Collecting, analyzing, and distributing transactional information to all relevant parties, SCM systems help all the different entities in the supply chain work together more effectively SCM has significantly improved companies’ forecasting abilities over the last few years Businesses today have access to modeling and simulation tools, algorithms, and applications that can combine information from multiple sources to build forecasts for days, weeks, and months in advance
CLASSROOM EXERCISE Supply Chaining Ask your students to try to choose an organization that is currently experiencing supply chain issues, perhaps an organization where the student has had recent issues, such as not receiving an order, receiving an incorrect order, or receiving someone else's order Be sure to have them list the names of the suppliers, manufacturers, distributors, retailers, and customers Ask the students to identify one or two areas where the organization can improve its supply chain Have each group present their supply chains to the class along with their recommendations for improvement
Considerable evidence shows that this type of supply chain integration results in superior supply chain capabilities and profits. CLASSROOM EXERCISE Near Beer Supply Chain Game This is an excellent exercise for students who are just learning about the supply chain. http://www.forio.com/nearbeer.htm
SCP and SCE both increase a company’s ability to compete SCP depends entirely on information for its accuracy SCE can be as simple as electronically routing orders from a manufacturer to a supplier
Why is information speed critical in a supply chain? If the information arrives three dates late, chances are high that managers have already made decisions based on current information that might have been inaccurate Information timeliness is critical IT is an enabler of information timeliness CLASSROOM EXERCISE Designing a Digital Dashboard for an SCM System Digital dashboards offer an effective and efficient way to view enterprisewide information at near real-time. According to Nucleus Research, there is a direct correlation between use of digital dashboards and a company’s return on investment (ROI), hence all executives should be using or pushing the development of digital dashboards to monitor and analyze organizational operations. Break your students into groups and ask them to develop a digital dashboard for the CEO of a transportation company. Be sure your students have addressed all of the following in their digital dashboard: Inventory Materials Demand/Supply Sales Supplier’s supplier Supplier Manufacturer Distributor Retailer Customer Customer’s Customer
As the business world increasingly shifts from product-focus to customer-focus, most organizations recognize that treating existing customers well is the best source of profitable and sustainable revenue growth Ask your students why, in the age of e-business, an organization is challenged more than ever before to truly satisfy its customers Business 2.0 ranked &quot;You - the customer&quot; as one of the 50 people who matter now for 2006. http://money.cnn.com/magazines/business2/peoplewhomatter/ These Web sites show the power people have in the consumer market today http://www.ihatedell.net/ http://www.donotbuydodge.ca/
Supply Chain starts with the customer: by cutting out retailers and selling directly to its customers, Dell is in a far better position to forecast real customer demand
2. Replace Inventory with Information!: to operate with close to zero inventory, Dell communicates constantly with its suppliers. It sends out status updates 3 times per day from its assembly plants; every week it updates its quarterly demand forecasts. By making communication its highest priority, Dell ensures the lowest possible inventory 3. If you cannot measure it, you cannot manage it: Dell knows what works because it measures everything from days in inventory to the time it takes to build a PC. As Dell slashed those numbers it got more efficient 4. Complexity slows you down: Dell cut the # of its core suppliers from several hundred to about 25. It standardizes critical PC components, which streamlined its manufacturing. Dell got faster by making things simpler 5. Create a watershed mind-set: Dell is not content with incremental improvement; it demands massive change. Each year, it wants its Austin-based PC assembly plant—already very fast—to improve production by 30%. “you don’t get big results if you don’t challenge people with big goals”
Organizations must embrace technologies that can effectively manage supply chains
Think of a business that you recently had a problem with, placing an order, receiving an order; Identify 1 or 2 areas where the business could improve its SCM with technology / information systems
Information technology’s role in the Supply Chain
At this point, the notion of virtually seamless information links within and between organizations is an essential element of integrated supply chains
Despite this however, remember: Privacy and security of customer information and intellectual capital remain a major concern and should be built into the system
5 basic SCM components Use metrics to meet demand Find reliable suppliers—deal with pricing, delivery, and payments with suppliers Manufacture product or service—Metric intensive! Logistics: deals with the processes & controls for efficient and effective transport and storage of supplies from supplier to customer Process for allowing customers to return defective and excess products
INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN
IT’s primary role is to create integrations or tight process and information linkages between functions within a firm
1980 Business Processes - In the case of larger, key clients it was a valuable tool for keeping the lines of communication open and tailoring service to the client’s needs. In the case of smaller clients, however, it tended to provide repetitive, survey-like information that cluttered databases and didn’t provide much insight.
1990 Resource Planning - In the 1990’s companies began to improve on Customer Relationship Management by making it more of a two-way street.
Instead of simply gathering data for their own use, they began giving back to their customers not only in terms of the obvious goal of improved customer service, but in incentives, gifts and other perks for customer loyalty.
2000 Customer Relationship Management - Life blood of most sales and service based business.
CRM is a business philosophy based on the premise that those organizations that understand the needs of the individual customers are best positioned to achieve sustainable competitive advantage in the future
CRM in many cases is about sifting through information
to reveal trends,
and predict results so that businesses can increase response rates& identify profitable customers
Integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems so that employees can make decisions by viewing enterprise wide information on all business operations
Really? What about access control & authentication? Remember Information Security!!!
Powerful Organizational Tools Reasons ERP Systems are Powerful Organizational Tools ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses ERP addresses the need for global information sharing and reporting ERP is used to avoid the pain and expense of fixing legacy systems
Applications such as SCM, CRM, and ERP are the backbone of e-business
Integration of these applications allows the unlocking of information to make it available to any user, anywhere, anytime
PeopleSoft: MainStreet Component PeopleSoft CRM X SCM X Financial management X HRM X Service Automation X Supplier relationship Management X Enterprise Performance management X Business Intelligence Learning Management Order management Manufacturing Marketing Sales
Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together
Middleware – several different types of software which sit in the middle of and provide connectivity between two or more software applications
Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors
EAI example, if a company is looking at purchasing Siebel CRM and they find out the Siebel has already built many integrations to PeopleSoft financials, it would be more inclined to purchase the product