Suply Chain Management

Supply Chain
Management
López Rodríguez Andrés
Ramón
González Ramón José Rodolfo
Montiel Hernández Martin
Moreno Juárez Daniel
BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

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Supply chain
management
 Definition Content
 Origin
 House of Supply Chain Management
 Example
 Advantage – Disadvantage
 Activities-Functions
 Principles of supply chain management

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Supply chain management (SCM)
Definition
It is the management of a network of interconnected
businesses involved in the ultimate provision of product
and service packages required by end customers.
Supply Chain Management spans all movement and

storage of raw materials, work-in-process inventory, and
finished goods from point-of-origin to point-of-
consumption

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Supply chain management
(SCM)
The classic objective of logistics is to be able to have the
right products in the right quantities at the right place at the
right moment at minimal cost. Figure translates this overall
objective into four main areas of concern within supply chain
management.

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(SCM)

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(SCM)

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Origin
s
1957 1982 The Term SCM has been
Channel research created by two consultants,
(Alderson) Oliver und Webber
1959
Location and Control of
inventories (Hannsmann)
1969
Collaboration and
Cooperation (Bowersox)
1975
Hierachical Production Planning
(Hax und Meal)

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House of Supply Chain
Management SCM
Competitiveness
Customer Service
Integration Coordination
Choice of partners Use of information

and communication
Network organization techonology
and collaboration Process Orientation
leadership Advanced Planning
Foundations
Logistics, marketing, operation research, organizationall theory

Purschasing and suplly

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Customer
Service
Is a multi – dimensional notion, there are three elements of customer
service
•Pre- transaction. Elements relate to a company’s activities preceding

a contract
•Transaction. Elements are all those wich contribute to order fullfilment

in the eyes of a customer
•Post – transaction element. Elements mostly concern the service once

the order is fulfilled

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Integrati
on
A supply chain in the broad sense consist of several legally separeted
Firms collaborating in the generation of a product or service with the
aim of improving the competitiveness of a supply chain as a whole.
Integration refers to the special building blocks that cause these firms to
collaborate in the log term.
1. Choice of partners
2. Network organization and inter-organizational collaboration
3. Leadership

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Integrati
on
1. Choice of
partners
Start with analyzing the activities associated with generation a product or
service for a certain market segment.
Firstly, activities will be assigned to existing members of a supply chain, if

these related tho their core competencies.
Secondly, activities relating to standard products and service widely available

on the market.
Thirdly, for all remaining activities, a partner to join the supply chain has to
Be looked for in the course of make-or-buy decision procedure

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Integrati
on
2. Network
Organisation
From the perspective of organization thery, supply chains are a special
Form of a network organization. They consist of loosely coupled,
independent
actor with equal rights.
•Their organizational structure is adapted dynamically according to the task

to be performed und the aims of the network organization as a whole.
Inter organizational collaboration is a necessity for an effective supply chain
Alttough legally independent, entities wothin a supply chain are

economically
depedent on each other. Obviosly the structure of a supply chain will remain

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Integrati
on
3.
Leadership
Being, is a delicate theme in light of the ideal of self-organizing, poly-centric
actors forming a supply chain, At least some decisions should be made for
the supply chain as a whole.
A foca company is usually a member having the largest power, the best
know-how of products and process or has the gratest share of valued
created
during order fulfilment.
On other hand, a steering committe may be introduce, consisting of

representatives of all members of supply chain. The rules of decision-
marking

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Coordinati
on
The coordination of information, material und financial flows, the
second
Main component of SCM, comprises three bulding blocks:
•Utilization of information and communication technology
•Process orientation
•Advanced planning

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Coordinati
on
1. Utilization of information and communication
technlogy
Advances in information technology (IT) made it possible to process
Information at differet locations in the supply chain and thus chain and
thus enable the application of advanced planning.
Communicationvia electronic data interchange (EDI) can be

established
via private und public nets. Members within a supply chain can thus
be
Informed instantaneously and cheaply.

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Coordinati
on
2. Process
orientation
Aims at coordinating all the activities involved in order fulfilment in the most
efficient way. It starts with an analysis of the existing supply chain, the
current allocation of activities to its members.
Key performance indicators can reveal weaknesses, bottlenecks and waste

and waste within a supply chain, especially at the interface between its
members. As a result, some activities will be subject to improvement efforts,
while some other may be reallocated.

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Coordinati
on
3. Advanced
planning
Incorporates long-term, mid-term and short-term planning levels.

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A Supply Chain for Beer

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Advantage -Disadvantage

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Supply chain
Uncertainty
ü Variability stems from uncertainty in forecasts, lead times, price
fluctuations, etc.
ü Inventory is a form of insurance
ü Distorted or erroneous information is one of the main causes of

uncertainty

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Supply chain
Uncertainty
 Supply Chains Are More Complex, Longer, and Harder to
Manage
 Increased Competition is Shrinking Margins, While
Customer Loyalty is Fleeting
 For Many Products, Profitability is Greatest Right After New
Product Introduction
 Product Success is More and More a Matter of Supply Chain
Success

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Company without adapting to
system
 More Manpower
◦ Salaries
◦ Time in converting fax and paperwork to electronic data
◦ Time in tracking on going supply and monitoring
inventory
◦ Accounting cost

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Company without adapting to Electronic
Commerce
system
 Less efficient in tracking invoice
 More wastage
◦ Additional local storage space are needed

◦ Costs related to the processing of that document
 Quality of service and efficiency
◦ Take longer time in monitoring inventory and supply

◦ The marketing department cannot quickly adjust their
action plans and prepare future campaigns

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With good Supply Chain Management System
system
 Less Manpower
◦ Less salaries to pay

◦ less time in invoicing and converting fax and paperwork.
◦ Less account cost
 Accurate payment
◦ saving cost on late payment charge

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With good Supply Chain Management System
system
 Less wastage
◦ less stationary, telephone/telfax and photcopying charges
 Improve service level
◦ With good Marketing information, Marketing department

can quickly adjust their action plan
◦ Better customer service

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Supply Chain Management functions
Activities-
Fustem
Information
Supplier Producer Distributor Customer
Materials, Finished Package Total

parts, sub- goods, end and delivery satisfaction
Products Products Products
assemblies, and products and and with quality,
and
Services
and services Services Services price,
services delivery, and
service
Inventory Inventory Inventory
Cash

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Supply Chain Management Activities -
Functions
Supply chain management is a cross-functional approach to
manage the movement of raw materials into an
organization, certain aspects of the internal processing of
materials into finished goods, and then the movement of
finished goods out of the organization toward the end-
consumer.
Several models have been proposed for understanding the

activities required to manage material movements across
organizational and functional boundaries. Supply chain
activities can be grouped into strategic, tactical, and
operational levels of activities

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Strategi
c
•Strategic network optimization,
•Strategic partnership with suppliers,

distributors, and customers,
•Product design coordination, so that new and existing

products can be optimally integrated into the supply chain,
load management
•Information Technology infrastructure, to support supply

chain operations.
•Where-to-make and what-to-make-or-buy decisions
•Aligning overall organizational strategy with supply strategy

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Tactic
al
•Sourcing contracts and other purchasing decisions.
•Production decisions, including contracting, scheduling, and

planning process definition.
•Inventory decisions, including quantity, location, and quality.
•Transportation strategy, including frequency, routes, and

contracting.
•Benchmarking of all operations against competitors and

implementation of best practices throughout the enterprise.
•Milestone payments
•Focus on customer demand.

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Operation
al
•Daily production and distribution planning.
•Production scheduling for each

manufacturing facility in the SCM (minute by
minute).
•Demand planning and forecasting, coordinating the demand

forecast of all customers and sharing the forecast.
•Sourcing planning, including current inventory and forecast

demand, in collaboration with all suppliers.
•Inbound operations, including transportation from suppliers

and receiving inventory.

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Principles of supply chain management
1. Supply chains extend beyond your immediate

customer and supplier.
2. Supply chains are not constant.
One of the easiest improvements to make is to share

demand data, Most retailers today offer to share the point of
sale data and forecasts with their suppliers. How much of it
is used is questionable and it is probably not passed up the
supply chain to the manufacturer's suppliers

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3. Parallel data sharing is better than serial
If a company could produce near perfect forecasts, the

lead-time to acquire the forecasted product would be
unimportant.
If a company's lead-time to acquire products were very

short, the forecast accuracy would not be as important
because the company could respond to whatever the
current demand was in a very short time.

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3. Parallel data sharing is better than serial
Supply Chain Data: Parallel is

Better
Sales Company Company Company
Data A B C
Sales Company Company Company

Data A B C

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4. Forecasting and lead-time are symbiotic. The lower the

manufacturing cost and the higher the logistics cost.
5. Manufacturing and logistics cost have inverse relationship.
6. Defined exceptions to the supply chain agreement save

expediting.
7. Collaboration improves forecasting.
8. Supply chain synchronization yields consistent results.

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Distribution
ü The actual movement of products and materials between

locations
ü Handling of materials and products at receiving docks,

storing products, packaging, and shipping
ü Often called logistics
ü Driving force today is speed

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Distribution Centers and Warehousing
ü DCs are some of the largest business facilities in the

United States
ü Trend is for more frequent orders in smaller

quantities
ü Flow-through facilities and automated material

handling
ü Final assembly and product configuration may be

done at the DC

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Warehouse Managament Systems
ü Highly automated systems
ü Controls item putaway, picking, packing, and shipping
ü Transportation management, order management, yard

management, labor management, warehouse
optimization

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Vendor-Managed Inventory
ü Manufacturers generate orders, not distributors
ü Stocking information is accessed using EDI or internet

methods
ü Increased speed, reduced errors, and improved

service
ü The first step towards supply chain collaboration

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Transportation
ü Important element, often overlooked
ü Common methods are railroads, trucking, water, air,

intermodal, package carriers, and pipelines

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Railroad
s
Low cost, high-volume
Improving flexibility
Truckin
Flexible, small loads
Part of TQM supplier-
customer relationship

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W
One of oldest means of transport
Low-cost, high-volume, slow
Bulky, heavy and/or large items
Standardized shipping
containers
improve service
Ai
Rapidly growing segment of
transportation industry
Lightweight, small items
Quick, reliable, expensive

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Intermod
Combination of several modes of transportation
Most common
truck → rail → truck
truck → water → rail → truck
Enabled by the use of containers

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Package
ü Significant growth driven by e-
Businesses
ü Use several modes of transportation
ü Expensive, fast and reliable
ü Innovative use of technologies
Pipelines
Primarily for oil & refined oil
products
Slurry lines carry coal
High capital investment
Low operating costs
Can cross difficult terrain
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Global Supply
ü Free trade & global opportunities
ü Nations form trading groups
ü No tariffs or duties
ü Freely transport
goods across borders
Global Supply Chain

National and regional differences
Customs, business practices, and regulations
Foreign markets are not homogeneous
Quality can be a major issue

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Duties and
ü Proliferation of trade agreements
ü Group members charge uniform tariffs
ü Member nations have a competitive advantage

within the group

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Infrastructure Obstacles to Global
ü Some emerging markets lack suitable distribution
systems, i.e. roads, rail systems
ü Existing roads and ports may be inadequate
ü Market instability, political instability

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Infrastructure Obstacles to Global
Influences
Flexibility Customer
Service
Influences Influences
Inventory

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Customer
satisfaction
It says something about the level of satisfaction among a
company's customers. It is in this sense a very vague term.
Therefore customer service is often discussed in terms of the
metrics which are used to measure it. Typical measures of
customer service are a company's ability to fill orders within
due date (fill rate), or its ability to deliver products to
customers within the time quoted (on-time deliveries). Other
metrics should be used to for example evaluate the delivery
performance of orders that are not delivered on-time. A way to
indicate this is to measure the average time from order to
delivery.

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Inventorie
s:
Manufacturing entities have inventories for raw products (RPI),
products in the production process (WIP), and finished products
(FGI).
In addition there are often warehouses or distribution centers

between the different levels of the supply chain. Inventories are
costly.
Binding capital in inventories prevents the company from investing

this capital in projects of higher return.
The holing cost inventories are therefore often set as high as 30 -

40% of the inventory value! In addition it is desirable to avoid so-
called dead inventory, i.e. inventory that is left when a product is
no longer on the market (often referred to as end of life (EOL) write-
off).

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Inventorie
s:
As we see it is in every company's interest to keep inventory levels
at a minimum.
Much effort has been put into this, for example an entire
manufacturing paradigm has come out of it.
A main objective of the Just in Time (JIT) paradigm is to virtually

abolish inventories. The efforts made have been more or less
successful.

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Flexibilit
y
Can be defined as the ability to respond to changes in the
environment. In the case of a manufacturer, flexibility is the ability
to change the output in response to changes in the demand. In a
supply chain the flexibility of one entity is highly dependent on the
flexibility of upstream entities.
The overall flexibility of a supply chain will therefore depend on the

flexibility of all the entities in a supply chain, and their
interrelations.

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Globalization
Through the past decades we have seen an increasing rate of

globalization of the economy and thereby also of supply chains.
Products are no longer produced and consumed within the same

geographical area. Even the different parts of a product may, and
often do, come from all over the world.
This creates longer and more complex supply chains, and therefore
it also changes the requirements within supply chain management.
This again affects the effectiveness of computer systems employed

in the supply chain.

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Globalization
A longer supply chain will often involve longer order to delivery lead
times. Flaherty states, in accordance with the discussion in Section,
that the consequences of longer lead times will often be;
-less dependable forecasts as these have to be made earlier,
-reduced production flexibility, i.e. greater difficulties to adjust to

order changes,
-higher levels of inventory.

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Globalization
The evident answer to the problem of longer lead times is to speed

up the supply chain.
But a limit is often reached beyond which further effort to shorten

lead times are futile, especially in international supply chains.
Another approach is to restructure the supply chain.
This simply means to reconsider the strategic level decisions

priorly made.
A third approach identified by Flaherty is changing coordination:
The order, forecasting, procurement, and information sharing

procedures among the members of the supply chain.

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Globalization
Globalization also brings foreign competition into markets that

traditionally were local.
Local companies are thereby forced to respond by improving their

manufacturing practices and supply chain management.
States that attempts have focused, among others, on reduction of

inventory levels, and increased flexibility through reduced lead
times.
Yet again we see how industry focuses on the issues of inventory

management and flexibility to maintain high levels of customer
satisfaction.


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Vertical Integration
Vertical Integration Examples of Vertical Integration

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Vertical Integration
Developing the ability to produce goods or service previously

purchased
Integration may be forward, towards the customer, or
backward, towards suppliers
Can improve cost, quality, and inventory but requires capital,
managerial skills, and demand
Risky in industries with rapid technological change

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Keiretsu Networks
A middle ground between few suppliers and vertical integration

Supplier becomes part of the company coalition
Often provide financial support for suppliers through ownership
or loans
Members expect long-term relationships and provide technical
expertise and stable deliveries
May extend through several levels of the supply chain

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Supply Chain Business Process Integration
Successful SCM requires a change from managing individual

functions to integrating activities into key supply chain processes
According to Lambert and Cooper (2000) operating an integrated

supply chain requires continuous information flow.

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Supply Chain Business Process Integration
The Key SCM stated by Lambert are:
• Customer relationship management

• Customer service management
• Demand management
• Order fulfillment
• Manufacturing flow management
• Supplier relationship management
• Product development and commercialization
• Returns management

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Supply Chain Business Process
Integration
Suggested keys critical supply business processes combining these
processes stated by Lambert result:
 Customer service management

 Procurement
 Product development and commercialization
 Manufacturing flow management/support
 Physical distribution
 Outsourcing/partnerships
 Performance measurement

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Integration
a) Customer service management process
Customer Relationship Management concerns the relationship

between the organization and its customers.
It also provides the customer with real-time information on

promising dates and product availability through interfaces with the
company's production and distribution operations.
The steps for successful relationships are:

 determine mutually satisfying goals between organization and
customers
 establish and maintain customer rapport
 produce positive feelings in the organization and the customers

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Integration
b) Procurement process
Strategic plans are developed with suppliers to support the

manufacturing flow management process and development of new
products. In firms where operations extend globally, sourcing should be
managed on a global basis.
The desired outcome is a win-win relationship, where both parties

benefit, and reduction times in the design cycle and product
development are achieved.
Also, the purchasing function develops rapid communication

systems, such as electronic data interchange (EDI) and Internet
linkages to transfer possible requirements more rapidly.
Activities related to obtaining products and materials from outside

suppliers requires performing resource planning, supply sourcing,
negotiation, order placement, inbound transportation, storage, handling
and quality assurance.

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Integration
c) Product development and commercialization
Here, customers and suppliers must be united into the product

development process, those to reduce time to market.
As product life cycles shorten, the appropriate products must be

developed and successfully launched in ever shorter time-schedules to
remain competitive.
According to Lambert and Cooper, managers of the product

development and commercialization process must:
 coordinate with customer relationship management to identify

customer-articulated needs;
 select materials and suppliers in conjunction with procurement, and
 develop production technology in manufacturing flow to manufacture
and integrate into the best supply chain flow for the product/market
combination.

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Integration
e) Physical distribution
This concerns movement of a finished product/service to

customers. In physical distribution, the customer is the final destination
of a marketing channel, and the availability of the product/service is a
vital part of each channel participant's marketing effort.
It is also through the physical distribution process that the time and
space of customer service become an integral part of marketing, thus it
links a marketing channel with its customers (e.g. links manufacturers,
wholesalers, retailers).

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Integration
d) Manufacturing flow management process
The manufacturing process is produced and supplies products to

the distribution channels based on past forecasts.
Manufacturing processes must be flexible to respond to market

changes, and must accommodate mass customization. Orders are
processes operating on a just-in-time (JIT) basis in minimum lot sizes.
Also, changes in the manufacturing flow process lead to shorter

cycle times, meaning improved responsiveness and efficiency of
demand to customers.
Activities related to planning, scheduling and supporting

manufacturing operations, such as work-in-process storage, handling,
transportation, and time phasing of components, inventory at
manufacturing sites and maximum flexibility in the coordination of
geographic and final assemblies postponement of physical distribution
operations.

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g) Performance measurement
Integration
Experts found a strong relationship from the largest arcs of supplier and
customer integration to market share and profitability. By taking advantage
of supplier capabilities and emphasizing a long-term supply chain
perspective in customer relationships can be both correlated with firm
performance.
A.T. Kearney Consultants noted that firms engaging in comprehensive

performance measurement realized improvements in overall productivity.
According to experts internal measures are generally analyzed by the firm
including
◦ Cost
◦ Customer Service
◦ Productivity measures
◦ Asset measurement, and
◦ Quality.

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Components of Supply Chain Management
Integration
The management components of SCM
The SCM components are the third element of the four-square

circulation framework. The level of integration and management of
a business process link is a function of the number and level,
ranging from low to high, of components added to the link.
Consequently, adding more management components or

increasing the level of each component can increase the level of
integration of the business process link.
The literature on business process reengineering, buyer-supplier
relationships, and SCM suggests various possible components that
must receive managerial attention when managing supply
relationships.

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Integration
Lambert and Cooper identified the following components which are:
 Planning and control

 Work structure
 Organization structure
 Product flow facility structure
 Information flow facility structure
 Management methods
 Power and leadership structure
 Risk and reward structure
 Culture and attitude

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Integration
However, a more careful examination of the existing

literature will lead us to a more comprehensive structure of what
should be the key critical supply chain components
The "branches" of the previous identified supply chain

business processes, that is, what kind of relationship the
components may have that are related with suppliers and
customers accordingly.
Bowersox and Closs states that the emphasis on cooperation

represents the synergism leading to the highest level of joint
achievement.
A primary level channel participant is a business that is

willing to participate in the inventory ownership responsibility or
assume other aspects of financial risk, thus including primary
level components.

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Integration
A secondary level participant (specialized), is a business that
participates in channel relationships by performing essential
services for primary participants, thus including secondary level
components, which are in support of primary participants.
Third level channel participants and components that will

support the primary level channel participants, and which are the
fundamental branches of the secondary level components, may
also be included.

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Integration
Consequently, Lambert and Cooper's framework of supply chain
components does not lead us to the conclusion about what are the
primary or secondary (specialized) level supply chain components.
That is, what supply chain components should be viewed as

primary or secondary, how these components should be structured
in order to have a more comprehensive supply chain structure, and
to examine the supply chain as an integrative one.
Baziotopoulos reviewed the literature to identify supply chain

components. Based on this study, Baziotopoulos suggests the
following supply chain components:

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Integration
 For customer service management: Includes the primary level
component of customer relationship management, and secondary
level components such as benchmarking and order fulfillment.
 For product development and commercialization: Includes the

primary level component of Product Data Management (PDM), and
secondary level components such as market share, customer
satisfaction, profit margins, and returns to stakeholders.
 For physical distribution, manufacturing support and

procurement: Includes the primary level component of enterprise
resource planning (ERP), with secondary level components such as
warehouse management, material management, manufacturing
planning, personnel management, and postponement.

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Integration
For performance measurement: Includes the primary level
component of logistics performance measurement, which is
correlated with the information flow facility structure within the
organization.
Secondary level components may include four types of

measurement such as: variation, direction, decision and policy
measurements.
For outsourcing: Includes the primary level component of

management methods, and the strategic objectives for particular
initiatives in key areas of information technology, operations,
manufacturing capabilities, and logistics (secondary level
components).

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The Bullwhip Effect
Occurs when slight demand variability is magnified as

information moves back upstream

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The Bullwhip Effect
• Each organization seek to solve the problem from its own

perspective
– Small changes in consumer demand result in large variations in
orders placed upstream
• Dramatic order size variation
• Amplification of order size variation as one moves up the supply
chain

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The Bullwhip Effect
• The Bullwhip Effect describes the phenomenon in which order
variability is amplified as it moves up the supply chain from end-
consumers through distribution and manufacturing to raw material
suppliers.
Delay 2 Delay 2 Delay 2

weeks weeks weeks
Manufactu Distribut
Supplier Retailer Customer
rer or
Orders 40 Orders 25 Orders 15 Buys

10

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What are the Effects?
•Manufacturing Cost  Lead Time
• Capital Investment ◦ New product releases
• Operating costs
•Inventories
◦ Order response time
• Anticipatory
 Shipping & Receiving Cost
• Cycle ◦ Order processing
• Pipeline  Customer Service Level
• Safety stock
◦ Product availability
• Infrastructure
•
 Transport Cost
◦ Economies of scale
◦ Variability

3/12/2008 79/99
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Causes
• Little or no communication between supply chain partners.

• Delay times between order processing, demand, and receipt of
products.
• Over reacting to the backlog orders.
• Inaccurate demand forecasts.

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VERFAHRUNGSTECHNIK
Forecasting
More variability
Poorer forecasts
Less reliable supply

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Treatments
• Information Sharing
•
• Chrysler makes the cars

• Leer makes the seats Shared
schedule
• Third party cuts & sews fabric
information
• Milliken makes the fabric
• Dupont makes raw material
• …

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Treatments
• Channel Alignment
• Coordination of promotions, transport, etc.
• Operational Efficiency
• Reducing cost and leadtime
•

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Example: Wal Mart

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Wal Mart´s Supply Chain Management
Satellite network installed in 1987 to supply data, voice, and

•
video as well as real-time sales and inventory information

•
EDI (Electronic Data Interchange) installed in 1990 to issue

•
purchase orders and receive electronic invoices from all of its

suppliers
•
Retail-Link installed in 1991 enable vendors to directly access

•
point-of-sale data in real-time

•
• These enable Supplier-Managed inventories

•

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VERFAHRUNGSTECHNIK
Locating and tracking the movement of
every item in the supply chain
•UPC = Universal Product Code
•A unique number assigned to one (and only one) product; in
most cases, same as Global Trade Item Number (GTIN)

•
•Bar codes
•Computer readable codes attached to items flowing through
the supply chain

•Generates point-of-sale data which is useful for determining
sales trends, ordering, production scheduling, and deliver

plans
•

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VERFAHRUNGSTECHNIK
Locating and tracking the movement of
every item in the supply chain
ü RFID’s: Radio Frequency Identity Tags
ü 21st century “bar codes” but, unlike bar codes, use radio
frequencies and are used to uniquely identify each and
every instance of a product (i.e. this “milk carton” versus
all other identical looking cartons)
ü WalMart’scurrent strategic initiative

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SCM Software
• Enterprise Resource Planning (ERP)
•
• software that integrates components of a company by

sharing and organizing information and data
•
• SAP was first ERP software

•
• mySAP.com
•
• web enabled modules that allow collaboration between

companies along the supply chain
•

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Linking Supply Chain with SAP

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Web-based International Trade Logistic
Systems
International trade logistics web-based
• software systems
reduce obstacles to global trade
•
• convert language and currency

• provide information on tariffs, duties, and customs
processes
• attach appropriate weights, measurements, and unit prices
to individual products ordered over the Web
• incorporate transportation costs and conversion rates
• calculate shipping costs online while a company enters an
order
• track global shipments
•

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Electronic Data Interchange
ü Computer-to-computer exchange of business documents

in a standard format
ü Quicker access, no paperwork, better communication,

improved tracing and expediting, improves billing and cost
efficiency
ü EDI historically done over private, secure lines

(expensive!), EDI-over-Internet is reducing costs further

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The Internet
ü Instant global access to organizations, individuals,

and information sources
ü Fundamentally changes the way organizations do

business
ü Removed geographic barriers
ü Adds speed and accessibility, reduces costs to the

supply chain

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Internet Transportation Exchanges
ü Bring together shippers and carriers
ü Initial contact, negotiations, auctions
ü Typically only one form of transportation,
intermodal
exchanges
difficult to develop

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Intranets and Extranets
ü Intranets are internet-like networks that operate within a
single organization
ü Extranets are intranets that are accessible (securely) via

the internet
ü Differences are in who has access to the system(s)

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VERFAHRUNGSTECHNIK
E-Business and Supply Chain.
 Cost savings and price reductions.
 Reduction or elimination of the role of intermediaries.
 Shortening supply chain response and transaction times.
 Gaining a wider presence and increased visibility for

companies.
 Greater choices and more information for customers

3/12/2008 95/99
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E-Business and Supply Chain (cont).
 Improved service as a result of instant accessibility to
services
 Collection and analysis of voluminous amounts of customer

data and preferences
 Creation of virtual companies
 Leveling playing field for small companies
 Gaining global access to markets, suppliers, and

distribution channels

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VERFAHRUNGSTECHNIK
E-Suppliers
ü Purchased materials account for about half (50%) of
manufacturing costs
ü Materials, parts, and service must be delivered on time, of

high quality, and low cost
ü Suppliers should be integrated into their customers’

supply chains
ü On-demand delivery (JIT) is a frequent requirement

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VERFAHRUNGSTECHNIK
E-Procurement
þ Uses the internet to facilitate purchasing
þ Electronic ordering and funds transfer
þ Electronic data interchange (EDI) – standard forms

þ Advanced shipping notice
þ Online catalogs (saves publishing, instant updates)
þ Catalogs provided by vendors

þ Catalogs published by intermediaries
þ Exchanges provided by buyers

3/12/2008 98/99
VERFAHRUNGSTECHNIK
E-Procurement
þ Auctions
þ Maintained by buyers, sellers, or intermediaries
þ Low barriers to entry
þ Increase in the potential number of buyers
þ Real-time inventory tracking

3/12/2008 99/99
VERFAHRUNGSTECHNIK
Example: Amazon.com

3/12/2008 100/99
VERFAHRUNGSTECHNIK
GRACIAS

3/12/2008 101/99
VERFAHRUNGSTECHNIK

Suply Chain Management

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Suply Chain Management

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Supply Chain

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Supply Chain Management spans all movement and

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Choice of partners Use of information

leadership Advanced Planning

Logistics, marketing, operation research, organizationall theory

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

•Pre- transaction. Elements relate to a company’s activities preceding

•Transaction. Elements are all those wich contribute to order fullfilment

•Post – transaction element. Elements mostly concern the service once

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

2. Network organization and inter-organizational collaboration

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Firstly, activities will be assigned to existing members of a supply chain, if

Secondly, activities relating to standard products and service widely available

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

•Their organizational structure is adapted dynamically according to the task

Inter organizational collaboration is a necessity for an effective supply chain

Alttough legally independent, entities wothin a supply chain are

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

On other hand, a steering committe may be introduce, consisting of

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

•Utilization of information and communication technology

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Communicationvia electronic data interchange (EDI) can be

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Key performance indicators can reveal weaknesses, bottlenecks and waste

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

ü Inventory is a form of insurance

ü Distorted or erroneous information is one of the main causes of

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

◦ Additional local storage space are needed

 Quality of service and efficiency

◦ Take longer time in monitoring inventory and supply

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

◦ Less salaries to pay

◦ saving cost on late payment charge

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

◦ less stationary, telephone/telfax and photcopying charges

 Improve service level

◦ With good Marketing information, Marketing department

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Supplier Producer Distributor Customer

Materials, Finished Package Total

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

Several models have been proposed for understanding the

BEREICH: FAHRZEUGTECHNIK SUPPLY CHAIN MANAGAMENT

•Strategic partnership with suppliers,

•Product design coordination, so that new and existing

•Information Technology infrastructure, to support supply

•Where-to-make and what-to-make-or-buy decisions

•Aligning overall organizational strategy with supply strategy