Supply Chain Of Motorola Smartphones Commerce Essay

Supply Chain Of Motorola Smart reverberates Commerce EssayIn the dynamic market of smart holler competition, companies need to establish a responsive put pop string to adapt with the changing environment and Motorola is none an exception. As they introduce their innovative Droid 2 to Vietnamese market, Motorola looks for suit able solutions to strengthen their competitive yield chain, in particular in this country. Through the ein truthwhereview of Motorolas internal and external aspects in dynamic Vietnam logistics environment, this paper exams the difficulties the initiatives emerge chain is facing and proposed three possible solutions in logistics and add chain perspectives.The strength of Motorola lies in their experience, engineering, and competency in managing electronics impart chain in different countries. Although outsourcing non-core business such as raptus may cause the enterprise to lose sway on the activity, yet it all overly enables them to focus more i n their core operations. Thus, the preparation chain is more adaptive to the dynamic Vietnamese logistics environment, where the bringation and knowledge al-Qaidas are under-developed. They make it to five major issues for Motorola come forth chain mentioned in this paper holding high level of armoury, low broaden cartridge clip, in sinless want forebode, quantifyliness, and inventory condition.To solve the suggested issues, the paper proposes three logistics strategy for Motorola carry-over-based terzetto party logistics (3PL), collaborative planning, vaticination and reclamation (CPFR), and using radio frequence identification (RFID). Transportation-based 3PL is expected to solve the transportation difficulties for Motorola, as well as ensuring in-transit stock quality and timeliness. CPFR enhances the collaboration mingled with trading partners to improve forecasting, reducing lead time and decreasing the risks of overstock and stock-out. Lastly, RFID supports i nventory visibility, leading to accurate inventory management and replenishment. Among the three strategies, CPFR is the most suitable for Motorola to adapt due to the advan chasees of collaborating, planning, and forecasting. Thus, lead time get out be reduced and inventory is bust managed, the burden bequeath be shared by many firms in the supply chain, and customers volition be served better.Adapting CPFR, in the first quarter of 2010, Motorola is expected to reduce forecast error to 2%, lead time to 5 old age and stock-out rate to 2.5%. Although CPFR is expensive and raises risks of manduction data, the benefits of accurate forecast, shorter lead time, better managing inventory, and above all better customer services will be critical for the successful launch of Droid 2 into Vietnam. rail line OF DISTRIBUTION FOR THE SUPPLY CHAIN FOR MOTOROLAInbound logisticsOutbound logisticsApparition Game Tech ( software schema and USB pads)Indonesia supplier (components)China suppli er (components)Vina telephony runny phone storesDepartment storesElectronics storesMobile phone single storesMobile phone store chain warehousesCamera shopsMobile phone storesDepartment storesElectronics storesMobile phone single storesMobile phone store chain warehousesCamera shopsCustomersMotorola Malaysia (manufacturing and assembling)Motorola Hanoi dissemination centersMotorola HCMC distribution centerPackaging, labeling, and manual printing providerResearch and Analysis1.1 DescriptionFrom China and Indonesia suppliers, 60% of components will be shipped to Motorola factory in Malaysia by air. Apparition Game Tech (AGT) will ship the USB game pads to the Malaysia plant to install with the phones. AGT will also supply the software to Motorola Malaysia plant to install into the phones.In Motorola Malaysia factory, they will produce 40% of critical components of Droid 2. The mobile phones will be assembled in this factory with software installed. Then the phones will be temporarily packed.Droid 2 will be shipped to Hanoi and Ho Chi Minh City distribution centers. The packaging, labelling, and printing provider will deliver the packages and Vietnamese language user manuals to the distribution centres, where the final packaging will be butted.From the distribution centers, Droid 2 will be delivered to retailers, including mobile phone store chains warehouses, single mobile stores, electronics stores, department stores, and camera stores carrying cell phone. The mobile phone store chains then will deliver Droid 2 to their shops. From retailers, Droid 2 is sold to end users.Vinaphone provides SIM card for customers in the retail shops so they back tooth use the phones. For users already having a Vinaphone account, Vinaphone will guide them to activate their 3G functions. in all the transportation in the supply chain will be outsourced to third party logistics.1.2 SWOT analysisStrengthMotorola has the applied science, experience and skill in managing electroni cs supply chain internationally.Outsourcing the transportation for third party providers, they can focus on its core competency. With their differentiation, the third parties can reduce transporting time and contribute to the responsive supply chain Motorola aims to build.The both distribution centers located in Ho Chi Minh City and Hanoi, which have the most cohesive transportation systems in Vietnam and concentrate complex retail systems, will enable the product flow from manufacturing to distribution and retailing move smoothly.WeaknessTransportation of the supply chain will be outsourced to transportation based third party logistic service providers. Thus, Motorola may loss some control over its transportation activities and in-transit inventory.Moreover, as two partners in the supply chain, such as Motorola and its retailers, will not deal directly with each other when inventory delivered, it can weaken the collaboration and communications between them, and challenges the dem and forecast ability in the supply chain.Motorola does not deal directly with Vietnamese end-users but through retailers. This creates difficulties for Motorola to adapt to the trend in smart phone market, reducing the responsiveness of the supply chain.OpportunitiesImproving telecommunication infrastructure a priority of Vietnamese government, so improving the flow of info in supply chain.After WTO accession, Vietnamese logistics is more welcome to foreign investors. Third party logistics providers in Vietnam is also improving their services to more sophisticated level (Nguyen 2009), so Motorola can access to more competent third party services to fasten and improve the supply chain performance.ThreatThe lack of mix transport agency (Venard 1996) forces Motorola to use more than one third party in transportation activities. The wide avowation sharing between the firms can raise the information security riskThere is no advanced technology and information system such as EDI (Nguyen 2009.p15) to support logistics, affecting the ability for Motorola to communicate with their partners.Vietnam transportation systems is under developed with intensive roads, the lack of cargo planes and facilities (Goh Ang 2000,p.897) congested ports even in Ho Chi Minh city, further handling ships up to 25,000 DWT, causing outstanding bottleneck in supply system (Goh Ang 2000,p.901). The problems result in longer lead time and adding up logistics appeals and risks, so the timeliness in Motorola distribution will also be affected.The rise in air cargo fee regarding higher demand near New Year may growth the cost of delivering USB pads to Malaysia and shipping Droid 2 in 2010.The shortage of automatic warehouse results in most material handlings are done manually (Goh Ang 2000,p.905), possibly prejudicious SKUs as well as lengthen lead time.Vietnamese companies are reluctant to share information (Tuang Stringer 2008.p398). This creates barriers to improve relationship and i nformation sharing deep down Motorola channel partnership, decreasing demand forecasting.SWOT matrixStrengthWeaknessOpportunities-Focus on improving demand management by investing in information sharing technology and improve coordination between firms in the supply chain-Continue outsource non-core activities such as transportation-Need a detailed benchmark to supreme the outsourcing activities to identify problems in those activities on time.-Maintaining and improving the relationship with third party service providers to plan the transportation as well as other activities better, which can reduce transit cost and time.ThreatChoosing a local third party transportation provider since they have more understanding the roads system and transportation process.Construct an automatic distribution centers to reduce manual work in material handlings.Improve the visibility over the product flow to control the condition and timeliness of inventory and delivering.Improving partnership with firms in supply chain, especially with retailers to catch up with the trends and improve the demand forecasting.Need a relentless evaluation process to choose a highly competent and responsive third party service providers1.3 Issues1/ Holding high level of inventory mostly in-transit stock due to the poor transportation infrastructure and the complicated customs procedures safety stock due to the uncertainty in demand forecasting and transportation problems affecting supply.2/ Long lead time possibly regarding to the low transportation structure and vehicles, the shortage of automatic warehouse and technology facilitating ordering.3/ Imprecise demand forecast due to the weak relationship and communication between channel partners.4/ Timeliness possibly due to the unforeseen factors in transportation and material handling. Moreover, Vietnamese companies still do not pay adequate attention on on-time delivery (Nguyen 2009,p.17), which reducing the customer service quality.5/ Inventor y condition and real time information mostly the lack of information technology to control the product flow causes this issue.Strategy Proposal2.1 StrategiesConsidering the issues of Motorola supply chain in Vietnam, three logistics strategies are proposed to help solving the problems transportation based third party logistics, collaborative planning, forecasting and replenishment, and RFID technology.2.1.1 Transportation based third party logistics (3PL)A company can decide to outsource its non-core business. It is the process of shifting a part of business functions within an organization to outside providers (Fawcet, Ellram Ogden 2007,p.282). Third-party logistics mean using an outside provider for some logistics activities such as transportation or warehousing (Fawcet, Ellram Ogden 2007,p.283). Transportation based third-party logistics is recommended for the case of Motorola supply chain in Vietnam, which will outsource transportation activities to a third-party logistics service provider. AdvantagesCost saving and improved services, as well as better transportation solution (Bhatnagar, Sohal Millen 1999,p.573). The specialization of the provider reduces lead time and guarantees good condition for in-transit stocks.By outsourcing non-core business, the company can focus on its core business (Bhatnagar, Sohal Millen 1999, p.573).DisadvantagesThe loss of control over transportation activities.Disagreement or confusion about work priorities (Harrington 1999,p.60). Since the goal of manufacturers, using transportation-based 3PL is cost saving while the service provider aims to increase revenue, swimming conflicts may occur between them.Although transportation-base 3PL results in several disadvantages, the strategy is still a suitable solution for transportation for Motorola supply chain. Due to the poor infrastructure of Vietnamese transportation system, in that respect is high transporting risks. The transportation-base 3PL provider, with their spe cialized understanding of the system and customs procedures, has the ability to foresee and prevent risks in transporting. Thus, the stocks can be delivered on time. Moreover, lead time can be reduced due to providers specialization and highly invested facilities. Using their well-equipped vehicles, 3PL provider can also ensure the condition of in-transit stock, which is very important for electronics products such as Droid 2. Overall, customer service will be improved2.1.2 Collaborative planning, forecasting and replenishment (CPFR)CPFR is an approach to coordinate activities such as production and purchasing planning, forecasting demand and stock replenishment between trading partners in supply chain base on Web technology (Fliedner 2003). It improves forecasting and increase product availability using synchronized replenishment, so customers will be served better at rase cost (Fawcet, Ellram Ogden 2007,p.482). The strategy ask an intense collaboration between trading partners and technology system such as EDI to facilitate the information exchange. The strategy includes nine main activities.Activities in CPFR process (Danese 2007,p182)After agreeing on working methods, how to solve problems and location of meeting, collaborative partners join business plan unitedly. Each company will do their own gross revenue forecast and share them on an CPFR system. If there is too many differences in the two forecasts, the system will alert them and both partners will get together to solve and produce an accurate forecast. After that, manufacturer will forecast the way they produce and supply for retailer, as retailer will also forecast how to receive the order, and CPFR system will ensure the two order forecasts are matched, otherwise two parties will sit together again to work out the difference. Then, the CPFR forecast will be translated into production and replenishment plan, and order delivery (Coyel et al 2009,p.252).CPFR business model (Coyel et al 2009.p153) .AdvantagesIncrease accurate forecasting, leading to better match between supply and demand (Murphy Wood 2008).Reduce inventory holding due to accurate forecasting and replenishment.DisadvantagesThe risk of sharing sensitive information to other companies (Fliedner 2003).The high cost of implementing technology (Fliedner 2003), especially EDI system for information exchange.Although the system is complex and costly, a technological enterprise such as Motorola is able to adapt and utilize CPFR. CPFR reduces order response times for retailers and cycle times for manufacturers, so the strategy will contributes to shorter lead time of Motorola supply chain overall. Moreover, the accurate CPFR forecast will enhance on-time delivery the products to customer, especially in cases of introducing upgrading AGT software or a new Droid version. Furthermore, accurate forecasting increases the certainty in demand, so preventing overstock and stock-out as well as reducing safety stock holding cos t, for both manufacturer and retailers. Thus, obsolescence and deterioration inventories will also be lower (Flidner 2003), which improve the stock condition, which is very important for phones batteries. Overall, applying CPFR will contribute to the performance and customer service of responsive Motorola supply chain.2.1.3 Radio frequency identification (RFID) technologyRadio frequency identification (RFID) is a high level of using barcode, reading the information through radio frequency. RFID tag and reader are two main components of RFID system. A microchip is sticked to RFID tag and data will be written on it. The tag is placed on objects or smart cards, and the data can be read by RFID reader through radio signals (Hansen et al 2008,p.1). Unlike barcode, RFID reader does not need to reach the surface of the tag to read information. The data is transferred to the main server and shared to other information systems.RFID system (Reproduced from The Major Learn)AdvantagesRFID impro ves inventory visibility and real time information. It enhances the control over inventory.RFID shortens lead time by reducing manual works in logistics processes.DisadvantagesSecurity using RFID readers, competitors, or criminal can track the sensitive data from the tag to use against the company. Moreover, consumers privacy can be violated by too much information about them are shared through RFID.The cost of RFID implementation is expensive as a tag may cost between $0.15 to $0.75 (Michael McCathie 2005,p.6).RFID is highly recommended to be used from the manufacturing plant in Malaysia, not only Motorola Vietnam. RFID gives real time information, which assists other methods of cooperation such as CPFR (Hansen et al 2008,p.13). The inventory and product flow will become visible for the supply chain. Therefore, the manufacturer and distributors will produce and replenish for their retailers the right quantity, on time, minimizing inventory holding. Furthermore, smart phone and its accessories are highly vulnerable, and RFID will help ensure the condition of Droid 2 remembering and movement as well as minimize human errors in handling the stocks. Moreover, with automatic tracking on the inventory, RFID reduces picking time, resulting in shorter lead time. And the uniform as CPFR, Motorola has the technological experience and budget to adapt RFID.Explanation of the Multi-criteria Decision Matrix(Appendix 1)Among the three proposed strategies, CPFR is the most suitable strategy applying for Motorola supply chain. The responsive supply chain system concerns on time, so the short lead time and accurate forecast are critical. By strengthening the connection and collaboration between manufacturer and retailer in the supply chain, CPFR significantly improves the forecast to match real demand, ensuring product availability, which strengthens Motorolas competitiveness better than the others. With the planned operation and transportation, risks and lead time will be reduced. It maintains on-time delivery. Moreover, accurate production and replenishment also prevent stock out and overstock, so the cost of holding inventory is lower and the old inventory can be minimized. Overall, CPFR help the Motorolas supply chain solve the broad set of issues over the two other strategies. It helps the supply chain to be more adaptive and responsive to the changing environment of smart phone market as well as overcome Vietnamese logistics issues.An illustration of this is JK Computers Ltd, a 3C products retailer, collaborates with its supplier, Synnex Logistics using CPFR (Chang et al 2007). After together formulating the working mechanism, JP transmits sales and inventory data to supplier in regular basic to confirm on replenishment. If there is a difference, supplier will respond to JP, so JP then identifies another supplier using its database. However, the replenishment will be approved, and supplier will inform JP about the replenishing amounts to each s tore on agreed time, then processing the order. After delivery, the stores put the date to information system and transmit to the head office. The replenishment is done and payment is collected monthly. Adapting CPFR with Synnex Logistics, JPs stockout rate decreased 4.95% to 2.49%, ROI increased from 1 to 1.5, capital turnover raised from 1.33 to 1.75 and service level improved from 95.05% to 97.51% (Chang et al 2007).2.3 give away Performance Indicators (KPIs)For Motorola manufacturer and retailers in the first quarter of 2010Reducing forecast error from 5% to 2% from January 2010.Shortening lead time from 7 days to 5 days in three months.Reducing stock-out rate from 5% to 2.5% in three months.A benchmark to control the above KPIs will be formed. A weekly report will be sent to manufacturer, distributors, and retailers about the overall performance to take appropriate correction together if goals are not achieved, ensuring final KPIs reached.2.4 Costs and Benefits of CPFR impleme ntationBenefitsCostsSignificantly improving demand forecast and planning.Better planning and simpler procedures passed between manufacturer and retailers. Thus, lead time will be reducedStock-out, overstock can be minimizedHolding less inventory so reducing costEnsuring items will be delivered on time and in good conditionsHigh risks Sensitive information shared maybe caught by competitors.High cost of implementation CPFR system and facilities, and training provideTime consumed in meeting to overcome the lack of trust and set up front-end agreement.Aggregate concerns with number of forecasting and generation (Fliedner 2003).ReferencesBhatnagar, R Sohal, A Millen, R 1999, Third party logistics services a Singapore perspective, International Journal of Physical Distribution and Logistics Management, vol. 29, no. 9, pp. 569-587, viewed 7 declination 2009, Emerald Management Xtra database.Chang, T Fu, H Lee, W Lin, Y Hsueh, H 2007, A study of an augmented CPFR model for the 3C retai l industry, Supply chain management An international journal, vol. 12, no. 3, pp. 200-209, viewed 8 December 2009, Emerald Management Xtra database.Coyle, J Langley, C Gibson, B Novack, R Bardi, E 2008, Supply Chain Management A Logistics Perspective, 8th edn, Cengage Learning, USA.Danese, P 2007, Designing CPFR collaborations insights from seven case studies, International Journal of Operation Production Management, vol.27, no. 2, pp.182, viewed 7 December 2009, Emerald Management Xtra database.Fawcett, S Ellram, L Ogden, J 2007, Supply chain management from visual modality to implementation, Pearson Education, USA, pp.282-283.Fliedner, G 2003, CPFR an emerging supply chain tool, Industrial Management Data System, vol 103, no. 1, pp. 14-21, viewed 7 December 2009, Emerald Management Xtra database.Goh, M Ang, A 2000, Some logistics realities in Indochina, International Journal of Physical Distribution and Logistics Management, vol.30, no. 10, viewed 6 December 2009, Emerald Man agement Xtra database.Hansen, W, Gillert, F, Cox, K Schmid, V 2008, RFID for the optimization of business process, John Wiley Sons, Great Britain.Harrington, L 1999, 3PL subcontracting whos handling your business? 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