Integrating Backward

extending the supply chain through inter-enterprise integration

Objectives introduce and define supply chain

management provide examples of extended supply

chain management

What is a supply chain? the complex network of relationships

that organizations maintain with trading partners to source, manufacture, and deliver products

coordination of flows: material, informational, financial

Traditional supply chain

SUPPLIER

MANUFACTURER RETAILER

DISTRIBUTOR CONSUMER

Supply chain planningPAYMENT FLOWS

INFORMATION FLOWS

Supply chain planningimprove forecast

accuracy

optimize production scheduling

reduce inventory costs

decrease cycle times

reduce transportation costs

improve customer service

demand forecasting

inventory simulation

distribution planning

transportation planning

manufacturing planning

order commitment

Supply chain execution

PRODUCT FLOWS

supply chain execution

PRO

DU

CTIO

N

DISTRIBUTION

REPLENISHMENTORDER PLANNING

DISTRIBUTIONSCHEDULING

INVENTORYAVAILABILITY

PRODUCTIONSCHEDULING

CUSTOMERSERVICE

SCHEDULEDELIVERY

PICK & LOAD

ORDER ENTRY& PROCESSING

ORDER CONFIRMATION

FULFILLMENTPLANNING

CAPACITYPLANNING

FORECASTING

MPS/SOURCING

Vendor managed inventory

Manufacturer

demandtrigger

ordertrigger

demand

Customer

ERPorder

ERP/SCM ERP/SCM

Supplier

Hammer’s observations You have to integrate internally

in order to integrate externally The walls between enterprises dwarf

the walls within enterprises

CASE #1:integrated make-to-stock 85 million pounds multiple channels complex sourcing network

one SCM system nightly sales & inventory

updates high performance planning and

integrated procurement

CASE #2:continuous replenishment WL monitors CVS store-level

consumption replenishes inventory to meet

agreed upon service levels seamless inter-enterprise

integration ultimate objective:

scan-one, make-one

CVSpharmacy/

Thymol, Eucalyptol, Methyl Salicylate, Menthol, Alcohol, Sorbitol, Poloxamer 407, Benzoic Acid, Sodium Saccharin, Sodium Benzoate and FD&C Green # 3.

CASE #3:build-to-order

customer demand is unpredictable machines ship within 48 hours of order match supply with demand in real time ultimate objective:

frictionless flow of information

CASE #4: channel assembly

Distributor parts

warehouse

Distributor assembly,

configuration, and order filling

Customerdesktop

Partssuppliers

orders

ordersand

inventory levels

Manufacturer electronic warehouseorder

Summary introduced and define supply chain

management provided examples of extended supply

chain management