Enterprise Systems and

1
Chapter 8

• Enterprise Systems and
• Supply Chain Management

2
The Schedule

• For Today
• Skipping a few chapters
• Current Events
• The Supply Chain Problems
• Efforts to Integrate the Supply Chain
• For Next Time
• BPR Supply Chain Mgmt
• Supply Chain Mgmt Examples

3
Supply Chain Components

• What is Supply Chain Management?
• Supply Chain Components
• Upstream Supply Chain
• Internal Supply Chain
• Downstream Supply Chain
• Cradle to Grave responsibility (Budweiser, auto
  makers)
• What might be included in a supply chain for a
  typical company (who are the players)?
• Some items might not be so obvious

4
Goals and Purpose of SCM

• Goals of Supply Chain Management
• Reduce uncertainty risks, inventory, cycle time
• Improve business processes, customer service
  (Road Work)
• Increased profits competitiveness (RFID proof)
• Agile Business video clip

5
A Few Questions

• What prevents supply chain software from
  returning value to all organizations? (Calif IT
  Crisis, Nestle)
• What changes need to take place within an
  organization in order for supply chain management
  software to be more effective?
• SC and VC both study connections with suppliers,
  customers, business partners
• What is the difference between them?
• How can Extranets improve SCM? (new case of
  pampers)

6
Problems in the Supply Chain

• Occur within complex / long supply chains
• GM 85B, Ford 80B with its suppliers
• 30,000 suppliers in auto industry
• Average car has 10,000 parts
• How do you recognize supply chain problems?
• What are some examples of problems? (cordless
  phone)
• Why do they happen?
• How do you fix them? (RFID box video)

7
Example of Supply Chain Probs.

• Toys R Us
• Online toy retail site unable to meet customer
  demands for 1999 holiday season
• Why was demand so high?
• What factors contributed to this?
• How did it turn out?
• Performance measures customer loyalty

8
Traditional (Poor!) SC Solutions

• Vertical Integration
• Ford purchased a rubber plant in South America
• Ryder Trucking purchased refineries in 1970s
• Accumulating large inventories
• What is the benefit?
• Why did/do companies do this?
• Why are these such poor solutions today?

9
What to do with large inventory?
10
Early Supply Chain Systems

• Late 1950s and 1960s
• First industrial use of IS
• Automate separate pieces of the supply chain,
  Why?
• What was automated first? Second?
• Goals reduce cost, expedite processing, reduce
  errors sounds good, right?
• Stovepiping vertical integration w/in company
• What are symptoms of stovepiping, both within the
  organization and from customers point of view?
• How can IS and BPR fix stovepiping?
• Why is IS alone not a sufficient solution?

11
Todays Supply Chain Systems

• Works with existing IS to gather data from all
  parts of the supply chain
• Provides a clear picture of where the
  organization is heading
• Integrates additional functionality
• Decision Support Systems, Customer Relationship
  Management, Electronic Commerce, Data warehousing
• BPR trend has now desrever watch out!
• Before Discover problems, find technology
  solution to fix it
• Now Discover technology solutions, look for
  probs it fixes

12
Retooling IT for BPR

• Make sure that IT fits the business process!!
  (again)
• Held Hostage Often organizations discover a
  problem only to find there IS will not support
  the solution (legacy systems)
• Important to understand existing infrastructure,
  benchmark technology use against best competitors
• Dont get left behind the rest of the field!

13
Restructuring Processes Orgs

• Major BPR activities include, but are not limited
  to
• Redesign of Processes
• Mass Production to Mass Customization
• Cycle Time Reduction
• Restructuring Organizations
• The following are examples

14
Redesigning the Process

• Ford Motor Company Accounts Payable
• Old Process
• Write Purchase Orders
• Invoice mismatches between purchasing, material
  control, accounts payable, vendor
• Had to manually match 14 items on every invoice
• New Process
• Invoiceless processing (EDI) no mismatches
• Now automatically match only 4 items on PO
• System pays vendor directly
• 75 reduction in headcount, more accurate info

15
Mass Production to Customization

• Bally Engineered Structures sales ordering
• Custom made insulated products
• Old 12 options, 86 sequential tasks, takes 5 to
  7 weeks
• Redesigned system to provide salespeople with
  cust requirements, prices, specifications, and
  increased communication
• New 10,000 options, 20 sequential tasks, takes
  1-2 weeks
• Possible through IT flexible manuf systems

16
Cycle Time Reduction

• Time to complete a process beginning to end
• More than just saving time First to market!
• Chryslers technology center reduced cycle time
  by 30
• Boeing 777 design, no physical prototype
• Fundamental change
• Computer becomes a platform for total design
  rather than just a tool
• Cultural change involving engineers and role of
  the computer - can be significant!

17
Restructuring Organizations

• Structure should
• Support critical activities and strategy
• Support the link between strategy IS
• Problems with hierarchy
• All it takes is one person to say No
• Restructure for customer focus
• Single contact point for customer
• Leverage competitive intelligence!

18
Organizational Structures

• Hierarchical (greater authority)
• Manager makes decision, job is to sell decision
  to others, may invite questions
• Flattened
• Manager presents problem, solicits input to make
  decision, or group makes decision
• Networked (greater freedom)
• Subordinates have more power, use of situational
  leadership
• Empowerment give permission to the workforce to
  develop utilize their skills knowledge for
  the good of themselves the organization
• No single best structure for all organizations

19
Important Concepts to Know

• The Supply Chain
• Early problems in SC
• Vertical Integration its benefits problems
• Supply Chain Management
• Restructuring the process organization

20
For Next Time

• NEW Minicase Quantum Corporation Green
  Mountain
• Start Chapter on Knowledge Management