The Supply Chain

Traditional Supply Chain

Manufacturing and Distribution

System for a Plastic Product
Entity

Function

Cost Point at
Each Stage

Oil Company

Make monomer

.03

Resin Company

Make polymer

.07

Plastic molder

Manufacturer plastic
part

.30

Product
wholesaler

Warehouse &
distribute

.45

Retailer

Sell to consumer

.50

Consumer

Use product

1.00
3

Supplier Relationships

Good specifications
Acceptance criteria
Evaluate suppliers satisfaction level
Reasonable and flexible in negotiations
Communication lines
Loyalty
Allocation?
Expectations on both sides
4

Motivating the Supply Chain

Discounts
Product knowledge
Leads
Increasing the level of distribution

Dealers
Stocking distributors
Direct
5

Strategy of supply chain

Profits
Margins
Control
Functions of intermediates

Assume some risk

Single product system
Break bulk
Customer information/contacts
6

Players in the
Electronic Marketplace

Virtual Fulfillment Network

The Supply Chain

Users buy successful supplier products

in order to better manufacture their own

products and achieve market leadership.
This is where the big money is.
NEMI, March 11, 1996

The National Electronics Manufacturing Initiatives

mission is to facilitate leadership of the North
American electronics manufacturing supply chain.

Implications of the
Electronic Marketplace
Because it is so easy to order via the
electronic marketplace, many companies
will inevitably choose to buy rather than to
make the products and services they need.
Strategic alliances between suppliers and
vendors, manufacturers and distributors,
and retailers and buyers will become
commonplace.

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Benefits of the
Electronic Marketplace
Reduces the costs of shopping around:
Locating vendors
Comparing products and services
Comparing costs
Handling paperwork

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Examples of Players
in the Electronic Marketplace
Inventory Locator Service, a subsidiary of
Ryder System
Offers an airline parts inventory that
makes it possible for the airlines to locate
suppliers of the parts they need for repair
and maintenance.
This information system links the airlines
with airline parts suppliers.

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Examples of Players
in the Electronic Marketplace
Telaction, an electronic home shopping
system introduced by J.C. Penny,
simulates shopping at a mall.
This system links customers with a retailer.

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Examples of Players
in the Electronic Marketplace
Comp-U-Card, a system available through
Compuserves Information Service
Enables buyers to search through the
systems database to obtain the best price
on a specific product and lets them call a
toll-free number to place an order.
This system links customers with multiple
suppliers.

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Examples of Players
in the Electronic Marketplace
Telcot, an electronic market for cotton,
enables 12,000 farmers to sell their
products.
Telcot was established by a cooperative
association of cotton farmers in Oklahoma
and Texas.
The system links sellers (the cotton farmers)
with buyers.

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Examples of Players
in the Electronic Marketplace
MEMA/Transnet, an electronic order system
for automotive parts, serves more than 100
manufacturers and over 4,000 customers.
It was invented by the Motor and Equipment
Manufacturers Association, a trade group.
The system links manufacturers with
automobile dealers and auto parts retailers.

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Examples of Players
in the Electronic Marketplace
IVANS, the network that links insurance
agents, insurance carriers, and other
information sources for insurance agents.
It was created by an industry association
of independent insurance agents.
IVANS links many independent agents
with many smaller insurance carriers.

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Examples of Players
in the Electronic Marketplace
SABRE and APOLLO, the airline reservations
systems of American and United.
Added the flights of competitive carriers
Become electronic travel supermarkets for
related services, i.e., hotel and car
reservations.
Links the airlines with with travel agents and
provides a wide range of travel information.

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Examples of Players
in the Electronic Marketplace
Med Facts, an electronic market for
physicians, lists fees, educational
backgrounds, and specialties of over
1,400 physicians in the Miami area.
This system links potential clients with
physicians offering the services they need.

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Leading Trends:
NEMIs Roadmap 2000
#3.Manufacturing efficiency for conversion
of materials is high; focus for cost-cutting
has shifted to improvements in supply
chain management.
Increased outsourcing and the resulting
distributed supply chain demand
improved integration and management.
Supply chain management is becoming a
key differentiator.
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