SCM of
Samsung Electronics
Table of Contents
1.
2.
3.
4.
5.
6.
Introduction
Background
SCM Case
APS
SCM Timeline
Result of SCM
1. Introduction
SCM - Definition
Supply Chain Management
Suppliers
Supply Chain
planning
Purchasing
Production
Supply Chain
Execution
Distribution
Customers
Collaborate
planning
Supply chain management (SCM)
 the management of a network of interconnected businesses involved in the
ultimate provision of product and service packages required by end customers
1. Introduction
SCM - Strategies
Collaborative Planning
Supply Chain Planning
To provide stable supplies
for any circumstance of market
3 strategies
of
SCM
Planning immediate
Information share with
customers and suppliers
Supply Chain Execution
To manage timeline
for Supply Chain System
1. Introduction
Elements of SCM
Organization: Global Operation Center
 Planning, Operating, regulating, and Monitoring
Process: Forecast-based, daily production planning
System: APS (Advanced Planning & scheduling System)
2. Background
Current Status
• The world's largest electronics company
• Global market leader in more than 60 products
• Business areas: Consumer electronics
Telecommunication
Semiconductor
• As of 2007
– Revenue $103.4 billion
– Net income $21.5 billion
– Employees Over 138,000
2. Background
Business process perspective
• Quick reactions in rapidly changing markets
– Rapid market growth, price drops, new paradigms, etc.
2. Background
Business process perspective
• Demand for centralized supply control
– sharing of quick, exact, and useful information about
current status & future forecast
Demands Forecast
Low reliability of forecasts
Lack of management tools on forecast
Planning
Decentralized planning processes
Lack of unified standard information
Delivery Due Date
Low reliability of delivery due date
Need for setting priorities for demands
Inventory Control
little control over worldwide inventory
Lack of tools for strategic planning
Late delivery
Surplus inventory
2. Background
Business process perspective
• Strengthening global competitiveness
– 60~70% of extra values come from supply chain
– Competitors (Intel, GE, Sony, HP, Toshiba, …) began
implementing SCM systems
– To gain competitive advantage, it was important to
enhance supply chain and the way of managing it
2. Background
Information Systems perspective
• Difficulties in integrating decentralized local information
systems
– Decided to develop a stand-alone SCM tool that centralizes and
streamlines supply chain management
• Preparation for future e-business system
– Implementing SCM as a step toward future e-business
3. SCM Case
Samsung Electronics
Samsung Electronics‘ Plans for introducing SCM
PLAN1.
Rapid planning for fast reaction to market changes
PLAN2.
Predicting demands with information integration
PLAN3.
Real-Time delivery to customers
3. SCM Case
PLAN 1
Month Cycle
Rapid planning for fast reaction to market changes
Salesperson
Forecasting / Order
Sales
Department
Control/Management
Strategy
Marketing
Selling Plan
Merchandise/
Manufacture
Allocation Plan
Manufacture
Management
Purchase
Manufacture Plan
Purchase Plan
Week Cycle
Salesperson
Forecasting/Order
Sales
Department
Strategy
Marketing
Merchandise/
Manufacture
Manufacture
Management
Control/
Management
Purchase
Selling Plan
Allocation Plan
Manufacture Plan
Purchase Plan
Integrates all planning steps
 Provides real-time business information &
Accurate plans and decisions are made for each order
 Right plans are made quickly
In
1 day,
Set-up
All
Plans
3. SCM Case
PLAN 2
Predicting demands with information integration
Local
Marketing
Salesman
Customer
Bullwhip
Effect
Strategy
Marketing
Command
Center
Customer
Command
Center
Salesman
Local
Marketing
Strategy
Marketing
Integrated management on information for forecasting demands
 Simultaneous management on information
 Eliminates all inefficiencies originated from inaccurate forecasts
3. SCM Case
PLAN 3
Real-Time delivery to customers
Delivery by
the supply
plan
Delivery by
the local
stock
Lack
Customer
OnHand
If there are no stock
and we don’t know
when can we buy, we
will buy from other
company!!
Headquarter
Allocation
OnHand
InTRANSIT
Manager Salesman
Stock
Manufacture
plan
Allocation of resources in advance, based on current situation
On time delivery through reliable information sources
Customer
Material
plan
4. APS
Global Production Planning
– Samsung Electronics introduced
“Global Production Planning”,
as a specific solution that enables SCM
– Global Production Planning is a similar concept
to APS
4. APS
Effects of implementing APS
• Simultaneous planning
• Reduction in time for planning
• Shortened planning cycle: Weekly, daily
planning
• Enables making accurate production plans
• Enhancements on on-time delivery
• Enables quick responses
• Enhanced Customer service
5.SCM Timeline
From 1997 To 2007
5.SCM Timeline
In 2009
Global SCM
TOP 8
The AMR Research Supply Chain Top 25 for 2009
6.Result of SCM
Improvements on process management
inventory
turnover
ratio
43.6
56
sales
(Trillion
Won)
(day)
33
18.5
inventory..bond
•
5.2
3.8
’97
’03
(Trillion Won)
Improvements on process management
- Shortened process management cycle: monthly -> weekly -> daily
- Simultaneous planning/execution of worldwide manufacturing/sales
plans as a single system
- Reduction of lead time for planning: previously 3 weeks, reduced to less
than 1 week
6.Result of SCM
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