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Supply Chain Management

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Mohsin Butt

on 18 December 2014

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Transcript of Supply Chain Management

Supply Chain Management
design by Dóri Sirály for Prezi
Coordination of all supply activities of an organization from its suppliers and delivery of products to its customers.
• An organization’s supply chain can be viewed from a systems perspective as the acquisition of resources (inputs) and their transformation (process) into products and services (out- puts) which are then delivered to customers.

• Such a perspective indicates that as part of moving to e-business, organizations can review the transformation process and optimize it in order to deliver products to customers with greater efficiency and lower cost.
• Benefits of e-supply chain management
 A simple model of a supply chain
Two alternative models of the value chain
a) Traditional models
b) Revised Model (by Deise et al. (2000)

1) Restructuring the internal value chain
An organization which uses information and communications technology to allow it to operate without clearly defined physical boundaries between different functions.
Towards the virtual organization
Mohsin Zahid Butt
Khurram Shehzad
Niaz Ali
Babas Abbas
Hina Khalid
What is SCM ?
How E-business assist to solve problems arising in SCM !

Upstream supply chain
Transactions between an organization and its suppliers and intermediaries equivalent to buy-side e-commerce.

Downstream supply chain
Transactions between an organization and its customers and intermediaries, equivalent to sell-side e-commerce.

Supply chain networks

The links between an organization and its partners involved in multiple supply chains. .
Efficient consumer response

ECR is focused on demand management aimed at creating and
satisfying customer demand. It creates operational efficiencies
and costs savings in the supply chain through reducing inventories.

Objectives and strategies for effective consumer response (ECR)

Using technology to support supply chain management "BHP Steel" example.
Chan and Swatman (2000) assess the stages in implementation of e-commerce for this company by use of PC-based technology for SCM.

1- Early implementation 1989–93
PC-based EDI purchasing system, objectives were to
reduce data errors
reduce administration costs
improve management control
reduce order lead time.
results 80% of invoices placed electronically, 7,000 items were eliminated from the warehouse, Shorter lead times.
2- Electronic trading gateway 1990–4
This was again EDI-based, involved a wider range of parties both externally and internally.
The aim was to provide a combined upstream and down stream supply chain solution to bring benefits to all parties.
This process was the difficulty of getting customers involved – only four were involved after 4 years.
3- The move towards Internet commerce
The Internet was thought to provide a lower-cost alternative to traditional EDI for smaller suppliers and customers, through using a lower-cost value-added network.
One objective of the project was to extend the reach of electronic communications with supply chain partners.

The second was to broaden the type of communications to include catalog ordering, freight forwarding
and customer ordering.
More recently, BlueScope Steel has introduced bluescopesteelconnect.com which is a secure Internet-based steel procurement solution which allows customers to order and confirm the status of products. It also offers users the ability to check statements and download invoices in real time
• it is not involve only in internal process but also in external process.

• As a result, supply chain management can dramatically have an impact on the profitability of a company through reducing operating costs and increasing customer satisfaction and so loyalty and revenue.
 What is logistics?
• Logistics is the time-related positioning of resource, or the strategic management of the total supply chain.
• It can include procurement, manufacture, distribution, and waste disposal, together with associated transport, storage and information technology.

Inbound logistics
• The management of material resources entering an organization from its suppliers and other partners.
Outbound logistics
• The management of resources supplied from an organization to its customers and intermediaries such as retailers and distributors.
 Push and pull supply chain models
A change in supply chain thinking, and also in marketing communications thinking, is the move from push models of selling to pull models or to combined push–pull approaches
Push supply chain
• A supply chain that emphasizes distribution of a product to passive customers.
Pull supply chain
• An emphasis on using the supply chain to deliver value to customers who are actively involved in product and service specification.
 Value chain
• A model that considers how supply chain activities can add value to products and services delivered to the customer.

• The value chain is a model that describes different value-adding activities that connect a company’s supply side with its demand side.

• We can identify an internal value chain within the boundaries of an organization and an external value chain where activities are performed by partners.

Restructuring the internal value chain
• Traditional models of the value chain have been re-evaluated with the advent of global electronic communications.

• It can be suggested that there are some key weaknesses in the traditional value chain model.

• It is most applicable to manufacturing of physical products as opposed to providing services.

• It is a one-way chain involved with pushing products to the customer .

• it does not highlight the importance of understanding customer needs through market research and responsiveness through innovation and new product development

Weaknesses in the traditional value chain model
1. Mostly applicable to manufacturing of physical products
2. One-way chain
3. Not emphasize the importance of value networks

Revised Model (by Deise et al. (2000)
The value stream
The combination of actions required to deliver value to the customer as products and services.
1. the problem-solving task
2. the information management task
3. the physical transformation task

Value chain analysis
This is an analytical framework for decomposing an organization into its individual activities and determining value added at each stage.
Porter and Millar (1985) propose the following five-step process.

Step 1. Assess the information intensity
Step 2. Determine the role of IS
Step 3. Identify and rank
Step 4. Investigate how IS might spawn new businesses
Step 5. Develop a plan for taking advantage of IS.

Value stream analysis (Womack and Jones (1998))
Companies should map every activity that occurs in creating new products and delivering products or services to customers and then categorize them as:
1. Those that create value
2. Those which create no value
3. Those that don’t add value so can be immediately eliminated.

2) External Value Chain or Value Network
The links between an organization and its strategic and non-strategic partners that form it’s external value chain.
Partners of a Value Network (Deise et al. (2000))
1. Supply-side partners
2. Partners that fulfil primary or core value chain activities
3. Sell-side partners

The process of a company developing more of the characteristics of the virtual organization.
Options for restructuring the supply chain
Vertical integration
The extent to which supply chain activities are undertaken and controlled within the organization.
Virtual integration
The majority of supply chain activities are undertaken and controlled outside the organization by third parties.
Hayes and Wheelwright (1994) provide a useful framework that summarizes choices for an
organization’s vertical integration strategy.
1- The direction of any expansion.
2- The extent of vertical integration.
3- The balance among the vertically integrated stages.
Using e-business to restructure the supply chain

1- Information supply chain
2- Information asymmetry
An information-centric view of the supply chain which addresses the organizational and technological challenges of achieving technology enabled supply chain management efficiency and effectiveness.
Imperfect information sharing between members of a supply chain which increases uncertainty about demand and pricing
If the B2B Company Adopts e-procurement Benefits
 Increased efficiency of individual processes.
 Reduced cycle time and cost per order as described.
 Reduced complexity of the supply chain
 Company will offer the facility to sell direct
 Reduced cost of channel distribution and sale
 Improved data integration between elements of the supply chain.
 Reduced cost of paper processing.
 Reduced cost through outsourcing.
 Better service quality through contractual arrangements?
 Better customer responsiveness.
 Flexibility in adapting to new business requirements is a key capability of e-SCM systems.
 Monitor and analyze your extended supply chain.

Alternative perspective on the benefits
 Technology can deliver to customers at the end of the supply chain.
 Increased convenience through 24 hours a day, 7 days a week, 365 days a year ordering.
 Increased choice of supplier leading to lower costs.
 Faster lead times and lower costs through reduced inventory holding.
 The facility to tailor products more readily.
 Increased information about products and transactions.
 It is also easier for the customer to break it and choose another supplier.

IS-supported downstream supply chain management
We review the importance of fulfilment in achieving e-commerce success.
The key activities of downstream supply chain management are outbound logistics and fulfilment.

For Example
• Tesco’s glossary World’s largest glossary online business
• Operating strategy of disinter mediation
• Annualized sales were running at nearly £300 million, with 48,000 orders per week.

Outbound logistics management
The importance of outbound logistics relates to the expectations of offering direct sales through a web site. In a nutshell, logistics is crucial to delivering the service promise established on the web site
For Example
Strategy and applications
 A final indication of the importance of logistics is its scale.
 The challenge for distribution companies is to deliver on time and provide services to enable customers to track shipment of products ordered online.
 While an order-tracking facility has been the reality for international parcel carriers.
 Example Dutch company

IS infrastructure for supply chain Management?
 Information systems need to deliver supply chain visibility to different parties.
 Information systems have a key role in providing this visibility.
 users be able to personalize their view of the information according to their needs
 customers want to see the status of their order
 Suppliers want to access the organization’s database.
 Modern supply chain infrastructure is the use of a central operational database.
 This operational database is part of an enterprise resource planning system
 use of Internet technologies to deliver information reduce the costs of proprietary
 Supply chain visibility Access to up-to-date, accurate, relevant information about supply chain processes

Supply chain management implementation
The difficulties facing managers within a company who are responsible for managing supply chains is indicates by,
For example
A respondent from a UK mobile phone operator described
‘’Everything is moving so quickly within our industry at the moment that sourcing suppliers and changing our processes to fit with them is a constant battle. We are hoping our SCM software and the roll-out of our extranet will grow end-to-end ROI but it is easy to forget that we must constantly examine the business model to ensure we are doing things right.’’

Data standardization and exchange
The difficulties of exchanging information between incompatible systems using non- standard formats which can lead to the rekeying of information has been a barrier limiting the adoption of SCM.
For Example
Elemica (chemical industry)
It is a more recent development which should help accelerate adoption of e-SCM
By adopting GDSA some of the benefits of this approach for retailers identified
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