Shweta Sharma 9/13/2016 IBS Gurgaon 1 Supply Chain Management Introduction Traditional View: Cost breakdown of a manufactured good • Profit 10% • Supply Chain Cost 20% • Marketing Cost 25% • Manufacturing Cost 45% Profit Supply Chain Cost Marketing Cost Manufacturing Cost Effort spent for supply chain activities are invisible to the customers. Magnitude of Supply Chain Management • Compaq estimates it lost $0.5 B to $1 B in sales in 1995 because laptops were not available when and where needed • P&G (Proctor&Gamble) estimates it saved retail customers $65 M (in 18 months) by collaboration resulting in a better match of supply and demand • When the 1 gig processor was introduced by AMD (Advanced Micro Devices) , the price of the 800 meg processor dropped by 30% Importance of SCM understood by some • AMR Research: – "The biggest issue enterprises face today is intelligent visibility of their supply chains-both upstream and down" • Forrester Research: – "Companies need to sense and proactively respond to unanticipated variations in supply and demand by adopting emerging technologies such as intelligent agents. To boost their operational agility, firms need to transform their static supply chains into adaptive supply networks ” • Gartner Group: – “ 90% of enterprises that fail to apply supply -chain management technology and processes to increase their agility will lose their status as preferred suppliers ” • Open ended statement. Agility can be increased continuously. Top 25 Supply Chains AMR research y/supply-chain/top25.jsp publishes reports on supply chains and other issues. Highlights the accomplishments and capabilities of long-term supply chain leaders in the Top 25. Companies qualify for the Masters category if their composite score places them in the top 5 rankings for at least 7 out of the past 10 years. SCM Generated Value Minimizing supply chain costs while keeping a reasonable service level customer satisfaction/quality/on time delivery, etc. This is how SCM contributes to the bottom line SCM is not strictly a cost reduction paradigm!
Shweta Sharma 9/13/2016 IBS Gurgaon 2 A picture is better than 1000 words!
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