BDT T4

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OM
IS

Organizational
WE ARE
BUSINESS
Decision Making
Supply Chain Management (SCM)
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Supply Chain Management
Why do organizations place so much effortinto
managing their supply chain?
What is the three main links associatedwith
the flow of products through a typical supply
chain?
What are some of the core managementconcerns
of the various organizationscomprising a typical
supply chain?
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Supply Chain Management
Distribution Cost
? The costs associated with the movement of a
good through a typical supply chain can be up
to three times the actual cost associated with
the production of a good.
Distribution Loss Cost
? Billions of dollars are lost annually by
members of a typical supply chain due to
supply chain waste. Poor production planning,
inefficient distribution processes, ineffective
inventory management practices, needless
competitive posturing result in needlessly
increased distribution costs.
Waste Impacts Competitive Position
? Supply chains that can work together to bring
a product to the consumer at the lowest
possible cost can either 1) pass the savings
onto the consumer (competitive advantage), or
take the savings as shared profits for supply
chain members (profit taking).
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Supply Chain Management
Three Main Links in the Chain

• Materials flow from suppliers and their
  upstream suppliersat all levels in the chain.
• Transformation of materials into semi-finished
  and finishedproducts through the organizations
  own production process.
• Distribution of products to customers and their
  downstreamcustomers at all levels in the chain.

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Supply Chain Management
Organizations must embrace technologies that can
effectively help to manage supply chains.
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Supply Chain Management
Supplier
? What of my products should I produce? (no stock
outs)
? How much of my product should I produce? (JIT
manufacturer needs)
? When should I produce each product to meet
manufacturer needs? (JIT)
? How much inventory should I have on hand?
(spoilage/holding cost)
Manufacturer
? What of my products should I produce? (no stock
outs)
? How much of my product should I produce? (JIT
buyer)
? When should I produce each product to meet
buyer needs? (JIT)
? How much inventory should I have on hand?
(spoilage/holding cost)
Transporter
? How quick do I need to respond to manufacturer
transportation needs? (on time pick-up and
delivery to support JIT)
? What is a reasonable rate to charge for product
delivery? (competition)
? How do a provide my customer with up-to-date
status on the delivery of products? (customer
service)
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Supply Chain Management
Retailer
? How much of each product should I buy? (no
stock outs)
? What products should my store carry? (consumer
needs)
? How much inventory should I have on hand?
(spoilage/holding cost/theft/loss/product
timeliness)
? How much should I pay to buy each product?
(economies of scale)
? How much should I sell each product for?
(business strategy)
Consumer
? Which retailers have the products I like to
buy? (no stock outs)
? Which retailer sells their products at a price
I am willing to pay? (retailer selection)
? Which retailer provides the highest customer
service? (customer service)
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Supply Chain Basics
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Supply Chain Management
What is ITs role in supporting SCM?
What factors are driving SCM?
What are the seven principles of SCM?
What are some SCM best practices?
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IT's Role in SCM
ITs primary role is to create integrations or
tight process and information linkages between
functions within a firm
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IT's Role in SCM
Factors Driving SCM
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Factors Driving SCM
1) Visibility
? The ability of all organizations within a given
supply chain to have access to pertinent
information concerning the flow of goods both
upstream and downstream in the supply chain.
? Visibility allows organizations to act in
concert with one another to ensure the
effectiveness and efficiency of the complete
chain.
? Bullwhip Effect this occurs when poor product
demand information is passed up the supply
chain from one organization to the next
resulting in the development of a faulty demand
model. The end result is too much product
supply in the chain.
2) Consumer Behavior
? Customer demands for a product drive the supply
chain. Supply chains that are quickly able to
respond to dynamic consumer demands and can
rapidly bring the product gain a competitive
advantage.
? Demand Planning Software applications that use
both historical and current status
information to generate demand forecasts.
Typically, these forecasts use models that
include factors like past sales, customer
demand, demographics, marking plans, etc.
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Factors Driving SCM
3) Competition
? The game is simple. Which ever supply chain
can provide its products to the consumer at
the least cost in a timeframe demanded by the
customer wins!
? IT can be used to support both the efficiency
and timing factors
? Supply Chain Planning Software (SCP)
applications that use advanced mathematical
models and algorithms to help plan the smooth
flow of goods through the various organizations
comprising a supply chain.
? Supply Chain Execution (SCE) Software
applications and technologies that automate the
different steps and stages of the supply chain.
Examples include bar coding, EDI, EFT, RFID
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Factors Driving SCM
SCP and SCE in the Supply Chain
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Factors Driving SCM
4) Speed
? three factors fostering speed include
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SCM Success Factors
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SCM "Best Practices"

• SCM industry best practices include
• Make the sale to suppliers
• Wean employees off traditional business practices
• Ensure the SCM system supports the organizational
  goals
• Deploy in incremental phases and measure and
  communicate success
• Be future oriented

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Why Invest in SCM?
Top reasons why more and more executives are
turningto SCM to manage their extended
enterprises
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SCM Success Stories
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Any Questions?