CHAPTER 9

ACHIEVING OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY: ENTERPRISE APPLICATIONS

Supply Chain Management Systems (SCMS)

A. Supply chain -a network of organizations and processes for:

Procuring raw materials
Transforming them into products
Distributing the products
Two types of supply chain:
a. Upstream supply chain:
Firms suppliers, suppliers suppliers, processes for managing relationships with them
b. Downstream supply chain:
Organizations and processes responsible for delivering products to customers
B. Information and supply chain management
1. Inefficiencies cut into a companys operating costs -Can waste up to 25% of operating expenses
2. Just-in-time strategy:
Components arrive as they are needed
Finished goods shipped after leaving assembly line
3. Safety stock- Buffer (a thing that lessens impact) for lack of flexibility in supply chain
4. Bullwhip effect
Information about product demand gets distorted as it passes from one entity to next across
supply chain (time, supply of order decisions, lack of communication, disorganization)

Impact of Bullwhip Effect: excess inventories, problems with quality, increased raw material costs, overtime expenses,
increased shipping costs, lost customer service, lost sales
C. Supply chain management software
1. Supply chain planning systems
Model existing supply chain
Demand planning
Optimize sourcing, manufacturing plans
Establish inventory levels
Identify transportation modes
2. Supply chain execution systems
Manage flow of products through distribution centers and warehouses
D. Global supply chain issues
1. Global supply chains typically span greater geographic distances and time differences
2. More complex pricing issues (local taxes, transportation, etc.)
3. Foreign government regulations
How to address? Internet helps companies manage many aspects of global supply chains like sourcing,
transportation,
communications, international finance
E. Supply chain management systems
1. Push-based model (build-to-stock)
Schedules are based on best guesses of demand (company push their products directly to
consumers)
e.x, Nokia retailers, TV ads, 2-for-1 discount sales (aggressive)
2. Pull-based model (demand-driven)(customers go to the manufacturers/companies to buy products)
Customer orders trigger events in supply chain, give me two examples
3. Sequential supply chains
Information and materials flow sequentially from company to company old style supply chain
4. Concurrent supply chains
Information flows in many directions simultaneously among members of a supply chain network
- latest
Business value (BENEFITS) of SCM systems we always consider Porters value chain perspective
a. Match supply to demand
b. Reduce inventory levels
c. Improve delivery service
d. Speed product time to market
e. Use assets more effectively
f. Reduced supply chain costs lead to increased profitability
g. Increased sales