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, (to p2) retailers, and customers themselves 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

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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 (to p7) Obstacles (to p8) Solutions to the problems
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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
Supply Chain Structure

Responsibilities
(to p3)

Inventory

Transportation

Facilities

Information
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SUPPLY-CHAIN MANAGEMENT
CUSTOMERS
ORDER PROCESSING PLANNING & FORECASTING

SUPPLIERS

PROCUREMENT ACCOUNTING

INTRANET
PRODUCTION

LOGISTICS SERVICES

SHIPPING

INVENTORY

DISTRIBUTORS
(to p3)

An integrative system for an SCM firm

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

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(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)
(to p14)

2. Adopting third party logistics

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 Example 2: Amazon

(to p8) (to p12)

Example 1 SCM for Dell

Customer Customer

Pull

Pull
Retail Store

Dell
(direct process)

PC Manufacturing

Supplier

Supplier

Dell Supply Chain

Conventional PC supply chain(to p11)

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Impact of E-B on Dell Performance

Factor Revenue
Impact Increase

Primary Causes
Direct sales to customer Flexible pricing Large variety of customers Faster new product introduction Fast delivery of customer order Aggregation of commonality Geographical aggregation Information sharing

Inventory costs Facilities costs Transportation cost

Decrease Decrease Increase

No retail outlets
Customer participation in ordering Higher outbound transportation cost
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(to p9)

Example 2 Amazon.com
Customer Customer

Pull
Amazon

Pull
Retail Store

Cut short process

Distributor

Warehouse

Publisher Publisher

Amazon supply chain

Conventional bookstore supply chain 12

(to p13)

Impact of E-B on Amazon.com Performance

Factor Revenue
Impact Increase Decrease

Primary Causes
Convenience Large variety of books Distributor margins Downward price pressure Inability to browse

Inventory costs Facilities costs

Decrease Decrease Increase

Geographical aggregation
No retail outlets, only warehouse No cashier required Each customers order is picked ad packed Higher outbound transportation cost
13
(to p9)

Transportation cost

Increase

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 reengineering. 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.
14

(to p8)

IS in SCM
Without the TPL
- Could be based on the
Enterprise Information System that implement through Intranet or e-Business (by internet technology)

With TPL
Now based on two systems:
1. The one on the right hand side The e-business system 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)

2.

(to p8)

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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?
16

(to p17)

Future researches
Topics:
What is the strategic impact of e-B technologies on the supply chain How has the Internet impacted supply chain operations, from the procurement of raw materials to productions and distribution of finished goods What performance enhancements and challenges can firms expect by using IT

How have online exchanges impacted procurement How has the presence of information brokers impacted information flows How do collaborative ideas and technologies improve supply chain visibility What are the challenges of integrating e-Business technologies into supply chain operations
(to p18)

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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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