Description
Software that supports activities along the supply chain and need for software integration, ERP and understand the relationships between ERP and SCM software. It also explains order fulfillment problems and solutions in e-commerce. It also covers issues of global deployment of supply chain management.
SUPPLY CHAIN MANAGEMENT AND ENTERPRISE RESOURCE PLANNING
Chapter Objectives
? ?
Concept of the supply chain, its importance, and management Problems of managing and some innovative solutions.
?
Software that supports activities along the supply chain and need for
software integration
? ? ?
ERP and understand the relationships between ERP and SCM software. Order fulfillment problems and solutions in e-commerce EC solving supply chain problems
?
?
Partner relationship management.
Process and issues of global supply chain management.
Supply and Value Chains
Supply chain refers to the flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses (Value Chain), to the final consumer (Demand Chain). It includes tasks such as purchasing, payment flow, materials handling, production planning & control, logistics & warehousing, inventory control, and distribution. When it is managed electronically it is referred to as an e-supply chain.
?
?
? ?
Supply Chain Flows
Materials flows are all physical products, new materials, and supplies that flow along the chain. Information flows relates to all data associated with demand, shipments, orders, returns and schedules. Financial flows include all transfers of money, payments, credit card information, payment schedules, e-payments and creditrelated data.
Supply Chains contribute to increased profitability and competitiveness
Automotive Supply Chain
Supply and Value Chains
?
Supply Chains Components
The supply chain involves three segments:
? ? ?
Upstream, where sourcing or procurement from external suppliers occur Internal, where packaging, assembly, or manufacturing take place Downstream, where distribution or dispersal take place, frequently by external distributors.
?
movement of information and money and the procedures supporting the movement of a product or a service.
?
Organizations and individuals are also part of the chain
Supply Chains Classifications
?
? ? ? ?
There are several major types of supply chain
Integrated make-to-stock Continuous replenishment Build-to-order Channel assembly.
“Supply” Chain
Value Chain
Demand Chain
Supply Chain Problems
Adding value along the chain is essential for competitiveness, however problems exist especially in complex or long chains and in cases where many business partners are involved. due to • uncertainties • need to coordinate several activities, internal units, and business partners.
• Demand forecasts are a major source of uncertainties
• • • • • Competition Prices Weather conditions Technological development Customer confidence Machine failures Road conditions Shipments
•
Uncertainties exist in delivery times
• • •
•
Quality problems may also create production delays
Bullwhip Effect
erratic shifts in orders up and down the supply chain
price fluctuation
poor demand forecasting Bullwhip Effect erratic shifts in orders up and down the supply chain
order batching
rationing within the chain
Even slight demand uncertainties and variability become magnified if each distinct entity on the chain, makes ordering and inventory decisions with respect to its own interest above those of the chain
Distorted information can lead to tremendous inefficiencies •excessive inventories •poor customer service •lost revenues •ineffective shipments •missed production schedules.
A common way to solve the bullwhip problem is by sharing information along the supply chain through EDI, extranets, and groupware
technologies. For example employing a vendor-managed inventory (VMI)
strategy, the vendor monitors inventory levels and when it falls below the threshold for each product this automatically triggers an immediate shipment.
Supply Chain Solutions
Information sharing among supply chain partners (c-commerce) sometimes referred to as the collaboration supply chain is one method to overcome problems in the flow. Others are:
•
• • • •
Optimal Inventory Levels
Supply Chain Coordination and Collaboration Supply Chain Teams Performance Measurement and Metrics Various IT-Assisted Solutions
• • • • wireless technology optimal shipping plans strategic partnerships with suppliers just-in-time
Computerized Supply Chains
The supply chain process is intertwined with the computerization of its activities. People have wanted to automate the processes along the chain to reduce cost, expedite processing, and reduce errors.
•
Material requirements planning (MRP) essentially integrates production, purchasing, and inventory management of interrelated products. Manufacturing resource planning (MRP II), enhanced MRP methodology by adding labor requirements and financial planning. Enterprise resource planning (ERP) further integrates the transaction processing as well as other routine activities in the entire enterprise.
• •
•
Integrations continues along several paths
• • • functional areas Combining transaction processing and decision support Business intelligence
•
CRM software
RFID
Research says worldwide RFID spending will jump from $300 million in 2004 to $2.8 billion by 2009, and that most will centre on the global supply chain
(EPC Global the Source January 2005)
An AMR Research study found early EPC/RFID adopters in the retail and consumer packaged goods (CPG) industries have lowered their supply
chain costs between three and five percent.
UPC= A class of product
EPC= specific instance of a product
RFID Capabilities
RFID Capabilities
2003
Source: http://www.symbol.com/products/rfid/rfid_next_generation.html
Supply Chains Benefits
• Tangible benefits:
• • • • • • • • • • • • Inventory reduction Personnel reduction Productivity improvement Order management improvement Financial-close cycle improvements IT cost reduction Procurement cost reduction Cash management improvements Revenue/profit increases Transportation logistics cost reduction Maintenance reduction On-time delivery improvement.
•
Intangible benefits:
• • • • • • • • • • Information visibility New/improved processes Customer responsiveness Standardization Flexibility Globalization Business performance Reduction in duplication of entries controls and reconciliation are enhanced rapid assimilation of data into the organization
Systems can be integrated internally and externally. Internal integration refers to integration between applications inside a company, whereas external integration refers to integration of applications among business partners.
Back and front office integration in a value chain
Collaborative Planning, Forecasting, and Replenishmentmore companies in a ? Process for two or
supply chain to synchronize their demand forecasts into a single plan to meet customer demand ? Parties electronically exchange
? ? ? ? ?
past sales trends point-of-sale data on-hand inventory scheduled promotions forecasts
CPRF
Collaborative Planning, Forecasting and Replenishment
SCOR Model Processes
Make Transform product to a finished state to meet planned or actual demand Deliver Provide products to meet demand, including order management, transportation and distribution Return Return products, post-delivery customer support
Plan Develop a course of action that best meets sourcing, production and delivery requirements
Source Procure goods and services to meet planned or actual demand
SCOR: Customer Facing
Performance Performance Definition Attribute Metric
Supply Chain Delivery Reliability Delivery performance Percentage of orders delivered on time and in full to the customer
Fill rate
Perfect order fulfillment
Percentage of orders shipped within24 hours of order receipt
Percentage of orders delivered on time and in full, perfectly matched with order with no errors
Supply Chain Order Number of days from order receipt to Responsivene fulfillment lead customer delivery ss time
Supply Chain Flexibility Supply chain Number of days for supply chain to response time respond to an unplanned significant change in demand without a cost penalty of days to achieve an Production Number flexibility unplanned 20% change in orders without a cost penalty
SCOR: Internal Facing
Performance Performance Definition Attribute Metric Supply Chain Cost
Supply chain management cost of goods Cost sold Value-added productivity Warranty/return s processing cost Direct and indirect cost to plan, source and deliver products and services Direct cost of material and labor to produce a product or service Direct material cost subtracted from revenue and divided by the number of employees, similar to sales per employee Direct and indirect costs associated with returns including defective, planned maintenance and excess inventory
Supply Chain Asset Management Efficiency
Cash-to-cash cycle time
Inventory days of supply Asset turns
Number of days that cash is tied up as working capital
Number of days that cash is tied up as inventory Revenue divided by total assets including working capital and fixed assets
Enterprise Resource Planning
ERP = Process of planning & managing all resources & their use in the entire enterprise.
Leading ERP software producers SAP, Oracle, J.D. Edwards, Computer Associates, People Soft
MAIN OBJECTIVE of ERP
? to integrate all departments & functions across a company onto a single computer system.
ERP and Supply Chains
ERP or enterprise systems control all major business processes with a single software architecture in real time.
• It is comprised of a set of applications that automate routine backend operations:
• • • • • • such as financial management inventory management Scheduling order fulfillment cost control accounts payable and receivable,
• It includes front-end operations such as:
• POS • Field Sales • Service
• It also increases efficiency, improves quality, productivity, and profitability.
Enhances the Supply Chain
Integrating – ERP and SCM
Creating an ERP/SCM integration model allows companies to quickly assess the impact of their actions on the entire supply chain, including customer demand. By providing intelligent decision support and business intelligence capabilities, the analytical SCM systems complement the ERP system.
i2 corporations
Manugistics SCM solutions
Build-to-order cars over the Internet
ERP application including SCM module (Colgate-Palmolive)
Second Generation ERP: DSS+CRM + E-Com+ Datawarehousing + Datamining + KM + PLM
E-Commerce and Supply Chains
E-commerce is emerging as a superb tool for providing solutions to problems along the supply chain. Many supply chain activities, from taking customers' orders to procurement, can be conducted electronically.
• E-commerce
• can digitize some products • can replace all paper documents
• can replace faxes and telephone calls with electronic messaging
• Enhances collaboration and information sharing • typically shortens the supply chain and minimizes inventories • facilitates customer service • introduces efficiencies into buying and selling • enables faster, cheaper, and better communication, collaboration, and discovery of information
A major role of EC is to facilitate buying and selling along all segments of the supply chain.
• Upstream Activities improve the upstream supply chain through e-procurement
• Internal Supply Activities from entering purchase orders, to recording sales, to order fulfillment, to tracking shipments, are usually conducted over a corporate intranet
• Downstream Activities enhance the activity downstream activities by providing online ordering • Vertical exchanges combine upstream and downstream EC supply chain activities. These B2B exchanges, provide a medium where buyers and sellers can meet.
Order fulfillment
Online Order Fulfillment & Logistics Outsourcing Innovative Solutions to Supply Chain Problems Automated Warehouses Options for Dealing with Returns Same day, same hour delivery
Partner Relationship Management
Every company that has business partners has to manage the relationships with them. Information needs to flow between the firms and constantly updated and shared.
• Manual methods include; phone, fax, and mail • EDI is typically used by large corporations • EC PRM functions include:
•partner profiles •partner communications •lead management (of clients) •targeted information distribution •connecting the extended enterprise •partner planning •centralized forecasting •group planning •e-mail •price lists
Partner Relationship Management
SRM: Supplier Relationship Management
Global Supply Chains
Supply chains that involve suppliers and/or customers in other countries are referred to as global supply chains.
• Companies go global (disperse the value chain) for a variety of reasons.
• lower costs of materials, products, services and labor • • • • • • • availability of products that are unavailable domestically the firm's global strategy technology available in other countries high quality of products intensification of global competition the need to develop a foreign presence to increase sales fulfillment of counter trade.
Global supply chains are usually longer than domestic ones, and more complex. Therefore, additional uncertainties are likely.
doc_695182443.pptx
Software that supports activities along the supply chain and need for software integration, ERP and understand the relationships between ERP and SCM software. It also explains order fulfillment problems and solutions in e-commerce. It also covers issues of global deployment of supply chain management.
SUPPLY CHAIN MANAGEMENT AND ENTERPRISE RESOURCE PLANNING
Chapter Objectives
? ?
Concept of the supply chain, its importance, and management Problems of managing and some innovative solutions.
?
Software that supports activities along the supply chain and need for
software integration
? ? ?
ERP and understand the relationships between ERP and SCM software. Order fulfillment problems and solutions in e-commerce EC solving supply chain problems
?
?
Partner relationship management.
Process and issues of global supply chain management.
Supply and Value Chains
Supply chain refers to the flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses (Value Chain), to the final consumer (Demand Chain). It includes tasks such as purchasing, payment flow, materials handling, production planning & control, logistics & warehousing, inventory control, and distribution. When it is managed electronically it is referred to as an e-supply chain.
?
?
? ?
Supply Chain Flows
Materials flows are all physical products, new materials, and supplies that flow along the chain. Information flows relates to all data associated with demand, shipments, orders, returns and schedules. Financial flows include all transfers of money, payments, credit card information, payment schedules, e-payments and creditrelated data.
Supply Chains contribute to increased profitability and competitiveness
Automotive Supply Chain
Supply and Value Chains
?
Supply Chains Components
The supply chain involves three segments:
? ? ?
Upstream, where sourcing or procurement from external suppliers occur Internal, where packaging, assembly, or manufacturing take place Downstream, where distribution or dispersal take place, frequently by external distributors.
?
movement of information and money and the procedures supporting the movement of a product or a service.
?
Organizations and individuals are also part of the chain
Supply Chains Classifications
?
? ? ? ?
There are several major types of supply chain
Integrated make-to-stock Continuous replenishment Build-to-order Channel assembly.
“Supply” Chain
Value Chain
Demand Chain
Supply Chain Problems
Adding value along the chain is essential for competitiveness, however problems exist especially in complex or long chains and in cases where many business partners are involved. due to • uncertainties • need to coordinate several activities, internal units, and business partners.
• Demand forecasts are a major source of uncertainties
• • • • • Competition Prices Weather conditions Technological development Customer confidence Machine failures Road conditions Shipments
•
Uncertainties exist in delivery times
• • •
•
Quality problems may also create production delays
Bullwhip Effect
erratic shifts in orders up and down the supply chain
price fluctuation
poor demand forecasting Bullwhip Effect erratic shifts in orders up and down the supply chain
order batching
rationing within the chain
Even slight demand uncertainties and variability become magnified if each distinct entity on the chain, makes ordering and inventory decisions with respect to its own interest above those of the chain
Distorted information can lead to tremendous inefficiencies •excessive inventories •poor customer service •lost revenues •ineffective shipments •missed production schedules.
A common way to solve the bullwhip problem is by sharing information along the supply chain through EDI, extranets, and groupware
technologies. For example employing a vendor-managed inventory (VMI)
strategy, the vendor monitors inventory levels and when it falls below the threshold for each product this automatically triggers an immediate shipment.
Supply Chain Solutions
Information sharing among supply chain partners (c-commerce) sometimes referred to as the collaboration supply chain is one method to overcome problems in the flow. Others are:
•
• • • •
Optimal Inventory Levels
Supply Chain Coordination and Collaboration Supply Chain Teams Performance Measurement and Metrics Various IT-Assisted Solutions
• • • • wireless technology optimal shipping plans strategic partnerships with suppliers just-in-time
Computerized Supply Chains
The supply chain process is intertwined with the computerization of its activities. People have wanted to automate the processes along the chain to reduce cost, expedite processing, and reduce errors.
•
Material requirements planning (MRP) essentially integrates production, purchasing, and inventory management of interrelated products. Manufacturing resource planning (MRP II), enhanced MRP methodology by adding labor requirements and financial planning. Enterprise resource planning (ERP) further integrates the transaction processing as well as other routine activities in the entire enterprise.
• •
•
Integrations continues along several paths
• • • functional areas Combining transaction processing and decision support Business intelligence
•
CRM software
RFID
Research says worldwide RFID spending will jump from $300 million in 2004 to $2.8 billion by 2009, and that most will centre on the global supply chain
(EPC Global the Source January 2005)
An AMR Research study found early EPC/RFID adopters in the retail and consumer packaged goods (CPG) industries have lowered their supply
chain costs between three and five percent.
UPC= A class of product
EPC= specific instance of a product
RFID Capabilities
RFID Capabilities
2003
Source: http://www.symbol.com/products/rfid/rfid_next_generation.html
Supply Chains Benefits
• Tangible benefits:
• • • • • • • • • • • • Inventory reduction Personnel reduction Productivity improvement Order management improvement Financial-close cycle improvements IT cost reduction Procurement cost reduction Cash management improvements Revenue/profit increases Transportation logistics cost reduction Maintenance reduction On-time delivery improvement.
•
Intangible benefits:
• • • • • • • • • • Information visibility New/improved processes Customer responsiveness Standardization Flexibility Globalization Business performance Reduction in duplication of entries controls and reconciliation are enhanced rapid assimilation of data into the organization
Systems can be integrated internally and externally. Internal integration refers to integration between applications inside a company, whereas external integration refers to integration of applications among business partners.
Back and front office integration in a value chain
Collaborative Planning, Forecasting, and Replenishmentmore companies in a ? Process for two or
supply chain to synchronize their demand forecasts into a single plan to meet customer demand ? Parties electronically exchange
? ? ? ? ?
past sales trends point-of-sale data on-hand inventory scheduled promotions forecasts
CPRF
Collaborative Planning, Forecasting and Replenishment
SCOR Model Processes
Make Transform product to a finished state to meet planned or actual demand Deliver Provide products to meet demand, including order management, transportation and distribution Return Return products, post-delivery customer support
Plan Develop a course of action that best meets sourcing, production and delivery requirements
Source Procure goods and services to meet planned or actual demand
SCOR: Customer Facing
Performance Performance Definition Attribute Metric
Supply Chain Delivery Reliability Delivery performance Percentage of orders delivered on time and in full to the customer
Fill rate
Perfect order fulfillment
Percentage of orders shipped within24 hours of order receipt
Percentage of orders delivered on time and in full, perfectly matched with order with no errors
Supply Chain Order Number of days from order receipt to Responsivene fulfillment lead customer delivery ss time
Supply Chain Flexibility Supply chain Number of days for supply chain to response time respond to an unplanned significant change in demand without a cost penalty of days to achieve an Production Number flexibility unplanned 20% change in orders without a cost penalty
SCOR: Internal Facing
Performance Performance Definition Attribute Metric Supply Chain Cost
Supply chain management cost of goods Cost sold Value-added productivity Warranty/return s processing cost Direct and indirect cost to plan, source and deliver products and services Direct cost of material and labor to produce a product or service Direct material cost subtracted from revenue and divided by the number of employees, similar to sales per employee Direct and indirect costs associated with returns including defective, planned maintenance and excess inventory
Supply Chain Asset Management Efficiency
Cash-to-cash cycle time
Inventory days of supply Asset turns
Number of days that cash is tied up as working capital
Number of days that cash is tied up as inventory Revenue divided by total assets including working capital and fixed assets
Enterprise Resource Planning
ERP = Process of planning & managing all resources & their use in the entire enterprise.
Leading ERP software producers SAP, Oracle, J.D. Edwards, Computer Associates, People Soft
MAIN OBJECTIVE of ERP
? to integrate all departments & functions across a company onto a single computer system.
ERP and Supply Chains
ERP or enterprise systems control all major business processes with a single software architecture in real time.
• It is comprised of a set of applications that automate routine backend operations:
• • • • • • such as financial management inventory management Scheduling order fulfillment cost control accounts payable and receivable,
• It includes front-end operations such as:
• POS • Field Sales • Service
• It also increases efficiency, improves quality, productivity, and profitability.
Enhances the Supply Chain
Integrating – ERP and SCM
Creating an ERP/SCM integration model allows companies to quickly assess the impact of their actions on the entire supply chain, including customer demand. By providing intelligent decision support and business intelligence capabilities, the analytical SCM systems complement the ERP system.
i2 corporations
Manugistics SCM solutions
Build-to-order cars over the Internet
ERP application including SCM module (Colgate-Palmolive)
Second Generation ERP: DSS+CRM + E-Com+ Datawarehousing + Datamining + KM + PLM
E-Commerce and Supply Chains
E-commerce is emerging as a superb tool for providing solutions to problems along the supply chain. Many supply chain activities, from taking customers' orders to procurement, can be conducted electronically.
• E-commerce
• can digitize some products • can replace all paper documents
• can replace faxes and telephone calls with electronic messaging
• Enhances collaboration and information sharing • typically shortens the supply chain and minimizes inventories • facilitates customer service • introduces efficiencies into buying and selling • enables faster, cheaper, and better communication, collaboration, and discovery of information
A major role of EC is to facilitate buying and selling along all segments of the supply chain.
• Upstream Activities improve the upstream supply chain through e-procurement
• Internal Supply Activities from entering purchase orders, to recording sales, to order fulfillment, to tracking shipments, are usually conducted over a corporate intranet
• Downstream Activities enhance the activity downstream activities by providing online ordering • Vertical exchanges combine upstream and downstream EC supply chain activities. These B2B exchanges, provide a medium where buyers and sellers can meet.
Order fulfillment
Online Order Fulfillment & Logistics Outsourcing Innovative Solutions to Supply Chain Problems Automated Warehouses Options for Dealing with Returns Same day, same hour delivery
Partner Relationship Management
Every company that has business partners has to manage the relationships with them. Information needs to flow between the firms and constantly updated and shared.
• Manual methods include; phone, fax, and mail • EDI is typically used by large corporations • EC PRM functions include:
•partner profiles •partner communications •lead management (of clients) •targeted information distribution •connecting the extended enterprise •partner planning •centralized forecasting •group planning •e-mail •price lists
Partner Relationship Management
SRM: Supplier Relationship Management
Global Supply Chains
Supply chains that involve suppliers and/or customers in other countries are referred to as global supply chains.
• Companies go global (disperse the value chain) for a variety of reasons.
• lower costs of materials, products, services and labor • • • • • • • availability of products that are unavailable domestically the firm's global strategy technology available in other countries high quality of products intensification of global competition the need to develop a foreign presence to increase sales fulfillment of counter trade.
Global supply chains are usually longer than domestic ones, and more complex. Therefore, additional uncertainties are likely.
doc_695182443.pptx