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SCM of

Samsung Electronics

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Table of Contents

1. Introduction

2. Background

3. SCM Case4. APS

5. SCM Timeline

6. Result of SCM

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1. Introduction SCM - Definition

Suppliers CustomersPurchasing Production Distribution

Supply chain management (SCM) the management of a network of interconnected businesses involved in theultimate provision of product and service packages required by end customers

Supply Chain

planningCollaborate

planning

Supply Chain

Execution

Supply Chain Management

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1. Introduction SCM - Strategies

Supply Chain Planning

Collaborative Planning

Supply Chain Execution

3 strategiesof

SCM

To provide stable suppliesfor any circumstance of market

Planning immediate

Information share withcustomers and suppliers

To manage timelinefor Supply Chain System

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1. Introduction Elements of SCM

Organization: Global Operation Center

Planning, Operating, regulating, and Monitoring

Process: Forecast-based, daily production planning

System: APS (Advanced Planning & scheduling System)

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2. Background Current Status

The world's largest electronics company

Global market leader in more than 60 products

Business areas: Consumer electronics

Telecommunication

Semiconductor As of 2007

Revenue $103.4 billion

Net income $21.5 billion

Employees Over 138,000

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2. Background Business process perspective

Quick reactions in rapidly changing markets Rapid market growth, price drops, new paradigms, etc.

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Demands ForecastLow reliability of forecasts

Lack of management tools on forecast

Delivery Due DateLow reliability of delivery due date

Need for setting priorities for demands

PlanningDecentralized planning processes

Lack of unified standard information

Inventory Controllittle control over worldwide inventory

Lack of tools for strategic planning

Late delivery Surplus inventory

2. Background Business process perspective

Demand for centralized supply control sharing of quick, exact, and useful information about

current status & future forecast

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2. Background Business process perspective

Strengthening global competitiveness 60~70% of extra values come from supply chain

Competitors (Intel, GE, Sony, HP, Toshiba, ) began

implementing SCM systems

To gain competitive advantage, it was important toenhance supply chain and the way of managing it

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2. Background Information Systems perspective

Difficulties in integrating decentralized local informationsystems Decided to develop a stand-alone SCM tool that centralizes and

streamlines supply chain management

Preparation for future e-business system Implementing SCM as a step toward future e-business

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3. SCM Case Samsung Electronics

Samsung Electronics Plans for introducing SCM

PLAN1.

Rapid planning for fast reaction to market changes

PLAN2.

Predicting demands with information integration

PLAN3.

Real-Time delivery to customers

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3. SCM Case PLAN 1

Rapid planning for fast reaction to market changes

Integrates all planning steps Provides real-time business information &

Accurate plans and decisions are made for each order Right plans are made quickly

Salesperson

SalesDepartment

StrategyMarketing

Merchandise/Manufacture

ManufactureManagement

Purchase

Forecasting/Order

Control/Management

Selling Plan

Allocation Plan

Manufacture Plan

Purchase Plan

In1 day,Set-up

AllPlans

Week Cycle

Purchase Plan

Manufacture Plan

Allocation Plan

Selling Plan

Control/Management

Salesperson

SalesDepartment

StrategyMarketing

Merchandise/Manufacture

ManufactureManagement

Purchase

MonthCycle

Forecasting / Order

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3. SCM Case PLAN 2

Predicting demands with information integration

Integrated management on information for forecasting demands Simultaneous management on information Eliminates all inefficiencies originated from inaccurate forecasts

CommandCenterCustomer

Salesman StrategyMarketing

LocalMarketing

BullwhipEffect

Customer

Command

Center

Salesman LocalMarketing

Strategy

Marketing

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3. SCM Case PLAN 3

Real-Time delivery to customers

Allocation of resources in advance, based on current situationOn time delivery through reliable information sources

Lack

Delivery bythe local

stock

Customer

On-

Hand

If there are no stockand we dont know

when can we buy, wewill buy from other

company!!

Headquarter

Manager Salesman Customer

Delivery bythe supply

plan

On-

Hand

In-

TRANSIT

Stock Manufacture

plan

Material

plan

Allocation

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4. APS Global Production Planning

Samsung Electronics introduced

Global Production Planning,

as a specific solution that enables SCM

Global Production Planning is a similar conceptto APS

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4. APS Effects of implementing APS

Simultaneous planning

Reduction in time for planning

Shortened planning cycle: Weekly, dailyplanning

Enables making accurate production plans

Enhancements on on-time delivery

Enables quick responses

Enhanced Customer service

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5.SCM Timeline From 1997 To 2007

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5.SCM Timeline In 2009

Global SCM

TOP 8The AMR Research Supply Chain Top 25 for 2009

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sales(TrillionWon)

97

18.5

03

43.6

56

33

inventoryturnover

ratio(day)

inventory..bond

(Trillion Won)5.2 3.8

Improvements on process management- Shortened process management cycle: monthly -> weekly -> daily- Simultaneous planning/execution of worldwide manufacturing/sales

plans as a single system- Reduction of lead time for planning: previously 3 weeks, reduced to less

than 1 week

6.Result of SCM Improvements on process management

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6.Result of SCM Articles