know what is supply chain management (scm)_ _ an overview _ oracle apps epicenter

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OW WHAT IS SUPPLY CHAIN MANAGEMENT (SCM)? : An Ov... http://www.oracleappshub.com/ebs-suite/know-what-is-supply-chain-...

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KNOW WHAT IS SUPPLY CHAIN MANAGEMENT

(SCM)? : An Overview

Posted on November 10th, 2007 by Sanjit Anand| Print This Post| Email This Post

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This is one of the basic areas from management books. In fact lot of people have requested some more information on SCM,OPM and other manufacturing area. therefore,I take this opportunity, as this is one of my favorite topic, as I started my firstjob in PPC (Production Planning &Control) department of a big steel company a decades ago, so I hope I will surly help ingiving a clear picture of SCM. Let's start with basic and gradually will move into ERP arena:

SCM is defined as combination of art and science that goes into improving the way your company find the raw componentsthat needs to make a product or services and deliver it to customer. In Business word this art and science become functionsthat an organization undertake.

If you are IT guys you can understood SCM as:

Systems that support manufacturing managers in making decisions that optimize the trade off between capital tied up instocks and inventories, versus the ability to deliver goods at prices and delivery dates agreed with customers.

In principle and reality, both inwards logistics operations to acquire materials to make products and outwards logisticsoperations shipping finished goods to final customers are monitored.

WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASIC COMPONENT OF SCM?

As per Supply-Chain Operations Reference-model (SCOR) which has been developed by Supply-Chain Council.This model organized and focused on the five primary management

PLAN1.SOURCE2.MAKE3.DELIVER4.RETURN5.

1. Plan: This is vital part of SCM philosophy, where the companies normally need to make strategy for managingall the resource that go towards fulfilling the customer demand for the product and services that they offers. Abig piece of planning is developing a set of matrices to monitor the Supply chain so that it would be efficient,cost effective and deliver high quality and value to the customer.

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2. Source: It means processes that procure goods and services to meet planned or actual demand. This part ofSCM consists of selecting right suppliers that will deliver the good and services that need to create your product.Developing a set of pricing, delivery and payment process with supplier is important. Also this will also take careof managing the inventory of goods, and services you receive from your suppliers, including receiving shipping,verifying them, transferring them into various facilities and authorizing supplier payment.

3. Make: This is basically a step where your company starts fulfilling the request or BUILT for products intofinished state to meet planned or actual demand. Schedule activity necessary for production, testing, packagingand preparation for delivery.

4. Deliver: This is also called Logistic Process. This is the processes that provide finished goods and services tomeet planned or actual demand, typically including order management, transportation management, anddistribution management.

5. Return - This is real pain of SCM model, which defined as processes associated with returning or receivingreturned products for any reason.

Typical model can be best described as:

WHO IS THE STAKEHOLDER OF SUPPLY CHAIN

These are considered as stake holder of SCM:

CustomersYour CompanyDesign PartnersMaterial SuppliersContract ManufacturersLogistic Providers

WHAT ARE DRIVERS OF THE SUPPLY CHAIN?

These are the main drivers :

ProductionInventoryLocationTransportationInformation

1. Production

This driver addressing these questions: what products does the market want? How much of which productsshould be produced and by when?This activity includes the creation of master production schedules that take into account plant capacities,workload balancing, quality control, and equipment maintenance.

2. InventoryThis driver addressing these questions: What inventory should be stocked at each stage in a supply chain? Howmuch inventory should be held as raw materials, semi finished, or finished goods?The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain.


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3. LocationThis driver addressing these questions: Where should facilities for production and inventory storage be located?Where are the most cost efficient locations for production and for storage of inventory? Should existing facilitiesbe used or new ones built?Once these decisions are made they determine the possible paths available for product to flow through fordelivery to the final consumer.

4. TransportationThis driver addressing these questions: How should inventory be moved from one supply chain location to

another? Air freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea orrail is much less expensive but usually involves longer transit times and more uncertainty.

5. Information

This driver addressing these questions: How much data should be collected and how much information should beshared?

Timely and accurate information holds the promise of better coordination and better decision making. With goodinformation, people can make effective decisions about what to produce and how much, about where to locateinventory and how best to transport it.

GET FAMILIAR WITH TOP 10 TERMS, DEFINITIONS AND TERMINOLOGY IN SCM

Master Demand Schedule - MDS

The MDS is a consolidation of demand by product and time bucket

Master Production Schedule- MPS

The MPS is a statement of supply required to meet the demand for the items contained in the MDS. The masterproduction schedule defines the anticipated build schedule for all products. The master production schedule alsoprovides the basis for order promising (ATP) function

Material Requirements Plan-MRP

The Material requirements planning (MRP) calculates net requirements from gross requirements by evaluating:

The master scheduleBills of materialScheduled receiptsOn-hand inventory balancesLead timesOrder modifiers

Advanced Supply Chain Plan- ASCP

Constrained Based and optimized version of MRP

Planned Order

Automatically suggested action from planning engine

Consumption

The process of "relieving" the forecast to prevent double counting of demand

Drop Ship

Having an order ship directly from the vendor to the customer without physically being in your inventory.

Vendor Managed Inventory- VMI

The process of giving the vendor the authority and visibility to determine what your inventory should be

Customer Owned Inventory- COI

Where you are managing the customers inventory on your premises and supply as required

Work Order/Sales Order


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The request that you received from the customer for fulfilling there demand.

SIMPLE PLANNING CYCLE WITHIN AN ORGANIZATION

A typical planning cycle would start by loading the sales orders, forecast and other demandsuch internal orders into the master demand schedule (MDS). That demand statement wouldthen be used as the schedule that drives the Master Production Schedule (MPS) . Take anote in regular MRP implementations the MPS is used as the schedule for ATP. Once theMPS is reviewed and updated is used as the schedule to drive the MRP process. The result

of the MRP process is planned orders and exception messages. When released from MRPthe planned orders for "buy" items become requisitions or purchase orders in the purchasingmodule and the "make" items become discrete jobs in the Work In Process Module. Oncethe finished goods are received into inventory it is shipped to satisfy customer orders.

Scenario I :Sales Order - Forecast Planning Cycle

This is the scenariowhere normally we arebuilding to stock andsatisfying sales orderdemand from stock. Here you will see the difference asplanned orders are released to become purchaserequisitions for components and work orders for subassemblies and finished goods. The finished goods arethen shipped to satisfy the sales orders.

Scenario II :Planning - Procurement Cycle

In the Planning-Procurement cycle we normally startwhere the first part of the planning cycle is complete andwe have a planned order for a buy item from MRP. Theplanned order is released and becomes a requisition orpurchase order in the purchasing module. A purchaseorder is then created from the requisition and sent to thevendor. The vendor would supply the materials. Thematerials would be received into inventory and thepurchase order would be closed.


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Scenario III :Planning - Drop Ship Cycle

In the Drop Ship cycle the process is as follows:

A sales order is received from the customer.After the sales order is entered a process is run that creates a purchase order that matches the sales ordersThe item, quantity and required date information on purchase order matches that information on the sales order.

The ship to address on the purchase order is the ship to address of the customer.The vendor ships the product directly to your customer. Once the vendor ships the product you receive" the purchaseorder and that creates the shipping transaction to satisfy the sales order.Matching accounting transactions complete the process

You can also see technical details for drop ship cycle in my earlier post.

Scenario IV :Planning - WIP Cycle

In the Work In Process cycle after the planning cycle is complete a planned order is released to create a discrete job.Material/components is issued the job or back flushed from inventory. The job is completed from Work In Process toInventory.

Scenario V :Planning - Outside Processing Cycle

With Outside Processing you could be buying a service, an item or capacity from an outside vendor. The setup for each ofthese scenarios will be described in the training sessions to follow, however they all follow a similar process. A routing withan outside processing operation is setup.

After the planning cycle is complete a planned order is released to create a discrete job. Once the Discrete job is moved to aoutside processing operation, a purchase requisition is triggered. The requisition is imported to Purchasing and a purchaseorder is created. The details of the discrete job such as job number, assembly number and quantity is tied to the purchaseorder. The purchase order is sent to the vendor. When the purchase order is received its destination will be shop floor and theassembly will be returned to the next operation on the work order.


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This make an end of this discussion. In Next post we will see what are the different subsystem SCM will have and what arethe modules which comes under SCM Implementation. Any comment is welcome

Related Posts

Production requisitions ..to PO release1.Understand Drop Shipment in Order Management?2.Oracle Purchasing Product Overview3.Understanding data flow for Internal Orders4.Learn and implement Purchase Orders in Oracle EBS Suite.5.

Posted in EBS Suite, Functional, Oracle Manufacturing|27 Comments Email This Post| Print This Post

Have you tried OracleappsHub in ipad/iphone/smart Phone? Don't wait. try it today27 Responses

Prativa Says:November 13th, 2007 at 12:01 pm

1.

Demand SensingTechnology

Demand Sensingincreases forecastaccuracy by up to

50%.www.TerraTechnology.com


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Hi Anand, Thank you so much for these nice articles.Regard,Prativa.

AkSays:February 20th, 2008 at 4:08 am

very Nice.can u send me the Total types of Cycles in SCM?

If so iam very thankful to you.

2.

Quazi Ahmad Faruque Says:February 25th, 2008 at 11:04 pm

Veri nice to learn briefly about SCM

3.

Thambu Says:March 3rd, 2008 at 1:01 am

Very simple and good narration of function.

Thanks

4.

chandru Says:March 12th, 2008 at 4:22 pm

nice presentation

5.

sandesh Says:March 27th, 2008 at 2:48 am

Hi Anand,Excellent work but can you provide any article on the functional mapping ofinventory,BOM,WIP,MRP,Costing,Quality,Purchasing and OM with related to the discrete manufacturing.The articlewhich can cover the maximum functinality to cover the all business processes and also give the navigation path in the

sequence to complete the process in EBS.Thanks in advance & waiting for your response.

6.

sajeedSays:April 13th, 2008 at 2:52 am

Hi,Excellent work, specially the simple way of explanation makes it so easy to understand. Please keep up the good work!

Any posts planned on Bill of Material, WIP and Cost Management?

7.

Pankaj Singh Says:May 1st, 2008 at 4:17 am

Hi Anand,

Excellant work done and knowledge is epitomized & reduced to comprehensive yet concise matter.

8.

Ajit ShirwalkarSays:August 2nd, 2008 at 3:07 am

Thank you. I am looking at OSP in OPM in r12. Where will I get this information. Can you help me in this regard.

Ajit

9.

Sudhakar Jukanti Says:September 19th, 2008 at 3:37 am

Excellent Blog. Keep going.

10.

Danish Says:October 15th, 2008 at 1:43 am

11.


f 13 22-02-2012 23:46


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Hi,I have gone through SCM process explanation it is Excellent work. I am looking for student guides for Manufacturing.Could you please help in this regard.

Regard.

Srini Says:December 30th, 2008 at 6:19 am

Hi Sanjit,I have query regarding Dropship Sales Order in case of forcast consumption.

Please, let me know your valuable suggesstion.

[email protected]

RegardsSrini

12.

Manjunath Says:July 27th, 2009 at 5:29 am

Hi Anand,

Neatly describe and very use full article.

Regards,[email protected]

13.

alvin Says:August 6th, 2009 at 4:46 am

very informative, simple. clear. thank you !!!

14.

kartikSays:August 12th, 2009 at 8:45 am

awesome one .. thanks a lot for this..

15.

Abhi Says:August 25th, 2009 at 4:42 pm

Hi, excellent article with crisp and clear understanding.Appreciate your hardwork and sharing knowledge.

Thanks!

16.

Renuka Says:October 9th, 2009 at 4:04 am

Thnaks..Nicely and well written article on SCM.. good job

17.

Ram Shankar Kushwaha Says:November 12th, 2009 at 4:17 am

Very good keep it up!

RAM

18.

Lakshmi Ramesh Says:January 20th, 2010 at 2:33 am

Nice presentation.Easy to understand narration.Please keep up the good work.

19.

Suyog Says:20.


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April 3rd, 2010 at 12:03 am

hello Anand,I am doing MBA in Operations and Supply chain management from one of the best schools in US. This is all what Ihave and will be learning for one more year. I want to switch to IT, can u suggest me the areas I should concentrate on?any trainings and job opportunities? Ur help will be greatly appreciated.

Francois Says:July 22nd, 2010 at 1:33 am

Good morning,

I have a problem how to deal with a return to vendor after it was BILLED AND PAID.The system allows you tobackout the receipt after it was billed and paid. How should you deal with this?

Thank you

21.

Sanjil Jain Says:August 4th, 2010 at 10:27 pm

Please tell me about the tables of SCM as well. It will be nice if you could provide screen shots for SCM product. Tellme about SCM responsibility to be added as I am from HRMS and need to learn SCM as well.

22.

pakala ramu Says:September 14th, 2010 at 7:40 am

please advise the navigation of oracle supply chain management.

23.

nayudu Says:October 2nd, 2010 at 4:22 am

if u don t mind pl s give me a brief e with scm

24.

Biren Shah Says:October 21st, 2010 at 3:20 am

Very well eplained!

25.

chs Says:November 23rd, 2010 at 11:01 am

Hi Anand Your definitions and explanations are so simple.. Gr8 job. Thank you very much for sharing yourknowledge.

26.

Sanjay Says:December 14th, 2010 at 11:47 am

I was always confused about SCM, but first time somebody has made me understand SCM in 5 mins YOU AREGREAT! I really want to thank you!!!!!

27.

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