Supply Chain Management

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Supply Chain Management

• Definition
• an integrative approach, consists of all stages
  involved, directly or indirectly, in fulfilling
  customer requests
• It functions include not only to manufacturing
  and suppliers, but also transporters, warehouses,
  retailers, and customers themselves
• Its efficiency deals with the enforcement of
  driving components on their new product
  development, marketing, operations, distribution,
  finance and customer services

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Capacity, inventory level, delivery schedule,
payment terms
Supplier
Manufacturing
Distributor
Customer
Retail Outlet
Order, return requests, repair and service
requests, payments
Supply Chain Management major entities
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Supply Chain Management

• What makes SCM success?
• Driving forces
• Traditional IS for SCM
• Based on Intranet, whereby it still highly
  dependent on the EDI technology for information
  interchange
• Obstacles
• Solutions to the problems

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Driving Forces of SCM

• It driving forces
• inventory (raw materials sourcing, WIP, and its
  finished goods)
• transportation (logistic of good transferring)
• facilities (hardware of storage facilities)
• information (IS systems)
• These forces are adopted interactively in a
  decision making process for SCM

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5
Supply Chain Decision-making Framework
Competitive Strategy
Supply Chain Strategy
Responsibilities
Efficiency
Supply Chain Structure
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Information
Inventory
Transportation
Facilities
Driving Forces
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SUPPLY-CHAIN MANAGEMENT
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An integrative system for an SCM firm
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Obstacles to achieving strategic fitness of SCM

• 1. Increasing variety of products
• 2. decreasing product life cycles
• increase the uncertainty in supplying of goods
• 3. increasingly demanding customers
• 4. fragmentation of supply chain ownership
• due to less vertical integrated
• 5. Globalization - increase competition
• 6. difficulty executing new strategies

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Changing facet of SCM

• 1. Adopting E-business concept
• Overcome the restriction of EDI application
  (how?)
• Expansion of worldwide operations
• Benefits
• 2. Adopting third party logistics
• Such as services of outsourcing firms
• Now most jobs such as distribution logistic,
  manufacturing, and assemblies may be rendered by
  TPL firms
• The IS dependency of SCM firms

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Revenue Impact of e-Business

• E-B enhancing the following advantages
• offering direct sales to customers
• providing 24-hour access of information from any
  location
• aggregating personalization and customization of
  information
• speeding up time to market
• implementing flexible pricing
• allowing price and service discrimination
• facilitating efficient funds transfer
• Example 1 Dell
• Example 2 Amazon

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Example 1 SCM for Dell
Customer
Customer
Pull
Pull
Retail Store
Dell
PC Manufacturing
(direct process)
Supplier
Supplier
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Conventional PC supply chain
Dell Supply Chain
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Impact of E-B on Dell Performance
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Example 2Amazon.com
Customer
Customer
Pull
Pull
Retail Store
Amazon
Warehouse
Distributor
Cut short process
Publisher
Publisher
Conventional bookstore supply chain
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Amazon supply chain
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Impact of E-B on Amazon.com Performance
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Concept of TPL

• Third party logistics, also known as outsourcing
  logistics, is a concept of which supply chains
  firms hiring outsource agents to take care of
  their non-core business activities so they could
  concentrate on their core-businesses and
  re-engineering.
• The adoption of third party logistics has an
  advantage that outsourcing agents could take
  charge of daily operations of non-core businesses
  such as transportation, inventory, assembly, and
  distribution. Offering value-added services to
  their clients are also known as some of
  distinctive features render by third party
  logistics firms that may otherwise be neglected
  by supply chains firms.

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IS in SCM

• Without the TPL
• - Could be based on the Enterprise Information
  System that implement through Intranet or
  e-Business (by internet technology)

• With TPL
• Now based on two systems
• The one on the right hand side
• The e-business system provided by the TPL
• (reason is that now partial information, such as
  inventory, delivery status, are controlled by
  them)
• (read it from the paper by Chow in my web site)

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SCM in HK

• Established a logistic center
• Logistics park
• Near airport island, allocated total of 1,255
  hectares
• Third party logistics park
• Two logistics centers (south and east commercial
  district in the about site)
• e-commerce logistic center by SEAL (South East
  Asia Logistics limited)
• Reserved 30000 sq meter site Tseung Kwan O
• Major/other obstacles?

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Future researches

• Topics
• What is the strategic impact of e-B technologies
  on the supply chain
• How has the Internet impacted supply chain
  operations, from the procurement of raw materials
  to productions and distribution of finished goods
• What performance enhancements and challenges can
  firms expect by using IT

• How have online exchanges impacted procurement
• How has the presence of information brokers
  impacted information flows
• How do collaborative ideas and technologies
  improve supply chain visibility
• What are the challenges of integrating e-Business
  technologies into supply chain operations

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Sample References

• Kajita, H. and Ohta, T., Third party logistics
  function for constructing virtual company study
  of assignments in Japanese business, Journal of
  Business Logistics, 2, 2001, 131-138.
• Vakharia, A.J., e-Business and supply chain
  management, Decision Sciences, 33(4), 2002,
  495-504.
• Frohlich, M.T. e-Integration in the supply chain
  Barriers and Performance, Decision Sciences,
  33(4), 2002, 537-556.
• Narasimhan, R. and Kim S.W., Information system
  utilization strategy for supply chain
  integration, Journal of Business Logistics,
  22(2), 2001, 51-75.