UNIT 3 Enterprise Systems(SCM)
UNIT 3 Enterprise Systems(SCM)
Planning
Plan and manage all resources required to meet customer demand for a
company’s product or service. When the supply chain is established, determine
metrics to measure whether the supply chain is efficient, effective, delivers value
to customers and meets company goals.
Sourcing
Choose suppliers to provide the goods and services needed to create the product.
Then, establish processes to monitor and manage supplier relationships. Key
processes include: ordering, receiving, managing inventory and authorizing
supplier payments.
Manufacturing
Returning
By analyzing partner data, the CIO.com post identifies three scenarios where
effective supply chain management increases value to the supply chain cycle:
Identifying potential problems. When a customer orders more product than the
manufacturer can deliver, the buyer can complain of poor service. Through data
analysis, manufacturers may be able to anticipate the shortage before the buyer
is disappointed.
Optimizing price dynamically. Seasonal products have a limited shelf life. At the
end of the season, these products are typically scrapped or sold at deep
discounts. Airlines, hotels and others with perishable “products” typically adjust
prices dynamically to meet demand. By using analytic software, similar
forecasting techniques can improve margins, even for hard goods.
IDC’s Simon Ellis in The Path to a Thinking Supply Chain defines what is supply
chain management by identifying the five “Cs” of the effective supply chain
management of the future:
Connected: Being able to access unstructured data from social media, structured
data from the Internet of Things (IoT) and more traditional data sets available
through traditional ERP and B2B integration tools.
Cyber-aware: The supply chain must harden its systems and protect them from
cyber-intrusions and hacks, which should be an enterprise-wide concern.
Cognitively enabled: The AI platform becomes the modern supply chain's control
tower by collating, coordinating and conducting decisions and actions across the
chain. Most of the supply chain is automated and self-learning.
Many supply chains have begun this process, with participation in cloud-based
commerce networks at an all-time high and major efforts underway to bolster
analytics capabilities.
As recently as 2017, a typical supply chain accessed 50 times more data than just
five years earlier. However, less than a quarter of this data is being analyzed. That
means the value of critical, time-sensitive data — such as information about
weather, sudden labor shortages, political unrest and microbursts in demand —
can be lost.
1. Material Shortages
Supply & Demand Chain Executive cites material shortages as the one of the most
significantly disrupting elements of 2021. Their article references a Hubs report
which finds that 56% of businesses experienced more supply chain disruptions in
2021 than in 2020.
In one example of how material shortages are heightening supply chain issues,
Forbes reports that, “Wineries around the country and world are reporting
shortages in packaging and production materials, while simultaneously
experiencing logistics headaches as they work to get the resources they need to
transport their wine to consumers.”
Supply chain visibility is the ability to pinpoint the location and track the
movement of individual components from raw materials and individual parts, to
the final products as they are delivered to suppliers and consumers. A high level
of visibility enables the company to know when goods will reach their destination,
and when they will be available to move on to the next step. All-too-real
examples of supply chain visibility during the pandemic appeared in shortages of
personal protective equipment and ventilators for COVID patients, as well as
initial distribution problems for the vaccines.
The ability to accurately gauge customer demand and prepare for future needs
can be critical to efficient supply chain management. It’s essential for business
profitability and growth, and ensuring strong customer relationship management.
Factors that can complicate the accuracy of demand forecasts include:
B) Seasonal variations
G) External factors
The University of Tennessee Knoxville Global Supply Chain Institute suggests that
the components of a successful demand forecasting strategy include:
D) Flexibility to find and correct potential errors and change course as needed
The Institute cites the example of Amazon for its work in demand forecasting.
They report that Amazon has sophisticated supply chain planning, which allows it
to accurately anticipate demand and efficiently move its ecommerce products to
warehouses close to customers most likely to order them. Powered by AI,
Amazon uses demand forecasting to follow through on its one-hour delivery offer.
Supply chain fragmentation is when the supply chain is spread over multiple
suppliers and manufacturers. While this may allow for some price or quality
advantages, managing the supply chain can be challenging. Apple’s iPhone may be
assembled in China from parts made in factories across the world. Motor vehicles
may be assembled in the U.S., Mexico, or Canada, with parts delivered on a just-
in-time basis from various manufacturers.
Once again, the pandemic showed how fragile the fragmented supply chain can
be when factories closed in one country, or borders were closed completely,
preventing the delivery of needed parts.
The most efficient way to overcome the challenges of supply chain fragmentation
is through better data management. Eliminate siloed systems that are not capable
of communicating with one another. Actively search for any disruptions to the
supply chain and analyze their possible impact on your operations. Use predictive
analysis to predict the best course of action based on the available data.
Tips for businesses that want to overcome the challenge of congestion at critical
ports include:
The steps to integrate technology into your day-to-day supply chain operations
include:
A) Conduct a supply chain audit. Assess your current situation and prioritize
needs.
B)Investigate possible technologies that may be able to meet your needs. Obtain
product demos to see the technology in action.
G) Update all suppliers and customers as to how the change may impact your
relationship with them.
According to Harvard Business Review, technology can benefit your supply chain
through:
Distribution management
What Is Distribution Management?
What Is a Distributor?
Other examples include a produce distributor that supplies lettuce, tomatoes and
other produce to restaurants; and a pharmaceutical distributor that supplies a
variety of prescription-controlled drugs to pharmacies.
Logistics refers to the detailed planning and processes involved with the effective
supply and transportation of goods. Logistics includes activities and processes
such as supply management, bulk and shipping packaging, temperature controls,
security, fleet management, delivery routing, shipment tracking and warehousing.
It is perhaps easiest to think of logistics as physical distribution.
Product disruptions include product recalls, packaging issues and quality control
issues. Buyer disruptions include order changes, shipment address changes and
product returns.
Many things can influence distribution management. The five most common are:
Unit perishability – if it’s a perishable item then time is of the essence to prevent
loss.
Buyer purchasing habits – peaks and troughs in purchasing habits can influence
distribution patterns and therefore varying distribution needs that can be
predicted.
Product mix forecasting – optimal product mixes vary according to seasons and
weather or other factors and
Mass:
The mass strategy aims to distribute to the mass market, e.g. to those who sell to
general consumers anywhere.
Selective:
The selective strategy aims to distribute to a select group of sellers, e.g. only to
certain types of manufacturers or retail sectors such as pharmacies, hair salons,
and high-end department stores.
Exclusive
The exclusive strategy aims to distribute to a highly limited group. For example,
the manufacturers of Ford vehicles sell only to authorized Ford dealerships, and
producers of Gucci-brand goods only sell to a narrow slice of luxury goods
retailers.
C) Security
With low price and reliability, IoT sensors are available in ample quantities;
internet penetration is massive and increasing still, data storage capacity has
increased tremendously as has processing capabilities, and AI has not only made
its entry but is also gaining more applicability.
All these have driven the rapid adoption of IoT in supply chain management.
Thanks to AI and IoT, customers today can find out where their shipments are at
any given time; the technology helps reduce costs and boost productivity,
increasing revenues.
AI saves time and money, and speeds up the entire supply chain process end-to-
end.
With lower-level decision making automated, management can focus on strategy
formulation and higher-level decisions.
AI helps in balancing supply with the demand forecast and transform the way you
view future trends in supply chain management.
It studies current patterns and predicts potential results for future scenarios –
thereby solving inefficiencies in the present chains.
8. Robotics and Automation
Supply chain can benefit significantly by adopting modern robotics, as they can
integrate with your processes safely, from remote locations.
While there is the fear of humans losing jobs, it actually only takes up low-value
tasks, enabling you to divert your attention to complex challenges and value-
adding tasks.
The employees performing lower-value tasks can be upskilled – they don’t have
to be dismissed.
Like it or not, automation is here to stay thanks to the increased productivity and
efficiency it offers.
9. 5G Networks
It is imperative that we have networks capable of handling a large number of
devices, now that thousands of IoT-enabled devices are becoming available in the
market.
There is a huge gap between the capabilities of 4G and 5G. while the former is
capable of handling 10,000 devices in a square mile, the latter can handle a
hundred times that number.
The rapid adoption of digital necessitates a robust network being in place to
enable seamless and speedy communication between machinery, processes, and
users.
5G offers better quality and also optimizes important supply chain components,
from logistics to distribution, up to warehouse management.
10. Capacity Crunch
The possibility of a capacity shortage stretched the trucking industry to its limit in
the past few years.
It was expected that this would be rectified by 2020, but then all hell broke loose
with the pandemic, and it doesn’t look like it will improve anytime soon.
With more people preferring to shop online, it is becoming challenging to deliver
their orders on time.
While revenue increase is an outcome of the increased need for transporting
goods, it has several challenges – maintaining trucks, for instance.
Truck breakdowns can have a ripple effect, especially when demand is at a high.
Companies have to become agile and diligently track their business processes to
respond to market changes.
Truck manufacturers should invest in software that automates processes and
reduces expenditure.
Trucking companies and shippers will require robust collaboration systems to sail
through the choppy waters of the supply chain