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Executive Summary In today’s rapidly changing business environment, ever-greater demands are being placed on business on every industry, such as to provide products and services quicker, with greater added value, to the correct location, with no relevant inventory position, etc. However, customers are more sophisticated by wanting more quality, design, innovation, choice, convenience and service, and they want to spend less money, effort, time and risk.
Hence, every business has to deal with highly competitive situation in order to survive; Supply Chain Management (SCM) becoming the main topic for improving efficiency and satisfy customer’s need. The supply chain of a company consists of different departments, ranging from procurement of materials to customer service. Supply chain management means transforming a company’s “supply chain” into an optimally efficient, customer-satisfying process, where the effectively of the whole supply chain is more important than the effectiveness of each individual department.
Cost involved in the Supply Chain operation and process can be significant influencing the satisfaction of customers and the whole chain efficiency. The following assignment I will be focus on the total cost concept in operating supply chains of my selected firm. Introduction Every business organization needs to delivers products to its customers. Traditionally we would have described these products as either goods or services. Then manufacturers like Sony makes electronic products or Toyota makes cars these kinds of tangible goods, while the Vodafone makes mobile or Internet service provide the intangible services.
In reality, this view is rather uncertainly, some products are really a complex package that contains both goods and services. The organization that I have chosen is one of the largest computer manufacture and IT consulting company that contains both goods and services. The IBM Company. IBM is one of the world large computers and IT service provider company, it provide the computer system and almost all industry information technology service and IT related solutions for its customers.
Behind their integrated management of the company, its supply chain management have involve much effort on improvement in order to be successful, the management processes start from Procurement, product lifecycle management, supply chain enterprise application, operation, planning, strategy, visibility, complex supply chain optimization, logistics business transformation to IBM asset management solutions. Logistics and Supply Chain Management Total Cost Concept
Total Supply Chain Management Cost is considered to be one of the most difficult measurable costs in business management, which is defined as the fixed and operational costs associated with the source, plan, strategy and delivery within the supply chain processes. It is a cost takes into account of procurement, order management, inventory carrying, planning or finance and information technology costs. From the Supply Chain Council’s Operations Reference by Scott Stevens stated, “It is estimated that reducing the cost of your supply chain by 1 percent can be the equivalent of increasing revenues from 4 to 12 percent. It tells the cost reduce from supply chain can make a significant large profit of company. Supply chain operations provide organizations with the ability to recognize operational improvements across many areas of their value chain. IBM comprehensive supply chain management address every phase of the supply chain, from design to source to plan to build to distribute. It has one of the broadest portfolios of alliances with leading and emerging supply chain vendors, such as SAP, Dassault Systems and i2 Technologies.
As a single source for supply chain management, IBM Supply Chain Management Services can help you address the full supply chain spectrum and help move companies from a lagging to a leading position in their industry Procurement IBM Procurement focuses on those business pressures that are driving companies to improve the effectiveness of their procurement operations to achieve better advantaged pricing, greater efficiency, tighter control of spending and improved service levels.
This service area leverage IBM’s strength and experience in procurement to enable IBM’s clients to better manage their enterprise spend. The IBM supply chain management services comprise a full range of procurement offerings, including: 1. ) Procurement strategy and opportunity assessment – Centralize the strategic sourcing and enable association such as spend analysis, process re-design and governance and compliance. Its deliver assignments focused on: -Procurement strategy -Opportunity assessment -Accelerated sourcing -Process reengineering -Strategic sourcing -Supplier relationship management 2. Strategic sourcing – Analysis and prioritization of key commodities for: Aggregation of spend and contract leverage to identify optimal spend strategy Implementation of governance and controls to realize the identified savings 3. ) Application implementation – For e-procurement and return on investment or benefits realization: -Package selection -Software integration -Content management -Supplier management It is also an integration partner for Ariba, SAP, Oracle, i2 and Perfect Commerce. 4. ) Managed solutions -Procurement business transformation outsourcing -Packaged services and technology for procurement services 5. IBM Leveraged Procurement Services – This is part of an important category of services that offers the delivery of standardized business processes, applications and infrastructure over the network via an e-business on demand environment. IBM Leveraged Procurement Services is designed to provide an affordable solution with low risk and minimal investment for managing indirect spend. This offering combines the best of Process, Hardware, Software, Integration and hosting services, Advantaged pricing from pre-established supplier relationships and Financing all into a single end package that can be adjusting scale and customize.
Product lifecycle management Product Lifecycle Management (PLM) enables collaboration for innovation whether for industrial companies such as aerospace, auto or electronics or for medical devices, consumer products, and food and beverage. Product design collaboration applies to both customers and suppliers. It is also across functional boundaries with a company, such as marketing, sales, product design and after sales services. Every organization can also make cost reduction, accelerate time-to-market, and help improve new product introduction success with IBM’s PLM services.
PLM combines software, services and consulting to enable the integration of a company’s product content across business functions and processes. The PLM solution manages the development and support of complex products and services throughout the entire lifecycle, from product design to product build to post-sale service. Product lifecycle management services that offer transformation services to assist companies in: -Market planning -Product development pipeline management -Product portfolio management -Product change management -Component/platform/asset commonality
The techniques used with PLM transformation services include effective engineering and procurement integration, product development process re-engineering, and digital engineering best practices. PLM is an integral part of the depth and breadth of IBM Supply Chain Consulting and Systems Integration Services which helping clients realize significant benefits. It has more than twenty years of PLM experience with a comprehensive offering portfolio of end-to-end solutions including services, hardware and software. IBM’s own research and development experience is made available to their clients.
With over 3,000 researchers around the world to provide first-of-a-kind solutions delivered to clients. There is considerable added value for their customers on IBM PLM Services by the PLM Software Solution Provider and their customer work together. This includes deep PLM process and industry knowledge from IBM and PLM independent software vendors (ISVs) added to customer knowledge and experience base, accelerated deployment and solutions implementation with best practices adapted to client company and products, and reduced project risk. Supply chain enterprise applications
Supply chain enterprise applications assist clients with the integration of enterprise resource planning (ERP) solutions across their supply chain to allow seamless exchange of information. ERP vendors are continuing to expand the breadth of integration through the supply chain. The main purpose of supply chain enterprise applications is to help existing ERP clients who are expanding their existing ERP solution and new clients about to integrate an ERP across their supply chain. And also these services cross all industries and include SAP, Oracle and PeopleSoft as strategic vendors.
The full rage of enterprise application offerings included: Package selection – Assist clients in determining which ERP package is best achieve their requirements. Business process improvement, design and implementation – To assist customers in the implementation of their ERP solution. These services included: -Accelerators -Standard tools -Sample deliverables and solution ready for use and accessible These tools also contain templates for process and system re-engineering to accelerate the ERP delivery and expected benefits.
In addition to help reduce costs and shrinkage existing systems as much as possible. Training and learning services – Educating customer’s knowledge of their ERP solution through multiple types of training techniques. Version upgrades – Bring customers up to the latest version of their ERP solution. The upgrade may include extending the capabilities of their ERP solution with new modules. Systems Synchronization – Synchronizing the multiple forms of ERP systems across the entire enterprise onto a common version of the software to optimize functionality and minimize errors caused. Supply chain operations
Supply chain operations provide organizations with the ability to recognize operational improvements across many areas of their value chain. The focus areas range from customer service, product quality, cycle time, asset utilization, and operational flexibility to finance and promotions management. The full range of operations included: Operations improvement and transformation – Design and implement processes across all elements of a company’s extended supply chain, which including: -Supply/demand integration -Manufacturing -Customer fulfillment -Inventory management -Order management -Sourcing
Asset management – Solutions to manage the maintenance and repair operations for an enterprise’s capital assets, including equipment, inventory and human resources associated with maintaining those assets. The aims are: -With greater equipment and facility utilization -Improved production capacity -Lower operating cost Distributed or consolidated order management – connecting customers to all areas of supply chain by focusing on solutions that enable customers to build new cross functional, cross enterprise and multi-channel processes on top of existing investments in transactional systems.
The goal is to enable the visibility and efficient management of customer and product information across the new extended network. Demand management – Design and implement processes and solutions intended to enhance revenue and profitability by optimizing: -Sell through -Inventory -Product mix -Product pricing -Promotional management Supply chain event management – it build an adaptive, responsive supply chain. Sense and respond capabilities address end to end supply chain variability issues by tracking supply chain events in real-time with increased visibility.
Events can be aligned against key performance indicators, as well as to identify exceptions. It also optimized operational alternatives or corrections that can apply across company’s entire supply chain. Logistics Logistics focuses on assisting clients in the management of goods through the supply chain. With the emergence of improved visibility and fulfillment tools, logistics has emerged as a key area of many companies’ supply chain operations. The effective implementation of new technologies in warehousing, transportation, and reverse logistics can result in significant cost reduction and customer service improvement.
Logistics strategy and network optimization – Utilize analytical and requirements based methodology to develop a customized and responsive solution to address logistics network optimization opportunities Warehouse process improvement and systems implementation – Implement process and technology change to improve warehouse operations. It assisting customer with: -Distribution process envisioning -Software selection and implementation -Warehouse layout and design -Material handling equipment selection -Developing deployment strategies around the utilization of advanced technologies
Transportation process improvement and systems implementation – Implement process and technology change to improve transportation operations. These assist customers with: -Transportation process envisioning -Core carrier program development -Software selection and implementation Specially focus on given to optimizing through improved delivery performance while achieving the lowest possible carrier cost. Labor management process improvement and systems implementation – Implement process and technology change to improve warehouse labor productivity.
Labor tracking and management allows for: -Real time tracking of employee time -Calculation of estimated task time -Comparison of records actual vs. estimated task time -Reporting on labor performance and efficiency -Monitoring of direct vs. indirect labor -Linking of performance to compensation. Reverse logistics process improvement and systems implementation – Implement process and technology change to improve the management of returns. These included: -Returns process envisioning -Software selection and implementation
Especially focus to placed on re-engineering the flow of returned goods based product disposition and value. Logistics business transformation The logistics business transformation provide business model which offer greater scope and deeper integration. The logistics transformation models include: transport, ware housing, customs brokering, third party logistics providers (3PL’s) and freight forwarders, lead logistics providers and supply chain integrators. Each type of model has different attributes with regards to customers’ relationships and pricing arrangements.
IBM’s approach to logistics transformation is to deliver improved business results through continuous strategic change and the transformation or operation measured against executive business outcomes. IBM’s logistics business transformation is built on success and innovation of IBM’s own Global logistics operations. IBM’s Global Logistics Network is secure, scalable and reliable. It has delivered track record of on time performance and availability. Because IBM’s logistics infrastructure is scalable and has sufficient supplier capability, so it can easily and quickly extend solution for the customers.
These are the service areas in the IBM logistics business transformation framework: Logistics strategy, network design and development -Translate business needs and priorities logistics requirements -Logistics network modeling and business case development -Logistics operations design, organization, process, IT, measurements -Best practice guidance Logistics services procurement -Sourcing strategy development & industry knowledge -Supplier evaluation, selection and contract management -Supplier cost and service management Supplier relationship and performance management Logistics Operation Management -Daily logistics network management -Integrated transit visibility, event management, order status, operation metrics -Supply chain total cost and network optimization -Claims processing -Logistics supplier payment and audit -IT integration and management -Logistics operational guidance Logistics global trade management -Global trade included import / export compliance process management -Government and Customs relationship management -Duty and tax accuracy and payment minimization Supply chain security management -Global and country specific shipping procedure management Conclusion In today’s complex global network, IBM’s logistics and supply chain management is running on change oriented, the more understanding the various paths and pitfalls and landscape of change is critical for supply chain management to safely navigate through the opportunities and dangers, so their supply chain leaders around the world understand the need to drive change smartly and effectively is the ingredient of success.