Web Based Supply Chain Management

1. Web Based Supply Chain Management Chris Nicol Betsy Vo Ryan Gee MBUS 626 Technology Briefing

2. Agenda • Overview of Supply Chain Management (SCM) • Benefits of SCM • SCM Technology • Conclusions

3. The Traditional Supply Chain Manufacturers Distributors/Converters Suppliers/Raw Materials Retailers Customers Information Flows Goods Flow

4. SOURCE MAKE DELIVER SELL Traditional SC Problems • Enterprise attempt to optimize individual processes often with conflicting goals Purchasing Manufacturing Distribution Customer Service/ Sales Low pur-chase price Multiple vendors Few change- overs Stable schedules Long run lengths High inventories High service levels Regional stocks Low invent-ories Low trans-portation

5. Overview of SCM • SCM deals largely with cross-functional and inter-enterprise business processes to speed product, information and fund flows up and down a supply chain Goods Flows Information Flows Funds Flows Distributors/ Wholesalers Suppliers Manufacturer Consumers Retailers

6. Typical Quantified Benefits from Integrated the Supply Chain *Source: PRTM Integrated Supply Chain Benchmarking Study, 1997

7. Lower Inventories & Lead Times • More frequent planning means responsive to changing customer needs while decreasing inventories Average Supply Average Supply Planning Cycle Time Time Planning Cycle

8. Reduced Volatility Multi-tier Suppliers Wholesale Distributors Consumers Manufacturer Retailers Sales Sales Sales Sales Time Time Time Time Bull Whip Effect

9. Distributors/Wholesalers Consumers Suppliers Manufacturers Retailers Lower Costs • Move from push to pull manufacturing Distributors/Wholesalers Suppliers Manufacturers Retailers Consumers • Make what we will sell, not sell what we will make!!

10. Procurement Planning Manufacturing Planning Distribution Planning Forecasting Synchronized, Concurrent Planning Supply Chain Optimization Procurement Planning Manufacturing Planning Distribution Planning Demand Planning Total Optimization • Optimization of all supply chain activities Synchronized, Sequential Planning

11. Purchasing Manufacturing Distribution Customer Service /Sales Available-to-Promise (ATP) Capable-to-Promise (CTP) Integrated Sales and Operations Planning (S&OP) SOURCE MAKE DELIVER SELL SCM and e-Business Practices • Move from functional silos to process-oriented business processes (e.g., order-to-cash, cash-to-cash)

12. Barriers • Integration of Systems • Legacy systems • Security Issues • Low Cost Technology • EDI vs. Internet

13. SCM Technology • APS and e-business technology supports best SCM practices • Advanced Planning & Scheduling Systems • XML (Extensible Markup Language) enabled internet APS and e-business MRP SCM

14. APS • Model factory production system • material requirements & constraints • plant capacity limitations • additional resource limitations • Evaluate existing or new production plans • Provide production scheduling • Capable of expansion to entire supply chain • Provide for internal and external integration

15. XML • Extensible Markup Language • Huge Advantage over EDI • Huge Advantage over HTML • XML Users • Heavily used in medical industry • Microsoft is employing it everywhere • Provides for external collaboration via sharing of data regardless of application • Provides Machine-to-Machine Interaction over the Internet

16. Supplier Exchanges Logistics Exchanges Customer Exchanges Virtual Manufacturers Contract Manufacturers Logistics Providers Future Internet-Connected Supply Chain Suppliers Wholesale Distributors Retailers Manufacturers Customers Information Flows Goods Flow

17. Conclusions • E-business technology will tear down the walls inside companies • Will also allow companies to do joint planning and scheduling with their supplier’s suppliers and customer’s customers • The Internet will help foster the rapid growth of dynamic supply chain trading communities

18. Leaders • Software Companies • IT2 Technologies • PeopleSoft • SAP • Industries • Automotive • Dell Computers • Lucent Technologies