Supply Chain Management Kim Jeong-hwan Kim Yong-ki Jeong Hee-jin IENG 381- MIS Term-project Spring 2005 Industrial Management Engineering in Postech

1 What is SCM? 1

What is Supply Chain Management ? 1 Industrial and Management Engineering POSTECH, Korea Definition right quantitiesright locationthe right time A set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right location, and at the right time, in order to minimize system wide costs while satisfying service level requirement. Customer Relationship Management Satisfaction of ordering Supply Management production Management customer services Management demand

1 Motivation ?! 2

2 Industrial and Management Engineering POSTECH, Korea Practical implementations have fallen short of theoretical recommendations. That is while many companies have tried to establish efficiently SC integration, few companies have succeeded in establishing SC integration, and there is no consensus as to what these terms mean Answer on the following Research Questions * What processes of integration should be pursued in a SC? * What should be first among such SC integration processes? The Resolution of Gap between Theoretical Recommendation and practical implementation

1 Concepts on SCM ! 3

Concept on SCM ! 3 Industrial and Management Engineering POSTECH, Korea Distribution Network Configuration Inventory Control Supply ContractsProduct Design Information Technology Customer Value

Concept on SCM ! 3 1)Distribution Network Configuration Consider several plants producing products to serve a set of geographically dispersed retailers. 2) Inventory Control Consider a retailer that maintains an inventory of a particular product. 3) Supply Contracts Relationships between suppliers and buyers are established by means of supply contracts that specify pricing and volume discounts, delivery lead times, quality, returns, and so on. Industrial and Management Engineering POSTECH, Korea 4) Product Design Effective design plays several critical roles in the SC. 5) Information Technology Information technology is a critical enabler of effective SCM. 6) Customer Value The measure of a company’s contribution to its customer, based on the entire range.

1 Market Situation 4

4 Market Situation of the World Leads ‘enterprise solution market’ with CRM Rapid growth in the last 3 years (3billions of US$ ) U.S. and Europe lead world market Asia market is expected to grow steadily Industrial and Management Engineering POSTECH, Korea Sales (millions $)

Market Situation 4 Until 1999 : Market generation stage In 2000 : Maximum expectation Since 2002 : Market stabilization and growth Vision Time Introduction of the New Technology Maximum Expectation Bubble Breaking Stabilization Maximum Effectiveness SCM ERP Market Situation of Korea Enter into the growth period through the introduction stage Main Target : Companies over annual sales of $500 million Rapid growth in spite of the depressed economy after 2000 Industrial and Management Engineering POSTECH, Korea

1 Case Study Wal-mart 5

Study Case (Wal-mart) 5 Wal-mart Case EDLP(EveryDay Low Price) policy Low Price VS. Low Cost Differentiated Supply Chain 73.0% (27.0%) 22.7% 4.3% 77.8% (22.2%) 15.8% 6.4% Industrial and Management Engineering POSTECH, Korea K-martWal-mart Cost of Goods Sold ( Gross Income ) Selling expenses & Administrative expenses Operating Income

Study Case (Wal-mart) 5 Supply Chain of Wal-mart 1. Cross-Docking System 2. Private Transportation System on System 3. POS (Point of Sales) System Industrial and Management Engineering POSTECH, Korea

1 Future Expansion 6

Future Expansion of the Concept 6 ESCM USCM Increasing Visibility & Customer Satisfaction