E- SCM

Chapter 1
THE ADVENT OF SUPPLY CHAIN MANAGEMENT: ARCHITECTING
THE SUPPLY CHAIN FOR COMPETITIVE ADVANTAGE

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Main Building
Blocks
E-Supply
Chain
Management

Stages Order
a. Logistics centralization 2
b. e-SCM 5
c. Logistics decentralization 1
d. Integrated Functions 3
e. Supply chain management 4 2
FIRST STAGE

 Can be described as “era of internal logistics decentralization”

o Companies segmented logistics activities dividing them among operation
functions such sales , production and accounting,..
o Logistics responsibilities were scattered throughout the organization,
o No single manager was responsible for integrating channel management
activities
o Logistics decentralization had made it impossible to pursue effective cost
reduction

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SECOND STAGE

 Logistics began the migration from organizational decentralization to

centralization of core functions driven by new attitudes associated with
cost optimization and customer service.
o Concerted effort made by companies to centralize logistics functions into a
single management system (merging fragmented functions into a single
department),
o Stage objective  minimize the total cost of logistics, rather than focus on
reducing the individual costs of logistics functions, such as transportation or
warehousing,
o Instead of a disconnected series of function, logistics should rather be
considered as a single integrated supply system,
o During this period, computers became much more sophisticated, less
costly,
and more accessible.
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THIRD STAGE

 “Integrated Functions” - Linkage of internal operations with

functions performed by channel trading partners
o Focus on : competition and quality management.
o The competition came from a new view of quality and how it could be
implemented to capture marketplace advantage.
o Management concepts, driven by JIT and total quality management
(TQM) philosophies, were providing competitors with tools to compress
time out of development cycles.
o Summary: the fundamental feature of the integrated logistics model was
the merger of channel management functions with those of trading partners
targeted at improving customer service and total cost reduction across
whole channels.

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STAGE FOUR

 A concept of channel relationship grew, old logistics concept

gave way to full supply chain management
o SCM organizations possess the power to move beyond a narrow
focus on channel logistics optimization to identifying the best core
competencies and collaborative relationships among their trading
partners.
o Through the application of SCM tools that seek to network whole
supply channels, enterprises have the capability to view themselves
and their channel partners as extended virtual organizations
through the use of ‘extranets’.

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STAGE FIVE

 Use of internet application to introduce “e-SCM”

o Utilizing the power of the Internet to synchronize the
channel functions of the entire supply network into a
single “virtual” enterprise,
o capable of optimizing core functions and resources from
anywhere at any time in the supply chain to meet
market opportunities.

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LOGISTICS & LOGISTICS MANAGEMENT

 Logistics
o Deals with all move - store activities that facilitate product flow from raw
materials to final destination,
o as well as the information flow that set the product in motion for the purpose
of providing adequate levels of customer service at a reasonable cost.
 Logistics Management
o is the process of planning, implementing and controlling the efficient, cost-
effective flow and storage of raw materials, in-process inventory, finished goods
and related information from the point of origin to point of consumption for the
purpose of conforming to customer requirements.
o The goal is achieving customer satisfaction by meeting customer
requirements and order fulfillments.

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E-LOGISTICS
 It’s a dynamic set of communication, computing and
collaborative technologies that transform key logistical
processes (move-store activities) to be customer centric by
sharing data, information and knowledge with the supply
chain partners.
 E-logistics are part of existing e-Commerce world.
o Describes three core back-end processes required to get an order
from the “buy” button to the bottom line:
o warehousing, delivery and transportation, and customer interaction
(usually handled through a call center where customers can ask
questions, place orders, check on order status, and arrange for returns).

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HOW E- LOGISTICS WORKS

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SUPPLY CHAIN AND SCM

 Supply Chain:
o The flow of materials, information, money and services from raw material
suppliers through factories and warehouses to the end customers
o A network of activities that deliver a product/service to the customer

 Supply Chain Management:

o Is the business function that coordinates all of the network links
o Coordinates movement of goods through supply chain from suppliers to
manufacturers to distributors
o Promotes information sharing along chain like forecasts & sales
data to achieve a sustainable competitive advantage.

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COMPONENTS OF THE SUPPLY CHAIN

Processing, purchasing,
planning, quality,
Tier one, two, three Material movement
shipping
suppliers including selection and
monitoring carriers

Inventory levels, delivery schedules, payment terms, orders, return

requests, repair and service requests, ....

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SUPPLY CHAIN PROBLEMS AND SOLUTIONS

 Problem: The need for Information Sharing along the Supply Chain to
and from all participating entities.
o It includes product pricing, inventory, shipping status, financial
information,….
 Solution: E-supply chain management (e-scm)
o It is a tactical (marketing/sales, manufacturing, procurement and logistics)
and
strategic management,
o that seeks to network the collective productive capacities and resources of
intersecting supply channel systems,
o through the application of Internet technologies,
o in the search for innovative solutions and the synchronization of channel
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capabilities dedicated to the creation of customer value.
GOALS OF E-SCM

 Why e-SCM?
o Extents channel management systems beyond traditional boundaries
to integrate in real time the customer/product information.
o Offers agile, flexible systems for customer-supplier partnership and
critical information flows.
o Having a more adaptive supply-chain.

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 ADAPTIVE SUPPLY CHAIN

 “An adaptive supply chain network means having

the ability to rapidly anticipate and/or respond to
changing environmental conditions”.
 Creating adaptive supply chain networks for
suppliers, manufacturers, distributors, and
customers require:
o sharing information dynamically across the
network.
o capturing customer demand (sharing that
information
throughout the network),
o coordinate planning and execution so partners in 15
 ENTERPRISE E-BUSINESS SYSTEM

Distributor COMPANY

B2B B2C Customers

Supplier
s
Customer facing
Busines Enterprise
Applications
s Resource Partner
partner Planning (ERP) Goal: optimize
“Backbone” relationships with
Applications facing Supplier /
customers to increase
Distributor / Business Partner
Internal operations service effectiveness and
Goal: optimize relationships
Goal: facilitate integration of sales
and reduce cost of goods sold
internal operations and
increase productivity
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ENTERPRISE E-BUSINESS SYSTEM
 E-procurement:
B2B transactions
o Electronic Data Interchange
(EDI) – Private Industrial
networks – Net marketplaces
 Supply chain monitoring
and control
o RFID - GPS
 E-logistics
 Corporate portals
 Groupware and
collaborative tools
o Ex: virtual meeting, …
 E-payment
 E-Customer Relationship
management (e-CRM)
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CHARACTERISTICS OF E-SCM

o Web applications provide whole supply chains with the capability of sharing
databases, forecasts, inventory, and product information needed for
effective decision making. The integration can be global, 24x7x365, with
100% accuracy.
o e-SCM requires an understanding of the following principles:

 A. e-SCM enables a whole new view of the function of

information in the supply chain
o “We are moving to a world where the fast eats the slow”. The prime attribute
of Internet is speed, speed is today’s most crucial competitive advantage.
o The spread of technology tools have enabled enterprises to be able to
effectively accumulate, track and monitor e-information from anywhere in
the supply chain in real time.

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CHARACTERISTICS OF E-SCM CONT’D

 B. e-SCM enables enterprises to form Customer-Winning

Relationships with Supply Chain Partners
o Ability of e-SCM to provide a seamless channel structure whose boundaries
appear invisible to the customer,
o The entire channel is enabled to act as if it were a single company,
o Example: Cisco System’s e-planning applications automatically alert
suppliers
when actual customer demand deviates from forecasts,
o thereby reducing inventory imbalances throughout the entire supply
channel.
o As Cisco is able to include more suppliers in the planning system, their
ability to be more flexible to meet any customer order grows.
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CHARACTERISTICS OF E-SCM CONT’D

o The ability to transmit and share supply channel information electronically

is simply not enough, constitutes only two of the three components of the e-
SCM concept.
 C. Supply Chain Synchronization:
o Example: Aspect Communications Corp., which manufactures
communications and call-center equipment.The company outsources much
of its manufacturing to multiple trading partners.
o A single customer order might be manufactured and delivered from four
different supply locations.
o Successfully executing such a strategy means that Aspect must be able not
just to transmit e-information, but also to perfectly integrate that
information across manufacturing processes owned by supply chain
partners.
o In such an environment, the value of the information is as
important as the actual manufacture and delivery of the product. 20
CHARACTERISTICS OF E-SCM CONT’D

o To meet the challenges of doing business in today’s marketplace,

organizations have been engineering new methods for linking together
real-time e-information. The result of this effort is the concept of
 e-supply chain synchronization (e-SCS):
o It is about transmitting e-information as fast as possible through the supply
channel, and interlinking all network nodes to achieve a seamless supply
chain response to the customer.
o Getting all of the partners operating in a manner that is mutually supportive
(flexible, cooperative) and seamless (smooth, unnoticed by customers).
o Goal: using technology to achieve a direct linkage between demand and
supply at all points in the channel network.

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CHARACTERISTICS OF E-SCM CONT’D

 e-supply chain synchronization (e-SCS), the process starts with:

 A clear definition of roles and responsibilities, making sure that all
supply chain partners know specifically
o what tasks they are expected to perform (e.g. storing goods, modifying them,
reassembling quantities),
o when they are expected to do them (deadlines),
o how they are expected to perform them (i.e. to what operating
specifications), and
o what results are expected (sales quotas, customer satisfaction ratings).

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E-SUPPLY CHAIN SYNCHRONIZATION (E-
SCS) CONT’D

 Advantages of e-SCS:
o Higher customer-service levels.
o A unified demand plan can result in significantly higher perfect-order fill rates.

o Reduced supply chain costs.

o Effective forecasting and inventory improvement have the potential to lower costs
dramatically.
o Leaner inventories.
o Reduce uncertainty of demand, cutting storage and handling expenses.

o Faster time to market.

o Enhance product launches.

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SUCCESS OF AN E-SCM:

 Depends on:
o The ability of all supply chain partners to view partner collaboration
as a strategic asset
o Information visibility along the entire supply chain
o Speed, cost, quality, and customer service
o Integrating the supply chain more tightly

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