CMP0394 e-Logistics Systems Instructor: Timothy Kf Au Email: [email protected] URL: cmp0394.

CMP0394 CMP0394

e-Logistics Systems e-Logistics Systems

Instructor: Timothy Kf Au

Email: [email protected]

URL: http://www.geocities.com/timothykfau/ cmp0394

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Chapter 4Chapter 4Combination with Other Information Combination with Other Information

Technology-based Processes Technology-based Processes Combination with Other Information Technology-based

Processes – Material Requirements Planning (MRP) – Enterprise Resource Planning (ERP)– Distribution Resource Planning (DRP)– Email Response Management Systems (ERMS)– Customer Relationship Management (CRM) and Electronic

Customer Relationship Management (e-CRM)– Amalgamation of SCM and CRM

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Material Requirements Planning (MRP)Material Requirements Planning (MRP)

What does Supply Chain Mean to Manufacturing?– From the perspective of a manufacturing company, the

supply chain includes not only the steps involved in buying and bringing raw materials to the factory,

– but also those involved in manufacturing the finished goods, storing them and delivering them to the end user.

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Resource Requirements Planning– In the chapter 3, we have discussed that e-Logistics

also improves the delivery of goods and services at reduced cost through development of methods for supply chain management including advances in data management and increasingly sophisticated planning and scheduling systems.

– Planners take forecasts of demand for logistics and plan the supply to meet this demand. Such forecasts are often unreliable.

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Material Requirements Planning (MRP) – The way to get around the supply-demand problems is

to match (best-fit) the supply of logistics to actual demand.

– Based on the known, in some ways we could find out, we want the actual demand rather than using unreliable forecasts – this might seems be rather optimistic at the first sight.

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Material Requirements Planning (MRP) – Uses the master schedule, along with other

relevant information, to plan the supply of materials.

– It is used for dependent demands.

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The MRP functionsThree main sources of information for MRP:– Order planning and control: when to release orders and

for what quantity;– Priority planning and control: how the expected date of

availability compares to the need date of each item;– Capacity Planning requirements and development of

broad business plans.

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The MRP approachThree main sources of information for MRP:– Master production schedule (MPS): provides the

number of every stock item to be made every period / cycle / season;

– Bills of material (BOM): is a list of materials needed for every stock item;

– Inventory Status File (ISF): is a record showing the materials available.

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Material Requirements Planning (MRP) Material Requirements Planning (MRP)

Material Requirements Planning (MRP) system– A MRP system is a manufacturing planning tools;

computer-based production and inventory control system;

– to minimize the inventory while ensuring adequate materials available for productions;

– automation tools for order entry, sales and marketing, manufacturing, production scheduling and control, accounting, finance, human resources.

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Manufacturing Resources Planning Manufacturing Resources Planning (MRP II)(MRP II)

Moving to MRP II– Materials are only one of the resources; organisations

have to schedule others resources such as people, equipment, facilities, finances, transportation.

– The natural extension of MRP led to Manufacturing Resources Planning (MRP II).

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Manufacturing Resources Planning (MRP II) – While MRP or MRP I (we wouldn't’t refer PS as PS1

before the emerging of the PS2) address the issues of inbound logistics flow of the inventory; MRP II adds finance, marketing and somewhat integrated logistics;

– Increase customer satisfaction, improve delivery, better response, reduce inventory levels and costs and allow more flexibility.

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Manufacturing Resources Planning (MRP II) – MRP II provides an integrated system for

synchronizing all related functions within an organisation in the aspects of manufacturing.

– It links up all the schedules for all related functions and resources back to the master schedule.

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MRP II linking up logistics activities– Linking up all activities to master schedule could give a

very efficient logistics;– During the moving up from MRP to MRP II, many

companies see the difficulties. Many companies prefer to implement a partial systems where the MRP approach is still used to plan logistics activities;

– The partial system is ‘retitled’ as distribution resource planning (DRP) or logistics resource planning (LRP).

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The emergence: MRP MRP II ERP– The emergence of the MRP (material requirements

planning) to MRP II (manufacturing resources planning) and the next move of the MRP evolution would possibly embracing the processing, manufacturing and distribution.

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The ERP/MRP IntegrationThe ERP/MRP Integration

The ERP/MRP integration– This integration it embodied naturally made it attractive

to other functional components of the business – finance, human resources and project management.

– MRP II was found to be a more and more misleading term as it covered more and more extensive domains and it was therefore better ‘renamed’ ERP.

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Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)

ERP is the backbone of e-business– Market leaders turbocharged their business to run a

breakneck speed on a transactional backbone called Enterprise Resource Planning (ERP).

– ERP works like an information lubricant, facilitating the exchange data among corporate division through the unification of key processes.

– The first step in back-office transforming.

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Enterprise Resource Planning (ERP) Enterprise Resource Planning (ERP)

Elements of ERP– EPR is not a single system but a framework of

administrative applications (accounting and finance, human resources), manufacturing applications (production scheduling, planning), sales distribution (order entry) and integrated logistics.

– ERP unites core business processes – from order processing, production and delivery.

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ERP– The first step: effective service delivery require

integrated back-office system– Second wave: e-Commerce drives more ERP

demand.– ERP decision = enterprise architecture planning

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ERP in real world– Phase 1:

Structural functionalities Reliability Best practice functionalities

– Phase 2 Extension of core vertical functions Ease of implementation and rollouts Enhance processes functionalities

– Phase 3 Ease of use Value to customer through supply chain integration Low TCO (total cost of ownership)

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Distribution Resource Planning (DRP) Distribution Resource Planning (DRP)

Distribution Resource Planning (DRP)– DRP applies MRP II principles to the flow of finished

goods to field warehouses and customers.– Although MRP was improved by MRP II by catering

for both materials management and production scheduling; it does not cater for outbound movement of the logistics flow.

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Distribution Resource Planning (DRP)Distribution Resource Planning (DRP)

Distribution Resource Planning (DRP)– acts as a buffer or automatic synchronous control – by adjusting the order patterns – if inventory needs vary, respond more readily to

system-wide inventory needs and better deal with product availability and timeliness.

– DRP II further enhance the system by planning for the entire storage and movement of inventory by combining MRP II and DRP and you may call this DRP II.

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Distribution Resource Planning (DRP)Distribution Resource Planning (DRP)

The relationship between MRP II and DRPMarket 1

Customer FocusMarket 2



Customer Focus

DRP

Master production schedule

MRPI I

ERP

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Just-in-time (JIT)Just-in-time (JIT)

Just-in-time manufacturing can be defined as:– Produce and deliver finished goods just in time to be

sold, sub-assemblies just-in-time to be assembled into finished goods, fabricated parts just in time to go into sub-assemblies; and purchased materials just in time transformed into fabricated parts.

– JIT is a disciplined approach to improve manufacturing quality, flexibility and productivity through the elimination of waste and the total involvement of people.

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Emerging Integrated Logistics ConceptsEmerging Integrated Logistics Concepts

There are five concepts come to the forefront recently:– Service Response Logistics (SRL);– Quick Response Logistics (QRL);– Response Logistics Recovery (RLR);– Efficient Consumer Response (ECR) and– Reverse Logistics.

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Service Response Logistics (SRL)Service Response Logistics (SRL)

Service Response Logistics (SRL)– While traditional logistics focus on the product

movement; – Service response logistics addresses the coordination of

non-material activities to fulfill the service efficiently and effectively.

– Physical logistics and Service response logistics are dependent on each others;

– Integrated Logistics Process Fig. 4.1 [BOM2002]

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Service Response Logistics (SRL) functions– Service request for sales forecasting– Partnership development– Staff, equipment, facilities scheduling and capacity planning– Distribution channel selection– Data collection, pickup customer/parts/repair items– Data and physical storage, retrieval and management– Quality customer service, quality assurance, expediting, billing– Interfacing with trading partners– Information infrastructure planning– System administration and network administration– Personnel/customer movement, data/information movement– Customer reporting, service engineering, routing and scheduling to customer

transportation sites.

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Service Response Logistics (SRL) Model1. Establish discussions with the customer;2. Determine what the customer really needs;3. Determine if the firm can deliver customer needs;4. Commit to customer;5. Evaluate the customer’s response;6. Schedule the customer’s service delivery;7. Inform delivery partners concerning the schedule;8. Monitor the service delivery process;9. Counsel partners;

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Intermediaries in Service Response Logistics (SRL)– Agents– Retailers– Wholesalers– Franchises– Electronic channels

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Quick Response Logistics (QRL)Quick Response Logistics (QRL)

Quick Response Logistics (QRL)– Some QRL system are the EDI version of JIT.– QRL means reducing the order cycle. – Many retailers adopt QRL, products purchased with

the bar codes scanned, recording the inventory level.– Purchase orders are automatically generated and

electronically through e-PO to the suppliers.– with the exact department code, style, color and size.

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Quick Response Logistics (QRL)– The supplier then picks up the order for the reorder

items to refill the stock requirements;– and transported to the retails almost immediately.– Obviously, QRL reduces the order cycle. In addition, it

reduces costs and transcription errors. – Implementing QRL has positive impact to inventory

management. How?

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Quick Response Logistics (QRL)– To achieve the benefits of QRL, company must

establish partnerships and alliances – must be forged to trust and mutual dependency.

– In essence, alliances become a part of the horizontal pipelines where products flow seamlessly from suppliers to customers.

– Of course, powerful retailers may invert or tilt the pipeline.

– In any case, QRL system must be built with long term relationship between suppliers and retailers.

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Approaches to Quick Response Logistics (QRL)

QRL model based on trust and mutual dependency

customer

supplier

retailer

Power and Fear relationship

Trust and dependency relationship

customer

retailer

supplier

QRL model based on fear and power

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Response Logistics Recovery (RLR)Response Logistics Recovery (RLR)

Response Logistics Recovery (RLR)– The term Response Logistics Recovery (RLR) relates

to integrated logistics and customer service interface. – RLR can be defined how quick integrated logistics

reacts to service error and turn a mistake into a customer service advantages.

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Response Logistics Recovery (RLR)– Example 1: How would you handle your customer for a

a delay shipment by the carrier while you won’t want to let your customer unhappy?

– Example 2: What would you suggest if a customer returns a broken parts for replacing?

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Response Logistics Recovery (RLR)– This does not count into downtimes, it demonstrates the

responsiveness to customer needs.– Customer generally understand that mistakes happen –

as long as it not too often, it will be okay.– What really concerns them is how a supplier reacts to

the problem.

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Efficient Consumer Response (ECR)Efficient Consumer Response (ECR)

Efficient Consumer Response (ECR)– ECR was initially introduced in the grocery industry. – Like QRL, the goal of ECR is to reduce order cycle

time.– In ECR, the suppliers and retailers work closely

together to capture to point-of-sale information and then send back to the distribution channel.

– Partnerships and alliances are required to realise this benefits to reduce consumer price.

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Reverse LogisticsReverse Logistics

Reverse Logistics– Deals with products that flows in the opposite direction

from the standard logistics channel – the products and services flow back to the manufacturer.

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Email Response Management Email Response Management Systems(ERMS)Systems(ERMS)

Email Response Management Systems– are automatic email routing and response tools that allow you to

assign and match the most appropriate agent or workforce based on the expertise and skills availability.

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Email Response Management Email Response Management Systems(ERMS)Systems(ERMS)

Components of ERMS– Smart Email Parsing and Processing

Automatic email acknowledgement Intelligent scripting response Email processing workflow engine Natural language processor

– Intelligent Email Routing and Queuing Auto-routing to define queues based on priority, service request, department

and etc. Workload or skill-based routing assignment Workflow-driven (or rule-based) logical routing

– Effective Request Handling Dynamic response template Knowledge base Support SLA

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Customer Relationship Management (CRM) Customer Relationship Management (CRM) and Electronic Customer Relationship and Electronic Customer Relationship

Management (e-CRM)Management (e-CRM) Customer Satisfaction and Integrated

Logistics– The goals of this business framework are:

Use existing relationships to grow revenue; Use integrated information for excellent services; Introduce more repeatable sales processes and

procedures; Create new value and loyalty; Implement more proactive solutions strategy.

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Customer Relationship Management (CRM) Customer Relationship Management (CRM) and Electronic Customer Relationship and Electronic Customer Relationship

Management (e-CRM)Management (e-CRM)

Customer Satisfaction and Integrated Logistics– The three phases of CRM:

Acquisition Enhancement Retention

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The amalgamation of supply chain The amalgamation of supply chain management and customer relationship management and customer relationship

management (CRM)management (CRM) The amalgamation of supply chain

management and customer relationship management (CRM) can radically improve competitiveness.

Cost reductions and customer service enhancements – exlucded form old economy strategic thinking.

The objective of the right product in the right place at the right time and cost is accommodated to a greater extent than previously possible.

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management (CRM)management (CRM) eLogistics enables organisations to see the big picture by

capturing and sifting data for procurement and fulfilment. Ultimately management of the entire supply chain is e-enabled and logistics generated data can feed back into strategic and tactical decisions made by other parts of the organisation. The Internet ultimately provides access to true rather than forecast supply and demand information.

ELogistics also permits a closer integration of a company’s internal business systems with collaborative information from partners and web-based functions and information.

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management (CRM)management (CRM) eLogistics represents

– improved business processes, allowing for real-time visibility, seamless channel linkage and collaborative solutions in the supply chain.

– with more companies seeking success through the efficiency of their supply chains, logistics is now an issue for owners / senior managers as well as the shipping supervisor.

– a key competitive weapon.

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Amalgamation of SCM and CRM Amalgamation of SCM and CRM

The amalgamation of SCM and CRM– Improve competitiveness;– Cost reduction;– Enhance customer satisfaction– It is not mutually exclusive as in the ‘old economy’.

E-logistics enables organizations to see the big picture:– Capture and sift procurement and fulfillment;– and the ultimate management of supply chain is e-enabled – The Internet provides the access.

E-logistics provides a ‘closer’ integration of internal business system with external information thru collaboration

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Amalgamation of SCM and CRMAmalgamation of SCM and CRM

E-logistics represents the foundation for improved business processes: visibility, seamless channel and collaborative solutions;

E-logistics is in fact a key competitive weapon.

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5858CMP0394A e-Logistics Systems CMP0394A e-Logistics Systems

Autumn 2004 Coursework Autumn 2004 Coursework

Assessment– 30% Coursework– 70% Final Examination– To be submitted on the 10th Lecture 10.January.2005

* This coursework subjects to be final confirmation by HKBU SCE.

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Autumn 2004 CourseworkAutumn 2004 Coursework

Coursework You are a SCM manager of a company having logistics

requirement to achieve its competitiveness in the market. Based on the business requirement your company plays in the supply chain, devise your logistics strategy and implementation. You are required to produce a short report in a few pages as described in Part (A) to (D) of the question paper (or Lecture 4 Slides):

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Coursework Guidelines– The objective to your express your own ideas and to

demonstrate your understanding on the topic.– There is no limit in number pages and number of

words. A short report in a few pages could be around 2 or 3 pages or around 500 words. Lengthy report document is not encouraged; your report should not more than 1000 words.

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Suggested Document Outline– You can design your presentation document style. The

following is a suggested report presentation format for your reference.

Cover Page 1. Executive Summary2. Background/Overview3. Report Body Part (A)-(D)4. Recommendation/ConclusionReference and acknowledge any work from published or

unpublished material

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Coursework Guidelines (continued)– You are required to write-up a half-page summary on

the whole document – from the senior and top executive perspective.

– Block diagrams and figures are useful to describe your design and implementation.

– No plagiarism is allowed and no need.– You may reference to academic papers, journals,

periodicals, magazine, reference book, web site and URL.

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Thank you!Any Question?

Instructor: Timothy Kf AuEmail: [email protected]

URL: http://www.geocities.com/timothykfau/ cmp0394

CMP0394 e-Logistics Systems Instructor: Timothy Kf Au Email: [email protected] URL: cmp0394.

Documents

mrp mrp

inventory mrp

mrp system

mrp material requirements

mrp functions

mrp approach

mrp evolution

mrp resource requirements