Silos and Enterprise Systems Cathy Dwyer Fall 2012 IS617 1 2 What Is the Supply Chain Also referred to as the logistics network Suppliers manufacturers warehouses distribution centers and retail outlets ID: 601692
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Supply Chains, Silos, and Enterprise Systems
Cathy DwyerFall 2012 IS617
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What Is the Supply Chain?
Also referred to as the logistics network
Suppliers, manufacturers, warehouses, distribution centers and retail outlets –
“
facilities”and theRaw materialsWork-in-process (WIP) inventoryFinished productsthat flow between the facilities
Suppliers
Manufacturers
Warehouses &
Distribution Centers
Customers
Material Costs
Transportation
Costs
Transportation
Costs
Transportation
Costs
Inventory Costs
Manufacturing CostsSlide3
3
The Supply Chain
Suppliers
Manufacturers
Warehouses &
Distribution Centers
Customers
Material Costs
Transportation
Costs
Transportation
Costs
Transportation
Costs
Inventory Costs
Manufacturing CostsSlide4
4
The Supply Chain – Another View
Suppliers
Manufacturers
Warehouses &
Distribution Centers
Customers
Material Costs
Transportation
Costs
Transportation
Costs
Transportation
Costs
Inventory Costs
Manufacturing Costs
Plan
Source
Make
Deliver
BuySlide5
5
What Is Supply Chain Management (SCM)?
A set of approaches used to efficiently integrate
Suppliers
Manufacturers
WarehousesDistribution centersSo that the product is produced and distributedIn the right quantitiesTo the right locationsAnd at the right timeSystem-wide costs are minimized andService level requirements are satisfied
Plan
Source
Make
Deliver
BuySlide6
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Why Is SCM Difficult?
Uncertainty is inherent to every supply chain
Travel times
Breakdowns of machines and vehicles
Weather, natural catastrophe, warLocal politics, labor conditions, border issuesThe complexity of the problem to globally optimize a supply chain is significantMinimize internal costsMinimize uncertaintyDeal with remaining uncertainty
Plan
Source
Make
Deliver
BuySlide7
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The 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 revenueHewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquakeU.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998Slide8
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The Importance of Supply Chain Management
Shorter product life cycles of high-technology products
Less opportunity to accumulate historical data on customer demand
Wide choice of competing products makes it difficult to predict demand
The growth of technologies such as the Internet enable greater collaboration between supply chain trading partnersIf you don’t do it, your competitor willMajor buyers such as Wal-Mart demand a level of “supply chain maturity” of its suppliersAvailability of SCM technologies on the marketFirms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal
processesSlide9
9
Today
’
s Marketplace Requires:
Personalized
content and services for their customersCollaborative planning with design partners, distributors, and suppliersReal-time commitments for design, production, inventory, and transportation capacityFlexible logistics options to ensure timely fulfillment Order tracking & reporting across
multiple vendors and carriers
Shared visibility for
trading partnersSlide10
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Supply Chain Management – Benefits
A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331 firms found significant benefits to integrating the supply chain
Delivery Performance
16%-28% Improvement
Inventory Reduction
25%-60% Improvement
Fulfillment Cycle Time
30%-50% Improvement
Forecast Accuracy
25%-80% Improvement
Overall Productivity
10%-16% Improvement
Lower Supply-Chain Costs
25%-50% Improvement
Fill Rates
20%-30% Improvement
Improved Capacity Realization
10%-20% Improvement
Source: Cohen & RousselSlide11
11Slide12
Business processes
Sequence of tasks or activities that take a set of inputs and convert them into desired inputsKey processesProcurement
Fulfillment
ProductionSlide13
Figure 1: A generic processSlide14
Business process - example
Make skateboardsWhat are some parts of a skateboard
Buy parts
What are some steps in the buying process
Who performs these steps
Sell skateboardsWhat are some steps in the selling procesWho performs these stepsSlide15
Procurement ProcessSlide16
Fulfillment Process Slide17
Functional structure
Common functionsTypical tasks in functional areasReview steps in procurementWho does what where?
Characterize processes - who is responsible for the process?
Why functional structure?Slide18
Functional organizationalSlide19
Functions vs. processesSlide20
The Silo effect
Communication and collaboration between functionsWhat must be communicated?
What information must be exchanged?
How is this coordinated
Paper based processes
Processes supported by functional systemsProcesses supported by enterprise systemsSlide21
Paper-based processSlide22
Consequences of delays
DelaysIncreased lead timesIncreased cycle timesExcess inventory
“just in case”
Lack of visibility across the process
Status: “where is my order”
How is the process doingWhy accept these delays?Slide23
Delays are no longer acceptable
Why?GlobalizationIncreased competitionPressure to do better
Reliance on technology!Slide24
Process using functional systemsSlide25
Processes using Enterprise SystemsSlide26
Framework: Key process flowsSlide27
Types of Enterprise Systems
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
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The ES Application Suite
Enterprise Resource Planning (ERP)
Supply Chain Management (SCM)Supplier Relationship Management (SRM) Product Lifecycle Management (PLM)Other classificationsBest of breed vs. Niche applicationsSoftware as a service (SaaS)Slide28
The application suite
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
28Slide29
SAP ERP Solution Map
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
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Shared Service Delivery
SAP NetWeaver
End-User Service Delivery
Analytics
Financial Analytics
Operations Analytics
Workforce Analytics
Financials
Financial Supply Chain Management
Treasury
Financial Accounting
Management Accounting
Corporate Governance
Human Capital Management
Talent Management
Workforce Process Management
Workforce Deployment
Procurement and Logistics Execution
Procurement
Inventory and Warehouse Management
Inbound and Outbound LogisticsTransportation Management
Product Development and Manufacturing
Production Planning
Manufacturing ExecutionProduct Development
Life-Cycle Data Management
Sales and Service
Sales Order ManagementAftermarket Sales and Service
Professional-Service Delivery
Corporate Services
Real Estate ManagementEnterprise Asset Management
Project and Portfolio Management
Travel Management
Environment, Health, and Safety Compliance Mgmt.Quality Management
Global Trade Services
Copyright SAP AG 2008Slide30
SAP Supply Chain Management
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
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SAP NetWeaver
Demand & Supply Planning
Demand Planning & Forecasting
Safety Stock Planning
Supply Network Planning
Distribution Planning
Service Parts Planning
Procurement
Strategic Sourcing
Purchase Order Processing
Invoicing
Manufacturing
Production Planning & Detailed Scheduling
Manufacturing Visibility & Execution & Collaboration
MRP based Detailed Scheduling
Warehousing
Inbound Processing & Receipt Confirmation
Outbound Processing
Cross Docking
Warehousing & StoragePhysical Inventory
Order Fulfillment
Sales Order Processing
BillingService Parts Order Fulfillment
Transportation
Freight Management
Planning & Dispatching
Rating & Billing & SettlementDriver & Asset Management
Network Collaboration
Real World Awareness
Supply Chain Event ManagementAuto ID / RFID and Sensor Integration
Supply Chain Visibility
Strategic Supply Chain Design
Supply Chain AnalyticsSupply Chain Risk Management
Sales & Operations Planning
Supply Network Collaboration
Supplier CollaborationCustomer Collaboration
Outsourced Manufacturing
Supply Chain Management with Duet
Demand Planning in MS ExcelCopyright SAP AG 2008Slide31
SAP Supplier Relationship Management
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
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SAP NetWeaver
Purchasing Governance
Global Spend Analysis
Category Management
Compliance Management
Sourcing
Central Sourcing Hub
RFx / Auctioning
Bid Evaluation & Awarding
Contract Management
Legal Contract Repository
Contract Authoring
Contract Negotiation
Contract Execution
Contract Monitoring
Collaborative Procurement
Self-Service Procurement
Services Procurement
Direct / Plan-Driven Procurement
Catalog Content ManagementSupplier Collaboration
Web-based Supplier Interaction
Direct Document Exchange
Supplier Network
Supply Base ManagementSupplier Identification & Onboarding
Supplier Development & Performance Management
Supplier Portfolio ManagementCopyright SAP AG 2008Slide32
SAP Product Lifecycle Management
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
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SAP NetWeaver
Product Management
Product Strategy and Planning
Product Portfolio Management
Innovation Management
Requirements Management
Market Launch Management
Product Development and Collaboration
Engineering, R&D Collaboration
Supplier Collaboration
Manufacturing Collaboration
Service and Maintenance Collaboration
Product Quality Management
Product Change Management
Product Data Management
Product Master and Structure Management
Specification and Recipe Management
Service and Maintenance Structure Management
Visualization and Publications
Configuration ManagementPLM Foundation
Product Compliance
Product Intelligence
Product CostingTool and Workgroup Integration
Project and Resource Management
Document Management
Copyright SAP AG 2008Slide33
SAP Customer Relationship Management
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
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Web Channel
Interaction Center
Partner Channel Management
Trade Promotion Management
Business Communication Management
Marketing
Marketing Resource Management
Segmentation & List Management
Campaign Management
Real-Time Offer Management
Lead Management
Sales
Sales Planning & Forecasting
Sales Performance Management
Territory Management
Accounts & ContactsOpportunity Management
Quotation & Order Management
Pricing & Contracts
Incentive & Commission ManagementTime & Travel
Service
Service Order ManagementService Contract Management
Complaints & Returns
In-House RepairCase Management
Installed Base Management
Warranty ManagementResource Planning
Copyright SAP AG 2008Slide34
Risk/Rewards of ES
Benefits of fully integrated information technology systemsIncreases speed, quality, accuracy – others?
Risk? – dependency and changing
expectations
Changes in the business environment as companies move to supply chain/value chain systems
(Changes in technology -> changes in org. Structure/social structure)34Slide35
ES Risks
NY Times news? — Hack of banks in retaliation for Muslim video (on Blackboard)(Risk - business continuity planning)(Security risk assessment - security audits, IT audits
)
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ES Risks cont.
Internet has become platform for political protest and civil disobedienceAnonymous on Scientology – http://www.youtube.com/watch?v=JCbKv9yiLiQ
Other actions
http://www.youtube.com/watch?v=HrXyLrTRXso
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Green Supply Chain
Use of ES have led to expectations that companies are responsible for who they select as suppliersWalmart
, Starbucks set environmental standards on their suppliers
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