Supply Chain Management
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Transcript Supply Chain Management
SUPPLY CHAIN
MANAGEMENT
(SCM)
Supply Chain Management (SCM)
Chapter 8 of Kroenke
Key Feature: SCM is the great example of where
an Information system goes beyond one Enterprise.
MIS SCM & RFID Lab
Functional Systems vs. Enterprise
Most early information systems were designed for one
functional area
Accounting
Finance
Human Resources
Etc.
Enterprise = “Entire Company/Organization”
Today (post 2000) the vast majority of commercial
information systems try to be “Enterprise”
Used by all the functional areas within the business.
Most Common Enterprise Systems
Enterprise Collaboration Systems (ECS)
Natural
for communication to involve enterprise
Customer Relationship Management
Sales
(Marketing) is so natually connected to
accounting, operations (especially post-sale services)
Enterprise Resource Planning (ERP)
Simply
a more integrated CRM (Investment/Finance
component, more strategic, long-term process).
How Big can an IS be?
Can an Information System be so large that it
integrated two or more enterprises/companies?
Why would two or more companies what to share a
common Information System?
Two companies can share an
Information System (WTF?)
Example: Large retailer (Walmart) may force
suppliers to use their Supply Chain System.
Example: Three long-time partners (supplier,
distributor, retailer) may pool resources to develop
their own Supply Chain System
The Simple Supply Chain
Complex Supply Chains
Supply Chain Management =
SRM + Inventory Management + CRM
SCM may cross enterprise boundaries
SCM Planning Functions
Supply Chain Design
optimize
network of suppliers, plants, and
distribution centers
Forecasting customer demand
by
sharing demand and supply forecasts
instantaneously across suppliers and distributors
MIS SCM & RFID Lab
SCM Execution Functions
Materials Management
share accurate inventory and order information,
ensure materials required for production are available
in the right place at the right time.
Collaborative Manufacturing
optimize plans and schedules
while considering resource, material, and dependency
constraints
MIS SCM & RFID Lab
SCM Execution Functions
Collaborative Fulfillment
order management, vehicle scheduling, etc.
support the entire logistics process,
including picking, packing, shipping, and delivery in
foreign countries
Supply Chain Event Management
monitor every stage of the supply chain process
from price quotation to the moment the customer
receives the product
receive alerts when problems arise – visibility!
MIS SCM & RFID Lab
Business Value of SCM
Benefits of SCM:
Reduces production and distribution costs
More information =>
less inventory, less lead times needed
Improves timeliness of shipments
Increases
supply chain “velocity”
More accurate fulfillment
Improves “visibility” of supply chain
MIS SCM & RFID Lab
SCM Benefits
Fewer employees needed to manage supply chain
Better customer satisfaction: less stock-outs
Strategic relationship with suppliers, enables new
business partnerships:
Collaborative Planning, Forecasting, and
Replenishment systems (CPFR).
Collaborative downstream customer service,
marketing, and relationship management.
MIS SCM & RFID Lab
Technical Challenges of SCM
Acquisition of secure extranet
Software can be confusing, contradictory and not
sculpted to their needs – difficult to implement.
Not everyone follows the same standards
High startup costs for SCM systems
MIS SCM & RFID Lab
Organizational challenges
Changes company structure
resistance from employees =>
leads to inadequate collaboration within departments across
department
Even companies
Supplier reluctance
Data Incompatibility issues.
Lack of proper demand planning knowledge
It can take time for
Suppliers to understand retailers
Vice versa
MIS SCM & RFID Lab
Bullwhip Effect
Bullwhip Effect
The variability in size and timing of orders
increases at each stage up the chain.
Bullwhip Negative Impact
Can create a cycle of stock-outs followed by excess
inventory.
Stock-outs
= Lost Sales/Revenue
Excess Inventory = High Costs
Difficult to stop the bullwhip cycle
caused
by natural delays in the transmission of
information through a supply chain
Great example of how an IS can solve a problem
that was previously unsolvable.
Bullwhip Prevention
It can be eliminated by giving all supply chain
participants consumer-demand information directly
from retailers through inter-organizational
information systems.
Solution can comes in two forms:
Two
SCM’s being integrated in real-time
Requires
Two
following same data standards
companies investing in the same SCM platform
Requires
using the same system or technology
A major challenge: The Bullwhip effect.
The bullwhip effect in supply chains occurs when
Distributors, manufacturers, and suppliers must carry larger inventories than
should be necessary to meet real demand because of the large
fluctuations in orders.
It reduces the overall
profitability of a supply
chain.
Fig 8-13 The Bullwhip Effect
© Pearson Prentice Hall 2009
Electronic Data Interchange (EDI)
Old-fashioned term that means:
How do different systems share data…
Refers
to data format but also
Physical connection
Before the Internet/WWW companies were
connecting their computer systems (Private Extranet)
Now, EDI happens over Secure Internet Connections
In Lab…
You’ll see how Electronic Data Interchange can help
smooth
out the communications (compatible data)
increase the velocity of information between Suppliers
Retailers
1.
2.
Investigate XML (Software Technology)
Explore RFID technology (Hardware Technology)