COMPELLINGRESEARCHBOLDIDEASUNPARALLELEDSERVICE©1999AMRResearch,Inc.www.amrresearch.comSupplyChainManagement:BasicstoE-BusinessLarryLapide,AMRResearchVicePresidentofResearchOperations,BusinessApplicationsAgenda•What’sDrivingtheSupplyChainande-BusinessExcitement?•OverviewofSupplyChainManagement(SCM)andTechnology•OverviewofSCMIssues•SCMande-BusinessPractices•ConclusionsManufacturersWholesaleDistributorsSuppliersCustomersInformationFlowsGoodsFlowRetailersTheTraditionalSupplyChainManufacturersWholesaleDistributorsSuppliersCustomersInformationFlowsGoodsFlowFutureInternet-ConnectedSupplyChainSupplierExchangesCustomerExchangesLogisticsExchangesContractManufacturersLogisticsProvidersVirtualManufacturersRetailers•APSande-businesstechnologysupportsbestSCMpractices•SCMwillallowUScompaniestoreapof$300Bto$400Bofsavings(1997:GDP$8.1T)•3%to5%ofrevenuesavingsforbestSCMcompanies*•50%reductionincash-to-cashcycle*•17%improvementinmeetingcustomerdeliverydates**Source:PRTMIntegratedSupplyChainBenchmarkingStudy,1997MRPSCMAPSande-businessEvolutionofSCMTechnology*Source:PRTMIntegratedSupplyChainBenchmarkingStudy,1997TypicalQuantifiedBenefitsfromIntegratedtheSupplyChainDeliveryPerformance16%-28%ImprovementInventoryReduction25%-60%ImprovementFulfillmentCycleTime30%-50%ImprovementForecastAccuracy25%-80%ImprovementOverallProductivity10%-16%ImprovementLowerSupply-ChainCosts25%-50%ImprovementFillRates20%-30%ImprovementImprovedCapacityRealization10%-20%Improvement•EnterprisefunctionalsiloswithconflictinggoalsPurchasingManufacturingDistributionCustomerService/SalesFewchange-oversStableschedulesLongrunlengthsHighinventoriesHighservicelevelsRegionalstocksSOURCEMAKEDELIVERSELLLowpur-chasepriceMultiplevendorsLowinvent-oriesLowtrans-portationOverviewofSCM-Issues•InternalIntegrationandExternalCollaborationAreTheUnderlyingIssues•LegacyApplicationsDoNotAlignWithDesiredInternalBusinessProcesses•EDIIsPrevalent,MostlyForConnectingLargerSuppliers•CompaniesAreFocusedonInternalIntegration,WithAnEyeTowardsTheExternalFindings:SupplyChainCouncil/AMRDiscreteManufacturingFocusGroupCycleTimeReductionsMoveManufacturersTowardsSupplierSynchronizationManufacturerWholesaleDistributorsConsumersMulti-tierSuppliersRetailersSCMWillReduceVolatilityTimeSalesSalesTimeSalesTimeSalesTimeBullWhipEffect•SCMdealslargelywithcross-functionalandinter-enterprisebusinessprocessestospeedproduct,informationandfundflowsupanddownasupplychainManufacturerDistributors/WholesalersConsumersSuppliersRetailersGoodsFlowsInformationFlowsFundsFlowsOverviewofSCMSCMBusinessProcesses•TechnologyhelpsenableavarietyofSCMbusinessprocesses–Pushtopull–Processorientation–Optimization–Postponement–Morefrequentplanning–Collaboration•MovefrompushtopullmanufacturingManufacturersDistributors/WholesalersConsumersSuppliersRetailersManufacturersDistributors/WholesalersConsumersSuppliersRetailers•Makewhatwewillsell,notsellwhatwewillmake!!SCMande-BusinessPracticesPurchasingManufacturingDistributionCustomerService/SalesAvailable-to-Promise(ATP)Capable-to-Promise(CTP)•Movefromfunctionalsilostoprocess-orientedbusinessprocesses(e.g.,order-to-cash,cash-to-cash)IntegratedSalesandOperationsPlanning(S&OP)SOURCEMAKEDELIVERSELLSCMande-BusinessPractices•OptimizationofallsupplychainactivitiesSupplyChainOptimizationSynchronized,ConcurrentPlanningDemandPlanningDistributionPlanningManufacturingPlanningProcurementPlanningSynchronized,SequentialPlanningForecastingDistributionPlanningManufacturingPlanningProcurementPlanningSCMande-BusinessPracticesPostponement•MovetoMTO,ATOandCTOfromMTS•Front-endAPSsuitessupport–ATP/CTP–Productconfiguration–Back-endintegrationtotransactionsystemsInternationalTradeLogisticsWarehouseManagementAdvancedPlanningSchedulingCustomerRelationshipManagementLogisticsManufacturingMaterialsManagementAccountingHumanResourcesEAISCMande-BusinessPractices•MorefrequentplanningmeansresponsivetochangingcustomerneedswhiledecreasinginventoriesTimeTimeAverageSupplyAverageSupplyPlanningCyclePlanningCycleSCMande-BusinessPractices•e-BusinesswillenablesupplychaincollaborationamongtradingpartnersManufacturerDistributors/WholesalersSuppliersRetailersCollaborativeDemandPlanningCollaborativeLogisticsPlanning•Transportationservices•DistributioncenterservicesSynchronizedProductionSchedulingCollaborativeProductDevelopmentSCMande-BusinessPracticesLogisticsProvidersConclusions•E-businesstechnologywillteardownthewallsinsidecompanies•Willalsoallowcompaniestodojointplanningandschedulingwiththeirsupplier’ssuppliersandcustomer’scustomers•TheInternetwillhelpfostertherapidgrowthofdynamicsupplychaintradingcommunitiesConclusionsManufacturersWholesaleDistributorsSuppliersSupplierExchangesCustomerExchangesLogisticsExchangesContractManufacturersLogisticsProvidersCustomersVirtualManufacturersInformationFlowsGoodsFlowRetailers