Dr K. ROUIBAH Chapter 11 (QM 240) / dept QM

Dr K. ROUIBAH Chapter 11 (QM 240) / dept QM & IS

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Chapter 11 Objectives

• How do enterprise systems provide value for businesses?

• How do supply chain management systems provide value for businesses? – 11.1.Enterprise systems (p. 380-383)

– 11.2. Supply chain management systems (p. 384-393)


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How Enterprise Systems Work

• ISs that integrate and coordinate key internal processes of the firms, integrating data from different business functions

• Enables data to be used by multiple functions and business processes for precise organizational coordination and control.


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Enterprise system architecture


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Benefits of Enterprise Systems

• Firm structure and organization: A more uniform organization

• Management: More efficient operations and customer-driven business processes –Firm-wide knowledge-based management processes

• Firm-wide information for improved decision making - Technology: Unified IT platform


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The Supply Chain vs. Supply Chain Management (SCM)

Supply Chain• A network of organizations and business processes of procuring

material, transforming raw materials into intermediate and finished products, and distributing the finished product to customers

• Materials, information, and payments flow through the supply chain in both directions.

Supply Chain Management (SCM)

• Coordination of business processes to speed information, product,

and fund flows up and down a supply chain to reduce time,

redundant effort, and inventory costs


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Supply Chain Management Systems


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Supply Chain Processes

SCOR (Chain Operations Reference Model) identifies five major supply chain processes: • 1-Plan: Balancing demand and supply to meet sourcing,

production, and delivery requirements • 2-Source: Procurement of goods and services needed to create a

product or service• 3-Make: Processes that transform a product into a finished state • Deliver: Processes to manage order transportation and

distribution • 5- Return: Processes associated with product returns

and post delivery customer support

Logistics: Planning and control of all factors that have an impact on the supply chain


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Supply Chain Processes


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Information and Supply Chain Management

Problem of supply chain

• Inaccurate or untimely information causes inefficiencies in supply chain, such as shortages, excessive inventory

• Objective of supply chain management is to overcome bullwhip effect (أثر كرة الثلج)

• There are several solution: Just-in-time

Just-in-time strategy

• Scheduling system for minimizing inventory by having:

• (A) components arrive exactly at the moment they are needed and

• (B) finished goods shipped as soon as they leave the assembly

line


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Bullwhip effect

• Distortion of information about the demand for a product as it passes from one entity to the next across the supply chain


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Supply Chain Management Applications [need to find useful examples-based on my background _OR]

Supply chain management systems

• Automate flow of information between company and supply chain partners (suppliers, logistics partners)

Supply chain planning systems

• Generate demand forecasts for a product (demand planning) and help develop sourcing and manufacturing plans for that product

Supply chain execution systems

• Manage the flow of products through distribution centers and

warehouses to ensure that products are delivered to the right

locations in the most efficient manner

• E.g. Agility when it delivers product to Jamayyats in Kuwait


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Supply Chain Performance Measurement

Metrics for measuring supply chain performance

• Fill rate (the ability to fill orders by the due date)

• Average time from order to delivery

• The number of days of supply in inventory

• Forecast accuracy

• The cycle time for sourcing and making a product (total elapsed time to complete a business process)


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Supply Chain Management Systems / Intranets and Extranets for Supply Chain Management


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Supply Chain Management Systems (cont’)

Internet-based supply chain management applications:• Provide standard set of tools

• Facilitate global supply chains

• Reduce costs

• Enable efficient customer response

• Allow concurrent supply chains

Two types of demand-driven supply chain management: Push & Pull


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Replenish =Refill

Push- versus Pull-Based Supply Chain Models


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Supply Chain Management Systems (cont’)

Push-based model • Production master schedules based on forecasts of

demand for products, and products are “pushed” from manufacturer to customers

Pull-based model • Supply chain driven by actual customer orders or

purchases• It is also called demand-driven model or build-to-order


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The Future Internet-Driven Supply Chain

The model is not any more sequential …Random


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Business Value of Supply Chain Management Systems

• Improved customer service and responsiveness

• Cost reduction

• Cash utilization


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Business Value of Supply Chain Management Systems (cont’)

Documents

Dr K. ROUIBAH Chapter 11 (QM 240) / dept QM