Summary Session 21-22

Supply Chain Management (Session 21-22)

Preview

Good supply chain management (SCM) system can act as a digital nerve center for the entire business and save the company millions of dollars in costs in order fulfillment and other back-end support processes. SCM gives companies access to all of the critical information. In addition, SCM improves efficiencies and reduces costs substantially while also giving companies the adaptability modify their business processes.

Supply Chain Management

Supply chain is the network of services, material, and information flow that link a firm’s customer relations, order fulfillment, and supplier relations processes to those of its suppliers and customers. Companies need to understand their supply chain and build the strategy such as competitive strategy and supply chain strategy are aligned. All the functions of a company’s supply chain contribute to its success and to achieve strategic fit, a company must ensure that its supply chain capabilities to support them.

Collaboration in Supply Chain Information

 

SCM Drivers

1.      Facilities

-          Places in supply chain network where product is manufactured, stored, or shipped

-          Two major type of facilities are production sites (plants) and storage sites (warehouses)

-          Company needs to decide how many suppliers, manufacturing facilities, distribution centers, and warehouses to have

2.      Information

-          Consists of data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain.

3.      Inventory

-          Raw materials, work in process, and finished goods that belong to the company

-          A successful inventory management policy is to achieve the right balance f responsiveness and efficiency

4.      Transportation

-          Moves the product between different stages in a supply chain

-          Type of transportation uses will affect the inventory and facility locations

SCM Flows

-          Product Flow: Includes the movement of goods from supplier to customer, as well as any customer service needs

-          Information Flow: Involves transmitting orders and updating the status of delivery

-          The Finance Flow: onsists of credit terms, payment schedules, and consignment and title ownership arrangements

Flows in a Typical Supply Chain

Software and Technology

SCM software

-          Planning applications: Use advanced algorithms to determine the best way to fill an order

-          Execution applications: Track the physical status of goods, the management of materials, and financial information involving all parties

Extended Enterprise

-          Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise

SCM Processes

-          Procurement: Business-to-business purchase and sale of supplies and services

-          Outsourcing and Partnerships: An arrangement in which a company provides services for another company

-          Manufacturing Flow Management: To produce and supply products to the distribution channels based on past forecast or point of sales (POS) data

-          Order fulfilment: Responds to customer demand by merging several important functions (order management, storage, and delivery of finished goods)

-          Customer Service Management Process: Source of customer information and also provides the customer with real-time information on promising dates and product availability through interfaces

-          Forecasting: Seeks to predict levels of weekly or monthly product activity over a time horizon

E-business and Supply Chain Management (E-SCM)

-          E-SCM solution is the digital nerve center of the entire business

-          E-SCM is the optimal combination of technology and business processes that optimizes delivery of goods, services, and information from supplier to consumer in efficient way

-          E-SCM can use e-business concepts and web technologies to manage inventory an information beyond the organization, both upstream and downstream

E-SCM Components

-          Replenishment systems

-          E-procurement

-          Collaborative planning

-          Collaborative design and product development

-          E-logistics

-          Supply webs (exchanges)

ERP System and Supply Chain

-          ERP focus is on providing an integrated transaction processing enhances organizational performance by increasing information consistency and transaction efficiency

-          SCM, on the other hand, are aimed at providing a higher level of business planning and decision support functionality for effective coordination and execution of inter-organizational business processes

-          Web-based technologies have revolutionized the way business carried on SCM and ERP

ERP/Legacy Systems Linkage Across the Supply Chain

ERP versus SCM

 

Supply Chain Integration

-          Companies have strived to achieve greater coordination and collaboration among supply chain partners

-          Information integration refers to sharing of information among members of the supply chain

-          Planning synchronization refers to the joint design and execution of plans for product introduction, forecasting, and replenishment

-          Workflow coordination refers to streamlined and automated workflow activities between supply chain partners

Dimensions:

Integrating ERP and SCM system

-          ERP systems help in automating the business processes and enabling reliable information capture and retrieval

-          SCM systems offer capabilities to integrate various entities that make up the supply chain and facilitate the seamless flow of information between all the supply chain partners

-          Integration of ERP and SCM is a very tough task because each member in the supply chain may have different hardware and software

Enterprise Application Integration

-          Facilitates the flow of information and straps transaction among disparate and complex applications and business processes within and among the organizations

-          Provides a broad range of services from security management to protocol management to data mapping, among other related functions

-          Many of companies today are embracing the component-based applications either by developing a new application or by componentizing their existing applications

Phases of Enterprise Application Integration Process

-          Solution outline phase

-          Architecture phase

-          Design phase

-          Implementation phase

Benefits of Enterprise Application Integration

-          Increased Efficiency: Automation of processes

-          Value of Information: Eliminating duplicate data

-          Lower Costs: One interface per application lowering the cost of upgrades

-          Increased Productivity: Results from business process automation and access to real-time information

-          Improved Customer Service: Employees have real-time access to give accurate information to customers

-          Enhanced Access: ability to extend applications to more user from anywhere and anytime over the VPN

RFID

-          Allows for real-time automation of many data collection functions originally conducted by paid employees

-          Hardware: Each hardware implementation will need to be design specifically to meet the needs of purchaser

-          Software: Much easier to design.

-          Changing any process to automated RFID will eliminate possibility of human error

Implications for Management

-          Managers should understand that SCM is an important component for the successful implementation of ERP systems.

-          E-Supply chain provides great competitive advantage in today’s Web-enabled economy

-          Integrating is the key issue to the success of the supply chain