Download Séminaire des technologies de l`information

UNIVERSITE
LIBRE DE
BRUXELLES
Solvay Business School
SEMINAIRE DE TECHNOLOGIES
DE L’INFORMATION ET DE
LA COMMUNICATION
GEST 116
Supply chain management
Pascale Vande Velde
Content of eBusiness course
Technologies de l’information et de
La communication
Introduction – Part I
Introduction – Part II
Payments & security
Supply chain management
V.1.1
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Agenda
Technologies de l’information et de
La communication
Introduction SCM
Case study : eprocurement
Case study : esynchronization
Case study : eplanning
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Technologies de l’information et de
La communication
Supply Chain functionality by segment
Supply Chain Planning
Consumers
Suppliers
and Vendors
Design
Procurement and
sourcing
Buy
Manufacturing
Strategy &
Operations
Inventory
Management
Make
Sell
Distribution &
transportation
Mgmt
Hold
Move
Customers
Synchronization and Execution – Fulfillment process
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Agenda
Technologies de l’information et de
La communication
Introduction SCM
Case study : eprocurement
Case study : esynchronization
Case study : eplanning
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eprocurement
Technologies de l’information et de
La communication
Supply Chain Planning
Consumers
Suppliers
and Vendors
Design
Procurement and
sourcing
Buy
Manufacturing
Strategy &
Operations
Inventory
Management
Make
Sell
Distribution &
transportation
Mgmt
Hold
Move
Customers
Synchronization and Execution – Fulfillment process
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Procurement Value Drivers
Technologies de l’information et de
La communication
Purchasing determines an important part of the competitive position of most firms.
• Purchasing is an area where large cost reduction can be made
• An organisations spend makes up on average of 60% of revenue
• Procurement cost savings go straight to the bottom line
• Purchasing and Supplier collaboration can reduce the need for large inventories and quickly
introduce goods and services to accommodate new product designs and changes in existing
designs
• Streamlining of processes allows organisations to acquire good more quickly.
It is well recognized by most organizations that procurement cost savings are particularly
attractive because they go straight to the bottom line
—Impact of Indirect Procurement Cost Savings on
Profit —
— Before —
Revenue
$1,000M
Revenue
ILLUSTRATIVE
$1,000M
- COGS
400M
- COGS
400M
Gross Margin
600M
Gross Margin
600M
- Labor
200M
- Labor
200M
- Indirect Purchases
300M
- Indirect Purchases
270M
Net Income
(before taxes)
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— After —
$100M
Net Income
(before taxes)
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$130M
(10% reduction)
(30% increase)
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Technologies de l’information et de
La communication
The Re-Emergence of Strategic Sourcing
The need for Strategic Sourcing, both online and off, has become increasingly
evident….everything is refocusing on the relationships between buyers and suppliers.
eSynchronised
Supply Chain
eCollaboration
eSettlement
eFulfillment
eIntelligence
eAuctioning
Outsourced
eProcurement
Services
Marketplaces
Integrated
ERP
Procurement
Card
eRequisitioning
Strategic Sourcing
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Technologies de l’information et de
La communication
The Re-Emergence of Strategic Sourcing
Strategic Sourcing is not a new concept but companies are increasingly realising the
importance of doing it and, just as important, doing it well…..
•
New focus on revenue and competitive advantage rather than cost and efficiency
•
Companies have not involved Procurement early enough in discussions about
demand and specifications and significant sourcing opportunities have been lost
•
Traditional Strategic Sourcing has been a time-consuming, paper-based and
manual process. Older methods have:
– Limited the number of potential suppliers with which a buyer can negotiate
– Forced many organisations to make decisions with sub-optimal information
– Extended the overall length and cost of the sourcing cycle
•
New tools are enabling a sophisticated and rounded eSourcing Strategy
•
Recognition that whilst eProcurement is a key to sustain savings, the true value is
achieved through Strategic Sourcing
“When the goal is boosting profits by dramatically
lowering costs, a business should look first to what it buys.”
- Fortune
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Technologies de l’information et de
La communication
Delivering and Maintaining Savings
Neither eProcurement nor Strategic Sourcing on their own is enough to realise
and maintain all potential benefits
Savings
Performance Organisation
 Performance and process focus
supported by eSourcing tools
 Right People in the Right place
 Cross-Skilled, motivated teams
Strategic Sourcing:
Consolidated Suppliers
Total Cost of Ownership
Strong Supplier Relations
eProcurement
Increased compliance
Some process savings
Better Information
Procurement initiatives fade
Supplier base expands
Time
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eSourcing Tools: The Future?
Technologies de l’information et de
La communication
A new breed of eSourcing solutions is focused on enabling, embedding and speeding up
the Strategic Sourcing process
Strategic
Higher
eSourcing
• Direct / Indirect products / services
• Deliver lowest total cost
• Buyer / Supplier partnership
eMarkets / Auctions
• Direct / Indirect products / services
• Reduce price
• Does not leverage existing contracts
Type of Process
Buyer Power
eProcurement Applications
• Indirect products / services
• Automate processes
• Leverage existing contracts
Tactical
Lower
Low
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Value of Goods Traded
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High
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Technologies de l’information et de
La communication
eSourcing Tools: The Future?
Web enabled tools drive consistency, efficiency and best practice into the strategic sourcing
process
New Priorities
• Strategic sourcing value opportunities have sometimes been missed due to
lengthy and complex analytical processes
• Non-value added work needs to be reduced to allow procurement professionals
to concentrate on more strategic and higher value tasks
New Opportunities
• Tools are emerging to enable global & enterprise-wide sourcing strategies –
paving the way for true eCommerce and new ways of working
• New leading edge web application solutions can improve business processes
and empower procurement professionals
• Deeper functionality is coming available as technology matures
• eAuctions are already producing proven results. They do though need to be
integrated within overall Strategic Sourcing process for maximum efficiencies
and benefits
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eSourcing Tools: Solution Landscape
Technologies de l’information et de
La communication
Applying new technological solutions to the purchasing cycle
• eIntelligence from multiple buying tools
• Online analysis
• 3rd party service capability: spend analysis
supported by strategic sourcing services
Research
• Manage demand
• Analyse spend,
identify
opportunities
• Analyse market
• Online
process tools
based on best
practices
• Analysis
templates
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Develop
Sourcing
Strategy
• Develop
commodity
specific
strategies
• Industry-specific supplier
directories & marketplaces
• Newsfeeds, online market
intelligence, online
corporate information
• eRFI creation
• Online auction
- multiple formats, languages & currencies
- 3rd party services: event setup, training &
facilitation
• Online sealed bid
• Online negotiation
RFP/Tender
• Source &
qualify
suppliers
Negotiate
• Negotiate
contract
• Create &
issue
RFQ/ITT
• eRFP/Q creation:
- multi-line, multi-parameter
- automatic weighting of responses to
speed up the assessment &
elimination of suppliers
• Collaborative tool / template creation
allows group-wide re-use
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Implement
• Award &
finalise
contract
• Industry-specific
marketplaces
• Buyer-led online
‘communities’
Manage &
Develop
Suppliers
• Manage
supplier
relationship
• Weighting of bids to reflect total
cost of commodity ownership &
supplier track record
• Online confirmation of contracts
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Technologies de l’information et de
La communication
eIntelligence Tools to Support the Strategic
Sourcing Process
eIntelligence
•Spend Analysis
•Buyer Portal
•Capability Analysis
•Benchmarks
•Procurement
•Total Cost Focus Knowledge Base
•SS On-line
•X-fn. teams
1
2
Research
3
Project
Direction
•Strategy Analysis
(e.g. eProcurement)
Develop
Sourcing
Strategy
•eRFP
•eTender
4
RFP/
Tender
Seven Step Process
7
Manage &
Develop
Suppliers
5
6
•Partnership Scorecard
•Procurement
Knowledge Base
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Negotiate
Implement
•eCommunication
•eContracting
•Process Standards
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•Team Negotiation
•eAuction
•Tenders
•eMarketplaces
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Technologies de l’information et de
La communication
eIntelligence & Portal Overview
‘eIntelligence’ is internet-based information which can add value to the Strategic Sourcing
process. It helps procurement professionals to analyse the marketplace, select suppliers and
award contracts.
Key Tools:
• Proactive delivery mechanisms, pushing tailored internal and external information to the
desktop
• Newsfeeds & free e-mails to subscription-based news services
• Knowledge Management & internal search capabilities
• Community features & discussion databases
2
• Industry Vertical providers inc. B2B eMarkets
• Applicable within the research and strategy steps of the 7 step
strategic sourcing process
Research
3
1
Project
Direction
Develop
Sourcing
Strategy
4
7
Manage &
Develop
Suppliers
RFP/
Tender
5 Negotiate
6 Implement
Arms procurement with detailed information to support ‘Total Cost of Ownership
(TCO) based negotiation’ with suppliers.
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Technologies de l’information et de
La communication
From searching the internet
to personalised portals and beyond…….
Value
Internet
Searches
VISION: Internal and
external sources combine
to deliver powerful
information solution
Industry
Newsfeeds
Category
Newsfeeds
eSynchronised
Integrated
Solutions
ERP Information
Integration
Personalised
Portal
Enterprise
B2B Portal
eMarkets
eRequisitioning
Communities
Knowledge
Management
Complexity
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Technologies de l’information et de
La communication
A procurement portal draws on many information
sources
internet
www pages
Procurement Portal
Business
Partners
intranet
Newsfeeds
B2B
2Market
B2B
Central Vendor
Database
View & access
Shared
Applications
Project
Application
Personal
Applications
eProcurement
Application
Market
Application
Outlook 2000
-Mail
-Calendar
ERP
Legacy
Corporate Portal
Collaboration
e.g.
Discussion
Forum
Personal
Folders
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eRFx Overview
Technologies de l’information et de
La communication
eRFx is the process of:
 Posting
an RFI/P online utilising a secure web site
 Collecting
 Bringing
supplier responses
qualifying suppliers through to RFQ
 Negotiating
the contract either via sealed bid or Reverse Auction
Project
Direction
• Integration of
best practice
• Strategic
Sourcing
Methodology
‘7 Step Methodology’
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eSourcing Value Proposition
Technologies de l’information et de
La communication
Tools & Knowledge = Efficiency & Leverage = Savings
Lowered Total Cost of
Ownership
More Effective Negotiation
Through eIntelligence
Reduced Cost of Purchase
Strategic
Sourcing Online tool
enables effective strategic focus
Full
(12–17%)
Spend Analysis
tools (OLAP) to
aggregate and optimise spend
Provides
facts fast for fact
based negotiation

Focus on attributes beyond
price
Reduce
Leverages

Identifies wider spectrum of
suppliers to take part
part proliferation
use of new internet
information sources
internal knowledge
and contacts
Identifies
Reverse
auctions deliver value
eTendering
supports:
significant industry
trends
Cost Effective Solutions
Online Process
Overall
Reduces
integration with online
auction/sealed bid capability can
bring as much as a 25% cost
reduction
Fast
solutions reduce risks
and integration costs
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cycles

ROI
Hosted
average sourcing

Compliance and
Consistency
eRequisition
Online tendering on its
own can reduce this time
by as much as 30%
Drives reusability by
bringing the process online
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and eRFQ reduce
maverick buying
Online
methodology drives and
guides process
Online
RFI/P/Q ensure standard
documentation and easier
comparison
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Technologies de l’information et de
La communication
V.1.1
Case study : MRO in the steel industry
(“MRO Steel”)

Consortium based marketplace

On June 22, 2000 the four consortium partners, who are leading
steel producers, signed a Memorandum Of Understanding to study
Trading Exchange

The four founding companies agreed to work towards forming a
leading-edge eProcurement marketplace for metals.

The marketplace is focused on MRO (Maintenance, Repair and
Operations), and vertically oriented.
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What is a Marketplace/ Exchange ?
Technologies de l’information et de
La communication
Marketplaces are trading platforms that bring
together multiple buyers and sellers on an Internet site
to do individually business with each other
Many
Many
Exchange
Individual
Buyers
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Many-to-Many
relationship
Individual
Sellers
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Vertical
Marketplaces
Provide specialized
products and
services which are
tailored to specific
industries
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Power of an Exchange - traditional model
Technologies de l’information et de
La communication
Supplier
EDI, custom, ...
Evolution towards an Exchange
Supplier
Buyer
- Buyers wanted to connect
electronically to their suppliers
Supplier
- Every buyer established a customized
link to their suppliers
Buyer
Supplier
EDI, custom, ...
- Eventually, a patchwork of customized
links existed
Supplier
Buyer
Supplier
EDI, custom, ...
Supplier
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Power of an Exchange – MRO Steel
Technologies de l’information et de
La communication
SUPPLIER
SUPPLIER
Partner
steel
producer
Partner
steel
producer
Partner
steel
producer
SUPPLIER
A standard and
uniform platform
MRO
Steel
SUPPLIER
SUPPLIER
SUPPLIER
SUPPLIER
SUPPLIER
Partner
steel
producer
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SUPPLIER
SUPPLIER
SUPPLIER
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Initiatives in the Metal Spectrum
Technologies de l’information et de
La communication
Metalmaker
MaterialNet
Metalexplorer
Independent
Steelscreen
iSteelAsia
Sell-side
GSX
E-Steel
Industry
Consortia
Procurement
Metalsite
Metalspectrum
Operational
Quadrem
Steel24-7
MRO Steel
Covisint
Alliance/
acquisition
Ferrousexchange
Individual
initiatives
Bethlehem
Steel
Announced
Kouzai.com
Steel-N.com
Suppliers
Metals
producers
Customers
Position in value chain
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Technologies de l’information et de
La communication
Liquidity
Liquidity provided
directly by
shareholders is
MRO Steel’s true
differentiating factor
Process efficiency
provides incentive
to commit spend
volume
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What differentiates MRO Steel ?
Low transaction fee
Ensure that MRO
Steel has a
competitive pricing
level and
compelling value
proposition
Economies of scale
reached quickly due
to shareholders’
liquidity
Speed-to-market
and partnership
Launch in short
timeframe with fast
ramp-up
Signing up the right
buyers, suppliers
and other
marketplaces
Strive for global
reach
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Value added
services
MRO Steel will
constantly innovate
by introducing value
added services
Effectively translate
internal needs into
tangible services
Deeper integration
of the supply chain
between
participants
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Pilot: Scope overview
Technologies de l’information et de
La communication
The pilot will support the following eRequisitioning process
MRO Steel
2
1
EBP Buying Tool
3
4
Catalogue
5
9
7
SAP ERP
12
Business
Connector
11
10
8
Order Mgt
System
6
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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User logs into EBP
From EBP, the user will “Punch-in” to MRO Steel to browse the hosted catalogue
Catalogue view will be restricted based on the user’s company/profile
Once items have been selected they are brought back to EBP (“Punch-out”), and added to the shopping basket
The shopping basket is sent from EBP to R/3 using standard interface and converted into a Purchase Requisition
Approval processes and the creation of the Purchase Order is done in R/3
Once the PO is created, it is sent under in Idoc format to the Business Connector
The BC translates the iDoc into an XML format
The PO is then sent to MRO Steel where it will be displayed in the Order Management System
A purchase order acknowledgment is sent from BFM and processed by R/3, (steps 10 to 12)
 Alternative scenario: shopping basket creation with selection of material, or based on free text
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Pilot: Three phased approach
Technologies de l’information et de
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Phase III
EBP – MRO Steel
Integration
MRO Steel
Catalogue browsing
Status
information
Requisition
EBP Buying
Tool
Catalogue
Selected items
Purchase order
BFM format
XML
Purchase order
SAP format
Business
Connector
SAP ERP
Receipt
Confirmation
BFM XML
format
Receipt
Confirmation
SAP format
Phase I
EBP – SAP
integration
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Order Mgt
System
Phase II
SAP – MRO Steel
integration
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Target situation
Technologies de l’information et de
La communication
MRO Steel
EBP Buying
Tool
Catalogue
SAP Steel
producer 1
SAP Steel
producer 2
SAP Steel
producer 3
SAP Steel
producer 4
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Business
Connector
Order Mgt
System
Common platform
hosted at one of
the steel producers
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E-requisitioning technical architecture
Technologies de l’information et de
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64kbit/s
Browser
Steel producer 2
Browser
Steel producer 3
2 x 256 kbit/s
Steel producer 2
Corporate
Browser
Telefonica
ITS Production
Internet
BC Production
ITS Test/development
BC Test/development
1 Mbit/s
W-gate
W-gate
W-gate
ITS server
ITS server
ITS server
Infonet
(Frame Relay
Network)
1 Mbit/s
SAP BC
SAP BC
SAP BC
64kbit/s
1 Mbit/s
DMZ
TA-segment at Steel producer 1
FW
256 kbit/s
Route
r
browser
Steel producer 1
Browser
SwB
10 Mbit/s
Steel producer 1 Lan
ITS Test/development
ITS Production
W-gate
W-gate
W-gate
SAP R/3 production
Aristos PSI
ITS 1
ITS 2
A-gate(s)
A-gate(s)
SAP R/3 acceptation
Aristos ASI
SAP R/3
development
Aristos DSI
SAP EBP production
(PED)
SAP EBP test/
development
(DEB)
ITS test/development
svism001
A-gate(s)
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Demo: Creation of Shopping baskets
Technologies de l’information et de
La communication
EBP – MRO Steel
Integration
MRO Steel
Catalogue browsing
SAP ERP
EBP – SAP
integration
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Catalogue
Selected items
Status
information
Requisition
EBP Buying
Tool
Business
Connector
Order Mgt
System
Alternatives for catalogue browsing:
• Selection of material in shopping basket
• Free text entry
• Usage of templates
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Technologies de l’information et de
La communication
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Demo: Back-end system activities
Technologies de l’information et de
La communication
MRO Steel
EBP Buying
Tool
Status
information
Requisition
Catalogue
SAP ERP
EBP – SAP
integration
V.1.1
Business
Connector
Order Mgt
System
• Release Procedure Purchase requisition
• Creation of purchase order
• Send purchase order
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Demo: Reformatting of purchase order
Technologies de l’information et de
La communication
MRO Steel
Status
information
Requisition
EBP Buying
Tool
SAP ERP
EBP – SAP
integration
V.1.1
Catalogue
Purchase order
BFM format
XML
Purchase order
SAP format
Business
Connector
Order Mgt
System
SAP – MRO Steel
integration
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Demo: Treatment by BFM
Technologies de l’information et de
La communication
MRO Steel
Status
information
Requisition
EBP Buying
Tool
Catalogue
Purchase order
BFM format
XML
Purchase order
SAP format
Business
Connector
SAP ERP
Receipt
Confirmation
BFM XML
format
Receipt
Confirmation
SAP format
EBP – SAP
integration
V.1.1
Order Mgt
System
SAP – MRO Steel
integration
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Demo: Status update process
Technologies de l’information et de
La communication
History update after
• Purchase order creation
• Goods receipt
• Invoice verification
•…
Status
information
Requisition
EBP Buying
Tool
Catalogue
Purchase order
BFM format
XML
Purchase order
SAP format
Business
Connector
SAP ERP
V.1.1
Order Mgt
System
Receipt
Confirmation
BFM XML
format
Receipt
Confirmation
SAP format
EBP – SAP
integration
MRO Steel
SAP – MRO Steel
integration
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Technologies de l’information et de
La communication
V.1.1
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Agenda
Technologies de l’information et de
La communication
Introduction SCM
Case study : eprocurement
Case study : esynchronization
Case study : eplanning
V.1.1
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efulfillment
Technologies de l’information et de
La communication
Supply Chain Planning
Consumers
Suppliers
and Vendors
Design
Procurement and
sourcing
Buy
Manufacturing
Strategy &
Operations
Inventory
Management
Make
Sell
Distribution &
transportation
Mgmt
Hold
Move
Customers
Synchronization and Execution – Fulfillment process
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Technologies de l’information et de
La communication
Current business architecture
of the value chain
Barriers
Inventory
levels
Push

V.1.1
 Inventory
 Long freeze
periods
 Infrequent
communication
 Inaccurate
information
transfer
Variability causes most
silos to be working on
the wrong stuff
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Technologies de l’information et de
La communication
Current business systems architecture
for the division
SCM
E-procurement
Storefront
CRM
Design
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Technologies de l’information et de
La communication
V.1.1
Current business systems architecture
for the enterprise
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How Do You Solve
This Problem?
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Technologies de l’information et de
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
What do you need to do to improve?
Reduce complexity
 Rationalize suppliers
 Rationalize items
 Generate better contracts

Increase visibility. Break down walls





Between divisions
Throughout processes
Between value chain partners
Between systems
Increase velocity
 Key weapon against variability
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Technologies de l’information et de
La communication
Introducing dynamic value
chain management
Dynamic value chain management (DVCM) is
a business approach to continuously increase
efficiency in the value chain by concurrently
reducing complexity, increasing visibility and
increasing velocity.
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DVCM methodology:
First key principle
Technologies de l’information et de
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
V.1.1
How well you
continuously improve the
value chain efficiency
depends on the speed
and quality of the
following cycle
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DVCM:
Second key principle
Technologies de l’information et de
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V.1.1
Value chain
configuration
Value chain
planning
Value chain
execution
Reduce
complexity
Increase
visibility
Increase
velocity
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Technologies de l’information et de
La communication
DVCM methodology
Step 1: Configure your value chain
 Rationalize your Bill Of Material’s and
components
 Rationalize your suppliers
 Rationalize carrier contracts
 Optimize supply network
 Create contracts and business processes
 Create collaborative response buffers
 Continuously monitor, decide and act
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Technologies de l’information et de
La communication






V.1.1
DVCM methodology
Step 2: Plan collaboratively
Collaboratively forecast demand and
plan supply
Influence demand and supply
Match supply with demand across
multiple enterprises
Plan allocations
Create Available Through Promise across
the value chain
Continuously monitor, decide and act
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Technologies de l’information et de
La communication
DVCM methodology
Step 3: Execute collaboratively,
implement a pull-based process
 Promise and create the
“perfect order”
 Schedule the order at the factory
 Immediately broker orders across
value chain
 Schedule fulfillment across multiple
fulfillment organizations and systems
 Replenishment signals generated
automatically for collaborative
response buffers
 Settlement done automatically on
receipt of goods
 Continuously monitor, decide and act
V.1.1
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An ideal rapid response value chain: Planning
happens in days, execution happens in hours
Lower
inventory
levels

Retailer
Pull
Huge benefits
for those who
practice DVCM,
despite limited
participation from
others
Component
suppliers
Contract
manufacturer
V.1.1
Applied DVCM
methodology
OEM
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Consumer electronics industry
potential value improvements with DVCM
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Inventory levels
Suppliers
EMS
Manufacturer
Inventory
4-6
wks
4-6
wks
2-3
wks
2-3
wks
Info flow
7
days
7
days
7
days
Physical
lead time
40
days
14
days
3
days
Sales/Distribution
Retailers/
Channels
Consumers
2-3
wks
2-3
wks
100
days
7
days
7
days
7
days
50
days
14
days
2
days
3
days
70
days
Response buffers
Potential $50B one-time – $10B continuing annual cash
flow/profit benefit. $10B in revenue improvements.
V.1.1
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







V.1.1
Collaborative Planning, Forecasting &
Replenishment
Shared plans developed jointly for Manufacturer and
Retailer
POS + Promotions + Marketing Activities
Proactive
Planning focus
Adds Sales and Marketing view
Goal is revenue growth
Category management
Efficient promotions, product introductions and
replenishment
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Internal and External Collaboration
• Demand Plan
See
Exchange
Maintain
• Supply Plan
• Production Plan
Internal
• Market Activities
Collaboration
Compare
External
Collaboration
V.1.1
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Architecture Example
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Third Party Data
NET
Open Application
Integration
Manugistics
Database
V.1.1
NetWORKS
Database
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• Intranet
• Extranet
• Internet
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Local Supply - Illustration of Collaborate

V.1.1
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The Materials Manager
identifies (by exception
lists) the planning Items
on which he needs
additional information
55
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Local Supply - Illustration of Collaborate

V.1.1
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The Materials
Manager marks these
planning Items...
56
Local Supply - Illustration of Collaborate
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
V.1.1
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… and attach
an explicative
note
57
Local Supply - Illustration of Collaborate
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
V.1.1
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The supply Planner
is informed via
Email about the
planning items to be
reviewed...
58
Agenda
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Introduction SCM
Case study : eprocurement
Case study : efulfillment
Case study : eplanning
V.1.1
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eplanning
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Supply Chain Planning
Consumers
Suppliers
and Vendors
Design
Procurement and
sourcing
Buy
Manufacturing
Strategy &
Operations
Inventory
Management
Make
Sell
Distribution &
transportation
Mgmt
Hold
Move
Customers
Synchronization and Execution – Fulfillment process
V.1.1
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

Case study : supply chain planning implementation
at a chemical company
To develop synergies between Chemical company XX and acquired
company YY, and to reduce operational cost, several initiatives were
implemented, impacting XX Supply Chain Operations
Asset consolidation
 Warehouses (Europe: from 40 to 10)
 Closure of local manufacturing plants (capacity reduction from 197.000 to 98.000
tons)




Need to increase production capacity utilization
Change in product offerings, Brand rationalization
Constraints on working capital
Context changes as a consequence of the acquisition
 Non integrated operations
 Multiples, non integrated ERP systems
… Significant changes in the Supply Chain Model were required to operate in this new
environment to achieve the business objectives of the YY company integration …
V.1.1
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Project Overview
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Objectives:


Move from country-based to European-wide Supply Chain Planning Processes and
Organization
Build an integrated supply chain planning platform using Manugistics
In order to achieve:
 10% inventory reduction
 Increased customer service
Implementation overview:
V.1.1

Project covers Europe and Asia operations

12 month implementation project
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Solution Overview
(1)Implement new integrated supply chain planning processes
(2)Move from Country to European-wide supply planning organization
(3)Implement an integrated supply chain planning platform using Manugistics
New SCP Model
Previous SCP Model
V.1.1
• Disconnect between demand plan and
supply plan (inventory / production plan)
• Tight integration across planning process
balancing demand and supply to meet
inventory target and service level
• Local warehouse ordering leading to
sub-inventory optimization
• Central replenishment of local warehouses
optimizing the complete supply network
• Multiple, non integrated ERP system
with no complete inventory visibility
• Integrated supply chain planning tools
allowing information visibility
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(1)
Implement new integrated planning processes
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 Integrated planning processes linking Demand and Supply side
 Implement common processes across Europe and Asia
 Develop Key Performance Metrics and Balance Scorecards to support new processes
YEARS
Sales & Operations Planning
S
C
QUARTERS
U
MONTHS
P
P
WEEKS
L
Materials
Planning
Materials
Planning
Inventory Target Setting
Production
Planning
Distribution
Requirement
Planning
I
DAYS
E
Procurement
Detailed
Production
Scheduling
R
HOURS
BUY
MAKE
U
Demand
Planning
T
O
Order Allocation
Deployment
Load
Planning
MOVE
S
Available to
Promise
M
E
R
SELL
In Scope Process
V.1.1
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(2)
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Move from Country to European wide
Supply Planning organization
Implement a new central planning organization:
 Manage Inventory centrally for the whole region
 Setting inventory planning targets and parameters
 Generate inventory replenishment plan to each Distribution Center and Warehouse
(daily / weekly)
 Generate production plan at each Manufacturing Plant (weekly / monthly)
 Supply Chain Planning process ownership
 Demand and supply alignment through Sales & Operations Planning process
Redefine roles & responsiblities of sales and marketing in the planning process:
 Forecast ownership per Market Unit
 Network of Demand Planning Coordinators
 Exceptional demand input based on statistical forecast
V.1.1
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(3) Implement an integrated Supply Chain
Planning platform using Manugistics
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Supply Chain Planning
Manugistics
Selected Transactional Data required for
Planning Purpose
Transactions to be executed based on
Planning decision
Project Scope
Supply Chain
Data Warehouse
Detailed Transactional Data required for
business information analysis
Messaging Systems
Various, non integrated ERP systems
SAP
R3
U.S.
MOS
Asia
• 2 Plants
• 5 Warehouses
• 2 Main DCs
• 15 Warehouses
V.1.1
CDS2
SAP
R3
SAP
R3
SAP
R3
SAP
R3
SAP
R3
Italy
Europe
Germany
Spain
Portugal
UK
• 1 Plants
• 1 Main DC
• 12 Warehouses
• 1 Plant
• 1 Main DC
• 1 Warehouse
• 1 Warehouse
• 1 Warehouse • 1 Warehouse
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(3) Implement an integrated Supply Chain
Planning platform using Manugistics
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Demand
Planning
Inventory
Planning
Define
Inventory
Targets
Forecast
Demand
Net
Forecast
Distribution
Requirements
Planning
Inventory
Deployment
Transportation
Planning
Apply
Constraints to
Requirements
Plan
Generate
Requirements
Plan
Generate
Transportation
Plan
Restock
Order
Net
Requirements
Manufacturing
Planning
Messaging Systems
Various, non integrated ERP systems
SAP
R3
U.S.
MOS
Asia
• 2 Plants
• 5 Warehouses
• 2 Main DCs
• 15 Warehouses
V.1.1
CDS2
SAP
R3
SAP
R3
SAP
R3
SAP
R3
SAP
R3
Italy
Europe
Germany
Spain
Portugal
UK
• 1 Plants
• 1 Main DC
• 12 Warehouses
• 1 Plant
• 1 Main DC
• 1 Warehouse
• 1 Warehouse
• 1 Warehouse • 1 Warehouse
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(3) Implement an integrated Supply Chain Planning
platform using Manugistics (con’t)
Supply Chain Planning Optimization
- Integrated Planning across Plant, Main DC, Warehouses
- Central and common Planning system linking the various ERPs
- Visibility across complete supply chain
- Decision support system:
- Sales forecasting
- Replenishment Planning: what, when to replenish
- Production Requirements Planning: what, when to produce
Supply Chain Planning
Manugistics
Supply Chain
Data Warehouse
Supply Chain Information Warehouse
-
Centralized data across non integrated ERP systems
Detailed operational and business analysis
Key Performance indicators
Sales & Operations reporting
ERP systems
Transactional Execution Systems
- Order Management
V.1.1
Shipping / Invoicing
Inventory replenishment plan to warehouse execution
Manufacturing plan execution
…
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Value to the client
Business case:



10% reduction in finished goods inventory
Increased in customer service/shipping performance
Project payback of 1 Year
Results to date
V.1.1

New central planning organization in place

Common planning process implemented across Europe and Asia operations. Integrated
planning solution balancing demand and supply plan across the supply chain network

Business Case realization to be monitored as of February ’02
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V.1.1
Lessons Learned

Focus on process and organization design prior to software implementation

Use of iterative and prototype approach to clarify requirements and gain solution
buy-in

Strong and visible Top Management support was key in project success

Involve key business planners at start of the project. Planners will require
extensive training, coaching, and expertise prior to be able to operate a Supply
Chain Planning solution (e.g. Manugistics)

Master Data and transactional Data quality and availability is the critical success
factor in any Supply Chain Planning implementation

Integration with multiple and non integrated ERP systems will increase Supply
Chain Planning project complexity and risk.
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