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Posted by vaishali_iware in Blog Jan,15 No comments Supply Chain Management w.r.t. Oracle Applications. Oracle Supply Chain Management (SCM) basically integrates and automates all key supply chain activities starting from design, planning, and procurement to manufacturing and fulfillment. It depends upon how the company or Line managers planning to use these application module in there business line Let’s understand first what supply chain management is all about.
Supply chain management (SCM) is a systematic approach to manage the seamless flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer.
Moreover, SCM involves seamless flow of material, information & finance in a network consisting of customers, suppliers, manufacturers, retailers and distributors.
Note: 1. supply chain is product specific, not company specific 2. This does not cover the financial flow with SCM.
You should be clear with Flow that SCM can manage :
The flow of actual materials, the top middle bars
• • • • • • • •
From suppliers : flows of raw materials, intermediate products, finished goods Reverse material flows : returns, repairs, servicing, recycling, disposal From suppliers : manufacturing capacity, delivery schedules, promotions they have going to launch for specific timeframe. Reverse flows : sales, orders, inventory, quality, promotions From suppliers: Credits, consignment, payment terms, invoice Reverse Flows : payments, consignment
and the information flows
And finally, there are financial flows:
notes and release the orders to warehouse for fulfillment based on requested date. Plan: Planning is the strategic portion of SCM. These are application potentially can be used. • • • • • Telesales Trade Management Incentive Compensation Order Capture • • Advanced Supply Chain Planning • • • • Order management Advanced Pricing Configurator iStore . Global Order Promising 4. SCM has three primary goals: Reduce inventory. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service.• • • • Supply Chain Management is the management of the entire value-added chain. Engineering & Bills of Materials 2. It depends upon how the company or Line managers planning to use these application module in there business line. For better understanding from Product point. and increase sales by implementing customer requirements more efficiently The need for SCM is because effective Supply Chain Mgt. Sell & Manage Order: Maintain and manage the customer orders. Supply Chain Management (SCM) in line manager prospective is “let’s-keep-things-moving- efficiently”. increase the transaction speed by exchanging data in real-time. is the next logical step towards increased profits and market share. 1. order holds. What is Oracle’s SCM Solution for Customer Oracle Supply Chain Management (SCM) basically integrates and automates all key supply chain activities starting from design. planning. let’s understood on eight key areas as given in below figure Here are the details with underline Product which is potentially used. Marketing also gets customer feedback and communicates to Product development group. Market: Marketing and Sales generates demand for the Product by publicizing its features and how it would address customer priorities. from the supplier to manufacturer right through to the retailer and the final customer. Design: SCM start with designing & developing new products where Product specifications are created. In the process. and procurement to manufacturing and fulfillment. • • • Oracle Product Life cycle Management Oracle Advanced product Catalog Oracle sales 3. Few Important applications play major role in this phase. product availability and customer credit limit.
Service & Maintain: Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products. testing. batch. Manufacturing: Consists of Inventory. packaging and preparation for delivery. • • Purchasing Work in Process 7. mass production. 1. Purchasing. Procure: Here you normally choose the suppliers that will deliver the goods and services you need to create your product. develop a network of warehouses. • • • • Shipping Execution Inventory Management Warehouse Management System Service Contracts Oracle SCM Solutions Oracle E-Business Suite does covers each area of SCM as discussed above. Fulfill & Release Management : Coordinate the receipt of orders from customers. iProcurement 6. Oracle provides two streams to capture entire supply chain planning. Manufacture: Schedule the manufacturing activities necessary for production. Bills of Material & Work in process to capture details of every type of manufacturing like discrete. delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. and Order Management to capture entire procure to pay & order to cash business processes. Here is how best we can describe involvement of all five key participants.5. • • • • Depot Repair Field Service Install Base . Develop a set of pricing. 2. Distribution: Consists of Inventory. • • • • • Cost Management Process Manufacturing Project Manufacturing Quality Transportation Execution 8. pick carriers to get products to customers and set up an invoicing system to receive payments.
or else directly converted in Purchase Orders. Procure to pay lifecycle captures demands from different applications like Inventory. Under this Business Process below Oracle module can be potentially used. • • • • • Oracle Purchasing iProcurement iSupplier Portal Inventory . Then you pick release & ship confirms these orders to interface data with accounts receivables for further financial transactions. Further more Financials applications can be used to capture invoices & process payments for suppliers. Approved PO then can be send to suppliers & receipts are generated in different Inventory organizations. Purchasing & consolidate all demands in the form of requisitions. Order Management. Requisitions can be optionally converted in to RFQ & Quotations. Booked orders are treated as firm demand to process orders either for manufacturing or fulfilling the demand through supplier networks. Book orders once all relevant scheduling & pricing information of item is reviewed. Payables 2) Order to Cash (O2C) O2C lifecycle starts with entering different types of orders on to customer’s name.Within SCM above shown Processes can be fit in Oracle applications called as business process lifecycles 1) Procure to Pay (P2P) Here is flow that can be best understood with Oracle Modules Involvement.
and how to analyze. Under this Business Process Oracle module can be potentially used. Under this Business Process Oracle module can be potentially used as • • • • • • • • CRM Foundation Sales Online Marketing Online Install Base Depot Repair Service Contracts iStore Collaborative Planning 5) Demand to Build This business flow outlines how a company analyzes or anticipates demand and translates that demand to a production plan. gathering just enough information to tell a sales organization whether there is sufficient interest on behalf of the buyer to make a lead worth following up. or distribution plan from that forecast. • • • • • • • Oracle Order Management Oracle Inventory Shipping Execution Advanced Pricing Oracle Configurator Warehouse Management Field Service 4) Forecast to Plan This business flow outlines how a company uses sales order history to produce a forecast.Under this Business Process Oracle below module can be potentially used. Receivables 3) Lead to Service A lead is an expressed customer interest that a sales agent uses to determine whether there is potential for a after sales service opportunity Leads are intended to capture the initial contact with potential or existing customers. design a production. manufacturing. and simulate changes to that plan. Under this Business Process Oracle module can be potentially used as • • • Material Planning Advanced Supply Chain Planning • • • • • Demand Planning Bills of Material Work in Process Cost Management Flow Manufacturing . revise.
PLAN SOURCE MAKE DELIVER RETURN 1. Developing a set of pricing. 2. delivery and payment process with supplier is important. 2. including receiving shipping. Schedule activity necessary for production. cost effective and deliver high quality and value to the customer. This part of SCM consists of selecting right suppliers that will deliver the good and services that need to create your product. . This model organized and focused on the five primary management 1. and services you receive from your suppliers. Let's start with basic and gradually will move into ERP arena: SCM is defined as combination of art and science that goes into improving the way your company find the raw components that needs to make a product or services and deliver it to customer. A big piece of planning is developing a set of matrices to monitor the Supply chain so that it would be efficient. Source: It means processes that procure goods and services to meet planned or actual demand. In Business word this art and science become functions that an organization undertake. transferring them into various facilities and authorizing supplier payment. If you are IT guys you can understood SCM as: Systems that support manufacturing managers in making decisions that optimize the trade off between capital tied up in stocks and inventories. Plan: This is vital part of SCM philosophy. versus the ability to deliver goods at prices and delivery dates agreed with customers. In principle and reality. verifying them. where the companies normally need to make strategy for managing all the resource that go towards fulfilling the customer demand for the product and services that they offers. Make: This is basically a step where your company starts fulfilling the request or BUILT for products into finished state to meet planned or actual demand. 4. therefore. OPM and other manufacturing area. 3. both inwards logistics operations to acquire materials to make products and outwards logistics operations shipping finished goods to final customers are monitored. 3. In fact lot of people have requested some more information on SCM. as this is one of my favorite topic.I take this opportunity. as I started my first job in PPC (Production Planning &Control) department of a big steel company a decades ago. testing. Also this will also take care of managing the inventory of goods. packaging and preparation for delivery.This is one of the basic areas from management books. 5. so I hope I will surly help in giving a clear picture of SCM. WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASIC COMPONENT OF SCM? As per Supply-Chain Operations Reference-model (SCORÃ‚Ã‚ÂÂ®) which has been developed by Supply-Chain Council .
typically including order management. Deliver: This is also called Logistic Process. 5. Return . Production This driver addressing these questions: what products does the market want? How much of . transportation management.4. and distribution management. Typical model can be best described as: WHO IS THE STAKEHOLDER OF SUPPLY CHAIN These are considered as stake holder of SCM: • • • • • • Customers Your Company Design Partners Material Suppliers Contract Manufacturers Logistic Providers WHAT ARE DRIVERS OF THE SUPPLY CHAIN? These are the main drivers : • • • • • Production Inventory Location Transportation Information 1.This is real pain of SCM model. which defined as processes associated with returning or receiving returned products for any reason. This is the processes that provide finished goods and services to meet planned or actual demand.
Location This driver addressing these questions: Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory? Should existing facilities be used or new ones built? Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer. workload balancing. Information This driver addressing these questions: How much data should be collected and how much information should be shared? Timely and accurate information holds the promise of better coordination and better decision making. quality control.which products should be produced and by when? This activity includes the creation of master production schedules that take into account plant capacities. Inventory This driver addressing these questions: What inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials. 3. 5. people can make effective decisions about what to produce and how much. Transportation This driver addressing these questions: How should inventory be moved from one supply chain location to another? Air freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea or rail is much less expensive but usually involves longer transit times and more uncertainty. 2. or finished goods? The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain. DEFINITIONS AND TERMINOLOGY IN SCM Master Demand Schedule . about where to locate inventory and how best to transport it. The master production schedule also provides the basis for order promising (ATP) function Material Requirements Plan-MRP The Material requirements planning (MRP) calculates net requirements from gross requirements by evaluating: • The master schedule . With good information. 4.MDS The MDS is a consolidation of demand by product and time bucket Master Production Schedule. GET FAMILIAR WITH TOP 10 TERMS. and equipment maintenance. semi finished.MPS The MPS is a statement of supply required to meet the demand for the items contained in the MDS. The master production schedule defines the anticipated build schedule for all products.
When released from MRP the planned orders for "buy" items become requisitions or purchase orders in the purchasing module and the "make" items become discrete jobs in the Work In Process Module. Once the MPS is reviewed and updated is used as the schedule to drive the MRP process. That demand statement would then be used as the schedule that drives the Master Production Schedule (MPS) .VMI The process of giving the vendor the authority and visibility to determine what your inventory should be Customer Owned Inventory.ASCP Constrained Based and optimized version of MRP Planned Order Automatically suggested action from planning engine Consumption The process of "relieving" the forecast to prevent double counting of demand Drop Ship Having an order ship directly from the vendor to the customer without physically being in your inventory.COI Where you are managing the customers inventory on your premises and supply as required Work Order/Sales Order The request that you received from the customer for fulfilling there demand.• • • • • Bills of material Scheduled receipts On-hand inventory balances Lead times Order modifiers Advanced Supply Chain Plan. Vendor Managed Inventory. The result of the MRP process is planned orders and exception messages. forecast and other demand such internal orders into the master demand schedule (MDS). . Once the finished goods are received into inventory it is shipped to satisfy customer orders. SIMPLE PLANNING CYCLE WITHIN AN ORGANIZATION A typical planning cycle would start by loading the sales orders. Take a note in regular MRP implementations the MPS is used as the schedule for ATP.
Forecast Planning Cycle This is the scenario where normally we are building to stock and satisfying sales order demand from stock.Scenario I :Sales Order . . The finished goods are then shipped to satisfy the sales orders. Here you will see the difference as planned orders are released to become purchase requisitions for components and work orders for sub assemblies and finished goods.
The vendor ships the product directly to your customer.Scenario II : Planning Procurement Cycle In the Planning-Procurement cycle we normally start where the first part of the planning cycle is complete and we have a planned order for a buy item from MRP. quantity and required date information on purchase order matches that information on the sales order. A purchase order is then created from the requisition and sent to the vendor.Drop Ship Cycle In the Drop Ship cycle the process is as follows: • • • • • A sales order is received from the customer. Once the vendor ships the product you receive" the purchase order and that creates the shipping transaction to satisfy the sales order. After the sales order is entered a process is run that creates a purchase order that matches the sales orders The item. The planned order is released and becomes a requisition or purchase order in the purchasing module. Matching accounting transactions complete the process • . The vendor would supply the materials. Scenario III :Planning . The ship to address on the purchase order is the ship to address of the customer. The materials would be received into inventory and the purchase order would be closed.
The details of the discrete job such as job number.WIP Cycle In the Work In Process cycle after the planning cycle is complete a planned order is released to create a discrete job. The purchase order is sent to the vendor. After the planning cycle is complete a planned order is released to create a discrete job. Scenario V : Planning . This make an end of this discussion. Any comment is welcome . In Next post we will see what are the different subsystem SCM will have and what are the modules which comes under SCM Implementation. When the purchase order is received its destination will be shop floor and the assembly will be returned to the next operation on the work order.Outside Processing Cycle With Outside Processing you could be buying a service. A routing with an outside processing operation is setup.You can also see technical details for drop ship cycle in my earlier post. Once the Discrete job is moved to a outside processing operation. a purchase requisition is triggered. Material/components is issued the job or back flushed from inventory. The requisition is imported to Purchasing and a purchase order is created. The job is completed from Work In Process to Inventory. The setup for each of these scenarios will be described in the training sessions to follow. assembly number and quantity is tied to the purchase order. however they all follow a similar process. an item or capacity from an outside vendor. Scenario IV :Planning .