Supply Chain Management System

Supply Chain Management System By: Naina Jyothi Pinky Lakhani Renju Thambi Renju Varghese Sandeep

Supply chain management refers to The coordination of activities involved in making and moving a product. It is the network of businesses and business processes involved in the creation and selling of a product, from suppliers that procure raw materials through retail outlets and customers.

The upstream portion of the supply chain includes the organization's suppliers and the processes for managing relationships with them. The downstream portion consists of the organizations and processes for distributing and delivering products to the final customers. The manufacturer also has internal supply chain processes for transforming the materials and services furnished by suppliers into finished goods and for managing materials and inventory.

Inefficiencies in the supply chain : could include parts shortages, underutilized plant capacity, excessive inventory, or runaway transportation costs, Which are caused by inaccurate or untimely information and can waste as much as 25% of operating costs. Uncertainties also arise because many events cannot be foreseen—product demand, late shipments from suppliers, defective parts or raw material, or production process breakdowns.

Bullwhip effect Distortion of information about the demand for a product as it passes from one entity to the next across the supply chain. More accuracy from the Supply chain management system can help in overcoming the bullwhip effect. With Perfect information about demand and production, a firm can implement an effective just-in time(a japaneese concept), delivering goods in the right amount and at the right time as they are needed.

Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.f

Classification of supply chain s/w Classified into two types: a).Supply chain planning system: 1). generate demand forecasts for a product. 2). develop sourcing and manufacturing plans for that product 3). make adjustments to production and distribution plans, and 4).share that information with relevant supply chain members. One of the most important supply chain planning functions is demand planning, which determines how much product a business needs to make to satisfy all of its customers' demands.

b).Supply chain execution system: physical flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.

Today, using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules.

Push-based model (also known as build-to-stock)

Earlier supply chain management systems were driven by a push-based model (also known as build-to-stock) in which production master schedules are based on forecasts or best guesses of demand for products, and products are "pushed" to customers. Supplier

Manufacturer

Distributor

Retailer

Customer

Pull-based model (or demand-driven model or build-to-order): With Web-based tools, supply chain management follows a pull-based model (or demand-driven model or build-to-order), in which actual customer orders or purchases trigger events in the supply chain. Supplier

Manufacturer

Distributor

Retailer

Customer

Concurrent supply chain system Concurrent supply chain is where information flows in many directions simultaneously among members of a supply chain network. Ultimately, the Internet could create a "digital logistics nervous system" throughout the supply chain to permit simultaneous, multidirectional communication of information about participants' inventories, orders, and capacities.

Figurative representation of Concurrent Supply chain System

The business value of supply chain management systems includes: * Streamlined supply chain and accurate information * Reduced supply chain costs * Increased sales through accurate product availability

Example IBM® Cognos® Suppply Chain Analytics provides ready-built reports, analyses and metrics for key business functions. Cognos Customer Analytics delivers pre-built reports, metrics, and connections to standard data sources to help you understand sales performance, product sales and the health of your customer relationships. Identify your top revenuegenerating customers, your most profitable customers and more.

* Determine whether your stock levels and fluctuations let you meet customer demand. * Understand yield and yield losses across all plants or for specific operations. Analyze the relationship between scrap, quantity, cost, and lost profits. * Analyze and report on time-to-delivery, quality, and costs by plant, department or shift. * Make better decisions about routing, material usage and substitutions. * Monitor and analyze product cycle time, inventory aging and downtime. * Evaluate buyer volume, budget distribution, and relationships to consolidate or redistribute purchasing.

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