Unit 4

Managing for Competition

Chapter 15: ERP and Supply Chain Management
Lesson 45– Introduction to ERP and SCM

Learning Objectives

After reading this lesson you would be able to understand

A computer system that integrates application programs in
accounting, sales, manufacturing, and the other functions in a firm
A segment with the capability needed to manage, schedule, pay,
and hire the people who work for the company
Five major components of manufacturing and logistics
A segment that includes customer, sales order, and configuration
management
Supply chain management

Good morning students, today we are going to discuss about the intersecting topic of
Enterprise Resource Planning Systems properly known as ERP.

Well my friends, some of you must be having a business background. In fact, all of us in
varying measures are aware of the fact that running a business requires a great planning
system.

What do we expect to sell in the future?

How many so we expect to sell in the future?
How many people should we hire to handle the Diwali rush?
How much inventory do we need?
What should we make today?

These are all questions that managers need to answer every day. Computers running
comprehensive software packages can help. For4 a manager, it is important to understand
the best way to solve these planning problems, so the right software can be purchased and
configured correctly.

An enterprise resource planning (ERP) system, when implemented correctly, links all the
areas of the business. Manufacturing known about new orders as soon as they are entered
in the system. Sales know the exact status of a customer order. Purchasing knows what
manufacturing needs to the minute, and the accounting system is updated as all the
relevant transactions occur.
The purpose of this managerial briefing is to provide an overview of what an ERP system
is and why it can benefit a company. The current ERP vendors have set new standards in
information integration.

In the early 1990’s many large companies realized that it was time to update their
existing information systems to take advantage of new technologies. Programs written in
programming languages such as COBOL, PLI, RPG, and assembler were becoming
increasingly expensive to maintain. Further the mainframe computer technology was not
cost defective compared to the ever more powerful and inexpensive microprocessor-
based computer. Change was inevitable. And SAP offered a comprehensive solution.

SAPAG, a German firm, is the world leader in providing ERP software. Its flagship
product is known as R/3.

The software is designed to operate in a three-tier client/server configuration. The core of

the system is a high-speed network of database servers. These database servers are
special computers designed to efficiently handle a large database of information.

The R/3 applications are fully integrated so that data are shared between all applications.
If for example an employee posts a shipping transaction in the sales and Distribution
module, the transaction is immediately seen by Accounts payable in the Financial
Accounting module, and by inventory management in the materials management module.

Much of the success of the product is due to the comprehensive coverage of business
applications. In a sense, SAP has changed the face of information technology.

Let’s now turn our attention to what are commonly known as:-

R/3 APPLICATION MODULES

R/3 is built around a comprehensive set of application modules that can be used either
alone or in combination. The modules can be used to support processes that span
different functional areas in the firm.

A significant feature that improves access to information in the system is the data
warehouse. In our review of the application modules the make up R/3 the emphasis is
placed on what these modules actually do, not on the technical aspects of how they
communicate with one another.

SAP organizes the R/3 modules in a variety of ways in its documents. In general, there
are four major elements to the organization: financial accounting, human resources,
manufacturing and logistics, and sales and distribution.

FINANCIAL ACCOUNTING
The financial accounting segment of R/3 includes three major categories of functionality
needed to run the financial accounts for a company: financials (FI), controlling (co), and
asset management (AM).

As with all the modules in the R/3 system, the user will find all information current and
integrated. Thus an individual manufacturing plant or sales organization can run a profit
and loss report at any time during the month and be shown the most up to date
information.

The controlling category includes costing; cost center, profit center, and enterprise
accounting and planning; internal order; open item management; posting and allocating;
profitability analysis; and a variety of reporting functions. It also includes a project
system to track activity and costs related to major corporate projects, such as the
implement of an R/3 system.

Also include is a module to add activity based costing (ABC) to other types of costing
approaches.

The asset management category includes the ability to manage all types of corporate
assets, including fixed assets, leased assed, and real estate. It also includes the capital
investment management module, which provides the ability to manage, measure, and
oversee capital investment programs.

HUMAN RESOURCE (HR)

The human resources (HR) segment contains the full set of capabilities needed to
manage, schedule, pay, and hire the people who make a company run. It includes payroll,
benefits administration, applicant data administration, personnel development planning,
workforce planning, schedule and shift planning, time management, and travel expenses
accounting. Because the structure of most companies shifts frequently, one function in
the human resource category provides the ability to represent organizational, charts,
including organizational units, jobs, positions, workplaces, and tasks.

Capturing data from the human resources module, the SAP business workflow system
allows management to define and manage the flow of work required in cross functional
business process.

MANUFACTURING AND LOGISTICS

The manufacturing and logistics segment is the largest and most complex of the module
categories. It can be divided into five major components: materials management (MM)
octant maintenance (PM) quality management (QM) production planning and control
(PP) and a project management system (PS). Each component is divided into a number of
subcomponents.
Plant maintenance supports the activates associated with planning and performing repairs
and preventive maintenances.

The quality management capability plans and implement procedures for inspection and
quality assurance. It is built on the ISO 9001 standard for quality management.

Production planning and control supports both discrete and process manufacturing
processes.

The project management system lets the user set up, manage, and evaluate large, complex
projects, whereas the financial costing project system focuses on costs, the manufacturing
project system is used for planning and monitoring dates and resources. The system
walks the user through the typical project steps: concept, rough cut planning, details
planning approval, execution and closing it manages a sequence of activities each with its
interrelationships to the others.

SALES AND DISTRIBUTION (SD)

The sales and distribution (SD) set of modules provides customer management; sales
order management; configuration management; distribution export controls, shipping and
transportation management; and billing, invoicing, and rebate processing.

In sales and distribution, products or services are sold to customers. In implementing the
SD module (as in other modules), the company structure must be represented in the
system so that for example, R/3 known where and when to recognize revenue.

When a sales order is entered it automatically includes the correct information on pricing,
promotions, availability and shipping options. Batch order processing is available for
specialized industries such as food, pharmaceutical, or chemical.

MYSAP.COM – INTRGRATED E – BUSINESS PLATFORM

SAP strategy is to build a set of business software solution around the application
modules; each of these solutions is designed for a specific purpose. The solutions can all
be implemented using an internet interface known as my SAP thus making it possible for
users to have the full functionality of the SAP software without requiring the deployment
of any special software to the users.

We focus on the mySAP supply Chain Management Product (SCM), (SAP) just as we
have organized the topics in these chapters organizes its software into planning scenarios
that represent the basic needs of the organization. Within mySAPSCM, the planning
scenarios are called “collaborative demand planning,” “sales and operations planning,
and “collaborative supply and distribution planning.” mySAPSCM Demand planning is
basically a toolkit of statistical forecasting techniques and planning features that helps the
user create accurate estimates of future requirements. Sales and operations planning is the
entire process of integrating sales and marketing plans with plans for producing products
and delivering services.

A key element of SAP sales and operations planning is the advanced planner and
optimizer functions that are available

The final element of my ASPSCM is the collaborative supply and distribution planning
functions.

ERP: SUCCESS STORIES

Like many new technologies, ERP systems have near-magical effects when they work as
promised. Managers at companies list dozens of productivity enhancements from ERP
systems, including the ability to calculate new process instantly when a single component
in a product is changed; more accurate manufacturing cost among different facilities;
better electronic data interchange (EDI) with vendors and suppliers; more details
forecasting; rapid delivery of customer quotes for special order; and the elimination of
bottlenecks and duplicate procedures.

IMPLEMENTING ERP SYSTEM

SAP has some strong competition. Companies such as oracle, i2 Technologies, and
People soft have aggressively gone after the market. SAP though is the market leader
with over 44500 sites and over 10,000,000 users worldwide. Implementation of ERP is
costly, with the actual cost of the software typically one third or less of the total cost.
Large companies, such as Chevron Corp. and Bristol-Myers Squibb, typically earmark $
250 million or more to implement an ERP system.

Implementing these systems does not always work out. A survey conducted by the
Harvard Business School revealed that a large percentage of executives had negative
feeling toward ERP software. In particular, they felt that (1) ERP technology could not
support their business, (2) their organization could not make changes need to extract
benefits from the new systems, and (3) ERP implementation might actually damage their
business. The same survey indicated that many companies implementing ERP had
overrun cost and schedule target and had not achieved the benefits sough.

Despite the reservations about ERP most companies surveyed by Harvard were going
ahead with ERP initiatives. The most popular reasons cited included a desire to
standardize and improve processes, to improve systems integration, and to improve
information quality even through there is evidence of many problems with implementing
ERP systems, forms continue in their ERP efforts because of the opportunity for
substantial reward.

Supply -chain management.

Well dear friends, supply -chain management may be defined as the
synchronization of a firm’s processes and those of its suppliers to match the
flow of materials, services, and information with customer demand.

Supply-chain management has strategic implications because the supply

system can be used to achieve important competitive priorities.

Let me give you an OVERVIEW OF SUPPLY-CHAIN MANAGEMENT

OVERVIEW OF SUPPLY-CHAIN MANAGEMENT

The basic purpose of supply-chain management is to control inventory by
managing the flows of materials. Inventory is a stock of materials used to satisfy
customer demand or support the production of goods or services.

Inventory exists in three aggregate categories, which are useful for

accounting purposes.
1. Raw materials (RM) are inventories needed for the production of goods
or services.

2. Work-in-process (WIP) consists of items such as components or

assemblies needed for a final product in manufacturing.

3. Finished goods (FG) in manufacturing plants, warehouses, and retail

outlets are the items sold to the firm’s customers.

We shall now try to answer the following question:

What is the best way to control suppliers in a complex supply

chain?

SUPPLY CHAIN

An important part of SCM is provision of the information needed for planning and
managing the supply chain. This information comes from internal and external
sources and is disseminated to decision makers through ERP systems, which
often contain supply-chain management modules.
The supply chain for a firm can be very complicated, because many
companies have hundreds, if not thousands, of suppliers.
The performance of numerous suppliers determines the inward flow of
materials. The performance of firm’s marketing, production, and distribution
processes determines the outward flow of products.
Imagine the chaos if all the firm’s suppliers acted independently and never
adjusted to changes in the firm’s schedules. Hence, management of the flow of
materials is crucial.
Friends, let’s now focus our attention on the:-

SUPPLY CHAINS FOR SERVICE PROVIDERS

Supply-chain management is just as important for service providers as it is for

manufacturers. Service providers must purchase the equipment, supplies, and
services they need to produce their own services. Generally, a service provider’s
supply chain must be designed so that the right resources and tools are available
to perform a service.
Supply-chain management offers service providers the opportunity to
increase their competitiveness.

Can you tell me as to what is the best approach for developing an

integrated supply chain?

DEVELOPING INTEGRATED SUPPLY CHAINS

Traditionally, organizations have divided the responsibility for managing the flow
of materials and services among three departments: purchasing, production, and
distribution.

1. Purchasing is the management of the acquisition process, which

includes deciding which suppliers to use, negotiating contracts, and
deciding whether to buy locally.
2. Production is the management of the transformation processes
devoted to producing the product or service.
3. Distribution is the management of the flow of materials from
manufacturers to customers and from warehouses to retailers,
involving the storage and transportation of products.

Materials management is concerned with decisions about purchasing

materials and services, inventories, production levels, staffing patterns,
schedules, and distribution.

Developing an Integrated supply chain

Phase 1:
Independent Suppliers Purchasing Production Distribution
Customers supply-chain entities.

Phase 2:
Internal Suppliers Purchasing Production Distribution
Customers (internal supply chain)
Materials management department
Integration
Phase 3:
Supply-chain Suppliers Internal supply Customers
Integration chain

Integrated supply chain

MANAGING THE CUSTOMER INTEFACE

Now we explore the impact of the Internet on the order-placement and the order-
fulfillment processes.

ORDER-PLACEMENT PROCESS

The order-placement process involves the activities required to register

the need for a product or service and to confirm the acceptance of the order.

The Internet provides the following advantages for a firm’s order-

placement process.

1. COST REDUCTION: Using the Internet can reduce the costs of

processing orders.

2. REVENUE FLOW INCREASE: A firm’s Web page can allow customers

to enter credit card information or purchase-order numbers as part of
the order-placement process.

3. GLOBAL FLEXIBILITY: Another advantage the Internet has provided

firm’s is the opportunity to accept orders 24 hours a day.

4. PRICING FLEXIBILITY: Firms with their products and services posted

on the Web can easily change prices as the need arises, thereby
avoiding the cost and delay of publishing new catalogs.

ORDER-FULFILLMENT PROCESS

The order-fulfillment process involves the activities required to deliver a

product or service to a customer.

Now we will focus on information sharing, the placement of inventories, and

postponement.
 1. INFORMATION SHARING: The Internet provides a quick and efficient
means to share information along the supply chain. Within a firm, ERP
systems facilities the flow of information across functional areas,
business units, geographic regions, and product lines.

Can you tell me your opinion about whether the distribution centers should
be added to position inventory closer to the customer?

2. INVENTORY PLACEMENT: A fundamental supply-chain decision is

where to locate an inventory of finished goods. The issue for any firm
producing standardized products is where to position the inventory in
the supply chain.

- Inventory pooling: A reduction in inventory and safety stock

because of the merging of variable demands from customers.

- Forward placement: Locating stock closer to customers at a

warehouse, distribution centers, wholesaler, or retailer.

- Vendor-managed inventories: An extreme application of the

forward placement tactic, which involves locating the inventories at
the customer.

- Continuous replenishment: AVMI method in which the supplier

monitors inventory levels at the customer and replenishes the stock
as needed to avoid shortages.

3. POSTPONEMENT: Assemble-to-order and mass customization firms

use a tactic called postponement, which refers to delaying the
customizing of a product or service until the last possible moment.

Postponement can be extended to the distribution channel.

Channel
assembly is the process of using members of the distribution channel
as if they were assembly stations in the factory.

Now let us turn our attention to:-

MANAGING THE SUPPLIER INTERFACE
The application of ERP has forced firms to reengineer their enterprise
processes to take advantage of large, integrated information systems.
Now we will discuss electronic purchasing (e-purchasing), the
considerations firms make when selecting suppliers or outsourcing internal
processes, the implications for centralized buying, and the reasons why value
analysis is important.

E-PURCHASING
 We will discuss four approaches to e-purchasing: electronic data
interchange, catalog hubs, exchanges, and auctions.

- Electronic data interchange (EDI): A technology that enables

the transmission of routine business documents having a
standard format from computer-to-computer over telephone or
direct leased lines.
- Catalog hubs: An approach to e-purchasing that is used to
reduce the costs of placing orders to suppliers as well as the
costs of the goods or services themselves.
- Exchange: An electronic marketplace where buying firms and
selling together to do business.
- Auction: An extension of the exchange in which firms place
competitive bids to buy something.

Can you tell me as to what criteria should be used to select suppliers and
how should suppliers be certified?

We shall discuss in detail.

SUPPLIER SELECTION AND CERTIFICATION

Purchasing is the eyes and ears of the organization in the supplier

marketplace, continuously seeking better buys and new materials from suppliers.
Consequently, purchasing is in a good position to select suppliers for the supply
chain and to conduct certification programs.

SUPPLIER SELECTION

To make supplier selection decisions and to review the performance of

current suppliers, management must review the market segment it wants to
serve and relate their needs to the supply chain.

Three criteria most often considered by firms selecting new suppliers are
price, quality, and delivery.

The benefits of fast, on-time delivers also apply to the manufacturing

sector. Many manufactures demand quick, dependable deliveries from their
suppliers to minimize inventory levels.

A fourth criterion is becoming very important in the selection of suppliers –

environmental impact. Many firms are engaging in green purchasing, which
involves identifying, assessing, and managing the flow of environmental waste
and finding ways to reduce it and minimize its impact on the environmental.

SUPPLIER CERTIFICATION

Certification typically involves site visits by a cross-functional team from

the buying firm who do an in-depth evaluation of the supplier’s capability to meet
cost, quality, delivery, and flexibility targets from process and information system
perspectives.

Let us see as to how can purchasing power be used effectively in a supply

chain?

SUPPLIER RELATIONS

The nature of relations maintained with suppliers can affect the quality,
timeliness, and price of a firm’s products and services.

Competitive orientation: A supplier relation that views negotiations between

buyer and seller as a zero-sum game: Whatever one side loses, the other side
gains; short-term advantages are prized over long-term commitments.

Cooperative orientation: A supplier relation in which the buyer and seller are
partners, each helping the other as much as possible.

Now let us turn to attention to the question as to what are the implications
for supply-chain management of outsourcing an activity?

OUTSOURCING

A special case of the cooperative orientation is outsourcing. The decision to

outsource an activity sometimes referred to as the make-or-buy decision.
Outsourcing has direct relevance for supply-chain management because of its
implications for control and flexibility.

DEGREE OF SOURCING CONTROL

The more important the activity is for the achievement of the firm’s competitive
priorities, the greater the degree of control the firm will want.

FLEXIBLITY TO CHANGE THE SUPPLY CHAIN

A firm has a more flexible arrangement with a supplier if it has a short-term
agreement with it. If market needs change, or the supplier experiences business
difficulties, the firm will have a more difficult time changing suppliers if it has a
long-term commitment.
Long-term arrangements should be used only when the firm is confident
that the supplier will fit into its long-term strategic plans.
CENTRALIZED VERSUS LOCALIZED BUYING

When an organization has several facilities (e.g., stores, hospitals or plans),

management must decide whether to buy locally or centrally. This decision has
implications for the control of supply-chain flows.
Centralized buying has the advantage of increasing purchasing clout,
savings can be significant, often on the order of 10 percent or more. Increased
buying power can mean getting service, ensuring long-term supply availability, or
developing new supplier capability.
Probably the biggest disadvantage of centralized buying is loss of control
at the local level.

Now let us examine as to how the suppliers can get involved in valve
analysis to benefit the supply chain?

VALUE ANALYSIS

A systematic effort to reduce the cost or improve the performance of products or

services, either purchased or produced, is referred to as value analysis. It is an
intensive examination of the materials, processes, information systems, and flow
of material involved in the production of an item. Benefits include reduced
production, materials, and distribution costs; improved profit margin; and
increased customer satisfaction.

Value analysis can focus solely on the internal supply chain with some
success, but its true potential lies in applying it to the external supply chain as
well. An approach that many firms are using is called early supplier involvement,
which is a program that includes suppliers in the design face of a product or
service. Suppliers provide suggestions for design changes and materials choices
that will result in more efficient operations and higher quality. In the automotive
industry, an even higher level of early supplier involvement is known as
presourcing. Whereby suppliers are selected early in a vehicle’s concept
development stage and are given significant, if not total, responsibility for the
design of certain components or systems.

MEASURES OF SUPPLY-CHAIN PERFORMANCE

We relate some commonly used supply-chain performance measures to several

important measures.

INVENTORY MEASURES

All methods of measuring inventory begin with a physical count of units, volume,
or weight. However, measures of inventories are reported in three basic ways:
average aggregate inventory value, weeks of supply and inventory turnover.
1. Average aggregate inventory value= (Number of units of items A typically
on hand)
(Value of each unit of item A) +
(Number of
units of item B typically on hand)
(Value of
each unit of item B)

Average aggregate inventory value

2. Weeks of supply =
Weekly sales (at cost)

Annual sales (at cost)

3. Inventory turnover =
Average aggregate inventory value.

PROCESS MEASURES

Supply-chain managers monitor performance by measuring costs, time, and

quality.

Supply-chain process measures

Order placement Order fulfillment Purchasing

1.Percent of orders Percent of incomplete Percent of suppliers

taken accurately orders shipped delivers on time

2.Time to complete Percent of orders Suppliers lead

times
the order-placement shipped on time
process

3.Customer satisfaction Time to fulfill the order Percent defects in

purch-
with the order-placement -ased materials and
service
process

Percent of returned items Cost of purchased

materials
 or botched service and services

Cost to produce the item

or service

Customer satisfaction with

the order-fulfillment process

LINKS TO FINANCIAL MEASURES

Managing the supply chain so as to reduce the aggregate inventory

investment will reduce the total assets portion of the firm’s balance sheet. An
important financial measures is return on assets (ROA), which is net income
divided by total assets.
Weeks of inventory and inventory turns are reflected in another financial
measures, working capital, which is money used to finance ongoing operations.
Increases in inventory investment requires increased payments to suppliers.
Managers can also reduce production and material costs through effective
supply-chain management.
Supply-chain performance measures related to time also have financial
implications.
The Internet has brought another financial measure related to time the
forefront: cash-to-cash, which is the time lag between paying for the materials
and services needed to produce a product or service and receiving payment for
it. The shorter the time lag, the better the cash flow position of the firm.

SUUPLY-CHAIN LINKS TO OPERATIONS STRATEGY

Operations strategy seeks to link the design and use of a firm’s infrastructure and
processes to the competitive priorities of each of its product or services so as to
maximize its potential in the marketplace. A supply chain is a network of firms.

We shall discuss two distinct supply-chain designs and demonstrate how

they can support the operations strategies of firms.

Dear friends, at this point in our discussion, let me draw a comparison between
the EFFICIENT and RESPONSIVE SUPPLY CHAINS.
I tell you, it’s going to be an immensely enjoyable discussion.
So, fasten your seat belts and pay attention.
Here we go.

EFFICIENT VERSUS RESPONSIVE SUPPLY CHAINS

Environment best suited for efficient supply chains

Factors Efficient supply chains

Responsive supply chains
Demand Predictable; low forecast errors Unpredictable; high
forecast errors

Competitive Low cost; consistent quality; Development speed; fast

delivery
priorities on-time delivery times; customization;
volume
flexibility; high-
performance design
quality

New-product Infrequent Frequent

introduction

Contribution Low High

margins

Product variety Low High

THE DESIGN OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS

The higher in an efficient supply chain that a firms is, the more likely it is to have
a line flow strategy that supports high volumes of standardized products or
services.

DESIGN FEATURES FOR EFFICIENT AND RESPONSIVE SUPPLY CHAINS

Factor Efficient supply chains Responsive supply chains

Operations strategy Make-to-stock or standardized Assemble-to-order,

make-to-order
Services; emphasize high-volume, Or customized
Standardized products, or services emphasize
product or
Services. Service variety

Capacity cushion Low High

Inventory Low; enable high inventory turns As needed to enable fast

investment delivery time.

lead time Shorten, but do not increase costs Shorten aggressively.

Supplier selection Emphasize low prices; consistent Emphasize fast delivery

time;
quality; on-time delivery customization; volume
flexibility;
high-performance design
quality

Time to pose a question, dear friends.

Could you tell me What causes supply-chain dynamics?
Well, let’s see.

SUPPLY-CHAIN DYNAMICS

Supply chain often involve linkage among many firms. Each firm depends on
other firms for materials, services, and information needed to supply its
immediate customer in the chain.

What causes supply-chain dynamics? The causes are both external and
internal.

EXTERNAL SUPPLY-CHAIN CAUSES

Typical disruptions include the following.

1. Volume changes: Customers may change the quantity of the product
or service they had ordered for a specific data or unexpectedly
demand more of a standard product or service.
2. Product and service Mix changes: Customers may change the mix of
items in an order and cause a ripple effect throughout the supply chain.
3. Late delivers: Late delivers of materials or delays in essential services
can force a firm to switch its schedule from production of one product
model to another.
4. Underfilled shipments: Suppliers that send partial shipment do so
because of disruptions at their own plants.

INTERNAL SUPPLY-CHAIN CAUSES

Typical internal supply-chain disruptions include the following:

 1. Internally generated shortages: There may be a shortage of parts
manufactured by a firm because of machine breakdowns or
inexperienced workers.
2. Engineering changes: Changes to the design of products or services
can have a direct impact on suppliers.
3. New product or service introductions: New products or services always
affect the supply chain.
4. Product or service promotions: A common practice of firms producing
standardized products or services is to use price discounts to promote
sales.
5. Information errors: Demand forecast errors can cause a firm to order
too many, or too few, materials and services.

Let us now focus on:-

SUPPLY-CHAIN SOFTWARE

Supply-chain software provides the capability to share information with suppliers

and customers and make decisions affecting the internal and external supply
chains. Supply-chain applications are often a part of enterprise resource planning
(ERP) systems or can be purchased independently from a variety of vendors.

The system has the following modules:

1. Order Commitment: Accepts customers order, allocates resources to

ensure that delivery is possible, and commits the firm to a specified
delivery date.
2. Transportation Managements: Schedules freight movements,
provides routing capability, allocates resources, and tracks shipments
worldwide.
3. Purchasing management: Links to suppliers to share information and
manage procurement contracts.
4. Demand management: Provides multiple forecasting algorithms and
causal modeling to assist in estimating demands, allowing for
management overrides to incorporate real-time customer information.
5. Vendor-Managed Inventory: Coordinates the replenishment of
inventories stored at the customer’s site.
6. Replenishment Planning: Facilities the order-fulfillment process by
orchestrating the flow of inventory through the various stocking points
in the distribution channel and allocates inventories among customers
when shortages exist.
7. Configuration: Enables the assemble-to-order strategy by checking for
the availability of all components before accepting an order and
facilitates the substitution of components or features based on
availability.
 8. Material planning: Determines the replenishment of components and
assemblies to support the master schedule of finished products.
9. Scheduling: Provides multisided schedules with the capability to
reschedule as needed.
10. Master planning: Offers optimization tools to allocate and coordinate
limited resources across the distribution network based upon user
strategies.
11. Strategic Planning: Provides tools for designing global supply chains,
which assist in deciding inventory levels and the appropriate product
mix across the distribution network and the best production and
storage locations subject to customer and resources constraints.

Dear friends, thus we have been able to visualize the rather fascinating
process of SUPPLY-CHAIN MANAGEMENT ACROSS THE
ORGANIZATION.

Indeed, Supply chains permeate the entire organization. It is hard to

envision a process in a firm that is not in some way affected by a supply
chain.
Supply-chain management is essential for manufacturing as well as
service firms.

With that, we have come to the end of today’s discussions. I hope it has
been an enriching and satisfying experience. See you around in the next
lecture. Take care. Bye.