Zen and the Art of SCM
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  • 1.  What is Supply Chain Management (SCM)? Goals of SCM Perdue Farms Case Study Questions Real World Activities Conclusion
  • 2.  “Cross functional inter-enterprise system them uses information technology to help support and manage the links between some of a companies key business processes and those of its suppliers, customers, and business partners”
  • 3.  Create a fast, efficient, low cost network of business relationships Get a product from concept to market
  • 4.  Supplier of agricultural products Made critical investments in SCM infrastructure to make sure products arrive fresh “Getting the turkey from farm to table is a race against time”
  • 5.  Demand Forecasting  Accurate  Realistic Collaboration with business partners  Internal (Marketing, Production)  External (Suppliers, Distributors) Cohesive network  IT Systems  Infrastructure Case Study Question #1
  • 6.  Supplier relationships Logistics Systems Information Systems  Accuracy  Consistency  Reliability/Stability Case Study Question #1
  • 7.  Regulations Weather Natural Disasters Government Intervention Competitor Action Inflation/Deflation Case Study Question #1
  • 8.  Increasing use of gift cards poses a unique problem to SCM:  Know there will eventually redemption and total dollar amount  But don’t know when, where, or what will be redeemed Causes issue with demand planning and supply chain management  20% redeemed week after Christmas  80% redeemed January and February Case Study Question #2
  • 9.  Strategy 1: Require online activation and offer discount to online products.  Customer can have the item they want shipped to the store of their choosing  No need to carry excessive inventory in store Strategy 2: Use information from holiday season and compare against dollar amount for a rough estimate of demand post-holiday season  Offers some rough demand planning based  Realistic and accurate Case Study Question #2
  • 10.  http://www.dimpledough.com/corporatecard http://www.retailsolutionsonline.com/article. mvc/DimpleDough-Releases-Total- Corporate-Gift-0001?VNETCOOKIE=NO
  • 11.  Holiday Season Spending Patterns  Total of $100 spent at XYZ Inc. ▪ $30 on TVs ▪ $40 on Candy ▪ $25 on Dog Food ▪ $5 on DVDs After holiday season spending pattern should mirror holiday season spending pattern We know $100 was purchased as gift cards Mixture of smaller and larger goods Case Study Question #2
  • 12.  The more information that is available, the more precise a firm can be in managing inventory  Location Level  Category/SKU Level Information on category demand, inventory turnover, and lead times can be invaluable Effectively using data can minimize inventory levels (and free up cash!) Case Study Question #3
  • 13.  Store A turns over its TV inventory every 3 days, while Store B turns over its TV inventory ever 12 days  Look for trends in sales to determine proper inventory levels  Monitor for possible changes in trend Supplier X lead time for orders in 120 days, while Supplier Y lead time for orders in 90 days but is more costly. Both suppliers supply the same product  Use Supplier X to satisfy base demand  Use Supplier Y to satisfy peaks in demand Case Study Question #3
  • 14.  Best Buy – “Bullwhip Effect”  Reduced demand forecast for Electronics  Reduced demand for Blue Ray Players  Reduced demand for semiconductors  Reduction of small business/manufacturing workforce by 75% http://online.wsj.com/article/SB124260855682928885.html Real World Activity #1
  • 15.  Sony PS3 SCM Failure  Sony launched 400k units of PS3 in USA on November 2006.  Despite there was a lack of availability of the Blu-Ray components for its Blu-Ray drive, this feature was a added value.  The Demand was higher than expected  January 2007, 1,000,000 consoles were shipped to USAhttp://mba.tuck.dartmouth.edu/digital/Research/AcademicPublications/GameC onsoles.pdf
  • 16. How do you do your holiday shopping?
  • 17. Darcy Last minute, not concerned with price at very last minuteHeli Well thought out in advanceKim Value shopper, goes wherever the sale isHermela Last minute value shopper, tough decisions madeDrew Partly skilled and thought out planning, last minute and haphazard 5 consumers with very different purchasing styles , makes it hard to plan! Diverse planning practices exist in the same company! Real World Activity #2