Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
10-1 Chapter 6 Information Systems and Supply Chain Management 10-2 What Is a Supply Chain? Flow of products and services from: – – – – – Raw materials manufacturers Intermediate products manufacturers End product manufacturers Wholesalers and distributors and Retailers • Connected by transportation and storage activities • Integrated through information, planning, and integration activities • Cost and service levels 10-3 Supply Chain Management Supply chain management is 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 locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements. Ryan McVay/Getty Images 10-4 Strategic Importance of SCM • Opportunity to Reduce Costs – Transportation Costs – Inventory Holding Costs • Provide Value to Customers by Making the Right Merchandise is in the Right Place at the Right Time – Fewer Stockouts – Greater Assortment with Less Inventory • Improved ROI 10-5 Supply Chain Illustration 10-6 Supply Chain for Denim Jeans 10-7 Supply Chain for Denim Jeans 10-8 SCM Collaboration Optimizing product mix Capacity Planning Demand Management Resource Planning Shipping Optimization Warehousing Management Ordering Administration Collaboration on Forecasting Analyzing Supply Chain Inventory Planning Transcctional Status Management Shop Floor Control Operational Transcctional Inventory Tracking Matching demand -supply Production Planning Analyzing Supply Chain Collaboration on Resource Planning Demand Forecasting Tactical Operational Collaboration on Capacity Planning Tactical Collaboration on Forecasting Shippment Tracking Order & Shipments 10-9 Benefits of Efficient SCM Fewer stockouts – merchandise will be available when the customer wants them Tailoring assortments – the right merchandise is available at the right store Customers respond to the convenience as evidenced by increased sales 10-10 High Return on Investment An efficient supply chain can improve a retailer’s ROI • Increases sales – customers are offered more attractive assortments • Net profit is improved by increasing gross margin and lowering expenses • Inventory levels are lower, lower investment and total assets are lower with asset turnover higher PhotoLink/Getty Images 10-11 Improve Return on Investment Total assets: The combined value of all items of monetary value owned by an individual or business. A company's assets include tangible assets, such as equipment, inventory and real property, and intangible assets such as goodwill (the value of a company's name in the market), patents and other intellectual property, which are owned by a company. Net profit : The gross revenue minus all expenses Net Sales: The value of sales generated by a company after deduction of returns, discounts and the value of damaged or lost goods ROI Calculation ROI = Net Profit/ Total assets * 100 Break down ROI into a profit-on-sales component and an asset-efficiency component. ROI = Net profit x Net sales Net sales Total assets * 100 Net profit after taxes $300, total assets $2500, Net sales $5000 ROI = 300/5000 * 5000/2500 * 100 = 0.06 * 2 *100 = 12% 10-13 Wal-Mart’s Sustainable Advantage Wal-Mart’s success is its information and supply chain management systems. Why are competitor’s lagging behind? Wal-Mart made a substantial investment in developing its systems and has the scale economies to justify it. The software is unavailable elsewhere and is constantly updated and improved Ryan McVay/Getty Images 10-14 Minimizing Stockouts Make sure merchandise in stockrooms is on the shelves Stores need to place orders with distribution centers in a timely fashion Distribution Centers need to send right quantities Managers need to provide enough lead time for deliveries Forecast demand accurately 10-15 Information and Merchandise Flow buyer/planner- A buyer, authorized to determine sourcing, negotiate agreements and place purchase orders with vendors, who also performs material planning and review functions done solely by planners in other organizations. 10-16 Information Technology: A Supply Chain Enabler Information links all aspects of supply chain • E-business – replacement of physical business processes with electronic ones • Electronic data interchange (EDI) – a computer-to-computer exchange of business documents • Bar code and point-of-sale – data creates an instantaneous computer record of a sale • Radio frequency identification (RFID) – technology can send product data from an item to a reader via radio waves • Build to order using Internet – allows companies to communicate with suppliers, customers, shippers and other businesses around the world, instantaneously 10-17 E-business and Supply Chain • Cost savings and price reductions • Reduction or elimination of the role of intermediaries • Shortening supply chain response and transaction times • Gaining a wider presence and increased visibility for companies • Greater choices and more information for customers 10-18 E-business and Supply Chain (cont.) • Improved service as a result of instant accessibility to services • Collection and analysis of voluminous amounts of customer data and preferences • Creation of virtual companies • Gaining global access to markets, suppliers, and distribution channels Walmart E-business Walmart E-business Walmart E-business 10-22 RFID Capabilities 10-23 RFID Capabilities (cont.) 10-24 Information Flow 1. When customer makes a purchase, sales associate scans UPC code or RFID chip on merchandise and customer credit card/loyalty card Steve Cole/Getty Images 2. Information about purchase is transmitted from POS terminal to the buyer/planner 3. Information about purchases are aggregated by buyer/planner and sent to distribution center and vendor to ship merchandise StockTrek/Getty Images 10-25 Information Flow 4. Buyer/planner communicates with vendor and places a purchase order to re-supply stores. 5. Buyer/planner notifies distribution center about incoming orders and how they are to be distributed to stores PhotoLink/Getty Images 6. Store managers inform distribution center about receipt of merchandise and coordinate deliveries David Buffington/Getty Images Build-to-order cars over the Internet 10-26 10-27 Electronic Data Interchange • EDI is the computer-to-computer exchange of business documents between retailers and vendors • Merchandise sales • Inventory On Hand • Orders • Advanced shipping notices • Receipt of merchandise • Invoices for payment Royalty-Free/CORBIS 10-28 EDI Security There are implications of security failures (loss of data, loss of public confidence), but retailers have security policy objectives: Authentication – system assures person on other end of session is who it claims to be Authorization - that person has permission to carry out request Integrity – info arriving is the same that was sent Ryan McVay/Getty Images 10-29 Benefits of EDI • Improves overall quality of communications through better record-keeping • Information can be easily analyzed Stockbyte/Punchstock Images 10-30 Advantages of Using a Distribution Center • Effects of forecast error for individual stores are minimized • Enables retailers to carry less merchandise in the store • Easier to avoid running out of stock • Retail store space is more expensive than space at the distribution center Ryan McVay/Getty Images 10-31 Logistics Strategy Pull Supply Chain Merchandise shipped to stores based on sales and inventory levels in the stores Push Supply Chain Merchandise shipped to the stores based on forecasted sales rate (c) Brand X Pictures/PunchStock Pull Strategy • The consumer requests the product and "pulls" it through the delivery channel. • An example: Car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers. Pull Strategy • Used where demand uncertainty is high • Production and distribution are demand driven • No inventory, response to specific orders Push Strategy • Demand is forecasted based on historical sales data. • Make-to-stock is the primary production approach. • Make-to-stock: involves holding products in inventory for immediate delivery, so as to minimize customer delivery times Push Strategy Push vs. Pull Strategy Pull-Push Strategy •The push/pull approach is important in designing supply chain. Demand uncertainty and variations are treated differently in these two systems. •In a push system, safety stock is used to manage demand variability; •While in a pull system, flexible capacity is required to meet the demand variability Pull-Push Strategy 10-39 Activities Performed by Distribution Center • • • • Managing inbound transportation Receiving and checking merchandise Storing or cross docking merchandise Preparing merchandise for the sales floor – Ticketing and marking – Putting on hangers • Shipping merchandise to stores • Managing outbound transportation Ryan McVay/Getty Images 10-40 Who Can Use DC’s? • Retailers selling non-perishable merchandise • Retailers offering merchandise that has highly uncertain demand like apparel • Retailers selling merchandise that needs to be replenished frequently • Retailers that carry a large number of items shipped in broken case quantities like drug stores • Retailers with many outlets Ryan McVay/Getty Images 10-41 Crossdocking Ryan McVay/Getty Images Merchandise flows directly from the vendor’s trucks through the retailer’s distribution center and is loaded on the trucks going to the retailer’s stores without being stored in the distribution center 10-42 Reverse Logistics • Process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. • Retailers recover loss through on-line auctions © image100 Ltd Customer The McGraw-Hill Companies, Inc./Andrew Resek, photographer Store Steve Cole/Getty Images Distribution Center Royalty-Free/CORBIS Vendor 10-43 Bull-Whip Effect An uncoordinated channel of built up inventory when retailers and vendors do not coordinate their supply chain activities 10-44 What Causes a Bull-Whip Effect? Chad Baker / Ryan McVay/Getty Images • Delays in transmitting orders and receiving merchandise • Over-reacting to shortage • Ordering in batches rather than generating a number of small orders 10-45 Retailers and Vendors Work Together By working together they can reduce the level of inventory in the chain and reduce the number of stockouts. • Use EDI • Exchange information to reduce need for backup inventory, improve sales forecasts and production efficiency • Vendor manage inventory • Collaborative planning, forecasting and replacement PhotoDisc/Getty Images 10-46 Vendor Managed Inventory