B2B (Back to Basics) Value Chain Management DCM/SCM/SRM ...

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Supply & Demand Uncertainty:Impact on InventoryManufacturer Distribution Center Store Backroom Store Shelf• Now we convert the trip into a journey through the value chain, frommanufacturing facility to DC to store backroom to shelf. In the entireorder to delivery cycle across the value chain, , uncertainty is caused by:• Inability to accurately model material, capacity and inventory levels• Inability to generate rapid replenishment signals• Supply and demand variabilityLT VariabilityLT = 7 days +/- 0 daysMean LT=7LT = 7 days +/- 2 daysMean LT=7LT = 7 days +/- 4 daysMean LT=7Demand = 10 (Fixed)Mean Demand = 1070 units required(0% excess)90 units required(29% excess)110 units required(57% excess)Demand VariabilityDemand = 10 units +/- 2Mean Demand = 1084 units required(20% excess)108 units required(54% excess)132 units required(89% excess)Demand = 10 units +/- 4Mean Demand = 1098 units required(40% excess)126 units required(80% excess)154 units required(120% excess)© 2003 i2 Technologies, Inc. CONFIDENTIAL 10
How to Reduce the Impact?• Improving Visibility• True sharing of information across value chain• Increasing Velocity• Rapid decision making for global optimization• Decrease Complexity• Reduce number of parts, suppliers and warehousesImproving VisibilityIncreasing VelocityControlling VariabilityPhysicalLead Time70 days70 days 70 days50 daysInfo Flow50 days25 days25 days20 daysInventories100 days75 days50 days30 daysLost Sales10-15% < 10% < 8% < 5%© 2003 i2 Technologies, Inc. CONFIDENTIAL 11
Page 2: Agenda• Current Business Environm
Page 5 and 6: Three Factors constrain success•
Page 7 and 8: Driving To The Airport With Uncerta
Page 9: Driving To The Airport WithAccurate
Page 13 and 14: Value Chain Management (VCM)Value C
Page 15 and 16: Evolution of Value Chain Management
Page 17 and 18: Supply Chain Management(SCM)
Page 19 and 20: Process, Organization, System Need
Page 21 and 22: APS is Based on Some Simple Concept
Page 23 and 24: What is Supply Chain Management (SC
Page 25 and 26: Decision Support Is Not Same As ERP
Page 27 and 28: Key Differences in Planning Capabil
Page 29 and 30: Why Invest in SCM?Business & Financ
Page 31 and 32: Why Invest in SCM?Business & Financ
Page 34 and 35: Dell ComputersHigh Velocity for Com
Page 36 and 37: Samsung Electronics (Visual Display
Page 38 and 39: Supplier RelationshipManagement(SRM
Page 40 and 41: Expand SCM into SRM !• SCM• Gen
Page 42 and 43: Decisions enabled by SRM• For Des
Page 44 and 45: Summary• SRM provides a single in
Page 46 and 47: What is Demand Chain Management?•
Page 48 and 49: Revenue and Profit OptimizationKey
Page 50 and 51: DCM Key Benefits• Decision suppor
Page 52 and 53: DCM Key Benefits• Channel Perform
Page 54 and 55: Summary• The holy grail of managi
Page 56 and 57: Summary• SCM (Supply Chain Manage
Page 58: Question & AnswerThank you!

B2B (Back to Basics) Value Chain Management DCM/SCM/SRM ...

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