MBUS 626 Technology Briefing Web Based Supply Chain Management Chris Nicol Betsy Vo Ryan Gee

Agenda Overview of Supply Chain Management (SCM) Benefits of SCM SCM Technology Conclusions

ManufacturersDistributors/ Converters Suppliers/Raw Materials Customers Information Flows Goods Flow Retailers The Traditional Supply Chain

Enterprise attempt to optimize individual processes often with conflicting goals PurchasingManufacturingDistribution Customer Service/ Sales Few change- overs Stable schedules Long run lengths High inventories High service levels Regional stocks SOURCE MAKEDELIVERSELL Low pur- chase price Multiple vendors Low invent- ories Low trans- portation Traditional SC Problems

SCM deals largely with cross-functional and inter-enterprise business processes to speed product, information and fund flows up and down a supply chain Manufacturer Distributors/ Wholesalers Consumers Suppliers Retailers Goods Flows Information Flows Funds Flows Overview of SCM

*Source: PRTM Integrated Supply Chain Benchmarking Study, 1997 Typical Quantified Benefits from Integrated the Supply Chain Delivery Performance16%-28% Improvement Inventory Reduction25%-60% Improvement Fulfillment Cycle Time30%-50% Improvement Forecast Accuracy25%-80% Improvement Overall Productivity10%-16% Improvement Lower Supply-Chain Costs25%-50% Improvement Fill Rates20%-30% Improvement Improved Capacity Realization 10%-20% Improvement

More frequent planning means responsive to changing customer needs while decreasing inventories Time Average Supply Average Supply Planning Cycle Planning Cycle Lower Inventories & Lead Times

Manufacturer Wholesale Distributors Consumers Multi- tier Suppliers Retailers Reduced Volatility Time Sales Time Sales Time Sales Time Bull Whip Effect

Move from push to pull manufacturing Manufacturers Distributors/ Wholesalers ConsumersSuppliersRetailers Manufacturers Distributors/ Wholesalers Consumers SuppliersRetailers Make what we will sell, not sell what we will make!! Lower Costs

Optimization of all supply chain activities Supply Chain Optimization Synchronized, Concurrent Planning Demand Planning Distribution Planning Manufacturing Planning Procurement Planning Synchronized, Sequential Planning Forecasting Distribution Planning Manufacturing Planning Procurement Planning Total Optimization

PurchasingManufacturingDistribution Customer Service /Sales Available-to-Promise (ATP) Capable-to-Promise (CTP) Move from functional silos to process-oriented business processes (e.g., order-to-cash, cash-to-cash) Integrated Sales and Operations Planning (S&OP) SOURCE MAKEDELIVERSELL SCM and e-Business Practices

Barriers Integration of Systems –Legacy systems Security Issues Low Cost Technology –EDI vs. Internet

APS and e-business technology supports best SCM practices –Advanced Planning & Scheduling Systems –XML (Extensible Markup Language) enabled internet MRPSCM APS and e-business SCM Technology

Model factory production system –material requirements & constraints –plant capacity limitations –additional resource limitations Evaluate existing or new production plans Provide production scheduling Capable of expansion to entire supply chain Provide for internal and external integration APS

Extensible Markup Language –Huge Advantage over EDI –Huge Advantage over HTML XML Users –Heavily used in medical industry –Microsoft is employing it everywhere Provides for external collaboration via sharing of data regardless of application Provides Machine-to-Machine Interaction over the Internet XML

Manufacturers Wholesale Distributors Suppliers Customers Information Flows Goods Flow Future Internet-Connected Supply Chain Supplier Exchanges Customer Exchanges Logistics Exchanges Contract Manufacturers Logistics Providers Virtual Manufacturers Retailers

Conclusions E-business technology will tear down the walls inside companies Will also allow companies to do joint planning and scheduling with their supplier’s suppliers and customer’s customers The Internet will help foster the rapid growth of dynamic supply chain trading communities

Leaders Software Companies –IT2 Technologies –PeopleSoft –SAP Industries –Automotive –Dell Computers –Lucent Technologies