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Virtual Supply Chain Management

VILLANOVA MBA PROGRAM. (VMBA). Virtual Supply Chain Management. Dr. Mohammad K. Najdawi College of Commerce & Finance Villanova University Villanova, PA 19085 Tel: (610) 519-5030 Email: m.najdawi@villanova.edu. VMBA. What is a Supply Chain?. The sequence of suppliers that contribute

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Virtual Supply Chain Management

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  1. VILLANOVA MBA PROGRAM (VMBA) Virtual Supply Chain Management Dr. Mohammad K. Najdawi College of Commerce & Finance Villanova University Villanova, PA 19085 Tel: (610) 519-5030 Email: m.najdawi@villanova.edu

  2. VMBA What is a Supply Chain? The sequence of suppliers that contribute to the creation and delivery of a good or a service to end customers.

  3. VMBA Supply Chain Activities The SC activities are planned, executed, and monitored under the guidelines set by the company’s chosen customer service levels and in line with the company’s other operating goals.

  4. VMBA Supply Chain Activities (2) The supply chain of a company consists of different departments, ranging from procurement of materials to customer service. The supply chain includes activities associated with inventory (materials) acquisition, storing, use in production, transit, and delivery to customers.

  5. VMBA What is Logistics? • The management of the storage and • flow of goods, services, and information • throughout the organization.

  6. VMBA Elements of Logistics • Materials management: • sourcing and receiving of raw materials or unfinished products for subsequent use • Material flow system: • the ability to locate and schedule material through to end production and disposition • Physical distribution: • the delivery of finished goods to customers

  7. VEMBA Logistics Goal & Objectives The right products The right quantity The right moment At minimal cost Flexibility Delivery reliability Delivery time/ lead time Inventory level

  8. VMBA Logistics Steps • Logistics steps: • accepting a customer order • receive and enter • credit clearance / authorize • delivery commitment • supplier ordering • forecasting demand • scheduling manufacturing • inventory management • delivery to customer.

  9. VMBA What is Supply Chain Management? Organizing the cost effective flow and storage of materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

  10. Quality products Lowest possible cost VMBA Order fulfillment Integration of supply chains Customer service Preferred partners Communication Supply chain communities Common goals, objectives Supply Chain Evolution

  11. VMBA Supply Chain Management Goal To evolve a company’s supply chain into an optimally efficient, customer-satisfying process, where the effectiveness of the whole supply chain is more important than the effectiveness of each individual department.

  12. VMBA Supply Chain Management focus • Supply Chain Management focuses on business processes: • product change • planning • order management • stock management • instead of functions: • sales • purchasing • production

  13. VMBA Supply Chain Management Functions • Forecasting demand • Selecting suppliers • Ordering material • Managing inventory • Scheduling production • Shipping and delivery • Organizing information exchange

  14. VMBA Understand the customer Understand the product Understand the information flow Understand the process Supply Chain Analysis

  15. VMBA SC Analysis Understand the Customer(1) • Know and understand the customers: • Your existing customers, i.e... • demographics • existing and potential number • income levels? • Who are your potential customers? • How might these customers be grouped? • For which percentage of sales is each group responsible?

  16. VMBA AnalysisUnderstand the Customer (2) • What is the effect of various methods of communications (i.e., telephone, fax, e-mail, internet telephony systems) in your relation with your customers? • What do your customers want from you? • How well do your competitors meet customers needs?

  17. VMBA AnalysisUnderstand the Products • Understand the products: • How many? • Where are they? • Which percentage of sales? • What is the product life cycle? • What is the product mix?

  18. VMBA Analysis Understand the Process • Understand the production process: • process flow • linear flow • job shop - batch flow • assembly line • continuous flow • project flow • order fulfillment strategy • make-to-order • make-to-stock.

  19. VMBA AnalysisUnderstand the Information Flow • Understand the information flow • What information is required for effective decision-making at each stage in the supply chain? • What data has to flow between each part of the supply chain?

  20. VMBA Performance Indicators (1) • A total view must be taken in assessing performance. • Performance measures need to be focused on what factors add to total performance, total value or total cost. • The principle measure of performance is customer service. Optimum service levels are necessary from each supplier to each customer throughout the supply chain.

  21. Customer Service + Quality VMBA Efficiency Effectiveness Suppliers Inputs Adding value Outputs Customers Results Productivity Customer Service Profitability Performance Indicators (2)

  22. VMBA Performance Indicators (3) • Effectiveness: • accomplishment of the right things, on time, within the requirements specified. • Efficiency: • resources expected to be consumed divided by resources actually consumed.

  23. VMBA Performance Indicators (4) • Productivity: • measures of output divided by measures of input for a given period of time. • Profitability: • relationship between revenues and costs.

  24. VMBA Supply Chain Management Drivers of Change (1) • Drivers of change: • outsourcing trend • actual customer demand: speed, flexibility and cheap products • new software: ERP, sophisticated application software

  25. VMBA Supply Chain Management Drivers of Change (2) New technologies • Electronic Data Interchange (EDI) • internet, intranet, extranet • wireless communications • teleconferencing and telecommuting • bar coding.

  26. VMBA Supply Chain Management Drivers of Change (3) • Shorter Product Life-Cycles • Product Proliferation and Mass Customization • Reduced Product Costs • Competition • Increased Customer Needs • Need to survive in the Age of the Virtual Enterprise

  27. VMBA Virtual Supply Chain Management VSCM • The Web is The Medium Through Which the Essential Processes of Managing and Synchronizing SCs is Carried Out • VSCM Critical to E-Business Implementations • VSCM Will Change the Nature of Business

  28. VMBA Virtual Supply Chain Management VSCM VSCM Will Change Nature of Business XYZ Company misses on VSCM will find itself celebrating the squeezing of supplier margins at auction or the reduction in inbound inventory by sharing forecasts. Competitor might shut XYZ out of the channel completely.

  29. VMBA Virtual Supply Chain Management & Customer Demands • Cost is not Sole Arbiter of Value • Customers Demand Personalization of Products, Services, and Delivery • Customers Demand Innovation of Products, Services, and Delivery • Customers Demand More Flexibility • Grants More Competitive Power (Network of Business Partners) • Requires Tight Synchronization of SC Activities With the Demands of Marketplace • Needs to manage Complexity & Immediacy of Synchronization

  30. VMBA VIRTUAL SUPPLY CHAIN MANAGEMENT • e Design • Product Innovation on the Web • e Mediaries and Exchanges • Using Online Markets to Revolutionize Buying and Selling • e Web-Based Collaboration Planning • The Virtualization of The Supply Chain • e Fulfillment • Matching the Performance of Physical Activities to the Virtual World

  31. VMBA Virtual Supply Chain Management • Provides Mass Customization • Allows Massive Scalability • Grants Faster Fulfillment • Provides More Flexible Fulfillment • Enhances the Ability to Develop New Channels • Grants More Competitive Power (Network of Business Partners) • Requires Tight Synchronization of SC Activities With the Demands of Marketplace • The Need arises to manage Complexity & Immediacy of Synchronization

  32. VMBA Virtual Supply Chain Management • Creates New Value Derived From: • Synchronized Supply Chain • Enhanced SC Performance • Reach out Bigger Markets • Mass Customization • New Products and Services • Changes SC Management, Planning, Control • Information, Decisions, Processes on the Web • New Paradigms of Inter-Company Boundaries • New Roles For Upstart Specialist Providers of Virtual and Physical Activities • New Virtual Competitive Capabilities

  33. Supply Chain Management & ERP Systems VMBA • ERP is an Internal System that Automates Internal Processing Transactions • SCM is an Information Decision Making System • Implementation of an ERP System is Controlled by the Enterprise • Implementation of a SCM System Requires the Cooperation of many different Entities with Different Information Systems

  34. VMBA ERP VENDORS • SAP • ORACLE • JD EDWARDS • PROPLESOFT • Baan

  35. VMBA SCM VENDORS • Agile: Agile Anywhere, Agile Buyer • Cognos: Cognos EBI • I2 Technologies: TradeMatrix • Industri-Matematic International: Vivaldi • Manugistics: NetWorks, WebWorks • Verano: Supply Chain Portal

  36. VMBA THANK YOU M.NAJDAWI@VILLANOVA.EDU

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