is 466 Advanced topics in information Systems Lecturer : Nouf Almujally 15 – 10 – 2011

1. is 466Advanced topics in information SystemsLecturer : Nouf Almujally15 – 10 – 2011 College Of Computer Science and Information, Information Systems Department

2. Lessons Learnt from Lecture5 • SD module • Cameron and Whetton 7 questions of evaluating ES success • What success measurement models are available?

3. Objectives • Supply Chain • SCM Definition • Components of a SCM System • Matching Supply and Demand • Components of a Supply Chain • The Importance of Supply Chain Management

4. Supply Chain Management

5. What is a Supply Chain? • A supply chain is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. • Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer.

6. Supply Chain Supplier Manufacturer Distributor Retailer Customers

7. A Supply Chain Example1… V. Highlands Kroger Peachtree Publix GA Ocean Drive Coke End customer FL Ft. Laud. JNJ Kellog AL P&G TX suppliers State distributors Local stores Super market chains

8. A Supply Chain Example 2… Riyadh Panda Karaj Danube Center Jeddah Coke Carrefour End customer Western Makah JNJ Kellog North P&G Eastern suppliers State distributors Local stores Super market chains

9. Supply Chain • Also referred to as the logistics network • Suppliers, manufacturers, warehouses, distribution centers and retail outlets – “facilities” and the • Raw materials • Work-in-process (WIP) inventory • Finished products that flow between the facilities

10. Supply Chain Processes

11. Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation Costs Material Costs Manufacturing Costs Inventory Costs The Supply Chain – Another View Plan Source Make Deliver Buy

12. Plan Source Make Deliver Buy What Is Supply Chain Management (SCM)? • A set of approaches used to efficiently integrate • Suppliers • Manufacturers • Warehouses • Distribution centers • So that the product is produced and distributed • In the right quantities • To the right locations • And at the right time • System-wide costs are minimized and • Service level requirements are satisfied

13. Basic supply chain management system • A basic supply chain management system has five (5) components: • Plan • refers to the over-all strategy of the SCM program including the development of SCM metrics to monitor • Source • refers to the suppliers who'll provide you with goods and services necessary for you to run your business • Make • refers to the execution of processes needed to produce, test, and package your products or services (manufacturing) • Deliver • refers to the system for developing a network of warehouses; and getting the products to the customers • Buy • refers to the system of receiving orders from customers; invoicing customers and receiving payment from them

14. Supply Chain Management (SCM) • Supply Chain Management is • the design and management of processes • across organizational boundaries • with the goal of matching supply and demand • in the most cost effective way. Supply Demand Mission impossible: Matching Supply and Demand

15. SUPPLY SIDE DEMAND SIDE = + + + + + Higher Profits The right Product The right Price The right Store The right Quantity The right Customer The right Time Matching Supply and Demand • Aims to Match Supply and Demand, profitably for products and services • Achieves:

16. Why so Difficult to Match Supply and Demand? • Why is supply chain management difficult? • Different organizations in the supply chain may have different, conflicting objectives • Manufacturers: long run production, high quality, high productivity, low production cost • Distributors: low inventory, reduced transportation costs, quick replenishment capability • Customers: shorter order lead time, high in-stock inventory, large variety of products, low prices • Supply chains are dynamic - they evolve and change over time

17. Cash Products and Services Information THAILAND INDIA MEXICO TEXAS US N-Tier Suppliers Suppliers Logistics Distributors Retailers Supply Side OEM Demand Side Demand Supply SCM in a Supply Network • Supply Chain Management (SCM) ) is concerned with the management and control of the flows of material, information, and finances in supply chains

19. Supply Chain for Denim Jeans

20. Supply Chain for Denim Jeans (cont.)

21. Components of a Supply Chain • External Suppliers– source of raw material • Tier one supplier supplies directly to the processor • Tier two supplier supplies directly to tier one • Tier three supplier supplies directly to tier two • Internal Functions include – processing functions • Processing, purchasing, planning, quality, shipping

22. Components of a Supply Chain • External Distributors transport finished products to appropriate locations • Logistics managers are responsible for managing the movement of products between locations. Includes; • traffic management – arranging the method of shipment for both incoming and outgoing products or material • distribution management – movement of material from manufacturer to the customer

23. The Importance of Supply Chain Management • Dealing with uncertain environments – matching supply and demand • U.S Surgical Corporation announced a $22 million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals” • Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake

24. The Importance of Supply Chain Management • Better information sharing among the partners • The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners • If you don’t do it, your competitor will • Availability of SCM technologies on the market • Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal processes

25. Top 25 Supply Chains • The Top 25 supply chains report comes out in Novembers. • The table on the right-hand side is from The Second Annual Supply Chain Top 25 prepared by Kevin Riley and Released in November 2005.

26. Dell Computer • Classic case in supply chain management. • Established in 1984, Dell experienced supply problems in 1993 and thereupon completely redesigned its supply chain process along the lines of what its founder, Michael Dell, called the “direct” model. • Between 1993 and 1998, Dell's earnings subsequently grew at 65 percent per year.

27. Dell Computer (con.) • Dell's supply chain redesign was based on the following elements. • First, Dell sells directly to customers, eliminating the wholesaler and retailer. • Second, Dell also takes advantage of new information technologies in their communications with suppliers who can access Dell's component inventories, production plans, and forecasts in real time and thus keep their production precisely matched to Dell's needs. • Third, Dell maintains absolute minimum inventory levels at every stage of production, averaging 4 days overall

28. Questions ??