This action might not be possible to undo. Are you sure you want to continue?
Rev: Feb, 2012
Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr)
Dept. of Industrial & Management Engineering POSTECH
※ 1 2 3 4 5 Discussion Questions Introduction Motivation in SCM Strategic approaches of SCM Roles of SCM Case Study
■ EDI involves the electronic exchange business transaction documents over the Internet or other networks between supply chain trading partners. 3 .Discussion Questions ■ Why do you think implementing SCM is difficult? ■ Find a successful case of SCM and explain it. customers. and partners. The intent is to create a fast. and low-cost network of business relationships to get an organization's products and services from concept to market. ■ What is the concept explained in the below pharagraph? – A cross-functional interenterprise system that uses information technology to help support and manage the links between some of the organization's key business processes and those of its suppliers. efficient.
build. customers. and other businesses that are needed to design. and processes Suppliers Manufacturers Warehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation Manufacturing Costs Inventory Costs Costs 4 . and sell a product make up the network of business entities. relationships. Introduction – The interrelationships with suppliers. distributors.What is a Supply Chain? ■ Definition 1.
to the right locations and at the right time. materials and service throughout the supply chain to provide the right quantities of right stuff.Supply Chain Management ■ Definition 1. Introduction – Applying a total systems approach to the entire flow of information. and so as to minimize total system cost subject to satisfying service requirements Customer Relationship Management Management customer services Satisfaction of ordering Management production Management demand Supply 5 .
Sales Strategy vs. Motivation in SCM ■ What would sales & production costs have to be to double net income? Which is easier? Percentages are % of sales Current Situation Sale Production Marketing Net Income Sales Strategy $? $ (80%) $ (10%) $2 Production Strategy $ 10 $? $ (10%) $2 $10 $8 (80%) $1 (10%) $1 Reducing production costs is more feasible. Production Strategy 2. ■ Solution Sale Production Marketing Net Income Increase sales 100% Reduce production costs by 12% Current Situation $10 $8 (80%) $1 (10%) $1 Sales Strategy $ 20 $ (80%) $ (10%) $2 6 Production Strategy $ 10 $7 $ (10%) $2 .
firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998 7 .The Importance of Supply Chain Management (1/2) 2.6 billion write-off in 1997 due to “raw materials shortages. Motivation in SCM ■ Dealing with uncertain environments – matching supply and demand – Boeing announced a $2.S.S Surgical Corporation announced a $22 million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals” – IBM sold out its supply of its new Aptiva PC in 1994 costing it millions in potential revenue – Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake ■ U. internal and supplier parts shortages and productivity inefficiencies” – U.
.g. Baan.The Importance of Supply Chain Management (2/2) ■ Shorter product life cycles of high-technology products – Less opportunity to accumulate historical data on customer demand – Wide choice of competing products makes it difficult to predict demand 2. Oracle. Motivation in SCM ■ The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners – If you don’t do it. your competitor will – Major buyers such as Wal-Mart demand a level of “supply chain maturity” of its suppliers ■ Availability of SCM technologies on the market – Firms have access to multiple products (e. SAP. JD Edwards) with which to integrate internal processes 8 .
Motivation in SCM 1960’s Inventory Management Focus.History of Supply Chain Management 2. Order Entry Optimized “Value Network” with Real-Time Decision Support.Materials Management. Synchronized & Collaborative Extended Network 1990’s 2000’s 9 . Logistics SCM . JIT . Manufacturing. Cost Control 1970’s MRP & BOM – Operations Planning 1980’s MRPII.ERP .“Integrated” Purchasing. Financials.
John Fontanella vice president of research at AMR Research 2008 2012 (source : AMR research.” .2B $ 6. Motivation in SCM Grow 7% annually $ 9.5B “The supply chain. and the technologies that support it.Supply Chain Technology Market 2. will play an important role in helping companies deal and thrive in an economy that is going to be quite unlike anything we’ve seen in the post-war era. 2008) 10 .
war Local politics.Why Is SCM Difficult? ■ Uncertainty is inherent to every supply chain – – – – Travel times Breakdowns of machines and vehicles Weather. natural catastrophe. labor conditions. border issues 2. Motivation in SCM ■ The complexity of the problem to globally optimize a supply chain is significant – Minimize internal costs – Minimize uncertainty – Deal with remaining uncertainty Plan Source Make Deliver Buy 11 .
Strategic approaches of SCM ■ The electronic exchange of business transaction documents between supply chain trading partners ■ One of the earliest uses of information technology for supply chain management ■ The almost complete automation of an e-commerce supply chain process ■ Many transactions occur over the Internet.Electronic Data Interchange (EDI) 3. using secure virtual private networks ■ A communications standard for sharing business documents and settlement information among firms 12 .
Today’s Marketplace Requires: ■ ■ ■ ■ ■ 3. Strategic approaches of SCM Personalized content and services for their customers Collaborative planning with design partners. and transportation capacity Flexible logistics options to ensure timely fulfillment Order tracking & reporting across multiple vendors and carriers Shared visibility for trading partners 13 . inventory. production. distributors. and suppliers Real-time commitments for design.
Strategic approaches of SCM – Very unlikely that actual demand will exactly equal forecast demand ■ The longer the forecast horizon.Supply Chain Management – Key Issues (1/3) ■ Forecasts are never right 3. if you prefer) are important management tools when some methods are applied to reduce uncertainty 14 . the worse the forecast – A forecast for a year from now will never be as accurate as a forecast for 3 months from now ■ Aggregate forecasts are more accurate – A demand forecast for all CV therapeutics will be more accurate than a forecast for a specific CV-related product ■ Nevertheless. forecasts (or plans.
Strategic approaches of SCM Purchasing Manufacturing Distribution Customer Service/ Sales Low purchase price Multiple vendors Few changeovers Stable schedules Long run lengths Low inventories Low transportation High inventories High service levels Regional stocks SOURCE MAKE DELIVER SELL 15 .Supply Chain Management – Key Issues (2/3) ■ Overcoming functional silos with conflicting goals 3.
g. Strategic approaches of SCM CONSIDERATIONS • Warehouse locations and capacities • Plant locations and production levels • Transportation flows between facilities to minimize cost and time • How should inventory be managed? • Why does inventory fluctuate and what strategies minimize this? • Impact of volume discount and revenue sharing • Pricing strategies to reduce order-shipment variability • Selection of distribution strategies (e.Supply Chain Management – Key Issues (3/3) ISSUE Network Planning Inventory Control 3.. cross-docking) • How many cross-dock points are needed? • Cost/Benefits of different strategies • • • • How can integration with partners be achieved? What level of integration is best? What information and processes can be shared? What partnerships should be implemented and in which situations? Supply Contracts Distribution Strategies Integration and Strategic Partnering Outsourcing & Procurement Strategies • What are our core supply chain capabilities and which are not? • Does our product design mandate different outsourcing approaches? • Risk management • How are inventory holding and transportation costs affected by product design? • How does product design enable mass customization? Product Design 16 . direct ship vs.
reduced inventory. standardized products. wide range of product offerings. many variations many variations on finished product.Supply Chain Management Operations Strategies 3. meet customer demands relatively predictable demand quickly customized products. unique customer specifications 17 . improved service levels Low inventory levels. infrequent demand Customization. Strategic approaches of SCM STRATEGY Make to Stock WHEN TO CHOOSE BENEFITS Low manufacturing costs. simplified planning Enables response to specific customer requirements Make to Order Configure to Order Engineer to Order complex products.
distributors. and others – Receiving feedback on the status of every link in the supply chain 18 .Role and Goals of SCM ■ Role of SCM 4. ■ Goals of SCM – To manage a process efficiently by forecasting demand – Controlling inventory – Enhancing the network of business relationships with customers. suppliers. Roles of SCM – SCM management helps a company get the right products to the right place at the right time. in the proper quantity and at an acceptable cost.
Supply Chain Management – Benefits 4. Roles of SCM ■ A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331 firms found significant benefits to integrating the supply chain Delivery Performance Inventory Reduction Fulfillment Cycle Time Forecast Accuracy Overall Productivity Lower Supply-Chain Costs Fill Rates Improved Capacity Realization Source: Cohen & Roussel 16%-28% Improvement 25%-60% Improvement 30%-50% Improvement 25%-80% Improvement 10%-16% Improvement 25%-50% Improvement 20%-30% Improvement 10%-20% Improvement 19 .
and guidelines – Inaccurate data provided by other information systems – Lack of collaboration among marketing. more accurate order processing Strategic relationships with supplier Lower transaction and materials cost Quicker times to market Reductions in inventory levels 4. and hard to implement 20 . incomplete. and inventory management – SCM tools are immature. Roles of SCM ■ Key Challenges – Lack of demand planning knowledge.Benefits and Challenges of SCM ■ Key Benefits – – – – – Faster. tools. production.
Case Study ■ In the Text book – Real World Case 3 : Perdue Farms and Others: Supply Chain Management Meets the Holiday Season ■ Domestic Case Click Here 21 .
276~281 ■ Keebom Kang. “Global Logistics and Information Technology(PPTSlide)”. McGraw – Hill. Chapter 7. pp. Graduate School of Business Naval Postgraduate School ■ Keebom Kang. “Introduction to Information Systems – Fifteenth Edition”. Stevens Institute of Technology 22 . “B2B: Applications for Improving Supplier Selection(PPTSlide)”.Reference ■ O’Brien & Marakas. Graduate School of Business Naval Postgraduate School ■ “Basics of Supply Chain Management(PPTSlide)”.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.