Supply Chain Management by liwenting


									    Supply Chain Management
• Definition
     • an integrative approach, consists of all stages
       involved, directly or indirectly, in fulfilling
       customer requests
     • It functions include not only to manufacturing and
       suppliers, but also transporters, warehouses,
       retailers, and customers themselves             (to p2)

     • Its efficiency deals with the enforcement of driving
       components on their new product development,
       marketing, operations, distribution, finance and
       customer services
                                                                     (to p3)

                  Capacity, inventory level, delivery schedule, payment terms

Supplier      Manufacturing                Distributor               Retail Outlet   Customer

                Order, return requests, repair and service requests, payments

           Supply Chain Management: major entities
    Supply Chain Management
• What makes SCM success?
  – Driving forces          (to p4)

• Traditional IS for SCM
                                      (to p6)

     • Based on Intranet, whereby it still highly dependent
       on the EDI technology for information interchange
     • Obstacles         (to p7)

     • Solutions to the problems       (to p8)

       Driving Forces of SCM
• It driving forces:
     • inventory (raw materials sourcing, WIP, and its
       finished goods)
     • transportation (logistic of good transferring)
     • facilities (hardware of storage facilities)
     • information (IS systems)

• These forces are adopted interactively in a
  decision making process for SCM                   (to p5)

             Supply Chain Decision-making Framework

                            Competitive Strategy

                            Supply Chain Strategy

Efficiency                                                      Responsibilities

                        Supply Chain Structure                            (to p3)

    Inventory        Transportation        Facilities                 5
                    ORDER             PLANNING &

ACCOUNTING                   INTRANET


                    SHIPPING           INVENTORY     DISTRIBUTORS
                                                                      (to p3)
             An integrative system for an SCM firm                6
Obstacles to achieving strategic
        fitness of SCM
1. Increasing variety of products
2. decreasing product life cycles
      – increase the uncertainty in supplying of goods
3. increasingly demanding customers
4. fragmentation of supply chain ownership
      – due to less vertical integrated
5. Globalization - increase competition
6. difficulty executing new strategies                       (to p3)

           Changing facet of SCM
1. Adopting E-business concept
       •   Overcome the restriction of EDI application (how?)
       •   Expansion of worldwide operations
       •   Benefits (to p9)
2. Adopting third party logistics           (to p14)

   –   Such as services of outsourcing firms
   –   Now most jobs such as distribution logistic,
       manufacturing, and assemblies may be rendered by
       TPL firms      (to p15)

   –   The IS dependency of SCM firms
                                                                    (to p16)

  Revenue Impact of e-Business
• E-B enhancing the following advantages:
   –   offering direct sales to customers
   –   providing 24-hour access of information from any location
   –   aggregating personalization and customization of information
   –   speeding up time to market
   –   implementing flexible pricing
   –   allowing price and service discrimination
   –   facilitating efficient funds transfer

                                  (to p10)
Example 1: Dell
                                                                          (to p8)
Example 2: Amazon                      (to p12)

              Example 1
             SCM for Dell
  Customer                                   Customer
                    Pull                                         Pull

     Dell                                   Retail Store

                                            PC Manufacturing
                    (direct process)

    Supplier                                     Supplier

Dell Supply Chain                      Conventional PC supply chain(to p11)
         Impact of E-B on Dell
Factor             Impact     Primary Causes
                   Increase    Direct sales to customer
Revenue                        Flexible pricing
                               Large variety of customers
                               Faster new product introduction
                               Fast delivery of customer
                   Decrease    Aggregation of commonality
Inventory costs                Geographical aggregation
                               Information sharing
Facilities costs   Decrease    No retail outlets
                               Customer participation in
                   Increase    Higher outbound
Transportation                 transportation cost                (to p9)
cost                                                         11
                          Example 2
                Customer                           Customer

                                  Pull                                Pull

                 Amazon                            Retail Store

Cut short         Distributor

                                                                           (to p13)
            Amazon supply chain      Conventional bookstore supply chain
 Impact of E-B on
Factor             Impact     Primary Causes
                   Increase    Convenience
Revenue                        Large variety of books
                               Distributor margins
                   Decrease    Downward price pressure
                               Inability to browse
Inventory costs    Decrease    Geographical aggregation

                   Decrease    No retail outlets, only
Facilities costs               warehouse
                               No cashier required
                   Increase    Each customers order is
                               picked ad packed
                   Increase    Higher outbound
Transportation                 transportation cost
cost                                                      13   (to p9)
                Concept of TPL
• Third party logistics, also known as outsourcing logistics,
  is a concept of which supply chains firms hiring outsource
  agents to take care of their non-core business activities so
  they could concentrate on their core-businesses and re-
• The adoption of third party logistics has an advantage that
  outsourcing agents could take charge of daily operations of
  non-core businesses such as transportation, inventory,
  assembly, and distribution. Offering value-added services
  to their clients are also known as some of distinctive
  features render by third party logistics firms that may
  otherwise be neglected by supply chains firms.                 (to p8)

                          IS in SCM
Without the TPL                      With TPL

- Could be based on the              -   Now based on two systems:
   Enterprise Information System         1.   The one on the right hand
   that implement through Intranet            side
   or e-Business (by internet            2.   The e-business system
   technology)                                provided by the TPL
                                              (reason is that now partial
                                              information, such as
                                              inventory, delivery status, are
                                              controlled by them)
                                              (read it from the paper by
                                              Chow in my web site)

                                                                                (to p8)
                         SCM in HK
• Established a logistic center
  – “Logistics park”
            – Near airport island, allocated total of 1,255 hectares
  – Third party logistics park
      • Two logistics centers (south and east commercial
        district in the about site)
  – e-commerce logistic center by SEAL (South East Asia
    Logistics limited)

      • Reserved 30000 sq meter site Tseung Kwan O
  – Major/other obstacles?                                                  (to p17)

                 Future researches
Topics:                             • How have online exchanges
                                      impacted procurement
• What is the strategic impact of
  e-B technologies on the supply    • How has the presence of
  chain                               information brokers impacted
                                      information flows
• How has the Internet impacted
  supply chain operations, from     • How do collaborative ideas and
  the procurement of raw              technologies improve supply
  materials to productions and        chain visibility
  distribution of finished goods    • What are the challenges of
• What performance                    integrating e-Business
  enhancements and challenges         technologies into supply chain
  can firms expect by using IT        operations
                                                                        (to p18)

                Sample References
•   Kajita, H. and Ohta, T., Third party logistics function for constructing virtual
    company – study of assignments in Japanese business, Journal of Business Logistics,
    2, 2001, 131-138.
•   Vakharia, A.J., e-Business and supply chain management, Decision Sciences, 33(4),
    2002, 495-504.
•   Frohlich, M.T. e-Integration in the supply chain: Barriers and Performance, Decision
    Sciences, 33(4), 2002, 537-556.
•   Narasimhan, R. and Kim S.W., Information system utilization strategy for supply
    chain integration, Journal of Business Logistics, 22(2), 2001, 51-75.


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