SCM: Focus on the Buy Side

SESSION 6
Difference between Supply Chain Planning and Execution
Supply Chain Planning : Network Design,
Demand Planning, Supply Planning, Material
Planning, ,Sales and Operations Planning,
Safety stock Planning, Inventory Planning,
Production Planning, Detailed scheduling ,
Route Planning
Applications : ERP, Supply chain planning
solution
Vendor solutions: Supply chain Planning
Solutions (SAP APO, i2 Technologies, Oracle
APS)
Supply Chain Execution : Inventory
Management ,Procurement, Vendor
management, Warehousing, Sales order
management , Production order Management,
Shipping, Transport, Execution, Quality
Management
Applications : ERP
Vendor Solutions: SAP ERP, Oracle ERP
ERP versus SCM
Point of Comparison ERP
Comprehensiveness Covers a wide range of functionality
Complexity Highly complex
Functionality Relatively less dynamic because they
are mainly concerned with
transaction processing speed and
capacity
Processing Speed Relatively Slower
Constraints handling All the demand, capacity, and
material constraints are considered
in isolation of each other
SCM
Limited to specific supply chain functionality
Relatively less complex
Relatively more dynamic because it
performs simulations of transaction
adjustments with regard to the constraints
in real time
Faster
Relatively more dynamic because it
performs simulations of transaction
adjustments with regards to constraints in
real time
SCM
Supply Chain
o The flow of material, information, funds and services from raw material suppliers through factories and
warehouses to end customer
e-supply chain management (e-SCM)
o The collaborative use of technology to improve the operations of supply chain activities as well as the
management of supply chains

Elements of a Supply Chain :

Upstream Supply Chain :- 1st tier supplier, 2nd tier supplier
Internal Supply Chain :- Manufacturing , Packaging
Downstream Supply Chain :- Distribution centre, retailer, customer
Problems with SCM
1. Very Long Supply Chains
2. Transfer of information can be slow and error-prone
3. Scope for improvement in demand forecasting with IT in Supply Chains
4. Lack of infrastructure
5. Deficiencies in supply chain due to problems in material and parts
6. Electronic commerce companies face problems due to lack of infrastructure
7. Poor co-ordination among partners and business activities
 e-SCM
• e-SCM is the optimal combination of technology and business processes that optimizes delivery
of goods, services , and information from the supplier to the consumer in an organized manner
• e-SCM focuses on globalization and information management tools to integrate all the activities
1. Tie together all the players in the extended enterprise, from raw materials to final point of distribution.
2. Give real-time market information to these players, allowing them to anticipate and adjust their operations in
response to market conditions.
3. Help eliminate costly stockpiling against demand spikes, freeing up resources and reducing costs.
4. Lower costs, improve speed and increase the accuracy of data sharing within the extended enterprise.
5. A truly integrated supply chain creates value-for the enterprise, its supply chain partners, and its shareholders.
6. e-SCM is particularly relevant to diversified business houses with complex supply chain networks, to
companies with wide distribution systems, and to enterprises that depend on a large number of out-sourced
products
Success of e-SCM
1. The ability of all supply chain partners to view partner collaboration as a strategic asset

2. Information visibility along the entire supply chain

3. Speed, cost, quality, and customer service

4. Integrating the supply chain more tightly

E-SCM

COMPONENTS TOOLS
Supply Chain Replenishment Intranet
e-Procurement Extranet
Collaborative Planning Corporate Portals
Collaborative product development Workflow Systems
e-Logistics Groupware
Supply Webs(Exchanges) EDI
RFID in Supply Chains
RFID is not just a replacement for barcodes
RFID ensures that the right goods are available in the right place with no discrepancies and zero
errors
Improves the efficiency and reliability of the entire chain makes SCM more precise
Administration and planning processes can be significantly improved in real-time
Promises the highly automated tracking of goods
◦ Inside industrial Warehouse, communicates information about their identities, current locations and even
movement/activity histories for each single valuable
Eliminates paper based management of goods movements, wrong identification and misplacement of
goods, reverse logistics as result of wrong dispatch of items, site emergencies as right goods has not
been reached at demanding site on right time etc.
RFID
Managerial Issues with RFID
1. Lack of Technology Standards
2. Lack of Acceptance by Supply Chain Partners
3. Returns on Investment
4. Data Management Problems
5. Expensive for Low-Value Merchandise
Collaborative Planning, Forecasting and Replenishment (CPFR)
CPFR is a business model that implements a holistic approach to supply chain management and
combines the intelligence of various trading partners to plan and fulfil customer demands

Done by using common metrics, firm agreements and language to improve efficiency for all participants

CPFR links the best practices of sales and marketing including category management, execution
processes and supply chain planning to increase availability while reducing the costs of merchandising,
inventory, transportation and logistics

For example, Walmart implemented CPFR model that helped the company in responding to cosnumer
demands more quickly
 Collaborative Planning, Forecasting and Replenishment (CPFR)
1.Strategy & Planning: Establishes the basic rules
for the collaborative relationship

2. Demand and Supply Management: Consists of

sales forecasting, inventory positions, order
planning/forecasting and transit lead times.

3.Execution: Consists of order generations, order

fulfilment

4.Analysis: This is the final phase that includes

exception management and performance
assessment.
Collaborative Planning, Forecasting and Replenishment (CPFR)

BENEFITS OF CPFR CHALLENGES OF CPFR

1. Improved Customer service through better 1. Selecting CPFR Partners

forecasting techniques
2. Getting a Buy in from senior managers
2. Lower inventories for higher profits
3. Keeping Confidentiality
3. Improved ROI on technology investment
4. Implementing a Cultural change
4. Improved relationships between trading
partners
5. Cost reductions
CPFR: Nine Steps
1. Develop Collaborative Agreement Collaboration

2. Create Joint Business Plan Planning

3. Create sales forecast

4. Identify exceptions to Sales Forecast
5. Resolve Exceptions to Sales Forecast
Forecasting
6. Create order Forecast
7. Identify exceptions to order forecast
8. Resolve exception to order forecast
9. Generate order Replenishment
Examples