1. “SCM, SRM, CRM, and ERP”

2. Supply Chain Management
Uses information technology to endow computerized intelligence to an ever-growing network of raw material suppliers, factories, warehouses, distribution centers, and points of sale. Each player in the supply chain conducts business with the latest and best information, and products move from point-of-origin to consumption as quickly as possible and at the least cost.

4. A Supply Chain for Bread
Stage of Production
Value Added
Value of Product
Farmer produces and harvests wheat
$0.25
Wheat transported to mill
$0.08
$0.33
Mill produces flour
$0.15
$0.48
Flour transported to baker
$0.56
Baker produces bread
$0.44
$1.00
Bread transported to grocery store
$1.08
Grocery store displays and sells bread
$0.21
$1.29
Total Value-Added

6. Value-Added Value added The difference between the cost of inputs
and the value or price of outputs.
Capital
Inputs
Land
Labor
Transformation/
Conversion
process
Outputs
Goods
Services
Value added
Control
Feedback

7. Value-Added
Value-Added
Value-Added
Value-Added
Value-Added
Value-Added

10. Pull/Push Systems
Push system: System for moving work where output is pushed to the next station as it is completed
Pull system: System for moving work where a workstation pulls output from the preceding station as needed. (e.g. Kanban)
(Assume fast response time for key activities along the chain)

14. of Supply Chain Management
(Missing slide)
Wal-Mart
The Poster Boy
of Supply Chain Management

16. Some Characteristics of Wal-Mart’s “Cross Docking”Technology as
Applied to Their Supply Chain
Cross Docking is a logistics approach that permits goods to cross from one loading dock to another to minimize the time that goods spend in a distribution center.
It is supported by a private satellite communications system with sends point-of-sale data to some 4000 venders, permitting less reliance on forecasting and less inventory in the system.
Cross Docking reduces Wal-Mart’s cost of sales by up to 3% compared to industry standards.

17. Some Comments on Accounting and Finance:
------> the pace of change by the FASB (Financial Accounting Standards Board) in reference
to recognizing software properly on financial statements. What did they eventually change?
------> a wait by the FASB on the impact of SCM on financial statements. What is this impact?
From transparencies, show job inquiry and salary surveys on CBA Departments

18. SRM — E-Procurement
Supplier Relationship Management: The practices needed to establish the business rules, and the understanding needed for interacting with suppliers of products and services of varied criticality to the profitability of the enterprise.
E-Procurement: A set of applications and B2B information management processes that support the buying of direct and indirect goods and services.

19. Supplier Relationship Management
Supplier Relationship Management Spans Functional and Enterprise Boundaries
Design
Forecasting
Planning and
Scheduling
Manu-facturing and Packaging
and Operations
Distribution
and Outbound
Logistics
Purchasing
Inbound
Logistics
Inventory
Management
Supplier-Shared Reporting, Analytics and Re-Evaluation

20. SCM-SRM Goals Improve speed and time to market
Reduce supply variability
Improve collaborative decision making
Lower the costs of supplier “ownership”
Reduce inventory levels
Drive Return on Relationships
Develop Competitive Advantage

21. SCM-SRM Benefits Reduction in Costs Reduction in Operating Expenses
Competitive Advantage

22. SCM- SRM Inhibitors and Accelerators
Not on CEO Radar Scope
“Comfortable” with Existing Suppliers
Lack of Cross-Business Cooperation
Doubt Suppliers’ Value
Lack of Comprehensive Applications and synchronized information
Bidding Practices
Price as Sole Criteria
Accelerators
↑Improved Buying Processes
↑Supply Chain Cost Cutting
↑Improved Bottom Line
↑Global Sourcing
↑Collaborative Commerce
↑Improved Competitiveness

23. Why SCM-SRM Matters: Cost of Goods Compared to Revenue
1999 Fortune 500
Sales (millions)
113,910
257,477
153,831
85,629
281,740
1,109,949
778,602
102,437
184,426
119,800
39,676
85,800
520,961
53,665
204,400
217,739
748,439
337,707
Profit Avg. % Sales
0.34
5.39
-0.47
9.75
3.59
4.03
3.63
1.35
4.18
4.21
7.88
3.50
9.54
-3.61
17.32
3.60
Purch. $ % of Sales
64.60
61.30
58.60
51.70
50.80
47.20
45.60
42.40
42.10
40.00
36.20
35.60
34.30
34.00
33.80
25.50
18.49
Industry
Metals
Chemicals
Engineering, Construction
Beverages
Computers, Office Equipment
Motor Vehicle and Parts
Electronics, Electrical Equip.
Railroads
Aerospace
Airlines
Scientific, Photo, Control Equip.
Forrest and Paper Products
Telecommunications
Mining, Crude Oil Production
Pharmaceuticals
Food
Petroleum Refining
Utilities, Gas, and Electric
Highest Impact
Medium Impact
Lower Impact

24. New Rules/New Realities
Because of a move to improve operations, more than 45 percent of the value produced by Fortune 500 companies will be purchased. Downward price pressures are the norm on the revenue generating side of businesses. Increased profits can only come through a reduction in supply chain costs. Competitiveness is dependent on improved supplier relationships to reduce supply chain and operational costs.

25. About 15 percent of global enterprises had implemented the supplier performance, procurement and operational management measures needed to develop the supply base as a competitive weapon.

26. Fortune 500 enterprises will move strongly to SRM methodologies or they will incur profit reductions of close to 2 percent.

27. Recommendations
Develop SRM practices that: 1) link business goals to SRM practice, 2) are based on cross-functional information sharing and processes, 3) are based on measurable results, and 4) are based on complete supplier performance, not just price.
Re-engineer sourcing practices along with the implementation of strategic-sourcing or e-procurement applications. Implementation of the applications alone will not assist an enterprise and may actually be disruptive to supplier relationships.
When procured goods or services are critical to the value-generating mechanism, enterprises should negotiate for quality, delivery and price performance, not just goods and services. These components of the supplier relationship should have an associated monetary value.

28. Successful SCM-SRM Implementation
Collaborate on Forecasts Information
Notify and Respond
to Sourcing Requests
Perform Contract Negotiations
Exchange design changes to improve time to market
Exchange Order Throughout the Purchasing Cycle
Share Performance Information
The large titles are Supplier Interaction areas - i.e. Procure, Replenish
The Red Items are current eBusiness functions provided
The Blue Items are next release/future eBusiness function items
The Black items are future vision but not yet planned to a release.
Applications for eBusiness enable you to build stronger relationships with your supplier. They are about about having a 360 degree view of your supplier and how each of your business processes works to keep that customer happy, well serviced and productive. The last 10 years of business have been focused on an internal perspective, on how you could run your business more efficiently.
Times have changed, and now the most innovative companies focus on expanding markets, driving revenue. This is achieved by focusing the enterprise on the customer and how each of their business processes interacts with the customer, whether it’s obvious processes such as marketing, selling, and servicing, but also production and fulfillment as well as administration.
Let’s look in each category
features common to all purchasing situations. A ‘must have’ for any organization looking to quickly improve productivity of employees involved in the procurement and payment cycle. Suppliers use these transactions to perform administrative tasks and keep their systems in sync with your, removing the administrative burden from your employees.
Suppliers can view purchase orders online, use sort and filter functions to display, and drill down into line item detail. Suppliers can use the schedule page to review existing PO schedules, change orders, and planned purchase orders.
Suppliers can view account balances and drill down to access a list of invoices for any open balance. Suppliers can also view invoices and drill down to invoice details.
Suppliers can also view receipts to identify when shipped materials have been received, and drill down to access invoice information.
The Maintain contacts and address features allow authorized employees of your suppliers to update their personnel information, and your PeopleSoft system automatically incorporates those changes.
Allow Suppliers to Maintain their Information
Exchange Inventory Levels and Replenishment requests
View and Resolve Account Balances and Payment Status

29. Successful SCM-SRM Implementation
(Missing slide)
Collaborate on Forecasts Information
Notify and Respond
to Sourcing Requests
Perform Contract Negotiations
Exchange design changes to improve time to market
Exchange Order Throughout the Purchasing Cycle
Share Performance Information
The large titles are Supplier Interaction areas - i.e. Procure, Replenish
The Red Items are current eBusiness functions provided
The Blue Items are next release/future eBusiness function items
The Black items are future vision but not yet planned to a release.
Applications for eBusiness enable you to build stronger relationships with your supplier. They are about about having a 360 degree view of your supplier and how each of your business processes works to keep that customer happy, well serviced and productive. The last 10 years of business have been focused on an internal perspective, on how you could run your business more efficiently.
Times have changed, and now the most innovative companies focus on expanding markets, driving revenue. This is achieved by focusing the enterprise on the customer and how each of their business processes interacts with the customer, whether it’s obvious processes such as marketing, selling, and servicing, but also production and fulfillment as well as administration.
Let’s look in each category
features common to all purchasing situations. A ‘must have’ for any organization looking to quickly improve productivity of employees involved in the procurement and payment cycle. Suppliers use these transactions to perform administrative tasks and keep their systems in sync with your, removing the administrative burden from your employees.
Suppliers can view purchase orders online, use sort and filter functions to display, and drill down into line item detail. Suppliers can use the schedule page to review existing PO schedules, change orders, and planned purchase orders.
Suppliers can view account balances and drill down to access a list of invoices for any open balance. Suppliers can also view invoices and drill down to invoice details.
Suppliers can also view receipts to identify when shipped materials have been received, and drill down to access invoice information.
The Maintain contacts and address features allow authorized employees of your suppliers to update their personnel information, and your PeopleSoft system automatically incorporates those changes.
Allow Suppliers to Maintain their Information
Exchange Inventory Levels and Replenishment requests
View and Resolve Account Balances and Payment Status

31. Issues  The complex nature of supplier relationships
 The technology landscape
 Competition versus collaboration
Gains and challenges related to supplier relationship management
 New measures on the financial strength of supply chain members

32. Simulation Modeling of Supply Chains as Networks
(Missing slide)
Note: Arrows (or network arcs) represent transportation links