Intro to Supply Chain and Channel Management Simulation - PowerPoint PPT Presentation

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Intro to Supply Chain and Channel Management Simulation

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Intro to Supply Chain and Channel Management Simulation – PowerPoint PPT presentation

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Title: Intro to Supply Chain and Channel Management Simulation


1
Intro to Supply Chain and Channel Management
Simulation
  • A 6 quarter (decision period) game

2
Learning Objective Give Students Meaningful
Experience
  • Developing business to business relationships
  • Working with and managing a supply chain/channel
  • Developing insight into
  • Selling - Purchasing
  • Negotiating Business Deals - Managing Conflict
  • Cultivating Trust - Using Power
  • Managing Dependence - Applying Influence
  • Delivering Service Quality - Dealing with Ethical
    Issues

3
There Are Three Market Segments(Market Structure)
Mercedes
Traveler
Performance
Work Horse
Price
4
Game Scenario
Each firm can choose to be either a
reseller or a supplier.
5
Resellers Can Setup 3 Regional Web Centers for
e-Commerce, and/or 12 International Sales Offices

                                                                                                                                                                       

                                                                                                                                                                                                                                                                                                 
6
Suppliers Can Setup a Factory in Any of Three
Locations

  
                                                
                                  
                                                
                                 

                                                  
                                                  
                                            
7
Suppliers and Resellers Have Specialized
Functions and Must Work Together to Satisfy the
Market
Reseller
Supplier
Market Research Capacity Investments Production
Scheduling Lean Manufacturing Quality
Control Financial Management
Market Research Marketing (brand, price
advertising) Sales Channel (web, offices) Sales
Force Management Financial Management
Negotiations Quantities Prices
Shipping Options Supply Chain
Improvements Special Payments
8
Channel Relations Are Free To Form and Dissolve
Suppliers
Resellers
1
1
End Users
2
2
3
3
n
n
9
There Are Many Decisions That Impact Channel
Partners
  • Order quantities and prices
  • Mode and frequency of delivery
  • Who pays the freight
  • Supply Chain Management Information System
  • Penalties for failure to fulfill promises
  • Financial incentives to encourage favorable
    activities
  • Points of influence
  • Quality control manufacturers reliability
    impacts resellers demand
  • Marketing decisions manufacturer can monitor
    market and offer advice to reseller

10
Negotiation Process
Time
t
Reseller emails RFP with order quantities,
shipment mode and frequency, who pays the
freight, penalties for failed deliveries
t1
Supplier runs demand specifications through
factory simulation to estimate production costs,
ability to deliver, and acceptable price
Supplier emails proposal to reseller or rejects
FRP
t2
Reseller evaluates offer and emails acceptance,
modifications or rejections
t3
Supplier builds and ships goods according to
agreed schedule
t4 to end of Q
Reseller ships products to customers from
warehouse if brand is in stock
11
Shipping Options
  • Mode of transportation
  • Slow Economic
  • Intermediate Expedite
  • Fast Quick Response
  • Frequency of shipment
  • Every 2, 4, 6, 8, 10 or 12 days
  • Who pays the freight
  • Supplier
  • Reseller

12
Supply Chain Management Information System
  • Four supply chain MIS options
  • None - Inventory Push System
  • Level I Partial Demand Pull System - 250,000
  • Level II Comprehensive Demand Pull System
    600,000
  • Level III Direct Link To Customer - 2,000,000
  • Both Supplier and Reseller must have the same
    MIS, otherwise working options default to the
    lesser system

13
Parties Can Negotiate Risk Sharing Fees
  • For Suppliers for Level II and III MIS
  • Reseller guarantees a minimum quantity of demand
  • If demand falls below minimum, reseller will pay
    a negotiated fee for each unit of demand not
    generated
  • Fee will offset or pay for excess capacity costs
  • For Resellers for Levels I, II, and III MIS
  • Supplier guarantees to produce and ship enough
    units to meet contractual obligations
  • If the quantity shipped is less than the number
    promised, then supplier will pay a negotiated fee
    for each unit promised but not delivered
  • Fee will offset or pay for lost profits

14
Challenges
  • Each party has a lot to do to just manage their
    operations, much less deal with supply chain
    issues
  • Leads and lags in inventory flows will cause
    misalignments between demand and supply leading
    to stock outs or excess capacity and/or unneeded
    inventory

15
Challenges
  • There is a finite amount of money to be divided
    between suppliers and resellers it will be hard
    to get past the zero-sum game to the win-win
    game
  • Improvements in supply chain require lots of
    money, negotiations, patience, trust and a
    long-term perspective
  • Relationships will be strained due to
  • Normal hiccups in system
  • Short-term opportunities that cause teams to
    short-change partners
  • Perceptions of inequity (real or imagined) due to
    how profits and costs are shared and who has the
    advantage

Ours
16
Longer-term Relationship Agreements
  • A clear statement of
  • your intent to work together,
  • the spirit of the intended relationship
  • The establishment of actions to be taken and a
    timetable for these actions,
  • Specification of goals, incentives and penalties,
    and
  • Specification of sizeable investments in supply
    chain assets.

17
Benefits of Longer-term Relationship Agreements
  • Reduce the uncertainty and risks of buying and
    selling inventory in the future.
  • Lead to a better coordination of activities and
    investments that could reduce costs and/or
    improve margins.
  • Reduce the workload and stress for all parties
    involved.
  • Allow your firm to move away from zero-sum
    negotiations to win/win business development.

18
Action Items
  • Choose day and time to meet
  • Class
  • Executive Briefing
  • Decide on teams
  • Sign up for software
  • Complete Q1 decisions by Tuesday noon
  • Decide on whether to be supplier or reseller
  • Only 2 supplier and 3 reseller positions open
  • Make relevant decisions for channel role

19
Resellers in Q1
  • Choose your target segments
  • Design a brand for each target segment
  • Schedule the opening of the first sales office
    and/or web center
  • Contact suppliers to learn who they are and how
    they would like to do business

20
Suppliers in Q1
  • Decide where to build a factory
  • Decide how large of a factory to build
  • Contact resellers to learn who they are and how
    they would like to do business

21
Resellers in Q2
  • Establish brand prices and priorities,
  • Design an advertising campaign,
  • Hire sales and service personnel,
  • Select web marketing tactics,
  • Negotiate supply contracts with one or more
    suppliers,
  • Explore longer-term relationships with suppliers
  • Invest in MIS
  • Invest in EDI (for Level II and III MIS)
  • Purchase market research.

22
Suppliers in Q2
  • Negotiate sales contracts with resellers,
  • Schedule production to meet the resellers' needs,
  • Add capacity if needed,
  • Explore longer-term relationships with resellers
  • Invest in MIS
  • Invest in EDI (for Level II and III MIS)
  • Purchase market research

23
Negotiation Schedule Deadlines
  • Wednesday 1200
  • Thursday 1200
  • Friday 1200
  • Monday 1000
  • Monday TBA
  • Monday 2300
  • Resellers send out RFPs to suppliers
  • Suppliers run simulations to evaluate
    opportunities
  • Respond to RFPs by sending a proposal or a
    rejection
  • Resellers accept, modify or reject proposals
  • Conclude negotiations with primary partner(s)
  • Start negotiations with secondary partner(s), if
    needed
  • End second round of negotiations
  • Teams meet with Business Coach
  • Wrap up for the quarter

New York Time Military Time
24
Questions?
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