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  1. 1. <ul><li>AIM 4343 </li></ul><ul><li>03/22/2004 </li></ul>
  2. 2. What is Supply Chain Management (SCM) ? <ul><li>SCM is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize systemwide costs while satisfying service level requirements. </li></ul>
  3. 3. What is Electronic Data Interchange (EDI) ? <ul><li>EDI is a set of standards which allow trading partners to use electronic (instead of paper) means to exchange data when performing purchasing, shipping, and other transactions. Communication via EDI can be established via private and public nets, the most popular being the internet. One of the benefits of using EDI is the reduction in information lead times (e.g., the time it takes to process an order). </li></ul>
  4. 4. What is Enterprise Resource Planning (ERP)? <ul><li>ERP is a business management system that integrates all facets of the business, including planning, manufacturing, sales, and finance so that they can become more closely coordinated by sharing information. ERP software models and automates many basic processes, such as filling an order or scheduling complex, expensive links between computer systems in different areas of the business. </li></ul>
  5. 5. Major segments of the Enterprise Application industry <ul><li>Enterprise Application </li></ul><ul><li>ERP SCM </li></ul><ul><li>SCP SCE </li></ul><ul><li>SCP—Supply Chain Planning </li></ul><ul><li>SCE—Supply Chain Execution </li></ul>
  6. 6. Major segments of the Enterprise Application industry <ul><li>Supply Chain Planning (SCP): Software developed by companies in this segment is associated with demand, transportation, supply, and manufacturing planning. </li></ul><ul><li>Supply Chain Execution (SCE): Software developed by companies in this segment is associated with execution tasks such as: warehouse, transportation, and order management. </li></ul>
  7. 7. ERP vs. SCP <ul><li>Whereas ERP systems focus on transaction processing and SCE systems on executing decision in supply chains, SCP software is designed to provide decision support . Improving the quality of decisions is the target of SCP systems; improving the quality of transactional data, the target of ERP systems. </li></ul>
  8. 8. ERP vs. SCP <ul><li> ERP SCP </li></ul><ul><li>• Focus Transaction processing Decision making and support </li></ul><ul><li>• User group People running daily Decision makers and </li></ul><ul><li> operations planners </li></ul><ul><li>• # of users 50-500 5-30 </li></ul><ul><li>• Implt’n time 14-48 months 6-12 months </li></ul><ul><li>• Payback period 24-60 months 6-12 months </li></ul><ul><li>• Area improved operational efficiency, demand planning, manufac- </li></ul><ul><li> control and visibility turing, planning, warehouse </li></ul><ul><li> of business transactions & transportation management </li></ul><ul><li>• Implementation relational data storage memory-resident modeling </li></ul><ul><li>technology and rule-based transac- and algorithms </li></ul><ul><li> tion processing </li></ul>
  9. 9. Elements of SCP systems <ul><li>Typical SCP systems consist of the following products: </li></ul><ul><li>• Demand Planner : using a combination of historical demand data, causal variables, and strategic plans to generate and consolidate demand forecasts from different departments and planning units. </li></ul><ul><li>• Factory Planner : supporting, for a single factory, short to medium term procurement, production, materials handling, and capacity planning to improve operational efficiency. </li></ul>
  10. 10. Elements of SCP systems (Cont’d) <ul><li>• Supply Chain Planner : extending planning capabilities across the supply chain and over a longer time horizon. Its master-planning module is used to develop, for an entire supply chain, a master plan that includes, at an average level, when, where, and in what quantities to purchase, produce, store, and ship both intermediate and finished goods in order to meet customer demand and inventory targets. </li></ul><ul><li>• Distribution Planner : enabling logistic managers to create operating plans that meet their supply chain’s global objectives. </li></ul>
  11. 11. Elements of SCP systems (Cont’d) <ul><li>• Transportation Planner : planning the transportation resources needed to move materials and goods within supply chains, so as to minimize costs while meeting deadline constrains. </li></ul>
  12. 12. Innovations in Demand Planner <ul><li>Time series methods use inferences from patterns identified in historical demand data to draw conclusions about the future values of the series. Two popular time-series-based techniques are “moving average” and “exponential smoothing” </li></ul><ul><li>Causal models use data from sources other than the series being predicted. Regression techniques are often used to analyze past data for causality in the event an explicit relation is not already known. </li></ul><ul><li>Subjective methods are often used in situations in which historical data are either scarce or not very helpful in predicting future sales. </li></ul>
  13. 13. Innovations in Master Planner <ul><li>• Master planning is the macro-level production planning that enable a company to produce efficiently the quantity and mix of products that customers might require in the “intermediate term”. </li></ul><ul><li>• The master planner component of a SCP often incorporates innovations that (1) offer a friendly user-interface to the planner, and (2) incorporate a number of decision rules (or heuristics) that have been identified and tested in different applications. </li></ul>