Presentation on theme: "E-Commerce and Supply Chain Management (SCM)"— Presentation transcript:
1 E-Commerce and Supply Chain Management (SCM) Chapter 4
2 Design MGMT 326 Capacity and Facilities Foundations of Operations Products &ProcessesQualityAssurancePlanning& ControlManagingProjectsManagingQualityIntroductionStrategyProductDesignStatisticalProcessControlProcessDesignJust-in-Time & Lean SystemsSupply Chain Management
3 Supply Chain Management (SCM) and E-commerce Chapter 4 What is SCM?E-commerceGlobal Supply Chains:InventoryInfrastructureProduct proliferationPatentsHealth & safetyVertical Integration:Backward integrationForward integrationMake-buy decisionsBusiness-to-business:Information technologiesBenefits to companiesManaging Suppliers:Selecting suppliersSingle suppliers vs.multiple suppliersBusiness-to-consumer:CompetitionInventory managementDelivery optionsManaging returns
4 Supply ChainsA supply chain is the network of activities that deliver a product/service to the customerSourcing (purchasing) of raw materials, parts, goods for sale, or service inventoriesOrder entryOperations planningTransformation process (manufacturing or services)Quality managementLogistics:Transportation (traffic)Distribution (delivering the product to customers)
5 Dairy Products Supply Chain Figure 4-2, page 100 A company hasmore control overTier 1 suppliersthan over Tier 2& Tier 3 suppliers
6 Lessons from the Dairy Products Supply Chain Figure 4-2, page 103 Companies often have several tiers of suppliers.Your company's Tier 1 suppliers are the firms that your company buys from.A company has more control over Tier 1 suppliers than over Tier 2 & Tier 3 suppliers
7 Supply Chain Management (SCM) Supply Chain Management is the business function that coordinates the movement of materials and information through the supply chain
8 Objectives of Supply Chain Management Minimize the cost of materials and material movementMinimize inventory investmentEnsure timely delivery of materials at every level of the supply chain and to customers (to ensure product availability and delivery speed)Ensure quality of materials used in manufacturing or servicesIf needed, get product design help or other services from suppliers.
10 Information Sharing in the Supply Chain The objective of information sharing is to match demand and supply. (What will be available when, and from whom?)Demand: actual sales, sales forecasts, booked orders, custom ordersProduct availability: current inventory, production plans, shipping schedules, shipmentsQuality: suppliers' data on quality
11 E-commerceThe use of the Internet and World Wide Web to conduct businessBusiness-to-business (B2B)Business-to-consumer (B2C)Also called e-business
12 Technologies for B2B E-commerce Electronic data interchange (EDI): electronic exchange of business-related information between companies, using data files in standard formatsOriginally, the data files were designed to be processed by computer systemsIn Web-based EDI, the supplier or business customer can access the information through the Web
13 Types of Web Sites for B2B E-commerce Electronic storefronts: Allow buyers to consult an online catalog, place an order, pay or make payment arrangements, and track shipmentsSimilar to B2C electronic storefrontsNet marketplaces: Allow buyers and sellers in the same industry to negotiate contracts, place orders, track shipments, pay or make payment arrangements, and work together on product design
14 Benefits of B2B E-commerce Lower administrative costs for purchasingLow-cost access to global suppliersLower inventory investment due to intense price competition and faster shippingBetter product quality because of increased cooperation between buyers and sellers, especially during the product design and development
15 Operations Issues in Business-to-consumer E-commerce More competitive marketsInventory management: information sharing in the supply chain helps to reduce inventory costs.Packing orders for shipmentDeliveryCustomer returns
16 Operations Issues in Online Sales Packing Orders for Shipment Items are identified by bar codes or radio frequency ID (RFID)Warehouse workers put ordered items in cratesSorter sends each item to the correct, bar-coded box for the customer who ordered itPacking slip is printedBoxes are packed, taped, weighedBoxes are put on trucks for shipment to customers
17 Operations Issues in Online Sales Delivery Objective: Deliver when promised, while minimizing delivery costsBrick-and-mortar stores (like Sears) can ship items to stores for customer pickup.Other online merchants ship via a package delivery service (like UPS) or U.S. postal serviceOnline merchants use package delivery services for most shipments to other countries.Customers usually pay a standard shipping cost – different for U. S. and other countries
18 Operations Issues in Online Sales Customer Returns Objective: minimize the cost of customer returns and reduce "hassles" for customers25% of Internet orders result in a customer returnProblems in returning goods are the 2nd biggest reason that consumers don't buy onlineCustomer usually pays for return shippingVariety of approaches used to return goods: postal service, contract package delivery service, brick-and-mortar store
19 Operations Issues in Online Sales Customer Returns (2) Online retailer must ship a replacement item or issue credit to customerOnline retailer must process returned itemsReturn defective items to supplier for a creditGood items can often be repackaged, priced, and resold.This process can be out-sourced.
20 Operations Issues in Global Supply Chains Inventory levels tend to be higher.Safety stock: inventory kept to protect a customer against late deliveries from a supplierPipeline inventory: inventory that has left a supplier plant but has not yet reached the customerBoth safety stock and pipeline inventory tend to be higher in global supply chains.
21 Operations Issues in Global Supply Chains (2) Shipping times are usually longer.Transportation in developing countries is less efficient than in developed countries.Port congestion causes delays.Customs and security inspections cause delays.In ocean shipping, goods arrive in large quantities. The shipment must be broken into smaller quantities (break bulk operations) for shipment to retailers and distributors.
22 Operations Issues in Global Supply Chains (3) Health and safety of consumersInfringement of patents and copyrightsBoth GM and BMW have accused Chinese firms of patent infringementProduct proliferation: the need to develop different product variations for different countries
25 Make or Buy Decisions (2) Who can do a better job: you or a supplier?Costs – breakeven analysis is used to compare costs. `QualityOn-time deliveryProduct or part designsIs there a supplier who can meet your firm's requirements in the above areas?