Tab le of Contents 1 SCM And Its Application........................................................................................................3

1.1 SCM..................................................................................................................................3

1.1.1 Planning applications.................................................................................................3

1.1.2 Execution applications...............................................................................................4

1.2 How to Deploy SCM System............................................................................................4

1.3 Critical Success Factors For SCM’s System’s..................................................................5

1.3.1 The Case of Walmart:................................................................................................6

1.4 Top 5 Reasons Why Supply Chain Fails..........................................................................7

1.4.1 Swift, Dramatic Order Cutbacks................................................................................7

1.4.2 Long Lead Times causing Delayed Delivery............................................................7

1.4.3 Overemphasis on Cost Cutting..................................................................................8

1.4.4 Inaccurate Demand Forecasts....................................................................................8

1.4.5 Lack of Risk Management Strategies........................................................................8

2 New Trends In SCM..............................................................................................................11

2.1 Improved Customer Service Levels Over Cost Cutting..................................................11

2.2 Execution Moves Ahead Of Demand & Supply Planning..............................................11

2.3 Resurgence of Contingency Planning.............................................................................11

2.4 End-To-End Partner Communication & Collaborative Execution.................................12

2.5 Big Data Is Becoming Mandatory..................................................................................12

1

2.6 The Case of Coca Cola....................................................................................................12

3 SCM in Services V/S Manufacturing....................................................................................13

3.1 Differences According to different Components of SCM:.............................................14

3.1.1 Inputs.......................................................................................................................14

3.1.2 Logistics...................................................................................................................14

3.1.3 Finished Goods........................................................................................................14

3.1.4 Optimization............................................................................................................15

4 SCM Application in Pakistan................................................................................................15

4.1 The Challenges faced by Pakistan’s Best Restaurants:...................................................15

4.2 The Solution:...................................................................................................................16

4.3 The Benefits:...................................................................................................................16

4.4 Restaurant Operations.....................................................................................................16

4.5 Different Operations which a MICROS POS Performs:................................................17

4.5.1 Alert Manager..........................................................................................................17

4.5.2 Kitchen Display System..........................................................................................17

4.5.3 Guest Service Solution GSS....................................................................................18

4.5.4 Table Management Solution....................................................................................18

4.5.5 Digital Signage and Menu Boards...........................................................................18

4.6 Successful Integration of MICROS:...............................................................................19

2

1 SCM AND ITS APPLICATION

1.1 SCM

Supply chain management (SCM) is the process of producing and managing materials,

information, and finances as they move in a process from supplier to manufacturer to wholesaler

to retailer to consumer. Supply chain management involves coordinating and integrating these

flows both within and among companies. It is said that the ultimate goal of any effective supply

chain management system is to reduce inventory (with the assumption that products are available

when needed). As a solution for successful supply chain management, sophisticated software

systems with Web interfaces are competing with Web-based application service providers (ASP)

who promise to provide part or all of the SCM service for companies who rent their service.

Supply chain management flows can be divided into three main flows:

The product flow

The information flow

The finances flow

The product flow includes the movement of goods from a supplier to a customer, as well as any

customer returns or service needs. The information flow involves transmitting orders and

updating the status of delivery. The financial flow consists of credit terms, payment schedules,

and consignment and title ownership arrangements.

There are two main types of SCM software:

1.1.1Planning applications

Planning applications use advanced algorithms to determine the best way to fill an

order.

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1.1.2Execution applications.

Execution applications track the physical status of goods, the management of

materials, and financial information involving all parties.

Some SCM applications are based on open data models that support the sharing of data both

inside and outside the enterprise (this is called the extended enterprise, and includes key

suppliers, manufacturers, and end customers of a specific company). This shared data may reside

in diverse database systems, or data warehouses, at several different sites and companies.

By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a

company's clients), SCM applications have the potential to improve the time-to-market of

products, reduce costs, and allow all parties in the supply chain to better manage current

resources and plan for future needs.

Increasing numbers of companies are turning to Web sites and Web-based applications as part of

the SCM solution. A number of major Web sites offer e-procurement marketplaces where

manufacturers can trade and even make auction bids with suppliers.1

1.2 How to Deploy SCM System

Implementing a strategic, integrated supply chain requires considerable effort on the part of the

initiating company. This change often is a result of external pressures faced by the company,

such as increased global competitors, an industry consolidation reducing the number of surviving

companies in the industry, a switch to e-commerce (including e-purchasing and e-sourcing), or

major technological changes within the industry. Typically, a company begins by analyzing its

current supply chain. A small cross-functional team leads the effort, examining all facets of the

system to determine where improvements are possible and necessary. Most companies begin by

looking at the parts of the supply chain, the internal dimension, in which they have the most

control: manufacturing or service processes, distribution processes, and/or retail capacity and the

time and costs of sourcing, producing, and distributing products or services. Improving

performance in these areas has been the priority of many supply chain management initiatives.

For a typical manufacturer, this means investing in automation and sales and operations planning

1 http://www.supplychainmusings.com/2009/04/business-functional-deployment-strategy.html4

technologies. For distributors and retailers, the priority has focused on supplier relationships,

warehouse management, and transportation management solutions.2

1.3 Critical Success Factors for SCM’s System’s

In today’s economic climate, no manufacturer can afford to fund any supply chain management

(SCM) project that fails to deliver results.

Fortunately, some best practices exist to guide companies through these projects and increase the

chances of success.

This white paper describes seven success factors for today’s SCM projects, which have been

identified by seasoned executives with decades of experience in the field.

These factors correspond closely to the 10 success factors for IT projects identified by The

Standish Group during 25 years of analyzing IT project success and failure.

Some are tried-and-true project management basics, such as “find an executive sponsor.” Others

may be surprising, such as “stay flexible.”

These seven success factors for SCM projects are:

1: Set realistic goals

2: Make an effective plan

3: Find a strong executive sponsor

4: Assemble good resources

5: Stay flexible

6: Allow for testing

7: Promote user buy-in.

2 Operations Management, Fourth Edition, Raid and Sanders 5

1.3.1 The Case of Walmart:

1.3.1.1 The key to Wal-Mart's supply chain

Wal-Mart is committed to improving operations, lowering costs and improving customer service.

But the key to retailer Wal-Mart's success is its ability to drive costs out of its supply chain and

manage it efficiently. Many supply chain experts refer to Wal-Mart as a supply chain-driven

company that also has retail stores. Wal-Mart's company philosophy ('The Wal-Mart Way') is

to be at the leading edge of logistics, distribution, transportation, and technology. The Wal-Mart

business model would fail instantly without its advanced technology (Wal-Mart has the largest

IT systems of any private company in the world) and supply chain (Wal-Mart has made

significant investments in supply chain management).

1.3.1.2 Wal-Mart's business model and competition

Wal-Mart's business model is based on a low price strategy and low transportation costs allow it

to sell its products at the lowest possible prices. In return for its strategy (Everyday Low Price

Strategy), Wal-Mart's suppliers - both large and small - either break even or make profit

supplying at Wal-Mart's stores. But the real winners are Wal-Mart's customers (approximately

175 million every week) who save thousands of dollars buying at low prices. Since Wal-Mart

stores began selling groceries almost three dozen regional grocery suppliers have struggled to

match or simply run out of business. Last year, Wal-Mart's annual sales were $350 billion and it

had more than 7,000 stores, 120 distribution centers and operations spanning 15 countries.

Nearly two million employees at Wal-Mart focus on cost, customers and continuous

improvement on a daily basis. Other major retailers like Target and Home Depot have emulated

Wal-Mart's logistics strategies and tactics.

1.3.1.3 Wal-Mart's one-store-at-a-time, RFID and just-in-time

distribution approach

Every Wal-Mart store operates like a small company. Store managers are trained to manage one

store at a time, one department at a time, and one customer at a time. Decisions are made by

store teams to make the individual stores operate at its best with superior in-store execution.

With established vendor partnerships with top manufacturers, Wal-Mart has implemented

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advanced logistics solutions like RFID (radio frequency identification). RFID solutions help

maintain lower costs, identify out-of-stocks and increase sales. Distribution centers instead of

warehouses, automated replenishment and cross-docking technology also reduce inventory

carrying costs.3

1.4 Top 5 Reasons Why Supply Chain Fails

Managing your supply chain can feel like herding cats. Just when you think you have a straight

chain to efficiency, there is a kink.

The Reasons for the failure of Supply Chain are as follows:

1.4.1 Swift, Dramatic Order Cutbacks

The bullwhip effect can be felt through every inch of your supply chain. A rapid, drastic cut in

orders due to an anxiously anticipated change in demand creates a ripple effect that reverberates

throughout your supply chain. And once this wave of cutbacks begins, it cannot be stopped.

The harshest results are often at the ends of your supply chain, those companies that provide the

bits and pieces that make up the final product. In some extreme cases, these ordered cutbacks can

mean layoffs and plant closures for smaller suppliers and manufacturers. Remembering how

every slight change can affect each link in your chain will help you prevent a bullwhip effect.

1.4.2   Long Lead Times causing Delayed Delivery

It seems like parts of every product are made in China these days. It may be cheaper to

manufacture in the land of a billion people, but what does it cost you along the way? A lot can

change in the 40 to 50 days you are waiting for your shipment to arrive. And once it’s in the

middle of the ocean, you can’t send it back.

Beyond long lead times, trouble at sea can double your expected delivery date with lost cargo,

capsized freighters or even pirates. Try explaining to your clients their orders will be delayed

because the shipping vessel was robbed by pirates – it will probably go over as well as, “My dog

ate my homework”. Your clients are likely to look locally while you are waiting another 2

3 http://supply-chain-case-studies.blogspot.com/7

months for their shipment to arrive. Compare and contrast the benefits of lower manufacturing

expenses to long or even longer lead times.

1.4.3Overemphasis on Cost Cutting

Lean manufacturing is the latest trend to hit the manufacturing industry and every organization is

looking into it. However, overemphasizing cost cutting can have detrimental effects your supply

chain. Removing the extra slack in your supply chain may expose your broken links, but it may

also remove the flexibility you need to be responsive to slight changes in orders, demands and

products.

Cost cutting is at the top of every executive’s mind today; remember there is a fine balance

between trimming the fat and cutting the muscle of your supply chain – don’t skimp on what you

need.

1.4.4 Inaccurate Demand Forecasts

Your demand forecasting model can determine whether you have a shortage, a surplus or a

smooth running supply chain engine. One unusual, out-of-scope sale embedded in your historical

data can throw off your demand forecasting accuracy for years.

Without a scrutinizing eye on actual usage and unusual activity, the probability of an accurate

demand forecast is as likely as winning the lottery. To ensure accuracy remember to exclude

unusual activity that is not likely to occur in the future and keep your eyes peeled for trends that

can change demand.

1.4.5Lack of Risk Management Strategies

Risk is inevitable. It is up to us to determine how we adapt to the unexpected changes and make

the most of every situation. As mentioned above, drastic order cutbacks can happen in every

industry; trends and demands change daily. When faced with these obstacles it is better to have a

proactive plan in place, than a reactive, knee-jerk that can cause more damage than the problem

itself.

8

Having a solid risk management strategy can help you mitigate common failures. A well-planned

and executed strategy can help you minimize and control the impact unexpected events can have

on your supply chain, while maximizing the opportunities they can present.4

4 http://www.softwarethinktank.com/articles/%EF%BB%BF-top-5-reasons-supply-chains-fail/9

5 http://www.scdigest.com/Kw_search.php?keyword=Top+Supply+Chain+Disaster

5 10

2 TRENDS IN SCM

Supply chain technology continued to evolve throughout 2012 as companies realize that a highly

visible supply chain is necessary for success in today’s business climate. Of course, overall IT

trends such as the cloud, big data and mobile are impacting the supply chain sector just as they

do other sectors.

But there are other trends specific to supply chain that came to the forefront in 2012. Based on

my discussions and work with clients, here are the five trends that truly shaped supply chain this

year.

2.1 Improved Customer Service Levels Over Cost Cutting

This was the foremost trend during 2012 and will continue through 2013. Supply chain costs

have been continuously cut since the recession began four year ago but customers have begun

pushing back on the cost cutting measures that negatively affected service levels. Companies are

now focusing on how to improve service levels while simultaneously decreasing costs.

2.2 Execution Moves Ahead Of Demand & Supply Planning

Demand and supply planning has been rightly focused on as this is a critical point for supply

chain success. However, the ability to execute on the plan when forecast errors occur - a constant

issue - results in the need to focus more and more on execution. Forecast errors, or the difference

between what is planned and what occurs, are driven by every day issues of “abnormal” supply

chain events that can cause major disruptions. The ability to react efficiently and effectively is

critical to every supply chain and primarily relies upon end to end supply chain process visibility

at the transaction level. This was a theme that came up again and again in 2012.

2.3 Resurgence of Contingency Planning

As supply chains have gotten leaner, the reduced inventory levels require the ability to react

quickly when abnormal events occur or stock outs will increase exponentially. Because these

events are occurring more frequently, responding to them in an effective manner is a must or

companies will face severe revenue losses. The result is that we have seen resurgence in

contingency planning this year to ensure that supply chain functions continue even in emergency

situations. More importantly, companies want to know how well they performed against their 11

plan and if the plan was truly followed. When a crisis occurs, individuals have the tendency to

find “work around” to resolve the issue as quickly as possible. Companies are focused on

developing contingency plans, executing those plans and understanding in real time if their plans

are effective.

2.4 End-To-End Partner Communication & Collaborative Execution

All partners in the supply chain from retailers through raw material providers must constantly

collaborate on what events are occurring, the data behind those events and how they can execute

as a unified group to respond to the challenges as they unfold. Trading partners in 2012 are now

acting in a concerted manner based on transparent information to resolve issues when they

happen. Solving a problem by pushing costs to another supply chain partner is an antiquated

proposition as companies realize that cost shifting is not a sustainable, competitive solution.

2.5 Big Data Is Becoming Mandatory

Big data was the big IT story in 2012. And combining the data of multiple supply chain partners,

turning that data into information and being able to react and execute accordingly requires a lot

of data. Big data solutions combined with complex event processing (CEP) solutions are being

used more than ever this year to digest the enormous magnitude of available data and turn it into

executable actions. Leveraging these tools with supply chain visibility solutions will quickly

become a “must have” rather than a “nice to have” as companies utilizing these tools set the bar

for the new normal in supply chain performance.

Supply chain technology is helping to transform the way companies do business with consumers

and each other. If there is one thing these five trends have in common it is that having constant

feedback and control over supply chain functions is key to doing business in today’s ever-

changing environment. For this reason, these trends are likely to continue into 2013 and beyond.6

2.6 The Case of Coca Cola

CCE is one of the world’s largest marketers, producers and distributors of Coca-Cola products.

CCE buys concentrate from The Coca-Cola Company and combines it with other ingredients to

6 http://www.scmr.com/article/five_supply_chain_trends_that_shaped_2012/12

create some of the most popular beverages in Belgium, Great Britain, France, Luxembourg, the

Netherlands, Norway and Sweden.

As part of its Genesys program, CCE set out to deploy a new supply chain management solution

at all 17 of its European plants. The new system would replace and automate many of CCE’s

supply chain processes and required new skill sets to ensure the required speed of deployment.

CCE needed a partner to help deliver this new SAP-enabled business transformation. This would

involve not only delivering a technology solution, but also training users on the new processes to

ensure the full benefits were realized.

CSC was selected because it has combined a strong ‘front office’ business transformation and

change management consulting capability with a ‘back office’ technology delivery capability for

CCE since 2008. Prior to Genesys, CSC had already been supporting CCE’s applications with

SAP, including order processing, manufacturing, financial transactions, human resources,

procurement and other related processes.

The Genesys program is an integrated SAP Enterprise Resource Planning (ERP) solution that

will replace CCE’s legacy systems in the processes of “order to cash,” “requisition to payment,”

and “record to report.”

Genesys will allow CCE to shorten cycle time in these processes and be more productive. It will

also help bring more visibility into the business and improve decision making.7

3 SCM IN SERVICES V/S MANUFACTURING

The end goal of any company is a satisfied customer. The process of locating, obtaining and

transporting the inputs needed to do this is the core function of supply chain management.

Supply chain design in the manufacturing industry requires a great deal of focus on physical

product and a broader supplier base, while service firms typically have little need for physical

inputs other than office supplies, and often work with a much smaller group of suppliers.

7 http://www.csc.com/application_services/success_stories/78846-coca_cola_supply_chain_management_success_story

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3.1 Differences According to different Components of SCM:

3.1.1 Inputs

Both the service and the manufacturing industries require an input of labor to complete the

processing necessary to satisfy their promise to the end customer. Additionally, companies in

both industries require inputs from suppliers of various types. Finally, both industries require

capital investment in equipment that allows their employees to do their work. The primary

difference is that most of the cost of manufacturing labor is involved in procuring, transporting

and manipulating physical material, while almost all service industry labor is expended on

manipulating information and developing relationships. Because of this difference, capital

investments in machinery and equipment are typically much higher in the manufacturing

industry.

3.1.2 Logistics

Traditional manufacturing supply chain management focuses on logistics in terms of moving

physical material from one location to another. The size and weight of objects being shipped and

the distance from the supplier to the manufacturing facility can play a major role in the cost of

the product. In service organizations, particularly in the financial sectors, these factors are

irrelevant because no physical product is moving except perhaps a few sheets of paper. While the

manufacturing industry tries to negotiate better shipping rates and fill containers with product to

reduce unit cost, the service industry upgrades servers and installs new software to speed the

flow of communication, thereby reducing the labor costs necessary to produce a finished

product.

3.1.3Finished Goods

Traditionally, a finished good is a product that has been completely transformed from a raw

material form to a form that is ready to sell to the customer. It's a physical unit that has been

assembled, tested and packaged, and is now sitting on a shelf at a warehouse or a store, ready to

be sold. In the service industry, a finished good equals a closed file. The loan has been booked,

the home sale has closed, or the class has been completed, leaving no physical evidence except a

few sheets of paper. However, the goal of either finished product is a customer who is satisfied

with the product or service she paid for.

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3.1.4 Optimization

In a manufacturing organization, optimization of the supply chain is accomplished primarily by

improving speed of delivery and reducing cost. Companies work to reduce physical bottlenecks

and inventory, and negotiate better pricing on raw materials. The main way to speed production

is to find a faster way to move or manipulate the components. A research paper published by

Eastern Illinois University points out that the main drivers of optimization in a service model are

relationships and information flow. By building partnerships with companies whose strengths

complement its own, a corporation can reduce costs. By eliminating virtual bottlenecks caused

by duplicate approval loops or other intangible delays, a service company can realize the same

goal as the manufacturing company: a lower-cost finished product, delivered to the customer

more quickly.8

4 SCM APPLICATION IN PAKISTAN

SCM is very rare in Pakistan in Service Industry. After a research we found out that a

multinational company MICROS is working for SCM application in Pakistan.

MICROS provides comprehensive restaurant and food service outlet point-of-sale (POS),

enterprise and consumer faced solutions that can be scaled to meet the needs of every type and

size of restaurant, whether you operate a single restaurant or hundreds. Our modular restaurant

enterprise solutions can easily be expanded as required, and can fit the demands of quick-service,

fast casual, and full-service restaurants.

4.1 The Challenges faced by Pakistan’s Best Restaurants: The typical business challenges full-service restaurants face today are how to increase table turn-

over and revenue while optimizing and streamlining the business organization, workflows and

resource planning. In today’s highly competitive restaurant industry, efficient inventory

management and seamless adoption of new technology are key to lowering costs and increasing

productivity. At MICROS, they provide a comprehensive suite of solutions that cater specifically

to the needs of full-service restaurant businesses.

8 http://smallbusiness.chron.com/differences-supply-chain-designs-manufacturing-industry-vs-service-industry-14610.html

15

4.2 The Solution: Customized to a restaurant’s unique business requirement, MICROS puts together a solution that

perfectly fits your business needs. Whether you need a pure POS solution or an integrated

enterprise management solution, if you prefer a local or central installation or a mixture of both,

or even a fully hosted solution – MICROS can pick from a wide range of solutions the right mix

that perfectly addresses your business needs. Choose from a wide range of tools that speed up

your food preparation process while keeping quality high. Increase table turn with powerful table

management solutions and drive sales with targeted marketing activities. MICROS’s end-to-end

portfolio encompasses Point-of-Sale System solutions, inventory management solutions, table

management solutions, labor management solutions, CRM/loyalty solutions, reporting tools and

much more.

4.3 The Benefits: Improved operational efficiency

Improved enterprise business intelligence and decision support

Increased guest satisfaction and loyalty

Increased sales

4.4 Restaurant Operations Managing business operations is a tedious responsibility that restaurant owners face day-in and

day-out.  No matter the size of the restaurant, MICROS has devised a product line of real-time

solutions which aim to alleviate time consuming operational procedures.  MICROS’s products

help restaurateurs to manage business conditions, customer preferences, and wait-times all while

reducing waste, improving speed-of-service and order accuracy, and upselling or marketing

events and products.  These solutions ensure that losses will be prevented, whether in the form of

wasted food or irritated customers, and resources will be maximized to their fullest to result in

increased revenues. 

4.5 Different Operations which a MICROS POS Performs:

4.5.1Alert Manager

MICROS Alert Manager allows operations to manage by exception. The system monitors

conditions and compares them to established standards. Exceptions are immediately identified

and a notice or alert is sent to the pager, PDA, cell phone, or email of those who need to know.

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The MICROS Alert Manager provides exciting new integration with MICROS products and the

on premise paging and communications solutions made available by JTECH, a MICROS

subsidiary.

4.5.2Kitchen Display System

The MICROS Kitchen Display System is like having a second expeditor in your kitchen. It

provides highly visible, real-time information to manage and control kitchen efficiency, which

drives customer satisfaction. Mounted conveniently in your kitchen or food prep area, this

seamlessly integrated, intuitive, graphical software application displays food orders for

preparation and monitors the timing of orders for your "Speed of Service." MICROS KDS also

provides feedback about the status of each table and captures service times for management

reporting.

Fully integrated with the MICROS 3700 POS System, KDS runs on standard PC hardware using

color touchscreen monitors or color monitors and bump bar. By managing food preparation,

KDS provides a higher level of management control and customer service.

Key Features:

Order Preparation

·         Highlights alert orders in yellow or red to indicate an order has exceeded expected prep

time

·         Displays each order in either List Mode or Chit Mode and monitors time to prepare

·         Allows user to define preparation times for both appetizers and entrees

·         Intuitive icons display Rush Order, VIP and Void status

·         Display features such as All Day, Order Done, and Order Recall make information

readily available

Speed of Service Displays

·         View the status of each table in the restaurant at a glance

·         Table buttons change color to indicate

·         Table Vacant

·         Guest Seated

·         Kitchen Working on Order

·         Entree Served

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·         Order Late

Reporting and Statistics

·         Captures service times for different courses at the various prep stations

·         Generates real-time reports on kitchen performance

4.5.3Guest Service Solution GSS

As a module of the complete MICROS Restaurant Enterprise Solution (RES), the Guest Services

Solution (GSS) provides restaurants with a single-source, all-in-one guest marketing system that

helps you build loyal and repeat customers. Implement a frequent-diner program and track guest

preferences to build a loyal following that comes back more often. Sell gift certificates or gift

cards and easily track redemption. Use MICROS GSS to bring customers in during off-hours by

establishing promotions at certain times of the day or certain days of the week.

4.5.4Table Management Solution

MICROS Table Management is simple, easy-to-use software that seamlessly integrates customer

preferences, seating capacity, and available staff, while effortlessly managing the customer’s

dining experience. Capturing time-sensitive guest demands, MICROS Table Management puts

you in complete control from the moment the guest is greeted until the next diner is seated.

4.5.5Digital Signage and Menu Boards

One of the latest tools to emerge in the quick-service market is the digital menu board. A fully

integrated feature of the MICROS point-of-sale (POS) system, this novel technology displays

menus while simultaneously drawing customers’ attention to other information, like current store

promotions. While the quick-service market becomes increasingly aware of the benefits of

digital versus traditional menu boards, restaurant owners seek a solid solution that will improve

operations and boost customer experience. Typically sold as an added module or an interfaced

product, MICROS includes the Digital Menu Board functionality as a core feature in its POS

solutions. So when you’re ready to deploy this innovative technology for your business,

MICROS is ready with Digital Signage & Menu Boards.9

4.6 Successful Integration of MICROS: MICROS is currently working in different five star hotels of Pakistan like:

Pearl Continental

9 http://www.micros.com/Solutions/ProductsAM/DigitalSignageAndMenuBoards/18

Marriot

Sheraton

Hotel Serine

Furthermore it is also working successfully in fast-food chains like:

Dunkin Donuts

KFC

M.C. Donald’s

Pizza Hut

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