SCM of Samsung Electronics

Table of Contents 1. Introduction 2. Background 3. SCM Case 4. APS 5. SCM Timeline 6. Result of SCM

1. Introduction SCM - Definition Suppliers Customers Purchasing Production Distribution Supply chain management (SCM) the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers Supply Chain planning Collaborate planning Supply Chain Execution Supply Chain Management

1. Introduction SCM - Strategies Supply Chain Planning Collaborative Planning Supply Chain Execution 3 strategies of SCM To provide stable supplies for any circumstance of market Planning immediate Information share with customers and suppliers To manage timeline for Supply Chain System

1. Introduction Elements of SCM Organization: Global Operation Center  Planning, Operating, regulating, and Monitoring Process: Forecast-based, daily production planning System: APS (Advanced Planning & scheduling System) Global Operation Center Process Customer Collaboration Out-Bound Logistics Busines s ManufacturingPurchasing In-Bound Logistics Supplier Collaboration Partners Customer Sales Department Manufacturing Department Manufacturing/Sales Controlling Department System(APS : Advanced Planning & Scheduling) Demand ManagerMaster PlannerDemand FulfillmentFactory Planner ERP ( SAP R/3 )

2. Background Current Status The world's largest electronics company Global market leader in more than 60 products Business areas: Consumer electronics Telecommunication Semiconductor As of 2007 –Revenue $103.4 billion –Net income $21.5 billion –Employees Over 138,000

2. Background Business process perspective Quick reactions in rapidly changing markets –Rapid market growth, price drops, new paradigms, etc.

Demands Forecast Low reliability of forecasts Lack of management tools on forecast Delivery Due Date Low reliability of delivery due date Need for setting priorities for demands Planning Decentralized planning processes Lack of unified standard information Inventory Control little control over worldwide inventory Lack of tools for strategic planning Late deliverySurplus inventory 2. Background Business process perspective Demand for centralized supply control –sharing of quick, exact, and useful information about current status & future forecast

2. Background Business process perspective Strengthening global competitiveness –60~70% of extra values come from supply chain –Competitors (Intel, GE, Sony, HP, Toshiba, …) began implementing SCM systems –To gain competitive advantage, it was important to enhance supply chain and the way of managing it

2. Background Information Systems perspective Difficulties in integrating decentralized local information systems –Decided to develop a stand-alone SCM tool that centralizes and streamlines supply chain management Preparation for future e-business system –Implementing SCM as a step toward future e-business

3. SCM Case Samsung Electronics Samsung Electronics‘ Plans for introducing SCM PLAN1. Rapid planning for fast reaction to market changes PLAN2. Predicting demands with information integration PLAN3. Real-Time delivery to customers

3. SCM Case PLAN 1 Rapid planning for fast reaction to market changes Integrates all planning steps  Provides real-time business information & Accurate plans and decisions are made for each order  Right plans are made quickly Salesperson Sales Department Strategy Marketing Merchandise/ Manufacture Management Purchase Forecasting/Order Control/ Management Selling Plan Allocation Plan Manufacture Plan Purchase Plan In 1 day, Set-up All Plans Week Cycle Purchase Plan Manufacture Plan Allocation Plan Selling Plan Control/Management Salesperson Sales Department Strategy Marketing Merchandise/ Manufacture Management Purchase Month Cycle Forecasting / Order

3. SCM Case PLAN 2 Predicting demands with information integration Integrated management on information for forecasting demands  Simultaneous management on information  Eliminates all inefficiencies originated from inaccurate forecasts Command Center Customer Salesman Strategy Marketing Local Marketing Bullwhip Effect Customer Command Center Salesman Local Marketing Strategy Marketing

3. SCM Case PLAN 3 Real-Time delivery to customers Allocation of resources in advance, based on current situation On time delivery through reliable information sources Lac k Delivery by the local stock Customer On- Hand If there are no stock and we don’t know when can we buy, we will buy from other company!! Headquarter ManagerSalesmanCustomer Delivery by the supply plan On- Hand In- TRANSIT StockManufacture plan Material plan Allocation

4. APS Global Production Planning –Samsung Electronics introduced “Global Production Planning”, as a specific solution that enables SCM –Global Production Planning is a similar concept to APS

4. APS Effects of implementing APS Simultaneous planning Reduction in time for planning Shortened planning cycle: Weekly, daily planning Enables making accurate production plans Enhancements on on-time delivery Enables quick responses Enhanced Customer service

5.SCM Timeline From 1997 To 2007

5.SCM Timeline In 2009 Global SCM TOP 8 The AMR Research Supply Chain Top 25 for 2009

sales (Trillion Won) ’ ’ inventory turnover ratio (day) inventory..bond (Trillion Won) Improvements on process management -Shortened process management cycle: monthly -> weekly -> daily -Simultaneous planning/execution of worldwide manufacturing/sales plans as a single system -Reduction of lead time for planning: previously 3 weeks, reduced to less than 1 week 6.Result of SCM Improvements on process management

6.Result of SCM Articles