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McGraw-Hill/Irwin ? 2003 Simchi-Levi, Kaminsky, Simchi-Levi Strategic Alliances Phil Kaminskykaminsky@ieor.berkeley.edu David Simchi-Levi Philip Kaminsky Edith Simchi-Levi Strategic Partnering:Types of SP Quick Response: Vendors receive POS data from retailers, and use this information to synchronize production and inventory activities at the supplier. The retailer still prepares individual orders, but the POS data is used by the supplier to improve forecasting and scheduling. Example: Milliken and Company: The lead time from order receipt at Milliken’s textile plants to final clothing receipt at several of the department stores involved was reduced from eighteen weeks down to three weeks. Continuous Replenishment: Vendors receive POS data and use it prepare shipments at previously agreed upon intervals to maintain agreed to levels of inventory. Wal-Mart, Kmart Advanced Continuous Replenishment: Suppliers may gradually decrease inventory levels at the retailer’s store or distribution center as long as service levels are met. Inventory levels are thus continuously improved in a structured way. Kmart Strategic Partnering:Types of SP Vendor Managed Inventory (VMI):JITD VMI Projects at Dillard Department Stores, J.C. Penney, and Wal-Mart have shown sales increases of 20 to 25 percent, and 30 percent inventory turnover improvements. Strategic Partnering:Types of SP Requirements for Effective SP Advanced information systems Top management commitment Information must be shared Power and responsibility within an organization might change (for example, contact with customers switches from sales and marketing to logistics) Mutual trust Information sharing Management of the entire supply chain Initial loss of revenues Important SP Issues Inventory ownership: Retailer owns inventory Supplier owns the goods until they are sold (consignment) Why would a firm do this? Performance measures: Fill rate, inventory level, inventory turns Important SP Issues Confidentiality Com
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