Futrue Supply Chain Model

7/31/2019 Futrue Supply Chain Model

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FUTURE SUPPLY CHAIN MODELS

From the beginning efforts have been directed to improve processsteps in SC.

Techniques, best practices, technologies were introduced in SC.

Future look at SCM will involve collaborations & technology.

Industry leaders are thriving to create networked enterprise thatdominate market and industry.

This movement will be pioneered by a large branded nucleus firmsrather than by smaller entities.

The use of external resources is to achieve optimal conditions ondaily basis.

Network effort will expand to include activities normally left outsidethe scope of supply chain.

It will include collaborative focus on productivity quality, andadministrative issues that related to achieving optimized supply chainconditions.

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TECHNOLOGY QUALITY

PRODUCTIVITY IN SC

Honeywell International failed to become part of General Electric.

After years of use of six sigma they found that it is not enough toachieve goals in competition.

This prompted Co; to reinvent & align & coordinate plant across four

units involving HRD, finance, legal & SC.

The team delivered a plan setting $500 million savings target to beachieved by 2005.

There will be merging of technology, productivity, quality, effort withan end to end focus on extended enterprise network supply chainoptimization.

Overall, objective was to gain market dominance through superior

customer satisfaction with SC being at the enter of strategy. RWJ/lv/xp-9


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P & G also made a move in this direction to improve but it

termed it as Reliability Engineering.

It applied defect and failure analysis productivity analysis,

manufacturing technology to improve SC.

This improved profit/savings across organization.

Blending of technology with productivity & quality

improvement, end to end process improvement is the next

frontier trying to optimise supply chain efforts.

P & G developed operating arrangement with key customers for

joint process development/management.

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Steps Applied at Honeywell

Selecting a technology team to lead the efforts so the criticalingredient would be included in implementation actions.

Taking inventory of existing and planed technology initiatives so theright blending of legacy and new systems would be enabling factors

and not obstacles.

Developing an institutional planning process to include:

Using a scorecard to monitor and manage allocations.

Assigning a champion to drive success within each unit &function.

Developing awareness and value of digital strategies andownership at the business unit level.

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New Business Model

Struggle for survival is important in global business environment

Important areas would be cost, quality productivity, asset utilization,customer satisfaction, time to market, value adding services.

Competitors will ambush wherever black siding takes place.

Solution. must be provided to the most demanding customer beforecompetitor can.

Firms should review their current business model, strategies andcapabilities & determine sufficiency of SC network.

Nucleus company works more closely with network partners sharingvital information investment.

Model must drive the firm to ward Advanced Supply ChainManagement (ASCM) techniques & participate in network

enterprise using collaboration & technology.

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Future State Extended Enterprise Network

Tier nSuppler

Designpartners

CreativeArtists

Tier 1Suppler

ConstraintAnalysis

Direct ship

Portals

ComponentSupply

Subcontractors

AssemblyManufacturers

StrategicSuppliers

Competitorsoutsource

supplyAgents Brokers

Distributors

Auctions

e-Procurement

Networkexchanges

SupplierRelationshipManagement

Partnering

System

DesignDevelopment

Manufacturing

DemandForecasting

Engineering

InventoryManagement

NucleusFirm

Cost toServe

CustomerSatisfaction

IntegratedSolutions

CustomerRelationshipManagement

CollaborativePlanning, Fore

Casting &Replenish

DistributorsResellers

Logisticsprovider

WarehousingDistribution

Exchanges Internal External

Enterprise wide planning & replenishment

Full Network connectivity

Network Business Management

CollaborativeDesign &

ManufactureBusinesscustomers

Retailers

COMPTI

ON

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Nucleus Firm to Organize Keiretsu

Figure gives general view of the future state of extended

enterprise networks

Nucleus firm & network companies must learn to balance

conflicting demands for optimization.

Company should discover to create & deliver new valueadding proposition to the most important customers.

Raw material suppliers will be in tiers but the closest

suppliers will assume responsibility for delivering

material.

Extranet technology can be used for viewing, tracking etc.

information.

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Constraint analyse will analysis the actual needs of themanufacturers supply chain and suppliers capabilities for

the direct flow of materials. Material are supplied to the place of consumption.

Company sponsored portals, where key suppliers gainaccess to manufacturing schedules & make deliveries

linked to codeveloped plans.

Items of low importance are handled by e-procurement.

The suppliers are linked through SRM system.

Agents, brokers are also needed. Design partners & creative artists trusted allies will be

linked through collaborative design & manufacturingsystem.

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These partners will work hard to put nucleus firm ahead ofcompetitors.

CRM will finally flourish & link nucleus firm with mostimportant business customers.

CPFR will be at work with any retailer etc.

Distributors & retailers will play a role in new model as theytake product & services to specific markets.

Logistics companies will assume responsibility forwarehousing distribution & fulfillment.

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Composite Supply Chain Model

Figure shows the process map detailing product &information flows occurring across nucleus co: to its

partners.

For complex manufacturing system, this model will growin complexity.

External participants are to be included & each stepbecome subject of analysis and improvement.

Technology plays key role in Kairetsu.

Figure illustrates how choice of EDI and BPM is affected.Higher tier supplier will bring information forward to theirfist tier supplier via EDI showing schedules, inventory

movement, logistics plans, fill rates.RWJ/lv/xp-9


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Supply Chain Model

Vendors

ProductionPlants

Suppliers

General

Ledger

CategoryManagement

Sales Force

CustomerContact Team

DevelopSales plan

Prices, Volumes, Planned Promotions

PromotionManagement

Sales

Fore

cost

Adjust

Fore

cost

DistributionPlanning


DemandPlanning

PurchaseOrder Mgmt.

Promotion requests

Planned Orders

Supply

Adjustments

Demand

Adjustments

Prom

otion

Eligibility

Pro

motion

Re

quests

Promotion Requests

Planned Orders

Purchases

ReturnsAuthorisation

Invoices


On OrderInventory

OnOrder

Inventory

PlannedTransfers

Available

Topromise

Shippoint

demand


CommittedInventory

Receipts

Onhand

Inventory

Anticipated

WorkLoad

Shipments

PlannedTransfers

ReturnsAuthorization

Customer OrderManagement

Accountspayable Accounts

payable

PaymentDeductions

MatchedReceipts

Authorisation toreceive orders

Authorisation to ship

Authorisation to pay

Returns

Shipment

Shipment

Returns

Payables Receivable

Payment

Deductions

Authorisationto ship order

Authorisationto receive returns

Authorisation to bill

Creditstatus

Planed

Orders

Supply plan(weekly by SKU)

NetRequire

Mends Demand Plan

(Weekly by SKU)Planed

Orders

Orders

Invoices

Cyclical

Inventories

Promotion

adjustments

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Strategies

Access to demand Signals

Inventory tied to use

Interactive Design

Product collaboration

Planning connectivity/

control

Automated Order Mgt.

Electronic payment

Strategic souring

Supplier Relationship Mgt.

Virtual Logistics

Application Systems

Integration

VMI

Decision Support

CRM

Tools

Forecasting algorithm

Online InventoryVisibility

ERP-to-ERP Systems Integration

e-commerce

Content management

B2B Integration

Management Systems

e-business software

Standards

IT fusion

Event Tracking

Enabling the Network Enterprise

LogisticsData

InventoryEDISchedule

ShipmentsPaymentproduct

Enterprise Apps

DataDelivery

DataApplications

payment

ChannelsOf DistributionSystemInventory

BPM

ExperiencePromotionsEvents

Prices

SegmsentsService needs

AccessTrends

Orders

ServersPlanning

InventoryControl

ProductSelection

Consumers

Business

Customers

Nucleus Firm

Strategicsuppliers

SecondTierSupplier

Technology Enables

e-markets for commodity supply

Smart procurement for MRO & Supplies Ariba, Aspect,

Commerce one

Middleware Extricity Syncra

Shaved Scheduling SAP, i2, Meningitis

ERP Systems SAP, Baan, JDE,

People Soft

Retail applications Retek

CRM Data Siebel

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First tier supplier & strategic supplier will interface directly

into the nucleus firms extranet, making information visible

on shipment orders & products.

Payment will be transferred electronically.

Nucleus firm used enterprise application for planning.

Servers are used to send data to customers.

BPM technology increases connectivity with key partners,

systems are interfaced to share vital orders, market data &

payment executed.

Service need, trends in buying patterns are found.

Product selection is reviewed with customers for jointly

planning promotions.

Pricing becomes a joint decision

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Future Models will Depend on House in Order

Internal house should be set in order i.e. prepared for

collaboration. People in side the firm should be ready to participate on

equal footing with technology being applied through networkconnectivity.

Hill & Knowlton, Inc. have crated half million dollar system

to makes information sharing more meaningful. Intranet lowered costs & increased revenues.

Information on new employees displaced.

System can alert HK about a particular client that has been

added in database. Person can be told online.

Brokers & suppliers carry large files for claims under theirarms.

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Lloyd decided to process claims electronically by London.

Insurance markets suing changing Software.

Linking the system with a new document repository cuts the cost of

processing complex industrial claims. The repository not only lets brokers, underwriters, & adjusters digitally

access the information they need, it provides tools such as online chat,

instant messaging video over internet protocol (IP) for real time

collaboration.

C.B. Richard Ellis built intranet to deliver document library to itsemployees.

This library makes available all companies procedures manuals available

at reducing costs for printing & procedures reducing costs for printing &

distribution.

Employees get instant access to upto data information. Employees get involved & play greater role in SC

Speed pass is a radio frequency identification device. Driver uses by

handling it close to receive built into gasoline pump. The driver

transmits credit information & customer ID to Exxaon Mobils

information network. Transaction is approved & customer pumps gas.RWJ/lv/xp-9


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Nucleus Firm Should be Capable

Ability to establish and successfully implement process

integration across extended enterprise.

Automate connectivity & ability to collaborate with key

business partners.

Technology links the constituents by extranet, informationsystem.

Nucleus firm will have to lead the drive for automation &

links ERP & other means for exchanging knowledge

Figure shows the future technology linkage.

Process execution & deployment facilities will be established

with a limited but critical supply chain constituents.

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IT system will be connect over an extranet designed for

sharing important knowledge.

Joint data bases & direction are setup to link back end

applications.

BPM technology will be at the heart of the effort as processservers are set up to use the BPM language to facilitate access

to key information & its sharing across many companies.

Business to business collaboration is the focus of

connectivity.

Global networks will become visible as BPM becomes means

to connect firms.

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Technology Will Link Value Chain

IT System

Applications

Process

Execution

Facilities

Process

Execution

Facilities

Databases

Directories

Back End

SystemConvergence

CORBA

SZEE

UML

XML

WMC

LDAP

DSML

BPM

CPFR

FPML

TMF

BPML Org.

BPQL

Process

Repository

BPML

B2B

Collaboration

B2B Protocols

Rosetta Net

ebXML

Bin Talk

ProtocolsWSDL

XAML

Services

UDDI

tpa ML

Front End.RWJ/lv/xp-9


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The focus of supply chain effort will move from efficientprocessing to sensible innovations that add value across thenetwork.

Metrics, Cycle times, increased networks sales, greatercustomer satisfaction & retention of most valued customers.

Autochoice.com is an example of new technology enabled

network model.

Consumer can brouse for new automobile coordinator AVIS,Bank of Scotland, Boston Consulting Group etc. providingcreative collaboration.

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Customer can select a new car, finance option, can return carin 7 days & get a refund.

Siemens is also undergoing Kieretsu. Boeing Toulouse, France based Airbus, the European aircraft

manufacturers are using technology as competitive weapon.

Project has spent $ 48.5 million to automate procurement of

material to better manage SC interactions & trackperformance, data on suppliers.

Ariba has created Enterprise Sourcing 4.0 for buyers.

It automatically creates a RFP, comparison ofcosts etc.

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ERP SystemKey for Connection

Takes advantage of potential offered by integrating networked

enterprises through linking ERP System.

Savings in inventory, synchronised planning & fulfillment to

optimise the entire supply chain.

Real power comes from integrating data across the network &

delivery many of the promises.

If each company achieves benchmark, reductions in inventory

levels would be enormous.

Visibility across the network showing forecasts, reliable data

& actual replenishment needs.

Discussion with key constituents, analysis of information

leads to more robust model lowering stocks across supply

chain.

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Only few business organization have used there systems toimprove supply chain performance.

Planners will be able to access what they need to improveforecast accuracy & plan closer to actual requirement.

Buyers will order to match what is required to manufacture.

Special shipments can be dramatically reduced.

Material shrinkages, lost product problems will surface.

RFID tags can track items after purchase so manufacture caneasily recall defective goods.

Theft can be reduced by RFID tags.

Product movement & consumption information will helpfirms divert shipments & trigger other control steps in SC.

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Companies adopt business intelligence extranets.

Fedex uses. Partnering companies access reports aboutrevenue, transit time analysis & other performance data.

Energy companies use such extranets to let commercialcustomers access power consumption data.

Personalization is an other phenomena email, multimediacontacts, voice messages moving into marketing functions.

Site creacted by by Dow Chemicals has improved sales..

Firms in hospitality business are trying hard to make similarachievements..

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Futrue Supply Chain Model