COMPELLING RESEARCHBOLD IDEASUNPARALLELED SERVICESupply Chain Management:Basics to E- BusinessLarry Lapide, AMR ResearchVice President of Research Operations, Business Applications 1999 AMR Research, Inc. www.amrresearch.comAgendaWhats Driving the Supply Chain and e-Business Excitement?Overview of Supply Chain Management (SCM) and TechnologyOverview of SCM IssuesSCM and e-Business PracticesConclusionsManufacturersWholesale DistributorsSuppliersCustomers Information FlowsGoods FlowRetailersThe Traditional Supply ChainManufacturersWholesale DistributorsSuppliersCustomers Information FlowsGoods FlowFuture Internet-Connected Supply ChainSupplier ExchangesCustomer ExchangesLogisticsExchangesContract ManufacturersLogistics ProvidersVirtual ManufacturersRetailersAPS and e-business technology supports best SCM practicesSCM will allow US companies to reap of $300B to $400B of savings ( 1997: GDP $8.1T )3% to 5% of revenue savings for best SCM companies*50% reduction in cash-to-cash cycle*17% improvement in meeting customer delivery dates*Source: PRTM Integrated Supply Chain Benchmarking Study, 1997MRPSCM APS and e-businessEvolution of SCM Technology *Source: PRTM Integrated Supply Chain Benchmarking Study, 1997Typical Quantified Benefits from Integrated the Supply Chain Delivery Performance16%-28% ImprovementInventory Reduction25%-60% ImprovementFulfillment Cycle Time30%-50% ImprovementForecast Accuracy25%-80% ImprovementOverall Productivity10%-16% ImprovementLower Supply-Chain Costs25%-50% ImprovementFill Rates20%-30% ImprovementImproved Capacity Realization10%-20% ImprovementEnterprise functional silos with conflicting goalsPurchasingManufacturingDistributionCustomer Service/SalesFew change- oversStable schedulesLong run lengthsHigh inventoriesHigh service levelsRegional stocksSOURCEMAKEDELIVERSELL Low pur-chase priceMultiple vendorsLow invent-oriesLow trans-portationOverview of SCM - IssuesInternal Integration and External Collaboration Are The Underlying IssuesLegacy Applications Do Not Align With Desired Internal Business ProcessesEDI Is Prevalent, Mostly For Connecting Larger SuppliersCompanies Are Focused on Internal Integration, With An Eye Towards The ExternalFindings:Supply Chain Council/AMR Discrete Manufacturing Focus GroupCycle Time Reductions Move Manufacturers Towards Supplier SynchronizationManufacturerWholesale DistributorsConsumersMulti-tierSuppliersRetailersSCM Will Reduce VolatilityTimeSalesSalesTimeSalesTimeSalesTimeBull Whip EffectSCM deals largely with cross-functional and inter-enterprise business processes to speed product, information and fund flows up and down a supply chainManufacturerDistributors/WholesalersConsumers SuppliersRetailersGoods Flows Information FlowsFunds FlowsOverview of SCMSCM Business ProcessesTechnology helps enable a variety of SCM business processesPush to pullProcess orientationOptimizationPostponementMore frequent planningCollaborationMove from push to pull manufacturingManufacturersDistributors/ WholesalersConsumersSuppliersRetailersManufacturersDistributors/ WholesalersConsumersSuppliersRetailers Make what we will sell, not sell what we will make! SCM and e-Business PracticesPurchasingManufacturingDistributionCustomer Service /SalesAvailable-to-Promise (ATP) Capable-to-Promise (CTP)Move from functional silos to process-oriented business processes (e.g., order-to-cash, cash-to-cash)Integrated Sales and Operations Planning (S&OP)SOURCEMAKEDELIVERSELLSCM and e-Business PracticesOptimization of all supply chain activitiesSupply Chain OptimizationSynchronized, Concurrent PlanningDemandPlanningDistributionPlanningManufacturing PlanningProcurementPlanningSynchronized, Sequential PlanningForecastingDistributionPlanningManufacturing PlanningProcurementPlanningSCM and e-Business PracticesPostponementMove to MTO,ATO and CTO from MTSFront-end APS suites support ATP/CTPProduct configurationBack-end integration to transaction systemsInternationalTradeLogisticsWarehouseManagementAdvancedPlanning Scheduling CustomerRelationshipManagementLogisticsManufacturingMaterialsManagementAccounting Human Resources SCM and e-Business PracticesMore frequent planning means responsive to changing customer needs while decreasing inventoriesTimeTimeAverageSupplyAverageSupplyPlanning CyclePlanning CycleSCM and e-Business Practicese-Business will enable supply chain collaboration among trading partnersManufacturerDistributors/WholesalersSuppliersRetailersCollaborative Demand PlanningCollaborative Logistics PlanningTransportation servicesDistribution center servicesSynchronized Production SchedulingCollaborative Product DevelopmentSCM and e-Business PracticesLogistics ProvidersConclusionsE-business technology will tear down the walls inside companies Will also allow companies to do joint planning and scheduling with their suppliers suppliers and customers customersThe Internet will help foster the rapid growth of dynamic supply chain trading communitiesConclusionsManufacturersWholesale DistributorsSuppliersSupplier ExchangesCustomer ExchangesLogisticsExchangesContract ManufacturersLogistics ProvidersCustomersVirtual Manufacturers Information FlowsGoods FlowRetailers