SCM: 供應 鏈 子管理 Introduction and Its Technology Research Trends

1. SCM: 供應鏈子管理Introduction and Its Technology Research Trends 2005. 11. 22. Heung-Suk Hwang (黃 興 錫) Department of Business and Administration, Kainan University, Taiwan

2. Characteristics of Consumer Product Goods Industry • Global Supply Chain / Complex Distribution Networks • High Volume - Low Margins • Competitive Environment / Promotions • High Customer Service / Make to Stock • Demand exceeds Supply / Product Mix Optimization • Seasonal Demands / Inventory Build Ups • Value Added Service for Customers (Retailers)

3. 物流管理 發展的 段階 5 Steps of e-Business Progress Model Contents Managing policy Step 1 Internet Application, only for com. PR Homepage Dev. Step 2 Start to develop new product and services according to internet level e-mail, Marketing Co-invest with venture co. Step 3 Implementing the internet technology into industry works Development of Intra-net Step 4 Using internet suppliers, co-relate customers and business partners Cooperation, networking Step 5 Customer’s information delivered in real time Data marketing

4. Change patterns of e-Business: Sales and circulation e- Business Conventional Business ▶ For the customers, needs several steps between suppliers and customers ▶ The cost of several steps distributed to the customers ▶ Generally the sales model is based on sales commission ▶ Direct sales between producers and customers ▶ Cost down portion by on-line trade is returned to customers ▶ Producers transfer the sales cost into marketing cost 分 配 小 買 業 消 備 者 製造業者 消費者 製 造 業 供 給 者

5. Evolution to Logistics/SCM e-Logistics 2000’s Integrate by Value Chain Management SCM Between Company ERP Supply Chain Management 1990’s MRPII Within Company Enterprise Resource Planning 1980’s MRP Manufacturing Resource Planning 1970’s Materials Requirement Planning 1960’s

6. New Wave of Net-centric Logistics Production Schedule Check Inv. Checking Suppliers Check Customer service • By predetermined business rule, the logistics process system is completed within a few seconds • Tracing and controls/confirms by order unit • Shorter leadtime, fewer errors, inventory reduction • Some obstacles, but inevitable move Order Distribution

7. Transfer Transfer Transfer Transfer Supply Chain: from Original Supply to Final Consumption INFORMATION FLOW Supplier Distribution Retail Outlet Consumer Manufacturing CASH FLOW Supply Chain Optimization Increase Customer Responsiveness at Least Cost

8. SCM(Supply Chain Management) • Integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders global optimum - The Global Supply Chain Forum(GSCF)

9. Logistics(物流) • Part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirementslocal optimum (Council of Logistics Management )

10. Key Objectives of Supply Chain • Maximize responsiveness to customer • Flexibility • On time delivery • Minimize total supply chain costs • Procurement • Manufacturing • Transportation • Administrative • Optimize asset utilization • Raw material, WIP and finished goods

11. Costs Market Share Profits Sales Volume Time to Market Growth Rate Product Quality Customer Satisfaction Strategic Objectives of SCM • Important drivers are customer satisfaction and profits.

12. Demand Forecasting 6 Manufacturing Marketing 4 2 Purchasing Sales Product Development Inventory Management Warehousing Transportation Perceived Benefit of SCM-related Investments

13. Investment for SCM • Survey of Fortune 1000 companies (by Lockheed Martin and Penn State’s Center for Logistics Research) • Approximately 33% of the respondents indicated they were engaging in SCM improvements in 1995. • 64% were making improvements in 1997. • 45% of respondents believe they will be making SCM improvements in the each of the next three years • “Leading” companies showed a pattern of continued investment in SCM Improvements

14. SCM Framework What process should be linked with each of these key supply chain members ? Supply Chain Business Processes Supply Chain Management Components Supply Chain Network Structure What level of integration and management should be applied for each process link ? Who are the key supply chain members with whom to link processes ?

15. 1 1 2 1 2 n n 1 Tier 3 to n suppliers 1 2 n 1 Consumers / End-customers 2 n Initial Suppliers 1 1 Tier 3 to n customers n 2 2 3 3 n n n 1 n Supply chain network structure Tier 3 to initial suppliers Tier 3 to Consumers/ End-Customers Tier 2 suppliers Tier 2 Customers Tier 1 suppliers Tier 1 Customers Focal Company Members of the Focal company’s Supply Chain

16. Primary Aspects of Supply Chain Network Structure • Members of the supply chain • structural Dimension of the Network • different types of Process links across the supply chain

17. Members of supply chain • Primary members of a supply chain: autonomous companies or strategic business units who carry out Value-addingactivities in the business processes designed to produce a specific output for a particular customer or market. • Supporting members: companies that Simply provide resources, knowledge, utilities, or assets for the primary members of the supply chain. Ex) companies leasing trucks, banks, owner of warehouse space etc.

18. Structural dimension of network • horizontal structure: number of tiers across the supply chain. Ex) the network structure for bulk cement is relatively short. Raw materials are taken from the ground, combined with other materials, moved a short distance, and used to construct buildings • vertical structure: number of suppliers/customers represented within each tier. A company can have a narrow vertical structure, with few companies at each tier level, or a wide vertical structure with many suppliers and/or customers at each tier level. • horizontal position within the supply chain: position of focal company at near the initial source of supply, or near to the ultimate customer.

19. Key supply chain processes • Customer relationship management • Customer service management • Demand management • Order fulfillment • Manufacturing flow management • Procurement • Product development and commercialization • Returns

20. Supply Chain Business Processes • Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. • Traditionally, both upstream and downstream portions of the supply chain have interacted as disconnected entities receiving sporadic flows of information over time • Operating an integrated supply chain requires continuous information flows, which in turn help to create the best product flows.

21. SCM: Integrating and managing business processes across the supply chain Information Flow Tier 2 Supplier Tier 1 Supplier Manufacturer Customer End-Customer Customer Logistics Marketing & Sales Purchasing PRODUCT FLOW Production Finance R&D CUSTOMER RELATIONSHIP MANAGEMENT CUSTOMER SERVICE MANAGEMENT DEMAND MANAGEMENT ORDER FILFILLMENT MANUFACTURING FLOW MANAGEMENT PROCUREMENT PRODUCT DEVELOPMENT AND COMMERCIALIZATION RETURNS Supply Chain Business Processes

22. Types of intercompany business process links Tier 3 to Consumers/ End-Customers Tier 3 to initial suppliers Tier 2 suppliers Tier 2 Customers Tier 1 suppliers Tier 1 Customers 1 1 2 1 2 n n 1 Tier 3 to n suppliers 1 2 n 1 Consumers / End-customers 2 n Initial Suppliers 1 1 Tier 3 to n customers 1 n 2 2 3 3 n n n 1 n Managed process link Not-Managed process link 1 n Monitor process link Not-member process link n Members of the Focal company’s Supply Chain Focal Company Non-Members of the Focal company’s Supply Chain

23. Information Flow Tier 2 Supplier Tier 1 Supplier Manufacturer Customer End-Customer Customer Logistics Marketing & Sales Purchasing PRODUCT FLOW Production Finance R&D CUSTOMER RELATIONSHIP MANAGEMENT CUSTOMER SERVICE MANAGEMENT DEMAND MANAGEMENT ORDER FILFILLMENT MANUFACTURING FLOW MANAGEMENT PROCUREMENT PRODUCT DEVELOPMENT AND COMMERCIALIZATION RETURNS SCM: disconnects Supply Chain Business Processes

24. Management Components for Successful SCM(physical and technical components) • planning and controlof operations; moving supply chain in a desired direction • work flow/activity structure; how the firm performs its tasks and activities. • organization structure; individual firm and the supply chain, the use of cross-functional teams • product flow facility structure; network structure for sourcing, manufacturing, and distributing across the supply chain. • Communication & information flow facility structure; kind of information passed among channel members and the frequency of information updating

25. Management Components for Successful SCM (cont.)(managerial and behavioral components) • management methods; corporate philosophy and management techniques, a top-down organization structure with a bottom-up structure • power and leadership structure; • risk and reward structure; • culture and attitude

26. SCM Decision Areas through Internet • Purchasing/procurement • Inventory management • Transportation • Order processing • Customer service • Production scheduling • Relations with vendors

27. Purchase/Procurement Decision Areas • EDI programs with vendors • On-line purchasing from vendor catalogs • Communicating with vendors • Negotiation with vendors • Checking price quotations of vendors • Arranging for returned/damaged products to vendors • Dealing with warranty issues of vendors

28. Inventory Management Decision Areas • EDI programs with vendors • Coordination of JIT delivery programs • Communication with customers on out-of-stocks, etc. • Notification of delays in order ship dates to customers • Communication with vendors on raw-material inventory levels • Communication with customers on emergency situations affecting inventory levels • Communication with vendors on finished-goods inventory levels • Communication with field warehouses and depots on field inventory levels • Communication with field depots on out-of-stock situations, emergencies, etc.

29. Transportation Management Decision Areas • Scheduling pickups at regional distribution centers • Scheduling drop-offs at regional distribution centers • Monitoring on-time arrivals of carriers • Managing claims status and processing communication with carriers on overall performance

30. Order Processing Management Decision Areas • Communication with customers on order status • Communication with vendors on order efforts • Communication with customers on out-of-stocks • Check credit status of customers • Check credit status of vendors • Communication with customers on returned merchandise • Providing total order-cycle performance for customers • Providing credit processing status to customers • Obtaining price quotes from vendors • Providing price quotes to customers

31. Customer Service Management Decision Areas • Receipt of customer complaints • Providing technical service • Notifying customers of emergencies in the supply • chain—strikes, fires, etc. • Use of Internet to sell to customers • Manage the outsourcing of customer service functions

32. Production Scheduling Decision Areas • Coordination of production schedules with vendors • Coordination of production schedules with field depots • Coordination of production schedules with JIT schedules of vendors • Coordination of production schedules of multiple manufacturing sites in the United States • Coordination of production schedules of multiple manufacturing sites at international locations

33. Vendor Relations Decision Areas • Coordination of deliveries of vendors to field warehouses and depots • Communication with vendors regarding raw-material stock levels at their plant sites • Purchasing of items from vendor on-line catalogs–supply lists • Receipt of information queries from vendors • Provision of information regarding vendor queries • Providing vendors with service ratings on their overall performance • Processing of returned materials, damaged products to vendors • Providing vendors with ratings of the on-time performance of their carriers

34. Research Groups for SCM • Supply Chain Council - Supply Chain Operations Reference (SCOR) Model - www.supply-chain.org - Korea chapter (한국능률협회컨설팅)

35. Research Groups for SCM (cont.) • The Global Supply Chain Forum(GSCF) - A group of non-competing firms and a team of academic researchers - To improve theory and practice of SCM - Director: Prof. Lambert at Ohio St. U.

36. Research Groups for SCM (cont.) • Council of Logistics Management • http://www.CLM1.org • Journal of Business Logistics

37. Suggestions For Future Research • What are the operational definitions of the key business processes and what are the relationships among these processes? • How do you obtain the functional areas in order to implement a process approach within the firm? • How can the various participants in a company be encouraged to work toward a common goal? • Beyond internal integration, how should inter-organizational change management be implemented?

38. suggestions for future research (cont.) • How should the existing supply chain be mapped? • Should the map include all connected firms or only the primary firms? • Are there other means of determining who should and should not be part of the supply chain map? • What are the implications for good SCM practice based upon the horizontal structure, the vertical structure, and focal company position in the supply chain?

39. suggestions for future research (cont.) • What is the value proposition at the consumer level or end point of the supply chain? • What are the methods that should be used to determine value? • How should the various firms in the supply chain share the costs and the benefits?

40. suggestions for future research (cont.) • What metrics should be used to evaluate the performance of the entire supply chain, individual members or subsets of members? • What are the potential barriers to implementation and how should they be overcome?

41. suggestions for future research (cont.) • What is the process to take the map of the existing supply chain and to modify it to obtain the best supply chain given the desired outputs?

42. suggestions for future research (cont.) • What determines with whom to link business processes? • What are the steps to take to determine with whom to link? • What are the critical factors to the firm’s success and that enable the firm to link with specific companies? • What are the barriers to forming these relationships?

43. suggestions for future research (cont.) • What determines the processes to link with these key members? • How should the firm decide which internal processes to link with suppliers and customers? • What decision criteria determine whose internal business processes prevail across all or part of the supply chain?

44. suggestions for future research (cont.) • What determines the type/level of integration that should be applied to each process link? • Some guidelines regarding what level of management components to apply to achieve the desired relationship and management of a link. • Do changes in the physical and technical components automatically require changes in the managerial and behavioral components?

45. Directions for future research & developing S/W • e-business and SCM • ERP and SCM • The mapping bet. the existing logistics system and the ideal SCM • SCP (SCM Planning) • SCS (supply chain simulator)

46. SCP is a major component of supply chain improvements. Strategic and Financial Impact • In-stock availability • Lead time • Ability to tailor to specific customer needs • Fixed • Purchase Cost • Variable Manufacturing • Trans/Distribution • Obsolescence/Markdown • Administrative/Transaction • Manufacturing • Distribution Centers • Inventory CustomerService Costs Assets

47. Supply Chain Requirements • New product introductions/innovations • Cycle time/response time reduction • Strategic relationships • Cost effective replenishment and fulfillment • Customer specific and channel specific service and value delivery • Dynamic end-to-end decision support

48. Advantages of SCM Planning • Simultaneous material and capacity planning • Decision support with what-if • Consider real-world constraints • Optimizes plan in concert with business goals

49. Expected Benefits of SCM Planning • Improved delivery performance • Decrease in order cycle times • Increase in order fill rates • Reduced planning times • Reduced response times • Improved asset utilization • Inventory reduction • Dynamic profitability determination

50. Key Processes - Sales and Demand Planning • Statistical Forecasting • Collaborative Forecasting • Sales Planning • Life Cycle Planning • Promotion Planning Retail Suppliers Distribution Center Manufacturing Units