2. Supply chain management in
the internet age
Supply chain management (SCM) is essentially
information driven function, since co-ordination
between various players in the chain is the key
to effective management in the supply chain by
working together to deliver the right products –
• At
the right time
•At the right place
•At the best price.
3. Effective management of supply
chain results in –
Reduced lead time
Inventory and operational costs while
improving
efficient
consumer
responsiveness (ECR)
Customization, ultimately leading to
enhanced customer satisfaction and
retention.
4. E-SCM: The solution range
The major categories of SCM software are
Supply chain planning and execution
Warehouse management software
Transportation management software
5. Electronic Supply Chain
Management
SCM process is composed of a wide range of
interrelated
sub-processes –
Time dimension through which SCM activities are
segmented into short term, midterm and long term
activities i.e., scheduling, operational, tactical and
strategic.
Functional dimensions where the activities are
separated by production, transportation, storage and
sales, outside of the planning funnel and the SCM
7. Challenges of the SCM –
The late supplier delivery creates an unexpected
volume of available capacity during a certain period.
It also creates a capacity shortage in the following
period, where the delayed orders will be competing
for the capacity that might already be allocated to
other orders.
The delayed production orders may end up affecting
the distribution plans.
These delays in the distribution plan may force the
company to break the delivery promises made to
customers based on the original supply plan.
8.
Finally, the purchasing plans for the components that
were supposed to be consumed in production orders
together with the supplier’s delayed components
specify purchases that will arrive at the company’s
docks too early, compared with the updated need.
9. Sourcing decisions –
Material costs
Transportation costs from supplier to facilities
Production costs paid to facilities
Material inventory costs
Inventory costs of products in facilities
Transportation costs from facilities to
warehouse
Inventory costs of products in warehouse
Transportation costs from warehouse to
customers
10. Models for implementing SCM –
Forecasting models – these models
allow prediction of demand based on past
data or other parameters that are
independently available. They enable
planning, given lead time necessary for
response.
Mathematical models –
Location models – help in planning the
optimal
location
of
plants
and
warehouses, considering the inbound and
11.
Allocation models – help in optimally allocating
commodities from source to destination in a multisource, multi-dimensional environment.
Distribution network design models – these are
usually comprehensive in nature, deciding between
multi-stages
distribution
networks,
location
warehouses and bulk points and even sometimes the
transportation made choices.
Inventory models – these have key role in logistics
management e.g., buffer stocks to take care of
uncertainties at finished goods, warehouse and
retails.
Routing models – these models allow optimal
routing on a transportation network from a given
source to a destination.
Scheduling problems – these models enables
allocation of resources to particular activities.
12. E-SCM Portfolio – A
Contemporary View
Business challenges –
Continuous product innovation – the open
economy introduced by globalization demands the
need for continuous product innovation and
improvement on par with global standards
Improve business agility and responsiveness –
the dynamic global business environment impacts the
profitability/revenue of the enterprises dramatically
Winning market to gain competitive advantage –
the extent of competitive advantage gained and
effective use of it can answer the question of business
sustenance.
Achieving cost containment – offering world class
services/products at competitive price
13. SCM – Tool for maximizing
value delivery –
Decrease inventory costs by matching
production to demand
Reduce overall production costs by
streamlining the flow of goods through
the production process and improving
information
flow
between
an
enterprise, suppliers and distributors.
Improving customer satisfaction by
offering
increased
speed
and
adaptability.
16. Creating new business models
Electronic information integration – it refers
to sharing of relevant information among all the
partners of supply chain in the most
transparent and genuine way.
Electronic synchronization of planning – it
is the process that synchronizes the
forecasting and replenishment strategies
among the partners of the supply chain.
Electronic workflow coordination – it is one
of the important demand of supply chain. Work
flows such as financial exchange, order
execution, design
optimization, procurements, etc.
17.
New business model – in recent year’s
new and innovative business models
have surfaced in the marketplace. Some
of them are –
Virtual resources
Supply chain restructuring
Service support
Mass customization
The Click – and – Mortar model for order
fulfilment
18. Bullwhip – Effect: a solution
roadmap
Change in customer orders
Price and promotions
Manufacturing scheduling
Supplier’s inability to provide at right
time
Unknown factors
19.
20. The solution footprints for
Bullwhip Effect –
Batch order processing
Logistics considerations
Safety stock monitoring
Creditworthiness of the customers
Special purchase contract
Special sales contract
False order and cancellation
21. e- Technologies for effective
SCM
Barriers to E-Technologies –
The uncertain cost of implementation
More pressing corporate priorities
Lack of proven benefits within the
industry
Perceived or actual low use of the
internet by customers and suppliers
The key, privacy, taxation and emerging
intellectual property issues
22. Still e- technologies are
leading towards –
E – learning opportunities
Knowledge management
E – HR management
E – business intelligence
E – supply chain management
Project management
Professional service automation
Sales force automation
E – sourcing
E – marketing
23. SCOR Model –
SCOR model consists of the best
designs of supply chain. The 5 main
processes of this model are –
Plan
Make
Source
Deliver
Return
24. These are organized at 4
different hierarchal levels –
Main process
Cluster categorization (make – to –
order, make – to – stock and engineer
– to – order)
Detailed refinery
Information of the international
business enterprises
25. Built – to – order automobiles
(BTO) –
Knowledge management tools –
Intra – enterprise KM
Customer KM
Supplier KM
Extended inter – enterprise KM
26. Measurable benefits derived –
Enhanced customer responsiveness
More predictable forecasting
Enhanced speed to market
Sharing of best practises
Collaborative R&D
Profit sharing
27. What is RFID?? –
Radio frequency identification (RFID) is a
method of automatic identification which
relies on storing and remotely retrieving data
using devices known as RFID tags or
transponders which is a tiny object that is
either attached or incorporated to a person or
product.
Announcement by Wall – Mart regarding
RFID tags compulsion in 2003.
Initiatives by the Auto-IT centre of MIT, USA.
28. Bottleneck in adopting RFID –
Start from the very beginning
Effectively storing and managing huge
data
Data integration efforts
Master files for the product are usually
not configured for RFID mode
29. RFID compatible media –
Web service through world wide web
Global positioning systems (GPS)
RFID tags
Manufacturing execution systems (MES)
Enterprise resource planning (ERP)
Point – of – sale (POS) technology
30.
31. Benefits of RFID in SCM –
Advanced Shipping Notices (ASN)
Returned goods
Anti – counterfeit
Supply chain efficiency
Improved stock management
Reduction in labour costs.
32. SPCM cycle contains –
Identification of performance
exceptions
Understanding the related issues and
root cause
Offering the alternative courses of
action possible
Analyzing the impact of each
33. Decoupled extended supply chains –
The first information flow is the ordering and
payment system, followed by order tracking. It
is the flow from retailer to distributer and done
through internet or EDI. The information is
only visible to customers and finally for the
returns.
Semi extended supply chains –
The major challenge with this strategy
involves managing inventory. To be successful
with it companies must carefully think through
several design decisions on how to coordinate
their channels.
34. Fully extended supply chains –
The concept of famous home delivery approach is
known as fully extended supply chain. In this the
retailer’s supply chain is continuously linked from the
supply side all the way to the customer’s front door.
Centralized extended supply chains –
This strategy has 3 major advantages –
It eliminates the link between supplies by removing
stores.
It sets apart decoupled extended strategies
Working from a distribution centre rather than a store
allows aggregated inventory making it possible to
hold less inventory while having a wide range of
products and more stock.
35. IT in SCM –
Strategic planning for IT in SCM
Virtual enterprise and SCM
E – commerce and SCM
Infrastructure for IT in SCM
Knowledge and IT management in SCM
Implementation of IT in SCM
36. Impact of IT on SCM –
Information availability and visibility
Single data contract point
Decision based on total supply chain
information
Collaboration with supply chain
partners
37. E – SCM in Indian industries
The internet application in supply chain
management area can be classified into
4 areas –
Product and process design
E – marketplace and exchange
Collaborative planning
Fulfilment management
38.
Infomediary – a revolution in agri supply chain –
In the area of procurement, ITC developed an
innovative method using Internet. It used the
concept of infomediary – a website which provides
exclusive information related to one subject area. By
educating the suppliers – mostly farmers and
providing needed information, ITC was able to get a
lot.
E – Procurement – Supply is based on exact
requirements and the goods can be delivered just in
time. Vendors across the world can be accessed on
line anytime and production and delivery schedule
are planned accordingly. Inventory levels therefore
kept for a minimum lead time – sometimes even a
day low only.
39. Research methodology –
Sample
–
127
computer
hardware
companies
were
selected
from
the
membership list from MAIT (manufacturers
association of information technology – the
association of hardware, training and service
sectors of the Indian IT industry) website and
the centre for monitoring Indian economy
(CMIE) prowess database.
Questionnaire – Two sets were prepared.
On was for the procurement chain and other
for the distribution chain. It was focused on a
number of questions related to SCM. These
40. Data collection – Data collection was done
through a combination of e- mails, telephonic
interviews and personal interviews in
Chennai, Hyderabad, Pondicherry and
Bangalore. Total number of responses was
38 from 6 companies.
Results and analysis –
The result of the survey was summarized
under the following subsections –
Procurement/distribution characteristics –
including inventory, delivery time, etc.
Transportation and warehousing
Costs in supply chain
41.
Procurement side – The usage of
technological infrastructure like intranet and
internet are relatively very poor in the
procurement side of the computer hardware
industry. Speed cargo is the mode of
transportation that is used by all the nodes in
the transportation link of the procurement
chain.
Distribution side – The outsourced service
providers need to improve their services to
capture the full potential of the distribution
side. Most of the hardware companies are
not fully satisfied with their outsourced
service providers, implying that there is a lot
45. Implementation of the e –
procurement solution at FedEx
–
Phase – 1 – pilot implementation of Ariba’s e
– procurement solution that include
installation of e – commerce platform along
with Ariba buyer technology.
Phase – 2 – rollout of Ariba buyer to around
7000 IT division employees. The managers
were given charges of producing the
business requirements, documents and
project plans.
Phase – 3 – an overall plan was developed
to bring out each commodity whose major
supplier had electronic catalogs.
