Supply Chain Supply Chain Management SystemsManagement Systems

What is Supply Chain Management?What is Supply Chain Management?

• SCM is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements.

In other meaningIn other meaning

• All facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows

History of an SCM system:History of an SCM system:

• 1960’s- First inventory software developed• 1970’s- Material Requirements Planning

was introduced.• 1980’s- Market demand increased which

led to managing material flow through SCM systems.

• 1990’s-NOW- SCM systems are more technologically enabled.

Goals of an Supply Chain system:Goals of an Supply Chain system:

• Speed• Efficiency• Reduce Cost• Improve Supply chain cycle times (to get a

company’s products from concept to market)

SCM vs. ERPSCM vs. ERP

• ERP integrates all functions of a business in a unified manner.

• SCM is a more specialized system.

ERP Business FunctionsERP Business Functions

Points of differences:Points of differences:

• Comprehensive• Complexity• Sourcing Tables• Handling of Constraints• Functionality• Speed of processing requests

HR Marketing

Accounting Operations

Finance

Functional Business Areas that Functional Business Areas that SCM touchSCM touch

Traditional WayTraditional Way

SUPPLY CHAIN MANAGEMENT SYSTEMSUPPLY CHAIN MANAGEMENT SYSTEM

The ArchitectureThe Architecture

Five Basic Components:Five Basic Components:

1. Plan2. Source3. Make4. Deliver5. Return

PlanPlan

• Develop strategies in order to meet customer’s needs and demands.

• Plan to develop high quality products with a lower cost at a fast pace.

SourceSource

• Decide where your products will come from. Who will be your supplier?

• Helps the company know who they can rely on to deliver their products in a timely manner.

MakeMake

• Where the source is going to manufacture their product.

• Includes scheduling, testing, packaging, and preparing the product for distribution

• How much inventory should they produce?

DeliverDeliver

• Where the company decides what distribution carrier to use in order to successfully get their orders fulfilled.

• How fast can they get their products to their consumers?

• Involves how the company is going to receive their payments.

ReturnReturn

• Involves the products that the customers are not satisfied with that get sent back to the company.

• Are the customers satisfied with their service?

SUPPLY CHAIN MANAGEMENT SYSTEMSUPPLY CHAIN MANAGEMENT SYSTEMThe ProcessThe Process

Process of Supply Chain Management:Process of Supply Chain Management:

• SCM systems include the flow of– Raw materials– Producing products– Providing service– Delivering the product to the end consumer.

The ProcessThe Process

SUPPLY CHAIN MANAGEMENT SYSTEMSUPPLY CHAIN MANAGEMENT SYSTEM

The IntegrationThe Integration

Accounting Operations

SCM System

ERP System

MarketingHuman Resources

Finance

Model of ERP and SCM systems working together:

Supply Chain IntegrationSupply Chain Integration

• Information sharing among supply chain members– Early problem detection– Faster response– Builds trust and confidence

• Collaborative planning, forecasting, replenishment, and design– Lower Costs (material, logistics, operating, etc.)– Higher capacity utilization– Improved customer service levels

Supply Chain IntegrationSupply Chain Integration

• Coordinated workflow, production and operations, procurement– Production efficiencies– Fast response– Improved service– Quicker to market

• Adopt new business models and technologies– Penetration of new markets– Creation of new products– Improved efficiency– Mass customization

LogisticsLogistics

• logistics is basically managing and controlling the flow or supply of goods, information, personnel, utilities and other resources from one location to destination to meet the demands of a customer or the requirement of one department or section of the organization.

TransportationTransportation

• Rail– low-value, high-density, bulk

products, raw materials, intermodal containers

– not as economical for small loads, slower, less flexible than trucking

• Trucking– main mode of freight

transport– small loads, point-to-point

service, flexible– More reliable, less damage

than rails; more expensive than rails for long distance

TransportationTransportation

•Air–most expensive and fastest, mode of

freight transport–lightweight, small packages –high-value, perishable and critical

goods–less theft

•Package Delivery–small packages–fast and reliable–increased with e-Business–primary shipping mode for Internet

companies

TransportationTransportation•Water

–low-cost shipping mode–primary means of international

shipping–slowest shipping mode

•Intermodal–combines several modes of

shipping-truck, water and rail–key component is containers

•Pipeline–transport oil and products in liquid

form–high capital cost, economical use–long life and low operating cost