SCM Systems

MIS

SC

Supply Chain & Management Information Systems

Presentors : Deepshikha Agarwal & Priyanka Mangla

Following Presentation covers : Supply Chain Nike’s Supply Chain Supply Chain Management System Importance of Supply Chain Management Information and Supply Chain Management Supply Chain Management Software Supply Chains and Internet Global Supply Chains Demand Driven Supply Chains Business Value Of Supply Chain Management

Systems

SUPPLY CHAIN

A firm’s supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers.

Distributing the finished products to customers

SUPPLY CHAIN - Classification

• organization's suppliers and the processes for managing relationships with them

Upstream Portion

• organizations and processes for distributing and delivering products to the final customers.

Downstream Portion

SCSuppliers

PlantDistributi

on Centre

Retail Outlet

Customer

NIKE’S SUPPLY CHAIN

SUPPLY CHAIN MANAGEMENT SYSTEM

Small Firm

•Small number of suppliers•Easy to coordinate•Using phone or fax

Large Firm

•Hundreds or thousands of suppliers•Complexity in coordination•Need of SCM system

 Supply Chain Management System refers to the coordination of activities involved in making and moving a product.

A set of approaches used to efficiently integrate Suppliers Manufacturers Warehouses Distribution centers

So that the product is produced and distributed In the right quantities To the right locations And at the right time

System-wide costs are minimized and

Service level requirements are satisfied .

IMPORTANCE OF SUPPLY CHAIN MANAGEMENT Dealing with uncertain environments – matching supply and

demand Boeing announced a $2.6 billion write-off in 1997 due to

“raw materials shortages, internal and supplier parts shortages and productivity inefficiencies”

U.S Surgical Corporation announced a $22 million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals”

IBM sold out its supply of its new Aptiva PC in 1994 costing it millions in potential revenue

Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake

U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998

INFORMATION AND SUPPLY CHAIN MANAGEMENT

The supply chain inefficiencies waste as much as 25 percent of a company’s operating costs.

Uncertainties also arise because many events cannot be foreseen—product demand, late shipments from suppliers, defective parts or raw material, or production process breakdowns. 

 More accurate information from supply chain management systems reduces uncertainty and the impact of the bullwhip effect.

With perfect information about demand and production, a firm can implement an effective just-in-time strategy, delivering goods in the right amount and as they are needed.

Bullwhip Effect Information about the demand for a product

gets distorted as it passes from one entity to the next across the supply chain.

Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain.

Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.

SUPPLY CHAIN MANAGEMENT SOFTWARE•Model existing supply chain•Generate demand forecast - Whirlpool•Develop optimal sourcing & manufacturing plans

Supply Chain Planning Systems

•Track physical status of goods•Management of materials, warehouse & transportation operations•Management of financial information

Supply Chain Execution Systems

How it worked @ PG ? One of the world’s largest companies More than 300 brands worldwide

Beauty Division - Pressure due to price war among retailers and demand variability

Need to reduce supply chain costs and improve efficiency throughout

Problem

Multi-echelon inventory optimization system – seek to minimize total inventory in all of the echelons

Optiant Software – Power Chain Suite

Solution

How it worked @ PG ?

Multi-echelon inventory optimization system

Multiple Independ

ent forecast updates in each echelon

Accounting for all

lead times and variations

in lead times

Management of the Bullwhip

Effect

Creation of

visibility up and

down the demand

chain

Synchronized order strategies

Appropriate

modeling of the

effects of different echelons replenish

ment strategies

on one another

How it worked @ PG ?

Optiant Software

SUPPLY CHAINS AND INTERNET

SUPPLY CHAINS AND INTERNET Before the Internet, supply chain coordination

was hampered by difficulties of making information flow smoothly

among disparate internal supply chain systems Difficult sharing of information – incompatible

technology platforms and standards

Today, using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules.

SUPPLY CHAINS AND INTERNET

Manager- Tap into suppliers’

systems to determine whether inventory

and production capabilities match demand for firm’s

product

Business Partners

- Collaborate online to forecast

Sales Representatives- Access suppliers’

production schedules and logistics

information to monitor customer’s

order status

GLOBAL SUPPLY CHAINS – Complexities and Challenges Greater geographic distances

Participants from different countries

Additional costs – transportation, inventory, local taxes or fees

Performance standards may vary

Need to reflect foreign government regulations and cultural differences

GLOBAL SUPPLY CHAINS AND INTERNET Internet help companies manage many aspects of their

global supply chain – sourcing, transportation, communications and international finance.

Example – Apparel Industry – have started to use Web to manage their global supply chain

In addition to contract manufacturing, globalization has encouraged outsourcing warehouse management, transportation management, and related operations to third party logistics providers like UPS Supply Chain Services.

GLOBAL SUPPLY CHAINS AND INTERNET – Example

e-SPS Web-based Software

Used by Koret of California

Gain end-to-end visibility into its entire global supply chain

Web-based software for sourcing, work-in-progress tracking, production routing, product-development tracking, problem identification and collaboration, delivery-date projections and production-related inquiries and reports.

DEMAND DRIVEN SUPPLY CHAINS

•production master schedules are based on forecasts or best guesses of demand for products, and products are "pushed" to customers

push-based model

•actual customer orders or purchases trigger events in the supply chain•Eg. Wal-Mart and Dell

pull-based model

INTERNET DRIVEN SUPPLY CHAIN – the future Moved from sequential supply chains to

concurrent supply chains

Ultimately, the Internet could create a digital logistics nervous system throughout the supply chain - It provides multidirectional communication among firms, networks of firms, and e-marketplaces so that entire networks of supply

chain partners can immediately adjust inventories, orders, and capacities.

INTERNET DRIVEN SUPPLY CHAIN – the future

BUSINESS VALUE OF SUPPLY CHAIN MANAGEMENT SYSTEMS

Streamline supply chain processes - both internal and external

Provide with more accurate information – what to produce, store and move

Reduced supply chain costs – impact on firm profitability

Increased sales – right product available at right time

Thank you…