SUPPLY CHAIN MANAGEMENTPRESENTED BY:AAMIR USMANIMEEZAN ALAM

ERP Enterprise Resource Planning Support business through optimizing, maintaining, and

tracking business functions Broken down into business processes

HRM Distribution Financials Manufacturing

EVOLUTION OF ERP1960’s - Systems Just for Inventory Control

1970’s - MRP – Material Requirement Planning(Inventory with material planning & procurement)

1980’s - MRP II – Manufacturing Resources Planning(Extended MRP to shop floor & distribution Mgnt.)

Mid 1990’s - ERP – Enterprise Resource Planning(Covering all the activities of an Enterprise)

2000 onwards – ERP II – Collaborative Commerce(Extending ERP to external business entities)

WHAT IS SCM Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.

THREE TYPES OF FLOWS IN SCMThree types of flows in SCM: Material flow – This is a physical flow which represents

the movement of product from supplier to customers as well as the movement of product from customers to suppliers in case of servicing, repairing etc.

Information flow – This represents capacity, order tracking, delivery schedule.

Financial flow – This represents the credit terms, invoices and other ownership arrangements. This flow requires highest level of co-operation between the members of the supply chain.

TYPES OF SCM Push-based supply chain With a push-based supply chain, products are pushed

through the channel, from the production side up to the retailer. It takes longer for a push-based supply chain to respond to changes in demand, which can result in overstocking or bottlenecks and delays.

Pull-based supply chain In a pull-based supply chain, procurement, production and distribution are demand-driven rather than to forecast. NIKE is frequently used as an example of pull production. It changed from make to sell to make to order.

NEW DEVELOPMENTS IN SCM Technology Advanced communications systems and

wireless technologies such as radio frequency identification (RFID) have further streamlined supply chain processes. allowing companies to share detailed

real-time data Tracking individual store purchases as they are made,

ADVANTAGES OF ERP IN SCM Improved efficiency across multiple departments and

organizations working within the supply chain. Automation of workflow for reduced overhead and operational costs. Automated Purchasing Vendor Performance Improved Efficiency Order Tracking Helps in Decision making Minimize the Delay Improves Productivity

DISADVANTAGES OF ERP IN SCM The cost of ERP Software, planning, customization,

configuration, testing, implementation, etc. is too high. The installation of the ERP system is costly. ERP consultants

are very expensive take approximately 60% of the budget ERP deployments are highly time-consuming – projects

may take 1-3 years (or more) to get completed and fully functional.

Too little customization may not integrate the ERP system

The cost savings/payback may not be realized immediately after the ERP implementation & it is quite difficult to measure the same.

CASE STUDYNIKEImplementation ERP in Supply Chain

INTRODUCTION Founded in 1964 Originally Blue Ribbon Sport Design, Manufacture and Distribute Athlete Wear Enterprise Resource Planning in 2001

I2 TECHNOLOGIES Founded in 1988 by Dallas, Texas Provide SCM software and services Employed in June 2000Objectives: Reduce the cost and quantities of Raw Materials Predict the demand pattern to plan and control the

production volume Allow Nike to reduce the production of unsalable shoes

ISSUES WITH I2 TECHNOLOGIES ERP SOFTWARE Stored data's in different formats. Caused systems unable to integrate. Consumed too much time to record single entry. System frequently crashed. Ignored some orders and duplicated others.

RESULTS OF I2 TECHNOLOGIESNike faced financial problems after an year of

implementation: Profits reduced by 24% Lost sales worth millions of dollarsAffected Nike’s Reputation: Extra Stocks sold at discounted Price I2 and Nike blamed each other for the failure

CAUSE OF FAILUREAs stated by Nike: The software could not predict the exact demand and

supply volume Underproduction of the popular productsAs stated by i2 Technologies : Requested too much customisation Too dependent on the demand forecast software for

project management Lack of ability to meet the circumstances Unable to solve bugs and data errors

ACTION MADE BY NIKE Continued to work for i2 on 5 year project. Contract ended on 2004 due to challenges where setting

goals were found unrealistic.

IMPLEMENTATION OF SAP AFS Systems Applications and Products in Data Processing. Founded in 1972, Germany. Provide enterprise software. Employed in 2004 by Nike.

NEW MOVES BY NIKEApplied Single Instance Strategy (SIS) The Big Bang approach: to implement all enterprise functionality and

ERP modules in a single instance as a major event Integrated With: i2 Technologies forecasting System Siebel’s Customer Relationship Management System (CRM)Invested: 6 years time $800 millionThe value of Nike Supply Chain (NSC) Project Foresee the trends sooner Share accurate information in shorter time

SIEBEL’S CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM (CRM)

SAP ERP CHARACTERISTICS Uses actual data for calculation collected from orders and

invoices Share information within Supply Chain between

Customers, Retailers, Distributors and Manufacturers.

FLOW OF INFORMATION IN OFFLINE BUSINESS

Implemented SAP apparel and Footwear software (AFS):

An E-business solution to control the supply Chain Trained SAP ERP users before implementing the system.

APPAREL AND FOOTWEAR SOFTWARE

THE CHANGE OF STRATEGYFrom make-to-sell to make-to-order: To reduce Nike’s order interval time from 1 month to a

week. Reduce inventory level.Retailers do not prefer to order 6 months in advance

because fashion change instantly, unpredictable.

THE RESULTS OF SAP ERPReduction in: 30% of make-to-sell shoes to 3% Solid waste: 28% Waste to landfill and incinerators: 70% Waste Consumption: 20%Improvement in: Cash Flow Management Revenue Forecasting Lead time from 9 months to 6 months. Gross margin moved up to 42.9% from 39.9% in one year.

GROWTH IN E-COMMERCE

REFERENCES http://

ijmrr.com/admin/upload_data/journal_rajesh%20arora%20%20%20%2018au12.pdf

https://ixmba09.wikispaces.com/file/view/nike-finals-erp-implementation-120549747734470-3.pdf

http://www.casestudyinc.com/nike-erp-implementation-saga

INTERNATIONAL JOURNAL OF MANAGEMENT RESEARCH July 2012/ Volume 2/Issue 7/Article No-18/1293-1300