Now let's talk about infrastructural dimension of supply chain design issues. But actually there is only one infrastructural dimension element, which is coordination. Coordination is based on supply chain perspective. In other words coordination must occur among supply chain participants. And it's pretty important thing for system [INAUDIBLE]. System-wise optimization. System optimal performance. Coordination meaning that you communicate with your suppliers and partners. Your partners are those that share the same value chain. So you make joint decisions and you communicate with them, you discuss issues with them, and you work with your partners to adjust some of your policies, or to come up with the better strategies, and so on and so forth. That's the definition of coordination. And now what other types of coordinations were, what is the important thing you want to work with your supply chain partners for instance the first thing that comes to our mind is information sharing. Information about the market, right? Information sharing. If you're the manufacturer and you work with your, you know, customer which is usually the retail stores, for example, then you are interested in knowing the end market's demand, and then you need to work with your customer. You need to work with the retailers to get more accurate information about the end customer's demand, you know? That kind of thing. Information sharing is a big part of coordination. And then, sometimes, you want to work with just supplies when you develop your new product. Because usually, you don't have all the knowledge, you don't have all the expert, expertise, you don't have all the technology needed to develop a new product. Sometimes much of that knowledge is with the supplier. So somehow you need to work with the suppliers to develop better, better products, to develop a new product in a more effective and more, you know, efficient way. And sometimes you do, many, joint decision making. You probably need to do, the advertising or promotion with your suppliers together. Or sometimes you need to adjust your capacity and while doing that, you constantly communicate and talk with your suppliers and maybe your distribution partners so on and so forth. So there are many issues related to very comprehensive to decision making [INAUDIBLE]. And obviously R&D which is you know, also should related to your product development but sum up R&D for the [UNKNOWN] product as well. So, you want to do your R&D activities by working with your suppliers and sometimes working with your own customers. So these are the sum of the, these are the sum of the elements of coordination. There are some other examples, but I will say that these are the four most important coordination areas. Now let's think about coordination levels. I want to make some typology. Coordination is necessary, not only between different companies, right? You have different companies and you need them to coordinate with each other. But even if you look at this inside, inside of this manufacturing company, if you look at the inside of the company, then there are also activities and functions that must be coordinated with each other. So, let's say, the coordination is not only for inter-firm relationship, but also intra-firm, within the firm. And also, there is coordination between different functions or within the same functions. For example, let's say production department, production department in company A, and also people in the production department company A, they must to work together. Maybe the imports or some, you know, different things in the production department. And they have to work together. That's, that coordination is intra-firm, intra-functional coordination. Or sometimes, even within, even within the same company, let's say production. Production function at company A need you to work with marketing function or sales function at company A. So this is inter-functional coordination but intra-firm. So intra-firm inter-functional coordination. Or let's say we have our reduction function and our supplier, our supplier's production function is there. So let's say that's company B. And then the, the coordination must be there. That's interfirm, but interfunctional coordination. Finally, we can think about let's say, production function. Production function at company A must work with the marketing function at company B. If that is the kind of coordination required, that is inter-firm, inter-functional coordination. And we'll just say that this might be the most challenging coordination style. Another perspective we can think about regarding this you know coordination. We, we can think about coordination intensity. Coordination intensity. This is most primitive form. There is actually not much coordination at all. It's one directional communication. One directional communication. And there is not much feedback there. So the communication flows from upstream to downstream. And now the next level of coordination is this, feedback. So, information is somehow moved back, backward, from downstream to upstream. So, we have information, but the thing is that this is just us, directions from the downstream functions. There is no guarantee that that feedback information is actually incorporated into the option neighbors decision making or optimum functions strategy. And this one is a little, you know, high level organization, and as you can see, the coordination and communication occurs between consecutive or neighboring functions, okay? So, in the manufacturing function coordinate with the distribution function, and supply function coordinate manufacturing function. So it's kind of like a local coordination, right? This is good coordination, but some are recorded as local coordination. So, coordination is good, local coordination is good, but somehow it has its own limitations as well. In other words you can see only this neighboring functions at the same time. And you probably cannot look at the entire value chain, entire supply chain. So, the most intensity, most intensity coordination form involves some sort of, integrated coordination entity. In other words there is a entity that can over, you know, that can look at this entire, the over all this value chain functions and project functions at the same time and this entity can be part of formal organizational you need, or, it can be informal. As long as you have a champion, or you have activity, you know, department or partition that has some power or authority to look at all these values and activities at the same time and to initiate, coordinate all of these functions and activities at the same time. Then that is going to be very significant developments in terms of coordination. So the company has to decide where we stand, where we stand in terms of, this coordination. Whether we have very high level of coordination, or low level of coordination. Okay. So far, we emphasized that, you know, coordination is needed, and coordination is good. And the [UNKNOWN] must try to coordinate all these value chain activities. But in reality, coordination is not that straightforward, it's not easy. Because there are some of these difficulties or barriers to effective coordination. Let me talk about three of such barriers. The first one is, sometimes we don't have fair measurement to system. Why do we coordinate with each other? Because we believe that if we coordinate, then somehow our, you know, profit or our share will increase. Lets say this is our current share, or pie, the current pie it is. But if we do coordination, we think that the pie can get bigger. But the thing is how much contribution you make. How much contribution I make to this you know, pie increase. Unless I know exactly how much contribution I make, you know either with or without fair measurement, I don't know how much, you know, cry, crane I have, to the increased part. So when there is you know, there is no systematic and fair measurement system, it is pretty difficult to choo, do fair sharing. Fair sharing of this coordination benefit. It becomes difficult. And that is problematic. Coordination involves very close relationship between parties involved in that process, and therefore, if you don't trust that partner, quite you know, quite well, then sometimes you're afraid of leaking your own proprietary knowledge. In other words you don't want to lose your own knowledge, know how information or technology. But sometimes it's, somewhat difficult to find the trustworthy partner for whom I don't have any concern with, or concern about this [UNKNOWN] proprietary knowledge. But that's not easy. That in reality, that's a little bit difficult. And finally, certain organizations as very particular or peculiar culture that prevents, prevents the members of their organization from working together. So, their culture is highly competitive, that means that you know, no matter what happens, I have to win this guy, and win this people and win this function and win this department. The culture is highly competitive then it's not easy to encourage this coordination. So these are the, some of the more important barriers to effective coordination, but at the same time we need to think about what cost do we have to pay if coordination fails. Basically the most important cost, the most serious cost is information quality reduction. Uncertainty increases, planning failure, unnecessary risk taking, and mismatch between supply and demand, and stock of high inventory. And that means that all those negative repercussions of having too much inventory, we already mentioned. So, in coordination phase information quality will go down, all the file information quality, more formally very shortly. But anyway, information quality goes down, that's very, you know, serious problem. It has very significant deprecation along the way. And therefore we have to measure this cost. And then we have to think about these barriers. And which one dominates. So this is another time of cost time analysis. And if coordination fails, inefficiency will go up. Somehow these two cost types are related with each other, right? Information quality goes down, that actually encourages or it enhances inefficients in the system. Non value added activities, unnecessary mistakes, sub optimal resource allocation, opportunity cost, so on and so forth. These are the reasons why we can see inefficiency increase when coordination fails. [BLANK_AUDIO]
