SESSION 17

SCM
 PURCHASE CYCLE
STEPS:

1. Decide on what you want to purchase

2. Request For Quotations(RFQs)
3. Get RFQs
4. Compare RFQs & decide on a vendor
5. Raise Purchase Order (PO)
6. Send it to Vendor
7. Vendor sends Goods + Invoice
8. Raise GR(Goods Receipt) when the product arrives
at warehouse
9. Compare PO, Invoice & GR (Matching)
10. If matched, pay vendor & update GL (General
Ledger)
ENTERPRISE SYSTEM ARCHITECTURE

ERP
SYSTEM
Processes
Processes
SCM Processes CRM
SYSTEM SYSTEM

Marketing Manufacturing Finance HR

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SCM SYSTEMS

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 SCM SYSTEMS
 Supply Chain (SC):
 Defn: N/W of Organizations & Processes for,

 Procuring Raw Materials

 Transforming into Finished Products
 Distributing Products

 SCM Solutions - Inter-Organizational Systems in

“Productized” form

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 SCM SYSTEMS
 “Upstream” Supply Chain:

Firm’s Suppliers, Suppliers’ Suppliers, Processes for

getting goods from them

 “Downstream” Supply Chain:

Organizations (Distributors, Retailers etc) &

Processes responsible for delivering Finished
Products to Customers

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 SCM SYSTEMS
NIKE’s SUPPLY CHAIN

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 SCM SYSTEMS
IS & SCM
 Inefficiencies in SC – Parts Shortage, Underutilized
Plant capacity, Excessive finished goods Inventory etc

 “Just-in-Time” Strategy

 “Just-in-Time” Strategy - Components arrive when

needed & Finished goods immediately shipped out of
assembly line

 “Safety” stock - Buffer for lack of flexibility in SC

 Can waste up to 25% of operating expenses

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 SCM SYSTEMS
IS & SCM - “BULLWHIP” EFFECT

Info. about product demand gets distorted as it passes

from one node to next across SC

Inaccurate information – Can cause minor

fluctuations in demand for product to be amplified
across SC

Eg. Info. about small rise in demand for an item –

Leads to ripples in SC, wherein different members in
SC stockpile inventory “Just In Case”

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 SCM SYSTEMS
IS & SCM - “BULLWHIP” EFFECT

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 SCM SYSTEMS
IS & SCM - “BULLWHIP” EFFECT

Creates excess Production, excess Inventory,

excess Shipping Costs

Effect is tamed by reducing uncertainties

about Demand & Supply when all members
across SC have access to accurate “Real-time
Info.”

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 SCM SYSTEMS
Shares Info. About,
1. Orders
2. Production
3. Inventory levels
4. Delivery of Products & Services
To
1. Firms
2. Vendors
3. Distributors &
4. Logistics companies

For better Production & Distribution Decisions

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 SCM SYSTEMS
 Supply Chain Planning Systems

 Model Supply Chain

Demand Planning
Sourcing
Manufacturing plans
Establish Inventory levels
Identifying Transportation modes

Supply Chain Execution Systems

 Manage Flow of Products across SC

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 SCM SYSTEMS
GLOBAL SUPPLY CHAIN

More Complex Pricing Issues (Transportation, etc.)

Foreign Govt. Regulations, Taxes

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 SCM SYSTEMS
SCM MODELS
Push-Based Model (Build-to-Stock)

 Functions based on estimate of demand

Pull-Based Model (Demand-Driven)

 “Make what we sell, not sell what we make.”

 Customer orders trigger events in SC

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SCM SYSTEMS
SCM MODELS

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 SCM SYSTEMS
SCM TYPES
Sequential SC

 Info. & Materials flow sequentially from node to

node

Concurrent SC

 Info. flows in many directions simultaneously

between nodes of SC N/W

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SCM SYSTEMS - CONCURRENT SC
INTERNET-DRIVEN SUPPLY CHAIN
DIGITAL LOGISTICS NERVOUS SYSTEM

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 SCM SYSTEMS
BUSINESS VALUE OF SCM SYSTEMS
1. Match Supply to Demand
2. Reduce Inventory levels
3. Improve Service Delivery
4. Speed Product Time to market
5. Use Assets more effectively
6. Increased Profitability
7. Increased Sales

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 SCM CASE

Alimentation Couche-Tard
 SCM CASE
Alimentation Couche-Tard
2012 – Alimentation Couche-Tard purchased Statoil
Fuel & Retail (SFR)

Purchase added 2300 Retail Fuel Stations (with

Convenience Stores) in North America & 8
European Countries

2016 – Alimentation Couche-Tard had 12,000 Sites &

1.05 Lakh Employees
 SCM CASE
Alimentation Couche-Tard
Gas, Diesel, LPG etc

Full Service Retail Station – Auto Supplies, Food

Products

12 Terminals, 38 Depots & 400 Road Tankers – For

Bulk Sales (B2B)

IT - Antiquated IT Infrastructure (Different Process

in each Country & Market)
 SCM CASE
Alimentation Couche-Tard
No Single Source of Data

No Uniform Method for Handling SCM Functions

Lack of Coordination – Impacting Productivity

 SCM CASE
Alimentation Couche-Tard
Need to Maximize SC Efficiency for 3 related Value
Chains (Fuel, Lubricant & Grocery Value Chain)

Oracle’s JD Edwards EnterpriseOne ERP – Chosen

“Web Services” – Within ERP to convert all Data into

Single Format

This Common Source of Data – Drives all Transactions

in SC

All Transactions in SC – Feeds Reporting S/W

 SCM CASE
Alimentation Couche-Tard
Oracle Middleware - Integrates Data Mgmt. &
Communication across Social, Mobile & Cloud &
across Multiple Systems & Regions (Manages
Multiple Tax Regimes)

Stock Availability & Sales @ Each Service Station

feed Real-Time Planning Program that projects
Expected Demand & helps Distribution Planning
System

Standardized & Integrated Business Functions into

SC
 SCM CASE
Alimentation Couche-Tard

2016 – Acquisition of Texas based CST brands

Firm’s Prior Investment in SCM Systems – Enabled

it to manage vast N/W of Convenience Stores

Company started with single store in 1980 !

 SCM Case - Alimentation Couche-Tard
Business
Challenge

Plan Production, Volatile Demand,

Select New Long Production Lead
Technology Time,
Management
Manual Planning Process

Receive Customer
Orders,
Replenish Inventory, Organization IS Business
Revise SC Processes Solutions
Forecast Demand
Accurately, Reduce Cost,
Deploy SAP, Reduce Forecast Increase
Integrate with Technology Time Growth
earlier ERP

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