E-supply chain

gabonesedestructionSoftware and s/w Development

Feb 17, 2014 (3 years and 10 months ago)

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Chapter 8

Supply Chain Management

&

Enterprise Resource Planning

Essentials of the Supply Chains


Supply Chain


the flow of material, information, payment, and services from raw material
suppliers through factories and warehouses (
Value Chain
) to the end
customers (
Demand Chain
)


Supply Chain Flows


Materials flows

-

all physical products, new materials, and supplies that flow along the chain


Information flows

-

all data associated with demand, shipments, orders, returns and schedules


Financial flows

-

all transfers of money, payments, credit card information, payment
schedules, e
-
payments and credit
-
related data


E
-
supply chain


Supply Chain Management (SCM)


to plan, organize, & coordinate all the supply chain’s activities


reduce uncertainty and risks in the supply chain

positively affect inventory levels, cycle time, business processes, & customer service

increase profitability and competitiveness

Benefits

An automotive Supply Chain

Supply Chain
-

Components & Types


The Components of Supply Chain


Upstream supply chain


sourcing or procurement from external suppliers occur


Internal supply chain


where packaging, assembly, or manufacturing take place


Downstream supply chain


where distribution or dispersal take place, frequently by
external distributors


Types of Supply Chain


Integrated make
-
to
-
stock


Continuous replenishment


Build
-
to
-
order


Channel assembly

Supply Chain


Supply” Chain

Value Chain

Demand Chain

UNCERTAINTY


Demand forecast


Delivery times


Quality

POOR COORDINATION


With Internal units & business partners


Ineffective customer service


High inventory costs, loss of revenue & extra
cost for expediting services


Supply Chain Problems


The Bull Whip Effect
-

The most persistent SCM problem


Erratic shifts in orders up & down the supply chain


Distributor orders fluctuate because of poor demand forecast, price
fluctuation, order batching & rationing with supply chain.


Example: P&G’s distortion in SCM for manufacturing of disposable diapers


Main Solutions


Vertical integration


Building inventories


It is difficult to correctly determine inventory level for each product & part.
This can be costly.

Solutions to Supply Chain Problems


Solution


Information sharing among supply chain partners (
c
-
commerce
)
sometimes referred to as the
collaboration supply chain



facilitated by EDI, Extranets & Groupware technology


Example: P&G and War
-
Mart (vendor
-
managed inventory,VMI)


Others


Optimal Inventory Levels


Supply Chain Coordination and Collaboration


Supply Chain Teams


Performance Measurement and Metrics


Use of IT for measuring areas in need of improvement



Delivery on time, Quality at unloading area, Cost performance & Lead time
for procurement


Various IT
-
Assisted Solutions


wireless technology


optimal shipping plans


strategic partnerships with suppliers


just
-
in
-
time

Other IT
-
assisted Solutions to SCM Problems


Other Solutions (Table 8.1, p. 365)



Use wireless technology to expedite certain tasks in the supply chain
-

SFA


Configure optimal shipping plans
-

Quantitative analysis, DSS, intelligent
systems


Create strategic partnerships with suppliers
-

DSS


Use the
just
-
in
-
time approach

to purchasing


Use outsourcing rather than do
-
it
-
yourself
-

DSS


Buy” rather than “make” production inputs when appropriate
-

DSS


Reduce the lead time for buying and selling
-

BI


Use fewer suppliers
-

BI


Improve supplier
-
buyer relationships
-

CRM & PRM


Manufacture only after orders are in


Achieve accurate demand by working closely with suppliers
-

Online
collaboration tools


Automate material flow, information flow, and partner relationship


Computerized Supply Chains


Computerized systems


Material requirements planning (MRP)



essentially integrates production, purchasing, and inventory
management of interrelated products


Manufacturing resource planning (MRP II)


enhanced MRP methodology by adding labor requirements and
financial planning


Enterprise resource planning (ERP)


further integrates the transaction processing as well as other routine
activities in the entire enterprise


Integration continues along several paths


functional areas


Combining transaction processing and decision support


Business intelligence


CRM software

The Evolution of Computerized Aids

Inventory

Purchasing

Production

scheduling

MRP

1960

Production
Management

+

MRP

Finance,

labor

MRP II

1970

Major
Manufacturing
Resources

+

MRP II

All internal

resources

ERP

1980

Coordinated
Manufacturing
and Service
Transactions

+

ERP

Internal customers

and suppliers

Internal

SCM

1990

Internal

ERP/SCM

+

Internal

ERP/SCM

External suppliers

and customers

Extended

SCM/CRM

2000

Extended

ERP/SCM

+

ERP/SCM

BI, EC, CRM, KM

Enterprise

Integrated


system

2005

Enterprise

Systems

+

Why Integration?


Benefits


Tangible benefits


Inventory reduction, personnel reduction, productivity improvement,
order management improvement, financial
-
close cycle improvements,
IT cost reduction, procurement cost reduction, cash management
improvements, revenue/profit increases, transportation logistics cost
reduction maintenance reduction, and on
-
time delivery improvement


Intangible benefits


Information visibility, new/improved processes, customer
responsiveness, standardization, flexibility, globalization, and business
performance.


Integrating the Supply Chain


After the introduction of computer
-
based information, companies
started to integrate the links of the supply chain


New forms of organizational relationships and the information
revolution, especially the Internet and EC, have brought SCM to
the forefront of management attention

Types of Integration:
From Supply to Value Chain


Types


Internal integration
-

to integration between applications inside a company


External integration
-

to integration of applications among business
partners


Value Chain Integration


The process by which multiple enterprises within a shared market
channel collaboratively plan, implement, and manage the flow of goods,
services, and information along the entire chain in a manner that
increases customer
-
perceived value.


A process of collaboration


A Supply Chain transforms into an integrated Value Chain


Extends the chain all the way from sub
-
suppliers to customers


Integrates back
-
office operations with those of the front office


Becomes highly customer
-
centric, focusing on demand generation and customer
service


Seeks to optimize the value added by information and utility
-
enhancing services


Is proactively designed by chain members to compete as an “extended enterprise”.

Value Chain Integration

Enterprise Resources Planning (ERP)


ERP =
Process of planning

&
managing all resources

&
their use in the entire enterprise



Objective


to integrate all departments and functions across a company onto a
single computer system


control all major business processes with a single software
architecture in real time


Leading ERP software producers


SAP, Oracle, J.D. Edwards, Computer Associates, PeopleSoft


Functions


Provides a single interface for managing routine manufacturing
activities


Facilitates customer interaction & manages relationships with
suppliers & vendors


Forces discipline & organization around business


Supports administrative activities

1
st Generation ERP


Objectives


Automate key office processes


Support routine transactional activities


Advantages


Excelled in transaction management


Generated reports which provided a snapshot of the business at a
point in time


Disadvantage


not support the continues refining and enhancing of plans as changes
and events occur, up to the very last minute before executing the plan


SCM Integration


Work with different software products from different vendors (i.e. one
for ERP & one for SCM)

Post
-

ERP: 2nd Generation ERP


Objectives


leverage existing systems in order to increase efficiency in handling transactions,
improve decision making, further transform ways of doing business


A need for planning systems oriented towards decision
-
making


Integration


Web
-
based


DBMS, spreadsheets in Excel or Lotus 1
-
2
-
3, CRM & EC



ERP/SCM integration model


companies to quickly assess the impact of their actions on the entire supply
chain, including customer demand


By providing intelligent decision support and BI capabilities, the analytical
SCM systems complement the ERP system.


Alternative ways


Emergence of SCM systems that complement ERP systems


ERP vendors add decision support & BI (Business Intelligence)

capabilities


To work with different SW products from different vendors

How can I best take or fulfill your order? Vs. Should I take your order?


Supply Chain Intelligence (SCI) & Componentization


SCI
-

the inclusion of BI in supply chain SW solutions


3 Ways to provide SCI


Use an enhanced ERP package that includes BI capabilities


Integrate the ERP with business intelligence software from a
specialized vendor such as Brio, Cognus, or Comshare.


Use Web services


Create a “best of breed” system by using components from several
vendors that will provide the required capabilities.


Componentization


Breaking large ERP systems into individual components that
work together.


Makes it easier for ERP vendors to enhance their solutions and
for customers to upgrade their software.


Helps vendors extend the core ERP system with supply chain,
sales force automation solutions, and CRM

ERP Implementation


To avoid failures, the following factors should be considered


The customer’s expectations


The ERP product capabilities and gaps


The level of change the customer has to go through to make the system fit


The level of commitment within the customer organization to see the project
through


The customer’s organization and culture


The risks presented by politics within the customer organization


The consultant’s capabilities, responsibilities and role (if applicable)


Application service providers
(
ASP) & ERP Outsourcing



ASP alternative”
-

a SW vendor that offers to lease ERP
-
based
applications to other businesses



A popular option today for businesses that want ERP functions but lease
applications rather than building systems


offerings are evident in ERP
-
added functions such as EC, CRM, datamarts,
desktop productivity, human resources information systems (HRMS), and other
supply chain
-
related applications


Concept
-

especially useful in ERP projects, which are expensive to install and
take a long time to implement, and for which staffing is a major problem

Global Supply Chains


Global Supply Chains =
Supply chains that involve
suppliers and/or customers in other countries


Driver
-

IT


IT provides EDI, communication options, online expertise in
sometimes difficult and fast
-
changing regulations


IT can be instrumental in helping businesses find trade partners


IT facilitates outsourcing of products and services, especially IT
programming, to countries with plentiful supply of labor, at low cost


The issues


legal issues, customs fees and taxes


language and cultural differences


fast changes in currency exchange rates


political instabilities


EC & SCM


Buying & Selling along the Supply Chain



UPSTREAM


improve the upstream supply chain through e
-
procurement



INTERNAL SCM


from entering purchase orders, to recording sales, to order fulfillment, to tracking
shipments, are usually conducted over a corporate intranet



DOWNSTREAM


enhance the activity downstream activities by providing online ordering


Selling on your own web site, Auctions & Exchange


Vertical exchanges


combine upstream and downstream EC supply chain activities


Supply chains in EC


Order fulfillment


Integration of EC with ERP


Since most middle
-
sized and large companies already have an ERP system, and
since EC needs to interface with ERP, it makes sense to interconnect the two.


The problem is that the ERP SW is very complex and inflexible (difficult to
change), so it is difficult to achieve easy, smooth, and effective integration.

Web
-
based Supply Chain

Order Fulfillment in EC


Online Order Fulfillment & Logistics


While order fulfillment is a part of the back
-
office operations, it is
strongly related to front
-
office operations.


Recently, e
-
Tailors have faced continuous problems in order fulfillment,
especially during the holiday season.


EC is based on the concept of “pull” operations, which begin with an
order, frequently a customized one.


In the “pull” case it is more difficult to forecast demand.


In a B2C pull model, the goods need be delivered to the customer’s door.


Deliver small quantities to a very large number of customers


Innovative Solutions to Supply Chain Problems


Outsourcing order fulfillment


Same
-
day, even same
-
hour delivery


Automated Warehouses


Large
-
volume EC fulfillment requires special automated warehouses.


Most B2C is shipped via outsourcers.


Options for Dealing with Returns

Partner Relationship Management(PRM)


PRM


refers to all of the efforts made to apply CRM to all types of business
partners


Every company that has business partners has to manage the relationships
with them. Information needs to flow between the firms and constantly
updated and shared.


EC PRM functions


partner profiles


partner communications


lead management (of clients)


targeted information distribution


connecting the extended enterprise


partner planning


centralized forecasting


group planning


e
-
mail


price lists

Global Supply Chains


Supply chains that involve suppliers and/or customers in
other countries are referred to as global supply chains.


Companies go global (disperse the value chain) for a
variety of reasons.


lower costs of materials, products, services and labor


availability of products that are unavailable domestically


the firm's global strategy


technology available in other countries


high quality of products


intensification of global competition


the need to develop a foreign presence to increase sales


fulfillment of counter trade.


Global supply chains are usually longer than domestic ones, and
more complex. Therefore, additional uncertainties are likely.