Supply-Chain Management

Businesses are facing pressure on the supply chain due to competition to develop new products and services at lower costs. Market shares are often limited towards expansion. this makes it necessary to find internal opportunities allowing a higher effectivity at lower cost. But Price is not the only decision supporting point of thought. Reliability, short notice supply availability and rapid response customers requirements have lead to an expantion of the quality improovement scemes.

By implementing a networked and integrated supply-chain-management system, companies can reduce costs, increase revenues, improve service, speed time to market, and use their assets more effectively. Learn more about supply-chain management.

Know the Background

Because of advances in manufacturing and distribution, the cost of developing new products and services is dropping. A general move towards harder business conditions speeds up to time to market. This has resulted in increasing customer demands, local and global competition, and increased pressure on the supply chain.

To stay competitive, companies must reinvent themselves so that the supply chain—sourcing and procurement, production scheduling, order fulfillment, inventory management, and customer care—is no longer a cost-based back-office exercise, but rather a flexible operation designed to effectively address today's challenges.

The Internet is proving an effective tool in transforming supply chains across all industries. Suppliers, distributors, manufacturers, and resellers now work together more closely and effectively than ever. Today’s technology-driven supply chain enables customers to manage their own buying experiences, increases coordination and connectivity among supply partners, and helps reduce operating costs for every company in the chain.

At this you will excell

Increasing customer demands, competition, and rising development costs are changing the face of business in the Internet economy. Markets are falling apart or marginal costs by far exceed the price of goods from an economists point of view. Companies are now attempting to reinvent themselves to meet ever-tightening lead times and higher customer expectations.

Assets were a crucial component of success in supply-chain management. In today's market, however, a customer-centric orientation is the difference between success and failure. Therefore following the new needs will help to retain a competitive advantage.

There are several points to consider when creating a customer-centric supply chain:

1. Taking orders is only one part of serving customer needs. Businesses must fulfill the promise they make to customers by delivering products and information upon request—not when it's convenient for the company to do so.
2. Time to market is a key competitive advantage. Companies must ensure uninterrupted supply, and information about customer demands and activities is essential to this requirement.
3. Cost is an important factor. Companies need to squeeze the costs from internal processes in order to make the final products less expensive.
4. Reducing design-cycle times is critical, as this allows companies to get their products out more quickly to meet customer demand.

Developing and implementing a networked, flexible supply chain that integrates all partners. Take into the team manufacturers, retailers, suppliers, carriers, and vendors and creat a seamless unit. This is the first step in meeting ongoing customer demand and maintaining a competitive edge. Taking this step is crucial for companies that seek to make better real-time forecasting decisions, reduce their inventory and associated costs, and speed the delivery of products and services. In doing so, companies transform their supply chain from a cost-based back-office exercise into a flexible operation designed to effectively address today's challenges.

The evolution of a networked supply chain involves the following steps:

1. Sharing static or dynamic information, including inventory levels, schedules, forecasts, and design documents, among companies and partners by integrating the Web with back-end systems such as enterprise resource planning (ERP)
2. Conducting transactions, including exchanging purchase orders, invoices, shipping information, and so on, through a network such as the Internet or a virtual private network (VPN)
3. Establishing business communities, such as portals, Web marketplaces, and auctions and bidding communities, to let business processes evolve and to further integrate companies

Through these changes, companies and their partners can see themselves as a single virtual organization. This creates a general strength to fight the shortening delivery times and longer payment periods. Shipping becomes on-demand and just-in-time, and the payment cycle is streamlined. As a result, companies change both how they conduct business and how quickly customers receive products from suppliers.

This puts the finger at the benfits to be expected from such expensive projects. The risks are there! Demotivated employees, cost bombs, planing failures, target jungles and other factors attack a projects task.

By implementing a networked and integrated supply-chain management system, companies can reduce costs, increase revenues, improve service, speed their products' time to market, and use their assets more effectively.

Innovative companies that implement supply-chain management techniques are realizing a number of key benefits, including:

1. Cost reductions in inventory management, transportation and warehousing, and packaging
2. Enhanced customer satisfaction through online order entry and configuration
3. Improved service through techniques such as time-based delivery and make-to-order
4. Enhanced revenues, thanks to higher product availability and greater product customization
5. Reduced product-cycle times
6. Increased market share due to shorter engineering-to-production cycle times
7. Flexibility to design, market, and retire products more rapidly
8. Ability to sustain product quality while outsourcing major portions of the fulfillment process
   

Major consultancies have taken to develop working methodologies based on clear statements about SM. We ask Supply-Chain Management really means? What do we understand by this term. An excellent example comes from Accenture who has developed seven principles of supply-chain management. They take you allong the first steps in your project definition:
1. Segment customers based on their service needs.
2. Design the logistics network based on service requirements.
3. Listen to the signals of market demand and plan accordingly.
4. Differentiate products based on actual consumer demand.
5. Strategically manage the sources of supply.
6. Develop a supply-chain-wide technology strategy.
7. Adopt measures that apply to every link in the supply chain.

This analysis is strenthend by recent case studies conducted by the Gartner Group. They predict that by 2004 we will see 90% of enterprises failing to apply supply-chain management strategies to increase their agility will lose their status as preferred suppliers. One can argue but reality is giving feeding to their results.

So if this so important - how to start such a project? Will the wrong approach lead to failure? What is black and what is white?

To begin developing a strategy for supply-chain management that is right for your organization you must first take business experts and discuss with them current developments and get an insight into the requiremnts of your customers. If you unterstand how is buying your services and goods then you can gain an advantage. take time to answer these questions:

How tightly integrated are your applications or processes with those of your partners?
How numerous are your partner relationships? Are there just a few, or hundreds?
How long-term and strategic are these relationships?
How mission-critical is the supply-chain integration (SIM)?
How cost-sensitive is your business model?

You will neeed to develop a strategy for supply-chain management that is right for your organization. The way your company connects with customers and suppliers is based on its business requirements. You may need to use different types of connectivity within a supply chain. Protect your systems by adding enough flexibility.

Focus on short returns, such as four three-month projects rather than one twelve-month project. By accomplishing goals in small batches, you can build on what you learn and are more likely to have a successful outcome to the overall project.

Never be happy with what you have, but don't strive for perfection unless it's really required. The 80:20 rule applies across the board here: Solving 80% of the issues usually takes care of the main point and allows you to address the most important areas.

Buy, don't build. Your business is not a workshop. Get quality from those who know their stuff because the cheap way ends up the expensive disaster. Take for your Hardware Systems from mayor brands such as IBM, Siemens, GE, HP, DELL but get the right consultants to choose the equipment based on reality rather than on marketing hipe.

Your company needs a scalable, flexible infrastructure that includes the network, core business systems such as ERP, and other components. Look at packaged solutions, including business applications for the underlying technologies.

Decentralize operations. That means depending on your suppliers more and more for areas outside your company's core competencies. Never put all cards on one boat. hit - sunk! This is what you get if you let yourselve drift into a one way alley.