistics and customer service. These are
surrounded by the infrastructure, human resources, technology
development and procurement functions. However, Michael E. Porter
neglects other supporting areas (such as treasury, finance or the
legal department) . According to Porter , differentiation or cost
advantages over the competition are based on optimizing the internal
value chain. When building this interdependence relationship, it is
necessary to question what value the organizational activities create
and how their costs are determined (cf. Porter 2014, p. 25).
Porter also refers to the cross-company value chain (cf. Porter Inclusion of
determinants of
2014, p. 60). The internal value chain of companies is interwoven
market
with upstream and downstream networks of external partners. In the
entrance area there are interdependencies with suppliers. Exist with
sales channels and customers
outgoing links.
The demarcation between supply chain management and the value demarcation to
chain can be seen in the fact that the first approach focuses on the supply chain
aspects of supply, disposal and recycling. Supply chain management management
involves the physical availability, disposal, use, or disposal of goods,

with these activities being surrounded by flows of information and
money. In a value chain
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In contrast, all value-enhancing and value-destroying influencing
factors on corporate performance are reflected in the functional chain.
This includes, for example, aspects such as design or image.
However, these variables are only of secondary importance for supply
chain management.
A.3.2.2 Logistic chain

attributes of A logistics chain is simultaneously geared towards process and
logistic chains customer orientation. A logistics chain usually manifests itself in
several stages: from the original production, through the transformation
and transfer activities, to the end consumer. The following features
characterize a logistics chain (cf. Klaus/ Krieger 2012, p. 359):
subordinates ÿ Logistics follows a horizontal view of activities that primarily serve to bridge physical
meaning of space and time. In contrast to supply chain management, information flows are
cash flows nevertheless important, but cash flows play a role in logistics
chain only a supporting role.
Structural ÿ A logistics chain must always be viewed as a whole , because the actors involved
organizational integration are involved in a network of constant interactions. The individual elements are
lined up in such a way that they are in a strict, logical context in terms of process
organization (cf. Schulte 2017, p. 281).
Internal and ÿ Sequences of supplier-customer relationships can be identified within the logistics
external customer reviews chain. In addition to satisfying the wishes of ultimate end users, the requirements
tion of internal customers (intercompany relationships) must also be satisfied in this
regard.
"What use are Compared to the logistics chain, supply chain management is a
the best much more comprehensive concept. While a logistics chain aims at
concepts and the internal and external horizontal interlocking of company areas
clever logistics if only with directly connected suppliers and customers, supply chain
the trucks get management includes complete vertical networks; thus also the
stuck in traffic
interaction with the suppliers of the suppliers and with the customers
jams?" (D. Aden)
of the customers. In doing so, the supply chain management makes
use of traditional logistics functions (procurement, production,
distribution, information and disposal logistics) to carry out the
activities of supply, disposal and recycling.
18

A.3
A.3.2.3 Demand Chain Management
Demand chain management is also referred to as a “chain of Chain of customers
customers” or “demand collaboration” (cf. Eagle 2017; Jansen/
Reising 2001; Marbacher 2001). Demand chains focus on the
customer (consistent pull orientation). In most cases, customers are
the ultimate end consumers (B2C processing). However, institutional
links between manufacturers and downstream distributors can also
be described with the term "demand chain management" (B2B or
B2A processing).
Marbacher (cf. Marbacher 2001) carries out the explicit merging of demand and
supply and demand view in a "demand and supply chain Supply in step
management". This approach subsumes well-known content such
as category management or customer relationship management. At
its core, Marbacher's thoughts are based on the principle of
collaborative demand. Zentes et al. attribute a mutual condition and
support to the integrated “demand and supply chain management” (cf.
Zentes et al. 2004, p. 53).
In contrast to supply chain management, demand chain management demarcation to
focuses primarily on the customer. Supplier attributes are covered SCM
only secondarily, if at all. In the present document, a separation
between supply chains on the one hand and demand chains on the
other hand is not further pursued. After all, the term "supply chain
management" has established itself in theory and practice and can
be regarded as fixed. The mere "empty phrase" demand chain
management therefore does not create any real added value.
A.3.2.4 Customer Relationship Management

Customer relationship management represents the planning, Bind profitable
management and control of all measures of a company aimed at customers in the long term
current and potential market partners, combined with the goal of
intensifying customer relationships (see p. 159 in detail). With the
help of modern information and communication systems, the aim is
to establish lasting interactions with selected customers (cf. Bruhn
2016; Hippner et al. 2011; Kumar/ Reinartz 2018; Raab/ Werner 2010).
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functionalities of
The functionalities of customer relationship management are
the customer
communicative, operational and analytical. In communicative
Relationship customer relationship management, the synchronization of all
Managements
communication channels in the direction of the customer (Internet, e-
mail, telephone or sales talk) manifests itself. Operational customer
relationship management is characterized by the merging of front
office (point of contact with the customer) and back office (IT-
supported implementation systems such as ERP or APS solutions) .
Finally, the analytical customer relationship management is due to
the recording and later evaluation of customer contacts and customer
reactions. For example, complaints must not be allowed to trickle
away. They are to be tracked systematically from their occurrence to
their solution ("closing the loop").
Share of wallet The change from transaction marketing to genuine relationship
over intensive marketing is characteristic of customer relationship management . In
customer relationship order to harvest the "share of wallet", not only individual transactions
gene
have to be carried out, but rather stable customer relationships have
to be initiated and intensified. Consequently, their respective customer
value is decisive for the selection of market partners . In order to
maximize customer value over the long term, additional incentives
should be added to the direct benefit, which encourage the buyer to
continue the business relationship (“relationship equity”).
Collaborative CRM A traditional customer relationship management can be extended to
and relation to a collaborative customer relationship management . By this,
supply chain Kracklauer et al. (cf. Kracklauer et al. 2002, p. 24) the joint acquisition,
formation and further development of customer relationships. All
stages of sales generation are to be included in such collaborative
processes (industry, trade and customers).
In contrast to supply chain management, upstream activities of the
suppliers are not taken into account in this regard.
For collaborative customer relationship management, the bundling of
the know-how of the actors and the coordinated use of marketing
measures dominate (cf. Hertel et al. 2011, p. 189). For collaborative
customer relationship management, the interface to supply chain
management is primarily to the logistics and marketing tools (category
management) of Efficient Consumer Response: For example, bundled
sales promotion activities directly at the point of sale (cf. p. 157).
20

A.3
A.3.2.5 Supplier Relationship Management
Supplier relationship management (cf. O'Brien 2018) includes all Suppliers as
activities related to supplier selection, supplier development and real value-
supplier integration. Supplier management is fed by the operational adding partners
and strategic design of procurement processes. The primary goals of
supplier relationship management are to optimize relationships with
suppliers, reduce process costs, lower purchase prices, improve
product quality and continuously monitor purchasing activities (cf.
Appelfeller/Buchholz 2010, p . 3).
Consequently, supplier relationship management represents a section demarcation to

of supply chain management. The approach pursues an improvement SCM
in incoming supplier flows. On the other hand, supplier relationship
management completely ignores downstream customer relationships.
The counterpart to supplier relationship management is customer
relationship management (cf. Hildebrand 2002, p. 3).
According to Appelfeller/ Buchholz (cf. Appelfeller/ Buchholz 2010, p. characteristics
9ff.), the general characteristics of supplier relationship management

are the supplier base (geographical structure, number of suppliers),
vertical cooperation intensity (scope of value creation), material group
(standardization, quantity bundling) and horizontal cooperation intensity
(partnership). Process-related features, on the other hand, relate to
the creation of the contract (tenders, price negotiations) and the
operative procurement model (for materials and services).
An interesting field of activity for the competition is currently emerging IT support

in the context of supplier relationship management. For example, with
“mySAP Supplier Relationship Management”, SAP offers its market
partners corresponding software . It goes without saying that SAP can
provide the consulting for this software at the same time.
A.3.2.6 Relationship Management

Relationship management describes the coordination of models and Social factors and
measures of vertically operating companies, combined with the claim psychological
to maintain the relationship and expand it for mutual benefit (cf. implications
Rentzsch 2012). The focus of relationship management is on social
factors and psychological phenomena (cf. Wiedmann/ Dunz 2000,
p. 46f.).
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demarcation to Relationship management is a subsystem of the supply chain, with
supply chain a focus on interpersonal and interorganizational relationships (“soft
factors”). This relationship network of actors is characterized by
security and trust, informal communication, cooperative as well as
competitive behavior patterns (cf. Krupp/ Klaus 2012, p. 64ff.).
increasing For supply chain management, the explicit consideration of

meaning softer relationships represents a fairly new challenge. However, emotional
factors for one ties to suppliers, dealers, distributors or customers are difficult to
supply chain measure and are subject to a high degree of subjectivity.
Nevertheless, human-to-human relationships within the supply chain
are always of great importance. An example of this is the buyer-seller
relationship between customer and supplier. While the investigation
of these influencing factors within business administration was
previously left to marketing and company management in particular,
in the future supply chain management will also focus on the
optimization of social factors.
A.3.2.7 Supply Chain Relationship Management

SCRM as a On the one hand, supply chain relationship management (SCRM) is
special form of supply based on supply chain management. On the other hand, it has its
chain roots in (generic) relationship management. Consequently, supply
management
chain relationship management represents a special form of
relationship management, which transfers the content specifically to
modern supply chain flows. Flows of materials, information and money
do not function as levers of supply chain relationship management.
Analogous to generic relationship management, social factors and
psychological phenomena that are more specific to logistics are
decisive components of success for supply chain relationship
management.
social network and According to Trumpfheller/ Hofmann (cf. Trumpfheller/ Hofmann 2004,
social skills p. 72), supply chain relationship management draws on the concepts
of customer relationship management and supplier relationship
management. Traditionally, material, information and value networks
exist between suppliers, manufacturers and customers.
Through supply chain relationship management, these relationships
are expanded to include a social level .
22

A.3
The goals of supply chain relationship management are to create “People are
trust, increase solidarity, promote communication, increase people so why
transparency and increase coordination (cf. Trumpfheller/Gomm should it be – you
2004, p. 301ff. ) . and I should get
Internal and networked interpersonal relationships are created, for along so

awfully…” (Depeche Mode)
example, at supplier days, sales talks, audits, customer events, joint
qualifications, congresses or conferences. The future will show to
what extent these processes will be affected by increasing home
office activities (keyword: Corona crisis 2020).
“Relationship promoters” can be involved in the coordination and Relationship

control of the supply chain partnership (cf. Walter 2002, p. 124ff.). A promoters as initiators
relationship promoter initiates the exchange of information, looks for

suitable contact persons and other partners, brings people together
and promotes their dialogue. In addition, the promoter mediates in
the event of conflicts. This relationship promoter can be a leading
employee of a participating organization who has the personal and
professional skills to handle the tasks mentioned. The employees of
neutral "clearing offices" (e.g. consultants) can also slip into the role
of a relationship promoter (cf. Werner/ Feliciano 2019, p. 62ff.).
A.3.2.8 Summary of Results

A supply chain management has some similarities with neighboring "To cut a long
concepts. As shown above, this applies in particular to the value story short, I lost
chain, logistics chain, demand chain management, customer my
relationship management, supplier relationship management, mind..." (Spandau Ballet)
relationship management and supply chain relationship management

approaches. However, with all content-related interrelationships with
these terms, supply chain management differs from these neighboring
concepts. The similarities and differences have been worked out in
detail in the explanations presented above . Figure A.4 shows the
core statements of these relationships in a clear manner.
23
basics
A
Figure A.4 Supply chain management and related concepts at a glance
management concept Description
Supply Chain SCM includes internal and external material, information and
Management (SCM) money flows and also takes into account the social relationships
between the actors.
value chain Value chains include factors that contribute to the increase and
destruction of value. These include image and design, which are
only of secondary importance for a supply chain.
logistics chain A logistic chain extends to physical activities to bridge space and
time. In contrast to the SCM, cash flows are hardly taken into
account. While a logistics chain primarily aims at interlinking
traditional company areas, an SCM encompasses complete
organizational networks. Only direct suppliers and direct
customers are included in the logistics chain.
Demand Chain DCM maps an integration of activities towards the customer (pull
Management (DCM) orientation). In contrast to SCM, DCM hardly takes supplier
attributes into account.
Customer relationship CRM represents the planning, management and control of all
Management (CRM) measures of a company aimed at market partners to intensify
customer relationships. Unlike SCM, CRM does not include
any supplier activities.
supplier relationship SRM includes all activities related to supplier
Management (SRM) selection, development and integration. In contrast to SCM,

SRM hardly takes external customers into account.
Relationship management Relationship management characterizes the coordination of

models and measures of vertically cooperating actors, combined
with the claim to maintain and develop relationships. Focus:
social level (psychological and emotional factors).
Supply Chain Relationship SCRM is based on the SCM and on relationship management.
Management Primary fields of investigation of the SCRM are social relationships
(SCRM) (not material, information and money flows). The approach is a
relational part of the SCM.
24
Structuring of the supply chain

A.4
A.4 Structuring of the supply chain
In a supply chain, value-added partners usually cooperate Multilateral
multilaterally, with the actors generally maintaining their legal mergers more
independence. The individual organizations take on special tasks, independent
actors
often concentrating on their strengths. Supply chains also follow a
life cycle: They are founded, operated and dissolved (cf. Wildemann
2006, p. 204).
ÿ Foundation phase: The foundation of a supply chain is based on To initiate
the strategies of the partners involved. The overall structure of the value chains
supply chain is derived from its individual goals. The purpose and
duration of an intended cooperation are of particular importance for
the development of a value-added association. The networks can
also concentrate on key areas of a supply chain: for example,
production mergers or purchasing and development alliances.
ÿ Operating phase: After the establishment of a supply chain, the the whole thing is
allocation of resources begins. The partners involved try to exploit more than the
synergetic potential. Ideally, the actors achieve a "win-win situation", sum of its parts
for which they preferably contribute their respective core
competencies to the network.
ÿ Dissolution phase: The affected organizations will constantly check "Wonder when will
whether they can achieve the envisaged goals (supply chain it all be
performance). The less this is the case, the more likely it is that the over..." (the Wipers)
supply chain will be dissolved. In some cases, a temporary
departure from individual links in the value chain is also conceivable.
Classic coordination mechanisms are blurring between the To vote in the
players in a supply chain: there is usually no higher-level, leading partner network
authority within the supply chain. Therefore, instructions, programs or
plans in supply chains are less effective than is the case in a private
company. In addition, a consensus is always necessary in order to
build up the longest possible cooperation (cf. Wildemann 2006, p.
204).
With regard to the structuring of supply chains, there are two basic Forms of
types: On the one hand, there are hierarchically pyramidal and, on modern design
the other hand, polycentric supply chains (cf. Wildemann 2006, p. networks
204). These two forms (so-called “phenotypes”) of value creation
partnerships are presented in more detail below.
25
basics
A
A.4.1 Hierarchical pyramidal supply chains
monocentric
A strategically relevant company is at the center of the hierarchically
network structure
pyramidal supply chain . All value creation partners align their
activities with this dominant organization (“hub firm”). The network is
controlled, for example, by the size, the financial resources or the
knowledge potential of the leading company. However, the direct
access of this focal company to procurement and sales markets can
also have a lasting effect on the structuring of the association.
Hierarchically pyramidal supply chains are consequently oriented
towards the market power of their “beacon”. The central organization
often binds its partners to itself through long-term contracts.
Clearly structured The structure of a hierarchically pyramidal supply chain often

network corresponds to the product-related sequence of technological
connections work steps (cf. Bretzke 2007, p. 15). All refinement steps of the
partners are strictly based on the respective production process. The
focal company is usually the end product manufacturer. Figure A.5
gives an example of a hierarchical pyramidal supply chain for the
“manufacture of bread”. The links involved are seed producers,
farmers, mills and finally the network node: the bread factory as a
hub.
Figure A.5 Hierarchical pyramidal supply chain
seed producer Farmer mill bread factory
26
Structuring of the supply chain

A.4
A.4.2 Polycentric Supply Chains
In contrast to the clear structuring of hierarchical, pyramidal value- Homogeneous supplies
added relationships, there are homogeneous, mutual dependencies Chains with

in polycentric supply chains . In this network, both the decision- multifaceted
making powers and the coordination tasks are distributed relatively design possibilities
evenly among the partners involved (cf. Wildemann 2006, p. 204).

Trust and openness on the part of those involved are particularly
desirable qualities in this chain.
Within this heterarchical network, leadership and dominance are Constant
regularly re-established through negotiations. In some cases, coordination processes
individual actors are responsible for coordinating specific areas
because they have special knowledge in this area, for example.
Within a network, this is referred to as a "specialization function". The
overlapping of individual activities is symptomatic of polycentric
supply chains, since the tasks are often performed in parallel
(simultaneous planning instead of successive planning).
The couplings in a polycentric network usually arise to solve a specific overlapping

interactions in
customer problem. The coordination of the actors is strictly based on
compound
the supply and demand situation. A specific organization is often not
an exclusive part of a single supply chain, but also an integrative
actor within other supply chains. Then there are so-called
multifunctional supply chain partnerships. For example, Infineon
does not only produce processors for Motorola, but also for Sony and
Nokia. Sony, on the other hand, does not only obtain its processors
exclusively from Infineon, but also from Intel and AMD (cf. Bretzke
2007, p. 19).
While the focal organization clearly “sets the tone” in hierarchically Wrangling of
competences
pyramidal supply chains, the actors in polycentric networks often
have to make compromises . In such a supply chain, for example, between the members
there is not always agreement when it comes to accepting new

partners, distributing costs, allocating scarce resources or the
"outphasing" of companies involved. Often the power of an actor
does not extend beyond its own value chain. This applies all the
more, the closer this company is to the origin of the supply chain.
27
basics
A
control over Due to the almost equal relationships between the individual links,
Steering Committee the implementation of a steering committee makes sense in
polycentric supply chains . This steering committee is made up of
representatives of the partners involved in a supply chain. Especially
when problems arise within the value chain, further measures are
initiated with the help of steering committees – by majority decisions
(cf.
Corsten/ Gössinger 2007, p. 200f.).
network nodes Figure A.6 shows an example of a polycentric supply chain. This
not clearly makes it clear that the actors in this network have overlapping
identifiable dependencies on one another. A focal organization can no longer be
identified. Ultimately, the ultimate end users pull the goods from this
supply chain. At the origin of the value chain, raw material suppliers
and parts suppliers are mutually dependent on one another. These
are often medium-sized companies. The bond between module
supplier and manufacturer is probably the closest. These OEMs, in
turn, are in various exchange processes with retailers. And after all,
trade has very different ties
genes to the ultimate end users.
Figure A.6 Polycentric Supply Chain
raw materials parts Module manufacturer trade end customer
28
Tasks and goals of supply chain management

A.5
A.5 Tasks and goals of supply chain
management
A.5.1 General Characterization

The tasks and goals of supply chain management are derived from Why will
overriding societal and economic requirements (human, ecological or supply chains

social requirements). founded?
In addition, the goals and requirements of a supply chain are based
on the general company guidelines. In this regard, the participants in
modern supply chains are particularly interested in improving costs,
performance or quality.
The primary tasks of supply chain management are the supply Tasks of modern
(availability aspect), disposal and recycling of integrated company supply chains at a
activities. In the context of maintaining these generic tasks, supply glance
chain management must take different components into account.

This includes quantities, qualities, prices, delivery and storage
locations as well as (delivery) dates.
The actors in a supply chain form a heterogeneous bundle of actors one
interested parties. Suppliers, manufacturers, dealers, distributors, supply chain
service providers and customers are integrated into this network. A
supply chain is in a latent state of tension between the players
involved. On the one hand, the partners hope that the coordination
across the organization will increase their competitiveness. On the
other hand, the legally independent organizations strive for autonomy.
A supply chain management framework must explore this constant
balancing act of competing goals.
Of course, there are "win-win situations" in this network of partners: "You gotta fight for
a term that has probably been celebrated a little too euphorically in your right to
supply chain management in recent years and hardly considered in a party..." (Beastie
differentiated manner. However, natural Boys)
extremely fierce competition. For example, in a bottleneck situation,

the allocation of scarce resources is not very altruistic.
Likewise, a supplier will hardly smuggle his materials into a respective
supply chain if he senses higher profit margins in another sales
channel.
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basics
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simultaneous improvement A primary concern of supply chain management is the fulfillment of
tion the tasks described above. The approach extends to a simultaneous
optimization of corporate effectiveness and corporate efficiency as
well as harmonization of the competitive factors of costs, time, quality
and flexibility (cf. term block A.III).
Block A.III Effectiveness and efficiency as well as target harmony of success factors
Doing the right ÿ Effectiveness and efficiency: Effectiveness means doing the right things. Efficiency,
things right on the other hand, means doing things right. Effectiveness is strategically shaped
and is based on the primarily external and long-term effectiveness of actions.
Efficiency refers to the achievement of favorable cost-benefit ratios. It is operational,
primarily internal and designed for the short term. The business goal is to “do the
right things right”.
Knowledge, ÿ Harmonization of competitive factors: The crucial factors of competition are costs,
innovations, service and time, quality and flexibility (“strategic square”). In principle, supply chain management
information has to focus on all success factors to a similar extent (harmony of goals).
expands on that Temporarily, of course, one factor can dominate.
square
key the The effectiveness of supply chain activities is fed by an improvement

supply chain in the competitive factors listed above (costs, time, quality and
flexibility). Other key variables can be service, innovation, sustainability
and information. The following optimization potentials can be assigned
to the four cardinal indicators:
cash throw off
potential ÿ Costs: In the supply chain, the key variable costs is aimed at parameters such as
inventories, freight, investments or depreciation on logistical assets (e.g. on
industrial trucks or buildings). High inventories result in security of supply within the
supply chain. However, excessive inventories drain an organization's capital (cash
flow losses).
acceleration ÿ Time: In most cases, the aim is to accelerate activities in the value chain. The
versus deceleration measurement takes place, for example, via the order fulfillment time. Modern supply
approval chain management can also contribute to reducing the time to market. In some
cases, however, a conscious deceleration of processes (postponement) is advisable
in the supply chain.
30

A.5
ÿ Quality: The success factor quality within the supply chain can be measured "Quality is
using criteria such as rejects or rework. In essence, the satisfaction of customer free!" (PB Crosby)
requirements is demanded, which is particularly important in the Total Quality
Management approach (cf. in detail p. 107).
ÿ Flexibility: Finally, the factor flexibility (agility) in the supply chain means the adjustments and
optimization of the adaptability and changeability of organizations. Modern IT changes
systems are used for this.
The cross-company approach of Advanced Planning and Scheduling (see p.
388) is an example of this.
Beckmann (cf. Beckmann 2004, p. 14f.) segments the benefits of "All theory is
the supply chain into market, internal and supplier-side attributes. gray, what counts
The market-side benefit for the players consists, for example, in is on the
concentrating on the core business (no outsourcing of activities), a field." (A. Preißler)
reduction in market risks (caused by a continuous flow of information)
or an increase in customer satisfaction (consequent alignment of
business processes towards ultimate end customers). In addition,
cooperation in the network accelerates the development of new,
lucrative sales markets.
Supply chain management in practice Example block a.1
Berentzen provides an example of the use of supply chain management in business

practice . For the spirits manufacturer, the supply chain is divided into five blocks by
“picks”. The project was initiated at Berentzen and includes processes, information
technology, controlling (monitoring), cooperation and service. These pillars support
Berentzen's supply chain management . For the company, the most important
innovations resulting from the introduction of supply chain management extended to
the areas of production (concentration of filling locations and revised production
planning), distribution (intensified involvement of external service providers and
establishment of a central warehouse), IT (revolving updates of SAP modules) . ) and
organization (establishment of our own logistics company and increased integration of
suppliers). With the help of “Picks” , Berentzen succeeded in reducing production
costs by 20% and distribution costs by 15% (cf. Werner 2013b, p. 25).
An internal benefit arises from supply chain management through internal benefits
optimized demand forecasts and permanent capacity
31
basics
A
city comparison. Modern SCM systems quickly identify potential
bottleneck situations (bottlenecks). This results, for example, in the
possibility of stock reduction. Furthermore, the forced planning
accuracy leads to lot size optimization.
Suppliers become Finally, modern network management has a benefit on the supplier
real partners side. This phenomenon results from the transfer of responsibilities to
upstream value creation stages (suppliers or manufacturers). An
example of this is the Vendor Managed Inventory concept (see p. 143
for details). A streamlining of the purchasing processes often results
from these intensified ties in the customer-manufacturer-supplier
relationship.
Keys of success Furthermore, the design of supply chains aims at the realization of
in the supply chain key principles. These include compression, cooperation,
virtualization, standardization, integration, customer orientation and
optimization (partly based on Otto/ Kotzrab 2001, p. 166).
These formative principles of network management are described in
more detail below.
Less is ÿ Compression: On the one hand, compression means the reduced number of
sometimes more nodes and actors within a logistic network. On the other hand, the distances
between these nodes must be minimized (e.g. optimization of returns).
Stronger together ÿ Cooperation: In supply chain management, the partners strive to maintain
be economies of scope in the supply, disposal and recycling chains. At the same
time, cooperation efforts are becoming increasingly global (internationalization
of the supply chain, global sourcing).
Virtual network ÿ Virtualization: A defining point in modern supply chains is the construction of
of relationships virtual networks. A virtual company means the temporary merging of core
competencies. The structure appears to the customer as a unit. Internally,
however, a virtual organization does not have any legal or organizational
interlocking.
Mass customization ÿ Standardization: Standardized modules are increasingly being used in modern
as a hybrid supply chains. This increases the possibility of simplified data exchange
strategy within the supply chain (EDI, Web-EDI, cognitive supply chain).
formation of alliÿ ÿ Integration: An integration of participants in modern value chains can be

show vertical or horizontal. This
32

A.5
Connection takes place internally or externally and runs sequentially or
simultaneously.
ÿ Customer orientation: Ideally, activities in a supply chain should only be initiated Customer kick-off
when there is a specific customer requirement (pull control). This is intended to
avoid the number of slow movers on the shelves (e.g. books-on-demand).
ÿ Optimization: The optimizations within the value chain are based on mathematical- Mathematical-
analytical models. They originate in particular from operations research. These analytical
include simulations, queuing models, linear optimization, game-theoretic improvements
approaches or transport and assignment models. As part of such improvements,
information barriers between the partÿ
to dismantle.
A.5.2 Conflicting goals of a supply chain

Different bundles of interests meet in a supply chain . Differentiated Systematization of
according to typification criteria, the individual goals of a supply chain individual goals
can be divided into certain segments (cf. in a similar way Gudehus

2010, p. 74ff.):
ÿ Human goals: These include, for example, the supply of essential goods, maximum secure basic
safety for people, the relief of physical work, the elimination of routine tasks and needs
the fastest possible care in crisis situations.
ÿ Ecological goals: In times of sustainable supply chains, for example, a reduction Relieve the environment,
in pollutant emissions, the avoidance (or reduction) of waste, the conservation of as sustainably as
resources and the reduction of noise must be demanded. possible
ÿ Performance targets: Within supply chains, the performance targets extend to performance in the
product or process improvements. The level of performance (ability to deliver) is increase
also latently put to the test, as is the quality of the shipment (completeness). supply chain
Furthermore, meeting deadlines is traditionally one of the defining supply chain
goals (same day delivery, next day delivery).
ÿ Efficiency targets: Ultimately, cost reductions must be constantly demanded within increase
modern supply chains. These extend, for example, to the degree of utilization of profitability
load carriers, the economic use of personnel, the reduction of inventories or an
increase in the performance of operating systems (batch size effects).
33
basics
A
Constantly The planning processes within modern supply chains are subject to
changing restrictions various restrictions. These framework conditions have a lasting
impact on the players’ scope for action. Since supply chains are
usually highly dynamic and highly complex, these boundary conditions
can change quickly (cf. Gudehus 2010, p. 78f.). The following
restrictions have a particular impact on the design of supply chains:
Coordinate ÿ Spatial restrictions: These include the locations of customers, suppliers and
sources and sinks service providers as well as available production and transport areas.
Observe legal ÿ Time restrictions: Process times (procedures), actual working and processing
standards times (shift schedules) or distribution times (timetables) must be observed
here.
Interfaces of ÿ Technical restrictions: This item includes, for example, the load capacity of
explore the means of transport, the available storage capacity or the speed of
influencing factors materials handling equipment. These factors can have a significant impact
on the durability or quality of goods.
create nodes ÿ Structural and organizational restrictions: The design of supply chains is
still determined by the infrastructure (traffic routes, transport networks) or
the available information systems
and databases affected.
legal environment ÿ Legal and ecological restrictions: In many cases, special safety
requirements must be observed. These apply in particular to valuable,
scarce or dangerous goods. Laws, regulations and standards govern these
processes.
Generic Porter Due to these differentiating target requirements and the limited scope
problem for action, there are often conflicting goals within the design of supply
chains (cf. also Schulte 2017, p.
11). A classic goal competition is derived from the latent tension
between cost reduction and quality improvement (cost-quality
conflict). Outsourcing or offshoring can help to alleviate this dilemma.
Customer Another potential for conflict arises from the divergence between
satisfaction inventory reduction and product availability (inventory/service level conflict).
at any price? What is meant here is the outgoing service level: An increase in
customer flexibility (for unforeseen orders) is partly bought at a high
price through higher stocks of finished goods. The actors should
34

A.5
ask what additional marginal income (in the direction of availability) a stock
build-up creates.
In addition, a constant power struggle between inventories and freight costs intralogistics
must be explored within supply chains (see p. 324). It is difficult to want to principle problem
improve both target values simultaneously (inventory freight cost conflict).
This is because a reduction in the delivery window (to reduce transport costs)
is usually associated with an inventory build-up. Ultimately, this depends on
the Incoterms taken into account. However, in the case of “free house
delivery”, the supplier will partly pass on his additional costs to the customer
via the higher sales price.
The level of inventories also competes with the negotiated material prices buyers against
(inventory material price conflict). In order to reduce material prices, the inventory manager
buyer will try to increase the order quantities as much as possible (purchase
volume impact). It goes without saying that this effect leads to an inventory
build-up, which results in cash flow losses.
ren.
Another problem derives from the different objectives Different worlds

two worlds: On the one hand, the functional areas of logistics, purchasing collide
and production are striving for standardization in order to keep the number
of variants as low as possible. However, employees from the technical and
sales disciplines do not like this very much. Rather, they would like to tailor
products to the customer (standardization-individualization conflict). As a
result, there is a latent risk of a stock build-up. Mass customization can
contribute to satisfying these different requirements (see p. 164).
One moment united, shortly thereafter divided: logistics and production are How high should he
both striving for standardization. However, logistics would like to get by with Existed now
the lowest possible stocks. Production, on the other hand, tries to avoid stock- be?
outs on the line at all costs. It will therefore demand a high deposit of goods
in stock (stock-availability conflict).
Likewise, there is a fundamental contradiction between rapid delivery and speed vs

optimal utilization of the means of transport (delivery utilization conflict). Costs
Because if the delivery is as fast as possible (e.g. same-day delivery), it is
usually not possible to wait until the means of transport is fully utilized. This
affects the transport costs. The result is that many trucks are completely
empty.
35
basics
A
How much is the With the pursuit of particularly fast delivery processes, however, not
environment worth to us?
only the costs are inflated. This approach is also ecologically
disastrous (delivery CO2 conflict). An acceleration of the distribution
processes burdens the environment, as more carbon dioxide is
emitted. This results in negative effects on the CO2 balances of
integrated supply chain partners.
A.6 Motives for the emergence of supply

chains
Even Heraclitus The competitive environment of companies is subject to constant
knew it: "Panta rhei" - change. Management of modern supply chains takes on these
everything is in flux... challenges. The following phenomena in particular characterize its
emergence: total cost of ownership consideration, transaction costs,
bullwhip effect, globalization and increased customer requirements.
These motives, which are formative for the construction of global
logistical networks, are discussed below.
A.6.1 Total Cost of Ownership
A.6.1.1 General characterization

Explicit consideration A first motive for the emergence of modern supply chains is a total
of cost of ownership (TCO) analysis. The concept was developed in
follow-up costs the mid-1980s by the consulting company Gartner (cf. Krämer 2012;
Kuhn 2007). In the original version, the approach was aimed at
information technology (IT). The considerations were later transferred
to other organizational areas. A total cost of ownership analysis is
similar to life cycle costing (full cost analysis, see p. 285 for details).
However, while lifecycle costing is essentially aimed at investments
(explicit time orientation), TCO is primarily devoted to transaction
costs (process focus). The transition between the two processes is
fluid. In addition to the actual acquisition costs of a good, TCO also
takes into account its subsequent costs . These are incurred for the
operation, training, maintenance or repair of a material asset over its
entire useful life.
36
Motives for the emergence of supply chains

A.6
Determining the total cost of ownership increases transparency in Gartner Group as
supply chains. For company management, the approach offers a trailblazer
basis for decision-making regarding the selection of homogeneous
goods. Cost drivers are derived from a TCO calculation. In this
regard , the differentiation between direct and indirect costs is
decisive for a total cost of ownership consideration by the Gartner Group :
ÿ Direct costs: According to the Gartner Group, the direct costs are visible (“hard hard costs
to measure”, “budgetable”). The IT-supported approach differentiates direct
costs into the three areas of hardware and software (procurement and use of
information technology), operations (remuneration of employees for operating
the systems) and administration (expenses for organization and administration) .
For supply chain management, direct costs result, for example, from
depreciation on investments, wages and salaries, insurance, customs duties,
packaging, travel expenses or inventories (capital commitment).
ÿ Indirect costs: Determining these “soft” (invisible) meaning softer

Influencing factors usually cause difficulties. The Gartner Group distinguishes influencing variables
indirect costs in the two segments of end user operations and downtime. Loss
of value through training, self- and peer-to-peer support (so-called
“communication among equals”; in a computer network all computers are
equally important, the opposite represents a client server solution), creation
of backups or futzing (IT use for private purposes). The term "downtime"
describes system failures. Indirect costs inhibit the consumer from using an
economic good. However, the measurement of these influencing factors on
investments is subject to a pronounced subjectivity of the observer. It is
undisputed, however, that indirect costs have an effect on income. According
to Krcmar (cf.
Krcmar 2015, p. 191), these soft influencing factors amount to 23% to 46% of
the total project costs. Albrecht puts these indirect costs at up to 53% of the
total costs for IT projects (cf. Albrecht 2006, p. 85).
In addition to the Gartner Group, Forrester Research and the Meta Other TCO
Group in particular have sponsored the Total Cost of Ownership Models at a
approach. The concept of Forrester Research is also borrowed from glance
information technology. The influencing cost factors of a decision
consist of infrastructure (costs for hardware and software),
maintenance contracts, management, support, training, downtime and proÿ
37
basics
A
take care (disaster control) together. The Meta Group, on the other
hand, slightly modifies a total cost of ownership analysis and calls it “real
cost of ownership” (RCO). The approach states that costs are “provable”.
They are broadly in line with Gartner's direct costs . However, the Meta
Group 's approach supplements these variables with influencing factors
that lead to a loss of productivity. This includes costs for maintaining
networks or migrating users to this network.
total profit of For some time now, the concept of Total Cost of Ownership has been
ownership expanding to include Total Benefit of Ownership (TBO). This method
determines the overall project benefit over its entire life cycle. In addition
to the costs, the performance (proceeds) of investments must also be recorded.
In this respect, all activities of a supply chain can be divided into useful,
supporting, blind and failure processes (cf. Albrecht 2006, p. 85 and p.
349 of this publication). User processes are definitely characterized by a
benefit towards the customer. Support, blind and failed processes, on
the other hand, have hardly any intrinsic benefit (one-sided consumption
of resources). For an IT system, a possible benefit arises, for example,
from a future possibility of integrating further applications or updates (e.g.
a firewall) into this system.
Example of TCO: A total cost of ownership analysis for supply chain management is
purchase one exemplified below (excerpts see Krokowski 1993, p. 14; Schulte 2017, p.
mantles
295). The example refers to the supplier selection of a trading company.
The buyer of a department store
fahrers would like to make a purchase decision for fashionable autumn
coats (trench coats) (see Figure A.7). All department stores to which the
coats are delivered are located in Germany. A first possible supplier
manufactures its trench coats in China. The purchase price per coat is
EUR 40.00. Alternatively, the buyer has a second offer from a German
manufacturer for EUR 50.00 per coat. In the light of a total cost of
ownership analysis, this purchase price is offset against follow-up costs
per coat (the “purchase price” of the coat is converted to its “cost price”).
freight charges ÿ First, the buyer calculates the freight costs per trench coat.
These add up to 4.50 euros for the Chinese variant (air freight 1.50 euros and sea/
land freight 3.00 euros). If the coat is purchased from the German manufacturer,
freight costs totaling 1.30 euros are incurred (these result exclusively from sea/land
freight).
38

A.6
ÿ Furthermore, for each coat purchased from China, there are costs for customs Customs and insurance
clearance and insurance of 3.80 euros, with the stolen portion consisting of tion
customs costs (3.50 euros). If the trench coat is purchased from the German
manufacturer, there are no customs costs.
Insurance costs EUR 0.25 per coat.
ÿ The delivery time and the transport time per jacket are decisive for the calculation capital commitment
of the capital and storage costs . It is planned to include these fashionable
trench coats in weather-dependent special sales activities at short notice. Due
to its long delivery time, the coat from the Chinese manufacturer will probably
have to be kept in stock for an average of 25.0 days. From this, the buyer
calculates capital and storage costs of 3.30 euros per coat (opportunity costs,
storage costs, handling costs). For a trench coat purchased from Germany, on
the other hand, there are only 1.55 euros in capital and storage costs per coat.
ÿ Furthermore, the buyer includes other logistics costs in his TCO calculation. Other influencing
These are made up of costs for: selection of service providers, order monitoring, variables
communication (including on-site visits to suppliers), quality control and office
commission (supervision by an agent in the foreign office). In total, these
influencing factors for the Chinese variant amount to 4.16 euros per trench
coat. If the coat is made in Germany, there are only 0.08 euros in other costs
per trench coat.
ÿ In addition, the purchase price (EUR 40.00) and the followÿup costs (EUR Result of the
15.76) for a trench coat made in China add up to EUR 55.76. The producer analysis
grants a bonus of 2% on the purchase price (EUR 0.80) for the coats.
Consequently, the total cost of the trench coats sourced from China is 54.96
euros. The trench coat made in Germany costs 53.18 euros (purchase price
50.00 euros and follow-up costs 3.18 euros). Since the German manufacturer
discounts a bonus of 5% on the purchase price per coat, the trench coat costs
a total of 50.68 euros. In this example, a coat made in Germany “beats” the
“Chinese alternative” by 4.28 euros per coat, despite the significantly higher
purchase price (see Figure A.7). Purely from a cost perspective, the buyer will
purchase this trench coat from Germany. However, it should be pointed out
that in this example only direct costs were charged. The calculation could be
expanded to include indirect costs as well as possible total benefit of ownership.
39
A basics
Figure A.7 Total cost of ownership
decision criterion Supplier A Supplier B
purchasing price 40.00 50.00
ÿ Air Freight 1.50 0.00
ÿ Sea freight/land freight 3.00 1.30
(A) Freight Total 4.50 1.30
ÿ Customs charges 3.50 0.00
- Insurance 0.30 0.25
(B) Customs Fees/ Insurance Total 3.80 0.25
ÿ Delivery time in days 90.00 40.00
ÿ Transport time in days 25.00 1.00
ÿ Storage time in days 25.00 1.55
(C) Capital Costs/ Warehouse Costs Total 3.30 1.55
ÿ Costs of service provider selection 0.30 0.05
ÿ Costs of order monitoring 0.23 0.00

- Communication costs 1:13 0.03
ÿ Quality control costs 0.98 0.00
ÿ Office commission costs 1.52 0.00
(D) Other logistics costs Total 4:16 0.08
ÿ Total follow-up costs (A + B + C + D) 15.76 3:18

Subtotal 55.76 53.18
ÿ Bonus deduction (2%/5%) -0.80 ÿ2.50
grand total 54.96 50.68
Legend: Supplier A is located in China, supplier B is from Germany.

All figures in €.
40

A.6
A.6.1.2 Interlocking with Maverick Buying
A.6.1.3 Maverick Buying: Basic Considerations

The term "maverick buying" stands for a wild, uncontrolled Curse of wild
procurement that is carried out without an existing framework procurement

agreement. The manifestations range from unconscious, forced,
intentional or criminal maverick buying (cf. Karjalainen et al. 2008, p.
9ff.). The key figure “framework contract rate” stands for the
measurement of this phenomenon (cf. key figure typology of this
publication on p. 416). Uncontrolled procurement sometimes devours
a lot of money. According to Wannenwetsch (cf. Wannenwetsch 2008,
pp. 17f.), maverick buying increases procurement costs by an average
of 15% (compared to “controlled” procurement). The purchase of C
items in particular is obviously quite chaotic. Up to 30% of these item
numbers are ordered outside of existing contracts (cf. Angeles/ Nath
2007, p. 110; Wannenwetsch 2013, p. 18).
The motives for maverick buying can be divided into two categories. multi-layered
On the one hand, they are to be considered specifically against the Reasons for
background of purchasing activities, i.e. procurement management. Maverick buying
On the other hand, they can be seen in a generic context: in work
behavior that deviates from general norms (cf.
Karjalainen et al. 2008, p. 4ff.). The reasons for maverick buying are
complex (cf. Karjalainen et al. 2008, p. 4; Large 2013, p. 210; Lonsdale/
Watson 2005, p. 159ff.):
ÿ Some of the operationally active employees simply do not know that supplier
contracts exist.
ÿ The consumer's decisions are based solely on the price of the material. Possible
consequential costs are not taken into account.
ÿ Conditions from framework contracts (purchase prices) are

assessed as advantageous.
ÿ The performance of the manufacturer is questioned. Consumers are of the opinion

that products do not have the required properties and can be obtained from third
parties with higher quality or more tailored to their needs.
ÿ There is still no fundamental decision about the procurement path. Buyers are forced
to act on possible strategic
41
basics
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logical decisions because standard definitions are still missing.
ÿ Conflicts of interest between the specialist departments and strategic

purchasing. The user puts local or personal interests ahead of company-
wide goals (intrinsic motivation).
ÿ Power games and disputes over competences between those involved

actors.
ÿ Lack of incentives to comply with framework agreements.
ÿ Pronounced budget pressure, which forces buyers to look for new

creative ways tempted.
ÿ Existence of petty cash (corruption).
ÿ Capacity bottlenecks at previous suppliers force the customer to look for other
procurement channels at short notice.
reasons of soft
In addition to more rational reasons for maverick buying, emotional
level causes can also be identified. Then the work behavior gives way
from the norm. It manifests itself in powerlessness, boredom,
injustice, frustration, lack of organizational affiliation, personal destiny
or general resistance to change (cf. Karjalainen et al. 2008, p. 5ff.).
Indirect material is The wild procurement of overhead material (office supplies, work
particularly affected gloves, cleaning agents, fuel, lubricating oils) is particularly
pronounced. These item numbers are of comparatively little value.
However, they require disproportionately high transaction costs (cf.
Karjalainen et al. 2008, p. 7; Wannenwetsch 2013, p. 17f.).
Services are not Furthermore, the curse of maverick buying often weighs heavily on
spared either the purchase of services . This dilemma may be due to the fact that,
for example, when repairs are to be carried out at short notice, the
capacities of the official service providers are insufficient or the
required specialist personnel are not available. The following example
block a.2 shows the inseparable coexistence of total cost of ownership
and maverick buying.
42

A.6
Total cost of ownership and maverick buying Example block a.2
Over the weekend, a person responsible for cost centers unearths an “unbeatable” offer for a
notebook. The manufacturer Vobis offers this at a price advantage of 100 euros (compared to
similar devices from the competition). In the course of the coming week, the cost center
manager will order five notebooks from Vobis. This results in a price advantage of 500 euros
for his organization. However, the company has a maintenance contract with Hewlett-Packard
(which the cost center manager ignores). After a short time, problems arise due to
incompatibilities in the system landscape. In addition, later maintenance difficulties arise. The
original price advantage of 500 euros is overcompensated by follow-up costs of 1,300 euros
(tradeÿoff situation).
A.6.1.4 Curbing Maverick Buying via Purchasing Cards
Not least to avoid maverick buying, more and more organizations are Purchasing Cards
using electronic purchasing card systems (purchasing cards). These to resolve
are primarily intended for the purchase of overhead materials. The Maverick buying
purchasing cards can be physically issued to selected employees of
a company. However, the mere deposit of a card number at a bank
is sufficient.
Authorized employees (e.g. cost center managers) are authorized to
use the purchasing card to order low-value items or services (such
as office supplies) directly from previously defined suppliers. Payment
for these goods is made using the purchase card.
Basically, purchasing card systems protect a decentralization of Steps to
selected order processes by outsourcing part of the procurement Implementation of
responsibility to the functional areas. This results in a relief for central Purchasing
purchasing departments, combined with a reduction in administration Cards
costs. With the use of purchasing cards, the striving for controlled
purchasing activities is launched. The risk of Maverick Buying
Syndrome emerging is significantly reduced. The following work
steps characterize a purchasing card system as an example,
described using the working example "Ordering of office supplies" (see
Figure A.8):
43
A basics
1. Online ordering of the office supplies by the user (cost center

manager) from a previously defined supplier.
2. The order is received by the supplier. The data is then compared
between the supplier and the credit card operator, the so-called
"clearing organization" (verification of the authorization).
3. If an authorization was successful, the office supplies

physically delivered by the supplier.
4. In the next step, the electronic payment reconciliation between the
credit card operator and the supplier takes place. The supplier is
usually paid fairly quickly.
5. The credit card company now sends a monthly collective bill to the
client.
6. Finally, the payment reconciliation between the customer and the
credit card company is initiated.
Figure A.8 Purchasing Cards
6
credit card
consumer payment reconciliation
company
Costs- (Clearing-
Job Organization)
client 5
Total invoice
3
2
1 Delivery
authorization
Order
supplier
4
payment reconciliation
44

A.6
Purchasing card systems are operated by UBS Visa, Airplus, Use of shopping
MasterCard or American Express . These "clearing organizations" cards
usually have their own lists of suppliers. It usually lists providers with
whom the credit card operators have had business relationships for
some time. Purchasing card benefits include :
ÿ Quick and uncomplicated procurement based on standardized rules

(procurement in compliance with guidelines to curb maverick buying).
ÿ Reduction of personnel costs at the client (relief of the central purchasing

employees).
ÿ Opportunity gains for the supplier: Prompt payment of the

Suppliers by the credit card company.
ÿ Achievement of economies of scale in purchasing (purchase volume impact

by bundling purchasing volumes).
ÿ Abolition of "petty cash" between suppliers and customers.
ÿ Posting of collective invoices: process cost reduction in the client's

accounting.
ÿ Variabilization of the cost structure (the customer reduces his fixed costs
by only paying the credit card company when it is used).
ÿ Increasing transparency in procurement.
However, technical solutions alone cannot eliminate all causes of High margins as
maverick buying. Therefore, in addition to the information technology primary stumbling
blocks
(IT)-oriented solution approaches, such as the purchasing card,
behavior-based solution approaches should also be considered.
This includes in particular employee management, service instructions,
personal empowerment, incentive systems and corporate culture.
ÿ Leadership: Managers must be able to share their knowledge about the

existence and purpose of framework agreements (role model function).
ÿ Service instructions: Such service instructions could, for example, allow

business trips to be booked exclusively via preferred suppliers.
45
basics
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ÿ Personal Empowerment: Transfer of responsibility to the staff in order
to strengthen their motivation. Employees are involved in the decision-
making process at an early stage and have to account for wrong
decisions.
ÿ Incentive systems: By submitting positive or negative

stimuli should influence the behavior of the employees.
ÿ Corporate culture: Strong cultures improve employee motivation. This

can promote conformity to framework agreements.
Critical In general, behavior-based solutions can increase the morale of

appraisal of employees and contribute to curbing maverick buying. However,
behavior-based measuring their effectiveness is difficult. Ultimately, personal
solutions empowerment can lead to a trade-off situation: the increased
autonomy of employees promotes wild shopping if the users continue
to put personal interests ahead of company-wide interests.
A.6.2 Transaction Costs

Ronald Coase as In general, a transaction characterizes the change of a tangible or
trailblazer intangible object from the sphere of activity of one actor to that of
another (cf. Corsten/ Gössinger 2007, p. 3). This transition incurs
(transaction) costs. The theory of transaction costs goes back to
Ronald Coase , who was awarded the Nobel Prize for it in 1991.
Based on the example of "concluding a contract", transaction
costs can be attributed to the following activities:
ex ante ÿ Transaction costs arise before a contract is concluded (ex ante) , for
Consideration example for information procurement (search for information about
potential market partners), initiation (contact) or agreement (negotiation,
contract formulation, agreement).
ex post ÿ After a contract has been concluded (ex post), transaction costs for
Consideration processing (commission or transport), changes (date, price or quantity)
and control (delivery acceptance) are incurred.
Causes of These influencing factors on transaction costs can also be

transaction surrounded by other activities. Examples of this are the need for
costs communication, misunderstandings, communication problems or
conflicts between the people involved. The amount of transaction costs can
46

A.6
bring business relationships to a complete standstill. They are
measured in total cost of ownership analyses.
In supply chain management, transaction costs arise primarily at the Transaction costs
interfaces. Therefore, within the value chain, regulations that are as in supply chains
binding as possible should be drawn up with regard to the exchange
of materials and information in order to curb transaction costs. Modern
IT systems support this objective within the supply chain (e.g. use of
e-commerce), whereby the respective organizational structure
definitely affects the level of transaction costs. Rigid relationships are
dissolved and forms that require intensive coordination are formed.
Due to its modular organizational form, the virtual company is an
exemplary trellis for this claim.
A.6.3 Bullwhip Effect

The bullwhip effect (cf. Figure A.9) goes back to Forrester's whiplash
investigations into "Industrial Dynamics" from 1958 (cf. effect
Forrester 1958, p. 37ff.). At the time, Forrester empirically
demonstrated the following phenomenon: If an unplanned increase
in demand of 10% is determined within a value chain (consisting of
the stages producer, distributor, dealer and customer), the
manufacturers overreact. You don't want to lose the potential revenue.
They increase their production by up to 40%. Only after about a year
does the supply level off at the specified increase in demand of 10%.
According to Forrester , the dilemma of the players in a supply chain
is that a market partner only knows specifically about the needs of
their upstream level. Forrester cites the following reasons for the
emergence of logistical whiplashes (cf. in particular Forrester 1958,
p. 43ff.; cf. also Beckmann 2004, p. 7f.):
ÿ Lack of requirement transparency in a value chain: The changes in the The customer,
requirement levels of ultimate end customers do not lead directly to production the unpredictable
adjustments in the upstream delivery stages. Latent excess inventories are beings...
built up in the supply chain within the period of time between a change in
demand and a response.
ÿ Distortion of information in a supply chain: MRP decisions and ordering Leakage losses
systems are geared towards one's own organization. Potential changes in in IT
consumer demand will only be
47
basics
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channeled into this system with a time delay (successive planning instead of
simultaneous planning).
Procurement routine
ÿ Frequent adjustment of the inventory level: Changes in the inventory policy cause
is missing
fluctuating order patterns in upstream value-added stages of the manufacturer (cf.
Keller 2013, p. 113).
reasons for that In particular, Lee et al. continued Forrester's results and extended
sprouting of them to the bullwhip effect (cf. Lee et al. 1997, p. 543ff.). In essence,
bullwhip effect they attribute the whiplash effect to information deficits within the
supply chains. Particular problems lie in the influencing factors of
demand forecast, procurement policy, demand bundling and price
variation (cf. Lee et al. 1997, p. 545ff.; cf. also Beckmann 2004, p. 8f.):
Information deficits ÿ Requirement forecast: Requirement information is passed on to the suppliers with a
about future delay. In this way, changes in the call-offs are not communicated directly to the
needs suppliers. As a result, the supplier organizations lose sight of the actual market
situation. An example of this is the mobile phone industry at the beginning of this
millennium. At that time, the first hype about mobile phones broke off.
The manufacturers corrected their demand forecasts significantly downwards. It

took almost ten months for the last stage of the supply chain to process this
information. During this time, latent overstocks were built up in the supply chain.
troubled ÿ Procurement policy: If a supply shortage is feared, the strategic ordering behavior
procurement proÿ of institutional customers and end consumers changes abruptly. Examples of this
cess are weather-dependent seasonal goods (sunscreen, road salt), trend items (fashion)
or resources that are rarely available (vaccines). Customers tend to hoard these
capacities from suppliers. The result is an inventory build-up within the supply chain.
Reduction of ÿ Requirements bundling: Requirements are bundled by aggregating customer

order-fixed costs requests over several periods. The customer would like to achieve the exploitation
via Purchase of economies of scale (achieve volume discounts in purchasing) and reduce his
volume order-fixed costs. These accumulated values lead the supplier to the fallacious
conclusion of increased future requirements.
price fluctuation ÿ Price variation: Finally, sales promotion activities usually lead to a short-term surge
gene in demand. Inventory planning before, during and after the doctorate is particularly
difficult, as demand can be very volatile. An example of this is the sometimes rare
availability of currently advertised cosmetics.
48

A.6
bullwhip effect Figure A.9
3
Requirement Manufacturer
2 trade
customer
0
1 23 45 67 8 9 10
Time
According to the bullwhip effect (cf. example block a.3), even slight Playful
fluctuations in demand in upstream stages of the value chain lead to experience
larger escalations in demand. This phenomenon can be experienced of whiplash
in the "Beer Distribution Game". In other words, even small changes
in the final requirements amplify in a downward direction. No value-
added stage wants to run the risk of having to give up unforeseeable
demand (whiplash effect).
bullwhip effect Example block a.3
The term bullwhip effect goes back to Procter & Gamble . In the production
of “Pampers” diapers, the number of end consumers (babies) in the United
States remained constant over the medium term. Therefore , Procter &
Gamble assumed a low variability in demand. But this wish did not come
true. Procter & Gamble observed that trade call-offs for the “Pampers”
diapers fluctuated greatly. The volatility of demand increased the further a
value-added stage was removed from the end consumer (baby).
An improved exchange of information in the Fight the bullwhip!
49
basics
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Supply chain via the actual demand (reduction of uncertainty),
simultaneity of actions (avoidance of time delays and "dead times"),
centralization of disposition, formation of strategic partnerships and
reduction of variability (synchronization of order cycles).
A.6.4 Globalization and

increased customer demands
"London calling to Another reason for the emergence of modern supply chains is increasing
the underworld - globalization, which is derived, for example, from the liberalization of
come out of the trade (cf. Arndt 2017, p. 8). The European integration process is also a
cupboard, you boys driving force for the internationalization of economic activity. In addition
and girls..." (the to economic liberalization, cheaper and faster transport and
Clash)
communication options are further levers of globalization. According to
Arndt (cf. Arndt 2017, p. 9), international exports from 1960 (127 billion
US dollars) alone to more than fiftyfold in 2000 (US$6,436 billion).
"National champions The globally active organizations use locations that are as cost-effective
are and efficient as possible. The continuing trend towards international
obsolete." (N. procurement is therefore not surprising (global sourcing). For example,
Kroes) companies secure the supply of scarce resources through global
procurement. Preliminary products are usually selected according to
cost considerations. For labour-intensive services, there is a shift to low-
wage countries (offshoring). Challenging tasks have to be performed
where qualified personnel are based. Many products are offered
worldwide, with local and customer-specific modifications (customization)
existing.
front office and The trend towards globalization means that customers can largely
Cleverly network choose where they want to buy their products. The demand for worldwide
the back office availability of goods is satisfied, for example, by the Internet. Regardless
of shop opening hours, goods can be obtained quickly and inexpensively.
But the mouse click alone (front office) does not secure the business.
An adequate logistical realization system is required behind it (back
office).
After Sales Services Many products now offer hardly any distinguishing features in terms of
their technical properties. Therefore always tempting
50
Primary supply chain strategy types

A.7
more organizations customers with added services. For example,
Honda is temporarily not just offering a vehicle itself for sale to current
and potential market partners in London. The Value Added Service
consists in the integrated sale of a parking space for the car. Supply
chain management takes this knowledge into account and relies on
high delivery reliability, short delivery times and pronounced delivery
flexibility to satisfy customer requirements (cf. Arndt 2017, p. 20).
A.7 Primary Supply Chain Strategy

Types
Even if the design of a supply chain is ultimately individual and phenotypes of
industry-related, modern supply chains can still be divided into four supply chain
different basic types : Low Cost Supply Chains, Innovative Supply strategies
Chains, Service Supply Chains and Qualitative Supply Chains (cf.
Cohen/ Roussel 2006, p. 26ff.).
A.7.1 Cost leadership in the supply chain

In low-cost supply chains, the players do everything they can to be Low Cost Supply
able to sell their products to cost-conscious buyers at particularly low chains
prices. The primary goal is to show customers sustainable price

advantages over the competition. To this end, cost managers initiate
targeted measures for rationalization and a permanent increase in
efficiency.
Important levers of a supply chain to achieve cost leadership relate, measures of
for example, to the utilization of the facilities, the promotion of cost leaders in
inventory turnover, a reduction in transaction costs, the standardization the supply chain
of the supply chain processes, improved supplier integration, the
automation of I&C systems and the reduction of distribution costs.
ÿ Optimization of plant utilization: Achievement of economies of scale in the areas

of warehouse, production process, materials handling equipment.
ÿ Accelerating inventory turnover: introduction of range monitoring, identification

and elimination of slow movers
Bundling of warehouse locations, introduction of just-in-time or
51
basics
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Just-in-sequence, automation of storage and handling processes, increase in
the number of central storage locations.
ÿ Reduction of transaction costs and process costs: Electronic business transactions,

fewer interfaces.
ÿ Standardization of the supply chain activities: reduction of complexity,

modularization of processes, technological specialization, automation of the
material flow.
ÿ Improved involvement of suppliers through targeted outsourcing: consideration of

the special knowledge of suppliers, concentration on the core business,
reduction in the number of suppliers, exploitation of synergetic potential.
ÿ Automation of information and communication systems: introduction of electronic

data interchange, improved customizing of existing systems.
ÿ Lowering of distribution port costs: Consolidation of goods

flows, use of inexpensive means of transport.
Product The achievement of cost leadership in the supply chain should start as
development early as possible: The levers for maintaining low-cost supply chains are
already set in supply chain engineering (see p. 125). A modular design
appropriate to the supply chain
is ideal for this, whereby the number of variants is kept within limits
(manageable range of articles).
As a result, the costs for goods handling, transactions and administration
drop significantly in some cases.
The downside of However, there is a risk of negative interactions with other key variables in
Cost Cutting: low-cost supply chains: If the players put the brakes on costs too much,
trade offs there will almost inevitably be trade-off effects for the ability to innovate,
service behavior, and process and product quality and corporate agility. In
a nutshell, cost cutting in the supply chain should not be done at any price.
A.7.2 Innovation leadership in the supply chain

Generate must- Innovation leadership in supply chains means producing "killer products"
haves that a customer really wants. This pronounced customer wish creates a
demand pull among certain consumers. At times, long queues formed in
front of the Apple stores when the company announced that it had a new
“iPhone” in its store
52

A.7
retail stores for sale. Some people camped in front of the shops to
get hold of a device of the latest generation early on. Real innovation
leaders achieve comparatively high profit margins with their products
and rake in lavish producer profits. Early buyers are willing to spend
a lot of money on innovative goods in order not to miss out on
tomorrow's trend.
The Spanish fashion company Zara (belonging to the Inditex Group, "People with a
currently the largest European clothing manufacturer) is pursuing a new idea are
binary supply chain strategy: most product ranges are associated considered cranks
with cost leadership (Asian supply chain). But Zara is striving for until it catches on." (M.
innovation leadership with a quarter of its fashion range : after its Twain)
scouts spotted fashion hypes around the world, Zara succeeds in

offering certain labeled textiles in the stores in less than 20 days. For
this purpose, components of the
European supply chain (backsourcing) in order to have direct access
to the individual links in this supply chain. Zara has consciously
invested in the optimization of selected flows of goods in order to
achieve maximum speed in its business processes.
Innovation leaders try to set up contemporary design supply chains Design Supply
in order to secure early market access. They are willing to make Chains through high
larger investments to reduce their time-to-market. speed
High-speed supply chains are created through the integration of

upstream and downstream value-added partners, i.e. through the
introduction of vertical integration strategies. Manufacturers are
happy to involve suitable employees from selected suppliers (resident
engineers, cf. p. 137 of this document) in their product development
in order to avoid protracted frictional losses at the interfaces (“iteration
loops”). Especially in the B2B and B2A areas, some manufacturers
also integrate selected customers into their development teams so
that they can tailor their activities to their needs at an early stage.
A.7.3 Service leadership in the supply chain

Another way to achieve competitive advantage in the supply chain is The customers
provide additional
to strive for service leadership. To this end, the manufacturers offer
their customers special services in the supply chain. Examples of this benefits
are concepts from inventory management (see p. 294). For example,

players handle inventory replenishment independently for their
customers if they have access to relevant
53
basics
A
Information is granted (Vendor Managed Inventory). The manufacturer
offers its customers a further incentive if they also offer selected VMI
item numbers as consignment goods. The customer not only ties up less
capital, he also saves transaction costs (fewer interfaces) and process
costs (less staff).
"Service means The assumption of additional services in the supply chain is called Value
seeing the referred to as Added Services . The customer recognizes these value-added services
business often not at first glance. In some cases, basic
through the eyes of the customer."
Services through additional services are only particularly attractive if the
(Phrase)
entire service is upgraded as a result. The service provider becomes a
real full-service provider. If these value-added services provide the
customer with a particular benefit, the bond with this player intensifies.
Supply chain service providers usually have to react quickly and offer
their customers consumption-oriented solutions.
Added services in the supply chain can be provided through assembly,
returns, shipment tracking, handling or repairs.
Win win- The attraction for the customer is that he can concentrate on his actual
situation through
core business. He will outsource unwanted additional activities to a
additional services reliable partner if he is particularly familiar with a specific business area.
The customer consciously makes himself "leaner", he saves personnel
and capacities. A supplier is happy to offer this service if he senses
additional business : If the service provider proves to be a reliable
partner in warehouse management, for example, in addition to the actual
warehousing, he may also get the goods handling (labelling, packaging)
or goods distribution ( distribution).
A.7.4 Quality leadership in the supply chain

resilience in the A fourth primary strategic positioning in the supply chain is quality
supply chain leadership. Qualitative supply chains are characterized by their
robustness . The quality leaders know how to handle processes without
errors. However, should deviations from the plan specifications arise,
they are able to rectify minor errors themselves.
anticipatory In order to maintain stable supply chain actions, risks must be identified
Risk management at an early stage and protective measures initiated. Possible risk areas
in the supply chain in the supply chain result from discrepancies between
54

A.7
of capacity and demand planning. Should difficulties arise here,
subsequent corrections in production and order management are
essential. Therefore, qualitative supply chains place high demands
on delivery times or reliability. Figure A.10 shows a number of supply
chain risks that can have a lasting impact on possible quality
leadership within a supply chain, differentiated by area of application.
Supply chain risks of quality leadership Figure A.10
supply chain area Supply chain risks (selection)
ÿ Increase in complexity and range of variants

- Technological dependency
design ÿ Uncertain markets, inaccurate forecasts
- Lack of coordination between SC areas
- Unpredictable SC costs
ÿ Procurement market risks (e.g. natural forces)

ÿ Political uncertainty ÿ
Customs restrictions ÿ
procurement Long replacement times ÿ Lack of
supplier certifications ÿ Supplier quality defects
ÿ Supplier dependency and price
increases
ÿ Material, personnel and capacity bottlenecks

ÿ Internal and external process disturbances
production ÿ Delayed flow of information
- High scrap and rework rates
ÿ Lack of quality management
ÿ Lack of sales forecast

ÿ Poor service level (quality, quantity, time)
distribution ÿ Transport damage and general average
ÿ Damage to goods
ÿ Customer failure
ÿ High return costs

return ÿ Customer insolvency
- Technological change
ship to label
Quality leadership is particularly important in some industries. For processes
example, errors in the pharmaceutical supply chain (e.g
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in the life sciences and healthcare supply chain) can have very serious
consequences if, for example, the cold chain of vaccines or time-sensitive
radiopharmaceuticals is interrupted.
In this cold chain management, a complete traceability of batches is
absolutely necessary. According to the "Ship-to-Label" principle, authorities
require proof that the affected products are not only stored at the
temperature specified on their packaging, but that they are also
transported within a specified temperature range. Drugs are extremely
sensitive to deviations: their molecular structures could shift, resulting in
biochemical reactions. The users of these medicines could suffer serious
damage to their health.
Suffer.
"One should offer In a temperature-controlled supply chain, particularly restrictive rules

the body something apply to frozen goods, with good reason
good so that “Temperature Mapping”:
the soul may
want to dwell in ÿ In the cold supply chain, special vehicles (refrigerated vans that also allow for division
it." (W. Churchill) into different cooling zones) and containers that are able to ensure low and stable
temperatures over a longer period of time must be used .
ÿ The entire distribution and storage process is strictly monitored (often supported by
temperature-sensitive sensors such as radio frequency systems).
ÿ The highest standards are placed on the hygiene measures for frozen
che asked.
ÿ During the entire distribution, air circulation must be possible in the refrigerated vans.
ÿ Goods checks are never carried out on the ramp, but always in the
fridge.
increasing Batch traceability also plays a particularly important role in the food
meaning of supply chain (food chain) in order to be able to guarantee permanent
food chains food safety. Customers increasingly want to be able to trace the
development of a product back to its starting point. The motto is: "From
the Farm to the Force". Ecological supply chains are emerging, the
market for "ethical" products is growing steadily. The affected supply
chain actors
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Network coordination in supply chains

A.8
re must take into account the effects of any environmental influences
(heat, light, oxygen) in their procurement, production and distribution
processes. These external factors have a lasting effect on the quality
of the food. The products must reach the customer quickly. Freshness
plays a major role in the food chain because food only has a limited
shelf life (cf. Cohen/ Roussel 2006, p. 30).
A.8 Network Coordination in Supply Chains

Network models are used to structure logistic activities. means SCM
To do this, complete value-added processes must be broken down network
into their individual components: All connections (“edges”) between coordination
previously defined elements (“nodes”) are included in a logistical
network, from the source to the sink. The next sections contain ideas
on modeling and systematizing networks in the value chain. The
levels of network models are described in more detail later.
Finally, the current discussion about network competencies within

supply chains is examined in this context.
A.8.1 Modeling and systematization of networks
Different characteristics have to be fulfilled for the modeling of characteristics of
networks. According to Otto (cf. Otto 2002, p. 225), the following network building
criteria in particular characterize supply chain networks:
ÿ An exchange takes place between the actors (individuals or organisations).
ÿ The partners are interdependent across dyads (a dyad is understood as a

“relationship within a group”).
ÿ Decision-making processes are subject to a double reflexivity: They are

derived both from the individual target function of an organization and from
the network itself.
ÿ Within the network, the actors are ready for multi-stage compensation.
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differentiation If these characteristics are fulfilled, various network types can be
of different identified. These include reproduction networks, innovation networks,
network types mediation networks, multiplication networks and transport networks
(cf. Otto 2002, p. 229). A reproductive network usually includes the
operations of supply chain activities. However, the network types
listed below can also be secondary.
The reproductive network represents the mass and routine production
of tangible (personal computers or textiles) and intangible (files or
bills) objects. The actors are firmly and long-term linked within the
reproductive networks.
R&D affinity in In contrast, the partners of innovation networks only find each other
supply chains selectively. They can be found in the form of research and development
alliances (high-tech industry) or consulting projects. With the help of
innovation networks, division of labor, know-how transfer and cost
splitting are targeted.
contacting The main concern of the mediation networks is the establishment of
contacts. An example of this is the mediation of the personnel
consultant between personnel seekers and job seekers. Credit
brokerage is similar. The arrangement of the actors is based on
specific mediation purposes.
2+2=5 Multiplication networks can be found at McDonalds in that the
franchise system is rolled out en masse via the partners. The principle
is similar at the financial service provider MLP: the central idea is
transferred to current and potential market partners in as identical a
form as possible by a large number of coordinated agents.
distribution Finally, freight forwarders, for example, deal with the distribution of
networks groupage goods within the transport network. This type of network
is primarily used for the physical bridging of spaces and times
(understood as basic logistics functions).
Types of Supply Different systematization approaches of networks are available for
chain networks a supply chain . In this regard, Gomm/ Trumpfheller name structure-
related, level-related and phase-related approaches (cf.
Gomm/ Trumpfheller 2004, p. 50ff.). These concepts are described in
more detail below.
structuring ÿ Structure-related approaches: A first criterion for typifying networks is their

properties size . This depends on the number of partners, the network density or the
spatial extent.
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Furthermore, specific characteristics of actors decide on the structure of
the networks (degree of specialization, network experience or willingness to
cooperate). With regard to the social criteria of a network, a distinction must
be made between trust, power relations, potential for conflict and network
culture. Likewise determines the
Form of business relationship the structure of the network. In this regard,
for example, the type and frequency of transactions made as well as the
stability of the business relationship should be mentioned. A closed form for
the classification of structure-related networks emerges in the IT relationships
(digitization, Internet, EDI, Web-EDI).
ÿ Level-related approaches: In principle, the levels of overall economic macro- SCM as an element
logistics, individual economic micro-logistics and the meta-logistics in of meta-logistics

between are to be differentiated for a typification of networks. In this
differentiation, supply chain management is classified within network-oriented
meta-logistics (cf. Gomm/ Trumpfheller 2004, p. 51). Another way of
structuring networks in supply chains is the SCOR approach . According to
this concept, different levels can be distinguished: top level, configuration
level, process element level and implementation level (see p. 70).
ÿ Phase-related approaches: Development steps of supply chains are Cycle related

differentiated within the phase-related concepts of cooperating companies. SCM concepts
In this way, the initializing, processing and reconfiguration stages can be
passed through (cf. Zajac/ Olsen 1993, p. 139ff.). In the initialization stage,
each partner develops its own cooperation strategy. In addition, the first
communication and exchange processes between actors are to be identified
(e.g. basic norms are specified). Subsequently, all activities of the formal
and informal exchange are summarized under processing. These serve to
regulate conflicts and build trust. Finally, a reconfiguration means the
evaluation of the achieved results of a cooperation, which can lead to the
termination, adjustment or unchanged continuation of the exchange
processes.
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A.8.2 Network levels
partial networks Goods networks, information networks, social networks, institutional
networks and financial networks must be distinguished for supply chain
management (cf. Gomm/ Trumpfheller 2004, p. 54ff.; Otto 2002, p. 248ff.).
These individual levels are synonymously referred to as partial networks .
They are in a constant process of interaction with one another.
Physical logistic A goods network takes into account logistical core activities such as
core attributes transport, handling, picking, sorting, storage, packaging and signing. This
means that goods networks cover time, space, quantity and type changes.
The transition to the information networks is fluent thanks to the use of
information and communication systems.
IT and communication The information networks (also called "data networks") include all IT
networks systems in the narrow sense. In addition to computer networks, this
includes other communication (post, fax, telephone) and information networks.
Ceteris paribus, the demands on the information and communication
systems increase with the complexity of supply chain processes. Telephone,
fax and internet are available as basic media for simple processes.
Particularly complex networks are controlled using collaborative solutions
(e.g. EDI, Web-EDI).
"I have nothing People ensure the structure and cohesion of a supply chain (social
against people network). Professional and personal relationships between the actors
as such, my best involved take place within the social network. But not only technical
friends are knowledge is exchanged between people.
some..." (Blumfeld) Social networks also contain emotional ties and feelings.
For example, there can be such tense situations between people that, in
extreme cases, supply chains are dissolved (load ratio). An essential
component of social networks is the trust of the partners.
Business Institutional networks are characterized by cooperation agreements,

combination equity investments and director interlocks. The rights and obligations of the
decides on actors in a supply chain are written down in the cooperation agreements.
bond intensity In addition, there are some capital links between the partners (e.g. mutual
shareholdings). Finally, a director interlock affects institutional networks.
This includes the exchange of supervisory boards and further
understood by high-ranking personalities within the supply chain. The

institutional connections in the Group are very
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A.8
shapes. The bond intensity of institutional partnerships is lower in the case
of cooperative company mergers (strategic alliance, joint venture, cartel,
BGB society, virtual organization, cooperative).
Finally, all the financial transactions (“payments”) of the actors go into the Financial networks
financial network of a supply chain. In this regard, a distinction must be

made between functional, institutional and financial networks (cf. Pfohl et
al. 2003, p. 4). In the function-oriented perspective, logistics interfaces
(procurement, production, distribution, information and disposal logistics)
are expanded to include accounting, controlling or treasury. Institutionally,
the supply chain partners (including their service providers) must be
considered in conjunction with finance and accounting/controlling. Finally,
financial networks take into account the effects of logistics activities on
process costs, fixed assets (asset management, fleet management) and
current assets (cash flow calculations).
These five partial levels of the supply chain are in constant interaction. Exchange
On the basis of the goods network, the ultimate goal is to optimize the relationships in
networks
financial results (financial network). Although the three networks in
between are essential, they are only a means to an end: They enable the
planning and control of the creation process of products and services.
A.8.3 Network Competence

In particular, Pfohl (cf. Pfohl 2004; similar to Dominik/ Hermann 2007) Pallas Athena,
advocates the investigation of network competencies within the supply goddess of wisdom
and strategy...
chain in the “Athene Project” (Applied Theories Enabling Network
Excellence). This means the spatial and temporal coordination and
connection of globally distributed actors in a supply chain. Within the
framework of the “Athene Project”, logistical competencies of organizations
are filtered out with regard to their material, information, financial and
relationship flows (cf. Pfohl 2004, p. 3).
The approach to network competencies describes the optimization of Further
cooperative relationships in the network of partners. In contrast to the developments of the resource
Based View
"resource-based view" (see p. 101), the considerations on network
competencies are based on exchange relationships and the principle of sharing. resource
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Center-oriented approaches, on the other hand, accentuate the
uniqueness and delimitation of company-specific factors (cf. Frunzke
2004, p. 31). And yet the two apparently hybrid contents are united in
the "Relational View" (cf. p. 102). According to this, network
competence in supply chains is based on individual and collective
skills (cf. Frunzke 2004, p. 32ff.).
"Your network In the presence of individual network competence , a competitive
gives you a better advantage of the actors is based on the expansion of their own
perspective -
resource base. This is created by time advantage, economies of
not your glasses." (R.
scale, resource interdependencies and (organizational and
Burt)
technological) innovation. Time advantages and economies of scale
result from the absorption of existing knowledge from cooperation
partners. An organization creates resource interdependencies by
combining its own resources with the resources of external partners.
Finally, innovation competence develops as companies participate in
the technological and organizational possibilities of third parties.
"Forever together, Collective network competence, on the other hand, develops on the
4 years 2 one hand from horizontal or vertical co-specialization. This means
come..." (ABC)
when individual organizations only act in those areas in which they
see their strengths. They leave the execution of other tasks to other
actors in the network. On the other hand, completely new forms of
cooperation in collective thinking are emerging. These are
expressed in interorganizational resources (for example, the partners
in a network settle in close proximity to one another), the exchange
and combination of knowledge, and the complementary resources
available. Commonly used information and communication systems
(such as EDI and Web-EDI) secure the ultimate claim.
A.9 Material flow analysis in supply chains

networking Many supply chains are subject to the increasing dynamics of global
markets and changing, multi-optional customer requirements. With
the help of network-oriented material flow analyses, modern
operating supply chain actors try to meet these market requirements.
The use of adequate IT systems is a sine qua non for this (cf.
Baumgarten 2009, p. 1ff.; Göpfert 2004, p. 33ff.).
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A.9.1 Motives for material flow analysis
The management of complete material flows is a central concern for all premature
value-adding actors. Customer orders are placed in a logistical network, uncovering of
resulting in interaction processes between the actors. The number of business bottlenecks
processes and interfaces can grow rapidly. With increasing complexity in the
network of partners, the risk of costly stock-outs increases.
This is where modern material flow analyzes come in. They serve to contain
the risks of interruptions in logistics chains (cf.
Beckmann 2004, p. 1ff.; Gienke/ Kampf 2007, p. 803; Haasis 2008, p. 62ff.).
The core tasks of supply chain management include the recording, Core tasks of
visualization and analysis of constantly changing material flows. With the help the material
of the material flow analysis, an attempt is made to increase transparency in flow analysis
this network in order to maintain the material flow structure, identify weak
points and their causes, and determine material flow costs.
With the help of the material flow analysis, the profitability of activities in the On the
supply chain should be increased. For this purpose, complex material flows of concept of
the operational environment are to be modeled in simulations. material flow analysis
form. Brunner and Rechberger provide a conceptual clarification of the
material flow analysis : “Material flow analysis is a systematic assessment of
the flows and stocks of materials within a system defined in space and time. It
connects the sources, the pathways, and the intermediate and final sinks of a
material.” (Brunner/Rechberger 2003, p. 3).
A.9.1.1 System definition

In a material flow analysis, the system to be recorded must first be delimited
spatially and temporally in order to limit the scope for interpretation in the
logistics network:
ÿ Spatial system boundaries: The principle of spatial system boundaries Limit material
characterizes the geographic localization of the overall system. This includes flow in
local and internally aligned logistics activities as well as global networks across the room
organizational boundaries.
ÿ Temporary system boundaries: A material flow analysis strives for Avoid

representativeness. Periods that show larger seasonal fluctuations (e.g. the fluctuations
Christmas business) are to be considered as
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period largely unsuitable. Moving averages can be calculated to update past
values.
Exponential smoothing can also be used to determine future values in order
to “catch” outliers using weighting factors (trend, business cycle, season).
Define system However, the system definition also refers to the elements of the
elements system that interact with it. This includes infrastructure (paths, areas,
buildings) as well as material and information flow means (storage
equipment, information technology). Production-specific and logistical
processes are equally taken into account in this regard.
Materials form the The systemically relevant elements are, of course, the materials
core of the
themselves – and the information surrounding them. However, the
analysis materials differ in their weighting. With the help of the ABC analysis,
those materials are specifically filtered which are representative and
have a lasting influence on sales or costs. According to the XYZ
analysis, the materials can also be subdivided according to their
forecast accuracy. Section D.2 (see p. 268) examines this content in
more detail.
A.9.1.2 Material Flow Recording
Capture and Material flow movements are recorded only after the complete
understand definition of the system to be analyzed . They are represented as
material flows transport or storage movements. By determining moving and
stationary materials, the actual direction and size of the material flows
can be recorded in terms of space, time, cost and quantity. The data
for the material flow analysis can be collected both primarily and
secondarily (or in combination). Irrespective of the chosen procedure,
the following questions, for example, must be clarified:
ÿ "Why is it stored and transported?" ÿ "What

and how much is stored and transported?" ÿ "Where and
where is it transported from?" ÿ "With what
and how is it stored and transported?" ÿ "When and how
long is it stored and transported?"
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A.9.1.3 Direct material flow recording
A direct material flow recording is carried out by a primary data Primary data
collection during operation. It is used when the required data on collection
material flow movements is not available or is of insufficient quality.
The most common methods include process and load studies (see
the content below).
The aim of the process study is the model description and mapping process study
of processes and their dependencies in the material flow through
direct observation, measurement or questioning. With the help of the
decomposition of the entire material flow into its individual processes,
activities in production and logistics (transport, storage) that cause
time or costs are identified.
Based on the flow studies, the stress studies provide information stress study
about the direction and the length of the material flows themselves
as well as about their interactions within the material flow network.
The material flow intensities (e.g. “tons per month”) can be derived
mathematically from the measured quantity (e.g. “tons”) that flows
through a supply chain within a defined time interval. In addition, the
utilization rates of means of transport and storage must be determined
(cf. Arnold/ Furmans 2009, p. 234ff.; Gienke/ Kämpf 2007, p. 375ff.;
Martin 2016, p. 31ff.).
A.9.1.4 Indirect material flow recording

With the help of a secondary data collection, an immediate Secondary data
evaluation of existing material flow data is made possible. Modern collection
information systems such as Enterprise Resource Planning and
Advanced Planning and Scheduling (cf. on ERP and APS p. 384)
serve as the basis for the secondary data determination . But digital
supply chain solutions also do a good job in indirect data acquisition
(see p. 249). They enable the planning, management and control of
logistical material flow processes along the entire supply chain. As
secondary sources of information, they are of crucial importance for
a material flow analysis (cf. Baumgarten 2009, p. 45ff.).
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A.9.1.5 Material flow analysis and visualization
Forms of When recording material flows, large amounts of data are usually
representation of material
generated (cf. Big Data on p. 258). In order not to drown in the sea
rivers of data, relevant information must be filtered and complete material
flows must be visualized . The structure of the entire network is
derived from the spatial arrangement and chronological sequence of
the relevant material flows. Qualitative and quantitative methods are
equally suitable for recording and displaying material movements.
These contents are explained in more detail below.
Qualitative The qualitative visualization of material flows serves the structural
material flow analysis system analysis of the supply chain. The system is broken down into
nodes (sources and sinks) and edges (material flows).
Sources and sinks characterize logistical or production-specific
service sectors (goods receipt, raw material storage, production,
finished goods storage, goods issue). In them, activities for temporal,
spatial, quantitative and qualitative material transformation (such as
storage or production) take place. Edges, on the other hand,
represent transport movements between the nodes. These
transports are also to be regarded as logistical processes, since they
enable the materials to be bridged in terms of space and time and
supply the service points. As the sending service point, the source
initiates the transport process. The sink, on the other hand, ends this
as a reception area (cf. Gienke/ Kampf 2007, p. 377ff.; Grundig 2012,
p. 119ff.; Gudehus 2010, p. 7ff.).
structural In this way, the supply chain represents a network-like system that is
parameters of defined by transport movements and service points. The structural
supply chain design of the value chain is derived from the respective material
flows. But the sources and sinks also include the structural
parameters of the supply chain with their location, their function
and their number (cf. Haasis 2008, p. 62ff.).
Combined Qualitative structural representations can be expanded to include
qualitative-quantitative quantitative attributes . Then the chronological and quantitative
Material flow flow of materials through the overall logistics system is shown. Thus,
analysis the pure structure to process analysis changes. This makes material
flow quantities per time interval and material flow intensities
between sources and sinks visible. They appear as cumulative
projections of initial statistical masses running in the same direction.
Previously determined throughputs (such as "tons per unit of time")
are now used as performance values for complete material flows
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used (cf. Arnold/ Furmans 2007, p. 251ff.; Gienke/ Kämpf 2007, p.
377ff.; Grundig 2014, p. 121ff.).
In the following, two qualitative-quantitative visualization forms of the Material flow
material flow analysis are discussed with the material flow matrix and matrix: From the
the Sankey diagram. The material flow matrix in particular is of source to sink
practical relevance. The material flow movements between the
sources ("From") and sinks ("To") are recorded in this "from-to-
matrix" . In this way, a qualitative conclusion can be drawn about the
direction of flow in the material movements, which are directed
forwards and backwards. The sources are removed on the vertical,
the sinks are found on the horizontal.
In order to be able to seamlessly record and map all possible material depict causal
flows, the service points are explicitly taken into account in the chains
material flow matrix. The concept is based on the process idea .

Accordingly, the output of an upstream process represents the input
of the downstream process. The matrix can be read in such a way
that, for example, source A ("procurement warehouse") supplies sink
B ("production") with 37 units (see Figure A.11) .
Material flow movements can also take place within a service point Internal
(e.g. the distribution warehouse). The diagonal in the matrix reflects Interrelationships
these interrelationships. For example, 3 units are moved from the
source to the sink within the distribution warehouse. In this way,
stocks of finished goods can be shifted from one customer to another
with a higher priority before they are dispatched. This knowledge can
become the starting point for a detailed material flow analysis that
deals exclusively with this phenomenon.
While all forward material flows can be found above the diagonals , Forward and
all backward movements are shown on the matrix fields below. Such reverse activities
backward movements in the material flow can be the first signs of ten
inefficiencies or potential cost reductions.
In addition to the material flow matrix, other methods for the analysis Insert Sankey
of material flows are used. One of these tools is the Sankey diagram diagram
(see Figure A.11). This allows material flows within the system under
consideration to be displayed true to scale or in terms of quantity.
The last variant is used in particular on higher aggregated levels: For
example, for the abstract mapping of global material flows of external
supply chains.
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Capture essentials But the Sankey diagram is also suitable for representing internal
at a glance material flows. The variant that is appropriate to the layout in particular
senior
creates a high degree of transparency, in that the meaning of the
individual material flows in the supply chain is represented by arrows.
The strength of these arrows can be related proportionally to the flow
rate. Figure A.11 illustrates this context. For example, production
supplies the finished goods store with 40 units and receives 3 units
from it (cf. Arnold/ Furmans 2007, p. 243ff.; Gienke/ Kämpf 2007, p.
377ff.; Grundig 2014, p. 120ff.).
Figure A.11 Material flow matrix and Sankey diagram
material flow matrix Sankey diagram (according to layout)
tonnage/month After (sink)

commodity storage 5
(a) (b) (C) (S)
From (source)
37 45 production
(A) Procurement Warehouse 8th
3
(B) production 5 40 45 37
(C) Distribution Warehouse 5 3 8th
8th 3 40
(S) sum 5 42 51 98
finished goods warehouse
A.9.2 Critical Appraisal

For the benefit of A significant advantage of the material flow analysis can certainly be
Material flow seen in the increased transparency. The recording and evaluation of
analysis material flows are simply easier, which is underlined by the following
explanations:
strategic ÿ Operational instrument with a strategic character: The material flow analysis
information provides information that can also be used for strategic problems. Effects on
sourcing decisions can be derived from it by allowing conclusions to be drawn
about transport costs and storage costs or uncovering possible stock-outs at an
early stage.
planning and ÿ Strategic network design: By using a material flow analysis, the actors involved
modeling of are forced to critically analyze their supply chain. Networked material flows must
material flows be simulated in order to achieve an improved overall result in the network.
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A.9
In combination with modern information systems, material flow analysis
can become an important tool for supply chain design and planning
(see p. 87 of this document).
ÿ Process understanding and cost transparency: With the analysis of process and
material flow movements, logistical core processes also receive an cost transparency
exact specification, so that logistical service points have to be formed.
With a view to activity-based costing (see p. 477), the importance of
material flow analysis for increasing cost transparency in the indirect
service areas becomes clear. It supplies important basic data in order
to allocate the overhead costs of logistics to the cost bearers according
to their cause.
ÿ Flexibility: The material flow analysis increases the transparency of structure and
material movements so that planning, simulation and modeling times speed
can be significantly reduced.
Of course, a material flow analysis also has its limits. Below are limits
some of these difficulties of material flow analysis in bullet points:
ÿ No model character: The material flow analysis is not an ideal model No generic
that can be used universally. Neither in practice nor in theory has a reference model
generally valid concept prevailed. Ultimately, this leads to a high
degree of abstraction with a more application-specific character.
ÿ High information content: With the help of the material flow analysis, focus on the
considerable amounts of data can be recorded, which increase with essentials
the complexity of the observation environment. Therefore, a delimitation
of the system is just as important as the selection of the database in
order to avoid incorrect analyses. Especially when using the material
flow analysis for the first time, misinterpretations of the material flow
data can hardly be avoided.
ÿ Lack of sustainability and reference to the past: The material flow Project past
analysis lacks sustainability if it is subject to the dictates of a one-off values into the
application. Even the resulting effort would hardly justify the results future
that are expected from their application. Especially against the
background of the dynamic development of material flows, one-off
static snapshots would be of little use.
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Gossip from ÿ Ex-post consideration: Finally, simulations of material flows are derived from
yesterday...? past values. However, forward-looking analyzes of material flows would be more
interesting.
A.10 Design models of supply chain

management
Formative SCM Two selected design models of supply chain management are
models discussed below . First of all, a more detailed description of the
SCOR approach can be found in this context. Subsequently, these
considerations are to be transferred to a special task model for
software systems, the development of which is based on SCOR.
A.10.1 SCOR model
A.10.1.1 Basics
history and all The SCOR model (Supply Chain Operations Reference Model) was
mean background set up with the aim of standardizing the processes within a supply
chain ( cf. www.supply-chain-org.; Bolstorff et al. 2008; Cohen/
Roussel 2006; Poluha 2016). The cornerstone for this was laid in
1996 by the Supply Chain Council (SCC): the two consulting firms
Pittiglio Rabin Todd & McGrath (PRTM) and Advanced Manufacturing
Research (AMR) created the Council in Pittsburgh (USA) together
with 69 companies from different sectors. As early as 1997, the SCC
was included in the commercial register in Pennsylvania. This
association is an independent, not-for-profit association that wants to
promote and constantly develop the SCOR model. The activities in
the Council are financed by membership fees. The Council now has
over 1,500 members. Participation in this network is basically possible
for a small fee. This council includes, for example, BASF, Black &
Decker, Dow Chemical, Federal Express, General Electric, IBM,
Merck, Motorola, Procter & Gamble, SAP and Xerox.
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A.10
At its core, the SCOR model is an ideal-typical and cross-industry fundamentals
approach in which the processes within the supply chain are uniformly characterization
described by the partners. With the help of key figures
the processes in the standardized supply chains must be measured.
The concept also contains requirements for the software used,
including a description of its functionalities (software database).
SCOR version 12.0 is currently in use. However, the model is in
continuous further development, with updates of the software used
being made in quite rapid succession. The members of the Supply
Chain Council already have access to the new version about six
months before the official release of a new software generation.
As a process reference model , the approach extends across the SCOR strives for
entire supply chain: from the source of supply to the point of consumption.standardization
The processes can be configured: different alternatives of the same
process are mapped. This creates a standardized language for
internal and external communication processes within the value chain.
This is an important prerequisite for the performance comparison
between the partners.
A.10.1.2 Process Stages
The ideal-typical reference model has a hierarchical structure and Four formative
contains four different levels. As you progress between the individual model stages
stages, the degree of specification increases constantly.
These development levels represent top level, configuration level,
process element level and implementation level. These different levels
are identified below. Figure A.12 shows this relationship.
A.10.1.3 Top Level (Level 1)
The top level defines the scope and content of a supply chain. The Specify process
five different process categories (groups of activities) planning categories in level
(plan), procurement (source), manufacture (make), deliver (deliver) 1
and return (return) are specified.
ÿ Planning (Plan): In the supply chain, the supply and expected demand structures must generic plan
first be planned. For this purpose, sources of supply are evaluated, demand tion
requirements are determined, stocks
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planned, requirements placed on production and sales, materials defined or
capacities compared in the quantity structure.
In addition, the "infrastructure" of the planning must be laid down. In this regard,
decisions must be made regarding make-or-buy, phase-in and phase-out control
or commodity structure.
input ÿ Procure (Source): Then, in the SCOR model, alternative sources of procurement
that guarantee security of supply are to be compared. The process includes
internal and external activities. The first include goods receipt, quality inspection,
storage or payment. The latter include, for example, the certification of suppliers
or the conclusion of framework agreements.
throughput ÿ Make : The third bundle of activities at the Top Level involves the production of
goods that are in demand. To do this, the manufacturing process and its interfaces
(e.g. engineering or quality assurance) must be coordinated. In order to achieve
a high level of customer satisfaction, the products must be manufactured to a
high quality.
output ÿ Deliver : The “Deliver” process category includes measures that serve to satisfy
customer demand. Customer orders are managed here (order entry, invoicing,
debt collection), warehouses are managed (picking, packaging, shipping) and
goods are distributed (fleet management, Incoterms, freight).
Re-Logistics ÿ Return : Finally, this core process includes all administrative activities associated
with the return of raw materials (to suppliers) or the receipt of returned finished
goods (from customers). In this way, Return covers the return flow of defective
products or excess items (Re-Logistics). Uncommon item numbers also come
under the “Return” heading.
A.10.1.4 Configuration level (level 2)

Creation of the On the basis of the top level, various standard modules are defined
process configuration on this second level, with which possible supply chains can be
configured. To do this, the entire supply chain must be broken down
into different sub-processes. The “bundles of activities” of the first
level serve as process categories : Plan, Source, Make, Deliver
and Return (see Figure A.12). In this context, for example, the
following questions need to be clarified:
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ÿ Plan: "Is there an outsourcing of activities?". "How to determine the potential
demand?".
ÿ Source: "Is there a pull control?". "Is it about the to

procuring goods by a catalog part?ÿ.
ÿ Make: “Do we mass produce?”. "Can the production facilities be converted

quickly?".
ÿ Deliver: "Should the products be packaged in a customer-specific way?".

“Are we opening a central warehouse?”.
ÿ Return: "Which products require a return?". “Who carries out the return transport?”.
The standard modules of the toolbox can be displayed in a matrix. SCOR primary
The five process categories Plan, Source, Make, Deliver and Return process types
are shown horizontally. There are three different process types
vertically in the matrix: Planning, Execution and Infrastructure.
ÿ Planning : The planning process type aims to define those activities that bring
supply and demand into line in the best possible way. This includes the
determination of the planning horizon as well as the design of the planning
processes.
ÿ Execution : In the next step, activities are initiated that serve to transform the
planning. For example, this includes appointments and machine allocations.
ÿ Infrastructure : Finally, the infrastructure includes all activities that create the
prerequisites for the realization of planning and execution. This includes, in
particular, information processing and data maintenance.
A two-dimensional matrix is created through the interaction of the Configuration

process categories Plan (P), Source (S), Make (M), Deliver (D) and toolbox
Return (R) with the process types Planning, Execution and
Infrastructure. It is called the Configuration Toolbox by the Supply
Chain Council (see Figure A.12). A closer look at the matrix reveals
that the Execution process type is further subdivided. As part of the
execution processes, the following differentiation is made:
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ÿ Source: “Stocked-Product”, “Make-to-Order-Product”, “Engineer-to-
Order product”.
ÿ Make: “Make-to-Stock”, “Make-to-Order”, “Engineer-to-Order”.
ÿ Deliver: “Stocked-Product”, “Make-to-Order-Product”, “Engineer-to-

Order product”.
ÿ Return: “Source-Return”, “Deliver-Return”.
Everything is put From these main fields of the toolbox, organizations select the
to the test process chains that apply to them. At its core, the problem is
specified. Each company thus receives its own suitable configuration.
This reveals deficient areas: The toolbox helps to identify
redundancies in the supply chain.
Figure A.12 SCOR Toolbox (Level 2)
Planning P1 Plan Supply Chain
P2 plan source P3 plan make P4 Plan Deliver P5 plan return
Source Make deliver
customers S1 stock product
S2 MTO product
S3 ETO product
M1MTS
M2 MTO
M3 ETO
D1 stock product
D2 MTO product
D3 ETO product
suppliers
execution
source return Deliver Return

R1 Return Defective Product R1 Return Defective Product
R2 Return MRO Product R2 Return MRO Product
R3 Return Excess Product R3 Return Excess Product
infrastructure
Legend: MTS = Make-to-Stock MTO = Make to Order

ETO = Engineer to Order MRO = Maintenance, Repair and Overhaul
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A.10.1.5 Process Element Level (Level 3)
At the third stage of the process, the design level, the specification of Process
the SCOR model continues. The process categories are now broken elements are formed
down into individual process elements . The focus is on the definition
of these process elements and the determination of input-output
relations for each process element. If possible, benchmarks should
be defined for each process element. This allows backlogs of best
practices to be identified. Finally, the software to be considered in the
supply chain must be specified.
Each field in the toolbox is provided with input-output relations for process element
each process element on this third level . An input-output relationship "M3" as an example
for the individual processes of "M3", engineer-to-order ("customer
order-related production"), is discussed as an example:
ÿ Schedule manufacturing activities (“M3.1”),
ÿ Issue material (“M3.2”),
ÿ Manufacturing and verification (“M3.3”),
ÿ Pack ("M3.4") and
ÿ Provide product (“M3.5”).
The activities of this causal chain for the termination of the "M3" is broken
manufacturing activities (“M3.1”) are originally derived. This requires up
information from the production plan (P = Plan), refill signals for
delivery (D = Deliver) and for production (M = Manufacturing). As a
result of these activities, a planned output for delivery (D) and
production (P) emerges.
The triggering of the inventory signal is the next cause of this causal Cause-
relationship, in that material is issued ("M3.2"). This is required for impact
the subsequent manufacture and verification ("M3.3"). connections
The system automatically detects a stock shortage (production refill
signal). Following production, the packing process takes place
("M3.4"). Finally, the finished goods inventories are ready for shipment
(“M3.5”). Figure A.13 serves to better understand this fact.
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Figure A.13 causal chain (level 3)
(P) Production plan (M) Refill Signal Craft

(D) Deliver fill signal (S) Order backlog
(M)(S) inventory
M3.1 M3.2 M3.3 M3.4 M3.5
Terminate material Produce pack product
Planned output refill signal Duration

(D)(P) Craft (S)(M) (P)(D)(M)
One for each The individual process elements must be meticulously defined
process element within a process category (M3). Such a control chart for the
control chart process element "manufacturing and checking" (M3.3) is visualized
in Figure A.14 as an example.
KPI to measure The four performance characteristics of flexibility/response time,
target achievement costs, delivery reliability/quality and capital are assigned to each
process element. These performance attributes are evaluated using
specific Key Performance Indicators (KPIs). For example, the
performance characteristic "costs" for the process element M3.3
("manufacture and inspection") is evaluated via the key figures
"guarantee costs", "total number of employees in production",
"capital turnover" and "value added".
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Control Chart (Level 3) Figure A.14
Process category: Process number: M3

Engineer to order
process element: Process Item Number: M3.3

Manufacturing/Verification
Process Element Definition: The activities that are undertaken to transform raw material into
the final state. There are processes associated with validating
product performance to ensure compliance with specifications
and requirements.
performance characteristics metrics
Flexibility/Response Time - Total Response Time

ÿ Rescheduling cycle
Costs ÿ Warranty costs

ÿ Employees in production
ÿ Capital Turnover
- added value
ÿ Costs for rejects and rework
Delivery reliability/quality
- Quality level
ÿ Error rate in the process
capital - Training and education

ÿ Capacity utilization
- Cycle time
A.10.1.6 Implementation Level (Level 4)

The fourth level is implementation. The focus is on the detailing of the implementation of
process elements. To do this, the individual process elements must be SCOR
broken down into different activities. For the process element

"M3.3" ("manufacture and inspection"), prices must be calculated,
storage space created, delivery dates set, means of transport defined
and routes planned.
The flexibility of the SCOR model is crucial in this context . SCOR aims
This does not present itself as a rigid structure. Rather, it is adapted adaptability
with regard to the respective specifics of an organization. According to
the Supply Chain Council, this fourth level does not belong directly to
the SCOR approach: because there are too many specifics in corporate
practice (especially between different industries).
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no general concept can be defined. However, the implementation
stage is absolutely necessary in its execution, since a SCOR model
would otherwise remain incomplete.
A.10.1.7 Measurement via SCOR

KPI comparison As briefly outlined above, two different groups of performance
straight away via SCOR characteristics are based on the SCOR approach: The first indicators
are externally shaped ("delivery reliability/quality" and "flexibility/reaction time").
The second performance category includes internal performance
indicators (“costs” and “capital”). Differentiated according to external
and internal performance characteristics, the following eight key
figures stand out from the SCOR approach (cf. Becker 2004, p. 83;
Bolstorff et al. 2011, p. 77ff.; Cohen/ Roussel 2006, p. 208ff.; Poluha
2016): Customer-requested delivery reliability, delivery reliability on
the confirmed date, order processing time, production increase
flexibility, total supply chain costs, cash-to-cash cycle, inventory range and capital
Figure A.15 shows this connection in a clear form. In the following,
these particularly important SCOR key figures (Key Performance
Indicators) are to be explained conceptually.
ÿ On Time Delivery to Request: According to SCOR, this KPI measures

the percentage of orders delivered to customers on time (in relation
to the originally requested delivery date).
ÿ On Time Delivery to Commit: Percentage of processed orders that

are completed on time or before the actually scheduled delivery date.
ÿ Order fulfillment lead time : Time in days required for the sequence
of activities to fully process a customer order.
ÿ Upside Production Flexibility : Time in days that organizations need

to meet an unplanned 20% increase in demand.
ÿ Total Supply Chain Costs : This indicator is preferably measured in

relation to sales.
According to SCOR, supply chain costs are made up of order
processing costs, material procurement costs, inventory costs,
financing costs, planning costs and IT costs. They also include
warranty costs.
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ÿ CashÿtoÿCash Cycle: Time span in days between the supplier billing and
receipt of the customer payment. Three ranges measure the cash-to-cash
cycle: customer days (days sales outstanding), warehouse range (days
on hand) and vendor days (days payables outstanding); cf. in detail p.
491 of this publication.
ÿ Days of supply (inventory days of supply): Time span in days that a

material is sufficient to cover calls (taking into account the current stock
levels).
ÿ Asset Turns: Number of annual inventory turns.
The Performance Measurement Group (PMG) carried out functional supply chain
benchmarking with regard to these listed key figures (cf. Cohen/ benchmarks
Roussel 2006, p. 286ff.; Poluha 2016; www.pmgbenchmarking.com).

PMG is a subsidiary of PRTM. 170 companies from various sectors
took part in the benchmarking. In order to make the organizations
anonymous, the data collected was consolidated into the five
segments of computer/IT, industry, telecommunications, chemicals
and mail order. The benchmarking originally covered the years
1999-2000 and was updated in 2017 (here are the new numbers).
Key figures of SCOR Figure A.15
Key performance indicators Service/ flexible

Costs capital
within the supply chain Quality activity/ time
customer-requested delivery reliability ÿ ÿÿ ÿ ÿ
Delivery reliability on the confirmed date ÿ ÿÿ ÿ ÿ
order processing time ÿ

ÿÿ ÿ
Production increase flexibility ÿ

ÿÿ ÿ
supply chain costs ÿ ÿ

ÿ
ÿ ÿ
Cash to Cash Cycle ÿÿÿ

ÿ
inventory days' supply ÿÿÿ

ÿ
capital turnover ÿÿÿ

ÿ
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customer request Although it is not explicitly stated in the study, it can be assumed that
faithful the customer-requested delivery date of this benchmarking refers to
external customers (and not to intercompany deliveries). A value of
the best-in-class close to 100% is not surprising. It is rather surprising
that, for example in industry, the key figure "On Time Delivery to
Request" is only 68.90%.
On Time Delivery to Request Average Best in class
Computers/IT 72.60% 94.30%
Industry 68.90% 97.00%
telecommunications 77.00% 99.00%
Chemistry 79.00% 99.00%
mail order 81.20% 97.60%
Delivery reliability The same applies to the KPI "On Time Delivery to Commit" (delivery
on the confirmed date reliability on the confirmed date). Again measured against the
industry, average organizations achieve a delivery reliability of
72.00%. However, the definition of this metric is fraught with problems.
According to SCOR, it measures the percentage of processed orders
that were completed on time or before the delivery date actually set.
Penalties (points) are therefore only awarded for those deliveries that
arrive late. However, goods that arrive much earlier also sometimes
present the customer with greater difficulties. If, for example, a
shipload of fertilizer reaches the customer three days too early, the
customer must find a suitable storage location for the goods at short
notice.
Deliberate slowing
To solve this problem, a logistical postponement offers itself, in
down of the proÿ
cess which a shipment tracking system (tracking and tracing) is used: For
example, supported by the "Event Manager" from SAP based on
modern sensors. In addition, it would be more meaningful not to
measure entire orders, but rather individual items per order (improved
granulation).
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On Time Delivery to Commit Average Best in class
Industry 72.00% 97.50%
Chemistry 82.10% 99.00%
mail order 81.90% 98.80%
The order fulfillment lead time depends not only on the industry order processing
itself, but also on the specific business within that industry. Therefore, time
the fact that, for example, in the mail order business, the best only
needs 2.00 days to completely process a customer order is quite
interesting. On the other hand, this statement hardly creates any real
added value for the viewer.
Order fulfillment lead time Average Best in class
Computers/IT 6.90 2.30
Industry 5.70 2.50
telecommunications 8.50 3.30
Chemistry 6.10 2.90
mail order 5.50 2.00
The flexibility to increase productivity is important in order to be able Production

to react quickly to unexpected customer demands. Best-in-class increase flexibility
companies say they can meet a 20% surge in demand in just a few
days. For example, the leader in the computer/IT segment claims that
it only needs 4.30 days to cover demand.
This significantly reduces the “Forrester effect” (see p. 47). In this From Forrester to
context, however, it should be noted that Forrester empirically bullwhip
determined at the time that organizations needed about a year to
satisfy a sudden demand surge of 10% at the end of the 1950s.
Upside production flexibility, on the other hand, was not determined
empirically. The specified numbers of the
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shared benchmarking partners are only estimates “on paper”. The
improvements achieved are not least due to the increasing digitization
in the supply chain, as well as the close cooperation between the
value-added partners.
Upside production flexibility Average Best in class
Industry 30.00 10.00
Chemistry 30.00 6.00
Entire Supply The benchmarking shows that average organizations use between
chain costs
8.30% and 11.20% of their sales to process their supply chain
activities, depending on the industry they belong to.
For example, supply chain costs in the telecommunications sector
average 8.30% of sales. The industry leader claims that supply chain
costs account for only 3.30% of its sales.
Lagging key If external organizations want to measure themselves against these

figure comparisons values, caution is advised: The definition of supply chain costs
shows that these consist of order management (management of
customer orders, distribution costs, invoicing), material procurement
costs (quality development from suppliers, goods receipt trolls),
warehousing costs (opportunity costs, value adjustments), financing
costs, planning costs and IT costs.
While the first three influencing factors are probably 100% included
in the calculation, it remains to be questioned what percentage of
financing, planning and IT costs are included in the calculation. In
the final analysis, only the internal accounting of services can provide
information about these values. However, these billing rates are set
individually for each organization and are therefore not visible to third
parties (proportionalization factors). Apples would probably be
compared to pears if a measurement were to be carried out “blindly”
with these percentage values.
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Total supply chain costs Average Best in class
Industry 10.30% 4.30%
Chemistry 11.20% 3.90%
mail order 9.20% 4.90%
A cash-to-cash cycle (cf. Heesen 2012; Pfohl 2010, p. 221; Weber Calculate liquidity
et al. 2007) is a capital element of the supply chain. Changes in cycle
inventories, receivables and payables are included in its determination.

The inventory level is derived in particular from procurement and
production logistic measures. Contractual framework agreements
concluded between suppliers and customers decide on the handling
of receivables and liabilities. The benchmarking figures show that the
liquidity cycle lasts an average of two to three months. It is calculated
by adding customer days (Days Sales Outstanding) and storage
range (Days on Hand), minus vendor days (Days Payables
Outstanding). The value should of course be as low as possible,
ideally even negative.
The cash-to-cash cycle reflects the balance of power within a supply "Money, get away,
chain. Organizations strive for quick payment and low inventories. you get a good
The suppliers are paid as late as possible in order to receive an job with more pay
interest-free loan from them (quasi as pre-financing). For example, and you're okay..."
the cash-to-cash cycle in the chemical industry averages 91.20 days, (Pink Floyd)
i.e. about three calendar months.

This results in considerable opportunity costs for the affected
organizations.
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Cash to Cash Cycle Average Best in class
Industry 67.60 ÿ 4.50
Chemistry 91.20 ÿ 3.40
The benchmarking shows that the players in the industry have an

Keep stock ranges inventory days of supply of 79.50 days on average.
small Telecommunications organizations have inventories that have not
changed for more than four months (slow movers). The best-in-class
organization from the field of mail order business manages with a
stock range of just 10.90 days. It would be interesting to break down
the range of inventories by business area, information that
unfortunately does not emerge from this benchmarking.
Inventory Days of Supply Average Best in class
Industry 79.50 24.50
Aim for high Finally, the inventory turnover (“asset turns”) can be found in the
capital turnover benchmarking. Since these figures are determined reciprocally to the
range of storage, the information regarding the inventory days of
supply would have been sufficient. Nevertheless, the information
regarding the inventory turnover can be understood as a "sample" of
the range. In fact, these results (compared to the inventory days'
supply) are understandable: if the average inventory days' supply in
the industrial segment is 79.50 days, this value correlates with an
inventory turnover of 4.70 turns per year: 4.70 turns multiplied
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with a range of 79.50 days results in 373.65 days. The deviation from the
actual calendar days is negligible.
Net asset turns Average Best in class
Computers/IT 7.30 19:10
Industry 4.70 16.30
The appeal of this benchmarking lies in the fact that external viewers get a "If you know your
enemy and
"first feeling" for evaluating their own supply chain processes. However,
yourself, you
many questions remain unanswered: While it is quite interesting to know
don't have
that the best-in-class in chemistry manages 15.30 net asset turns per year.
to fear 100
But what skills will catapult him to the top of his class? The path to a best
battles." (Sunzi)
practice situation is not shown. It also remains unclear which organization is
behind the best. Finally, the range between best-in-class and worst-in-class
is also covered.
A.10.1.8 Critical Appraisal

The thoughts surrounding the SCOR model are of several strengths and SCOR satisfies
characterized by weaknesses. First, the advantages of SCOR are discussed. many desires...
The disadvantages of SCOR are then discussed.
ÿ The SCOR approach is used for the cross-industry standardization of processes

within the supply chain. The organizations involved "speak the same language",
for example by defining their key figures identically. In addition, compatibilities
within a supply chain are forced because the respective hardware and software
are coordinated with each other.
ÿ If the companies consider the SCOR approach, they have to apply this general
concept to their specific competitive situation. As a result, there is a compulsion
to deal critically with the current processes within the organization (“clarifying
thunderstorm”).
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ÿ Furthermore, the partners can learn from the best practices and thereby
maybe even pass the Stages of Excellence yourself.
...however, a number of
However, some problems of the SCOR model must also be
questions remain unanswered considered, which can become stumbling blocks on the way to modern
supply chain management.
ÿ Due to its cross-industry approach, the model has a high degree of abstraction.
ÿ It can hardly be used with an unstable basis for cooperation in the network because
it requires a certain continuity .
ÿ If the approach is applied sustainably, the dependency between the involved

partners increases, which means that the actors lose sovereignty.
ÿ The close supplier-customer connection at the interfaces leads to the disclosure of

sensitive information. As a result, there is a latent risk of an outflow of know-how.
A.10.2 Task model for supply chain software
A.10.2.1 Basics
Software model Based on the considerations of the Supply Chain Council, the two
based on Fraunhofer Institutes developed IML (“Fraunhofer Institute for Material
SCOR Flow and Logistics”) from Dortmund and IPA (“Fraunhofer Institute for
Production Engineering and Automation”), based in Stuttgart , together
with the “Center for Business Sciences” of the Swiss Federal Institute
of Technology in Zurich, an SCM reference and task model (cf. in
particular Hellingrath et al. 2008, p. 99ff.; similar to Kuhn/ Hellingrath
2013). The Hellingrath et al. The developed concept dissects the SCOR
approach, and it assigns specific requirements of SCM software models
to each level. Thus, this task model can be understood as the basis for
the selection of software alternatives for supply chain management.
Software provider Potential supply chain software vendors include Agilisys, Axxom,
in the SCM Demand Solutions, Descartes, DynaSys, Iconÿ SCM, JD Edwards,
Manhattan Associates, Manugistics, Mapics, Oracle , and SAP. Most
of these software manufacturers are listed in a “market mirror” by Busch et al. (see.
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Busch et al. 2003) subjected to a closer examination. According to
Busch, the evaluation of the different software solutions refers to the
functional depth, supporting operator model, database system, data
transmission, license costs and support after implementation.
The task model according to Hellingrath et al. comprises three main main levels of
levels: Supply Chain Design, Supply Chain Planning and Supply model
Chain Execution. Figure A.16 visualizes this relationship. The focus
of the considerations is on the planning stage. It is broken down into
various planning contents. The three reference levels of the task
model are characterized in more detail below (cf. Hellingrath et al.
2008, p. 104ff.).
Task model for SCM software systems Figure A.16
design
network
demand planning
Planning
network planning
Sourcing, Production, Distrib.
Order Promising
Detailed planning procurement, production, distrib.
order processing
execution
transport production camp
event management
alert tracking/ workflow maÿ
...
management tracing nagement
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A.10.2.2 Supply Chain Design
supply chain First of all, the model is based on the strategic network design
Design: Generic (supply chain design, cf. Gattorna 2015; Straube et al. 2007, p. 12ff.;
network design Watson et al. 2012). An iron goal is the selection of the most cost-
effective SCM software system. To this end, generic questions must
be asked about the structure and design of the strategic network (cf.
Hellingrath et al. 2008, p. 104f.; Straube et al. 2007, p. 12ff.).
For example, the following questions are clarified: "Which product is
being manufactured?". "In which plant does the production take
place?". "Which suppliers are integrated into the supply chain?". "Are
intermediate distribution levels needed?".
simulations for Fundamental investment decisions are made as part of the definition
process of the supply chain design. On their basis, there can be serious cost
optimization changes within the entire supply chain. The selection of a software
solution for supply chain management depends, for example, on the
number of plants, suppliers, trading partners, distribution centers or
freight forwarders involved. With the simulation of "what-if scenarios",
different logistical networks are to be run through with regard to their
size, complexity and complexity. In this way, the expansion of the
supply chain by additional plants, the change of suppliers, the loss of
customers, the use of other distribution channels or the use of new
carriers can be simulated.
A.10.2.3 Supply Chain Planning

Tactical and The second main level of the model is based on collaborative planning
operational decisions within the supply chain. After the strategic considerations
planning decisions have been fixed in the supply chain design, the tactical and
operational implementation process begins at the planning level.
In this regard, the needs, stocks, capacities or capacity allocations of
the actors must be compared. The following planning content (cf.
Hellingrath et al. 2008, p. 105ff.) is distinguished: requirements
planning, network planning, procurement, production and distribution
planning, order promising, detailed procurement, production and
distribution planning as well as collaborative planning.
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A.10.2.4 Demand Planning
The primary task of requirements planning consists of long-, medium- Fluctuations in call-
and short-term forecasts of all the needs of collaborative actors. In offs complicate
the B2B business, requirement planning is based on customer calls. demand planning
If the buyers do not constantly revise their orders, such a requirement

planning can be easily structured. For B2C processing, on the other
hand, different rules apply. The purchase decision of the ultimate end
consumer depends on many influencing factors. Particular difficulties
are inherent in seasonal or fashionable business processes. These
fluctuations in demand affect, for example, the consumer goods and
clothing industries (fashion supply chain). In this regard, requirements
planning is in a latent tension between optimal capacity planning, a
high degree of delivery service and low capital commitment. As a
consequence of these problems, the whiplash effect (bullwhip effect,
cf. p. 47) occurs within a supply chain.
In particular, medium-term and long-term requirements planning pictures of the future

cause difficulties. The available data are values of the past. With the Build base of past
help of statistical forecasts, this information is projected into the future values
(e.g. using moving averages or exponential smoothing). These
parameterized images of the future are based on various
restrictions, which may lose their validity. As a result, medium-term
and long-term demand planning are a bit “on shaky ground”.
A.10.2.5 Network Planning

With the help of network planning, the individual actors in a supply Network planning
chain are coordinated. Within the framework of internal planning, for spans
example, the production and logistics centers of business areas must lighthouses
be defined worldwide. For cross-company networks, the procurement,

production and distribution planning along the entire logistics chain
are clarified in the collaborative network of partners. In this regard,
the dominant players (“hub firms”) occupy a special position: they
have the most comprehensive information for planning, steering and
controlling the entire value chain.
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Creation and An important concern of network planning is the optimization of
dissolution of the requirements, resources (repetition factors) and capacities (potential
quantity framework factors). The result of this comparison is the generation of a quantity
structure. On the basis of sales forecasts, the allocation of production
volumes to different plants is derived from this quantity structure.
Such network planning on an annual basis (budgeting) is usual. In
rare cases, however, quantity frameworks can also be set up over a
longer planning horizon for "stable" networks.
A.10.2.6 Procurement, production and distribution planning
Sound out Procurement planning is based on demand and network planning.

tensions On the one hand, procurement planning ensures the supply of parts.
On the other hand, it is carried out with the lowest possible stocks.
The planning period is usually days or weeks. The parts list is an
important planning tool in this context. It is used to determine primary,
secondary and tertiary requirements. Delivery frequency, replacement
lead time and inventory level are defined as decision criteria for
procurement planning.
Finding the In addition, a production plan must be drawn up for each location in
optimal capacity the supply chain (“Master Production Schedule”). When generating
utilization rate production plans, high capacity utilization should be aimed for. At the
same time, it must be taken into account that unexpected additional
orders are not rejected if possible (production flexibility). Other
possible levers of production planning are throughput times, set-up
costs, scrap rates, inventories, service levels and (labor) productivity.
The horizon of this forecast is days or weeks. Shift plans or machine
allocation plans serve as an aid to creating a master production
schedule.
integration of The main task of distribution planning is to secure the flow of goods
logistics service towards the customer. This planning is created on a daily or weekly
providers
basis. The key figure "coverage of finished goods inventories" (finished
goods) provides important assistance. It is used for fine adjustment
in the context of goods distribution. Different supply scenarios can be
run through to optimize distribution planning. Possible influencing
factors for such simulations are the integration of logistics service
providers in the distribution of goods, the use of other distribution
channels or the construction of warehouse transhipment points (cross
docking).
90

A.10
A.10.2.7 Order Promising
Order promising means an availability or feasibility check. Key terms A promise is
are available-to-promise and capable-to-promise (see p. 162). Available made...
-to-Promise (ATP) means the promise made to the customer to provide
a service under defined conditions. An example of this is the delivery of
books and other products by Amazon within 24 hours. Otto-Versand
makes a similar promise . In addition to the desired delivery date, other
promises must sometimes be kept. These can relate to delivery
quantities, configurations, prices or compatibilities of items.
Capable-to-Promise (CTP) describes the ability of an organization to ...can it also

keep the delivery promise signaled to the customer. be held?
This principle is due to the logistical realization process.
While Available-to-Promise is directed outwards (towards the customer),
Capable-to-Promise is directed inwards. The coexistence of both
perspectives acts as a front-end-back-end relationship. Consequently,
the approach includes the optimization of logistical assets. Fleet
management is an example of this.
A.10.2.8 Detailed procurement, production

and distribution planning
Another module of the planning stage is the fine adjustment of Fine adjustment of
procurement, production and distribution processes. In some sectors, views
detailed procurement planning is carried out on an hourly basis (e.g.
for time-critical radiopharmaceuticals). Described in general terms, the
delivery call-offs (LAB) received in procurement planning are now
converted into JIT call-offs (FAB). Procedures such as just-in-time and
just-in-sequence are based on this meticulous fine-tuning.
The detailed production plan is to be drawn up in a similarly detailed decomposition on
manner. It is derived from the generic production plan. In contrast to Level of production
areas
this, the fine adjustment no longer takes place at the factory level, but
rather at the production area level. The planning horizon is hours or a
few days. A tool for fine-tuning production is sequencing planning.
Route and means of transport planning are characteristic for the fine Distribution
adjustment of distribution . For example, a milk run (see p. 328) is costs vs. service level
specified therein. In general, in the detailed distribution planning, the distribution
91
basics
A
same different transport scenarios. On the one hand, decisions are
made based on cost considerations (such as outsourcing the vehicle
fleet). On the other hand, the outgoing delivery service level plays an
important role in detailed distribution planning (to improve customer
satisfaction).
A.10.2.9 Collaborative Planning

create harmony Collaborative planning pursues the harmonized cooperation of all
of goals actors in a supply chain. For this purpose, supply, disposal and
recycling activities are synchronized. Possible collaborative software
solutions relate to capacity planning, demand planning and inventory
planning.
Determine ÿ Capacity planning: The necessary capacities of interacting actors are

necessary capacities derived from primary, secondary and tertiary requirements. In addition to
your own work data, information from suppliers and external service
providers must also be imported into web-based solutions.
APS systems ÿ Requirements planning: For collaborative requirements planning, customer

enable simulations data is processed at the same time as your own information (real-time
process). In addition, supplier data can be integrated into the requirement
planning. On the basis of "what-if scenarios", simulations take place via
advanced planning and scheduling systems (see p. 384).
intensified ÿ Inventory planning: Ultimately, collaborative inventory planning is mostly

Interface based on the transfer of inventory sovereignty from a customer to the
processing manufacturer (Vendor Managed Inventory).
Inventory monitoring is based on IT solutions in the sense of Collaborative
Planning, Forecasting and Replenishment (CPFR).
A.10.2.10 Supply Chain Execution

supply chain After the planning activities have been completed, executing logistic
perform activities are initiated (Supply Chain Execution). An important pillar of
management this implementation is the order processing.
This essentially extends to transport processing, production processing
and warehouse management. In general, the term "order processing"
stands for the sequence of logistical activities that are necessary for
the complete processing of a customer order
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A.10
(cf. Otto 2004, p. 14ff.). Basically, order processing describes the flow
from ordering to payment (cf. on "Order-to-Payment-S" p. 7 of the
present document).
The demand for supply chain execution is achieved in particular via Event manageÿ
event management (cf. Ijioui et al. 2007; Fürstenberg/ Vogeler 2012). ment to uncover
Supply chain event management (SCEM) involves permanent bottlenecks
monitoring of supply chain activities, with early warning mechanisms senior
taking effect. For example, transport bottlenecks or production losses

should be detected in real time (see Kilger/ Stahuber 2002, p. 479ff.).
Supply chain event management is also used to avoid or identify out-
of-stock situations.
Dedicated software solutions have existed for some time to detect example of one
deficits within the supply chain . "CapriChain" is an example of this : a software solution
web-based solution for monitoring the entire supply chain. The provider
suggests displaying potential target deviations within the value chain
in real time.
"CapriChain" is an automotive solution from appliLog.
Important tools of supply chain event management are, for example, aids of
alert management, workflow management or tracking and tracing Event
systems. The content of these tools is closely intertwined. These terms management
are described in more detail below.
ÿ Alert management: An alert (“Alarm!”) management serves to identify deviations alarm signals over
between actual and target processes as early as possible. Tolerance profiles Display
must be set in this regard. When leaving these intervention points, a warning dashboards
signal "sounds" automatically. Examples of alerts are budget overruns or
customer contract terminations. Monitoring systems are particularly suitable
for alert management. This means visual monitoring of activities within value
chains. Depending on the IT system, different graphical interfaces are available
to the user.
ÿ Workflow management: The term "workflow management" refers to the Optimization of

electronic monitoring of work processes. workflows
In this regard, a "Computer Supported Cooperative Work (CSCW)" takes an
important position. This means the structured and collaborative work of individual
users (based on “groupware”). The respective activities are in the workÿ
93
basics
A
flow management depending on each other. A follow-up activity is directly
controlled by the outcome of the previous activity.
If deviations occur, the flow of information is automatically interrupted.
Shipment ÿ Tracking and tracing: This term describes systems for shipment tracking.
tracking systems In particular, the identification technology RFID plays a prominent role in
event management (cf. the explanations starting on p. 364).
A.10.2.11 Critical appraisal

The golden The charm of this model lies in its stringent continuation of the supply
side of the coin chain systematization according to SCOR. From the specific attributes
of an SCM software, Hellingrath et al. concrete suggestions that can
ultimately lead to faster throughput times, increased delivery reliability
or inventory reduction. Concrete software solutions for supply chain
management can be derived from the "Marktspiegel SCM" (cf. Busch
et al. 2003; Laakmann et al.
2003). It contains neutral (manufacturer-independent) evaluations of
software solutions for supply chain management. The study by
Laakmann et al. considers 23 alternative software providers (cf.
Laakmann et al. 2003). Busch et al. tested the suitability of 14
different software solutions for supply chain management (cf. Busch
et al. 2003, p. 72ff.).
"I still haven't As interesting as the results of these two market studies on SCM
found what I'm software are. Ultimately, they only provide an initial (rough) overview
looking for..." (U of the requirements placed on supply chain software. Interested
2)
viewers cannot avoid “customizing” these generic versions with
regard to their specific organization. Furthermore, the industry
heavyweights Oracle and SAP (which offer comprehensive software
tools in supply chain management) are compared directly with smaller
niche providers (DynaSys, Axxom or Icon-SCM) . The question may
be asked to what extent such a heterogeneous evaluation of software
solutions is tenable.
94
comprehension questions
A.11
A.11 Understanding Questions
ÿ What do you mean by supply chain management? ÿ

Identify the historical development of supply chain management.
Name the protagonists of the concept.
ÿ Delimit supply chain management from neighboring traditional
functional approaches.
ÿ Clarify the terms demand chain management and customer

relationship management. What are the differences to supply chain
management?
ÿ Define the approaches of supplier relationship management,
relationship management and supply chain relationship
management. ÿ Identify typologies to clarify the term "supply chain
management".
ÿ Name possible causes for the bullwhip effect. What solutions are
available to reduce it? ÿ Describe the
content of the internal and network-driven supply chain.
ÿ Identify three conflicting goals within modern supply chains. List

ways to alleviate these potential dyssynergias. ÿ Characterize the
Order-to-Payment-
S. ÿ For the Order-to-Payment-S, give an
example from the consumer
goods industry.
ÿ Name the decisive factors of competition. To what extent are these
key variables in competition with one another?
ÿ What is a tradeÿoff effect? Derive an example of a trade-off situation

in supply chains. ÿ Clarify
the term “network competence”. Systematize forms of logistic networks.
ÿ Mark the network levels of explanatory
approaches to network competence. ÿ Total cost of ownership: Clarify
the term. Name
possible logistical influencing factors for global sourcing. What is Total
Benefit of Ownership? ÿ Define the term “maverick buying”. Which
dangers measÿ
Are you joining a Maverick buying?
95
basics
A
ÿ Characterize the work steps for the implementation of purchase card systems.
What advantages and what dangers do you see in using shopping cards?
ÿ Type possible supply chain strategies. Briefly describe these approaches

and name possible advantages and disadvantages of these strategies in
note form. ÿ Describe different
network types. Give two examples for each form. ÿ Clarify the term “relational
view”. Draw up a table in which
you list the advantages and disadvantages of the concept in a clear form.
ÿ Derive an example material flow considering the flow matrix and the Sankey
diagram.
ÿ Describe the rationale and benefits of SCOR. ÿ Name the features and
key figures of
SCOR.
ÿ Make a table listing the advantages and disadvantages
from SCOR in a clear way.
ÿ Discuss the cash-to-cash cycle from suppliers and from
customer point of view.
ÿ Interpret the level of the cash-to-cash cycle: What does a

negative cash-to-cycle?
ÿ Mark the stages of the task model for SCM software. ÿ Clarify the terms
“Supply Chain Design”, “Supply Chain Planÿ
ning” and “Supply Chain Execution”.
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B.1
B influence of
management concepts on the
Supply chain design
B.1 Learning objectives and approach

Chapter B examines the extent to which selected management learning goals from
concepts influence the design of supply chain management. The Chapter B

criteria for the selection are the topicality, the practical relevance and
the theoretical relevance of the approaches. The selected concepts
are:
ÿ Market and resource focus,
ÿ Total Quality Management,
ÿ Business reengineering and
ÿ Time Based Competition.
The learning objectives of this section are to describe the four benefit of the content
management concepts in their main features, to show the need to

integrate supply chain management within the approaches, and to
identify the extent to which the concepts influence the design of the
value chain.
The procedure in this context is that first the market and resource Further procedure
focus (first isolated and later integrated) are identified. A of this chapter
characterization of the Total Quality Management then takes place.

The counterpart of total quality management is the radical approach
of business reengineering. Finally, the competitive factor of time is
given special consideration when describing time-based competition.
Many examples from corporate practice underline the explanations.
At the end of Chapter B, some comprehension questions are asked.

https://doi.org/10.1007/978-3-658-32429-2_2
Influence of management concepts on the design of the supply chain

B
B.2 Market and resource focus
market reference and Market and resource focus represent two basic options for designing
resource oriented strategic management .
designation First of all, both concepts are to be characterized separately in the following.
In addition, their interlocking is carried out with the help of a special
portfolio. It will have to be shown that both approaches can very well
be considered in combination. Finally, the special importance of
market and resource focus for supply chain management must be
shown.
B.2.1 Characterization
B.2.1.1 Isolated Market Focus

outside-in The market-focused concept of strategic leadership has its roots in
perspective the mid-1980s. The work goes back to the Harvard School and deals
with the achievement of strategic advantages in competition (structure-
conduct-performance paradigm). Michael E. Porter (cf. Porter 2006;
Porter 2013; Porter 2014) paved the way for the formulation of the
market-based view. This is to be understood as an outside-in
perspective, which is based on the idea of the value chain.
competitive According to Porter, the main determinants of the market include

drives customers, competitors and suppliers. The position for success of an
organization is influenced by different driving forces of competition
(“forces of competition”). In this context , Porter identifies five key
drivers, which are reproduced below:
ÿ A threat from new competitors.
ÿ The negotiation potential of suppliers.
ÿ The bargaining power of customers.
ÿ A threat of substitute products.
ÿ The rivalry among existing organizations.
98
Market and resource focus

B.2
The first driving force of the market-based view is the threat of new competitors ("threat New competitors
of new entrants"). When new competitors enter a market, its attractiveness often suffers. enter the
The likelihood of new competitors entering a market depends primarily on its profitability market
and growth prospects. Established companies therefore protect themselves by
construction of market entry barriers:
ÿ Economies of scale: cost advantages due to cumulative production

amounts.
ÿ Benefits of scale on the demand side: For example, when established players offer
their customers long-term, individual service.
ÿ Exchange costs on the customer side: These are incurred for transactions
training or conversion.
ÿ Capital requirements: reduction through leasing of assets

standing.
ÿ Established sales channels and sales systems: For example, branches

consolidation in food retail.
ÿ Other factors: patent protection, access to scarce resources, special knowledge.
When the bargaining power of suppliers increases (“bargaining power of suppliers”), "Do you want that
the attractiveness of the sector usually decreases. Strong suppliers tend to increase character one
prices, limit quality and service, or shift costs to those who cause them. They arise from a Recognize people,
limited number of providers, products that are difficult to exchange and high switching give them
costs. A “sandwich position” is particularly precarious for manufacturers: when they are power.” (A. Lincoln)
more or less stuck between a strong customer and a strong supplier. To measure this
relationship of dependency, for example, the key figure “Sales share of the three largest
suppliers” can be used.
Another driving force behind competition is the bargaining power of buyers . If their scope "And they blame
for negotiation increases, this development reduces the attractiveness of the market: you with the power
Dominate customers play off each other's suppliers and force them to make price of
persuasion..." (ABC)
concessions. In many cases, few customers encounter a comparatively large number of
suppliers, which means that there is substitutability
99

B
of products is easier. For suppliers, on the other hand, there are few
alternatives ("barriers-to-excit").
Promising If a threat of substitute products and services occurs, this
substitutes phenomenon reduces the appeal of the market. The better the price/
performance ratio of the substitute, the more serious such a threat is.
Examples of this are mobile phones versus fixed lines, online ordering
versus brick-and-mortar retail, digital photography versus chemical-
based photography, flat screen TVs versus CRT televisions, or
generics versus branded medical products.
"Where two Finally, the attractiveness of a market will suffer if there are strong
collide, the rivalries between the existing players (“rivalry among existing
special always wins suppliers”). Bitter battles are taking place for market shares and the
nene.” (Lao
skimming off of pensions. The result is extreme price wars (low profit
Tse)
margins) and the promotion of expensive innovation processes. The
rivalry is particularly pronounced in a mature competitive environment:
when the battle is primarily fought over price (steel production, brick-
and-mortar retail).
From these driving forces, Porter derives three generic competitive
strategies . Generic means that the strategies apply to most
companies (“standard strategies”).
Cost advantage ÿ Cost leadership: An actor achieves cost leadership when it secures a cost
over the advantage over its competitors.
competition This can result from locational advantages (e.g. cheap access to resources),
economies of scale or experience effects. Mass production (process type) or
flow production (organization type) are suitable for the strategy of cost leadership.
Singularity through ÿ Differentiation: For the differentiation strategy, a company selects a range of
special attributes services that is characterized by a singularity . The product has unique attributes.
Examples of this are the sportiness of Porsche, the exclusivity of Rolex and the
rare availability of Afri-Cola. The customer rewards the product with an additional
bonus. Individual production, series production (process type) or workshop
production (organization type) are used as production processes.
Concentration on ÿ Concentration: While the strategies of cost leadership and differentiation relate
market niches to the entire industry, the target segment of concentration is a geographic region,
a buyer group or a section of the range. Often he will
100

B.2
concentrator to be a niche processor. A fundamental decision regarding the
competitive strategy to be selected must also be made within this sub-segment.
In this way, a position that can be defended over the long term can be taken.
Thus, an organization in the sub-segment in turn commits itself to one of the two
strategies of cost leadership or differentiation.
An example of the concentration strategy within the motor vehicle industry are
the microcars from ATW Autotechnik. These "moped cars" can be driven with a
class five driver's license. They reach a top speed of between 25 km/h and 50
km/h.
According to Porter, an organization must decide on one of the "Here I am, stuck
strategic orientations described. He recommends avoiding a position in the middle with
"between the chairs" - based on the two extreme cases of cost you…” (Louise)
leadership and differentiation. The simultaneity hypothesis (cf. the
hybrid competitive strategies on p. 164), on the other hand, assumes
that a combined strategy is possible, at least temporarily. After that,
a company can gradually change from a differentiator to a cost
leader. A reverse change is also possible. An example for the first
case are radio controlled clocks. These were offered at a high price
when they were launched and aimed at the attribute of exclusivity.
Some models can now be purchased for as little as five euros from
the “Wühltisch”. Nowadays, radio clocks are mass-produced.
B.2.1.2 Isolated resource focus

At the beginning of the 1990s, the Chicago School developed a inside out
blatant counter-position to the market focus, the Resource-Based- perspective
View (Resource-Conduct-Performance-Paradigm). Its defining
feature is the inside-out perspective. Institutions can have special
skills (potential for success) in certain areas. These are referred to
as core competencies . They can be divided into:
ÿ Tangible competencies (equipment, machines, buildings).
ÿ Intangible competencies (know-how, reputation).
ÿ Financial skills (forms of financing).
ÿ Organizational skills (information and communication

systems, personnel management systems).
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B
From ability to The road to core competence is long: the basic prerequisite for its
core competence development are individual skills (all performance potential related to
a person). Collective skills are derived from these individual skills,
which are reflected in factors such as understanding and skill within
a group (organization). An individual competency results from the
proven ability of an individual to master a specific task. The collective
competence describes when these requirements are met in a group.
Resources, on the other hand, are merely material and immaterial
aids for solving tasks. A core competence exists in the long term, it
is to be defended, recognized and transferred. It results in special
competitive advantages for an organization that are based on
resources and special (individual and collective) skills.
“Competence The protagonists of resource focus include Prahalad and Hamel (cf.
is found in Prahalad/ Hamel 1990; Prahalad/ Ramaswamy 2004). For example,
simplicity.” (GW Sony has the core competency of miniaturization, which is incorporated
Exler) into products such as walkmans, CD players, notebooks and mini
discs. Honda uses its special skills in the design and manufacture of
small engines (lawn mowers, motorcycles and cars). Tupperware has
special skills in selling household items. Important prerequisites of
the concept are (see definition above):
ÿ Limited imitability and substitutability of core competences

Zen.
ÿ Defensiveness and stability of these special abilities

in certain areas.
ÿ Targeted transformation of core competencies into future business areas.
ÿ Customer perception of special skills.
network competence in The resource-based view has meanwhile been further developed into
relational view the “relational view” (cf. Dyer/ Singh 1998). While the resource-based
view accentuates the uniqueness and the possibility of differentiation
of individual strengths, the relational view focuses on individual or
collective network competence. The individual network competence
results from time and cost advantages, which result from the
absorption of existing knowledge from partners within a
102

B.2
Set supply chain: Resource interdependencies through the combination
of own and external funds in a supply chain.
A collective network competence, on the other hand, results either collective supply
from a co-specialization or from a cooperation competence. Co- chain competence
specialization means that an organization concentrates on its own
strengths, combined with outsourcing the remaining activities to other
actors in a network (virtual company). A cooperation competence is
shown by the targeted exchange and the active combination of
knowledge within a competence community (strategic supply chain
alliance).
B.2.1.3 Integrated market and resource focus

The disadvantages of an isolated application of Market-Based-View combination of
inside view and
and Resource-Based-View result in the need to integrate both
perspectives. If only the market-focused concept is taken into account, outside view
there is an inherent danger that a company will permanently "hunt

after" the wishes of the customer. It takes some time before the
organization implements its painstakingly identified customer
requirements (“time gap”). Within this period of time, however, the
wishes of consumers can change again, especially in dynamic markets
(e.g. fashion). In addition, the manufacturer loses innovation potential.
When viewed exclusively, the Resource-Based View has the problem
that under certain circumstances services are produced that are
technically mature. Nevertheless, the customer rejects them because
of their high price or poor user-friendliness.
The possibility of combining market and resource orientation is success position and
described by GEKKO . This abbreviation stands for the business potential for success
attractiveness core competence portfolio (cf.

Werner 1996, p. 25). Figure B.1 visualizes this connection.
An external environmental dimension (success position) is interlinked
with the internal company dimension (success potential). Business
area attractiveness is based on Porter’s five competitive drivers . In the
portfolio, the question is asked whether it is "high" or "low". With regard
to the dimension of core competencies, the question of whether these
are fundamentally available (“yes” or “no”) must be addressed.
This results in four different fields in the matrix. These are strikingly
occupied with strategic recommendations.
103

B
"Should I stay ÿ Move or Quit: If the business segment is not very attractive and a company
or should I go, if has no core competencies, this means: “Move or Quit”. The organization
I go there will must either improve its competitive position (e.g. through intensified
be trouble, cooperation with suppliers) or acquire core competencies (Move). If this is
and if I stay not successful, it leaves the market (quit). A number of traditional mail
there will be order companies that failed to “move” in time (e.g. to expand the business
double..." (the Clash) model to include online mail order) have now completely disappeared from
the scene.
take positions ÿ Search for new markets: An organization has core competencies, but uses
of success them in a market that is not very attractive.
An example of finding new markets is Sony. Based on its expertise in
miniaturization, the company combined two mature, unattractive business
areas at the time: the cassette recorder and headphones were integrated
into the Walkman, which conquered the market almost in flight. Another
example is McDonald's . The company found what it was looking for in
new markets and has been addressing a completely new target group with
“McCafé” for some time now. In addition, manufacturers of cosmetic
products have evidently discovered the target segment “men” in the past
few years in their search for new sales markets. A large number of products
from different manufacturers (such as “Nivea for Men”) can now be found
under the signet “Men's Health” . Another example of the search for new
markets is provided by adidas: Under the “Neo” label, the company offers
clothing and shoes that are specially tailored to young buyers. The brewers
also underwent a certain change. They have added beer mix drinks to
their range. This with considerable success, in any case there are now a
number of mixed beer drinks on the market (Schöfferhofer with “Grapefruit”,
Flensburger with “Lemongrass”, Becks with “Twisted Orange”).
Promote potential ÿ Build up Competencies: This field in the matrix describes a situation in
for success which a company is already in a lucrative market but does not have any
core competencies. The company Continental Automotive Systems is an
example of this . In the late 1970s, Bosch announced ABS (anti-lock
braking system).
Continentalÿ Teves recognized its future prospects and pulled out all the
stops to also acquire the new technology.
After about two years, the company was rewarded for its efforts. A number
of competitors who failed to recognize the signs of the times and continue
to rely on hydraulic brake systems
104

B.2
ten, had to file for bankruptcy. The “Books on Demand” principle also falls
into this field of the matrix. For example , Books on Demand GmbH from
Norderstedt acquired the relevant competence to no longer print books on
suspicion (which might just be gathering dust on the shelves). Rather, book
printing is only initiated when there is a specific demand. This principle is also
interesting for young authors in order to limit the subsidy for printing costs.
The fuel cell is also a hard-fought field in the automotive sector. Competitors
are currently vying for current and future producer rents in this space. The
situation is similar with electric cars. The "green cars" have established
themselves on the market in recent years and snatched significant market
shares away from the internal combustion engine. After all, Nokia had
obviously overslept the transition from pure mobile phones to smartphones.
In any case, the company tried emphatically to win back lost market shares
with the “Lumia” model. To do this, they had to acquire extensive knowledge
in the areas of computer functionality and connectivity. A management error
that the company paid dearly for: in April 2014, Microsoft bought Nokia 's
mobile phone division .
ÿ Stay on top: If a manufacturer has core competencies and is in an attractive "We are the
market, it should try to defend its competitive position over the long term. In champions, my
Palmela, Portugal, VW (“Sharan”), Seat (“Alhambra”) and Ford (“Galaxy”) friends, and
jointly built the “World Car” under the “Autoeuropa” emblem until the end of we'll keep on
1998. . In 1995 the vans came onto the market. However, VW ended this fighting 'til
liaison dangers with Ford after a short time. Since 1999, the plant has the end..." (Queen)
belonged entirely to VW. The successors to the largely identical vehicles were
developed separately. VW bought its way out of this strategic alliance for
more than four billion euros in order to no longer allow the competitor to look
at its diesel engine development technology: VW wanted to stay “on top”.
Other companies have also been able to occupy a top position for years.
These include Microsoft, Google, Amazon, Coca Cola, Ikea and Aldi. They
know how to defend their pioneering role in their respective segment. Even if
it is not always easy to keep the competition at a distance,
ten.
105

B
Figure B.1 Business Area Attractiveness Core Competencies Portfolio (GEKKO)
Resource Based View

GEKKO
potential for success
Core competencies available?

No Yes
Low
Search for new

move or quit
Markets
success
position
Market
Based
View
High
attractiveness?
Business
buildup stay on
competencies Top
"The idea is It should be noted that the market-based view and the resource-based view
good, but the world
should always be viewed together . A successful position (market focus)
is not ready
can only be achieved through success potential (resource focus).
yet..." (Tocotronic)
Conversely, potential for success must always be used in a targeted
manner. Technical innovations are characterized by their usability on the
market. The market-based view and the resource-based view are therefore
not two different medals. Rather, they are two sides of the same coin. One
approach will short-term the other
tig maybe major. In the medium to long term, however, both concepts must
always be considered in a balanced manner.
B.2.2 Impact on supply chain management
Value chain as a The basic idea of integrating components of supply chain management is
basis derived primarily from Porter's value chain . A complete process is broken
down as part of its optimization. Isolated solutions should be avoided
because they only produce suboptimal results. This is an attempt to create
synergetic
106
Total quality management

B.3
to exploit technical potential and to prevent trade-off situations.
The market-based approach promotes supplier-customer integration. Cooperation

This means that there is an improvement at the interfaces . The with suppliers
dispatchers in particular will implement the cooperation between the and customers
partners in supply chain management. You control your daÿ
exchange of information about the call-offs. The aim is to reduce
frictional losses within the value chain. For example, the supply chain
"supplier-manufacturer-customer" agrees on the IT systems to be
used. In this context, IT-supported standard solutions based on SCOR
are establishing themselves.
In supply chain management, a company can use its own skills Example in goods
combined with the skills of its partners. receipt
The market- and resource-focused approach merge. this one
A short example underscores the facts: An external logistics service

provider (3PL) has know-how in the field of incoming goods processing.
He uses RFID in the incoming goods inspection and in the distribution
of materials to their storage locations. This reduces errors in goods
receipt. Compared to manual processes, personnel is saved. A mail
order company recognizes the competence of the service provider.
He transfers the responsibility for the incoming goods inspection to
the latter. Mail order companies often have special picking skills
themselves because they have been dealing with the provision of
articles for many years. By outsourcing the incoming goods inspection
to the 3PL, the mail order company optimizes the entire material flow,
from goods receipt to order picking.
B.3 Total Quality Management
All functional areas and employees of an organization are included in TQM: “So that
Total Quality Management (TQM, cf. Hummel/ Malorny 2011; Oakland was the poodle
2020; Oess 2013; Rothlauf 2014; Zink 2004) ("Company-Wide-Quality- Core."
Control"). . The first considerations go to TQM (JW von Goethe)
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B
goes back to William Edwards Deming , an American physicist and
statistician. However, the concept only became known through its
further development in Asia. Good results were achieved with TQM
in the early 1980s, particularly in the Japanese automotive industry.
When companies such as Bosch or Philips founded the European
Foundation for Quality Management (EFQM) in the late 1980s , TQM
also established itself in Europe.
Improvement of Total Quality Management puts the customer first to increase process
Process effectiveness effectiveness . Quality is achieved when the company processes
as the main goal are suitable for excellently fulfilling specific customer requirements
(application-oriented concept of quality).
This does not only mean the external customers. The internal
customers, the employees of other functional areas, must also be
satisfied with the service provided. Accordingly, quality manifests
itself as a permanent corporate philosophy. This avoids the “over the
wall syndrome” (cf. p. 119 of this document). Total Quality
Management focuses on increasing customer satisfaction, with the
concept having the following content :
ÿ Manifestation of clear principles and evaluation criteria (operationalization)

to increase the quality of products, processes and services.
ÿ Definition of clear goals to initiate a continuous improvement process

(continuous goal achievement control). Quality is not an end goal, but a
process that never ends.
ÿ Implementation of a quality management system that requires active action:

Quality improvements are not a sure-fire success.
ÿ Determination of the organizational responsibilities with fundamental

inclusion of all company departments and as many employees as possible.
Paradigm shift With the advent of Total Quality Management, a paradigm shift from
through TQM traditional quality control to true quality management has taken place.
Figure B.2 reflects this phenomenon. The illustration shows serious
differences in the areas of orientation, work focus, employees, control
and costs.
108

B.3
Paradigm shift through TQM Figure B.2
From traditional quality control…
orientation work focus Employees control Costs
quality at strategy of Separate QM Quality costs for

product Mistake- Department through final committee
aligned avoidance control planned
orientation work focus Employees control Costs
quality at strategy of integrated Quality poka yoke

process Mistake- QM system constantly Principle
aligned prevention accompanying (freedom from errors)
...to real quality management
Lean management (cf. Bertagnolli 2018; Gorecki/ Pautsch 2018; "Most
Thomsen 2006; Tündermann 2020; Womack/ Jones 2013; Womack/ slimming diets
only thin out the
Jones/ Roos 2007) describes the exploitation of optimization potential
account.” (T.
by simplifying company processes and streamlining hierarchies
Häntsch)
(process efficiency) . With the identification and later elimination of
activities that do not add value, increases in productivity are targeted.
Examples of this are the consistent introduction of make-to-order
processes, a holistic view of value creation or the merging of
comparable tasks in homogeneous bundles.
The concept represents an extension of lean production developed Dismantling of
by the Massachusetts Institute of Technology (MIT) . Lean hierarchical levels
management does not only refer to production, but to all functional

areas. The hierarchical structure of an organization is not felt to be
inherited. Rather, it is to be constantly checked with regard to its
usefulness. Tiers identified as superfluous are eliminated, promoting
competitive agility. For example , Texas Instruments radically reduced
the number of its executives from 4,000 to 200 at the time.
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B
when off However, radical lean management also has disadvantages .
thinness becomes Many companies have not only become lean, they have even become
anorexia “anorexic”. They cut employees during recessionary phases and
were understaffed when the economy picked up. Not all incoming
orders could be accepted. There was a lack of employees for order
processing, which is why these companies lost potential sales. With
the application of lean management, some organizations have literally
catapulted themselves out of the market. In retail, specialist staff
were replaced by less qualified employees, which meant that
customer service suffered. In production, the skilled worker level was
partially eliminated (loss of know-how).
politics of the small Kaizen management (cf. Brunner 2014; Hermold 2020; Takeda
Steps: Dem 2006) means the initiation of a continuous improvement process.
follow the Sisyphus Corporate activities are permanently geared towards increasing
principle consumer benefits. The policy of "small steps" means that changes
do not occur in leaps and bounds, but gradually. The basic prerequisite
for this constant change is the efforts of all those involved to improve
the process know-how . The approach is therefore an integrative
and essential part of a quality element that is permanently anchored
in the corporate philosophy.
"Quality eases the The focus of Kaizen Management is the reduction or avoidance of
pain that price human errors, which are mainly due to waste ("Muda"), overload
causes ("Muri") and irregularities ("Mura"). All organizational processes are
gently.” (idiom)
continuously analyzed with regard to their potential for improvement.
They should then be standardized as far as possible and integrated
into the company in the long term. The next optimization process – at
a higher (improved) level of work – is only triggered when this activity
is generalized. This principle is based on the so-called "Deming
Cycle". Among Deming's 14 points (cf. Deming 2000) are practices
for quality improvement. Suggestion schemes, small group work,
mechanization or work discipline are examples of this.
Three levels of A three-level model is used below to classify these different terms
Quality of quality management (cf. Figure B.3). In this document, Total
Quality Management is viewed as the all-encompassing concept, so
it is located at the meta-management level. TQM experiences on the
second level (strategy
110

B.3
level) direct support through Lean Management and Kaizen
Management. Finally, on the third level there are various quality
management tools (“quality kits”), which help the second level directly
and the meta-management level indirectly. Some of these quality
tools are characterized in more detail on p. 348, with special
consideration of their effects on supply chain management.
Three-level model of quality Figure B.3

(process effectiveness)
- Overall quality philosophy in the company

ÿ Internally and externally oriented customer loyalty
- Avoidance of over-the-wall syndrome
ÿ From quality control to quality management
Level 1: meta-leadership level
ÿÿÿ
lean management Kaizen management

(process efficiency) (process know-how)
ÿ Simple processes - Continuous Improvement

ÿ Lean hierarchy - Employee Suggestions
ÿ Productivity increase - Deming Cycle
ÿ Value creation orientation - Error avoidance strategy
Level 2: Strategy level
FMEA Bottleneck
Six Sigma ÿ
QFD
engineering
Statistical Proÿ Quality
Quality Circle ...
process control benchmarking
Level 3: Instrument level
111

B
TQM in the supply A significant objective within the supply chain is to reduce scrap and
chain rework rates . The initiation of preventive measures to improve the
key variable quality supports this requirement. A supply chain
management correlates with the production area. For both
organizational units, the target PPM (parts per million) quota is often
set to zero. It aims to avoid rejects and rework. Two examples show
selected options for error reduction in the value chain.
Ident techniques in ÿ Goods receipt: In order to avoid errors in goods receipt, manual identification of
Goods Receipt materials can be substituted by IT-supported techniques. Bar codes and RFID
promote data management. There is an IT-oriented assignment of item numbers to
their storage locations.
mixed load im ÿ Dispatch: When attaching the goods tags, errors creep in, especially with mixed
Shipment pallets (mixed load). The employees have to attach different labels to the boxes,
which can lead to some confusion. Customers complain when they are supplied
incorrectly, which means that rectifications are necessary. This potential source of
error can be reduced by allowing only one item number per pallet (single article
pallet). In the first step, the shipping costs tend to increase. However, these are
often (over)compensated for by lower costs for quality assurance.
organizational In order to take total quality management into account within the
Frame supply chain, an implementation in the sense of the countercurrent
process should be selected. Top down, the management level must
exemplify the new quality awareness. Bottom up, the workforce
should identify with TQM.
Robust supplies If quality as a competitive factor is understood as a true philosophy

chains and is included in the formulation of corporate strategies, the
foundation for the development of robust supply chains is created.
In quality competition, products and services are characterized by
reliability and performance. Since almost 90% of all possible errors
already occur in the early stages of product development
112
business reengineering
B.4
occur, error avoidance strategies already start in these so-called
design phases (cf. Cohen/ Roussel 2006, p. 29).
A key objective in the quality competition of modern supply chains is Determine
batch traceability. This increases security in supply chains. This payback times for RFID
requirement is particularly important in some sectors (e.g. in pharmacy
and in the trade with organic food). With the help of radio frequency
systems, these requirements can often be met (see p. 346). In
individual cases, however, the question arises as to which investments
are associated with the use of RFID: Even simple transponder
solutions cost three to four times as much as a two-dimensional
barcode.
B.4 Business Reengineering
The counterpart of total quality management is business reengineering Everything is
(cf. Hammer/Champy 2004; Jeston 2006; Slamanig 2014). While the put to the test
incremental improvement of existing structures is carried out in total
quality management, business reengineering represents a process
organizational reorientation . Known procedures are overhauled in
terms of their effectiveness and efficiency.
checks. Executed consistently, the approach is a radical cure for the
organization. Old systems are thrown overboard and processes and
activities that do not create any added value are consistently and
permanently eliminated.
A business reengineering is a bomb-throwing strategy, which can "Beware

Technicians: With
also be expressed figuratively: If a tree is ailing, not only a few
They start with
branches are cut off and the tree is fertilized and cared for with special
care (this would be the philosophy of total quality management). sewing machines,
they stop with
Rather, the diseased tree must be completely torn out of the ground.
atomic
A new tree is planted. The term BI uses the four "Re's" to illustrate the
bombs.” (M. Pagnol)
nature of business reengineering (see also Figure B.4).
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B
Concept block BI Four "Re's" of business reengineering
ÿ Renewing: "Renewal" means the improved training and organizational integration of

employees in the company.
ÿ Revitalizing: “Revitalization” means a process redesign within

within the organization.
ÿ Reframing: "Changes in attitude" cause conventional thought patterns to be discarded

and new paths to be taken.
ÿ Restructuring: “Restructuring” finally requires the revised definition of the activity

portfolio. In other words, a company is looking for new pillars.
reengineered from For example (cf. Hammer/Champy 2004, p. 113) it took IBM six
lease applications working days to process an application for leasing , although the
procedure of actually filling it out took only 90 minutes. The documents
went from one department to the next. This process was identified as
a weak point in business reengineering and responsibility was placed
in one hand. A specialist now processes an application completely in
an average of four hours.
simplification of The company Hallmark also operated a reengineering (cf.
process flows
Hammer/Champy 2004, p. 135). Hallmark produces greeting cards.
It took more than three years from the idea to the marketing of a new
card. The organization found through business reengineering that
work was 90% dormant. To reduce time-to-market, Hallmark
assembled a team of artists, writers, marketing and manufacturing
specialists. The group managed to offer a new card to customers in
just under six months. Work was reorganized from outcome and no
longer related to specialized functional areas (such as sales or
manufacturing).
Kodak as a positive Kodak also used reengineering successfully. The company broke
example through its originally functional organizational structure. Rather,
Kodak developed a process organization. With the result of a
drastic cost reduction: The previously 20% budget overrun turned
into a 15% underrun in the annual plan. At Kodak, the average
processing time per job was also halved . Still, Kodak was forced to
make a deep transition into becoming a digital printing specialist.
114
business reengineering
B.4
Components of Business Reengineering Figure B.4
renewal _ revitalizing _
“Show people that they are important "Turn the organization upside down
and make them fit” and cut out old habits"
Reframing (Settings) Restructuring _
"Take different paths and throw "Clean up the program portfolio and
old thinking overboard" bet on new cards"
However, the response from business practice to business Put all one's eggs in
reengineering varies. While Rolls-Royce and Mastercard have had one basket…
good experiences with business reengineering, a study by Arthur D.

Little shows that around 50% of users are dissatisfied with the
approach and are turning away from business reengineering (cf.
Werner 2013a, p. 19). The failure is mainly justified by the fact that
one’s own employees are not willing or able to adapt to a significant
change. In addition, some reengineering projects are simply initiated
too late. The consulting company Kurt Salmon Associates even
certifies that business reengineering has a flop rate of almost 75%
(cf. Werner 2013b, p. 39).
Supply chain management benefits from the fact that all main and increase of
sub-processes are called into question during business reengineering. transparency
Excessive inventories often cover up faulty processes.
If a company wants to carry out its activities according to the
philosophies of just-in-time or just-in-sequence , these deficits must
be uncovered. For the realization of just-in-time and just-in-sequence,
the cooperation between the partners within the internal and the
overarching value chain must work. If there are problems at the
interfaces
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B
interim storage facilities are set up and safety stocks (emergency
reserves) are increased. Measures are to be taken that contradict the
philosophy of JiT and JiS. With the help of business reengineering,
these weak points can be automatically uncovered and processed.
Revision of the Another point concerns the monitoring aspect in the supply chain.
basic philosophy Traditionally, part numbers are checked in the incoming goods
inspection. The parts are checked for their quantity and quality by
visual inspection, counting or weighing.
After they have been identified, defective supplies end up in the quarantine warehouse.
The system is based on the motto: "Don't trust any suppliers!".
Business reengineering could support new thinking. Through the
intensified cooperation with selected partners, the aim is to abolish an
incoming goods inspection (supplier integration). Own employees
are to be sent to the suppliers in order to pass on the requirements of
the manufacturers at an early stage (resident engineering). A long-
term relationship of trust is sought with the suppliers, for which the
individual work steps and the IT systems must be coordinated. A
production-synchronous delivery, which starts directly at the assembly,
is associated with a potential inventory reduction.
Business For example (cf. Werner 2013a, p. 33), Stoll, a German manufacturer
reengineering one of textile machinery, carried out business reengineering in its supply
knitting machine chain. For the "CMS Selectanit" knitting machine, the procurement
and production processes were broken down and the variety of parts
reduced. An integral cast part now replaces the previously used slide
in the knitting machine, which combined five different part numbers.
In addition, Stoll reduced the number of work steps from 260 to 68 in
the manufacture of its needle beds. In assembly, the workplaces were
rearranged (reorganized).
Since then, the parts have no longer been in boxes and unsorted, but
have to be delivered unpackaged and in a defined order. Stoll saved
30% of the time per assembly process. Overall, the throughput time
was reduced by 20 working days (from 50 days to 30 days). The
length of the material flow was 1,000 km/year. It was shortened by
50% through business reengineering. Eventually, the tied-up capital
was reduced by almost 60%.
116
Time Based Competition

B.5
B.5 Time Based Competition
Time-based competition is a management approach in which the On the trail of the
competitive factor of time dominates. At the beginning of the 1990s, the time thieves
importance of the success variable time was particularly emphasized by Stalk and Hout (cf.
Stalk/Hout 2003). They recognized that the development cycles of products
were lengthening, while at the same time the actual market cycles of the
products were becoming shorter in many sectors. A problem that will be
examined in more detail below.
Pioneer follower management correlates with the time-based competition The optimal one
approach . Block B.II summarizes the characteristics of Pioneers, Early time for the
Followers and Late Followers. The pioneer (first mover) acts proactively Finding market
and takes risks. In addition, the pioneer siphons off producer profits at an access: Innovative
First mover
early stage and fixes the trend, at least temporarily. Following Porter,
pioneers often act as differentiators. A first mover acquires market know-
how at an early stage and exploits image advantages. He also sets standards
in the industry, gains brand loyalty and generates barriers to entry (e.g. via
his pricing strategy). Any problems for a first-to-market result in particular
from technical and economic ones
Uncertainties, high market development costs, quality defects (technically

immature products) and the risk of correct needs assessment. Apple is an
example of a first mover in the smartphone technology segment . When it
comes to the use of artificial intelligence in cell phones, Huawei is currently
setting standards.
Early followers (early movers) are also referred to as second-to-market. Sandwich position
They do not pursue a pure imitation strategy, but try to further develop the of Second Moÿ
achievements of the pioneer in order to generate their own standards. Early vern
followers do everything they can to snatch pensions from first movers early
on in lucrative markets. You consistently use the market development
activities of the first-to-market. At the same time, they avoid their mistakes
(reduction of sunk costs and switching costs). Problems arise for the early
mover because he no longer has any monopoly advantages and the pioneer
has already implemented industry standards. Samsung is an example of a
conscious second-to-market in the cell phone segment .
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B
Reactive-defensive The late followers (late movers), on the other hand, act in a reactive-
third mover defensive manner. Third-to-market generally shy away from market risks.
A late mover often works in niches and learns from the mistakes of first and second
Mover whose services he adapts or copies. Later followers consistently rely
on Porter's cost leadership strategy . They use the transparency of the
market. There is hardly any risk of their products flopping. Late movers are
not expected to innovate. Her
Sales prices are relatively low (minimal research and development effort,
pronounced fixed cost degression in production).
Difficulties arise for late followers because there is only limited market
potential (they mainly operate in mature sectors), marketing measures can
no longer be used in a meaningful way (market flooding) and buyers have
already given up their preferences in the direction of first movers and
second movers have. Referring again to the field of smartphone
manufacturers, Wiko, Oppo, Meizu or OnePlus are examples of late
followers.
Block B.II Pioneer and follower management
First mover second mover Third mover

(Pioneer) (Early successor) (Later follower)
Proactive-offensive further development of reactive-defensive

pioneering achievements
Takes very high risks Takes high risks risk aversion
Sets barriers to market entry Sets own standards Edited consistently

ren niches
Skims off producer surplus Low sunk costs and Learn from the mistakes of
switching costs Pioneers and Early Ones
infer
Fixes the trend ("Trendsetter") Modifies the trend Adapts the trend ("me-too
("Mimic Innovator") products")
Example smartphone: Example smartphone: Example smartphone:

Apple, Huawei Samsung Wiko, Oppo, Meizu
118

B.5
B.5.2 Acceleration Management
When dealing with the key variable time, the possibility of accelerating “Said 'race against
processes is usually examined. Terms such as Capabilities of Time, time', thought it
Speed Management and High Speed Management have become was clever, time
is immortal and we're
established in theory and practice in recent years. Product
development is promoted primarily with the help of simultaneous forever…” (GBH)
engineering and rapid prototyping. Great success has been achieved

in reducing market access times (time-to-market) , which is
underpinned by the two examples below (cf. block b.1).
Reduction of the time-to-market example block b.1
ÿ The Boeing Aerospace Corporation needed more than two weeks for their design
drawings. Using computer-aided design techniques, Boeing is now able to create
construction plans in just 38 minutes.
ÿ Another example is the Japanese multinational Panasonic. The company reduced

the production times for its washing machines from 360 hours to two hours.
B.5.2.1 Simultaneous engineering

Traditional Proÿ
Simultaneous engineering (cf. Anderson 2020; Bullinger 2013; Dixius
2013; Eversheim/ Schuh 2004; Hartley 2017) means moving away product development
from sequential product development. In this case, the risk of

delays results from the fact that the transition to the next stage is only
possible once a phase has been fully completed. In addition, the
departments hardly cooperate with each other. The work of one area
is thrown “over the wall” after its completion in the next department,
largely without coordination (“over the wall syndrome”). The result
is time-consuming corrections.
These problems can be circumvented with the help of simultaneous core statements of
engineering (synonymous with "concurrent engineering"). The simultaneous
approach was developed in the Japanese automotive industry. A Engineering

team of experts from different functional areas is to be formed,
consisting of around ten people (“joint working group”). Ultimately,
however, the size of the team depends on the complexity of the task
to be accomplished. The chairman usually reports directly to the management
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B
ment. Suppliers and customers can be integrated into the group
(resident engineering). The development stages are no longer
isolated, but integrated. Simultaneous engineering means the
parallel processing of tasks in an interdisciplinary team, taking into
account the competitive factors of time, costs, quality, agility,
innovation and service. Modern groupware solutions are preferred for
communication between members.
Experts from different operational functional units (logistics,

Experts from
different areas purchasing, marketing, development, design, quality or controlling)
work together contribute their professional competence to this group in a targeted manner.
together Time parallelization means that, for example, the marketing
campaigns are initiated well before the actual start of series
production, for which purpose existing prototypes can be used. There
is an exchange of knowledge "at a high level", one's own horizon of
thought is expanded through the transdisciplinarity of the group. With
simultaneous engineering, the time to market can be significantly
reduced, which is illustrated by some examples from block b.2.
example block b.2 Simultaneous engineering
ÿ Kodak reduced the product development time of the “Funsaver” camera by 50%
by using simultaneous engineering.
ÿ The time saved by Fuji in the development of the copier

device "FX 3500" over 30%.
ÿ AT&T originally took two years to develop a new phone. Simultaneous

engineering reduced this period to less than six months.
ÿ Hewlettÿ Packard finally succeeded in shortening the development time of a new

en printer from 54 months to 15 months.
Example "industrial The reduction of components used through simultaneous engineering

robot" is important for supply chain management . The German company
Reis Robotics has used simultaneous engineering in over 20 projects.
One of these projects was the development of the new industrial
robot with an articulated arm. Reis Robotics reduced the number of
components on the robot's six joints by 50%. The company attributes
this effect primarily to simultaneous engineering
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B.5
back (cf. Werner 2013a, p. 15). Following the takeover, Reis Robotics
from Obernburg am Main is now part of Kuka, one of the world's
leading providers of robotics, as well as plant and system technology.
Kuka is one of the pioneers of Industry 4.0
With the figures given in the examples above, however, it should be "Most
noted (and this ultimately applies to all the examples given in this problems arise
book) that these values always only apply ceteris paribus : If when they are
beneficial effects occur between an early point in time without and a solved." (L. da Vinci)
later point in time with the use of instruments (here: Simultaneous
Engineering) are determined, strictly speaking a comparison is only
valid if no further changes have occurred in the period under consideration.
In practice, this requirement certainly represents a heroic premise
that is likely to be met only rarely. The following problems can arise
with simultaneous engineering:
ÿ Due to the interdisciplinary approach, the control mechanism

between the departments is reduced . If the hypotheses originally
developed in the team later turn out to be incorrect, the entire group
has worked in the wrong direction. This results in high change costs
(switching costs) and time delays.
wrestled.
ÿ Another difficulty of simultaneous engineering is its clumsiness. If
different opinions arise in the group, the team leader can demand a
forced approach. However, if the people involved have contrary
ideas, he will encounter open and hidden resistance.
ÿ For the employees sent to the team, their work there is a real
endurance test: Due to physical and mental overload, burnout can
occur . Some people get caught in the middle when they are on both
the simultaneous engineering team and their home department at
the same time
work.
ÿ Finally, some customers fear that the formation of a cross-company

team for simultaneous engineering will result in an outflow of
knowledge to their suppliers. This applies in particular if an employee
of a supplier (resident engineering) was temporarily involved in the
simultaneous engineering team.
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B
B.5.2.2 Rapid prototyping
departure from Rapid prototyping is a CAD-supported, iterative process that has
the conventional revolutionized the traditional creation of prototypes (cf. Becker 2020;
product Berger/ Hartmann 2019). Rapid prototyping is synonymously referred
development to as "generative manufacturing process" . Rapid tooling is the use
of the process specifically in tool making, while rapid manufacturing
refers to the construction of individual finished parts. Rapid prototyping
is an additive manufacturing technique used to construct models with
the aim of visualizing ideas, exploring aspects of finding a solution
and systematically testing a preliminary work result.
Various types of prototypes can be produced using the process:
design prototypes (optics), ergonomic prototypes (applications),
functional prototypes (properties), proportion prototypes (size ratios)
and technical prototypes (functions) .
Widespread use of The increasing importance of rapid prototyping is made clear by

the method the figures from Euromold . The Euromold is the world's most
important trade fair for tool and mold making, design and product
development. It has been held annually since 1993. Euromold has
meanwhile moved to Munich via Frankfurt and Düsseldorf . Of the
approximately 1,300 exhibitors in 2019, more than 600 companies
dealt with the special field of rapid prototyping. Selected rapid
prototyping techniques can be found in block B.III.
Simultaneous The acquisition costs for systems for carrying out rapid prototyping
improvement of several vary greatly. They range from a few hundred euros (simple printers
key sizes for 3D printing) to well over 200,000 euros (stereolithographic
devices). The time savings potential through the use of the
procedure is estimated at between 30% and 70%.
The automotive industry, for example, has managed to speed up the
creation of prototypes by a factor of 22 compared to conventional
techniques. In the meantime, complicated forms can also be produced
by rapid prototyping. The process is characterized by its
responsiveness, as changes are made directly on the PC.
For example , Porsche has optimized the flow tests for the new
cooling jacket of the vehicle for its "GT1" through rapid prototyping. A
few months later, the "GT1" won the 24 Hours of Le Mans.
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B.5
Selected techniques of rapid prototyping Block B.III
ÿ Stereolithography: It is a widespread industrial technique. Main variant in

Liquid photopolymers (photosensitive plastic resins) are cured selectively. the industry
The CADÿsupported geometry data must be transferred to a control
computer. Then the slice process begins.
This means the decomposition of the complete model into thin, horizontal
layers (with transfer to the laser). The laser beam is directed vertically onto a
tub filled with liquid resin. The hardening of the mass takes place in layers.
The result is a finished, three-dimensional prototype.
ÿ Laminated Object Manufacturing: Thin layers of paper are laminated on top CADÿassisted
of each other with hot glue. A special machine then uses a laser beam to adhesive technology
cut out the contour previously defined on the computer. The geometry data
are created with the help of CAD.
ÿ 3D printing: In this process, the layered structure is also derived from CAD. Process with
The starting point is a garanulate or lime powder bed. In the 3D printer, the great
powder particles are bonded together by an externally injected binder. In the potential for the future
subsequent process step, the binder is expelled again and the excess
granulate (or lime powder) is sucked off. The starting mass is then ready for
a new printing process. 3D printing is currently experiencing a great deal of
hype, which extends to the private sector (B2C segment). It is the cheapest
and the fastest method. Different materials can
are now being printed (metals, plastics, ceramics, etc.).
ÿ Laser sintering: Again, the drawing is generated by CAD. Robust

During sintering, the laser beam is aimed at a container filled with sand and prototypes
metal powder. A bundled beam of light (a roughly 100 watt carbon dioxide
laser) draws the contours in the sand and the metal powder, hardening the
mass in layers.
The speed of the light beam is between 100 and 500 millimeters per second.
Difficulties in rapid prototyping can result from the fact that the problems from
prototypes are predestined for a case study in the wind tunnel, but rapid prototyping
fail in the crash test. In addition, the parts are too light to ensure
compliance with the permissible total weight.
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B
voices. Finally, the parts produced are very fragile (cf. e.g. prototypes
printed from granules by 3D printing).
These are the Recently, prototypes are no longer physically produced. Modern
dummies of the variants of CAD-supported prototype generation are digital mock-up
future and virtual reality (virtual prototyping). Digital mockups (artificial
"dummies") are reproduced realistically on the computer. Classic
areas of application are component calculation and computer
simulation. Artificial mockÿups are definitely of interest for the supply
chain. For example, installation space analyzes (for optimal use of
space) or assembly processes can be simulated on the computer.
Various assembly techniques can be compared virtually with one
another as early as the design phase. If an entire material flow is
simulated via individual mock-ups, this describes a virtual reality
(virtual prototyping). With the help of this procedure, alternative
scenarios can be run through according to decision criteria such as
maintenance times, downtimes, storage times or maintenance
intervals. Due to these digital models, the cost-intensive generation
of physical prototypes in the automotive industry, for example, has
halved in recent years. The users wear data glasses with which they
no longer perceive their real environment. The virtual world can be
seen, heard and felt (industrial applications, 3D gaming, training).
B.5.3 Deceleration management

Courage to slow The success factor of time is usually viewed in little detail.
down: Take your In recent years, companies in some sectors have experienced a
foot off the veritable “acceleration euphoria”. The possibilities of conscious
accelerator pedal... deceleration are rarely analyzed. The Japanese Ministry of
International Trade and Industry (MITI) recognized the dangers of the
unbridled development fever and recently warned the Japanese
automotive and audiovisual industries against further reducing the
concept-to-cash period. The processes of substitution are now
taking on dimensions that seemed unthinkable a few years ago: the
product life cycle of a flat screen TV is currently barely six months. A
generation of laptops becomes obsolete after a similarly short time.
For the consumer can hardly be
product-specific characteristics, the products are now cannibalizing
each other.
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B.5
B.5.4 Supply Chain Engineering
In the following, supply chain engineering is understood to mean supply Logistical

chain-oriented product development (synonymously also “Supply Chain product
Driven Product Development” or “Design for Supply Chain”). Supply chain development
engineering comprises six building blocks: Variety of variants, configuration
of parts, effects on procurement planning, conditions for storage and
transport, packaging components and composition of the products (cf.
Pawellek et al. 2005; Schulte 2017 , p . 400ff.).
B.5.4.1 Diversity of variants
When determining the number of variants , there are a number of conflicting Many variants as
goals (trade-offs) within an organization: From the point of view of supply a logistical disaster
chain management, the range of variants to be developed should remain
manageable: after all, every newly designed item number must also be
managed logistically become. Diverse administrative activities (such as
creating the part number in the parts master) are known to drive up the
process costs.
The sales employee, on the other hand, will appreciate a variety of variants. Offer the
This allows him to offer his customers different product variants customer
present, open up new markets and position yourself against the competition. alternative variants
Perhaps one of the alternatives offered meets the customer's wishes exactly
and leads to the conclusion of a contract.
The development of product alternatives corresponds as far as possible to Mass customization

the principle of modern variant management: maximizing the variety of as a solution
variants perceived by the customer while at the same time minimizing the
number of parts, assemblies or components used internally. Exploring this
balancing act can be a Herculean task. Because it is not easy to find the
right degree of product customization. If this screw is overtightened, there
are negative logistical effects (the effort involved in handling the item
numbers increases). The hybrid approach of mass customization (see p.
164) can be used to solve this balancing act between standardization and
individualization. The modular design is based on a kit (limited number of
variants) and is
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duct alternatives still meet the special wishes of the customers (large number of variants).
B.5.4.2 Configuration of parts

"One is never The parts configuration sets the course for subsequent logistical decisions as early as
too heavy for the product development stage. The weight, volume and form of part numbers influence
one's height, but later distribution, picking and storage processes . For example, the selection of load
one is often too carriers and the manual handling of products depend on their nature . Light products are
small for one's
weight." (G. Fröbe)
Easier to handle and require less help to reload, move, or transship. The rule of thumb
is: By using standard sizes (e.g. the load carriers) and avoiding bulkiness, logistics costs
are reduced.
Standardized But the construction of the parts also influences the subsequent logistics: In the case of
develop components an integral construction, the construction is based on a few part numbers (e.g. cast
parts), which are characterized by a high degree of complexity. Consequently, integral
parts require special packaging and a lot of storage space. In the case of differential
parts, on the other hand, components that are easy to produce are assembled into a
finished component. Due to the large number of individual part numbers, differential
components require a large logistical control effort. In addition, symmetrical designs can
be clamped better in processing machines than differential parts (minimization of
processing operations).
The surface finish of constructed parts also has an effect

insensitive
Surfaces logistical follow-up decisions: Special protective measures must be taken for surfaces
facilitate logistical that are sensitive to impact (soft underlays, additional packaging material, increased
handling transport costs).
The surface properties of materials also affect the packaging process: Insensitive
surfaces can often be packed automatically. Special rules apply to hazardous substances
and dangerous goods. They cause high costs for packaging, storage and transport (cf.
Schulte 2017, p. 402).
B.5.4.3 Effects on procurement planning

Guarantee Supply chain engineering has a lasting influence on procurement planning. This applies
simple in particular to the selection of suppliers, the replenishment lead time of the materials
procurement planning and the integration of suppliers.
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B.5
ten. For the selection of suppliers (sourcing decision) , the rates of
developmental restrictions and special configurations limit the spectrum of
possible suppliers. Patent protection also narrows the selection of possible
procurement sources.
The replenishment lead time of individual parts is closely linked to the Create close
integration of suppliers. Technical compatibilities between manufacturers relationships with Tier
and suppliers are not necessarily congruent with logistical goals: While 1 providers
technology particularly appreciates the innovative potential of suppliers,

logistics pays more attention to the supplier’s level of delivery service.
B.5.4.4 Conditions for storage and transport

If the cold chain
Modern supply chain engineering takes storage and transport conditions of
breaks, they can
individual parts into account. Early on, engineers should consider components
consequences can be
such as temperature, humidity , and storage time in their design-specific
dramatic
considerations. There are special requirements for temperature-sensitive
goods. In refrigeration logistics, the cold chain must not be interrupted (see
p. 56).
Temperature-stable goods, on the other hand, do not require insulation or
climate adaptation.
When distributing goods, special transport positions should be avoided: If Optimal use of
products are transported in different positions, their packing density on the loading space
means of transport is reduced, which increases distribution costs. Nesting of

the components in one another is also hardly possible. The packaging and
transport processes are becoming more complicated, and special tools (such
as hanging devices or carrying aids) are required.
The limitation of the storage period leads to an increase in logistics costs. total cost of
If corrosion-resistant material is used, the procurement and production costs ownership
increase. However, these additional costs are often worthwhile if there are analysis
later cost reductions in the storage processes (positive trade-off situation).
B.5.4.5 Components of the packaging

A logistics-oriented product development takes into account subsequent Ensure packing density
packaging logistics decisions at an early stage. The primary goal is to reduce
the packing density (degree of filling of the container, utilization of storage space).
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to optimize means of transport. Basically, the higher the packing
density, the lower the transport costs. Large quantities of packaging
material reduce the use of storage space. Even minor changes to the
packaging itself can increase the packing density (stackability,
component spacing, weight restrictions).
Standardization The use of standardized load carriers (crates, cartons, pallets, bins,
beats specialization containers) with standardized dimensions serves to reduce process
tion and transaction costs. Special load carriers are expensive both to
purchase and to operate. For example, they lead to high cleaning
costs because logistics service providers have geared their processes
to the use of standard load carriers.
B.5.4.6 Composition of the articles

Use component Finally, supply chain engineering includes the development of a
design logistical composition of the products. The products can be improved
in their structure in different ways. For example, the number of
individual parts installed in the product has a lasting influence on
subsequent logistical decisions. A large number of different
components increases the number of suppliers. As a result, volume
effects in purchasing are lost. In addition, there are high transaction
and capital commitment costs (cf. Schulte 2017, p. 403).
opportunities and Identical parts (multiple use parts) are installed in various variants
Assess the risks of of a product (platform strategy). With their use, the purchasing power
identical parts of the manufacturer increases: price advantages can be achieved in
negotiations with a supplier. The use of standard parts facilitates the
complete procurement and sales planning. The consequences are
reduced safety stocks, which lead to positive cash flow effects.
However, it should not be concealed that a stock-out of identical parts
has devastating effects on the manufacturing processes. Then there
is a threat of a multiple line standstill.
Avoid critical If, on the other hand, special, critical components are designed,
components if the spare parts logistics (spare parts) is confronted with the problem
possible of ensuring the long-term availability of these parts. This spare parts
management is particularly difficult with short product life cycles. This
is where the gap between the lifespan of the product and what follows
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B.5
Availability of spare parts particularly apart. A number of notebooks
have been on the market for barely more than half a year. On the other
hand, the supply of spare parts often has to be guaranteed for more
than ten years.
The competitive factor time has a significant influence on the order-to- Suitable for
payment process. For the optimization of the supply chain, the two production and assembly
construction
possibilities of process acceleration and process deceleration must be
examined. In most cases, priority is given to the first variant in order to
shorten throughput times , which is achieved, for example, by setting
up the machines more quickly. However, improvement measures
should not only be sought in the manufacturing process itself, but in
the upstream development cycle of products and processes. In product
development, the course is set for the optimization of throughput times
and set-up times. The machines are to be designed for production and
assembly in order to meet the demands for responsiveness and
adaptability. Product development aligned in this way is referred to as
design-for-manufacturing-and-assembling (DFMA). In the automotive
industry, DFMA strives for improved interchangeability of components
by dividing the vehicle into assemblies. Mercedes estimates the annual
savings potential of DFMA at 25 million euros for its Sindelfingen plant
alone (cf. Batchelor/ Schmidt 2004, p. 25).
Competitive advantages can be achieved in fast supply chains. designchain

This applies in particular to innovation leaders (“design leaders”, see p. management
52). Companies like Apple, Nike or Sony set many trends. These
innovation leaders try to build up market access barriers , which they
succeed in very different ways:
ÿ Innovation leaders initiate economies of scale (savings in company size) by
distributing the fixed costs over increasing production volumes.
ÿ Design leaders act together with partners in the supply chain.

In this way, they exploit economies of scope (network effects). They force
supplier integration processes at an early stage. Examples of this are system
sourcing or modular sourcing (see p. 180).
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ÿ Furthermore, innovative supply chain actors generate economies of
density. For example, they achieve bundling effects in industrial parks
(as in Hambach, in the production of the "Smart"). Cost advantages
(“cost sharing”) arise from this agglomeration.
ÿ In addition, innovation leaders can create market access barriers through

an aggressive pricing policy (“penetration pricing”), for example by
exploiting savings in company size or advantages of differentiation.
ÿ Raising Rivals Costs: Finally, a barrier to entry for a market can be set
up using deterrent measures. According to this, the first-to-market
demands excessive prices from a follower for the use of its capacities:
for example in telecommunications for the use of networks.
IT support in An adequate IT architecture must be created for teamwork. The

supply internal and cooperative transfer of know-how is guaranteed by
ensure chain networked work. Communication, documentation and research
processes in the supply chain should be based on the idea of
groupware . This avoids information islands. The members can
access the identical and always up-to-date data material. In the
logistics chain, these prerequisites are realized by EDI (Electronic
Data Interchange) and Web-EDI. In the simultaneous engineering
team, the members of the functional areas of logistics, purchasing
and operations in particular support the optimization within the supply
chain. They must enforce their requirements with the IT department,
which secures the basis for an IT connection for all value-added
partners.
"It's better to Supply chain management can also refer to an intended deceleration
burn out than of processes (cf. in this context the postponement strategies on p.
to fade 169). This is possible, for example, if the company has a virtual
away..." (N. Young) monopoly or enjoys patent protection for certain services. If the
benchmarks agreed with suppliers and customers in the framework
agreement are observed, manufacturers can avoid typical logistical
errors: overdeliveries or underdeliveries from customers (deviating
delivery quantities), incorrect delivery dates, wrong goods tags
(labels), qualitative deficits in the Goods, incorrect delivery locations
or incorrect packaging.
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comprehension questions
B.6
B.6 Questions of understanding
ÿ Characterize the driving forces of competition and the strategies for

market cultivation according to M. E. Porter. To what extent do
these driving forces influence possible developments within modern
supply chains?
ÿ What is a core competency? What are the prerequisites for core
competencies to develop? Name three practical examples of the
existence of core competencies from the business environment.
ÿ Identify the main features of the market-based view and the resource-
based view. How can both approaches be combined in GEKKO?
Put the advantages and disadvantages in a table
le of GEKKO opposite.
ÿ Characterize the further development of the resource-based view to
the relational view. In doing so, go into specific extensions in the
light of the supply chain. ÿ
What is Total Quality Management? Go into the term in more detail.
Describe the importance of TQM for contemporary value chains.
ÿ How do lean management and kaizen management support total

quality management? Characterize Lean Management and Kaizen
Management in bullet points. To what extent does total quality
management influence the design of a supply chain? ÿ Show
the possibilities and limitations of business reengineering. Describe
the four "Re's" of business reengineering. What dangers do you
attribute to reengineering?
ÿ Is a bomb-throwing strategy suitable for supply chain management?
Justify your statement. Name the reasons why an average of three
out of four reengineering projects fail in the operational environment.
ÿ What strategies
and tools can organizations use to shorten their time-to-market? Briefly
characterize these strategies and tools.
ÿ Why can the use of conscious delay strategies (deceleration) lead

to competitive advantages in supply chains?
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B
ÿ Simultaneous Engineering: Describe the process and show the
differences to successive product development.
Name the advantages and disadvantages of simultaneous
engineering for designing a value chain.
ÿ Rapid prototyping: Clarify the term. What are the most important
techniques of rapid prototyping? Choose such a procedure and list
its advantages and disadvantages in a table.
ÿ Explain the current euphoria about 3D printing. What further

developments do you expect from this process in the next few
years?
ÿ Resident Engineering: Give an example from the automotive industry.
Draw up a table in which you compare the advantages and
disadvantages of the procedure.
ÿ Characterize the instrument design-for-manufacturing-and-assembling
in its basics. Give an example from the business environment.
Create a table comparing the advantages and disadvantages of
DFMA. ÿ Name reasons for a conscious
deceleration in supply chains (postponement strategy). Use the cost
growth curve as part of your explanation.
ÿ What are the influences of time-based competition on the supply

chain management of companies? Name advantages and
disadvantages of acceleration strategies for a modern supply chain.
ÿ Describe the
individual components of supply chain engineering. Select one of
these levers for a logistical product development and compare
possible advantages and disadvantages of this instrument in a
table.
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C.1
C supply chain strategies
management
The management concepts described in Chapter B are a platform for Strategies for
supply chain management. Based on these approaches, different implementation of
strategies can be used in the supply chains. management

concepts
Their selection depends on the specifics of the organizations, with
these supply chain concepts relating to the supply, disposal and
recycling of business activities.
C.1 Learning objectives and approach

The learning objective of chapter C is to describe supply, disposal learning goals and
and recycling strategies of value chains. They ensure the flow of method
goods in the order-to-payment-S. In the further procedure , the basics
are shown, with a focus on the possibility of cooperation between
supplier, manufacturer and customer. This is followed by the labeling
of supply strategies.
The focus is on efficient consumer response, customer relationship
management, mass customization, postponement, sourcing and
procurement strategies, spare parts and risk management as well as
electronic supply chains and cognitive supply chains. In addition,
approaches to disposal and recycling must be outlined for supply
chain management before questions of comprehension are asked.
C.2 Basics
Cooperation strategies support the functions of supply, disposal forms of
and recycling within contemporary supply chains. Cooperative cooperation
strategies are aligned vertically or horizontally. Their distinction is
based on the integrated value-added stages (see Figure C.1).

https://doi.org/10.1007/978-3-658-32429-2_3

C
ÿ Vertical cooperation strategies take place with upstream or downstream
value creation partners. The first relate to supplier integration, the last
to customer integration.
ÿ Horizontal cooperation strategies are aimed at the same level of value

creation. They take place between competing partners, often in the
form of strategic alliances.
Figure C.1 Vertical and horizontal cooperation
cooperation strategies
Vertical cooperation Horizontal cooperation
customer cooperation Strategic Alliance
supplier cooperation cooperation
C.2.1 Vertical cooperation strategies
C.2.1.1 Supplier Cooperation

"Only where money The relationship between supplier and customer has been intensifying for some time
rules, where years. The provider is accepted as a "real" value-added partner. Every
the customer is supplier means an interface for the customer . It ties up capacities, for
king. Where example for controlling scheduling. The trend is that many manufacturers
materials are are reducing their number of suppliers (number-of-active-suppliers)
scarce, the supplier is a prince.”
overall. For example, the clothing manufacturer Steilmann parted with 40%
(Phrase)
of its suppliers within a year in order to improve its competitive position.
British food manufacturer Quaker Oats reduced the number of folding

carton suppliers from 22 to just two. The aerospace group EADS also
drastically reduced its number of suppliers over a period of four years (from
3,000 to 500). The remaining suppliers were given more responsibility.
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basics
C.2
The reason for initiating this drastic measure was the delay in delivery
of the flagship "A 380". Finally , Sony also sought salvation in a
supplier reduction program. The company halved the number of its
suppliers to 1,200 active suppliers in two years. The procurement
costs were reduced by 20% as a result.
In many sectors, the industry transfers more responsibility to the Examples of supplier
reduction
suppliers. The suppliers move closer to the manufacturer. They are
located in industrial parks - often in the immediate vicinity of the
manufacturer or on the customer's premises . Block c.1 shows an
example of this.
Supplier integration in Hambach example block c.1
ÿ MCC manufactures the “Smart” in Hambach (France) . To this end, the organization has
integrated seven selected suppliers in an industrial park close to the factory (“Smartville”).
Among them are Continental and Magna. Daily production is around 560 vehicles. MCC is
supplied just-in-sequence, which means that safety stocks are comparatively low. The
movement is designed in the shape of a cross (“assembly plus concept”). Each of the four
branches takes on different logistical and assembly requirements: cockpit integration into the
steel body (branch 1), marriage of the vehicle in which technical work takes place under the
"Smart" (branch 2), cladding of the car with panels, doors and windows (branch 3 ) and
installation of seats, accessories and wheels (Ast 4). The construction is strictly modular. The
respective assemblies run directly to the assembly lines via conveyor belts. This structure
takes up little space. The maximum distance between the docking point per supplier and the
assembly line is just ten meters. The "Smart EQ" is the electric version. Daimler is currently
considering moving production of the “Smart EQ” to China.
Due to the intention of the manufacturers to reduce the number of Suppliers also
cooperate
their suppliers, some suppliers are reacting with network strategies.
each other
For example, 160 mostly smaller providers in Austria joined forces to
form the Styrian automobile network AC Styria . The cluster represents
a symbiosis of supplier companies geared towards the automotive
industry. Today, more than 40,000 people find their jobs here. The
association has now grown to 180 partners.
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The total turnover is more than 2 billion euros per year. For example, 25
partners from Austria who supply Opel in Germany with parts cooperate in
the cluster. You exploit synergy potential in logistics and reduce freight
costs through the joint use of industrial trucks. The Styrian project is
borrowed from the Verbund Initiative Automobil (VIA) in North Rhine-
Westphalia.
possibilities of The manufacturers use the special knowledge and the flexibility of the
Supplier integration suppliers to relieve their own capacities. A cooperation between
manufacturer and supplier can be differentiated with regard to the intensity
of the commitment and the performance potential (cf.
block of terms CI and p. 187).
Concept block CI Possibilities of supplier connection
ÿ Differentiation according to the intensity of the bond
- System suppliers: They supply the manufacturer directly (first tier supplier).
Some of the responsibility for development is transferred to them. Dovetailing
with the manufacturer is geared towards the long term, and the bond intensity
is high.
- Subcontractors: These are suppliers of the second or next order (Tier 2 to Tier
n). They are direct or indirect suppliers of a system provider and indirect
suppliers of the manufacturer (OEM). The influence of the producer on the sub-
suppliers is low, the intensity of the ties between the actors is low.
ÿ Distinction according to performance potential
- Black box suppliers: Black box suppliers are involved in the manufacturer's
product development at an early stage. The target profile is defined in the
requirement and functional specification. Within the framework of the realization
of requirements, the supplier is granted freedom, his performance potential is
very high. - Detailed specification suppliers: A manufacturer provides
the detailed specification supplier with drawings and sketches. He manufactures
according to strict instructions. The detailed specification supplier aligns his
range of services according to the framework and production conditions of the
producer.
- Catalog suppliers: Customers retrieve standard parts from a catalogue. Specific

requests remain unconsidered. The performance potential of the provider is
low.
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basics
C.2
On page 119, in the description of simultaneous engineering, the possibility of What is a resiÿ
resident engineering was briefly discussed. Suppliers send their own dent engineer?
employees to the manufacturer. These are integrated into the manufacturer's

product development for a period of two to three years because the greatest
opportunities to influence the competitive factors of costs, time, quality,
flexibility, innovation, sustainability and information exist in the early phases (cf.
example block c.2).
Resident Engineering example block c.2
Continental Automotive Systems and Thyssen Krupp send resident engineers to VW in Wolfsburg.
They are involved in the development of a powertrain for the new Golf . The engineers of the two
suppliers direct their activities to the wishes of the manufacturer VW at an early stage
out of.
In order to improve their supply chain management, customers become active Fitness for use
and train their suppliers. The customers try to establish compatibility between
the actors. Chrysler involved selected suppliers in the development of the
"Concorde" , equipped them with identical (CADÿsupported) software and
trained the employees of the suppliers. Questions from the suppliers could be
answered directly. Chrysler had no conversion problems with the incoming files .
However, the cooperation between supplier and customer can also involve Supplier connections
problems . Dangers for supply chain management are to be seen above all in do not always work
the fact that one of the parties involved tries to unilaterally drive down prices or
merely shifts responsibility for inventory to a third party. The iron goal of a win-
win situation between suppliers and customers is sometimes put to a serious
test, which the following example underlines:
ÿ The price dictation of the former Opel and later VW purchasing manager José Ignacio Lopéz
de Arriorùa went down in history with little credit under the signet “Lopéz effect” . In
accordance with the “lawnmower method”, Lopéz demanded price reductions of up to 10%
from the suppliers in a “brand letter”. He justified this by saying that the suppliers should
develop suggestions for improvement that lead to a reduction in costs.
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C.2.1.2 Customer Cooperation
"The customer is In addition to working with suppliers, manufacturers are looking
our focus and
also an intensified cooperation with their customers. Customer
therefore always in expectations and requirements are often bundled into groups. There are
the way." (idiom) three types to be distinguished in this context: Expressed expectations,
unspoken requirements and unspoken expectations.
basic needs ÿ Expressed expectations: They contain wishes that current and potential consumers
clearly express to their environment: “I particularly like green lawnmowers!”. The
manufacturer can adapt well to these wishes of its customers.
Significant sources ÿ Unspoken requirements: Customers take unspoken requirements for granted, but
of error evaluate them particularly negatively when they are not present. Examples of this
are driver and front passenger airbags as well as electronic stability program (ESP)
in a car of the upper middle class or the lane assistant of a navigation device.
Innovation ÿ Unspoken expectations: These are to be understood as innovative ideas and

playground suggestions on the part of the manufacturer that the customer does not take for
granted and the existence of which he
rewarded particularly positively. Examples of this are Internet use on the television
set with the "Plug & Play Internet E@sy Box" from Satelco, the first biodegradable
chewing gum "Chicza" from the manufacturer Phytotreasures, a motorcycle helmet
from the Italian manufacturer Brembo with an automatic strap closure or "Bicibomba":
The first bicycle that can drive water pumps.
Recognize The focus is on recognizing the wishes of consumers.

customer needs early on The laboratory store concept is used for this. The basic idea behind
this approach, which originated in Japan, is that the customer not only
gives feedback on the product alternatives presented to him, but is also
directly involved in the development process. He is actively involved in
the "laboratory" and is questioned or observed there. Example block c.3
illustrates this connection.
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basics
C.2
customer integration example block c.3
Little Tikes is a toy manufacturer from the USA. Children are invited to the organization's
"Child Care Center" to play with newly developed toys, prototypes or improved toy variants.
Little Tikes staff observe and question the children. This gives the engineers very early
information for their development concepts: Little Tikes was able to significantly reduce
the rate of slow sellers.
Conjoint measurement can be used to describe and research conjoint analysis

customer attitudes (cf. Gustafsson et al. 2013). Market research
institutes have been using the method since the late 1970s. Selected
respondents rank complete product releases.
The inquirers submit preference or pair comparisons. Then part utility
values for the individual features of a product can be derived
decompositionally (by breaking down total products to the level of
their parts). Their respective contribution to the overall benefit of a
product is determined. The product is no longer a homogeneous
whole, but a heterogeneous bundle of different partial properties. Due
to the variation of a part property, the resulting subjective change in
utility can be read in units.
C.2.2 Horizontal cooperation strategies

Horizontal cooperation strategies relate to the integration of actors at Use common
the same value-added level. Above all, the formation of strategic strengths
alliances takes on a prominent position in this context. Competitors

want to gain competitive advantages by working together. There are
many examples of the formation of strategic alliances in supply chain
management :
ÿ International airlines have been pooling their expertise in the “Star Alliance” for a
number of years. Air Canada, Asiana Airlines, Lufthansa, Scandinavian Airlines,
Singapore Airlines, Swiss and United are all involved in this partnership .
ÿ Since April 2014, the Bitburger brewery has been selling the Benediktiner Weißbräu
made by the Ettal monastery brothers. The brewing itself, of course
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C
Licher takes over (the Licher brewery has been part of the Bitburger Group for years).
ÿ The two companies active in medical technology, B. Braun and Paul Hartmann , founded
"MedSL" in order to jointly shoulder the costs for the distribution of goods.
ÿ In the pharmaceutical industry, Pfizer and Merck joined forces in 2015 to develop a joint
anticancer agent (“Anti PDÿL1” project).
ÿ The two largest German specialist retail trade associations in the toy and leisure article
market (Vedes and Idea & Game) have been bundling their purchasing in the “Toy
Alliance” for a number of years.
ÿ Several car manufacturers (e.g. Chrysler, Ford, General Motors) have joined forces in
the “California Fuel Cell Partnership” to further develop fuel cell technology.
Cooperation and Coopetition is a special form of horizontal cooperation. The term is

competition in derived from Corporation (cooperation) and Competition (competition).
step For example, Daimler and Renault-Nissan decided on a far-reaching
cooperation, which relates in particular to three segments: Joint small
car development (concerns the "Smart" at Daimler and the "Twingo"
at Renault), cooperative engine development (Daimler takes over
smaller units from Renault - in return the posh Nissan subsidiary
Infinity receives four and six cylinders from Daimler) as well as
cooperation in light commercial vehicles (Daimler is interested in the
development of a box station wagon based on the Renault "Kangoo").
In all other areas, however, Daimler and Renault-Nissan are still in
fierce competition with each other.
C.3 Strategies of care

Ensure Figure A.2 (see p. 9) showed that in supply chain management the
availability of goods supply strategies run downstream – from left to right . An upstream
stage supplies its respective downstream stage. This ensures the
availability of goods. The first supply strategy of modern supply chains
discussed here is Efficient Consumer Response.
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supply strategies
C.3
C.3.1 Efficient Consumer Response
The origins of Efficient Consumer Response (ECR) lie in the USA History of ECR
(cf. Corsten 2004; Dreeser 2007; Goldhahn 2007; v. d. Heydt 1999;

Kühnel 2009; Lammers 2012; Seifert 2006; Wildemann 2012). In
1992, the Food Marketing Institute, located in Washington DC,
presented the concept for the first time. The consumer goods industry
and trade in particular initially took up the idea of Efficient Consumer Response.
In the meantime, many other organizations have joined the initiative.
In 1994, the idea was finally taken up in Europe and the Executive
Board of ECR Europe was founded.
A legendary example of the concept is the collaboration between Wal- ECR on the
Mart and Procter & Gamble. The department store group Wal-Mart triumphal march:
achieved improvements in the key figures of goods turnover, sales "Veni, vidi, vici..." (GJ
per sales area and EBIT by using Efficient Consumer Response. The Caesar)
food industry calculates through the
intensified procurement and sales cooperation in terms of ECR with
a reduction in consumer prices by up to 7.1% (cf.
Corsten 2004, p. 36). According to the European Executive Board ,
the approach contains a cost reduction potential of 27 billion US
dollars in the European food industry alone. The volume for stock
reduction is estimated at up to 40% (cf. Hughes et al. 2000, p. 124).
Even if these numbers appear to be quite high, ECR certainly has a
significant potential for improvement.
Efficient Consumer Response means an "efficient customer reaction". “Marketing has to
What is new about the approach is the successful combination of be so compelling
logistics and marketing. Information technology provides the interface that people in their
lives
for this. At its core, ECR follows two approaches in particular:
want to have.” (J.
Marketing Channel Management and Quick Response. Marketing
Channel Management (cf. Emrich 2008) has its roots back in the Stengel)
1960s. The focus is on the physical distribution of goods, which is

why the storage and transport of salable goods are latently examined
for potential for improvement. In this context, questions about the
sales channels or the sales intermediaries dominate. The
implementation of marketing channel management involves the
development of new forms of cooperation between manufacturers
and the trade levels involved.
The Quick Response approach was developed in the mid-1980s by lightning reaction
Kurt Salmon Associates - specifically for fashion logistics: The

consulting firm recognized that various sub-processes within the text
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tiling and clothing industry worked efficiently, but the overall process
was not very economical. Kurt Salmon Associates employees broke
down the value chain into its component parts. Project groups were
set up in selected clothing stores and worked closely with trading
companies (such as J.C. Penny and Dillards) . The teams that were
set up tried to uncover inefficiencies along the logistics chains.
Apparently with good success, as soon became clear. Thanks to
Quick Response, companies in the textile industry saw sales increase
by up to 25% (cf. Werner 2013a, p. 17). The textile industry also
managed to avoid costly price reductions at the end of each season.
Today, Quick Response users receive the sales figures for each
article. Another advance can be seen in the fact that – in the sense
of a modern postponement – the pullovers are initially available
undyed in the Benetton factories and are only dyed according to
demand when a customer order is received.
Pillars of ECR Below are the components of Efficient Consumer Response to

examine. First, the logistics components Vendor Managed Inventory,
Cross Docking and Synchronized Production are described. The
marketing approaches are then identified: Efficient Product
Introduction, Efficient Store Assortment and Efficient Promotion. The
link between logistics and marketing is ensured by a third component,
information technology (see Figure C.2).
Figure C.2 Components of Efficient Consumer Response
logistics components Marketing Components
Vendor Managed Inventory Efficient Product Introduction
cross-docking Efficient Store Assortment
Synchronized production Efficient promotion
IT architecture
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C.3.1.1 Components of logistics
With Efficient Consumer Response, the contents of logistics follow the goals Logistic roots
and basic principles of the supply chain in general.
In this context, the focus is on a chain of value-added partners. The
availability of goods is based on the simultaneous optimization of different
competitive factors. Ideally, goals in the direction of costs, time, quality,
agility, service, innovation, sustainability and knowledge should be met at
the same time. Of course, one of these key variables can temporarily stand
out. In the long term, however, failure to comply with this desired
harmonization of goals will lead to trade-offs. For example, exaggerated cost-
cutting measures often result in qualitative deficits.
C.3.1.1.1 Vendor Managed Inventory

Nomen est omen: the term "Vendor Managed Inventory" (cf. Beckmann roll over
2007; vd Heydt 1996; vd Heydt 1997; Mau 2003; Reitner 2013; Seifert 2004; sovereignty
Werner/ Brill 2011) already reflects the central idea: one The customer
transfers planning and control sovereignty for inventory management
(“inventory”) to its manufacturer (“vendor”). For example, he is responsible
for making deadline and quantity decisions about the items to be delivered
(cf. Arndt 2017, p. 161).
Consequently, the customer transfers the responsibility for stock Guarantee

management to the autonomous area of his industrial partner (see Seifert access to
2006, p. 124). At the same time, the customer provides this manufacturer information
with forecast data from needs and market analyses, as well as actual sales
data from the point-of-sale. On this basis, the manufacturer generates an
independent and autonomous production and transport plan (cf.
Arndt 2017, p. 162).
The term Vendor Managed Inventory has definitely established itself in hodgepodge
literature and practice when it comes to the transfer of inventory responsibility neighboring terms
for selected partners within a supply chain.

For some time now, however, related terms have been appearing that must
first be distinguished from VMI. Concept block C.II takes on these concepts.
Continuous Replenishment, Buyer Managed Inventory, CoÿManaged
Inventory and Supplier Managed Inventory are described in more detail.
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Block of terms C.II VMI and related terms
Continuous ÿ Continuous Replenishment (CR): The approach is synonymously referred to as

Replenishment as "Efficient Replenishment" and is the historical predecessor of VMI. The replenishment
a strategic of goods should be continuous, stockÿout situations are therefore prohibited. Both
building
concepts are similar in their objectives. But Continuous Replenishment goes further
than VMI. In addition to shifting responsibility for inventory to the manufacturer, CR
also includes their demand-synchronous production planning and control. CR is to be
understood as a philosophy (strategy level). As an operative lever for the realization
of the philosophy, VMI ensures a continuous replenishment of goods.
Classic ÿ Buyer Managed Inventory (BMI): BMI describes traditional inventory management.
inventory The responsibility for stock management lies entirely within the customer's area of
management by BMI autonomy. This controls and monitors its inventory independently.
Try VMI in test ÿ CoÿManaged Inventory (CMI): This hybrid form is aggregated from VMI and BMI. With
phase Co-Managed Inventory, VMI is not “activated” directly, but tried out for a period of
around a year. During this time, no contractual penalties are payable.
The manufacturer does not control itself completely independently at CMI. Rather, he
submits a proposal for inventory management to the customer, which he can accept
or reject.
Inventory ÿ Supplier Managed Inventory (SMI): The basic idea of SMI and VMI is identical: in
management each case, the customer assigns inventory management to a partner upstream in the
through supplier integration supply chain. However, VMI is a manufacturer-customer relationship, and the concept
is located at the end of the value chain. At SMI, on the other hand, there is a supplier-
manufacturer relationship, which means that SMI is shifting in the supply chain
towards original production.
How VMI works When managing inventory using Vendor Managed Inventory, a
minimum and maximum inventory must be defined for each part
number, depending on the warehousing model. In addition, a safety
stock can be stipulated (range of coverage corridor). When the
reorder point is reached, the supplier automatically ensures that the
goods are replenished. He is responsible for this process. If
the manufacturer fills the retail shelves himself, he supplies in the
sense of rack jobbing. This principle is also widely used in industry.
A number of special techniques support vendor maÿ
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nailed inventory. These tools are briefly identified below:
ÿ Roll Cage Sequencing (RCS): The approach is synonymously described with the term container on
"Efficient Operating Standards" . Vehicles are loaded in the (central) warehouse in customize layout
a manner appropriate to the branch (cf. the comments on cross-docking on p. 152).
In this context, RCS means coordinating the order of the transport units with the
layout of the branches to be supplied in such a way that the pallets and roll containers
can be removed directly when unloading on site. At-
for example, the height of the article ideally corresponds to its later positioning on the
shelf.
ÿ Efficient Unit Loads (EUL): This tool focuses on the load carriers used in goods Optimize load
handling (pallets, roll containers, cardboard boxes, barrels). EUL endeavors to create carriers
uniform standards to optimize transport and storage activities. The consulting
company AT Kearney sees a cost reduction potential of 1.2% in the consideration of
uniform load carriers (cf. Werner 2013b, p. 15).
ÿ Computer Assisted Ordering (CAO): Computer Assisted Ordering uses the capabilities Use IT
of modern IT to record and control the flow of goods between industry and trade. The collaboratively
software is used at significant interfaces, such as goods receipt or the point of sale in
retail. The system represents a departure from traditional inventory management, in
which employees in retail manually check the stocks and initiate order processes.
However, extensive investments in CAO are required in some cases.
When considering inventory management in the sense of Vendor Affected competitive

Managed Inventory, the manufacturers orientate themselves towards factors
the actual demand of their customers (pull control). With the help of
VMI, an improvement in important key variables of the competition is
often achieved:
ÿ Reduction of costs, in particular due to reduced warehousing, but also due to an improve cash flow
optimized utilization of transport capacities: The consulting company Kurt Salmon ser
Associates calculated that the average inventory range in retail without VMI was 104
days. After the VMI was introduced, this period was shortened to 61 days (cf. Mau
2003, p. 58). The cooperation between L'Oreal and the drugstore chain dm is
designed to take advantage of this
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owes. Both organizations reduced the inventory range by more than 50% with VMI
(cf. Senger/ Österle 2003, p. 9).
Acceleration ÿ Forcing the (throughput) time: The throughput times are reduced by up to 20% with
successes VMI processing (see Seifert 2004, p. 28).
Increase service ÿ Increase in quality (increase in service and service level): According to Mau , the
levels service level in retail improves to up to 99.9% through the introduction of Vendor
Managed Inventory (cf.
Mau 2003, p. 89).
cushion peaks ÿ Exploiting manufacturers' flexibility : The company Novozymes is one of the world's
leading manufacturers of enzymes. With the help of Vendor Managed Inventory,
the organization independently selects the optimal delivery quantity for customers.
Depending on the transport volume, the delivery volumes are rounded up or down
in order to better utilize the means of transport. Additional flexibility is achieved by
prioritizing subsequent deliveries to different trading partners. This results in a
smoothing of the otherwise usual production and distribution peaks (cf. o. V.
2006a, p. 28).
game rules The operational framework for warehouse management via VMI is
complex. Below is a summary of the relevant influencing factors:
don't leave money ÿ Conditions and framework agreements: The procurement quantities and purchase
behind prices must be specified in the contracts between manufacturers and customers.
Due to the fact that consignments of goods are broken up into small units, retailers
should nevertheless make sure that they take advantage of volume discounts
(consider the possibility of placing “collective orders”).
range window ÿ Storage capacity: In order to avoid overfilling the storage facilities at the point of
sale, the supplier is allocated maximum storage capacities for the part numbers
concerned.
define rhythm ÿ Delivery rhythms: "Fixed" delivery rhythms can be defined for relatively continuous
ren requirements. This reduces the transaction costs because some administrative
activities are no longer necessary.
Find critical ÿ Minimum delivery quantities: In order to achieve a real win-win situation between
delivery quantity the partners involved, "mini deliveries" should be avoided. You could break the
already very tight cost corset of Vendor Managed Inventory.
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With the transfer of responsibility for the range at the point of sale, Benefits of VMI
the manufacturer is obliged to ensure that goods are replenished in at a glance
a timely manner to meet requirements. This has the advantage that
the stock gaps in the retail range decrease, which reduces possible
sales losses. The manufacturer uses the retail sales data to control
production (according to consumption demand) in line with demand.
Another strength of Vendor Managed Inventory is the reduction of absorb

the bullwhip effect (see p. 47). The level and course of the flow of whiplashes
goods along the supply chain do not correspond to the actual
consumer demand, since minor disruptions and fluctuations in
demand in the value chain as a whole distort the original consumer
demand. This results in fluctuations in order quantities that are
inflated like whiplashes and oscillate along the entire supply chain. A
key reason for the emergence of the bullwhip effect is a divergent
information gap across the stages of the supply chain. VMI largely
eliminates this different level of knowledge of the individual network
players, since the customer continuously provides the manufacturer
with information.
Even though Vendor Managed Inventory has the advantages "Obstacles and
described, the approach is surrounded by a number of problems . difficulties are
At VMI, the customer pushes the buck in the direction of the manufacturer. steps on which
If stock-out situations arise, the customer will be subject to contractual we climb." (F.
penalties. Another difficulty can be seen in the exchange of Nietzsche)
confidential information. This includes stock data, planned sales
quantities or price agreements (know-how outflow). From the point of
view of the trade, there is also the latent risk of losing possible
competences due to the transfer of inventory control to the
manufacturer. In this way, their influence on their own shelf space
disappears. Another problem is that the retail sales figures only
provide limited information about future buyer behavior, since they
are data from the past.
The high degree of automation of Vendor Managed Inventory is also supply chain
critical . The order suggestions created by the system on the basis relationship
of inventory and sales data save time (since there are no planning management
levels in retail). However, the key figures on which they are based
also require qualitative supplementation, cause research and
interpretation. A formative element
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ment of VMI is its automatism. On the other hand, human attributes
(social factors) have so far hardly been taken into account. For
example, the successful introduction of Vendor Managed Inventory
not only benefits from the technical interior, but also from the
experience of his employees.
Do not exaggerate Furthermore, the incentive for a Vendor Managed Inventory seems
VMI to depend heavily on the industry affiliation of the actors involved.
There is also obviously a critical maximum mass to adequately
ensure processing via VMI. According to Thonemann et al.
Organizations have difficulties in controlling more than 30% of their
turnover via Vendor Managed Inventory (cf. Thonemann et al. 2012, p. 37).
First practical Two practical examples for the use of Vendor Managed Inventory
example for are discussed below . The first case refers to dm, the second example
drugstores to Twentieth Century Fox Home Entertainment Germany.
The drugstore chain dm (cf. Holland et al. 2001, p. 69 for example)
laid the foundation for the use of Efficient Consumer Response as
early as 1986 by building a centralized goods distribution center. In
1991, all branches were equipped with scanner cash registers. Three
years later, the network-oriented IT system “Laboss” was introduced.
"Laboss" was primarily used for order and storage optimization. The
company decided to follow the vision of a so-called "Consumer Driven
Supply Chain". At its core, dm strives to increase the effectiveness
and efficiency of its logistics processes.
VMI in use at dm On this basis, warehouse management via Vendor Managed Inventory
was initiated between dm and Colgate in 1995 . The aim of this pilot
project was for the manufacturer to fully control the affected stocks
right up to the point of sale in the retail stores.
After initially choosing to handle the activities using co-managed
inventory , the transition to “real” VMI took place in 1997. At the
same time, the new permanent low price concept "EDLP (Every Day
Low Price)" was introduced at dm in order to give the flow of goods
more continuity.
Pioneer project with The collaboration between dm and Colgate was so successful that
Colgate dm involved a number of other manufacturers in its VMI activities.
In the meantime, almost 40% of the items in the branches of the
drugstore chain are controlled via VMI.
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C.3
A second example of processing via VMI is Twentieth Century Fox "The fox who
Home Entertainment Germany (hereinafter referred to as “FOX” ). couldn't get hold
FOX is a subsidiary of the Twentieth Century Fox film studio and has of the grapes says
they're sour anyway."
belonged to the Walt Disney Company, one of the largest media
groups in the world, since 2019. The company is represented in all (Phrase)
relevant markets with its own branches and sells film productions and
TV series from the group's own film studios on digital data carriers
with the standard formats DVD and Bluray.
Recently, FOX has also enabled its customers to download data
electronically via VOD (“Video on Demand”) and EST (“Electronic
Sell Thru”). Located in Frankfurt am Main, FOX is responsible for the
marketing of physical media in the areas of rental (rental business)
and retail (purchase business) in Germany and Austria.
FOX has been practicing Vendor Managed Inventory for 20 years "Johnny the Fox
(as of 2020) . The company now handles more than 50% of its meets Jimmy
the Weed..." (Thin
scheduling processes using VMI. Initially , FOX used the IT system
of a service provider. But for more than ten years, the organization Lizzy)
has relied on its own systems, which are used worldwide. First of all,
some persuasion work had to be done with the retailers in order to
provide the required inventory and sales data. Gradually, however, a
rethinking has taken place among trading partners: it is a good
argument when pilot projects in a number of branches (outlets) report
doubling sales that VMI processing achieves compared to traditional
replenishment organisation. In addition, the specialist trade
appreciates the fact that local buyers are relieved of the burden of
disposing of the basic range and have more time for other activities.
With FOX, customers can choose between full and partial supply: In
the first case, the entire active product portfolio is planned using VMI,
in the second case only the classic catalog area (cf. Werner/ Brill
2011).
FOX handles all data streams via EDI. The necessary information is System processing
processed in separate merchandise management systems and, if at FOX
necessary, made available to selected service providers (cf. Werner/

Brill 2011).
ÿ Basic merchandise management system: First, the sales and inventory data basic system
are entered into the basic merchandise management system JD overnight
Edwards and forwarded to the separate VMI system "Demantra" (see below).
The merchandise management system also sends
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system of a logistics service provider open orders and deliveries to the basic
system. Unknown or incorrect EAN codes are not taken into account and
are collected in a daily error report for further processing. A master data
correction in the basic systems must be carried out for them.
IT customizing ÿ Title planning (MIDAS): Minimum and maximum stock ranges are specified
for each title and branch. The MIDAS (“Maintenance of Item, Display and
Store Relationship”) system was specially developed by FOX . This tool
indicates, for example, titles that should not be missing from the customer's
range. Temporary actions are provided with start and end dates. Special
areas at the point of sale usually have to be designated for them. In MIDAS,
the basic parameters are defined. The crucial question is: "Which branch
has which titles in what quantity and when in the range?"
ÿ Demand determination and order generation (DEMANTRA): The VMI

planning and
system Demantra (“Demand Management”) is divided into a “Demand
replenishment
Planner” and a “Demand Replenisher”. The future requirements (forecasts)
are derived from comparable historical sales data via the Demand Planner.
The reach of new releases, on the other hand, is estimated based on the
sales of comparable titles that are already available. Planning is made more
difficult when retailers specify maximum inventory values that FOX must not
exceed. Daily subsequent delivery quantities per data medium and outlet
are calculated using the Demand Replenisher. Available stocks, open
orders, forecasts from the Demand Planner and minimum and maximum
stock ranges from MIDAS are included in the calculations. FOX also takes
special customer requests into account in the Demand Replenisher. For
example, it is possible to switch off individual displays on a daily basis or to
vary the package sizes to suit customers.
ÿ VMIÿAccount Manager: In the Account Manager, the daily determined

detailed planning
deliveries from the Demand Replenisher are released and transmitted to the
logistics service provider’s scheduling system.
The Account Manager allows the FOX employee to import complex displays
at title and store level into an EXCEL worksheet. Orders can be read in and
released manually, and initial stocking for campaigns or returns calls can be
made.
performance measurement
ÿ VMIÿReporting Manager: Finally, the performance control takes place in the
sung Reporting Manager. All relevant information will be
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C.3
collected in a database. Possible standard reports refer to service level, delivery quantity or
inventory. Special reports (e.g. on stock outs) complement these results. The assignment of
individual displays to the branches can also be viewed with the Reporting Manager.
The VMI process (cf. Werner/ Brill 2011) is usually triggered by In the beginning was
scanning processes at the tills of the retail branches. These sales the sales report...
figures are first transmitted to FOX in the "Sales Report" (SLSRPT)

via EDI. The dispatcher supplements this data with information
relevant to requirements. In this way, FOX learns – updated daily –
the available inventory per title at the point of sale. In addition, each
branch transfers the inventory report to FOX, whereby the message
format INVRPT (“Inventory Report”) is used in this regard. The import
of this data, its further processing and the derivation of requirements
takes place automatically on the basis of the set parameters.
The inventory level of an image or sound carrier is calculated from
the agreed storage range and the actual customer requirements for a
title (the gross requirement minus the available stocks on site). In the
next step, the scheduler determines the delivery dates and the
delivery quantities of the respective orders (ORDERS). Contrary to
traditional inventory management, FOX does not wait for the customer
to call it off, but rather sends the retailer a self-initiated order with an
order number. A number of customers review this information and, if
necessary, make changes or reject the order (co-managed inventory).
When they confirm the order, they use the transmission type ORDRSP
(“Pegged Orders”). Other customers, on the other hand, leave order
planning entirely to the dispatcher at FOX (Vendor Managed Inventory
in its purest form).
Before the physical delivery of the digital data carrier, FOX sends Direct supply only
the customer a shipping notification. This electronic delivery note is in emergencies
transmitted using the message format DESADV (“Despatch Advice”).
The final listed delivery items can be found on it. After the customer
has received the goods, he compares the delivery documents with
the posted goods receipts. FOX receives a confirmation of the receipt
of the goods via the RECADV (“Receiving Advice”) format. Finally,
FOX issues the (collective) invoice and sends it to the customer. The
delivery of goods usually takes place via prior central storage and
subsequent branch-specific picking (cross-docking). However, if there
is a risk of stock-outs at the point-of-sale, FOX will deliver directly to
the branches
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performed. Within 48 hours, a directly delivered audio or video
medium will be available in stores. Figure C.3 visualizes the VMI work
steps at FOX described above.
Figure C.3 VMI at Twentieth Century Fox
trade
inventory Goods receipt

SLSRPT confirm
data order gears
ORDRSP RECADV
INVRPT ORDERS DESADV
Duration Create make

FOX The invoice
test order delivery
C.3.1.1.2 Cross docking

history and goals Cross-docking is synonymously referred to as "consumption-
oriented distribution of goods" . The approach emerged at the
beginning of the 1990s as a special variant of central storage. Like
Vendor Managed Inventory, Cross Docking stems from the Efficient
Consumer Response philosophy. The concept attempts to minimize
warehousing and reduce throughput times. In many cases, VMI is
only made possible by cross-docking: In order to maintain the
continuous supply of goods over the long term
central goods transshipment points should be set up (primarily in
conurbations). Otherwise "mini loads" would have to be handled over
longer distances, which would not be profitable.
Establish docking The emergence of cross-docking (cf. Becker 2020; Harnisch 2011;
station Harps 1996; Holland et al. 2001, p. 55ff.; Mau 2003, p. 87ff.) is due
to the “bottleneck ramp”. Especially in the city, it is sometimes
extremely difficult for the manufacturer to deliver to the shops in the
often narrow streets. Large trucks often queue at the ramps.
Therefore, the complete loads of the manufacturers are broken up.
Industry no longer delivers directly to retailers, but to a transshipment
point. This centralized docking station is synonymously called a
transshipment point . It contains the charges
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C.3
to be picked correctly and then distributed to the customer (cf. the
"two-stage principle" below). In the case of cross-docking, ideally
there is no interim storage of the goods. These are then “passed on”
directly to the customer by the transshipment point.
There are three basic types of cross-docking: Article-only cross- species
docking, single-stage and two-stage cross-docking (cf. Harnisch 2011,

p. 33ff.; Stickel 2006, p. 7):
ÿ With single-item cross-docking, only one part number is distributed per mixed load
pallet. The supplier sends full pallets to the centrally located transshipment avoid
point, which only serves as an interim storage facility. Without breaking up
the pallets, they are dispatched to the trade. This method is particularly
suitable for large-volume, fast-moving items and display pallets.
ÿ Single -stage cross-docking describes a variant in which the goods are pre-commissioning
already pre-picked by the manufacturer per pallet. In the central warehouse, tion
these mixed pallets are usually only stored temporarily. If necessary, these
articles are distributed to the customers (sometimes together with other
shipments). Accordingly, the additional logistical effort for the one-step
cross-docking is low.
ÿ The most commonly used variant of cross-docking is the two-stage Cross docking in
principle. Article-specific pallets are brought to the docking station, broken the strict sense
up there and later distributed to the store (“cross docking in the narrow
sense”). In retail, the dwell time of goods at the transshipment point is
sometimes less than 24 hours. Figure C.4 visualizes the processing of
cross-docking according to the two-stage principle.
As a strategy for supply chain management, cross docking is suitable properties of

for improving storage and handling costs. The method also serves to Cross docking
save storage space. From the point of view of the customer
(particularly the trade), the turnover of goods is pushed per part
number. This is where the essence of supply chain management
comes in: a move away from supply, disposal, and recycling chains
with high inventories and erratic deliveries of large quantities. And the
shift to low-stock processes based on actual demand without lead
time (see Stickel 2006).
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Figure C.4 Two-tier cross-docking
Transshipment point
Manufacturer customer
A
aaaaa 1
ABC
aaaaa
Beer
aacc 2
bbbbb
bbbbb bb 3
Potato Chips
aac
4
C
ccccc
ccccc
bbc
Pizza 5
Costs on several The cost of setting up a transshipment point is initially borne by the
shoulders customer (e.g. retail). About the price
distribute: Cost but he passes on part of the costs to the manufacturer. Also the
sharing The end consumer partly contributes to covering the costs by increasing
the selling price of the goods. Essentially, there are costs for goods
handling in the central warehouse. Logistics service providers (3PL) can
be remunerated accordingly for these services. However, processing in
the sense of cross-docking is now clearly worthwhile – especially in
retail. The originally incurred costs are in some cases significantly
overcompensated by the income received. Accordingly, McKinsey sees
a cost reduction potential of between 10% and 15% in the use of cross
docking in retail (cf. Werner 2013b, p.
23). But also in several other sectors (such as construction, cheÿ
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supply strategies
C.3
mie or automotive) cross-docking is now being used quite successfully.
Small and medium-sized organizations use a multiple user warehouse to "Chips on my

perform cross-docking . This means the construction of a transshipment shoulder, more as
point that different, legally independent partners use together. The actors I grow older..."
involved distribute the storage investments across several shoulders (“cost (soft cell)
sharing”).
Ideally, the supply chain actors remunerate the operator of the transshipment
point (3PL) proportionately via process cost rates. However, paying the
service provider using process cost rates is very labor-intensive if several
independent partners share the space within the docking station. In this
case, a calculation using the area meters used in the storage zones is
recommended.
In principle, the use of cross docking results in reduced inventories at all Benefits of the
levels of the supply chain. Another benefit is better use of the space gained rens
in the warehouse. Furthermore, the competitive factor of time is optimized

by faster storage and retrieval processes. The timing with retailers improves
freshness and reduces the number of goods with an expired best-before
date. In addition, the bundling of shipments leads to better utilization of the
means of transport.
But where there is light, there is also shadow. Cross-docking is known to Limits of branch-
have difficulties in organizational implementation. A number of potential specific picking
partners simply do not have the required storage capacity or a suitable
fleet of vehicles to implement the process. Therefore, either investments
have to be made or cooperations with logistics service providers have to
be entered into. In addition, in some cases it is not necessarily the available
information and communication systems that are lacking, but the lack of
accuracy of the data exchanged. There are also fears about maintaining
the sphere of secrecy. Another risk is that the costs are not necessarily
reduced equally across all stages of the supply chain, but merely shifted in
the logistics chain from the customer to the manufacturer. The average
Incidentally, it takes seven months to implement cross-docking (cf. Lillig et

al. 2005, p. 30).
As a practical example for the implementation of cross-docking, reference practical example
is made to the company Danzas . Danzas Holding AG was founded in 1815
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was founded and is currently one of the leading organizations for the
transport of commercial goods. Storage or order picking are also
offered as services by Danzas , for example (cf. on the example o. V.
2005, p. 40ff.).
Cross docking at In a pilot project between industry, trade and Danzas, small
Danzas consignments from different branded goods manufacturers were
combined in a special transshipment point. In the docking station,
Danzas handles all logistical services (such as order picking) entirely
on its own. For Danzas, this results in the advantages of better
utilization of transport capacities and shorter waiting times. The
consignments of goods leaving the factory for retailers are also
bundled. Due to the economies of scale, freight costs are reduced for
trading partners. Finally, there is also an advantage for the end
consumer: the goods can be offered fresher at the point of sale.
Batches can be Communication in the network of partners is secured by the "Number

clearly identified of the shipping unit" (NVE) in connection with the EAN code 128.
This avoids errors in the identification and subsequent control of the
goods. For example, the scanning processes in the incoming goods
department enable automatic space reservation, which corresponds
to the product-specific requirements of the storage location. In this
regard, differentiations must be made in terms of temperature,
hygiene or safety.
Lots of light... The international acceptance of the EAN standard enables Danzas
to extend the philosophy to other branches. The pilot project achieves
cost savings of up to 30% (cf. o. V. 2005, p. 31). The ramp is no
longer a bottleneck for retailers. Deliveries are also more reliable and
on schedule. In addition to a reduction in inventory, a reduction in
process costs can be observed. The manufacturer also benefits from
optimized route planning with fewer trucks, better capacity utilization
of the means of transport, reduced environmental pollution and
cheaper transport tariffs.
C.3.1.1.3 Synchronized production

Use JiT or JiS In addition to Vendor Managed Inventory and Cross Docking,
Synchronized Production serves to complete the logistical attributes
of Efficient Consumer Response. The automatically removed from the trade
156
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C.3
The manufacturer uses the scanner data to optimize its production
planning and control. He does not rely on vague planning figures
(“what the customer might like”), but on actual demand (“what the
customer actually wants”).
Synchronized production is based on the pull principle. For example ,
Edeka makes the scanner data available to selected partners using
the "E 3 Trim" software. The trade is also increasingly looking for
cooperation with manufacturers. Sommerfield Stores Ltd. introduced
a pilot project in England in which eleven system suppliers were
integrated to implement ECR. In this case, the interface between
industry and trade was secured by EDI (Electronic Data Interchange).
C.3.1.2 Components of Marketing

The contents of marketing represent the counterpart to the logistics Define
components and are assigned to category management (cf. product groups
Grajczyk 2015; Kleinfeld 2020; Steiner 2012). Category management
includes the formation of product groups (“categories”). These are
defined as strategic business areas (e.g. the audiovisual industry) or
strategic business units (like CD players within the audiovisual
industry). The category manager is responsible for a specific product
group. The “Baby, Kids & Co” segment of the real hypermarket is an
example of this . Manufacturers and retailers align their activities with
the wishes of customers and form interdisciplinary teams. Category
management includes the three marketing components Efficient
Product Introduction, Efficient Store Assortment and Efficient
Promotion.
ÿ Efficient Product Introduction: The efficient introduction of new products "Concept to" phase
refers to the reduction of flop rates. These indicate the average Shorten cash".
probability of a failure occurring in product development as a percentage.
Industry and trade are working together to develop concepts to avoid
slow sellers on the shelves. They pool their skills. For example, the
Belgian retail giant Delhaize wanted to include a private label for chilled
ready meals in its range. A suitable partner was found in Hot Cuisine .
Hot Cuisine offers ready meals and masters “vacuum cooking”. The
partners developed a joint strategy for selling the vacuuming technology.
ÿ Efficient Store Assortment: With an efficient assortment design, a Curl and skim
harmonization of the articles in the store is pursued. For the
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C
An example is to create a balance between strategy articles and profit
articles (mix of products): strategy articles are frequency generators that only
have a low contribution margin, but lure customers into the store. Profit items,
on the other hand, have a high contribution margin.
Personally initiated ÿ Efficient Promotion: Finally, within Efficient Consumer Response, activities for
measures on efficient sales promotion must be coordinated between the manufacturers
POS and the retailers. The personally initiated measures are aimed directly at the
point of sale (which is increasingly developing into a point of difference ).
C.3.1.3 Information Technology Components

IT as a platform With Efficient Consumer Response, the connection between the
components of logistics and marketing is guaranteed by information
technology. It creates the digitized basis for data exchange via EDI
(Electronic Data Interchange) or Web-EDI (see p.
361). For example, industry uses the scanner data from retail.
In addition, the information is also filtered according to purpose and
decision-making. To do this, customer data, sales data and competitor
data must be managed in a data warehouse (cf. p. 374 of this
document). Wal-Mart provides an example of a data warehouse
solution as part of Efficient Consumer Response . The company stores
and manages the sales of over 80,000 items from around 2,000 stores
worldwide for a period of 65 weeks. If required, each item number can
be called up and edited individually. All persons who are responsible
for designing the product range have access to this database.
Authorized suppliers can also log into the system.
Limits of ECR In the wake of the onset of euphoria regarding Efficient Consumer
observe Response, however, critical voices are also being raised. In particular,
Efficient Consumer Response is accused of the fact that by introducing
the approach, retailers would try to unilaterally drive down prices and
pass on the responsibility for inventory to the manufacturer (retailers
would make themselves “leaner”). In addition, the dependency
relationships between the involved partners are increasing. Despite
this, Efficient Consumer Response is currently establishing itself not
only in retail, but also in the construction industry, in the timber industry,
in the automotive industry and in the chemical and pharmaceutical industries.
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C.3
C.3.2 Customer Relationship Management and Mass
customization
Supply chain management is consistently geared towards the Pull strategy:
customer. The approach focuses on a pull orientation. Directly addressing
In supply chain management, an answer is sought to the question of end customers
what the customer actually wants ("built-to-order"). Vague assumptions
regarding a possible demand should be pushed into the background
(cf. in this context the discussion about the meta-leadership
approaches of Market-Based-View and Resource-Based-View on p.
98). Therefore, supply chain management uses instruments that
contribute to improving customer management. With customer
relationship management and mass customization, two of these tools
are described in more detail below.
C.3.2.1 Customer Relationship Management

The term “customer relationship” emerged in the United States in the CRM: history and
mid-1980s. In the meantime, it has been further developed in various Expression
ways into relationship marketing, one-to-one marketing and customer

relationship management (cf. Bruhn 2016; Hippner et al. 2011;
Müller 2015; Raab/ Werner 2010 and term block C.III).
Customer relationship management and related concepts Concept block C.III
ÿ Relationship marketing: This refers to the development and improvement of existing win customers
customer relationships. The focus of activities in relationship marketing is not on permanently
acquiring new customers (cf. Bruhn 2016).
ÿ One-to-one marketing: One-to-one marketing focuses more on the individual customer. Customer
The aim is not to find as many buyers as possible, but to sell products to customers benefit decides
with particularly high sales (e.g. by means of cross-selling). With one-to-one
marketing, an attempt is made to bind these regular customers to the organization in
the long term.
ÿ Customer relationship management: Customer relationship management means the relationship

planning, management and control of all measures aimed at current and potential management
market partners with the aim of intensifying the customer relationship (Kumar/
Reinartz 2018, p. 15).
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C
KPI for measuring In terms of customer relationship management (CRM), the factors of
customer benefit customer satisfaction, customer loyalty and customer acquisition
zens must be constantly improved. Pure transactional marketing has
turned into real relationship marketing with the advent of CRM .
This expansion relates in particular to the components of information,
interaction, integration and individualization.
"What": Structure of ÿ Information: Customer relationships are established and maintained through information.
customer relationship The Internet is used for this, for example. The information should be of high substance
and contribute directly to solving a customer problem. Digitization offers extensive
possibilities for collecting information.
“How?”: Focus on ÿ Interaction: Virtual communities (communities) can be set up for the exchange process
customers between an organization and its customers. This should create a sense of belonging
for the customer. Discussion forums on the Internet or the use of social media channels
offer one possibility for this.
"With what?": ÿ Integration: The demand for integration means involving the customer directly in the
Customer relationship process of creating the service. An example of this is tracking and tracing in supply
measure chain management.
Another option is the affiliate program. This is a system that ensures performance-
related remuneration for users: such as the success bonus that Amazon and Sky grant
for actively and successfully recruiting new customers.
"How?": ÿ Individualization: Individualization in customer relationship management describes the

implement transition from mass consumption to mass customization (cf. p. 164 of this publication).
specialization With the help of "Collaborative Filtering" it is possible to give individual recommendations
and comparison - based on a preference comparison - to other users. Selected product suggestions
are transmitted to the users via the Internet.
Define key sizes Customer relationship management aims to intensify the exchange
processes between manufacturers and customers. It serves to
improve the strategic target values of profitability, differentiation
and durability.
secure profit ÿ Profitability: Classic marketing strategies are primarily aimed at retaining as many
customers as possible in order to increase the share-of-market (market share). The
Customer Relationship
160
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C.3
Management, on the other hand, focuses on improving the purchase
intensity of selected customers (share-of-wallet).
ÿ Differentiation: Customers are no longer understood as a little differentiated customer-specific

entity. Rather, mass-produced products are successively developing into in bulk
genuine custom-made products (mass customization).
ÿ Durability: In the context of CRM, the objective changes. long range

It is no longer owed to acquiring new customers as extensively as possible, Planning
but turns to the long-term maintenance of existing customer relationships.
The intensive use of modern information and communication Create

technologies is essential for customer relationship management. touch points
Previous isolated marketing solutions (such as help desk solutions
or sales information systems) are no longer tolerated. They do not
permit a uniform view of the customer and only contain incomplete or
outdated data. This information is now being integrated into a
company-wide standardized CRM system.
This system is a “customer touch point” that ensures dialogue with
customers.
Customer relationship management represents a systematic merging "It's not hard to
of customer information, combined with the synchronization of all go the distance
communication channels, in order to depict the customer holistically when you
("one-face-of-the-customer"). This ensures a differentiated and finally get
uniform approach to the customer: "One-Face-to-the-Customer" (cf. involved face
Bruhn 2016; Buttle 2019, p. 53; Hippner et al. 2011; Raab/ Werner to face..." (Daft Punk)
2010).
C.3.2.1.1 Components
The components of customer relationship management are made Structure of CRM
up of communicative CRM, operational CRM and analytical CRM (cf.
Hippner et al. 2011, p. 91ff.). This content is briefly described below.
ÿ In communicative CRM, the communication channels are synchronized with "The world hasn't
the customer. These include the tools telephone, internet or e-mail as well gotten any
as the classic sales pitch of the sales representative. The information from worse, we just
these different communication levels can flow together in the "Customer have a better
Interaction Center" . network of
communications." (K. Hubbard
161

C
front end back ÿ The operational CRM includes all solutions that are directly connected to the
Final solution front office, the point of contact with the customer. An operational CRM is
subdivided into marketing automation, sales automation and service automation.
For targeted processing within the supply chain, the know-how from the front
office is processed in the back office. Possible solutions in this back office are
ERP and APS systems.
closed loops ÿ Finally, customer contacts and customer reactions are to be systematically
recorded in the analytical CRM . This ensures that no information leaks out.
If, for example, a customer complains to the organization's call center, this
knowledge must be able to penetrate to the top management level.
CRM is a closing-the-loop approach : the customer's complaint is entered into

the CRM system, maintained there and tracked until the problem is solved.
Essential system components of an analytical customer relationship
management are data warehouse, OLAP and data mining (see p. 375).
C.3.2.1.2 Evolution to Enterprise Relationship

Management
Supply Chain In modern supply chains, customer relationship management is

Champions League changing into enterprise relationship management (ERM, cf.
Baumgarten 2001a, p. 25; Werner 2013b, p. 18). The full integration
of the customer into the manufacturer's supply chain is symptomatic
of Enterprise Relationship Management. A customer order is tracked
continuously: from the order through production to delivery. All of the
producer's parameters are based on the principles of available-to-
promise and capable-to-promise.
ATP: Making a ÿ Available-to-Promise: The buyer can expect that his order will be processed on
promise is one time. Therefore, the manufacturer confirms the timely delivery of the customer
thing... order with binding effect. An example of this is Amazon 's promise to deliver
certain goods within a specified time (e.g. "Next Day Delivery"). Available-to-
Promise is therefore a front-end consideration.
...to be able ÿ Capable-to-Promise: Capable-to-Promise means that a company also has the
to hold it, the internal capabilities to manufacture the product that is in demand (back-end
other (CTP) perspective). If the customer's order has not yet been planned in a production,
this consideration now takes place, whereby the customer
162
supply strategies
C.3
which a delivery date can be proposed. This procedure can be found, for
example, in the automotive industry.
Producers often use flexible KEP (courier, express and parcel Use KEP
services) to implement available-to-promise . These external goods purposefully
distributors specialize in the distribution of small consignment sizes.
With the help of courier, express and parcel services, manufacturers
meet customer demands for specialization and individualization. In
some cases, the KEP also take on chargeable additional services
(e.g. Amazon Prime through “Same Day Delivery”).
Enterprise Relationship Management collects, manages and prepares Use ERM as
customer information electronically. For example, data can be MIS
compressed for the purpose of management information . Here,
the electronic front-end system of the customer (the Internet) is no
longer seen separately from the back-end system of the producer
(the logistical realization process).
Front-end and back-end merge in enterprise relationship management
to form an integrated supply chain with maximum customer satisfaction
and added value.
In times of ERM, all partners in a supply chain are connected with process specific
each other in a goal-oriented manner: From the supplier (the source ren
of supply), through the manufacturer, to the customer (the point of
consumption). The approach is strictly based on the pull concept.
Planning, management and control in the supply chain take place
across the boundaries of actors. This avoids friction losses at the
interfaces and achieves value-added services. Enterprise relationship
management requires modern information and communication
technologies. They allow processes to be processed in real time (real-
time process). A possible settlement within the meaning of ERM
exists if:
ÿ A customer orders goods over the Internet from a manufacturer of his choice
and this customer order is placed with the manufacturer in an IT
system is segmented,
ÿ for which the structural and process organization of the manufacturer must be
adapted as quickly as possible with regard to the necessary process
changes, and there is also close coordination at the interfaces to selected
suppliers (tier one suppliers) and
ÿ This means consistent order tracking and binding deliveries

fer promise is made possible.
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C
C.3.2.2 Mass customization
Times of stuck- In mass customization (cf. in particular Piller 2012; Pine 1993; cf.
in-the-middle are also Beaufils 2016; Hanisch 2006; Seidenschwarz 2008) the
over advantages of mass production are combined with those of customer-
specific individual production. The approach challenges Porter 's
“stuck-in-the-middle” thesis : According to Michael E. Porter, an
organization must choose one of the generic competitive strategies
of cost leadership or differentiation, otherwise it will find itself caught
in the middle (cf. p. 98). This postulate of the incompatibility of cost
leadership and differentiation is opposed by hybrid competitive
strategies . They allow the simultaneous realization of cost leadership
and differentiation. One of these hybrid concepts is mass customization
(see Figure C.5 and Piller 2012, p. 16).
Figure C.5 Hybrid competitive strategies
strategy Description protagonist
outpacing Timely change between cost leadership and Gilbert/ Streckel

differentiation possible, whereby the competitive (1985)
benefits are retained.
mass customisation Customized mass production. pine
(1993)
Simultaneity hypothesis Simultaneous cost leadership and differentiation Corsten/ Will

through modern production approaches. (1995)
dual internationalization Global application of different competitive strategies spot

tion in different places (e.g. cost leadership domestically (1995)
and differentiation abroad).
Dynamic product Possibility of product change through adequate Kaluza

differentiation manufacturing processes. (1996)
characteristics of Mass customization means a customer-specific mass production

concept of goods for a large sales market. The products must meet the
different needs of consumers. The costs should be approximately
those of a mass production standard
164
supply strategies
C.3
dissed products. That is why mass customization does not mean
“one-off production at any price”. Rather, the approach is based on a
balanced combination of continuous mass production and
discontinuous individual production. Prerequisites for using mass
customization include :
ÿ Large quantities: The production of mass customization refers to a large generate economies
quantity. Economies of scale are achieved in the process. of scale
The bases for mass production ("mass") represent standardized service

modules. They are put together "from the construction kit". Their customer-
specific configuration only begins in the actual sales process. The food
industry provides examples of this in the production of muesli (MyMuesli.com)
or chocolate (chocri.de). But many kitchens are also made according to this
principle.
ÿ Individualization: The term "customization" stands for the individual wishes of

satisfaction of customer requests. This customer-oriented specification of identify customers
the service program can extend to communication, configuration, design, ren
pricing or the after-sales area (variety). The aim is not to replace classic one-
off production. Rather, to create a spectrum of mass-produced and
standardized modules, the configuration of which provides the buyer with a
particularly high benefit. An example of this is the individual production of
chinos: the American mail order company Lands' End produces this type of
trousers according to the principle mass customisation.
ÿ Price and target market: For a mass-customized product, the selling price Fix prices and
should match that of a comparable off-the-shelf product in order to be able target markets
to compete with the services of competitors. Also, the target market must not
be too small so that the manufactured goods can be sold.
ÿ Number of variants: The number of variants should not be too large. It's not Don't let the number of
about producing a particularly large number of similar products, one of which variants get out of hand
could “accidentally” correspond to the customer's wishes. With mass

customization, customers do not have to choose from a hodgepodge of
alternatives.
Instead, they receive a service that is specifically tailored to them.
Mass customization is a combined push-pull process: First, semi- primary pull
refined products are manufactured in fairly large quantities and orientation

pushed a little way into the market (push). thereby achieve
165

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Machine Translated by Google

supply chain management

ISBN 978-3-658-32428-5 ISBN 978-3-658-32429-2 (eBook) https://doi.org/

Mrs. Gabriele Gebauer

for the 80th birthday

Foreword to the seventh edition

then it is not over yet.”

(Oscar Wilde, Irish writer, 1854 – 1900)

the Wiesbaden Business School (degrees “Bachelor of Arts in Business

Foreword to the first edition

The topic of supply chain management is currently omnipresent in

I would like to take this opportunity to express my heartfelt thanks to everyone

I would be very happy to continue the topic of supply chain management

Wiesbaden, August 2000

List of Figures................................................. ....................... XXI

List of Example Blocks ..................................................... ...................XXV

List of terminology blocks ................................................ ................ XXVII

List of abbreviations and acronyms ..................................................... ...XXIX

A Basics ..................................................... .................................................. 1

and development stages of supply chain management................................. ...............8th

A.2.2.1 Types of supply chain management ........................................................ ......9

A.2.2.1.1 Typology according to Bechtel/Jayaram................................. .9 A.2.2.1.2 Typology according to

Otto ........................................ .......... 10 A.2.2.1.3 Typology according to Göpfert......................... ............... 12 A.2.2.2

related management approaches......... 17

A.3.2.1 Value chain ............................................ ............ 17 A.3.2.2 Logistics chain....................... ........................................ 18

A.3.2.3 Demand Chain Management. .......................................... 19 A.3.2.4 Customer Relationship Management............................

19 A.3.2.5 Supplier Relationship Management.......... .................... 21 A.3.2.6 Relationship

A.6.1.2.2 Containment of Maverick Buying via Purchasing

Cards ..................................... ........ 43 A.6.2 Transaction

A.6.3 Bullwhip Effect................................................ ................................ 47 A.6.4

A.8.3 Network competency................................................. ........................... 61 A.9 Material

A.10.1.1 Basics................................................ .......................... 70

A.10.1.2.1 Top level (level 1) ........................................ .......... 71 A.10.1.2.2 Configuration

appraisal ..................................... .................. 94 A.11 Questions for understanding ........................ ................................................ 95

117 B.5.2 Acceleration management................. ................................ 119

B.5.2.1 Simultaneous engineering ............................................ .. 119 B.5.2.2 Rapid

prototyping ........................................ ................... 122 B.5.3 Deceleration

management ........................ ................... 124 B.5.4 Supply chain

engineering ........................ ....................... 125

B.5.4.2 Configuration of parts................................................ ......... 126 B.5.4.3 Effects on

B.5.4.5 Components of the packaging............................. ........ 127 B.5.4.6 Composition of the

Questions for understanding............................. ................................................ 131

C Strategies of Supply Chain Management........................................ 133

C.1 Learning objectives and procedure................................................. .......... 133 C.2

Basics........................................ .................................................. 133 C.2.1 Vertical

cooperation strategies................................................. 134 C.2.1.1 Supplier

cooperation ............................................ ...... 134 C.2.1.2 Customer

cooperation..................................... ................... 138 C.2.2 Horizontal cooperation

strategies......................... ............ 139 C.3 Supply strategies ................................ ..............................

140 C.3.1 Efficient Consumer Response............. ................................... 141 C.3.1.1

Components of logistics ...... ...................................... 143 C.3.1.1.1 Vendor Managed

Inventory... ................................ 143 C.3.1.1.2 Cross Docking.......... ................................................

152 C.3.1.1.3 Synchronized Production................................. 156 C. 3.1.2 Components of

marketing ........................................ 157 C.3.1.3 Components of Information Technology.................

158 C.3.2 Customer Relationship Management

and Mass Customization................................................ ........ 159

C.3.2.1 Customer Relationship Management.......................... 159 C.3.2.1.1

Components ........ .................................................. 161 C.3.2.1.2 Further development to