Supply Chain Management

Introduction:

“The 1990s have seen a dramatic change in the way that we do business. Rapid advancesin technology and increasing regulatory freedom have changed the rules of competition.Companies are now competing globally and traditional barriers between industries are breaking down. To cope with these changes and achieve superior performance, businessleaders are moving towards new business paradigms that allow their companies to work more closely with their traditional and new business partners to adapt to the rapidlychanging marketplace. This improved integration is the very essence of supply chainmanagement. Supply chain leaders are reconsidering the linkages, not only betweenfunctions within their own company, but with other organisations up and down the supplychain.” Supply chains are becoming more efficient and more responsive to the needs of increasingly demanding customers, driven by competitive pressures and supported bydevelopments in information technology (IT). IT plays a major role in integrating supplychains and managing them more effectively. Almost every industrial company is now considering the implementation of an advancedsystem to manage their supply chain more effectively, improve customer servicedramatically, and reduce costs as well. These systems are Advanced Planning andScheduling systems (APS) with marvellous names such as i2/Rhythm, Red Pepper andManugistics. With these systems it is possible to answer customer enquiries within seconds instead of hours or days. Speed is just one of the characteristics of APS. It promises that after implementation of APS, better throughput times, delivery times, inventory levels andutilisation rates result in higher levels of customer service and major reductions in costs. During the recent years system vendors have put much effort in improving thefunctionality of APS systems. But what is the true value of these concepts? Are they asrevolutionary as they sound? Implementations of these kinds of systems have dramaticconsequences for the organisation. Is it worth to implement these new software packages?

The objective of this paper is to map the characteristics of advanced planning andscheduling systems and to find out the (use) fulness of these systems. Therefore thefollowing problem has been formulated: “Why (and how) should organisations implement an Advanced Planning and Schedulingsystem?”

To solve this problem several questions will be answered:

What is supply chain management?What is supply chain integration?What is Advanced Planning and Scheduling?What is the difference between ASP and traditional planning systems?What are the current functionality’s of APS systems?What are the key success factors for implementation?

The integration of the Supply Chain:

“Like the medieval lords who built moats and walls around their castles manyorganisations have constructed artificial boundaries between themselves and the outsideworld. While these boundaries do not consist of water and bricks, they are just as difficultto surmount. More importantly, just as social evolution made castle walls obsolete; thenew success factors of speed, flexibility, integration, and innovation are making boundaries between organisations less relevant. In fact, hiding behind such boundariestoday can be more dangerous than venturing outside.”

Supply chain:

World class companies are now accelerating their efforts to align processes andinformation flows through their entire value-adding network to meet the risingexpectations of a demanding marketplace.

Some of the drivers for change that forces companies to overhaul their logistical structureare:

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Increased regional and global competition:

The most potent force driving companies to overhaul their supply chains is increasedcross border competition, regional and global. For many companies the competitive arenahas become worldwide, rather than national or regional.

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The role of the single market in Europe

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Europe’s single market has intensified competition by tearing down the last protective barriers. At the same time the single market is an important factor which enables supplychain integration across borders. The dismantling of frontier controls has led to the speed-up of road transport, which facilitates the switch from national to multi-countrydistribution centres.

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Shorter product life cycles:

The trend towards shrinking product life cycles force a change in logistic management asit augments the risk of being stuck with obsolete inventory.

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Changes in the market place:

National and cross border mergers and acquisitions in recent years have led to greater concentration of purchasing power in most sectors of industry. In the wholesale and retaildistribution the growth of powerful chains is squeezing out the independents.

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Pressure from smarter customers:

Major retailers and industrial end-users are becoming more sophisticated and moredemanding. They are reducing their supplier base and are working more closely with theremaining suppliers.