Does The Using Of Supply Hub Can Improve The Efficiency Of The Supply Chain?

2286 words - 10 pages

1. IntroductionDoes the using of supply hub can improve the efficiency of the supply chain? That is vital question should be solved how is improving the efficiency of supply chain among the supply chain partners. With the rapid development of the world economic and the progress of the science and technology, the modern logistics is developing swiftly in the global.How to plan and optimal the logistical and supply chain management become more important for promoting the development of modern logistics. Erenguc et al. point out that through a dominant firm in a supply chain usually tends to optimize locally with no regard for its impact on the other members of the chain, there are cases of ...view middle of the document...

The supply chain is constantly evolving and the supply chain mode as far as the IT industry is concerned is that of using supply hubs (or material hubs or vendor hubs) to provide both lean and agile operations in the supply chain.In this paper, focus on the studying of supply hubs from the perspective of suppliers, 3PL providers and key customers. In the case of Ericsson, we could found that global high-tech industry players have supply hubs or another and in one geographical region or another. Typically the use of supply hubs also comes with an increase in VMI agreements . Indeed, many companies in the high-tech and electronics industry have set up hubs or VMI facilities to house many of the components, parts, and raw materials, necessary for the assembling or manufacture of a product.2. Supply hub--an overviewA supply hub is a location generally close to a manufacturer's facility where all or some of its supplies are warehoused with the agreement that the materials will be paid for only when consumed; Which is also an innovative strategy employed by especially the high-tech industry to achieve cost reduction and responsiveness.Indeed there are variations in the instant at which the payment for the material becomes effective, but `the above definition will be used for all practical purposes. The location referred to here is usually the premises of a 3PL provider but it may also be on-site, so there will be different implementations of the same concept.About the overview of the developments leading to the establishments of supply hubs will be gave at below.2.1 Development leading to supply hubSupply hubs as defined above can be thought of as yet another model of supplier-buyer relationships that have grown after the highly successful agreement between Wal-Mart and its suppliers Procter and Gamble (P&G) and Rubbermaid . P&G set out to manage replenishment of pampers at Wal-Mart in exchange for daily information. The result is the costs of Wal-Mart cam down and thus was born what is now called "VMI". Basically, in VMI, the supplier assumers more responsibility and actually managers inventory for the retailer. The success story of the Wal-Mart and P&G association spread to the retailer industry in the form of efficient consumer response. In December 1995, the National Association of Electrical distributors made VMI the standard program for the industry.One of the reasons forwarded is that there was no real sharing of data as is required under VMI. The supply chain visibility promised by VMI was not achieved because the vendors were not able to use point-to-sales data but were dependent on using the quantity dropped at distribution centers. High-tech industry product manufactures have to be deal other reasons. Product life cycles have been extremely shorten over the year and so risk of obsolescence is very high in the field. Manufactures are now forced to keep no inventory or low inventory. But for some suppliers, managing inventory may...

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