Submitted By Anoop.

N 3-rd Semester MBA IMK,TVM 2011-2013(Evening)

What is Supply chain

A supply chain is a system of organizations, people,

technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value

 A typical supply chain begins with ecological and

biological and political regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., component construction, assembly, and merging) before moving on to several layers of storage facilities of everdecreasing size and ever more remote geographical locations, and finally reaching the consumer.

 Supply Chain Management encompasses the planning and

management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology. In essence, supply chain management integrates supply and demand management within and across companies.

Supply Chain Management (SCM) Systems

SCM is the process of effectively managing the

components of an extended value chain--from suppliers, through manufacturing and distribution chain, and to the consumers.

SCM information systems use technology to more effectively manage supply chains

Why Supply Chain Management?

1950-1980s Manufacturing 50 years ago, U.S. is the only country that can manufacture cars. You buy a car from GM, all the money will go to the GM. 1980-2000s Supply Chain Management Today, foreign parts and labors are much cheaper than that in US. You buy a car from GM, only a portion of money will go to the GM.

Parts
Labor Overhead Management Marketing Total Cost

$5,000
4000 2000

3000 $14,000

Value Chain Analysis

Benefits of Value Chain Analysis Disintermediation to the Consumer

Cost/ Sweate r

Manufacturer

Distributor

Retailer

Customer

$48.50

Manufacturer

Retailer

Customer

$40.34

Manufacturer

Customer

$20.45

Stockless Inventory Compared to Traditional and Just-in-time Supply Methods

Information Technology for Supply Chain Management

Software Systems
Electronic Data Interchange (EDI) Material Requirements Planning (MRP) Manufacturing Resource Planning (MRP II) Enterprise Resource Planning (ERP) Supply Chain Management Systems (SCM) Customer Relationship Management (CRM) Internet-based Software

Network Infrastructure
Wide Area Network
Internet (for E-commerce: B2B, B2C)

Role of Information Technology in a Supply Chain

Information is the driver that serves as the glue to create a

coordinated supply chain Information must have the following characteristics to be useful: Accurate Accessible in a timely manner Information must be of the right kind Information provides the basis for supply chain management decisions Inventory Transportation Facility
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Characteristics of Useful Supply Chain Information

Accurate

Accessible in a timely manner

The right kind Provides supply chain visibility

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Use of Information in a Supply Chain

Information used at all phases of decision making:

strategic, planning, operational Examples:

Strategic: location decisions

Operational: what products will be produced during

todays production run

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Use of Information in a Supply Chain

Inventory: demand patterns, carrying costs,

stockout costs, ordering costs Transportation: costs, customer locations, shipment sizes Facility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.

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Role of Information Technology in a Supply Chain

Information technology (IT) Hardware and software used throughout the supply chain to gather and analyze information Captures and delivers information needed to make good decisions Effective use of IT in the supply chain can have a

significant impact on supply chain performance

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The Importance of Information in a Supply Chain

Relevant information available throughout the

supply chain allows managers to make decisions that take into account all stages of the supply chain Allows performance to be optimized for the entire supply chain, not just for one stage leads to higher performance for each individual firm in the supply chain

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The Supply Chain IT Framework

The Supply Chain Macro Processes Customer Relationship Management (CRM) Internal Supply Chain Management (ISCM) Supplier Relationship Management (SRM) Plus: Transaction Management Foundation Figure 16.1 Why Focus on the Macro Processes?

Macro Processes Applied to the Evolution of Software

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Macro Processes in a Supply Chain (Figure 16.1)

Supplier Relationship Management (SRM) Internal Supply Chain Manageme nt (ISCM) Customer Relationshi p Manageme nt (CRM)

Transaction Management Foundation (TFM)

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Customer Relationship Management

The processes that take place between an enterprise

and its customers downstream in the supply chain Key processes:

Marketing

Selling
Order management Call/Service center

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Internal Supply Chain Management

Includes all processes involved in planning for and

fulfilling a customer order ISCM processes:

Strategic Planning

Demand Planning
Supply Planning Fulfillment Field Service

There must be strong integration between the ISCM and

CRM macro processes

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Supplier Relationship Management

Those processes focused on the interaction between the

enterprise and suppliers that are upstream in the supply chain Key processes:
Design Collaboration Source Negotiate Buy Supply Collaboration

There is a natural fit between ISCM and SRM processes

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The Future of IT in the Supply Chain

At the highest level, the three SCM macro processes

will continue to drive the evolution of enterprise software Software focused on the macro processes will become a larger share of the total enterprise software market and the firms producing this software will become more successful Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

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Supply Chain Management (SCM) Systems

A typical SCM system might address the following

issues:
Planning Vendor selection Manufacturing Logistics Customer relationship

Supply Chain Management (SCM) Systems

Supply Chain Management (SCM) Systems

With the advent of the Internet, e-businesses began to demand different things from their SCM systems Most importantly, SCM systems vendors (largely the same vendors that provide ERP systems software) had to modify their products to include a Web-based interface The ultimate goal of a business ERP system is complete optimization of internal business processes

Supply Chain Management (SCM) Systems

The two basic types of SCM system software are:
Supply Chain Planning software (SCP): uses

mathematical models to predict inventory levels based on the efficient flow of resources into the supply chain Supply Chain Execution software (SCE): is used to automate different steps in the supply chain such as automatically sending purchase orders to vendors when inventories reach specified levels

Major Supply Chain Planning (SCP) Players

i2 Technologies i2s strength began with its powerful Advanced Planning and Scheduling (APS) Manugistics
Oracle SAP Advanced Planner and Optimizer (APO)

SAP Advanced Planner and Optimizer (APO)

Supply Network Design (SND)

Levels of SAP APO

The Supply Chain Cockpit (SCC) Demand Planning (DP) Supply Network Planning (SND)

Collaborative Planning, Forecasting, and Replenishment (CPFR)

SAP R/3

Oracle Supply Chain Planning

Oracle Supply Chain Planning is part of the Oracle E-Business Suite's family of Supply Chain Management solutions
It includes
Demand Planning Collaborative Planning Inventory Optimization

Manufacturing Scheduling, and

Global Order Promising

Customer Relationship Management (CRM) Systems

Customer relationship management (CRM) systems, sometimes called e-CRM systems, use technology to help an e-business manage its customer base
CRM allows an e-business to match customer needs with product plans and offerings, remind customers of service requirements, and determine

what products a customer has purchased

Relationship among SCM, ERP, CRM

SCM

ERP

CRM

Broader SCM

E-Business and ERP Systems

An e-business must keep track of and process a

tremendous amount of information Businesses realized that much of the information they needed to run an e-business stock levels at various warehouses, cost of parts, projected shipping dates could already be found in their ERP system databases A major part of the online efforts of many e-businesses involved adding Web access to an existing ERP system

Outsourcing ERP Systems

One response to the challenge of managing a complex

ERP system is to outsource it Some businesses choose to outsource not only the installation but also the ERP system software

The Transaction Management Foundation

Enterprise software systems (ERP)

Earlier systems focused on automation of simple

transactions and the creation of an integrated method of storing and viewing data across the enterprise Real value of the TMF exists only if decision making is improved The extent to which the TMF enables integration across the three macro processes determines its value

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Intranet vs. Extranet

Intranet is to use Internet technology and protocol

(TCP/IP) for the internal communications Extranet is to use Internet technology and protocol for the internal and suppliers communications

Network Infrastructure: Wide Area Networks (WANs)

WAN Technologies
Ordinary telephone line and telephone modem. Point-to-Point Leased lines (such as T1 line) Public switched data network (PSDN)

Such as ATM, Frame Relay

Send your data over the Internet securely, using Virtual

Private Network (VPN) technology

PSDN VPN

Global Considerations in Using SCM/ERP Systems

Time differences
Language issues Currency exchange rates Tax Different accounting systems Internet and security restrictions Culture and religion holidays