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Supply Chain Management

Supply Chain Management. Team 223 EMBA 2002. Supply Chain Management. Introduction Supply chains exist in both service and manufacturing organizations May be simple or complex Made up of various organizations inherent conflicts may exist between them

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Supply Chain Management

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  1. Supply Chain Management Team 223 EMBA 2002

  2. Supply Chain Management Introduction • Supply chains exist in both service and manufacturing organizations • May be simple or complex • Made up of various organizations • inherent conflicts may exist between them • Ideally a well-balanced, well-practiced relay team, positioned for “hand-offs” Cover Graphic From Internet, ORACLE Website, Oracle Supply Chain applications Team 223 EMBA 2002 2

  3. Supply Chain Management A Brief History* • Multicommodity Logistics Network Model • “PLANETS” • Stochastic Sub-Models • Normative Model • Comprehensive Deterministic Model • “OPTIMIZER” Model * Ganeshan, Ram and Harrison, Terry P. An Introduction to Supply Chain Management. Internet, Penn State University website Team 223 EMBA 2002 3

  4. Supply Chain Management A Brief History (continued) • Current Research • Shows promise in reducing inventories, increasing customer service • Several limitations: • Focus is on the inventory system only; largely ignores the production side of the supply chain • Assumes re-supply from only one site • Restricted to well-known forms of demand and lead-time Team 223 EMBA 2002 4

  5. Supply Chain Management Supply Chain Decisions* • Two broad categories: • Strategic • longer horizon • linked with corporate strategy • guide supply chain policies from a design perspective • Operational • shorter term • focus of effort is on effective, efficient management of product flow • Four major decision areas: Location, Production, Inventory and Transportation. Each has strategic and operational elements. *Ganeshan, Ram and Harrison, Terry P. An Introduction to Supply Chain Management. Internet, Penn State University website Team 223 EMBA 2002 5

  6. Supply Chain Management Supply Chain Decisions • Location: largely strategic • Involves commitment to a long term plan • Decisions regarding size, number, location represent the basic strategy for accessing customer markets • Considerable impact on revenue, cost and levels of service • Production • Strategic: • Product Path(s): these decisions determine the exact path(s) the product will take to and from a facility • Facility capacity: this decision will depend primarily upon the degree of vertical integration within the firm • Operational: • The focus is on detailed production scheduling Team 223 EMBA 2002 6

  7. Supply Chain Management Supply Chain Decisions • Inventory • Strategic: top management goals • Operational: the primary approach to inventory management • Push vs. Pull • Optimal order quantities and reorder points • safety stock levels • Transportation • Primarily strategic • Closely linked with inventory decisions • Customer service levels & geographic location play key role • Shipment size • Routing • Scheduling Team 223 EMBA 2002 7

  8. Supply Chain Management Tools Strategy Tools for SCM Broad decision scope Requires lots of data Provide approximate solutions Focus is on design Operational Tools for SCM Address day-to-day SCM operation Models have a narrower scope, consider detail and provide optimal solutions Focus is on inventory control policies (usually multi-level) Supply Chain Management Team 223 EMBA 2002 8

  9. Supply Chain Flow - Manufacturing Advance Planning, Scheduling and Logistics Techniques Supply Chain Management Graphic from: Internet, ORACLE Website, Oracle Supply Chain applications Team 223 EMBA 2002 9

  10. Supply Chain Flow - Manufacturing Procurement - Vendor/Supplier Management Supply Chain Management Graphic from: Internet, ORACLE Website, Oracle Supply Chain applications Team 223 EMBA 2002 10

  11. Supply Chain Management Supply Chain Flow - Manufacturing* • Manufacturing • Workflow technologies enable trading partners to: • Collaborate on new product development • Shorten time-to-market • Detailed product information can be collected and distributed to various partners to expedite collaboration • New product design timelines and objectives can be synchronized to achieve shared goals • Distribution • Impacts inventory level, cost and customer service level • Push vs. Pull Inventory • The Role of Warehouse and Distribution Managers *Internet, ORACLE Website, Oracle Supply Chain applications Team 223 EMBA 2002 11

  12. Supply Chain Management Supply Chain Flow - Manufacturing • Customers • Customization becoming standard to order fulfillment • Synchronized operations, global visibility and large-scale reductions in inventory across the extended supply chain grant trading partners the agility and flexibility necessary for participation in a mass customization model Team 223 EMBA 2002 12

  13. Supply Chain Management Supply Chain Flow - A Service Industry Example Airborne Logistics Services From: Airborne Express: WebMethods at Work with Airborne Logistics Services Team 223 EMBA 2002 13

  14. Supply Chain Management Driving Forces • With the Internet Age: • Traditional barriers to market entry have disappeared • Global markets can be reached overnight • Customers are more informed, demanding • Forrester Research forecasts that inter-company trade over the Internet will double every year over the next 5 years - from $43B last year to $1.3T by 2003* • The Bottom Line: ROI. A recent Benchmarking Partners, Inc. study revealed that 90% of surveyed companies benefited from integration through electronic commerce. *Internet, WebMethods website, Whitepapers, B2B Integration: The Drive to Gain and Maintain Competitive Advantage Team 223 EMBA 2002 14

  15. Supply Chain Management Supply Chain Synchronization: B2B & SCM* • B2B: the automated exchange of information between different organizations • Crosses corporate boundaries (firewalls) • Accomplished over the Internet or VAN’s (Value-Added Networks) • Increasingly uses open standards such as XML and HTTP • Has spawned dedicated organizations to develop the software solutions *Internet, WebMethods website, Whitepapers, B2B Integration: The Drive to Gain and Maintain Competitive Advantage Team 223 EMBA 2002 15

  16. Supply Chain Management Considerations for SCM Development & Deployment • Learning Costs of new tools and data • Supplier information needs • Optimize the entire system • Implement in stages • System flexibility and capability for customization* • Impact on employees (jobs, assignments, responsibilities, compensation structure) *Managing and Using Information Systems, Keri E. Pearlson, John Wiley & Sons, 2001, pg 100 Team 223 EMBA 2002 16Co

  17. Supply Chain Management Examples: Success Stories Team 223 EMBA 2002 17

  18. Supply Chain Management Examples: Success Stories • IBM • Supplier relationships moved to web beginning in 1998 • Links 20,000 IBM suppliers • 94% of invoices handled electronically • 400,000 e-invoices/month via IBM’s private exchange • Estimated savings: $400M/year • Kimberly Clark • Implemented an Automated Replenishment Program with 44 retailers • Estimated savings: $200M/2 years Team 223 EMBA 2002 18

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