Table of Contents

SCM And Its Application.........................................................................................................3

1.1

SCM..................................................................................................................................3

1.1.1

Planning applications.................................................................................................3

1.1.2

Execution applications...............................................................................................4

1.2

How to Deploy SCM System............................................................................................4

1.3

Critical Success Factors For SCMs Systems..................................................................5

1.3.1
1.4

The Case of Walmart:................................................................................................6

Top 5 Reasons Why Supply Chain Fails...........................................................................7

1.4.1

Swift, Dramatic Order Cutbacks................................................................................7

1.4.2

Long Lead Times causing Delayed Delivery.............................................................7

1.4.3

Overemphasis on Cost Cutting..................................................................................8

1.4.4

Inaccurate Demand Forecasts....................................................................................8

1.4.5

Lack of Risk Management Strategies........................................................................8

New Trends In SCM..............................................................................................................11

2.1

Improved Customer Service Levels Over Cost Cutting..................................................11

2.2

Execution Moves Ahead Of Demand & Supply Planning..............................................11

2.3

Resurgence of Contingency Planning.............................................................................11

2.4

End-To-End Partner Communication & Collaborative Execution..................................12

2.5

Big Data Is Becoming Mandatory..................................................................................12

2.6

The Case of Coca Cola....................................................................................................12

SCM in Services V/S Manufacturing....................................................................................13

3.1

Differences According to different Components of SCM:..............................................14

3.1.1

Inputs.......................................................................................................................14

1 SCM AND ITS APPLICATION

3.1.2

Logistics...................................................................................................................14

1.1 SCM
3.1.3
Finished Goods........................................................................................................14
Supply chain management (SCM) is the process of producing and managing materials, information,
and finances
as they move in a process from supplier to manufacturer to wholesaler to retailer to
3.1.4
Optimization............................................................................................................15
consumer. Supply chain management involves coordinating and integrating these flows both within and
4
SCM Application in Pakistan.................................................................................................15
among companies. It is said that the ultimate goal of any effective supply chain management system is
to 4.1
reduceThe
inventory
(withfaced
the assumption
that
products
are available when needed). As a solution for
Challenges
by Pakistans
Best
Restaurants:...................................................15
successful supply chain management, sophisticated software systems with Web interfaces are
4.2 The
Solution:...................................................................................................................16
competing
with
Web-based application service providers (ASP) who promise to provide part or all of
the SCM service for companies who rent their service.
4.3 The Benefits:...................................................................................................................16
Supply chain management flows can be divided into three main flows:
4.4 Restaurant Operations.....................................................................................................16

The product flow

Different Operations which a MICROS POS Performs:.................................................17

The information flow

4.5.1
Alert Manager..........................................................................................................17

The finances
4.5.2
Kitchenflow
Display System..........................................................................................17

4.5

The product
the movement
of goods from a supplier to a customer, as well as any
4.5.3 flow
Guestincludes
Service Solution
GSS....................................................................................18
customer returns or service needs. The information flow involves transmitting orders and updating the
TableThe
Management
Solution....................................................................................18
status4.5.4
of delivery.
financial flow
consists of credit terms, payment schedules, and consignment and
title ownership arrangements.
4.5.5
Digital Signage and Menu Boards...........................................................................18
There are two main types of SCM software:
4.6 Successful Integration of MICROS:...............................................................................19
1.1.1 Planning applications
Planning applications use advanced algorithms to determine the best way to fill an order.
2

1.1.2 Execution applications.

Execution applications track the physical status of goods, the management of materials,
and financial information involving all parties.
Some SCM applications are based on open data models that support the sharing of data both inside and
outside the enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers,
and end customers of a specific company). This shared data may reside in diverse database systems, or
data warehouses, at several different sites and companies.
By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's
clients), SCM applications have the potential to improve the time-to-market of products, reduce costs,
and allow all parties in the supply chain to better manage current resources and plan for future needs.
Increasing numbers of companies are turning to Web sites and Web-based applications as part of the
SCM solution. A number of major Web sites offer e-procurement marketplaces where manufacturers
can trade and even make auction bids with suppliers.1

1.2 How to Deploy SCM System

Implementing a strategic, integrated supply chain requires considerable effort on the part of the
initiating company. This change often is a result of external pressures faced by the company, such as
increased global competitors, an industry consolidation reducing the number of surviving companies in
the industry, a switch to e-commerce (including e-purchasing and e-sourcing), or major technological
changes within the industry. Typically, a company begins by analyzing its current supply chain. A small
cross-functional team leads the effort, examining all facets of the system to determine where
improvements are possible and necessary. Most companies begin by looking at the parts of the supply
chain, the internal dimension, in which they have the most control: manufacturing or service processes,
distribution processes, and/or retail capacity and the time and costs of sourcing, producing, and
distributing products or services. Improving performance in these areas has been the priority of many
supply chain management initiatives. For a typical manufacturer, this means investing in automation

1 http://www.supplychainmusings.com/2009/04/business-functional-deployment-strategy.html
3

and sales and operations planning technologies. For distributors and retailers, the priority has focused
on supplier relationships, warehouse management, and transportation management solutions.2

1.3 Critical Success Factors for SCMs Systems

In todays economic climate, no manufacturer can afford to fund any supply chain management (SCM)
project that fails to deliver results.
Fortunately, some best practices exist to guide companies through these projects and increase the
chances of success.
This white paper describes seven success factors for todays SCM projects, which have been identified
by seasoned executives with decades of experience in the field.
These factors correspond closely to the 10 success factors for IT projects identified by The Standish
Group during 25 years of analyzing IT project success and failure.
Some are tried-and-true project management basics, such as find an executive sponsor. Others may
be surprising, such as stay flexible.
These seven success factors for SCM projects are:
1: Set realistic goals
2: Make an effective plan
3: Find a strong executive sponsor
4: Assemble good resources
5: Stay flexible
6: Allow for testing
7: Promote user buy-in.

2 Operations Management, Fourth Edition, Raid and Sanders

4

1.3.1

The Case of Walmart:

1.3.1.1

The key to Wal-Mart's supply chain

Wal-Mart is committed to improving operations, lowering costs and improving customer service. But
the key to retailer Wal-Mart's success is its ability to drive costs out of its supply chain and manage it
efficiently. Many supply chain experts refer to Wal-Mart as a supply chain-driven company that also
has retail stores. Wal-Mart's company philosophy ('The Wal-Mart Way') is to be at the leading edge of
logistics, distribution, transportation, and technology. The Wal-Mart business model would fail
instantly without its advanced technology (Wal-Mart has the largest IT systems of any private company
in the world) and supply chain (Wal-Mart has made significant investments in supply chain
management).
1.3.1.2

Wal-Mart's business model and competition

Wal-Mart's business model is based on a low price strategy and low transportation costs allow it to sell
its products at the lowest possible prices. In return for its strategy (Everyday Low Price Strategy),
Wal-Mart's suppliers - both large and small - either break even or make profit supplying at Wal-Mart's
stores. But the real winners are Wal-Mart's customers (approximately 175 million every week) who
save thousands of dollars buying at low prices. Since Wal-Mart stores began selling groceries almost
three dozen regional grocery suppliers have struggled to match or simply run out of business. Last year,
Wal-Mart's annual sales were $350 billion and it had more than 7,000 stores, 120 distribution centers
and operations spanning 15 countries. Nearly two million employees at Wal-Mart focus on cost,
customers and continuous improvement on a daily basis. Other major retailers like Target and Home
Depot have emulated Wal-Mart's logistics strategies and tactics.
1.3.1.3

Wal-Mart's one-store-at-a-time, RFID and just-in-time

distribution approach
Every Wal-Mart store operates like a small company. Store managers are trained to manage one store at
a time, one department at a time, and one customer at a time. Decisions are made by store teams to
make the individual stores operate at its best with superior in-store execution. With established vendor
partnerships with top manufacturers, Wal-Mart has implemented advanced logistics solutions like
RFID (radio frequency identification). RFID solutions help maintain lower costs, identify out-of5

stocks and increase sales. Distribution centers instead of warehouses, automated replenishment and
cross-docking technology also reduce inventory carrying costs.3

1.4 Top 5 Reasons Why Supply Chain Fails

Managing your supply chain can feel like herding cats. Just when you think you have a straight chain to
efficiency, there is a kink.
The Reasons for the failure of Supply Chain are as follows:
1.4.1 Swift, Dramatic Order Cutbacks
The bullwhip effect can be felt through every inch of your supply chain. A rapid, drastic cut in orders
due to an anxiously anticipated change in demand creates a ripple effect that reverberates throughout
your supply chain. And once this wave of cutbacks begins, it cannot be stopped.
The harshest results are often at the ends of your supply chain, those companies that provide the bits
and pieces that make up the final product. In some extreme cases, these ordered cutbacks can mean
layoffs and plant closures for smaller suppliers and manufacturers. Remembering how every slight
change can affect each link in your chain will help you prevent a bullwhip effect.
1.4.2 Long Lead Times causing Delayed Delivery
It seems like parts of every product are made in China these days. It may be cheaper to manufacture in
the land of a billion people, but what does it cost you along the way? A lot can change in the 40 to 50
days you are waiting for your shipment to arrive. And once its in the middle of the ocean, you cant
send it back.
Beyond long lead times, trouble at sea can double your expected delivery date with lost cargo, capsized
freighters or even pirates. Try explaining to your clients their orders will be delayed because the
shipping vessel was robbed by pirates it will probably go over as well as, My dog ate my
homework. Your clients are likely to look locally while you are waiting another 2 months for their
shipment to arrive. Compare and contrast the benefits of lower manufacturing expenses to long or even
longer lead times.
3 http://supply-chain-case-studies.blogspot.com/
6

1.4.3 Overemphasis on Cost Cutting

Lean manufacturing is the latest trend to hit the manufacturing industry and every organization is
looking into it. However, overemphasizing cost cutting can have detrimental effects your supply chain.
Removing the extra slack in your supply chain may expose your broken links, but it may also remove
the flexibility you need to be responsive to slight changes in orders, demands and products.
Cost cutting is at the top of every executives mind today; remember there is a fine balance between
trimming the fat and cutting the muscle of your supply chain dont skimp on what you need.
1.4.4 Inaccurate Demand Forecasts
Your demand forecasting model can determine whether you have a shortage, a surplus or a smooth
running supply chain engine. One unusual, out-of-scope sale embedded in your historical data can
throw off your demand forecasting accuracy for years.
Without a scrutinizing eye on actual usage and unusual activity, the probability of an accurate demand
forecast is as likely as winning the lottery. To ensure accuracy remember to exclude unusual activity
that is not likely to occur in the future and keep your eyes peeled for trends that can change demand.
1.4.5 Lack of Risk Management Strategies
Risk is inevitable. It is up to us to determine how we adapt to the unexpected changes and make the
most of every situation. As mentioned above, drastic order cutbacks can happen in every industry;
trends and demands change daily. When faced with these obstacles it is better to have a proactive plan
in place, than a reactive, knee-jerk that can cause more damage than the problem itself.
Having a solid risk management strategy can help you mitigate common failures. A well-planned and
executed strategy can help you minimize and control the impact unexpected events can have on your
supply chain, while maximizing the opportunities they can present.4
5

http://www.scdigest.com/Kw_search.php?keyword=Top+Supply+Chain+Disaster

4 http://www.softwarethinktank.com/articles/%EF%BB%BF-top-5-reasons-supply-chains-fail/
5
7

2 TRENDS IN SCM
8

Supply chain technology continued to evolve throughout 2012 as companies realize that a highly
visible supply chain is necessary for success in todays business climate. Of course, overall IT trends
such as the cloud, big data and mobile are impacting the supply chain sector just as they do other
sectors.
But there are other trends specific to supply chain that came to the forefront in 2012. Based on my
discussions and work with clients, here are the five trends that truly shaped supply chain this year.

1.5 Improved Customer Service Levels Over Cost Cutting

This was the foremost trend during 2012 and will continue through 2013. Supply chain costs have been
continuously cut since the recession began four year ago but customers have begun pushing back on the
cost cutting measures that negatively affected service levels. Companies are now focusing on how to
improve service levels while simultaneously decreasing costs.

1.6 Execution Moves Ahead Of Demand & Supply Planning

Demand and supply planning has been rightly focused on as this is a critical point for supply chain
success. However, the ability to execute on the plan when forecast errors occur - a constant issue results in the need to focus more and more on execution. Forecast errors, or the difference between
what is planned and what occurs, are driven by every day issues of abnormal supply chain events that
can cause major disruptions. The ability to react efficiently and effectively is critical to every supply
chain and primarily relies upon end to end supply chain process visibility at the transaction level. This
was a theme that came up again and again in 2012.

1.7 Resurgence of Contingency Planning

As supply chains have gotten leaner, the reduced inventory levels require the ability to react quickly
when abnormal events occur or stock outs will increase exponentially. Because these events are
occurring more frequently, responding to them in an effective manner is a must or companies will face
severe revenue losses. The result is that we have seen resurgence in contingency planning this year to
ensure that supply chain functions continue even in emergency situations. More importantly, companies
want to know how well they performed against their plan and if the plan was truly followed. When a
crisis occurs, individuals have the tendency to find work around to resolve the issue as quickly as
9

possible. Companies are focused on developing contingency plans, executing those plans and
understanding in real time if their plans are effective.

1.8 End-To-End Partner Communication & Collaborative

Execution
All partners in the supply chain from retailers through raw material providers must constantly
collaborate on what events are occurring, the data behind those events and how they can execute as a
unified group to respond to the challenges as they unfold. Trading partners in 2012 are now acting in a
concerted manner based on transparent information to resolve issues when they happen. Solving a
problem by pushing costs to another supply chain partner is an antiquated proposition as companies
realize that cost shifting is not a sustainable, competitive solution.

1.9 Big Data Is Becoming Mandatory

Big data was the big IT story in 2012. And combining the data of multiple supply chain partners,
turning that data into information and being able to react and execute accordingly requires a lot of data.
Big data solutions combined with complex event processing (CEP) solutions are being used more than
ever this year to digest the enormous magnitude of available data and turn it into executable actions.
Leveraging these tools with supply chain visibility solutions will quickly become a must have rather
than a nice to have as companies utilizing these tools set the bar for the new normal in supply chain
performance.
Supply chain technology is helping to transform the way companies do business with consumers and
each other. If there is one thing these five trends have in common it is that having constant feedback
and control over supply chain functions is key to doing business in todays ever-changing environment.
For this reason, these trends are likely to continue into 2013 and beyond.6

1.10The Case of Coca Cola

CCE is one of the worlds largest marketers, producers and distributors of Coca-Cola products. CCE
buys concentrate from The Coca-Cola Company and combines it with other ingredients to create some
of the most popular beverages in Belgium, Great Britain, France, Luxembourg, the Netherlands,
Norway and Sweden.
6 http://www.scmr.com/article/five_supply_chain_trends_that_shaped_2012/
10

As part of its Genesys program, CCE set out to deploy a new supply chain management solution at all
17 of its European plants. The new system would replace and automate many of CCEs supply chain
processes and required new skill sets to ensure the required speed of deployment.
CCE needed a partner to help deliver this new SAP-enabled business transformation. This would
involve not only delivering a technology solution, but also training users on the new processes to
ensure the full benefits were realized.
CSC was selected because it has combined a strong front office business transformation and change
management consulting capability with a back office technology delivery capability for CCE since
2008. Prior to Genesys, CSC had already been supporting CCEs applications with SAP, including
order processing, manufacturing, financial transactions, human resources, procurement and other
related processes.
The Genesys program is an integrated SAP Enterprise Resource Planning (ERP) solution that will
replace CCEs legacy systems in the processes of order to cash, requisition to payment, and
record to report.
Genesys will allow CCE to shorten cycle time in these processes and be more productive. It will also
help bring more visibility into the business and improve decision making.7
3

SCM IN SERVICES V/S MANUFACTURING

The end goal of any company is a satisfied customer. The process of locating, obtaining and
transporting the inputs needed to do this is the core function of supply chain management. Supply chain
design in the manufacturing industry requires a great deal of focus on physical product and a broader
supplier base, while service firms typically have little need for physical inputs other than office
supplies, and often work with a much smaller group of suppliers.

7 http://www.csc.com/application_services/success_stories/78846coca_cola_supply_chain_management_success_story
11

1.11Differences According to different Components of SCM:

1.11.1

Inputs

Both the service and the manufacturing industries require an input of labor to complete the processing
necessary to satisfy their promise to the end customer. Additionally, companies in both industries
require inputs from suppliers of various types. Finally, both industries require capital investment in
equipment that allows their employees to do their work. The primary difference is that most of the cost
of manufacturing labor is involved in procuring, transporting and manipulating physical material, while
almost all service industry labor is expended on manipulating information and developing
relationships. Because of this difference, capital investments in machinery and equipment are typically
much higher in the manufacturing industry.

1.11.2

Logistics

Traditional manufacturing supply chain management focuses on logistics in terms of moving physical
material from one location to another. The size and weight of objects being shipped and the distance
from the supplier to the manufacturing facility can play a major role in the cost of the product. In
service organizations, particularly in the financial sectors, these factors are irrelevant because no
physical product is moving except perhaps a few sheets of paper. While the manufacturing industry
tries to negotiate better shipping rates and fill containers with product to reduce unit cost, the service
industry upgrades servers and installs new software to speed the flow of communication, thereby
reducing the labor costs necessary to produce a finished product.
1.11.3

Finished Goods

Traditionally, a finished good is a product that has been completely transformed from a raw material
form to a form that is ready to sell to the customer. It's a physical unit that has been assembled, tested
and packaged, and is now sitting on a shelf at a warehouse or a store, ready to be sold. In the service
industry, a finished good equals a closed file. The loan has been booked, the home sale has closed, or
the class has been completed, leaving no physical evidence except a few sheets of paper. However, the
goal of either finished product is a customer who is satisfied with the product or service she paid for.

1.11.4

Optimization

In a manufacturing organization, optimization of the supply chain is accomplished primarily by

improving speed of delivery and reducing cost. Companies work to reduce physical bottlenecks and
12

inventory, and negotiate better pricing on raw materials. The main way to speed production is to find a
faster way to move or manipulate the components. A research paper published by Eastern Illinois
University points out that the main drivers of optimization in a service model are relationships and
information flow. By building partnerships with companies whose strengths complement its own, a
corporation can reduce costs. By eliminating virtual bottlenecks caused by duplicate approval loops or
other intangible delays, a service company can realize the same goal as the manufacturing company: a
lower-cost finished product, delivered to the customer more quickly.8

4 SCM APPLICATION IN PAKISTAN

SCM is very rare in Pakistan in Service Industry. After a research we found out that a multinational
company MICROS is working for SCM application in Pakistan.
MICROS provides comprehensive restaurant and food service outlet point-of-sale (POS), enterprise
and consumer faced solutions that can be scaled to meet the needs of every type and size of restaurant,
whether you operate a single restaurant or hundreds. Our modular restaurant enterprise solutions can
easily be expanded as required, and can fit the demands of quick-service, fast casual, and full-service
restaurants.

1.12The Challenges faced by Pakistans Best Restaurants:

The typical business challenges full-service restaurants face today are how to increase table turn-over
and revenue while optimizing and streamlining the business organization, workflows and resource
planning. In todays highly competitive restaurant industry, efficient inventory management and
seamless adoption of new technology are key to lowering costs and increasing productivity. At
MICROS, they provide a comprehensive suite of solutions that cater specifically to the needs of fullservice restaurant businesses.

1.13The Solution:
Customized to a restaurants unique business requirement, MICROS puts together a solution that
perfectly fits your business needs. Whether you need a pure POS solution or an integrated enterprise
management solution, if you prefer a local or central installation or a mixture of both, or even a fully
hosted solution MICROS can pick from a wide range of solutions the right mix that perfectly
8 http://smallbusiness.chron.com/differences-supply-chain-designs-manufacturing-industry-vs-serviceindustry-14610.html
13

addresses your business needs. Choose from a wide range of tools that speed up your food preparation
process while keeping quality high. Increase table turn with powerful table management solutions and
drive sales with targeted marketing activities. MICROSs end-to-end portfolio encompasses Point-ofSale System solutions, inventory management solutions, table management solutions, labor
management solutions, CRM/loyalty solutions, reporting tools and much more.

1.14The Benefits:

Improved operational efficiency

Improved enterprise business intelligence and decision support
Increased guest satisfaction and loyalty
Increased sales

1.15Restaurant Operations
Managing business operations is a tedious responsibility that restaurant owners face day-in and dayout. No matter the size of the restaurant, MICROS has devised a product line of real-time solutions
which aim to alleviate time consuming operational procedures. MICROSs products help restaurateurs
to manage business conditions, customer preferences, and wait-times all while reducing waste,
improving speed-of-service and order accuracy, and upselling or marketing events and products. These
solutions ensure that losses will be prevented, whether in the form of wasted food or irritated
customers, and resources will be maximized to their fullest to result in increased revenues.

1.16Different Operations which a MICROS POS Performs:

1.16.1

Alert Manager

MICROS Alert Manager allows operations to manage by exception. The system monitors conditions
and compares them to established standards. Exceptions are immediately identified and a notice or alert
is sent to the pager, PDA, cell phone, or email of those who need to know.
The MICROS Alert Manager provides exciting new integration with MICROS products and the on
premise paging and communications solutions made available by JTECH, a MICROS subsidiary.
1.16.2

Kitchen Display System

The MICROS Kitchen Display System is like having a second expeditor in your kitchen. It provides
highly visible, real-time information to manage and control kitchen efficiency, which drives customer
satisfaction. Mounted conveniently in your kitchen or food prep area, this seamlessly integrated,
intuitive, graphical software application displays food orders for preparation and monitors the timing of
14

orders for your "Speed of Service." MICROS KDS also provides feedback about the status of each
table and captures service times for management reporting.
Fully integrated with the MICROS 3700 POS System, KDS runs on standard PC hardware using color
touchscreen monitors or color monitors and bump bar. By managing food preparation, KDS provides a
higher level of management control and customer service.
Key Features:
Order Preparation

Highlights alert orders in yellow or red to indicate an order has exceeded expected prep time

Displays each order in either List Mode or Chit Mode and monitors time to prepare

Allows user to define preparation times for both appetizers and entrees

Intuitive icons display Rush Order, VIP and Void status

Display features such as All Day, Order Done, and Order Recall make information readily

available
Speed of Service Displays

View the status of each table in the restaurant at a glance

Table buttons change color to indicate

Table Vacant

Guest Seated

Kitchen Working on Order

Entree Served

Order Late

Reporting and Statistics

Captures service times for different courses at the various prep stations

Generates real-time reports on kitchen performance

1.16.3

Guest Service Solution GSS

As a module of the complete MICROS Restaurant Enterprise Solution (RES), the Guest Services
Solution (GSS) provides restaurants with a single-source, all-in-one guest marketing system that helps
you build loyal and repeat customers. Implement a frequent-diner program and track guest preferences
to build a loyal following that comes back more often. Sell gift certificates or gift cards and easily track
15

redemption. Use MICROS GSS to bring customers in during off-hours by establishing promotions at
certain times of the day or certain days of the week.
1.16.4

Table Management Solution

MICROS Table Management is simple, easy-to-use software that seamlessly integrates customer
preferences, seating capacity, and available staff, while effortlessly managing the customers dining
experience. Capturing time-sensitive guest demands, MICROS Table Management puts you in
complete control from the moment the guest is greeted until the next diner is seated.
1.16.5

Digital Signage and Menu Boards

One of the latest tools to emerge in the quick-service market is the digital menu board. A fully
integrated feature of the MICROS point-of-sale (POS) system, this novel technology displays menus
while simultaneously drawing customers attention to other information, like current store promotions.
While the quick-service market becomes increasingly aware of the benefits of digital versus traditional
menu boards, restaurant owners seek a solid solution that will improve operations and boost customer
experience. Typically sold as an added module or an interfaced product, MICROS includes the Digital
Menu Board functionality as a core feature in its POS solutions. So when youre ready to deploy this
innovative technology for your business, MICROS is ready with Digital Signage & Menu Boards.9

1.17Successful Integration of MICROS:

MICROS is currently working in different five star hotels of Pakistan like:

Pearl Continental
Marriot
Sheraton
Hotel Serine

Furthermore it is also working successfully in fast-food chains like:

Dunkin Donuts
KFC
M.C. Donalds
Pizza Hut

9 http://www.micros.com/Solutions/ProductsAM/DigitalSignageAndMenuBoards/
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