Theory: The Supply Chain Management Effect Team 6040405

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Theory The Supply Chain Management EffectTeam
6 04/04/05

• Arsalan A. LodhiPankaj LuthraDaniel M. Li

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Agenda
Vertical View

• Cross Enterprise Integration
• Market Mediation
• Demand Focus
• Collaborative Eco System
• Breakthrough Business Models
• Tailored Offerings

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1. Cross Functional to Cross Enterprise
Integration

• Authors Key Points
• Enterprises have moved their focus from Cross
  Functional to Cross Enterprise Integration
• Many forms of cross enterprise Integration
• Privately led for example Wal-Mart, Dell, JC
  Penny let vendors manage their inventory
• Industry-level initiatives for example ECR,
  CPFAR. Dominant leaders head towards common goal
• Shared initiatives companies from multiple
  different industries collaborate to create cost
  benefits. For example third party logistics
• Personal Views
• Concept of Cross Enterprise Integration is not
  new
• Complex economy has shifted value-Chain to
  value-Network

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Cross Enterprise Vs Cross Functional Integration

• Proposing New Name Value Network Management

Researchers
Professionals
Organization
Vendors
Students
Partners
value
distribution channels
Customers
Dynamic Roles
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2. Market Mediation

• Authors Key Points
• Most companies lose their profit margin by
  overlooking the management of market mediation
  cost that includes safety stock, safety capacity,
  price protection, returns and lost sale
• Certain industries have uncertain supply
  agriculture requires extensive physical cost
  management while others like clothing and
  apparels have uncertain demand requires
  extensive market mediation cost management. Tech
  industry has both uncertain supply and demand
  requires the management of both components .

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2. Market Mediation

• Personal Views
• Agree with author. Todays complex economy
  requires an effective management of both
  components Total Physical Cost and Market
  Mediation Cost
• Recent News according to LogisticToday DOT
  (department of Transportation) announced 3.5
  million funding for breakthrough transportation
  model in SMB market
• Clearly Government want to simulate economy with
  ripple effect
• 70-80 of America constitute of SMB market
• Efficient supply chain would bring innovation and
  involve other industries together perhaps will
  create more jobs
• New Models of Supply Chain requires prediction
  accuracy, knowledge management, and collaboration
  tools that will boost tech industry
• Amazon Prime another example how they are
  bringing more value for end customers by
  establishing strong relationships with logistics
• Sun MicroSystems, Inc reduced lead times and cost
  by integrating half of the solution during its
  transportation example of effective market
  mediation management

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Cross enterprise Integration Market Mediation

• Key Technology Vendors
• Oracle
• Retek covering retail industry
• PeopleSoft
• SAP
• IBM partnered with many ISVs (Independent
  Software Vendors)
• SSA Global
• Key Supply Chain Services Companies provides
  consultancy how companies can optimize their
  supply chain
• IBM
• CSC
• EDS

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3. Demand-centric Approach

• Authors Point
• Move away from being supply-focused to more
  emphasis on pro-active demand management
• Better quantification of demand impact on
  supply-chain performance on sales.
• Marketing Sales become the champions of SCM
• Breakthroughs in demand management
• Mitigation of the Bullwhip Effect (ie. PG
  Pampers)
• Investment in better demand information, POS data
  coupled with reactive supply-chain
• Demand based management integrate marketing
  efforts and demand-management instruments with
  supply-chain initiatives (ie. Dells dynamic
  pricing system)
• Personal Views
• Highly reactive supply-chain through aggressive
  demand management is necessary in adapting
  supply-chains and capabilities to meet changing
  market needs.
• Is CRM the prerequisite to a more pro-active
  approach to SCM?

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4. Collaborative, Concurrent Product, Process
SC Design

• Authors Point
• Product design influences supply chain definition
  and performance
• Early consideration of SCM issues in product
  development
• Increased collaboration (design for supply-chain
  management)
• Use of information systems for collaborative
  product development (ie. Agile Software,
  Freeborders)
• Postponement strategies
• Generic safety stocks
• Reduction of demand variability through demand
  pooling (ie. HP)
• Personal Views
• Collaboration is necessary to
• Establish strategic operating models
• Migration from internal-only to extended supply
  chains
• Integration of core business processes with
  best-in-class partners across the chain

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5. New Supply-Chain Initiatives to Enhance
Customer Value

• Authors Point
• Shifting to a customer oriented approach will
  bring to light new go-to-market strategies,
  opening new lines of revenue and enhancing
  customer value.
• GMAC built own auto auction infrastructure
  generating revenue from sales and services in
  addition to becoming the largest auto auction
  house.
• Increased customer awareness through auctions.
• Personal View
• Innovating go-to-market strategies to enhance
  end-customer experience - is this SCM or CRM?

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6. From Mass Market Supply to Tailored Offerings

• Authors Point -
• Companies should integrate Sales and Marketing
  with Supply-Chain logistics to understand the
  customers needs and provide custom offerings to
  valuable customers.
• Advances in Technology further aids in
  customizing offerings, thereby enhancing customer
  experience, increasing sales and enabling
  efficient resource usage.
• Whirlpool web-based configurator.

• Companies integrate SCM CRM to create Digital
  Loyalty Networks that help increase
  profitability.
• Samsung performed a "value-driver analysis" by
  asking customers which of its capabilities would
  provide the most value.
• The results Samsung has reported 50 sales
  increases year on year
• In the simplest form, a company will track
  customers in terms of repeat purchases and share
  of purchases and then design the most appropriate
  supply-chain response.

Source http//www.optimizemag.com/article/showArt
icle.jhtml?articleId17700912
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Interesting Facts

• The supply chain management services market will
  reach 21.6 billion by 2005, according to a
  report from Gartner Dataquest.
• The RFID Journal writes an interesting article
  suggesting 2005 could be the year for widespread
  adoption of the RFID standard Wal-Mart factor
  (Intel is a significant player with its RFID-EPC
  technology).
• The cost of lost revenue opportunity, measured by
  leading consumer package goods audit firm,
  suggest that inventory out of stock situations
  can account for up to 20 of lost sales.
• Thank you !