Okay. This is our seventh lecture. And today I want to look at a little more detailed or let's say specific topics, especially related with supply chain coordination. You already said there are two dimensions for supply chain design. One is a structured dimension, and the other one is a infrastructure dimension. And, that is only one key construct in, infrastructure dimension which is coordination. How to coordinate to this, value chain activities and, you know, how to coordinate all these, participants and partners in supply chain. So, what is coordination? Coordination is basically, you know, communication or working together and, you know solving problems together and so on and so forth. So, so it's a, really, general concept. But, when we look at this concept of coordination from supply to management, we have to make sure that, the firms or the supply chain partners must coordinate with each other in order to achieve both efficiency-driven value and responsiveness-driven value at the same time. So always remember, the goal of supply chain management. The, the overarching goal of supply chain management is always to maximize efficiency-driven value and responsiveness-driven value at the same time. When we talk about coordination, we, you know, imply that these supply chain partners must coordinated with each other and there are two different groups of partners. One is internal supply chain partners, like employees, workers, managers at the same company. You'd remember, when we, you know, discussed this topology of coordination, we said that sometimes intra-firm coordination is necessary and intra-firm implies within the firm. And also, the firm or the company must coordinate with external partners. External, you know, participants in the same value chain or same supply chain. Offers we have, external supply chain partners. These, companies, they share same value chain. Suppliers, vendors, distributors, and even customers. So, in order to create value, one single supply chain partner cannot achieve that, you need that thoroughly, that supply chain entity must to, work with the other partner companies that share the same value chain. So in this sense, coordination is at the center of supply chain management, especially effective supply chain management. More specifically, or for what, the company should coordinate with each other. There are many diverse orders, diverse orders, where coordination generate logical values, but let's think about a couple of very critical coordination areas. In other words, the areas where coordination create much value. First, the company must coordinate with each, you know, supply chain partners like suppliers, vendors, and distributors and even customers in order to decide which products and which services the company will make and deliver to the market. So, the choice of products and services, probably number one area, number one, you know, subject the coordination mastery job. Obviously, sometimes you know, people might think that the choice of products and services solely belongs to the, the time management, time management at the company. In a sense, that's right. I mean, that the, the companies support their top managers or top management with the CEO, is supposed to decide what kind of products and what kind of services his or her company will make. [iii] But, let's say CEO when, you know, she or he decides the products and services, he or she was the talk with some other, you know, value chain partners including customers and sometimes suppliers, right? If I want to make a something, I have to make sure that all these necessary raw materials and parts or the supplies are in place, right? And also I need to make these products and services that will be valued by my customers. And in that sense, I think that the choice of products and services also, is also part of this coordination. And, another important coordination area is information sharing especially information about the market demand or the customer requirements. If we can see that this intra-firm coordination, in other words, within the same company, information sharing is also important, right? The manufacturing department must share information with the Sales and Marketing department. And when the Sales department tries to enter new market, that decision must be communicated with the Manufacturing department, so that the manufacturing people can start preparing for entering the new market early. Otherwise you know, there might be some discrepancy between functional strategies in the end and that hampers the company's ability to end that particular market more successfully. So information sharing is not into firm information sharing, it also implies inter-firm information sharing. Now there is, it becomes more and more important for the suppliers and the manufacturers to work together to develop new product. Whenever they add a new prod, add a new market, or when they try to, you know, the, the design or define their existing product, the companies must pay attention to new product development. And this becomes more and more an important area where coordination must create more value. In a similar vein, we can think about R and D as, one important coordination area, and there are many other joint decision making, for example, sometimes, the companies want to do the marketing together, advertising a promotion, right? Suppliers and manufacturers sometimes won't do this promotion together and they pay money for the advertising. For instance Intel might work with Dell computer, Dell, in a way to promote the Dell products by saying that Intel inside. Now there is Dell computer has Intel's microprocessor inside itself and doing that actually, Intel expects, Intel wants to sell its own microprocessors more. Right? Okay, so that's, that kind of thing is joint decision making. Coordination seems a little, you know, simple terminology. It's, it's kind of a straightforward, everybody has ideas about what coordination is. But, in reality, when the, you know, the companies, when the supply chain partners decide to coordinate with each other, there are some very, difficult issues. Sometimes thorny issues. Issues that are not easy to resolve between these supply chain partners. These issues usually driven by some of these questions. The first one is, who has more knowledge, expertise, and experience? Let's say, the supplier and manufacturer coordinate with each other and what kind of coordination methodology they will use? And how intensive such coordination would be. If they formed kind of a joined team, then who should have more power? Who should have more decision weight? And so on and so forth. Ideally, I think you know, companies might, we can, we believe that companies might you know, decide all these things before they actually get into this coordination. But sometimes it's not easy because you have to decide, who has more knowledge, expertise and experience for that particular market and point and for that particular product who saw this in point. [bbb] And then why firms coordinate from each other? Because they expected that the coordination will help them to have more profit, right? Otherwise, the companies have no incentive to coordinate with each other. In other words you know, the profitability will increase through that coordination. Then, the question is how we can measure the performance improvement and how we can measure the profit increase? We gotta have some, you know, tools to differentiate the normal or regular increase in our profit from this extra profit increase due to coordination. So the management issue, management issue is an important one. And then in a similar vein, how to share, how to divide this increased extra profit due to the coordination. And also there is issue, the keys of proprietary technology information. Coordination involves very close relationship, very close communication, very close interaction between supply chain partners, that implies that it's possible that some of my own technology, some of my own information, some of my own, you know, know how might leak to outside this supply chain coordination relationship, right? And I want to prevent that, I want to prevent that. And finally I think that we need you to understand how to have the supply chain coordination in the long run. In other words, how we can make sure that sustainable coordination between supply chain partners. So I would just say that this some of the key issues we have to always keep in our mind when we discuss the issue of supply chain coordination [bbb].
