Supply Chain Management

1
Supply Chain Management

• MIS 7223
• Fall 2002

2
Outline

• Definition
• E-SCM
• CPFR, CSCP and Effective Sales Response
• Internet-Enabled SCM
• Elements
• Stages
• Value Chains

3
Supply Chain

• Core business processes that create and deliver a
  product/service, from concept through development
  and manufacturing/conversion, into a market for
  consumption
• Supplier, Manufacturer, Distributor, Retail
  Outlet, Customer

Poirier and Bauer, 2000
4
SCM

• The methods, systems, and leadership that
  continuously improve an organizations integrated
  processes for product/service design, sales
  forecasting, purchasing, inventory mgmt,
  manufacturing/production, order mgmt, logistics,
  distribution, and customer satisfaction.
• Optimizing the creation and delivery of goods,
  services, and info from suppliers to business
  customers and consumers
• Coordination of material, info, and financial
  flows
• Info is replacing inventory

Poirier and Bauer, 2000 Schneider, 2002
5
SCM

• Same concepts as ERP extended to trading partners
• Lack of info about customer demand more
  inventory levels to manage unpredictability
• Trends increasing need for SCM
• Dispersion of mfg and distribution facilities
• Channel unpredictability
• Responsiveness over efficiency
• Lower margins in return for market share
• Goal of SCM more cost effective customer
  accountability and responsiveness

6
SCM

• SCM migration enterprise to partners to direct
  connection with customers
• Even if business model is not direct use SCM to
  get demand signal from consumer upstream
• E-SCM
• Enable info sharing
• Develop joint performance measures (not buying
  products but service of ontime delivery, etc.)
• Redefine work (analogous to redefining customer
  value who would be the best person to do this
  work)
• Right chain structure is driven by Nature of
  Product

7
SCM

• Supplier Manufacturer Distributor Retail
  Outlet Customer
• Want transparent supply chain
• Lack of info more inventory and/or stockouts
• Stockouts okay in some cases (i.e., cars), but
  not good for hot items (i.e., clothing)

8
Collaborative Planning, Forecasting, and
Replenishment

• CPFR requires creating a new business model
• Holistic approach to SCM among a set of value
  chain partners
• Can deliver increased sales, interorganizational
  streamlining and alignment, administrative and
  operating efficiency, improved cash flow, and
  greater return on asset performance

Poirier and Bauer, 2000 Rayport and Jaworski,
2002
9
Collaborative Supply Chain Planning

• CSCP is made viable by Internet technology
• Designed to increase collaborative decision
  making between firms responsible for providing
  supply
• Helps link suppliers and customers in the
  creation of mutual business plans through full
  network connectivity
• Can include SC strategies, partnering agreements,
  promotion plans, product/service development,
  forecasting improvement efforts, and
  replenishment plans

Poirier and Bauer, 2000
10
Effective Sales Response

• Network response
• Solidifying the external alliances that assures
  the value chain has the capability of giving an
  accurate and timely response to the orders it gets

Poirier and Bauer, 2000
11
Internet-Enabled SCM

• Enterprise Focus
• Separate systems for each SC member
• Partner Focus
• Collaborative systems
• Direct Focus
• Shared market data and virtual fulfillment

12
Elements of SCM

• Advanced scheduling
• Demand planning
• Order commitment
• Transportation planning
• Distribution planning

13
E-Business Modeling
Phase 1 Supply Chain Level I/II Phase 2 Supply Chain Level III Phase 3 Supply Chain Level IV
Current situation evaluation Supply chain, ecommerce loosely coupled Intranet-based supply chain optimization Network incubation Collaborative network design Extranet-based full network cooperation
Info sharing Product/sales data Sourcing help Logistics Order fulfillment Order mgmt Inventory mgmt Resource allocation Systems use and integration Focused mktg, sales service Total systems efficiency Collaborative design delivery
Poirier and Bauer, 2000
14
E-Business Development Framework
Progression Business Appl Level I/II Internal SC Optimization Stage 0 Level III Network Formation Stage 1 Level IV Value Chain Constellation Stage 2 Level IV Full Network Connectivity Stage 3
Purchase, procurement, sourcing Leverage business unit volume Leverage full network through aggregation Key supplier assistance, web based sourcing Network sourcing through best constituent
Engineering, planning, scheduling, manufacturing MRP MRPII DRP ERP internal connectivity Collaborative network planning best asset utilization Full network business system optimization
Logistics Manufacturing push inventory intensive Pull system through internal/external providers Best constituent provider dual channel Total network, dual-channel optimization
Marketing, sales, customer service Internally developed programs, promotions Customer-focused, data-based initiatives Collaborative development for focused consumer base Consumer response system across the value chain
Customer care Customer service reaction Focused services call centers Segmented response system, CRM Matched care customer care automation
Human resources Internal supply chain training Provide network resources, training Interenterprise resource utilization Full network alignment and capability provision
Poirier and Bauer, 2000
15
SCM Stages

1. Enable info sharing
2. Create joint performance measurement system and
   collaborative planning processes
3. Realign work and collaborate
4. Redesign products and processes so that work
   becomes easier or more efficient

16
Wal-Marts Supply Chain

• Use of data warehousing and data mining used
  for decision-making on various management levels
• Retail Link
• Drive costs down before the product gets to each
  store

Swift, 2001
17
Dells Supply Chain

• Network of dedicated suppliers for JIT deliveries
• Computerized global network of components and
  parts inventories
• Timely information about demand forecast, cost of
  needed inventory, and days of supply of
  inventory

18
Value Chain

• Union of supply chain and demand chain
• Combination of how you get the components of your
  product and how you get the finished product to
  customers
• Series of activities that your company engages in
  to create the value from which it extracts profit
• Internets affect on the VC

Carr, 2001 Fingar and Aronica, 2001 Pallatto,
2001
19
References

• Carr, D. F. (2001). Forging 21st-Century Value
  Chains Weaving the Partnership Web, Internet
  World.
• Fingar, P. and Aronica, R. (2001). Empower Your
  Customers the Driving Forces of the Real New
  Economy, Internet World, 15 July.
• Kalakota, R., Robinson, M. and Tapscott, D.
  (2001). E-Business Roadmap for Success 2.0,
  Addison Wesley Longman, Inc.
• Pallatto, J. (2001). Inside Intels Value Chain
  A Case Study, Internet World, 15 July.

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References

• Poirier, C. C. and Bauer, M. J. (2000). E-Supply
  Chain Using the Internet to Revolutionize Your
  Business, Berrett-Koehler Publishers, Inc.
• Rayport, J.F. and Jaworski, B.J. (2002).
  Introduction to E-Commerce, McGraw-Hill
  Companies, Inc. New York.
• Schneider, G.P. (2002). Electronic Commerce, 3rd
  edition, Course Technology Thomson Learning,
  Inc.
• Swift, R. S. (2001). Accelerating Customer
  Relationships Using CRM and Relationship
  Technologies, Prentice-Hall, Inc., Upper Saddle
  River, NJ.