BA 244: SUPPLY CHAIN MANAGEMENT

Reminders

!  Next Case: Mattel

!  LinkedIn Group: Presentation Grades for !  (1) McDonalds and Bhopal !  (2) Nike and Zara !  (3) Article 1 and Lenovo

LENOVO CASE

Lenovo

!  Fast Track !  Industry Print !  Why SAP over others? !  Return on Investment Assurance !  Top Management support !  Manage Expectations from the start !  Inter-departmental participation !  After implementation?

Information and Communication Technology (ICT) Systems

!  Automation and computerization raise productivity by allowing faster, more accurate, more consistent work than human beings can achieve alone

Information and Communication Technology (ICT) Systems

!  Supply Chain Management use may include: !  Inventory Management Systems

!  Enterprise Resource Planning (ERP)

!  Communication Systems

!  e-Procurement

Inventory Management Systems

!  Data capture for stock tracking !  Uses barcodes and radio frequency identification (RFID)

Barcodes

!  Code numbers in the form of optical bars printed on a data carrier (such as a label, tag, or card)

!  Coded information is read using a scanner, which inputs the data in an IT system and links it to related database records (e.g. price, supplier, classifications, and stock levels)

!  Receiving staff scan the barcode to transmit info the the inventory system

!  If incoming materials are packaged or containerized in standard quantities, the process can be streamlined even further

Barcodes

!  Barcodes may also be scanned for: !  Tracking deliveries in transit at key points of contact (e.g.

loading bays, delivery offices, international delivery points or customs check-points)

!  Issuing items from stock, linked to requisitions and picking lists, updating stock levels

!  Recording outgoing deliveries (or sales, in an electronic point of sale – EPOS system) to customers

Radio Frequency Identification (RFID)

!  RFID tag (transponder) is attached to or placed inside items

!  Micro-electronic circuits store data for transmission to a remote RFID reader

Radio Frequency Identification (RFID)

!  Advantages over Barcode: !  The tag does not have to be scanned or ‘seen’ by the

reader

!  it can be used for moving and ‘hidden’ items in complex storage and transport environments

!  Saves costs of manual scanning

!  Dust and other problems for barcode reading do not apply

!  Multiple tags can be read and written at the same time

Warehouse Management Systems (WMS)

!  Models proposed changes to warehouse design and layout

!  Models or maps operational processes for materials flows

!  Vehicle tracking

!  Transport Planning e.g. optimizing vehicle loads

Management Information Systems (MIS)

!  Management Information is data collected, processed and formatted to aid in planning, control, and decision-making

!  Key problem in many organizations: !  Management Information is fragmented within the business

!  Separate functional IT systems may have evolved over many years

!  ‘Islands of information’

!  Information is available to one function but not accessible to other internal stakeholders

Enterprise Resource Planning (ERP)

!  Consolidate materials, manufacturing, logistics, sales and marketing, finance, and HR planning information into a single integrated management system

!  Single database able to offer ‘real time’ information for solving a range of business problems

!  ‘computer-based systems designed to process an organization’s transactions and facilitate integrated and real-time planning, production, and customer response’ (CIPS)

Enterprise Resource Planning (ERP)

!  Benefits: !  General reduction in process costs

!  Standardization and sharing of data and practices across the enterprise

!  Quicker response times and improved customer service

Enterprise Resource Planning (ERP)

!  Caution !  Very large IT investment and commitment !  Implementation is carefully phased in over a period of 3

months to 2 years !  May not be genuinely accessible to smaller organizations

!  Leading suppliers !  PeopleSoft !  SAP !  JD Edwards !  Oracle

E-PROCUREMENT

Oracle

E-PROCUREMENT

SAP

How does you company share internal information?

Enterprise Resource Planning (ERP) II

!  ERP II software extends the system to include links with suppliers and other supply chain stakeholders

Communication Systems

Intranets

!  Networked or internet-linked computers

!  Private network usually only accessible to registered users within the same organization !  Multi-directional communication and data-sharing

!  Link remote sites and workers in ‘virtual’ teams

!  Encourage more frequent use of reference sources (e.g. manuals and policies)

!  Save cost on producing and distributing printed documents

E-Commerce

!  Business transactions carried out online via the Internet

E-COMMERCE

• Owned by Alibaba Group of Jack Ma • Alibaba has majority share of Lazada

Taobao

• Boyfriend for hire

Taobao

• Chinese online grocery business • Owned by Walmart

Yihaodian

Internet

!  The most obvious way in which the internet has supported the growth of e-commerce is in providing information in an accessible, up-to-date, and voluminous form

E-PROCUREMENT

Benefits of Automating Supply Chain Processes

!  10:1 cost ratio when comparing manual to automated processing costs due to speed

!  Real-time information to support decision making !  Reduced risk of fraud through fewer cash transactions

E-PROCUREMENT

Costs and Risks

!  High Capital Investment !  High Initial Learning Curve Costs !  Reliability issues, especially at an early stage !  Data Security Risks

E-PROCUREMENT

E-Catalogue

!  Suppliers exhibit their products, which can be viewed online or downloaded by potential purchasers

!  Which quadrant in the Kraljic Matrix uses e-catalogues?

E-Catalogue

E-PROCUREMENT

E-Tendering

!  Using e-RFQs (requests for quotation) and specifications posted online or emailed to potential suppliers. Bids can also be received and evaluated electronically

!  Improves the transparency and fairness of the tendering process: all suppliers getting the same information, operating to the same time-scales, evaluated on the same criteria, etc

!  Improving the audit trail (the recorded history of events and decisions leading up to the contract award) providing evidence in the event of a legal challenge to the contract award decision

!  Which quadrant in the Kraljic Matrix uses e-tendering?

E-PROCUREMENT

E-Tendering

• Auction • Suppliers offer goods online • Potential buyers bid competitively • All bids are open (visible to all participants, minus the names) • Highest bid wins

• Reverse Auction • Buyer specifies its requirements • Suppliers submit competitive quotes • All bids are open • Lowest bid compliant with the specification wins

• Which quadrant in the Kraljic Matrix uses reverse e-auction?

E-Auctions

Reverse E-Auctions

!  Based on zero-sum, adversarial, or win-lose approach

!  Gets in the way of collaborative supply chain relationships

!  Suppliers get the message that price is the most important factor in winning business, and may downgrade quality

!  Lowest price reverse auction processes should be used only where there is little concern about production specifications or the suppliers selected. They are not appropriate for complex products or projects requiring collaboration or considerable negotiation. (Lysons & Farrington)

Purchase to Pay Process (P2P)

UNCLASSIFIED

Requisition Purchase

Order

Budget Approval

Supplier Supplier paid Receive Invoice Input (matched to PO)

Validation Approval Requestor

E-PROCUREMENT

Electronic consolidated invoice Automatic Invoice matching vs. PO and GR

E-Payment

Purchase Order

Receipt Invoice

5 invoiced

5 posters

5 receipted

Perfect 3 way match

39

MATCHING BY QUANTITY

Purchase Order

Receipt Invoice

4 invoiced

5 flags

4 receipted

Invoice will still pay but housekeeping needed

40

MATCHING BY QUANTITY

Purchase Order

Receipt Invoice

50 cases of champagne

50 receipted 0 invoiced

GRNI – Accrual situation

41

MATCHING BY QUANTITY

!

Purchase Order

Receipt Invoice

No receipt

No PO

Invoice for 500 cut crystal glasses X

Retrospective Purchasing

42

MATCHING BY QUANTITY

E-PROCUREMENT

Electronic Funds Transfer

• EFT is the process of transferring monies between bank accounts using electronic means

e.g. Salary payments from ATM, Direct payments to suppliers • International transfers can be made using the SWIFT system (Society for Worldwide Interbank Financial Telecommunications)

Purchasing Cards

• Corporate charge cards for discretionary, ad hoc, or low-value payments

• Alternative to petty cash systems • Pre-set limit on spending

PURCHASING CARDS

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