SCM ofSamsung Electronics

Table of Contents

1. Introduction2. Background3. SCM Case4. APS5. SCM Timeline6. Result of SCM

1. Introduction SCM - Definition

SuppliersSuppliers CustomersCustomersPurchasing Production Distribution

Supply chain management (SCM) the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers

Supply Chainplanning

Collaborateplanning

Supply ChainExecution

Supply Chain Management

1. Introduction SCM - Strategies

Supply Chain Planning

Collaborative Planning

Supply Chain Execution

3 strategiesof

SCM

To provide stable suppliesfor any circumstance of market

Planning immediateInformation share with

customers and suppliers

To manage timelinefor Supply Chain System

1. Introduction Elements of SCM

Organization: Global Operation Center Planning, Operating, regulating, and Monitoring

Process: Forecast-based, daily production planningSystem: APS (Advanced Planning & scheduling System)

2. Background Current Status

• The world's largest electronics company• Global market leader in more than 60

products• Business areas: Consumer electronics

Telecommunication Semiconductor

• As of 2007– Revenue $103.4 billion– Net income $21.5 billion– Employees Over 138,000

2. Background Business process perspective

• Quick reactions in rapidly changing markets– Rapid market growth, price drops, new paradigms, etc.

Demands ForecastLow reliability of forecasts

Lack of management tools on forecast

Delivery Due DateLow reliability of delivery due date

Need for setting priorities for demands

PlanningDecentralized planning processes

Lack of unified standard information

Inventory Controllittle control over worldwide

inventoryLack of tools for strategic planning

Late deliverySurplus

inventory

2. Background Business process perspective

• Demand for centralized supply control– sharing of quick, exact, and useful information

about current status & future forecast

2. Background Business process perspective

• Strengthening global competitiveness– 60~70% of extra values come from supply chain– Competitors (Intel, GE, Sony, HP, Toshiba, …)

began implementing SCM systems– To gain competitive advantage, it was important to

enhance supply chain and the way of managing it

2. Background Information Systems perspective

• Difficulties in integrating decentralized local information systems– Decided to develop a stand-alone SCM tool that centralizes

and streamlines supply chain management

• Preparation for future e-business system– Implementing SCM as a step toward future e-business

3. SCM Case Samsung Electronics

Samsung Electronics‘ Plans for introducing SCM

PLAN1. Rapid planning for fast reaction to market changes

PLAN2. Predicting demands with information integration

PLAN3.  Real-Time delivery to customers

3. SCM Case PLAN 1Rapid planning for fast reaction to market changes

Integrates all planning steps Provides real-time business information & Accurate plans and decisions are made for each order Right plans are made quickly

Salesperson

SalesDepartment

StrategyMarketing

Merchandise/ManufactureManufactureManagement

Purchase

Forecasting/Order

Control/Management

Selling Plan

Allocation Plan

Manufacture Plan

Purchase Plan

In1 day,Set-up

AllPlans

Week Cycle

Purchase Plan

Manufacture Plan

Allocation Plan

Selling Plan

Control/Management

Salesperson

SalesDepartment

StrategyMarketing

Merchandise/

ManufactureManufactureManagemen

t

Purchase

Month

Cycl

e

Forecasting / Order

3. SCM Case PLAN 2Predicting demands with information integration

Integrated management on information for forecasting demands

Simultaneous management on information Eliminates all inefficiencies originated from

inaccurate forecasts

Command CenterCustomer

SalesmanStrategy

Marketing

LocalMarketing

Bullwhip Effect

Customer

Command Center

Salesman LocalMarketing

StrategyMarketing

3. SCM Case PLAN 3

Real-Time delivery to customers

Allocation of resources in advance, based on current situation On time delivery through reliable information sources

Lack

Delivery by

the localstock

Customer

On-Hand

If there are no stock and we don’t know when can we buy, we will buy from other company!!

Headquarter

Manager Salesman Customer

Delivery by

the supply plan

On-Hand

In-TRANSIT

Stock Manufacture

plan

Material

plan

Allocation

4. APS Global Production Planning– Samsung Electronics introduced “Global Production Planning”, as a specific solution that enables SCM – Global Production Planning is a similar

concept to APS

4. APS Effects of implementing APS

• Simultaneous planning• Reduction in time for planning• Shortened planning cycle: Weekly,

daily planning• Enables making accurate production

plans• Enhancements on on-time delivery• Enables quick responses• Enhanced Customer service

5.SCM Timeline From 1997 To 2007

5.SCM Timeline In 2009

Global SCM Global SCM TOP 8TOP 8

The AMR Research Supply Chain Top 25 for 2009

salessales(Trillion

Won)

’97

18.5

’03

43.656

33

inventory turnover

ratio(day)

inventory..bond(Trillion Won)5.2 3.8

• Improvements on process management- Shortened process management cycle: monthly -> weekly ->

daily- Simultaneous planning/execution of worldwide

manufacturing/sales plans as a single system- Reduction of lead time for planning: previously 3 weeks, reduced

to less than 1 week

6.Result of SCM Improvements on process management

6.Result of SCM Articles