Supply Chain Management

1. Supply Chain Management MIS 7223 Fall 2002

2. Outline • Definition • E-SCM • CPFR, CSCP and Effective Sales Response • Internet-Enabled SCM • Elements • Stages • Value Chains

3. Supply Chain • Core business processes that create and deliver a product/service, from concept through development and manufacturing/conversion, into a market for consumption • Supplier, Manufacturer, Distributor, Retail Outlet, Customer Poirier and Bauer, 2000

4. SCM • The methods, systems, and leadership that continuously improve an organization’s integrated processes for product/service design, sales forecasting, purchasing, inventory mgmt, manufacturing/production, order mgmt, logistics, distribution, and customer satisfaction. • Optimizing the creation and delivery of goods, services, and info from suppliers to business customers and consumers • Coordination of material, info, and financial flows • Info is replacing inventory Poirier and Bauer, 2000; Schneider, 2002

5. SCM • Same concepts as ERP extended to trading partners • Lack of info about customer demand = more inventory levels to manage unpredictability • Trends increasing need for SCM • Dispersion of mfg and distribution facilities • Channel unpredictability • Responsiveness over efficiency • Lower margins in return for market share • Goal of SCM – more cost effective customer accountability and responsiveness

6. SCM • SCM migration – enterprise to partners to direct connection with customers • Even if business model is not direct; use SCM to get demand signal from consumer upstream • E-SCM • Enable info sharing • Develop joint performance measures (not buying products but service of ontime delivery, etc.) • Redefine work (analogous to redefining customer value – who would be the best person to do this work) • Right chain structure is driven by Nature of Product

7. SCM • Supplier – Manufacturer – Distributor – Retail Outlet – Customer • Want transparent supply chain • Lack of info = more inventory and/or stockouts • Stockouts okay in some cases (i.e., cars), but not good for hot items (i.e., clothing)

8. Collaborative Planning, Forecasting, and Replenishment • CPFR requires creating a new business model • Holistic approach to SCM among a set of value chain partners • Can deliver increased sales, interorganizational streamlining and alignment, administrative and operating efficiency, improved cash flow, and greater return on asset performance Poirier and Bauer, 2000; Rayport and Jaworski, 2002

9. Collaborative Supply Chain Planning • CSCP is made viable by Internet technology • Designed to increase collaborative decision making between firms responsible for providing supply • Helps link suppliers and customers in the creation of mutual business plans through full network connectivity • Can include SC strategies, partnering agreements, promotion plans, product/service development, forecasting improvement efforts, and replenishment plans Poirier and Bauer, 2000

10. Effective Sales Response • Network response • Solidifying the external alliances that assures the value chain has the capability of giving an accurate and timely response to the orders it gets Poirier and Bauer, 2000

11. Internet-Enabled SCM • Enterprise Focus • Separate systems for each SC member • Partner Focus • Collaborative systems • Direct Focus • Shared market data and virtual fulfillment

12. Elements of SCM • Advanced scheduling • Demand planning • Order commitment • Transportation planning • Distribution planning

13. E-Business Modeling Poirier and Bauer, 2000

14. E-Business Development Framework Poirier and Bauer, 2000

15. SCM Stages • Enable info sharing • Create joint performance measurement system and collaborative planning processes • Realign work and collaborate • Redesign products and processes so that work becomes easier or more efficient

16. Wal-Mart’s Supply Chain • Use of data warehousing and data mining – used for decision-making on various management levels • “Retail Link” • Drive costs down before the product gets to each store Swift, 2001

17. Dell’s Supply Chain • Network of dedicated suppliers for JIT deliveries • Computerized global network of components and parts inventories • Timely information about demand forecast, cost of needed inventory, and “days of supply of inventory”

18. Value Chain • Union of supply chain and demand chain • Combination of how you get the components of your product and how you get the finished product to customers • Series of activities that your company engages in to create the value from which it extracts profit • Internet’s affect on the VC Carr, 2001; Fingar and Aronica, 2001; Pallatto, 2001

19. References • Carr, D. F. (2001). “Forging 21st-Century Value Chains: Weaving the Partnership Web,” Internet World. • Fingar, P. and Aronica, R. (2001). “Empower Your Customers – the Driving Forces of the Real New Economy,” Internet World, 15 July. • Kalakota, R., Robinson, M. and Tapscott, D. (2001). E-Business: Roadmap for Success 2.0, Addison Wesley Longman, Inc. • Pallatto, J. (2001). “Inside Intel’s Value Chain: A Case Study”, Internet World, 15 July.

20. References • Poirier, C. C. and Bauer, M. J. (2000). E-Supply Chain: Using the Internet to Revolutionize Your Business, Berrett-Koehler Publishers, Inc. • Rayport, J.F. and Jaworski, B.J. (2002). Introduction to E-Commerce, McGraw-Hill Companies, Inc.: New York. • Schneider, G.P. (2002). Electronic Commerce, 3rd edition, Course Technology: Thomson Learning, Inc. • Swift, R. S. (2001). Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice-Hall, Inc., Upper Saddle River, NJ.