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…