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SupplyChainManagement e Procurement cMfgWorkshopDate April27 2001Time 9 00A M 3 00P M Agenda 9 00 9 15 Introductions9 15 10 00 SupplyChainManagement10 00 11 00 e ProcurementOverview11 00 11 15 Break11 15 12 00 c Manufacturing12 00 1 00 Lunch1 00 2 30 Workshop2 30 3 00 ImplementationConsiderations CaseStudies3 00 SummaryandConclusion SupplyChainManagement SupplyChainManagement Planning implementingandcontrollingtheefficientandeffectivesourcing productionanddeliveryprocessesforafinalproduct servicesandrelatedinformationfromthepointoforigintothepointofconsumptionforthepurposeofconformingtocustomerrequirements SupplyChainManagementGoal Tocreateareal time virtualmarketplacewhereallthepeopleconnectedtoSAICareengagedininformeddecisionmakingandcustomerfulfillment Evidencedby Leadtime responsetimeisreduced revenueopportunitiesaregenerated costsarecut customersatisfactionisincreased The5majorstrategicconceptsofSupplyChainManagement CustomizationCompanieshaveachoiceandabilitytoadapttheiroperationalenvironmenttochangingmarketdemandCollaborationAllpartnersinthesupplychaindonotonlyoptimizetheiroperationsbutjointlyplan optimize monitorandexecute VisibilityAllpartnershaverealtimeinformationaboutstatusandperformanceofeachelementinthesupplychainfromcustomerstosuppliers OptimizationBestpracticesandmostadvancedtoolsbringthepartnersinthesupplychainanditstotalresultclosertoitsoptimum SynchronizationTheendresultisatotallysynchronizedsupplychainthatisentirelydrivenbythecustomer sdemand SupplyChainValuePrinciples ProvideVisibilityofInformationInventories Forecasts Orders Plans EngineeringChanges KPIsSynchronizeActivitiesOptimizedfeasiblesourcing planning pull basedtriggersPromoteResponsivenessReducetimetodetectdemand commit produce fulfillLeverageMarketMechanismsAggregatedbuyingpower auction basedbuying sellingAchieveProcessSimplificationAutomatedsteps One stepbusiness SUPPLIERNETWORK INTEGRATEDENTERPRISE DISTRIBUTIVENETWORK Information Product Service FinancialandKnowledgeFlows MATERIALS Capacity Information CoreCompetencies CapitalandHumanResources RelationshipManagement Sourcing Operations Logistics ENDCONSUMERS Source SupplyChainFaculty MichiganStateUniversity THEINTEGRATEDSUPPLYCHAIN ChallengesforSupplyChains Takeordersovertheweb orautomaticallyviaB2BOfferrichproductselectionand ortheabilitytocustomizeSourcetheorderandcommittodelivery immediately onlineServicetheorderonline includingchangesandinquiriesDeliverproductquickly efficiently profitablyBeinconstantcommunicationwithcustomersandsupplierstorespondquicklyto pullsignals tomanageinventoriesadaptquicklyandeconomicallytochangesindemand supplyoperatewithlowinventories InternetSellingCollaborativePlanning ForecastingandReplenishmentCPFRInternetVendorManagedInventoryiVMICollaborativeSupplyPlanningCSUPCollaborativeProductionPlanningCapabletoPromiseCTPe Procurement auctioning bidding Internet basedTenderingInternet basedKanbane Fulfillment CollaborativeBusinessScenarios DriversofHighPerformanceAchievement RatedbyPriority CustomerintegrationInternalintegrationTechnology PlanningintegrationRelationshipintegrationMeasurementintegrationSupplierintegration CustomerIntegration HighAchievers IdentifyandfocusonimportantcustomersUseformalvisioningprocessImplementpreplannedsolutionsDevelopresponsiveorpulllogisticalcapabilities SegmentalFocusRelevancyResponsivenessFlexibility Material ServiceSupplierIntegration HighAchievers DevelopinterlockingprogramsandactivitiesCommittosharedresponsibilitywithsuppliersPlaceemployeesatcustomer supplierbusinessfacilitiesEnterintolong termagreementsIncludesuppliers suppliersinplanning FusionFinancialLinkageStrategicAlignmentOperationalSupplierRelationshipManagement E Dashboard KeyPerformanceIndicators On TimeDelivery LeadTime Cash to CashCycle InventoryTurns OrderManagementCost PerfectOrderFulfillment OrderFillRates InventoryCarryingCost SG A IncreaseRevenueDecreaseCostImproveAssetUtilization TheE Dashboard Isaweb basedtoolthatallowsdynamicmonitoringoftheSupplyChainSolutionMonitorsKeyPerformanceIndicatorstooptimizeimportantbusinessprocessesMeasuresReturnonInvestmentAllowsdecisionmakersatalllevelsofanorganizationtonavigate organize record andanalyzestrategicbusinessinformationtodevelopinsightsandunderstandpossiblescenarioswhichwouldleadtoimproveddecisionmaking DigitalOrderFulfillmentProcessExample ERP ATP ERP ATP ERP ATP WEB ATP ERP Order ProductConfiguration DSS MES WEB PCS I dlikeProductA withFeaturesB CandD byDateE Dowehaveallthematerial Whatisthepriority Buildable Cost Whencanwedeliver Specialhandlingrequired 1stSupplier Yes I llreserveit 2ndSupplier No 3rdSupplier I llneedaconfirmationsignalfrommysuppliers 1 2 3 Customer Manufacturer Suppliers DigitalOrderFulfillmentProcessExample Wecanhaveyourproductbythisdate Yes wecan 6 8 4 Confirmed 5 7 Orderit ConfirmtheorderstosuppliersAllocatethematerialScheduleproduction ERP ATP ERP ATP ERP ATP WEB ATP ERP Order ProductConfiguration DSS MES WEB PCS Customer Manufacturer Suppliers IndustrySpecificValueChainIssues Challenges Solutions Better FasterDecisionsDriveVelocity ReceiveMaterialReleaseData ProcessOrders PlanProduction MakeIntelligentDecisions SendMaterialReleaseData AIAGWorstCase AIAGBenchmark Plantw oi2 BR1 Plantw i2LineSchedulingDecisionSupport BR2 Plantw i2Material CapacityPlanningDecisionSupport Total 2days 4days 5 5days 30min 11 5days Source AIAGManufacturingAssemblyPilotProjectFinalReport 10min 1hour 5hours 30min 6 5hours 1hour 1hour 7days 30min 7 1days 1hour 1hour 1day 30min 1 1days 1hour 1hour 4hours 30min 6 5hours Timedelaysresultinadditionalmixandvolumebuffering LegacyAutomotiveCommunications Complex Costly AdHoc Inflexible Design Mfg Customer 1 Customer 3 Customer 2 Supplier 3 Supplier 2 Supplier 1 ANX Value NetworkConsolidation Simpler LowerCost Managed Adaptable Customer 1 Customer 3 Customer 2 Supplier 3 ANX TheBusinessInternet RevisedApril42001 ANX Stakeholders ANX Usableinanysector Business government academic non profit BasedonInternettechnologies Standards based off the shelfproductsNoproprietarysolutions Varietyofconnectivity speed Dial DSL ISDN and56KB T3 Availableglobally NorthAmerica Canada Mexico U S Africa Asia Australia Europe SouthAmerica ANX Characteristics ANX CovisintRelationship Similarities Funded endorsed guidedbyBig3OEMsSpun offasseparatefor profitcompaniesButdifferentmeaningsof exchange ComplementaryRoles ANX networkserviceinfrastructureCovisint e businessprocesses applications Synergy ANX enablesfasterCovisintroll outto700 TPsCovisintisanANX customer with2connections E Procurement CommonTerms EBusiness Buying sellingtransactingorexchanginginformationviaInternetwithcustomers suppliers employeesReachesbeyondadvertisingandmarketing includescorebusinessprocessesoforderentry purchasing supplychain CRMECommerce Transaction orientedWebbasedfunctionssuchasplacingorders orderentry paymentsEProcurement Requesting Approving Ordering Receiving andPaymentofgoodsandservicesviatheInternetTradingExchanges VirtualMarketplaces Portals VerticalindustryfocusedWebsitesforbuyersandsellerstomakeofferstobuyandsell conducttransactions DotCom s MarketplaceTrends ElectronicCommerce Suppliers Bombardedwithinfo Whycompaniesareconsideringe procurement Buyers SoftwarevendorspushtheirproductsMagazineandnewscoverageabounds Coststoohigh VolumenotleveragedSignificantaccountspayableeffortUsersbuyingatretail Processesareinefficient ApprovalstakedaysorweeksUsersarewastingtime85 ofpurchasingtimespentmanagingordersToomuchre keyinganderrors Notleveragingnewtechnologies TheircompetitionisdoingitTheirintranetisunder utilizedTheyhavemultiplehome grownsystemsERPimplementationsarewindingdown Informationunavailable Don tknowwhattheyspendUsersdon tknowaboutdealsNoaudittrail TheBusinessChallenge TheProcurementProcessofToday ConfusingandSlow Multiplecommunicationchannelsandprocesses internalandexternalTimeandLaborIntensive Manysuppliers manydifferenttypesoftransactionstomanage Inaccurate Informationspreadacrossmanysystems mustleverageproductspending reducecosts anddriveprofittothebottomline FragmentedSpendPattern 38 61 513 630 1021 2315 2659 3864 3381 3246 10M 1M 10M 11M 5M 500K 1M 250K 500K 100K 250K 50K 100K 25K 50K 15K 25K 10K 15K 4 0003 5003 0002 5002 0001 5001 0005000 1 2B 1B 800M 600M 400M 200M 0 NumberofSuppliers Total SupplierGroup Purchases Numberofsuppliers Total persuppliergroup 3 8billionwith17 700 suppliers LackofEnterpriseLeverage 16 773suppliersusedonlyin1businessunit Only1supplierusedbyall 16 773 704 148 54 31 9 5 3 1 1 2 3 4 5 6 7 8 9 181614121086420 NumberofSuppliers Thousands BusinessUnitsCrossed Acrossbusinessunits EProcurementPractices TraditionalEDI ElectronicCatalogOrderingSystems InternetReverseAuctions ERFQ RFP BuyersImplementationandintegrationofend to endWeb basedself serviceprocurementsystemObjective CostReductionSuppliersDevelopmentandmanagementofelectroniccatalogandsystemfororder takingObjective RevenueEnhancementMarketMakersCreationandhostingofinfrastructurethatconnectsbuyersandsellersinaverticalorhorizontalmarketplaceObjectives CostReduction RevenueEnhancement InternetProcurement Internetoffersabreakthroughcommunicationschannel Newsoftwareapplicationsbringsimpleuserinterfaces electroniccatalogs securechannelforcollaborationtodovendormanagedinventoryanddocumentexchange CatalogsMultipleitemswhicharesearchablebyitemnumber description category orbrandwhichcanbeordered acknowledged tracked invoicedandpaidforon line Objective CostReductionAuctionsReverseordownwardauctioninwhichbuyerinvitesqualifiedsupplierstobeatthelowestprice BiddersseetheirbidinrelationtolowestbidinrealtimeObjective Lowestpossibleprice InternetReverseAuction Compaq HP Dell Sourcingteam Auctioneer IBM Suppliers BuyingOrganization CategoryselectionconsiderationsCategoriesforAuction Doesthevalueperbuyexceed 1 0million EventAuctionCriteria IsthesamegoodorserviceroutinelypurchasedIsthevalueperbuyabove 30 000 RecurringAuctionCriteria GeneralCriteria Isthemarketcompetitive i e morethan4suppliers IsthegoodorservicefairlywelldefinedLineitemsforasub categoryexceeding25canbeputintoamarketbasketLackofsupplierconstraints e g switchingcost CansuppliersaccesstheInternet Don tAuction Criteria CategoriesinvolvingjointprocessimprovementwithsuppliersHighlystrategicsuppliersofferingtrulyuniqueitems StepsinanAuctionProcess PotentialStepsintheAuctionCycle Profile Category Supply Market Identify Potential Sourcing Strategies 1stRound Supplier Qualification Setup Auction SourcingStrategy AuctionEvent FinalSelection Conduct Auction Report Analyze Negotiate withand select supplier s Customizedauctionenvironment Supplierandbuyertraining Onetimeauctionenvironmentsetup Auctionevent Post Auctionreportingandanalysis Bidconfirmationfromsuppliers EventAuctionDeliverables1 RecurringAuct

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