The Development of a Supply Chain Model for the Computer Notebook Industry

By Feng, Cheng-Min; Chern, Chi-Hwa | International Journal of Management, August 2009 | Go to article overview

The Development of a Supply Chain Model for the Computer Notebook Industry


Feng, Cheng-Min, Chern, Chi-Hwa, International Journal of Management


Integrated and coordinated operations are necessary if manufacturers are to reduce lead-times and respond quickly to customers' needs. An important part of such operations are supply chains that give manufacturers a competitive advantage in their global operations. In this paper we develop a supply chain model for a particular manufacturing industry (computer notebooks) designed to achieve this objective. In our model, we divide supply chains into those that operate at the strategic level and at the operational level. Although there are models for optimizing supply chain operations at each level, there is an absence of a single integrated model that is applicable at both levels. In this paper we seek to overcome this deficiency by developing an integrated multi-objective supply chain model that simultaneously considers strategic and operational level operations. According to our model, decisions at the strategic-level have a direct impact on operational-level decisions, and vice versa. Tradeoffs are discussed in terms of cost, customer service levels (fill rates), and flexibility (volume or delivery), each of which are need to be taken into account by manufacturers who want or desire to have an optimal supply chain configuration. It is argued that the comprehensive model developed here will assist or help manufacturers, especially in the computer notebook industry, in designing efficient and effective supply chain systems.

Introduction

Global competition, short product life cycles, asset concentration and demand diversification are major challenges to the notebook-computer industry, where multinational brands have kept playing the leading roles in the global market. Supply chains have also been changing as manufacturers seek to reduce costs and respond quickly to customer needs and cost reduction. These trends have made contract manufacturers in countries like Taiwan pay more contribution to their global supply chain operations. This is because such operations, if they are efficient and effective, can give such manufacturers a competitive advantage in the global market and help them to gain or at least keep orders from the multinational firms for whom they manufacture the computer notebooks.

In the past, use or reliance on a relatively simple 'build to forecast' model (BTF) has enabled such contract manufacturers in Taiwan to operate sufficiently effectively to gain a significant share of the global market. As a result, at the current time most of the leading Taiwanese notebook-computer manufacturers either use or employ extensions of the BTF model, specifically a build-to-order (BTO) or a configure-to-order (CTO) supply chain management model. In recent years, brand companies placing the orders have focused on 'zero touch' and 'one-stop shopping' as means for shortening their lead times and reducing their costs. These methods have meant that the contract manufacturers have been given authority over the final product, what it looks like or how it is configured and its distribution. It is thus the manufacturers in say Taiwan who have 'predominated' in procurement, production and distribution in terms of their arrangements with the multinational firms who have copyright to the brands.

The problems inherent in complex systems of supply and production, production and distribution, and inventory and distribution have been studied for many years. Because most of these studies have focused only on a single component of each system, limited progress has been made in understanding how best to integrate these systems into a single supply chain. Because supply chain management (SCM) is different at the strategic level and the operational level, strategic optimization models that determine the most cost-effective location of facilities, flow of goods throughout the supply chain, and assignment of customers to distribution centers are inadequate when it comes to making operational decisions about inventory levels, and customer service requirements. …

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