Supply Chain Management
SCM – some definitions
• Supply chain management (SCM) The coordination of all supply activities of an organization from its suppliers and partners to its customers.
• Upstream supply chain Transactions between an organization and its suppliers and intermediaries, equivalent to buy-side e-commerce.
• Downstream supply chain Transactions between an organization and its customers and intermediaries, equivalent to sell-side e-commerce.
Members of the supply chain
(a) simplified view (b) including intermediaries
A typical supply chain
(an example from the B2B company)
A history of SCM at BHP Steel
. Early implementation 1989-1993. This was a PC-based EDI purchasing system. • Objectives
– (1) reduce data errors to 0,
– (2) reduce administration costs,
– (3) improve management control,
– (4) reduce order lead time.
• Benefits included
– rationalization of suppliers to 12 major partnerships (accounting for 60% of invoices).
– 80% of invoices placed electronically by 1990.
– Seven thousand items were eliminated from the warehouse, to be sourced directly from suppliers, on demand.
– Shorter lead times in the day to day – from 10 days to 26 hours for items supplied through a standard contract and from 42 days to 10 days for direct purchase items.
• Barriers
– Mainly technological.
2. Electronic trading gateway 1990-1994.
• Character
– Also EDI-based, but involved a wider range of parties both externally (from suppliers through to customers) and internally (from marketing, sales, finance, purchasing and legal).
• Aim
– Provide a combined upstream and downstream supply chain solution to bring benefits to all parties.
• Learnings
– the difficulty of getting customers involved – only 4 were involved after 4 years, although an industry standard method for data exchange was used. This was surprising since suppliers had been enthusiastic adopters. From 1994, there was no further uptake of
• Supply chain management (SCM) The coordination of all supply activities of an organization from its suppliers and partners to its customers.
• Upstream supply chain Transactions between an organization and its suppliers and intermediaries, equivalent to buy-side e-commerce.
• Downstream supply chain Transactions between an organization and its customers and intermediaries, equivalent to sell-side e-commerce.
Members of the supply chain
(a) simplified view (b) including intermediaries
A typical supply chain
(an example from the B2B company)
A history of SCM at BHP Steel
. Early implementation 1989-1993. This was a PC-based EDI purchasing system. • Objectives
– (1) reduce data errors to 0,
– (2) reduce administration costs,
– (3) improve management control,
– (4) reduce order lead time.
• Benefits included
– rationalization of suppliers to 12 major partnerships (accounting for 60% of invoices).
– 80% of invoices placed electronically by 1990.
– Seven thousand items were eliminated from the warehouse, to be sourced directly from suppliers, on demand.
– Shorter lead times in the day to day – from 10 days to 26 hours for items supplied through a standard contract and from 42 days to 10 days for direct purchase items.
• Barriers
– Mainly technological.
2. Electronic trading gateway 1990-1994.
• Character
– Also EDI-based, but involved a wider range of parties both externally (from suppliers through to customers) and internally (from marketing, sales, finance, purchasing and legal).
• Aim
– Provide a combined upstream and downstream supply chain solution to bring benefits to all parties.
• Learnings
– the difficulty of getting customers involved – only 4 were involved after 4 years, although an industry standard method for data exchange was used. This was surprising since suppliers had been enthusiastic adopters. From 1994, there was no further uptake of