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Supply Chain Management-Drivers


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Supply Chain Management-Drivers

  1. 1. Presented By: • Kapil Jain 2013PIE5199 Submitted to: Prof. Rakesh Jain Enabling Technologies 1
  2. 2. Content  CPFR-Collaborative Planning, Forecasting and Replenishment ECR-Efficient Consumer Response VMI-Vendor Managed Inventory ERP-Enterprise Resource Planning SCM Software-Supply Chain Management Software  RFID-Radio Frequency Identification
  3. 3. CPFR- Collaborative Planning, Forecasting and Replenishment
  4. 4. What is CPFR ?  CPFR is a tool used to enhance the supply chain that should optimally results in lower inventories, logistic costs and create efficiency in the whole supply chain to all participants.  CPFR uses cooperative management in sharing key information about the supply chain between suppliers and retailers (sellers and buyers) who work together to satisfy the needs of the end customer.
  5. 5. What are the Typical Tasks Performed under CPFR ? In more detailed description of CPFR, the four collaborative activities are divided into 8 tasks – two for each collaborative activity:
  6. 6. What are the Benefits of CPFR For Retailers?  The benefits include better store shelf stock rates, lower inventory levels, higher sales, and lower logistics costs. This leads to higher customer satisfaction and increased profits for the retailer.  The whole purpose of a retailer is to maximize profits. Maximizing profits increases the financial strength of the retailer, allowing it to invest its’ profits in different business ventures, allowing for expansion. What are the Benefits of CPFR For Manufacturer ?  If a manufacturer is known for having good customer service, new clients are more likely to approach the manufacturer for new manufacturing contracts, which also increases profits.
  7. 7. What are the Challenges For CPFR ?  No shared targets, having a trading partner that focuses on the traditional supply chain steps, and not on the exception/review process.  Not having adequate information technology/expertise.  The lack of trust in sharing sensitive information, the lack of internal forecast collaboration, and fragmented information-sharing standards.
  8. 8. What are the Next Steps For CPFR ?  As the dynamics of supply chain and consumer demand patterns change, CPFR needs to adjust accordingly.  CPFR would be to include multiple Tiers to the model, where all the suppliers could communicate and share information not only with the retailer but with each other at the same time.  To increase the importance of transportation in the model by including outside logistics firms into the system of CPFR.
  9. 9. ECR- Efficient Consumer Response
  10. 10. Introduction to ECR  Efficient Consumer Response (ECR) is a grocery industry management strategy designed to make the industry more efficient and responsive to consumers' needs.  ECR is a grocery industry supply chain management strategy aimed at eliminating inefficiencies, and excessive or non-value-added costs within the supply chain. Thus, delivering better value to grocery consumers.  It is designed to re-engineer the grocery supply chain away from a “push system” in which manufacturers “push” products into stores, towards a “pull system” in which products are “pulled” down the supply chain into
  11. 11.  The ultimate goal of ECR is to produce a responsive, consumer-driven system which allows distributors and suppliers to work together in order to maximize consumer satisfaction and minimize cost.  In order to achieve the goal, ECR proposes changes in nearly all the grocery industry business practices to make them efficient.  The technologies, which are primarily electronic commerce (ecommerce) components, are used to automate these efficient business processes, as well as to enhance the communication and relationships between companies.  ECR is an application of ecommerce within the
  12. 12. The figure also demonstrates via arrows how subordinate ECR factors contribute to super-ordinate factors and, finally, to the practice of ECR overall. ECR factors and relationships
  13. 13. Strategies Efficient store assortment Efficient product introduction Efficient promotion Efficient product replenishment Processe s Category management Continuous replenishment program (CRP)
  14. 14. Enabling technologies Barcodes / Scanners Electronic Data Interchange (EDI) Computer-Aided Ordering (CAO) Cross-Docking/Direct Store Delivery Activity-based costing ECR adoption issues ECR education Change management Creating Performance Measures Level of program and technology implementation
  15. 15. In order to promote ECR implementation, there is still a need for- • investments in communication both in a technological and behavioral sense to address the reluctance in sharing information between trading partners. • Training to address the inadequacy of skilled personnel and to develop clear road maps for the implementation process. • Investments in IS to achieve compatibility between organizations. • Reassessment of priorities for resources. • Improving the strategic use of ECR to longer term business growth to overcome the problem of conflicting priorities.
  16. 16. VMI-Vendor Managed Inventory
  17. 17. Introduction to VMI Definition and Process Description  Vendor Managed Inventory (VMI) is a concept and process for consumption-based Supply Chain Management.  It requires the supplier to maintain inventories within predefined and mutually agreed thresholds based on a min / max-range.  The supplier can freely deliver within this indicated range.  The basic requirement for a successful VMI process is a good partnership and cross company information sharing and transparency close to real-time. Therefore communication and visualization of the min / max-range, the inventories and the gross demands of the customer is
  18. 18. Basic Principles and Information Flows VMI is based and controlled using the following information:  Customer’s actual gross demands = planned consumption (BOM explosion of the production plan without further parameters)  Actual customer inventory and daily consumption  Actual in-transit inventory  Actual supplier finished product inventory (optional)  Agreed minimum and maximum stock levels (fixed quantities or dynamic expression as days of stock)
  19. 19. Processes of VMI The Initialization Process
  20. 20. The Service Process The Operative Process
  21. 21. Goals and Benefits  Reduced non value-added activities and administration  More secure and efficient Supply  Reduced Inventory and Transport Costs
  22. 22. Further Considerations  Multi-Sourcing: VMI is not limited to single-sourcing. Prerequisites for using multi-sourcing are:  Separation of supplier-specific inventory information  Separation of planned consumption per supplier  The main focus is on direct material for series production, however other products may also be controlled by VMI.  The predictability, reliability and relative stability of the demands is important (VMI does not resolve allocation problems or very volatile demands)  All data has to be up-to-date and correct, and sent on a regular basis, e.g. daily  Flexibility agreements should be committed  Bilateral agreements regarding transport are essential (frequency, minimum lot sizes…)
  23. 23. Tracking / Alerting / Early Warning Based on all the information flows described above an alert system is necessary to provide early warning of issues requiring corrective action.
  24. 24. ERP-Enterprise Resource Planning
  25. 25.  ERP is a software architecture that facilitates the flow of information among the different functions within an enterprise.  Similarly, ERP facilitates information sharing across organizational units and geographical locations.  It enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion. ERP-Enterprise Resource Planning
  26. 26.  ERP provides the backbone for an enterprise-wide information system. At the core of this enterprise software is a central database which draws data from and feeds data into modular applications that operate on a common computing platform, thus standardizing business processes and data definitions into a unified environment.  With an ERP system, data needs to be entered only once.  The system provides consistency and visibility or transparency across the entire enterprise.  A primary benefit of ERP is easier access to reliable, integrated information.  A related benefit is the elimination of redundant data and the rationalization of processes, which result in
  27. 27. ERP Software Vendors  SAP AG-SAP stands for Systems, Applications and Products in Data Processing.  SAP AG was founded in Germany in 1972 by five engineers who wanted to produce integrated business application software for the manufacturing enterprise.  Seven years later, the company launched its first enterprise software, R/2, which was designed around a centralized, mainframe-based database.  SAP’s client/software product, R/3, was introduced in 1992 and quickly came to dominate the ERP software market.
  28. 28. Some Other ERP Software Vendors  J.D. Edwards  Baan
  29. 29. SCM Software Supply Chain Management Software
  30. 30.  Supply Chain Management (SCM) software traditionally deals with five distinct processes: plan, source, make, deliver, and return.  The SCM market is currently led by vendors who provide solutions as one component of their product portfolio, such as ERP vendors SAP, with its mySAP SCM suite, and Oracle, which offers a series of SCM solution.  Oracle in particular has grown its line with the acquisition of PeopleSoft (and PeopleSoft acquisition J.D. Edwards), as well as the Oracle Retail offering, based on its purchase of Retek. Along with Oracle Retail, the company also offers the Oracle E- Business Suite SCM, PeopleSoft enterprise SCM, and JD Edwards EnterpriseOne SCM suites. The space also includes specialty vendors, whose core offerings are SCM solutions.  i2 Technologies is the leading vendor in the pure-play
  31. 31. Solution Set Enterprises selecting supply chain management tools and applications should consider the following key differentiating characteristics: 1. Systems Specifications 2. Electronic Collaboration Solutions 3. Process Integration 4. Interoperability/Ease of Integration 5. Standards Compliance 6. Flexibility 7. Customer Relationship Applications 8. Industry Focus/Vertical Markets
  32. 32. mySAP Supply Chain Management  SAP gained its reputation as a provider of robust, full- featured ERP solutions for multi-national companies, and it has gained the same reputation in the SCM market.  As part of its mySAP Business Suite, mySAP SCM segments its functions into categories of planning, execution, coordination, and collaboration.  It also provides a set of supplier relationship and execution capabilities, which combine to offer one of the most comprehensive solutions in the market.
  33. 33. Oracle Supply Chain Management  Oracle has invested heavily in its applications suite and its infrastructure.  It has complemented its ERP portfolio with a solid supply chain management suite that satisfies planning and execution capabilities, as well as a good CRM portfolio and a strong vertical market focus that targets the transportation, communications, consumer packaged goods, high tech, manufacturing, and government markets.
  34. 34. i2 Technologies The company's SCM suite include products that are designed to meet customers’ business needs around five optimizations, which are: 1. Revenue and Profit Optimization. 2. Spend Optimization. 3. Production Optimization. 4. Fulfillment Optimization. 5. Logistics Optimization.
  35. 35. RFID-Radio Frequency IDentification
  36. 36.  RFID = Radio Frequency Identification.  An ADC (Automated Data Collection) Technology that: • uses radiofrequency waves to transfer data between a reader and a movable item to identify, categorize, track.. • Is fast and does not require physical sight or contact between reader/scanner and the tagged item. • Performs the operation using low cost components. • Attempts to provide unique identification and backend integration that allows for wide range of applications.  Other ADC technologies: Bar codes, OCR. RFID-Radio Frequency IDentification