The supply chain execution module would have the following applications-
Order Planning
This application would select the plan that best meets the desired customer service levels with respect to the transportation and manufacturing constraints. Increasingly, the firms have to plan backward from customer priorities and fulfillment deadlines.
Production
This application would start with the master production schedule for the finished product, and then generates an MRP (Material Requisition Planning) to determine when, where and in what quantities various sub-assemblies and components are required to make each product.
Replenishment
This application would help in minimizing the amount of inventory in the pipeline and coordinate product handoffs between the various parties that are involved.
Value Creation in the Supply Chain
Supply chain management was originally developed as a way to reduce costs. It focused on very specific elements in the supply chain and tried to identify opportunities for process efficiency. Today, supply chain management is used to add value in the form of benefits to the ultimate consumer at the end of the supply chain. This requires a more holistic view of the entire supply chain than had been common in the early days of supply chain management.
Businesses that engage in supply chain management work to establish long-term relationships with a small number of very capable suppliers. These suppliers, called tier one suppliers, in turn, develop long-term relationships with a larger number of suppliers that provide components and raw materials to them. These tier two suppliers manage relationships with the next level of suppliers, called tier three suppliers, who provide them with components and raw materials. A key element of these relationships is trust between the parties. The long-term relationships created among participants in the supply chain are called supply alliances. Clear communications, and quick responses to those communications, are a key element of successful supply chain management. Technologies, and especially the technologies of the Internet and the Web, can be very effective communications enhancers. For the first time, firms can effectively manage the details of their own internal processes and the processes of other members of their supply chains. Software that uses the Internet can help all members of the supply chain review past performance, monitor current performance, and predict when and how much of certain products need to be produced.
Increasing Supply Chain Efficiencies
Many companies are using Internet and Web technologies to manage supply chains in ways that yield increases in efficiency throughout the chain. These companies have found ways to increase process speed, reduce costs, and increase manufacturing flexibility so that they can respond to changes in the quantity and nature of ultimate consumer demand.
Using Materials-Tracking Technologies with EDI and Electronic Commerce
In the second wave of electronic commerce, companies are integrating new types of tracking into their Internet-based materials-tracking systems. The most promising technology now being used is radio frequency identification devices (RFIDs), which are small chips that use radio transmissions to track inventory. RFID technology has existed for many years, but until recently, it required each RFID to have its own power supply (usually a battery).
Creating an Ultimate Consumer Orientation in the Supply Chain
One of the main goals of supply chain management is to help each company in the chain focus on meeting the needs of the consumer at the end of the supply chain. Companies in industries with long supply chains have, in the past, often found it difficult to maintain this customer focus, which is often called an ultimate consumer orientation. Instead, companies have directed their efforts toward meeting the needs of the next member in the supply chain. This short-sighted approach can cause companies to miss opportunities to add value in subsequent steps of the chain.
Building and Maintaining Trust in the Supply Chain
The major issue that most companies must deal with in forming supply chain alliances is developing trust. Continual communication and information sharing are key elements in building trust. Because the Internet and the Web provide excellent ways to communicate and share information, they offer new avenues for building trust. Most procurement professionals have built trust on years of doing business with the same vendors. In many industries, vendors send sales representatives to call on buyers regularly. Vendors also participate actively in trade shows and conferences. By giving buyers frequent opportunities to interact with vendor representatives, vendors help build trust.
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