Is DSN Important?

“Nokia's infrastructure sales and

profitability in the fourth quarter
exceeded our expectations due to
robust year-end spending by
operators combined with our
shortened delivery lead times.
Profitability was also positively
impacted by the successful resolution
of a prior customer delivery issue as
well as a product mix favoring high-
margin products. In Asia-Pacific, we
emerged as a clear leader in 3G
WCDMA. “
 THE CONCEPT OF DEMAND-SUPPLY NETWORK

SUPPLY NETWORK

PAPER MILL PRINTING HOUSE REGIONAL WAREHOUSE BOOKSTORE STUDENTS

DEMAND NETWORK

PAPER MILL PRINTING HOUSE BOOK DISTRIBUTOR BOOKSTORE PROFESSOR STUDENTS

DEMAND NETWORK + SUPPLY NETWORK = DSN

Hoover, B, E. Eloranta, J. Holmström, K. Huttunen:

"Managing the Demand-Supply Chain: Value Innovations for Customer
Satisfaction", Wiley, New York, 2001
 Concepts
TARGETS OF ASSETS
DSN
PROFITABILITY

CUSTOMER COSTS
SATISFACTION
Manage the flows (material, information, finance) of demand-supply
chain to create customer satisfaction for maximising current and
future network profitability
• customer satisfaction
• OTD; do we measure customer's perception of on time delivery?
• AVAILABILITY; how do we measure it?
where do we measure it (customer, POS, site, DC)?
• asset performance
• Variable assets: do we know total network DOS and liability; upstream & downstream?
• Fixed assets: do we see the difference between utilization vs. opportunity costs?
• cost efficiency
• do we know the total cost drivers throughout the network?
 What is Supply Chain Planning ?

Supply Chain is a set of activities (e.g. purchasing,

manufacturing, logistics, distribution, marketing) that
perform the function of delivering value to end customer

Traditionally, all the business units along a supply chain

have their own objectives and these are often conflicting

There is no single plan to carry out supply chain activities

 What is Supply Chain Planning ?

There is need for a mechanism through which the

execution of various business activities along a supply
chain can be planned in an integrated fashion.

The supply chain planning is an effort to achieve the

primary goal of “producing and distributing the
merchandise at the right quantity, to the right
locations, and at the right time with minimum system
wide cost” in the presence of conflicting goals of various
business units
 Dynamics of Material Flow

Supplier Plant Warehouse Logistics Retailer

 Dynamics of Order Flow

Supplier Plant Warehouse Logistics Retailer

 Supply Chain Planning Processes
Demand Forecasting
Material Requirement Planning Demand Planning

Component Production
Requirement Plan

Supplier Plant Warehouse Logistics Retailer

Order Management
 Supply Chain Planning Decisions

STRATEGIC

TACTICAL

OPERATIONAL

Procurement Manufacturing Distribution Logistics

 Supply Chain Planning Decisions
• Supplier •Location, Number,
Selection Capacity of Plants • Mode of
•Location, Number,
•Allocation of •What Products to Shipment
Size of Warehouses
Suppliers to the Produce
Plants •Which Plants to • Port Selection
Produce them
•Warehouse
Allocation
• Customer • Vehicle Routing
• Procurement • Inventory
Allocation
Policy Decisions
• Distribution Policy • Fleet Size
• Manufacturing
Policy
• Production
Schedule
•Scheduling on • Finished Goods
• Vehicle Routing
Machines Inventory
• Workload
Balancing
 Results

 Reduced inventory levels by 10-15%

 Reduced markdown & scrap by 10-15%

 Used resources10-20% more efficiently Companies that

utilized best-in-
 Improved delivery reliability by 95-95% class SCM solutions
have
 Reduced outages to 0-5%

 Reduced cycle time by 10-20%

 Reduced transportation cost by 10-15%

 The RosettaNet Value Proposition
“A company's demand management, direct material procurement, logistics, part
management and order fulfillment processes are closely linked to supply chain partners.
Value is created by close integration of these processes among the company’s
suppliers, logistics & service providers and customers. Collaborative processes that
provide visibility to forecasts, inventory levels, order execution, and shipments between
trading partners achieve this. The collaborative process is hampered by lack of industry-
wide processes and data standards that enable system-to-system automation of core
processes…..”

“In today’s competitive world, well-oiled and responsive extended supply chains are
increasingly becoming a foundation for competitive advantage. No longer can
companies restrict their focus on increasing supply chain efficiencies within the four walls
of the enterprise. The supply chain that extends beyond a company’s organizational
boundaries increasingly determines its effectiveness. There is an increasing
dependence on "collaboration" as key to bridging the boundaries – not only within the
enterprise, but also between enterprises and across industry boundaries.”

“Adoption of RosettaNet standards could well be a critical factor in bringing the high
technology dream of dynamic value chain management to fruition.”

Source: RosettaNet website, Implementing RosettaNet E- Business Standards for Greater Supply Chain Collaboration
and Efficiency
 Supply Chain Mo del Foundation

papiNet messages can be categorized according

to the Supply-Chain Council’s, Supply-Chain
Operations Reference (SCOR) model

Plan Source Make Deliver Utility

• Product • Request For • Product • Delivery • Credit/Debit Note

Attributes Quotation Quality Message • Business
• Planning • Availability • Usage • Goods Receipt Acknowledgement
• Purchase Order • Inventory • Invoice • Information Request
• Order Change • Complaint
Confirmation • Product • Complaint Request
• Call-Off Performance
• Order Status
• Inventory Status
Ex ecutio n St yle s

Traditional The papiNet Way

Approach: “Efficient and cost effective “An efficient and cost effective
transactions” supply chain”
Scope: Transaction between trading The entire supply chain
partners
Objectives: Transactional efficiency Operational improvement

ROI: Break-even (at best) Positive

Impact: Enables reduced admin and Enables reduced operating costs,

systems cost improved quality, throughout and
working capital
Potential $ Tens-hundreds of Tens-hundreds of millions/company
Return: thousands/company
How viewed: An IT project A margin improvement project-
strategic enabler for supply chain
improvements
 The Supply Chain “Iceberg”
Perceived Value

Transactional
Efficiency

Critical Data to improve:

Trim waste
Multiple handling
Intrinsic Value
Transit damage
Web breaks Process delays
Strip waste
Press delays Damage
Press damage
Delays
End-to-end Yield
Excess freight
cycle-time

Inventory turns
Warehouse fees

Late
Deliveries
 papiNet Value Proposition

Specifications
Data Collection
•papiNet Messages •Publishers/ Data
Catalogers Transmission
•Common Definitions
•Printers (XML)
•Standards
•Paper Companies

Standards are fundamental to an efficient supply

chain:

 Enable timely, efficient and effective communications

 Avoid costly/non-value added translation activities

 Enable fast and widespread connectivity

 Avoid “one-off”custom connections

…This must be done, but it only enables collaboration
 Supply Chain Benefi ts

 Cost
 Reduced inventories
 Reduced waste
 Reduced total system costs

 Quality
 Reduced variation and increased quality through data-driven
performance feedback
 Service
 Establishment of a collaborative framework
 Near real time information flow

 Business growth opportunities

 Preferred source for new opportunities
 Expanded benefits to other customers
 Th e Th ree Ts

Velocity
Timeliness
Acceleration

Collaboration
Empowerment
The 3 Ts Trust Information(eg. open schedules)
Sharing
Accountability
Key Ingredients
Understanding the process
For Improving
Supply Chain Transparency
Ability to see the real situation
Efficiencies