1. SCM Systems MIS SC Supply Chain & Management Information Systems Presentors : Deepshikha Agarwal & Priyanka Mangla

2. Following Presentation covers :  Supply Chain  Nike’s Supply Chain  Supply Chain Management System  Importance of Supply Chain Management  Information and Supply Chain Management  Supply Chain Management Software  Supply Chains and Internet  Global Supply Chains  Demand Driven Supply Chains  Business Value Of Supply Chain Management Systems

3. SUPPLY CHAIN  A firm’s supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers.

5. SUPPLY CHAIN - Classification organization's suppliers and the processes for managing relationships with them Upstream Portion organizations and processes for distributing and delivering products to the final customers. Downstream Portion

8. NIKE’S SUPPLY CHAIN

9. SUPPLY CHAIN MANAGEMENT SYSTEM Small number of suppliers Easy to coordinate Using phone or fax Hundreds or thousands of suppliers Complexity in coordination Need of SCM system

10.  Supply Chain Management System refers to the coordination of activities involved in making and moving a product.

11.  A set of approaches used to efficiently integrate  Suppliers  Manufacturers  Warehouses  Distribution centers  So that the product is produced and distributed  In the right quantities  To the right locations  And at the right time  System-wide costs are minimized and  Service level requirements are satisfied.

12. IMPORTANCE OF SUPPLY CHAIN MANAGEMENT  Dealing with uncertain environments – matching supply and demand  Boeing announced a $2.6 billion write-off in 1997 due to “raw materials shortages, internal and supplier parts shortages and productivity inefficiencies”  U.S Surgical Corporation announced a $22 million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals”  IBM sold out its supply of its new Aptiva PC in 1994 costing it millions in potential revenue  Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake  U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998

13. INFORMATION AND SUPPLY CHAIN MANAGEMENT  The supply chain inefficiencies waste as much as 25 percent of a company’s operating costs.  Uncertainties also arise because many events cannot be foreseen—product demand, late shipments from suppliers, defective parts or raw material, or production process breakdowns.

14.  More accurate information from supply chain management systems reduces uncertainty and the impact of the bullwhip effect.  With perfect information about demand and production, a firm can implement an effective just-in-time strategy, delivering goods in the right amount and as they are needed.

15. Bullwhip Effect  Information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain.  Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain.  Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.

17. SUPPLY CHAIN MANAGEMENT SOFTWARE Model existing supply chain Generate demand forecast - Whirlpool Develop optimal sourcing & manufacturing plans Supply Chain Planning Systems Track physical status of goods Management of materials, warehouse & transportation operations Management of financial information Supply Chain Execution Systems

18. How it worked @ P  G ?  One of the world’s largest companies  More than 300 brands worldwide Beauty Division - Pressure due to price war among retailers and demand variability Need to reduce supply chain costs and improve efficiency throughout Problem Multi-echelon inventory optimization system – seek to minimize total inventory in all of the echelons Optiant Software – Power Chain Suite Solution

19. How it worked @ P  G ? Multi-echelon inventory optimization system Multiple Independent forecast updates in each echelon Accounting for all lead times and variations in lead times Management of the Bullwhip Effect Creation of visibility up and down the demand chain Synchronized order strategies Appropriate modeling of the effects of different echelons replenishment strategies on one another

20. How it worked @ P  G ? Identify alternative supply chain design Create an optimal redesign of supply network Optimize inventory strategy within supply chain Target service level above 99% Configure existing cosmetics supply chain Pull in previous 18 months of demand data Optiant Software

21. SUPPLY CHAINS AND INTERNET

22.  Before the Internet, supply chain coordination was hampered by  difficulties of making information flow smoothly among disparate internal supply chain systems  Difficult sharing of information – incompatible technology platforms and standards  Today, using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules.

23. SUPPLY CHAINS AND INTERNET Manager - Tap into suppliers’ systems to determine whether inventory and production capabilities match demand for firm’s product Business Partners - Collaborate online to forecast Sales Representatives - Access suppliers’ production schedules and logistics information to monitor customer’s order status

24. GLOBAL SUPPLY CHAINS – Complexities and Challenges  Greater geographic distances  Participants from different countries  Additional costs – transportation, inventory, local taxes or fees  Performance standards may vary  Need to reflect foreign government regulations and cultural differences

25. GLOBAL SUPPLY CHAINS AND INTERNET  Internet help companies manage many aspects of their global supply chain – sourcing, transportation, communications and international finance.  Example – Apparel Industry – have started to use Web to manage their global supply chain  In addition to contract manufacturing, globalization has encouraged outsourcing warehouse management, transportation management, and related operations to third party logistics providers like UPS Supply Chain Services.

26. GLOBAL SUPPLY CHAINS AND INTERNET – Example e-SPS Web-based Software  Used by Koret of California  Gain end-to-end visibility into its entire global supply chain  Web-based software for sourcing, work-in-progress tracking, production routing, product-development tracking, problem identification and collaboration, delivery-date projections and production-related inquiries and reports.

27. DEMAND DRIVEN SUPPLY CHAINS production master schedules are based on forecasts or best guesses of demand for products, and products are "pushed" to customers push-based model actual customer orders or purchases trigger events in the supply chain Eg. Wal-Mart and Dell pull-based model

29. INTERNET DRIVEN SUPPLY CHAIN – the future  Moved from sequential supply chains to concurrent supply chains  Ultimately, the Internet could create a digital logistics nervous system throughout the supply chain - It provides  multidirectional communication among firms,  networks of firms, and  e-marketplaces so that entire networks of supply chain partners can immediately adjust inventories, orders, and capacities.

30. INTERNET DRIVEN SUPPLY CHAIN – the future

31. BUSINESS VALUE OF SUPPLY CHAIN MANAGEMENT SYSTEMS  Streamline supply chain processes - both internal and external  Provide with more accurate information – what to produce, store and move  Reduced supply chain costs – impact on firm profitability  Increased sales – right product available at right time

32. Thank you…