Logistics Management/
Supply Chain Management
Judith Molka-Danielsen
j.molka-danielsen@himolde.no
http://home.himolde.no/~molka
Overview
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Global value model for B2B systems (all)
Logistics management/supply chain (ch10)
Human Resource/support services (+ch10)
Customer Relations Management (ch11)
Manufacturing and process management
(ch12)
Financial management/EDI (+ch12)
B2B Inputs
Logistics
Management
Manufacturing Process
Management
Support
Services
Financial
Management
Customer
Management
Logistics Management
Supply Chain Management
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Supply Chain Management (SCM) is an outgrowth of
“traditional” logistics management and Enterprise
Resource Planning (ERP)
It extends the management function outside the
organization to both the supplier organizations and
the distribution channels
Good ERP/SCM can increase net revenues 4-6%
SCM has become an expectation for industry
LM-SCM
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Firms are moving from an process-efficiency driven
focus
to a customer value-benefit focus.
This involves understanding Customer Needs.
Costs are coorelated to uncertainty in the Supply
Chain (enterprise integration SCM software is to
address this).
SCM modules address: logistics, manufacturing,
finance, etc.
LM-SCM
Approaches
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The best-in-practice approaches have been
incorporated in various systems
Major vendors include
– SAP
– PeopleSoft
– Baan
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Often, organizations find adoption of full
blown ERP/SCM systems require significant
organizational change
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Components
Purchasing
Management
Distribution
Management
Supplier
Management
Requisition
Management
Invoice
Management
Inventory
Management
Warehouse
Management
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Purchasing/Supplier Management
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The goal is to simplify routine transactions
and reduce paperwork
Trend is to reduce supplier steering and
partner with the selected suppliers so that
both organizations win
Purchase orders can be issued by DBMS
triggers on inventory
Suppliers can be allowed to replenish
inventory based on agreed upon parameters
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Distribution Management
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The distribution or demand chain is
concerned with:
– Speeding data acquisition
– Controlling inventory, warehousing and
shipping
– Reducing paperwork
It also includes invoice auditing and order
tracking
LM-SCM Fundamentals
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What is a Supply Chain? Steps to meet customer
needs. Global competition makes the customer in
control of production, not the manufacturer.
What is SC-management? Coordination of tasks
(order generate, taking, filling, distribution of
products, services and information). Key players
create an extended enterprise.
Is SCM a new concept? No, 25 years. Focus
progresses: efficiency, integration of enterprise,
product made to customer expectations. The last
means more information integration between
organizations.
LM-SCM Fundamentals
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Pull (build to order) versus Push (build to stock)
models.
Pull model requires: support product varients,
reduced lead times, improved quality, lower unit cost,
operational excellence, performance measures.
Pull implementation requires: gather customer
demands, make right choices to meet demand, make
informed decisions on materials, deliver goods,
collect payments.
Managers need: unified plan, communication,
coordination to all involved.
LM-SCM
Elements of SCM
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Planning System for Purchasing Management: right
product, right place, right time. Consumer demand
triggers order up the supply chain. Begin with POS
terminal. Then use information to determine inventory
investment, saftey stock, inventory turns,
replenishment frequency.
System: 1. Order generation and forecast planning,
2. Order taking and entry for replenishment.
LM-SCM
Elements of SCM
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Execution System for Distribution
Management: facilitate the physical
movement of goods and services. Focus on
operational efficiency.
Ensure order fulfillment, procurement,
manufacturing, and distribution management
are integrated. .
LM-SCM
Elements of SCM
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Performance Measurement Systems to study the
health of the approach: accounting and financial
management systems are focus. Electronic
commerce tools such as datawarehousing used to
analyse data without impacting performance of
operational systems.
Use of software agents to let different users set
different criteria for sifting through data. ( ie.
Salespersons, accountants, material planners,
purchasing agents).
LM-SCM
Integrating Functions
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Customer Asset Management: manage proactively,
better understand market and needs.
Integrated Logistics: production planning,
procurement, inventory management.
Financial Management: manage flows through
financial intermediaries.
Supply Chain coordination is also know as Integrated
Workflow Management.
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Merchandise management
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1 Million stockkeeping units (SKUs), every
product style, size, color.
On-trend, in-stock execution strategies
(optimize selection, minimize inventory)
best price per unit, minimize markdowns.
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Order Management Cycle (OMC)
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1. order planning and generation - make sure the
inventory is there.
2. online cost estimation and pricing - find prices,
understand price elasticity of market, yield
management
3. order receipt and entry - how to interact with
customers, receive requests, what to do with
soldouts.
LM-SCM
Order Management Cycle (OMC)
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4. order selection and prioritization - which
customers get served first, better, which orders filled.
5. order scheduling - coordination between
departments needed.
6. order fulfillment and distribution - bringing parts
together, ie. FedEx ships parts to assembly place, not
warehouse. Retailing is not just selling but order
fulfillment.
7. order billing and payment management - can the
customer understand the bill.
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Software Interfaces
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1. CRI - Store operations and customer service. UPC
- mark, track, exchange product information.
2. RSI - where to keep stock. Partnerships with few
key suppliers
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purchasing - from suppliers
inventory mgmt - how much in stock, where
stock control - track movement
stock movement - receiving, checking, storing, pick-ups,
dispatching
– distribution operations - ops of warehouse, transport fleet
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3. RMI – merchandise planning (profitability analysis, markdowns),
– mircomarketing (advertising, targeting customers),
– brand management (package and design).
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Application Software
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Horizontal: common functions across industries, ie.
financial and manufacturing. See applications in
Table 10.1
Vertical: automate tasks that are specific to a market
segment.
Dominate players: SAP, Oracle, PeopleSoft, Baan.
Three-tier software and Intranets become technology
to support enterprise business processes and
philosophy. Use of ubiquitous Web interface.
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Application Software
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Packages are good: they include the best practises of
many businesses. They include distilled knowledge.
Important Characteristics of Software for SCM:
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total costs
access to expanded distribution channels
ability to integrate new technology
security is addressed
tailor to customer from the pre-packaged software with
selective options.
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Ultimate Goals
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When a sophisticated SCM system is coupled
with agile manufacturing system, customer
driven manufacturing is possible
A first experiment in this direction is the LeviStrauss custom jeans
Most of the computer vendors offer similar
capabilities
Human Resource and Other
Support Services
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Any other support service in the organization
can also be enhanced by distributed
electronic processing
Human resources management is frequently
addressed as a part of the effort because of
the complexity of modern benefits packages
HRM
Functions
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Recruiting, training, salary administration
Payroll functions including time reporting,
payroll calculation and tax computation
Benefits administration including flexible
spending accounts, pension programs and
defined benefits
Health care benefits management
HRM
Information Dissemination
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A big part of the human resources function
involves making information available to
employees
Policies, procedures, options can be
maintained and updated efficiently using
intranet technology
Employee queries related to options and
enrollments can be distributed by intranet
HRM
Workflow
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Benefits claims and queries can be submitted
electronically and processed using workflow
systems
Standard queries can be processed and
returned securely by email to the appropriate
person
Relationships with external agencies can be
facilitated by email and EDI processing