1. Supply Chain Management
IST 421
Fall 2005

2. Vertical Market Companies are united through a common owner
Example: Carnegie Steel company.
Controlled mills where the steel was manufactured
mines where the iron ore was extracted
the coal mines that supplied the coal
the ships that transported the iron ore and the railroads that transported the coal to the factory
the coke ovens where the coal was coked

3. Horizontal Market A business sells a product in different markets
Example: GAP Inc. controls three distinct companies
Banana Republic
Old Navy
GAP brand

4. Supply Chain Management
Supply chains support the flow of goods and services from their origin to their endpoint – the customer.

5. Supply Chain Management

6. Supply Chain Management
Supply Chain Management (SCM) comprises business-management applications that provide guidance on which products to manufacture, when, and where they should be distributed.
The category includes:
software that manages plant scheduling,
demand forecasting,
ordering raw materials
Etc.

7. Supply Chain Management
Prior to 1999, most companies were looking at the supply chain from an internal perspective.
The emphasis was on bringing together the operations of manufacturing, planning and scheduling with sales and marketing.
Many companies turned to Enterprise Resource Planning (ERP) and advance planning and scheduling systems to bring together the procurement process internally.

8. Supply Chain Management
Performance measurements –
Cash-to-cash cycle time: the time from paying for raw materials to collecting cash from the customer. Efficient SCM processes do this in 30 days vs. 100 days.
Total SCM cost: cost of buying and handling inventory, processing orders, and information systems support. Efficient SCM incur costs equal to 5% of sales vs. costs equal to 12% of sales.

9. Supply Chain Management
Other Performance measurements –
Initial fill rate: % of the order that the supplier provided in the first shipment
Initial-order lead-time: time needed for the supplier to fill the order
On-time performance: how often the supplier meets agreed to requested delivery dates

10. Packaged Applications
Market leaders
SAP
Oracle
Baan
State-of-the-art client/server or internet/intranet architectures

11. Integrated Supply Chain
Supply chain or value chain is the flow of goods and services from their points of origin to the ultimate consumer.
Fully integrated supply chain can react to consumer demand in minutes
High-value opportunity for most businesses

12. Integrated Supply Chain
Step 1: Automate and optimize major business processes within each member organization.
Step 2: Extend the enterprise to all members in the supply chain

13. Exercise
What would be a supply chain for our semester project which is a services based industry?

14. Enterprise Resource Planning

15. ERP Evolution Integrated applications seem obvious today
Complex hardware and software system not feasible until the 1990’s
ERP systems evolved as a result
Development of hardware & software technology
Development of a vision of integrated information systems

16. ERP Evolution Integrated Vision:
Materials Requirements Planning (MRP) used for inventory tracking
Electronic Data Interchange (EDI)
enabled processing of purchases
avoided paper purchase orders & invoicing systems
Start of Supply-Chain Management

17. ERP Evolution
Business model started in 1930’s by Alfred P. Sloan – Functional Model of Business Organization
During economic problems of 1980’s and 1990’s, view changed to cross-functional processes.
Michael Hammer’s 1993 book, Reengineering the Corporation: A Manifesto for Business Revolution

18. ERP Evolution ERP software was seen as a solution to business problems
Number of ERP vendors:
SAP
PeopleSoft
Oracle
Baan
J.D. Edwards

19. ERP Applications Best-of-Breed approach
Each ERP vendor has perceived specialty
SAP – Production Planning & Materials Management
PeopleSoft – Human Resources
As is install or customize?

20. ERP Applications Failed package installation projects
Dell Computers cancelled implementation
Owens-Corning lengthy implementation
FoxMeyer drug company (bankrupt) lawsuit
In a fortune 500 company, software, hardware and consulting fees exceed $100 million and take years to fully implement

21. ERP Applications Most use three-tier architecture
Presentation layer
Application server layer
Database layer
Various integration techniques
Proprietary
EDI, COM, CORBA, Java

22. ERP Applications
Business Vision – What business problem is being addressed?
Adopt “best practices” addressed by software vs. customization?

23. ERP Applications Returns expected? Realized returns?
33% of companies saw a cost savings in sales order management
34% reduced personnel needs
More sales can be generated through streamlined process
Reduced frustration
Realized returns?

24. Customer Relationship Management

25. Customer Relationship Management
CRM allows companies to:
gather customer data swiftly,
identify the most valuable customers over time,
and increase customer loyalty by providing customized products and services.
Reduces the costs of serving these customers
Makes it easier to acquire similar customers down the road.

26. CRM as Corporate Strategy
Software used to identify customer needs - profile
Used to build long-term relationships
Build an integrated, company-wide profile of each customer
Present a single “face” to each customer
All customer contacts with the company are recorded in database

27. CRM as Set of Activities
Some companies use sub-set of features for specific activities
Segmenting customers
Data Warehouse / Data Mining
Analyze and manipulate data
Looking for patterns in information
Looking for relationships unknown
Look at customers by volume, profitability, or other measures

28. CRM as Set of Activities
One-to-One Marketing
Once a customer is categorized, products, promotions, and pricing are tailored
Cross-selling – related products
Upselling – higher-margin products in the same line

29. CRM as Set of Activities
SFA (sales-force automation)
Customer contacts logged into database
Also called “lead management software”
Track transaction from initial lead to post-sale
Sales Campaign Management Software
Organize a marketing campaign
Compile results

30. CRM as Set of Activities
Marketing Encyclopedias
Database of promotional literature about products
Routed to sales reps or customers as needed
Call Center Automation
Knowledge management database containing information about product
Customer service access to assist customers

31. Customer Relationship Management
Most successful CRM projects begin with specific goals and objectives.
Cost reduction,
Revenue production
Sales efficiency

32. Customer Relationship Management
Dell Computer Corp.
Customers enter orders for computers using web page.
Order goes to the shop floor, purchasing
Status of order is posted on web page for customer to see

33. Customer Relationship Management
BMG Music Service
Web site contacts the data warehouse upon customer login
Customer’s web page is configured to offer music based on customer’s preferences

34. Customer Relationship Management
Holophane Corp
Manufacture roadway lighting
Sales rep’s take orders, which are custom made
Implemented sales force automation software – order is uploaded to the home office
Customer queries can be answered by service representative using database

35. Customer Relationship Management
What are examples we encounter everyday?
How do you feel about companies building these massive profiles of you?