Assessment 3 Amanda D Pitaloka S3973010

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OMGT1021

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Oct 30, 2023

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Assessment 3 SUPPLY CHAIN PRINCIPLES OMGT1021 AMANDA DYAH PITALOKA S3973010

Table of Contents List of Tables and Figures ................................................................................................... 1 Question 1 ......................................................................................................................... 2 Question 2 ......................................................................................................................... 3 Question 3 ......................................................................................................................... 4 References ......................................................................................................................... 6 List of Tables and Figures Figure 1. Comparison between traditional supply chain structure with JD.com supply chain structure. (Sun & Shen, 2020) .................................................................................................... 2 1

Question 1 Supply chain resilience is when a company's supply chain is facing disruption and they can mitigate and recover from it. For a company to be completely resilient, they have to be able to forecast and anticipate any disruptions that may come their way and find a solution. Just before COVID-19 hits, JD.com already had an integrated retail supply chain and built an extensive intelligent platform. JD.com possessed a unique supply chain structure that is completely different from any other retailer, which is what they called “self-operated mode.” With the “self-operated mode” JD.com can maintain the quality of its products and services. This is since “self-operated mode” made them have a good relationship and collaboration with their suppliers, which they already have and build long- term cooperation with. Figure 1 below shows the difference between the traditional supply chain structure compared with JD.com supply chain structure. Figure 1. Comparison between traditional supply chain structure with JD.com supply chain structure.[ CITATION Sun20 \l 1033 ] The structure shown in the figure above shows that JD.com has a simpler supply chain stream compared with the traditional retail supply chain. Traditional supply chain makes the product reach the customers longer than JD.com does. One of the disadvantages of this supply chain structure is they do not share any information and resilience between each party. Lack of information sharing could lead to delays in finding out solutions and responding to any disruptions that might appear. It will also take a longer time for the company to satisfy customer’s demand and thus it could lead to a bullwhip effect. The bullwhip effect is when there is an “increasing variability of demand further upstream in the supply chain” [ CITATION Wou00 \l 1033 ]. Therefore, other retailers should slowly 2

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adopt what JD.com had done with their supply chain because this structure could help them in enhancing their supply chain resilience. There are advantages that retailers can get from adopting the JD.com structure, which a high level of collaboration, effective information sharing, and a high level of agility. These retailers would be able to check and manage their product and service quality and it could be resulting them providing better services for their customers. Better customer service could then increase customer satisfaction. They could also find a better solution when a disruption like COVID-19 happens out of a sudden. Question 2 TTR and TTS are two types of resilience matrices that can be used to analyse supply chain resilience. TTR is the time needed for a node in a supply chain to go back to its full function after a disruption happens. While TTS is the time duration for a node in a supply chain needed to match its supply and demand after a disruption in the node. According to Simchi-Levi (2015), he mentioned that both of these resilience matrices can be used altogether and combined to specify the needs of the strategic inventory of a company. However, in the case of JD.com as a retail company, these two resilience matrices are not commonly used, due to their unstable demands. Especially when COVID-19 happened, it is hard to predict and forecast any future customer demand. If JD.com would like to implement the TTR model to define its resilience, it will be a problem due to the lack of accuracy in data and information given by its suppliers. Sometimes suppliers also create an optimistic assessment of their performance. Even though it is stated that JD.com owns the entire retail supply chain and has a good connection and relationship with its suppliers. However, if JD.com would like to use the TTR and TTS matrices, they are still able to do it because of its “self-operated” business model, they have the responsibility and visibility of all the processes in the supply chain, such as the inventory management, distribution, delivery, and the after-sale service. JD.com has its way to manage risk and disruption that comes along the way with its business. First will be their highly integrated retail supply chain structure and second will be their comprehensive intelligent platforms. Nike was the chosen company for the second assignment related to its unique supply chain and the competitive advantage that it can bring to the company. Comparing the three risk management approaches, Nike will be suitable for the risk management that is used by JD.com. First of all, Nike is an athletic sportswear manufacturer but also can be considered a retail company. One of the things that Nike can adopt from JD.com is the use of intelligence platforms, such as smart replenishment platforms. With this approach, Nike should categorize their products based on the predictability of the demand and the stability of the supply and use the TIBPA platform for the products which are categorized in a highly predictable demand and stable supply. Once The TIBPA platform is used, Nike can speed up its ability to manage the products because it is an automatic periodic replenishment 3

model, they can start focusing on their high-seasonal products such as winter fleeces and how to replenish this products inventory, so it won’t increase their inventory holding cost. Since now, Nike had started to open up their retail store and stop their partnership with wholesaler retailers, Nike has to come up with a better strategy to where they stock their inventory so products can easily reach customers. When COVID-19 hits, they are also faced with supply chain disruption, in which they are forced to close up their factory in Vietnam, which causes a delay in the delivery of products from Asia to North America. Therefore, Nike can adopt another one of JD.com's intelligent forecast platforms called distribution network optimization. This platform will let Nike use nonlinear integer programming to help them to minimize total related costs. This model pays attention to constraints that could hinder Nike’s distribution such as path capacities, delivery time, and sales. Question 3 Advanced technologies have supported and helped JD.com in implementing its resilience strategies while faced with the COVID-19 pandemic. First is when they are trying to manage their exceptional demands for their dull sales. As they would like to shift their focus more on the sales of products with higher demand. To help them with this strategy, they are using intelligent platforms such as the intelligent forecast platform and the smart replenishment platform. The system for their smart replenishment platform is known as the TIBPA system, which is an end-to-end model that combines replenishment and prediction strategies. Second is when JD.com was trying to coordinate with their suppliers to make sure that these suppliers can have a strong supply of the products with high and growing demand. One of the advanced technologies used by the company is how they use an automatic method for procurement. Once their system had calculated its purchase quantity based on the in-stock transit cost, the purchase order was digitally automatically ordered by a system. Therefore, it improves the speed of the JD.com procurement process. The third is when JD.com tried to deal with the logistical disruption caused by the lockdown during COVID-19. This lockdown “impacted both the logistics network and delivery process of JD.com, particularly the last mile delivery” [ CITATION Sun20 \l 1033 ]. To help with the logistical disruptions, JD.com use a system called JD-NetSIM, this system is a distribution network optimization system. JD.com had already had this system before COVID-19 hit, however, due to COVID-19, they redesigned their whole distribution network with updated inputs regarding the lockdown places. Other than using a system to help hinder the logistical disruptions, JD.com used technologies such as intelligent delivery robots, automated logistics for their smart warehouse, 5G networks, and autonomous driving. JD.com had also worked together with the Hubei government to build up a system that could help them in the rational distribution and scientific scheduling of emergency supplies. “This platform could 4

trace the production, inventory, and distribution of all emergency supplies” [ CITATION Sun20 \l 1033 ]. The company believes that advanced technology such as automated logistics technologies can help them to overcome obstacles that came from a pandemic such as COVID- 19. JD.com had modified its existing platform and procedures for them to adapt to the current new environment which is resulting in high operational flexibility. As for the case of Olympus shared on week 6 of tutorial class, the company is facing a problem with their suppliers. They are struggling to build a closer relationship with its supplier. Even though the company believes that they are having a close good relationship with some of its suppliers, they are faced with suppliers who cannot keep their promises. Suppliers are the most important external party of a company because it is where you source your raw materials or products. If they are not able to meet the demand, then the company cannot fully operate. Therefore, to solve the issue, Olympus could adopt SRM, known as Supplier Relationship Management. SRM can be defined as a “ comprehensive approach to managing an organization’s interactions with the firms that supply the products and services it uses” [ CITATION Met09 \l 1033 ]. Nowadays, there are a lot of software builders that created a system for a company where it can help them manage their vendors and suppliers. The system itself can help a company like Olympus to manage its suppliers' performance and manage the contracts between them. Other than that, technology, and system for SRM can also be used for an onboarding process for the new suppliers. Being able to better manage the relationship with the suppliers can bring benefits for Olympus. The advance technology used by the company can help Olympus to review their supplier performance and have a better look on which of their SC alliances that failed to meet the expected value. 5

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References Kang, J (2015) ‘Inventory optimization model for NIKE's long lifecycle highly seasonal replenishment products’ [Master thesis], Massachusetts Institute of Technology, https://dspace.mit.edu/handle/1721.1/99008#:~:text=NIKE%20manages%20inventory%20to %20a,benefit%20of%20holding%20the%20inventory. Mettler, T and Rohner, P., 2019. Supplier Relationship Management: A Case Study in the Context of Health Care. Journal of Theoretical and Applied Electronic Commerce Research, 4(3), pp.58- 71, doi: 10.4067/S0718-18762009000300006. SAP (n.d.) What is a Resilient Supply Chain?, SAP Website, accessed 6 June 2023. https://www.sap.com/products/scm/integrated-business-planning/what-is-a-resilient- supply-chain.html Shen, Z.M. and Sun, Y., 2023. Strengthening supply chain resilience during COVID 19: A case study of ‐ JD. com. Journal of Operations Management , 69(3), pp.359-383. Simchi-Levi, 2015. Find the Weak Link in Your Supply Chain, Harvard Business Review Website, accessed 7 June 2023. https://hbr.org/2015/06/find-the-weak-link-in-your-supply-chain Simchi-Levi, D., Schmidt, W., Wei, Y., Zhang, P.Y., Combs, K., Ge, Y., Gusikhin, O., Sanders, M. and Zhang, D., 2015. Identifying risks and mitigating disruptions in the automotive supply chain. Interfaces , 45 (5), pp.375-390. Thomas, L (2021) Nike can turn its snarled supply chain to its advantage to boost its direct-to- consumer business, CNBC website, accessed 8 June 2023. https://www.cnbc.com/2021/09/24/nike-can-turn-its-snarled-supply-chain-to-its- advantage.html Wilson, G (2021) Is technology the answer to effective SRM?, Supply Chain Digital Website, accessed 9 June 2023. https://supplychaindigital.com/procurement/technology-answer-effective-srm Wouters, M.J.F. and Fransoo, J.C., 2000. Measuring the bullwhip effect in the supply chain. Supply Chain Management: An International Journal, 5(2): 78-89. 6