E-Supply Chain Technologies & Applications

EBC 6230 – Winter Session 2014

Title : Inventory Management in SCM

Submitted to:

Dr. Mohamed Baymout

Prepared by:

Anil Momin – 7037681 Alaa Alharbi - 6689773 Anil Momin – 7040551

Agenda

1. Traditional SCM vs e-SCM 2. Inventory Management 3. Role of Inventory Management in SCM 4. Impact of e-SCM in Inventory Management 5. Methods for effective inventory Management. 6. Tools used for managing inventory 7. Case Study - Domino Pizza 8. Problems 9. Possible Solution 10.Conclusion 11.References

Traditional SCM vs E- SCM

• Supply chain management (SCM) is the process of coordinating and optimizing the flow of all products or service, information and finances among all players of the supply chain, from raw material provider to the end consumer.

• E–Supply chain is a system which manage inventories based on electronic Web technologies using internet.

• Difference between SCM & e-SCM- The main difference between traditional and modern supply

chain management approaches is in how the activities in the processes are interconnected.

http://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdf

Inventory Management

“Inventory management is the process

that identify the amount and the position of the goods that a firm used in their product”

http://www.barcodesinc.com/articles/what-is-inventory-management.htm

Role of Inventory Management System

in SCM • The role of inventory in the supply chain is to bridge the difference between demand and supply.

• Inventory management helps a business achieve several goals:

satisfy demand but ensuring commensurate product availability and minimize costs by capitalizing on economies of scale

• Inventory management help in creating a balance between

availability and efficiency http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-

management/

Impact of E-SCM on Inventory Management

● JIT bring more efficiency and better customer satisfaction in the organisation.

● Just in Time inventory Management: ○ Components arrives as they are needed. ○ Shorten Lead Times ○ Integrate all supplier with SCM System ○ Reduce holding cost ○ Reduce wastage.

Methods to Manage Inventory for effective SCM • Inventory Planning • Appropriate Forecasting • Supplier Assistance • Lead time should be appropriate • Monitor inventory levels • Inventory Management Systems (e.g ERP inventory

Modules like Procure to Pay and Order to Cash)

http://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.html

• Economic Order Quantity

• Reorder Point

• Safety Stock

Tools for Managing Inventory

Economic Order Quantity -EOQ

• Developed by Ford.W Harrison in 1913.

• It identify the order size.

• It minimize total ordering cost and holding cost.

• Underlying Assumptions: o Ordering Cost is Constant. o Rate of demand is known o Lead time is fixed o Only one product is involved.

Re-Order Point

• It identifies a certain point when to order inventory.

• It help orgainsation to avoid running out of stock.

• Reorder point can be identify by two method o Continuous Review System o Periodic Review System

Safety Stock

• Additional Inventory to meet average demand during lead time.

• It protects companies from any uncertainty in demand and lead

time.

• Balance the cost of stockout against the holding cost of extra

inventory.

CASE STUDY

Case Study - Domino’s Pizza

• Domino’s Pizza started its operation in 1960.

• In Sep, 2012 they achieve 10,000 outlets in the world.

• In 1999 Company sold 360 Million Pizza in USA market and

reached $3.36 Billion in sales.

• They have 18 distribution centers which cover 4,500 outlets.

http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002

• Issues in maintaining stock.

• Issues of vendor Ordering.

• Orders requirement of Outlets.

• Not following a safety stock procedure.

• Expire product inventory Issues.

Problems

Possible Solutions

• Implement a e-SCM system.

• Formulate Inventory System.

• Formulate Ordering System.

• Generate safety stock.

• Forecast requirement of inventory.

• Integrate store inventory system with sales.

Conclusion

“Effective E-SCM techniques can play vital role in managing the business efficiently and it also provide opportunity to create better business relations with outside suppliers and departments within the organisation.”

References:

EOQ: http://en.wikipedia.org/wiki/Economic_order_quantity Methods to manage: http://smallbusiness.chron.com/top-ten-ways-manage-inventory-

11099.html Reorder Point http://docs.oracle.com/cd/A60725_05/html/comnls/us/inv/roplan.htm http://en.wikipedia.org/wiki/Reorder_point Saftey Stock: http://accountingexplained.com/managerial/inventory-

management/safety-stock http://www.businessdictionary.com/definition/safety-stock.html Case Study: http://www.retailsolutionsonline.com/doc/supply-chain-management-

helps-dominos-deliver-0002

Thank You !