MBUS 626 Technology Briefing

Web Based Supply Chain Management

Chris Nicol

Betsy Vo

Ryan Gee

Agenda

• Overview of Supply Chain Management (SCM)

• Benefits of SCM

• SCM Technology

• Conclusions

Manufacturers Distributors/Converters

Suppliers/Raw Materials

Customers

Information Flows

Goods Flow

Retailers

The Traditional Supply Chain

• Enterprise attempt to optimize individual processes often with conflicting goals

Purchasing Manufacturing Distribution Customer Service/Sales

Few change- overs

Stable schedules

Long run lengths

High inventories

High service levels

Regional stocks

SOURCE MAKE DELIVER SELL

Low pur-chase price

Multiple vendors

Low invent-ories

Low trans-portation

Traditional SC Problems

• SCM deals largely with cross-functional and inter-enterprise business processes to speed product, information and fund flows up and down a supply chain

Manufacturer

Distributors/Wholesalers

Consumers

Suppliers Retailers

Goods Flows Information Flows

Funds Flows

Overview of SCM

*Source: PRTM Integrated Supply Chain Benchmarking Study, 1997

Typical Quantified Benefits from Integrated the Supply Chain

Delivery Performance 16%-28% Improvement

Inventory Reduction 25%-60% Improvement

Fulfillment Cycle Time 30%-50% Improvement

Forecast Accuracy 25%-80% Improvement

Overall Productivity 10%-16% Improvement

Lower Supply-Chain Costs 25%-50% Improvement

Fill Rates 20%-30% Improvement

Improved Capacity Realization

10%-20% Improvement

• More frequent planning means responsive to changing customer needs while decreasing inventories

Time Time

AverageSupply

AverageSupply

Planning Cycle Planning

Cycle

Lower Inventories & Lead Times

Manufacturer

Wholesale

Distributors

Consumers

Multi-tier

SuppliersRetaile

rs

Reduced Volatility

Time

Sales

Sales

Time

Sales

Time

Sales

Time

Bull Whip Effect

• Move from push to pull manufacturing

Manufacturers

Distributors/ Wholesalers

Consumers

Suppliers

Retailers

Manufacturers

Distributors/ Wholesalers

Consumers

Suppliers

Retailers

• Make what we will sell, not sell what we will make!!

Lower Costs

• Optimization of all supply chain activities

Supply Chain Optimization

Synchronized, Concurrent Planning

DemandPlanning

Distribution

Planning

Manufacturing Planning

Procurement

Planning

Synchronized, Sequential Planning

Forecasting

Distribution

Planning

Manufacturing Planning

Procurement

Planning

Total Optimization

Purchasing Manufacturing DistributionCustomer Service

/Sales

Available-to-Promise (ATP) Capable-to-Promise (CTP)

• Move from functional silos to process-oriented business processes (e.g., order-to-cash, cash-to-cash)

Integrated Sales and Operations Planning (S&OP)

SOURCE MAKE DELIVER SELL

SCM and e-Business Practices

Barriers

• Integration of Systems– Legacy systems

• Security Issues

• Low Cost Technology– EDI vs. Internet

• APS and e-business technology supports best SCM practices– Advanced Planning & Scheduling Systems– XML (Extensible Markup Language) enabled internet

MRP SCM APS and e-business

SCM Technology

• Model factory production system– material requirements & constraints– plant capacity limitations– additional resource limitations

• Evaluate existing or new production plans• Provide production scheduling• Capable of expansion to entire supply chain• Provide for internal and external integration

APS

• Extensible Markup Language– Huge Advantage over EDI– Huge Advantage over HTML

• XML Users– Heavily used in medical industry– Microsoft is employing it everywhere

• Provides for external collaboration via sharing of data regardless of application

• Provides Machine-to-Machine Interaction over the Internet

XML

Manufacturers

Wholesale Distributors

Suppliers

Customers

Information Flows

Goods Flow

Future Internet-Connected Supply Chain

Supplier Exchanges

Customer Exchanges

LogisticsExchanges

Contract Manufacturers

Logistics Providers

Virtual Manufacturers

Retailers

Conclusions

• E-business technology will tear down the walls inside companies

• Will also allow companies to do joint planning and scheduling with their supplier’s suppliers and customer’s customers

• The Internet will help foster the rapid growth of dynamic supply chain trading communities

Leaders

• Software Companies– IT2 Technologies– PeopleSoft– SAP

• Industries– Automotive– Dell Computers– Lucent Technologies