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ERP Course: Supply ChainChapter 9 from Mary Sumner
Peter Dologdolog [at] cs [dot] aau [dot] dkE2-201Information SystemsOctober 11, 2006
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2Peter Dolog, ERP Course, Supply Chains
Supply Chain
Supplier Manufacturing Distribution Retail Customer
Cash Flow
Information Exchange
Products Exchange
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3Peter Dolog, ERP Course, Supply Chains
Material vs. Customer Driven
Buy raw material
Make finishedProducts
Move goods to market
Sell throughretailers
Sell Customized
Products
Move to deliverybased on
consumption
Make only those products
for which there is a demand
Buy raw materials in line
with accurate production
requirements
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4Peter Dolog, ERP Course, Supply Chains
Distributed Independent Companies
Sales(Company A)
Marketing(Company B)
Manufacturing(Company C) Warehousing
(Company D)
Services(Company E)
Shipping(Company F)
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5Peter Dolog, ERP Course, Supply Chains
Examples
Wall Mart – links to suppliers and when to restock the wall mart inventory
Ford and General Motors – dierect link to supplier order entry systems
Hallmark – continuos replenishment for having right products on retailers stores
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6Peter Dolog, ERP Course, Supply Chains
Shared Information
Consumers: demand + forecastRetailers: on-hand inventory, consumer sales dataDistributors: on-hand inventory, retailers’ orders,
shipping noticesCarriers: in-transit inventory, planned shipments,
delivery schedulesManufacturers: on-hand inventory, material
production schedule, actual production completed, distributors’ orders, shipping notices
Suppliers: on-hand inventory, material production schedule, actual production completed, manufacturers’ orders, shipping notices
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7Peter Dolog, ERP Course, Supply Chains
Goals of Supply Chain Management
To focus just on competencies which company is good at
Outsourcing other activitiesTo reduce costsTo reduce inventoryCycle time improvementCustomer service
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8Peter Dolog, ERP Course, Supply Chains
Issues addressed
Strategy – what level of customer service is neededProcess – how can linkage be established
throughout the processesOrganization – e.g. which level of functional
integration is neccessaryTechnology – e.g. data integration
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9Peter Dolog, ERP Course, Supply Chains
Partnerships
In the past – negotiating with several suppliers => long times
Nowadays – partnerships between suppliers and consumers, vendor managed inventory
Retail decreases cost associated with inventory managements
Manufacturer benefits from larger volumes of orders from retailers
Manufacturer pro-actively monitors stocks of the retailer and compares them to placed orders
Customer benefits from on-time delivery
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10Peter Dolog, ERP Course, Supply Chains
Strategies for coordination
Open MarketCooperationSingle-Level CoordinationMultiple-level CoordinationFull Coordination
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11Peter Dolog, ERP Course, Supply Chains
eBusiness
Virtual value chainSelling and buying products electronicallyActivities supported:
• Inbound logistics lower costs• Customized productions – low costs• Faster communication• Marketing and sales – help for newcommers• Faster support for customer service
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12Peter Dolog, ERP Course, Supply Chains
Coca-Cola example
Inbound logistics – connections between Coke suppliers
Production – Coke and bottlesManagement – worldwide communicationMarketing and sales – cellular linked vending
machinesCustomer support – provide more timely delivery to
trade customers
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13Peter Dolog, ERP Course, Supply Chains
Transaction Contract Partnership
Basis of Interaction
Buyer/seller excange
Prior contracts govern exchange
collaborative goals and processes (common product design)
Level of Integration low medium high
Coordinationbased on supply and demand
contract determines level of coordination
interogranizational processes
Information Exchange
one-way exchange
information exchange defined in contract
two-way, interactive exchange of information
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14Peter Dolog, ERP Course, Supply Chains
Business-to-Business
eProcurementRealizing business between companies electronicaly
on the webeProcurement web sites offering services for
registered usersClustered according to offered servicesSystematic sourcingHot spot sourcingManufacturingReduce transactions costs
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15Peter Dolog, ERP Course, Supply Chains
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16Peter Dolog, ERP Course, Supply Chains
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17Peter Dolog, ERP Course, Supply Chains
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18Peter Dolog, ERP Course, Supply Chains
eProcurement
B2B purchase and sale of procucts and servicesLookups for buyers and sellersPrices can be specified or provided for bidsVolume discountsSpecial offersSome level of automation through APIs
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19Peter Dolog, ERP Course, Supply Chains
eProcurement types
Outsources ERP to the webe-MRO (maintanance, repair and operating –
customer support)e-sourcing – identifying new suppliers on the
internete-tendering – analysis of the market based on send
and received messages on internete-reverse auctioninge-informing – distributing purchasing iformation
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20Peter Dolog, ERP Course, Supply Chains
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21Peter Dolog, ERP Course, Supply Chains
Extranet Extranet
AmazonERP
Intranet
Virgin RecordsIntranet
WOMERP
Intranet
NokiaERP
Intranet
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22Peter Dolog, ERP Course, Supply Chains
Roles in eProcurement
Administrative managerPurchasing managerVendorAccounting
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23Peter Dolog, ERP Course, Supply Chains
Business Inteligence
ERP creates raw dataCollection and aggregation to datamarts and
datawarehousesUsing multidimensional data structures to analyse
dataData mining techniques
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24Peter Dolog, ERP Course, Supply Chains
Questions to be Answered by BI
What are characteristics of potential defectors in case of grocery stores
Who are the most profitable customersWhat is an effectiveness of various marketing
programsWhich customers are best prospects for credit card
promotionsWhich credit limits to establish for various
applicantsWhat is a long term value of various customers