Supply Chain Management - A Practical Solution Approach

Transcription

1 Supply Chain Management - A Practical Slutin Apprach Supply Chain Management - A Practical Slutin Apprach Abstract Sameer S Paradkar This paper starts by describing the SCM and then walks thr the different dmains that cmprise SCM value chain. The dcument lists the drivers and benefits f SCM enterprise applicatins. This papers tuches upt the SCOR methdlgy which is a best practice prcess reference mdel endrsed as the crss-industry de fact standard diagnstic tl fr SCM. This paper ges n t describe a Reference architecture fr SCM n which mre specific slutins can be build. This paper prvides a table cnsisting f SCM functinal area and prduct/vendr slutins fr that area/dmain. The apprach is t transfrm SCM enterprise s that the slutin is based n the Reference architecture and prduct vendr catalg that the white paper emphasizes. Supply Chain Management SCM Intrductin: SCM is the management f the entire value-add chain, frm the supplier t manufacturer t the retailer and finally t the custmer. SCM is a systematic apprach t manage the entire flw f infrmatin, materials, and services. Supply Chain is a huge netwrk f retailers, distributrs, transprters, warehuses and suppliers that participate in the sale, delivery and prductin f a particular prduct. SCM invlves the flws f material, infrmatin and finance in a netwrk chain cnsisting f custmers, suppliers, manufacturers, and distributrs. SCM Drivers: The fllwing list describes the drivers fr the current SCM industry at large Reduce the cst f carrying excessive Inventry Reduce the cst f gds sld t Custmer Increase the transactin prcessing speed by exchanging data in real-time Increase sales by implementing custmer requirements mre efficiently Reduce lead time frm raw material t the finished gds t the custmer Figure 1: SCM Value Chain Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 1

2 Supply Chain Management - A Practical Slutin Apprach SCM Dmains: The abve figure represents the SCM value chain. The fllwing paragraphs describe in detail each f these areas. 1) Planning: Planning is a critical part f SCM in which the cmpany develps a strategy fr managing all the resurces that are necessary t fulfill the custmer demand fr the rganizatin s prducts and services. Sales and Operatins Planning enables key decisin makers t mnitr crprate S&OP perfrmance metrics and trends. This will help cmpany t achieve real-time sales and peratins planning that will expand S&OP prcess beynd the traditinal bundaries. The cmpany will be able t balance supply, demand, and budgets and address prmtin, allcatin, cst, and custmer service level issues prfitably. The prcess helps cmpany t achieve a hlistic view f key perfrmance metrics and trends acrss perfrmance and acrss a wide variety f metrics, dimensins at varius levels f aggregatin. 2) Material Resurcing r Surcing: This prcess deals with rdering, delivery, receipt and transfer f raw materials, prducts r services t meet planned r actual custmer demand. This pertains t managing the inventry f gds and services the cmpany receives frm their suppliers, including receiving, verifying, transferring the gds and services t the apprpriate facilities and authrizing supplier payment. This requires develping a set f pricing, delivery and payment prcesses with suppliers. The resurcing prcess mitigates the cmpany s risk f engaging in business with suppliers wh fail t cmply with crprate r gvernment-set standards with centralized infrmatin. This prcess als enables an nline registratin facility fr suppliers t register and edit infrmatin, thereby streamlining the prcess and remving the barrier fr entry. The prcess als cnslidates the supplier data and enables prcurement tracking in different regins frm different suppliers with varying degrees f cst, risk and perfrmance. 3) Prductin: This part f the value chain cnsists f rder fulfillment fr anticipated r actual custmer demand fr finished gds. The prcess facilitates scheduling activities necessary fr prductin, testing, packaging and delivery preparatin. The user shuld be able t schedule prductin and visibly track available stck f raw materials and finished gds in the inventry at all lcatins including suppliers and warehuses. 4) Warehuse: Warehuse Management prvides fr the planning and executin capabilities that allw warehuse managers t better plan and manage distributin center wrkflw. It prvides upfrnt visibility int inventries t help manage and prcess rders at a faster rate. It prvides better visibility int rder prcess time and labr availability. WMS ffers push and pull based replenishments t select the warehuses best able t efficiently pick high vlume rders. Warehuse management facilitates integrated transprtatin planning and executin by leveraging dck dr delivery mdels. 5) Distributin: This can als be referred t as Lgistic Prcess. These prcesses will cnsist f prviding finished gds and services t meet anticipated r actual demand, typically including rder management, transprtatin management, and distributin management. This includes the distributin t the cmpany s distributin Partner, ther distributrs such as direct distributin t the channel partners including, IT key accunts, IT retailers and whlesalers. 6) After Sales: The final segment f the value chain defines prcesses assciated with returning r receiving returned prducts frm a custmer r ther channel partners. It als manages handling defective material received frm the suppliers. It enables tracking all the infrmatin related t prducts r services. The prcess is integrated with the finance functin t track and initiate cst settlement with custmer / vendr. This enables users t seamlessly manage reverse lgistics peratins in the same distributin centers that handle vendr receipts and custmer rder fulfillment. The prcess supprts cmpnent picks fr discrete jbs and schedules, ingredient picks fr prcess manufacturing batches, parts picks fr maintenance wrk and repair rders. Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 2

3 Supply Chain Management - A Practical Slutin Apprach Supply-Chain Operatins Reference - SCOR Methdlgy: SCOR is a prcess reference mdel endrsed by the Supply-Chain Cuncil (SCC) as the crss-industry de fact standard diagnstic tl fr SCM rganizatins. SCOR enables users t address, imprve, and cmmunicate SCM practices within an enterprise. Figure 2: SCOR Methdlgy The mdel is based n 3 majr pillars which are described belw. 1) Prcess Mdeling Pillar: Describes supply chains using prcess mdeling building blcks. The prcess pillar is fcused n: Plan: Prcesses that balance aggregate supply and demand t develp a curse f actin which best meets surcing, prductin and delivery requirement Surce: Prcesses that prcure gds and services t meet planned r actual demand Make: Prcesses that transfrm prduct t a finished state t meet planned r actual demand Deliver: Prcesses that prvide finished gds and services t meet planned r actual demand, typically including rder management, transprtatin management, and distributin management Return: Prcesses assciated with returning r receiving returned prducts fr any reasn. These prcesses extend int pst-delivery custmer supprt Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 3

4 Supply Chain Management - A Practical Slutin Apprach 2) Perfrmance Measurements Pillar: This pillar deals with measuring the perfrmance f the supply chain and cmparing it against internal and external industry gals. These perfrmance metrics derive frm the experience and cntributin f the Cuncil members. Supply chain perfrmance is fcused n: Reliability - achievement f custmer demand fulfillment n-time, cmplete, and withut damage etc. Respnsiveness - the time it takes t react t and fulfill custmer demand Agility - the ability f supply chain t increase/decrease demand within a given planned perid Cst - bjective assessment f all cmpnents f supply chain cst Assets - the assessment f all resurces used t fulfill custmer demand 3) Best Practices Pillar: After the perfrmance f the supply chain peratins has been measured and perfrmance gaps identified, it becmes imprtant t identify what activities are melded t clse thse gaps. Re-alignment is achieved thrugh a cmbinatin f the fllwing: Classic Prcess Re-engineering frm "As-Is" t "T-Be" Lean Manufacturing analysis and prcess change Six-Sigma analysis f defective prcesses Thery-f-Cnstraints analysis f systems f prcesses t elucidate rt-cause issues Balanced SCOR cards and benchmarking SCM Reference Architecture SCM sftware slutins prvide real-time systems that manage the flw f prduct and infrmatin thrughut the supply chain netwrk. They are designed t enhance SCM peratins by reducing manual tasks thrugh autmatins. This belw diagram depicts SCM applicatin landscape cnsisting f interfacing applicatins/systems. Diagram depicts an SCM Reference architecture n which mre specific architectures can be build. The Reference architecture is based n the SCM value chain dmain and SCOR prcess methdlgy. The diagram segregates the applicatins based n infrastructure applicatins (Integratin, Security, MDM) and business applicatins (Prductin Management, Prcurement Management). The blcks depicted frms the essential cmpnents f the SCM ec system. There are clse t 10 different vendrs prviding SCM applicatin catering t different functins hence there is a lt f chice when it cmes t the final list f applicatin that will make the cut fr an rganizatin but the Reference architecture shuld still hld gd. The final slutin will be a matter f mixing and matching the COTS prducts and/r Custmer Develpment applicatins based n different parameters life functinality, integratin, prcesses, budget and vendr supprt t essentially t meet the rganizatin requirements. Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 4

5 Supply Chain Management - A Practical Slutin Apprach Figure 3: SCM Reference Architecture The Majr Building Blcks f the reference architecture fr SCM are 1) ERP: ERP accmmdates a variety f business activities, including sales, marketing, delivery, billing, prductin, inventry management, quality management, and human resurce management. It is ften referred t as a back ffice system suggesting that custmers and the general public are nt directly invlved with its functins. The majr cmpnents f ERP includes a. Financial Accunting b. Prcurement c. Inventry d. Order Manager e. Pint f Sale 2) Planning: Planning deals with all planning related activities in the SCM ecsystem. This blck includes supply, demand, prductin and distributin planning functins. 3) Warehuse Management: Warehuse management prvides the planning and executin capabilities that allw warehuse managers t better plan and manage distributin center wrkflw. WM prvides upfrnt visibility int inventries t help manage and prcess rders at a faster rate. Warehuse management facilitates integrated transprtatin planning and executin by leveraging dck dr delivery mdels. 4) Claims and Warranty: CWS deals with the returns management prcess including warranty. This system manages returning r receiving returned prducts frm a custmer r ther channel partners. It als deals with handling defective material received frm suppliers. 5) Transprtatin Management: Transprtatin Management prvides transprtatin planning and executin capabilities t shippers and third party lgistics prviders. It integrates and streamlines transprtatin planning, executin, freight payment, and business prcess autmatin acrss all mdes f transprtatin. Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 5

6 Supply Chain Management - A Practical Slutin Apprach 6) Supplier Prtal: Supplier Prtal deals with cmmunicatin and crdinatin with suppliers. 7) Prductin Management: Prductin Management deals with activities related t Prductin Management including MPS/MRP and prductin rder. 8) Prcurement Management: Prcurement Management enables the cmplete prcurement prcess frm rder t payment and allws cmplete visibility f the entire prcess. It als facilitates nline negtiatin and cllabratin. 9) Order Management: Order Management handles the rder fullfillment prcess frm f SCM business. OM facilitates end t end rder t cash slutin. 10) Inventry Management: Inventry Management prvides advanced, real time inventry transactins and visibility functinality fr SCM. IM supprts inbund, utbund, and reverse lgistics, transactinal supprt and finished gds, raw materials, and wrk in prcess cmpnents tracking. 11) Master Data Management: Master Data Management acts like the Central Repsitry f the Master data. It standardizes matches and remves duplicates frm the incming data. MDM cleanses and enriches the data centrally. MDM is a wrkflw-driven prcess in which varius business units cllabrate t harmnize, cleanse, publish and prtect cmmn infrmatin assets that must be shared enterprise wide. MDM ensures the cnsistency, accuracy, stewardship and accuntability f the enterprise's cre infrmatin. 12) Integratin Infrastructure: This cmpnent deals with the integratin f disparate systems and applicatin thrugh the EAI cmpnent. Allws simplified systems integratin (Plug and Play) thrugh clearly defined cntract interfaces between applicatins. It als reduces sftware develpment csts by building n industry best practices and standards. 13) PLM Prduct Life Cycle Management: PLM manages the infrmatin, prcesses, and decisins abut prducts thrughut their. The prduct recrd includes all the infrmatin required by an SCM enterprise and its extended design and supply chain t cnceptualize, design, surce, build, sell, service and dispse f prducts. Benefits f SCM IT Slutins: 1) Imprved staff and task prductivity: Autmating varius SCM tasks frm plan-tprduce, demand-t-build and rder-t-cash prcesses thereby imprving business prcesses and leading t increased prductivity. 2) Imprved Supply Chain Netwrk: Supply chain sftware prvides cmplete, all-rund visibility thrughut the entire supply chain netwrk, a feature that cannt be achieved with manual prcesses. The rganizatin can detect and respnd quickly t market changes and quickly capitalize n new pprtunities. 3) Enhanced Cllabratin: This feature prvides the rganizatin with the ability t track the status f all interactins with its suppliers and distributrs. It als enables suppliers and distributrs access t the same infrmatin in the rganizatin. 4) Minimized Delays: All prcesses can be seamlessly crdinated and executed frm start t finish, ensuring cllabratin and much higher levels f n-time delivery acrss the bard 5) Reduced Csts: Supply chain sftware can help reduce verhead expenses in a variety f ways. 6) Increased Custmer Satisfactin: SCM enables the rganizatin t better adapt t and meet custmer demands thereby increasing custmer satisfactin. 7) Cmpliance with Regulatry Requirements Organizatins can mnitr cmpliance with the regulatry requirements. Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 6

7 Supply Chain Management - A Practical Slutin Apprach SCM Applicatin Functinality and Prduct Catalg: SCM applicatins prvide real-time analytical systems that manage the flw f prduct and infrmatin thrughut the enterprise supply chain netwrk. They are designed t enhance SCM peratins - supplier surcing, prductin planning, inventry planning, transprtatin planning, and demand planning, and s n. The SCM slutins are fragmented alng these functinal applicatins int specific spaces fr example, advanced planning and scheduling fr the manufacturing plant, demand planning fr the sales grup, and transprtatin planning fr the distributin center. The belw table list the vendrs against each f the functinal areas in supply chain netwrk Functin Applicatin Area/Sub Functin Vendr/Prduct Catalg Demand Planning Planning Supply Resurce Aggregatin fr Supply Planning SAP, Oracle Apps, JD Edward and Baan Final Demand & Supply Plan Material Resurce Planning Material Resurcing Purchasing and Inventry Raw Materials Supplier Prtal Prcurement SAP, Oracle Apps, Baan Prductin Prductin Management Inventry Finish Gds SAP, Baan, Oracle Apps, Interbiz Warehuse Warehuse Management Transprtatin Management JD Edward, JBA (System 21), Oracle Apps Distributin Order Management Inventry Management Interbiz, Oracle Apps After Sales Claim and Warranty Mgmt (Order Return & Return Lgistics) Oracle Apps Prduct Life Cycle Management Others Master Data Management Oracle, Sun, IBM Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 7

8 Supply Chain Management - A Practical Slutin Apprach Integratin Infrastructure Table 1: SCM Functinality and Prduct Vendr Mapping Supply Chain Management Vs Enterprise Resurce Planning ERP equips the cmpany t gain cmpetitive edge by integrating all business prcesses and ptimizing the resurces available. It facilitates integratin and synchrnizatin f the islated functins int streamlined business prcesses. ERP is being implemented in almst all types f rganizatins irrespective f its mde and spread f peratin. Difference Between ERP and SCM. 1) Real Time Infrmatin: Traditinal ERP systems generally d nt gather real-time infrmatin frm everywhere in the supply chain. On the cntrary, they ften cntain static, dated infrmatin nly related t subsectins f the supply chain. Getting answers frm an verladed ERP system may take hurs, whereas getting them frm a separate, memry resident, always running SCM system may take minutes r secnds. 2) One Vs Many: An ERP system accmmdates a single cmpany that is attempting t integrate its business activities, SCM almst always spans acrss multiple cmpanies and invlves nly a relatively few peple and resurces within each cmpany. One cmpany may be invlved in many supply chains fr different prduct lines r different markets fr the same prduct line. 3) Decisin Making: Real-time infrmatin thrughut the entire supply chain is needed t make crrect decisins, and SCM prducts are designed t gather that real-time infrmatin. ERP systems bradly cver sales and distributin, business planning, prductin planning, shp flr cntrl, and lgistics. This wuld seem t cver the same areas as SCM. Hwever, effective SCM enables the rganizatin t make infrmed decisins thrughut the entire supply chain netwrk. SCM ges beynd traditinal planning slutins by simultaneusly cnsidering demand, capacity and material cnstraints. SCM User Case Scenaris: The fllwing scenaris are addressed by SCM end t end wrkflw slutins and invlve several f the cmpnents highlighted in the SCM reference architecture. Prcure t Pay Order t Cash Lead t Service Frecast t Plan Demand t Build Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 8

9 Supply Chain Management - A Practical Slutin Apprach Figure 4: SCM Use Case Scenaris Cnclusin: SCM sftware is the mst fragramented grup f sftware applicatins n the planet. Each f the six majr supply chain dmains utlined earlier cnsists f dzens f specific tasks, many f which have their wn sftware. Organizatins need t track supply, demand, manufacturing status, lgistics and distributin n a real time basis. They als need t share data with supply chain partners at an ever increasing rate. Vendrs assemble these different chunks f sftware under a single rf, but n single vendr will have a cmplete package that is right fr every cmpany. The trend is t cnslidate these disparate functins int a cmprehensive SCM slutin, and this is where the Reference Architecture explained earlier prvides a fundatin n which mre specific slutins can be built based n enterprise requirements. Authr Sameer S Paradkar is an Enterprise Architect with Wipr Cnsulting Services. Sameer has 14 years f experience in IT and have wrked acrss different industry verticals. Sameer can be reached at [email protected]. Disclaimer The views expressed in this article / presentatins are that f mine and Wipr des nt subscribe t the substance, veracity r truthfulness f the said pinin BPTrends Linkedin Discussin Grup We recently created a BPTrends Discussin Grup n Linkedin t allw ur members, readers and friends t freely exchange ideas n a wide variety f BPM related tpics. We encurage yu t initiate a new discussin n this publicatin r n ther BPM related tpics f interest t yu, r t cntribute t existing discussins. G t Linkedin and jin the BPTrends Discussin Grup. Cpyright 2011 Sameer S Paradkar. All Rights Reserved. 9