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Atlanta OAUGJune 19, 1998Supply Chain Management

Tim Boyle, CFPIM, CPMAnswerThink Consulting Group, Inc.

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What is a “Supply Chain”?

— APICS (1): The processes from the initial raw material to the ultimate consumption of finished product, linking across supplier-user companies.

— APICS (2): The functions within and outside a company that enable the value chain to make products and provide services to the customers.

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Definitions of “Supply Chain”

— A strategic logistical linkage between customers and suppliers; demand and supply. (You fill in the details).

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What is linked in a Supply Chain?

— Information/data

— Communication

— Processes

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Objectives of Supply Chain Management (SCM)

— Greater efficiency; lower costs

— Enhance flexibility; agility

— Improve customer service

— Optimize the value chain

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What The Analysts Say. . .

Business Objectives Drive Supply Chain Management Investments

Improve Customer Service

Improve Order Management

Corporate Growth

Improve Asset Use

Improve Demand Planning

Improve Warehouse/Distribution Activities

Accelerate “Cash to Cash” Cycle

Supplier/Supply base Management

Strength Partnerships

Year 2000

Regulatory Compliance0.5 1 1.5 2 2.5 3 3.5 4 4.5

Source:

AMR/Logistics Management

1997 - 300 Respondents - Primarily manufacturers 1 = low, 5 = high

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SCM-specific Techniques & Technologies

— Distribution Resources Planning (DRP)

— Distributed warehousing

— Drop ship

— Multi-sourcing

— Supplier scheduling

— Information networks

— Internet

— EDI

— Integrated ERP

— The “Interprise”

— The “Virtual Corporation”

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Planning & logistics -

Approaching Zero Working Capital

Strategic Forecast

Sales Order

Demand

Vendor

Owned

Managed

Strategic

Inventory

Pull Pull

Min/Max Replenishment Common Inventory

Vendor

• Optimize Capacity

• Optimize Daily Through-put

• Optimize J.I.T. for Common Parts

Point of Use-MTO

CTO

ATO

Point of Use

Point of Use

A

ccounts

R

e

c

e

iv

a

b

le

AccountsPayableJIT JIT JIT

BANK

Distributor/Customer

Distributor/Customer

Distributor/Customer

Flow Manufacturing

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The Virtual Corporation

PartsPartsSupplierSupplier

VirtualVirtualCorporationCorporation

ManufacturerManufacturer

BuyerBuyer

ServiceServiceSupplierSupplier

Flow of GoodsFlow of Goods

Flow of InformationFlow of Information— Suppliers as Buyers, Suppliers as Partners, Manufacturers as Suppliers… unlimited

combinations in virtual corporations

Suppliers Suppliers as Buyersas Buyers

Suppliers Suppliers as Partnersas Partners

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Communication links -

Multi-directional feedback loops resultin rapid supply chain improvement

Continuous flowmanufacturing

Rules basedconfiguration

Real time availableto promise

SupplierManagement

Point ofPoint ofUseUse

Delivery onDelivery onDemandDemand

J.I.T.J.I.T.

First PromisedFirst PromisedDeliver DateDeliver Date

CorrectCorrectConfigurationConfiguration

InventoryInventory

SupplierSupplier

WIPWIP

DistributorDistributor

InterpriseVisibility

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MainframeMainframechoking thechoking the

WebWeb

DumbDumbTerminalTerminal

DatabaseDatabaseServerServer

ApplicationApplicationServerServer

PersonalPersonalComputerComputer

Th

ree-Tiered

Clien

t Server A

rchitectu

reT

hree-T

iered C

lient S

erver Arch

itecture

WebWebServerServer

ApplicationsApplications

NetworkNetworkComputerComputer

Leveraging Technology Infrastructure

Leapfrogging Technologies

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Purchasing

ProductionOptimization Advanced

Planning

OrderManagement

Export / Import and FreightManagement

Forecastingand DemandPlanning

Warehousing& Distribution

Available toPromise

ERP Engine- Oracle- Peoplesoft- Baan

Web Procurement AribaCyberSystemsConnect

Integrated SCM Applications

Thinki2Manugistics

DallasMcHugh FreemanUniteq

I2Red PepperManugistics

Factory WorksConsiliumGEMMS

VasteraRockportCSX Transnet

TrilogyIMI

Integrated Optimization:

Process PLUS Technology

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Oracle SCM-Specific Applications

— Web applications in general

— EDI Gateway

— Supply Chain Planning (DRP; multi-source planning)

— Supplier Scheduling