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Chapter 10. Enterprise Systems and Supply Chain Management. The Schedule. For Today Skipping a few chapters Current Events The Supply Chain & Problems Efforts to Integrate the Supply Chain For Next Time BPR & Supply Chain Mgmt Supply Chain Mgmt Examples. Supply Chain Components.

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Chapter 10

Chapter 10

Enterprise Systems and

Supply Chain Management

The schedule
The Schedule

  • For Today

    • Skipping a few chapters

    • Current Events

    • The Supply Chain & Problems

    • Efforts to Integrate the Supply Chain

  • For Next Time

    • BPR & Supply Chain Mgmt

    • Supply Chain Mgmt Examples

Supply chain components
Supply Chain Components

  • What is Supply Chain Management?

  • Supply Chain Components:

    • Upstream Supply Chain

    • Internal Supply Chain

    • Downstream Supply Chain

    • “Cradle to Grave” responsibility (Budweiser, auto makers)

  • What might be included in a supply chain for a typical company (who are the players)?

    • Some items might not be so obvious

Goals and purpose of scm
Goals and Purpose of SCM

  • Goals of Supply Chain Management

    • Reduce uncertainty & risks, inventory, cycle time

    • Improve business processes, customer service (Road Work)

    • Increased profits & competitiveness (RFID proof)

A few questions
A Few Questions

  • What prevents supply chain software from returning value to all organizations? (Calif IT Crisis, Nestle)

  • What changes need to take place within an organization in order for supply chain management software to be more effective?

  • SC and VC both study connections with suppliers, customers, business partners

    • What is the difference between them?

  • How can Extranets improve SCM? (new case of pampers)

Problems in the supply chain
Problems in the Supply Chain

  • Occur within complex / long supply chains

    • GM $85B, Ford $80B with its suppliers

    • 30,000 suppliers in auto industry

    • Average car has > 10,000 parts

  • How do you recognize supply chain problems?

    • What are some examples of problems? (cordless phone)

    • Why do they happen?

    • How do you fix them? (RFID box video)

Example of supply chain probs
Example of Supply Chain Probs.

  • Toys ‘R’ Us

    • Online toy retail site unable to meet customer demands for 1999 holiday season

      • Some History…

      • Demand was very high for several reasons…

    • What factors contributed to this overall situation?

    • Performance measures & customer loyalty

Traditional poor sc solutions
Traditional (Poor!) SC Solutions

  • Vertical Integration

    • Ford purchased a rubber plant in South America

    • Ryder Trucking purchased refineries in 1970’s

  • Accumulating large inventories

    • What is the benefit?

    • Why did/do companies do this?

  • Why are these such poor solutions today?

Early supply chain systems
Early Supply Chain Systems

  • Late 1950’s and 1960’s

    • First industrial use of IS

    • Automate separatepieces of the supply chain, Why?

    • What was automated first? Second?

    • Goals: reduce cost, expedite processing, reduce errors; sounds good, right?

  • Resulted in “Stovepiping”

    • What are symptoms of stovepiping, both within the organization and from customer’s point of view?

    • How can IS and BPR fix stovepiping?

    • Why is IS alone not a sufficient solution?

Today s supply chain systems
Today’s Supply Chain Systems

  • Works with existing IS to gather data from all parts of the supply chain

    • Provides a clear picture of where the organization is heading

  • Integrates additional functionality

    • Decision Support Systems, Customer Relationship Management, Electronic Commerce, Data warehousing

  • BPR trend has now ‘desrever’: watch out!

    • Before: Discover problems, find technology solution to fix it

    • Now: Create technology solutions, look for probs it fixes

Retooling it for bpr
Retooling IT for BPR

  • Make sure that IT fits the business process!! (again…)

    • “Held Hostage” Often organizations discover a problem only to find there IS will not support the solution (legacy systems)

    • Important to understand existing infrastructure, benchmark technology use against best competitors

    • Don’t get left behind the rest of the field!

Restructuring processes orgs
Restructuring Processes & Orgs

  • Major BPR activities include, but are not limited to:

    • Redesign of Processes

    • Mass Production to Mass Customization

    • Cycle Time Reduction

    • Restructuring Organizations

  • The following are examples…

Redesigning the process
Redesigning the Process

  • Ford Motor Company Accounts Payable

  • Old Process

    • Write Purchase Orders

    • Invoice mismatches between purchasing, material control, accounts payable, vendor

    • Had to manually match 14 items on every invoice

  • New Process

    • Invoiceless processing (EDI): no mismatches

    • Now automatically match only 4 items on PO

    • System pays vendor directly

    • 75% reduction in headcount, more accurate info

Mass production to customization
Mass Production to Customization

  • Bally Engineered Structures: sales & ordering

    • Custom made insulated products

    • Old: 12 options, 86 sequential tasks, takes 5 to 7 weeks

    • Redesigned system to provide salespeople with cust requirements, prices, specifications, and increased communication

    • New: 10,000 options, 20 sequential tasks, takes 1-2 weeks

  • Possible through IT & flexible manuf systems (robotics)

Cycle time reduction
Cycle Time Reduction

  • Time to complete a process beginning to end

    • More than just saving time: First to market!

    • Chrysler’s technology center reduced cycle time by 30%

    • Boeing 777 design, no physical prototype

  • Fundamental change

    • Computer becomes a platform for total design rather than “just a tool”

    • Cultural change involving engineers and role of the computer - can be significant!

Restructuring organizations
Restructuring Organizations

  • Structure should:

    • Support critical activities and strategy

    • Support the link between strategy & IS

  • Problems with hierarchy:

    • All it takes is one person to say “No”

  • Restructure for customer focus

    • Single contact point for customer

    • Leverage competitive intelligence!

Organizational structures
Organizational Structures

  • Hierarchical (greater authority)

    • Manager makes decision, job is to “sell” decision to others, may invite questions

  • Flattened

    • Manager presents problem, solicits input to make decision, or group makes decision

  • Networked (greater freedom)

    • Subordinates have more power, use of “situational leadership”

    • Empowerment: give permission to the workforce to develop & utilize their skills & knowledge for the good of themselves & the organization

  • No single best structure for all organizations

Important concepts to know
Important Concepts to Know

  • The Supply Chain

  • Early problems in SC

  • Vertical Integration: its benefits & problems

  • Supply Chain Management

  • Restructuring the process & organization

For next time
For Next Time…

  • Minicase for Monday

  • Reading on Knowledge Management will be sent to you