4 – Cherry – ERP and Suppliers
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MIS2901 – An Experiement in Teaching and Learning
It's about learning, not just covering content!
Mart Doyle
Measure of Success
Many performance measurements are used to measure the effect of better supply-chain management.
Cash to Cash Cycle time is the time between paying for raw materials and collection case from the customers.
The total supply-chain costs are another way of assessing the efficiency of a supply chain. Implementing a more efficient process should result in lower costs.
Initial fill rate measures the percentage of an order that was provided in the first shipment.
Initial order lead time measures the amount of time the supplier needs to fill an order.
on-time performance measures how often a supplier meets guaranteed or requested delivery dates.
Using these different performance measurements is a good way for suppliers to see if they are meeting their own standards while striving to surpass their competitors. Additionally, they could be useful for manufacturers to use to help determine who they want to get their raw materials from, when they should be order by, and so on.
Multiple Choice:
Which of the following is NOT an example of a performance measurement discussed in Chapter 4?
a. initial fill rate
b. cash-to-cash cycle time
c. lot size determination
d. on-time performance
(C)
In a traditional supply chain, lags occur because each link receives new information at different times. However, in an integrated supply chain, information is known by each link as soon as it becomes available.
Q. Which of the following is a problem that may occur for a Raw material supplier in a Traditional Supply chain?
a) It might lose sales in its stores because it is unable to keep up with demand
b) It might improperly schedule shipments of bars to the wrong reatiler
c) It might be unable to ajust its manufacturing process in time
d) It might experience a temporary shortage of materials
Answer: d
Thank you I really didn’t know that there was huge difference I just thought that it was a new age way of conducting a supply chain.
SUPPLY CHAIN refers to the various activities that occur from the collection of the raw materials to getting the finalized product on store shelves.
Raw Materials -> Supplier -> Manufacturer -> Wholesaler -> Retailer -> Customer
A quality ERP system can facilitate supply chain management, or SCM.
To measure the effectiveness of SCM, performance measurements called METRICS have been created. Emily has listed some of them above.
Wholesalers get their product from whom in SCM?
A)Manufacturers
B)Suppliers
C)Retailers
D)Raw Materials
The correct answer is A.
Despite the supply chain being rather efficient and cost effective, I do believe there is some room for cost cutting and cutting out the middle man. For example, a manufacturer with enough resources could cut out the obtainer of the raw materials and just collect the materials needed for production themselves, cutting the cost of having to pay the firm that gathers the raw materials. Though a company should only cut out a middle man when it is cheaper for them to do so.
Supply chain management is quite an important idea. As is the case with all chains, all of the links are connected. A break at any point in the chain will result in all of the entities remaining in the chain to be left out. If the supplier runs out of materials, the manufacturer, wholesaler, retailer, and consumer will all feel the ramifications. Understanding the supply chain is essential when producing a product. One breakdown in the supply chain can prove to be disastrous. For instance, if Fitter Snacker doesn’t receive hazelnut from their suppliers, they can’t make NRG-B bars.
Supply chain today is so different. Company are constantly cutting the middle men, so cost had dropped significantly. Also, many companies no longer hold large amonut of inventory, that could save some dollar on manage inventory and keep cash flow running more smoothly. It all depends on automatic system and precise prediction.
As far as cutting out the middle man I believe that you would attack the raw material. I understsnd now that I have breifly read some parts of the book a well as you detail paragraph.
Costs go down and communication is more direct. Optimizing the communication and inflow and outflows is key.
The timeline of who gets materials from which person is very important in understanding the supply chain. All companies and employees need to understand all people in this chain need to be on the same page in order for a successful transaction. Any hookup in the line will cause delays or problems.
In a traditional supply chain, information is passed through the supply chain reactively as participants increase their product orders. For example, if the demand for energy bars increases Retailers order more bars from Wholesalers. Wholesalers, in turn, require more goods and shipments from a manufacturer (like FS) of the product. Manufacturers, then, would need to order more raw materials from the Suppliers (farmers). Suppliers would thus need sufficient time to develop/grow the necessary amount of the raw materials and ship the materials.
Companies who do not use integrated processes within their respective suply chains will be at a major disadvantage. Information would pass from each chain slowly, and the production runs would be constantly backed up. Shortages would arise due to the time contraints. If participants, however, in a supply chain are part of an integrated process, information regarding customer demands can be passed quickly through the supply chain, so each link can react quickly to the volatile changes in consumer demand.
One useful tool for this integrated system is the utilization of ERP systems. ERPs allow for sharing production plans along the supply chain and information is updated in real-time (accounting plans, manufacturing plans, sales forecasting, etc.) The use of the Internet makes this type of communication even faster and cheaper than the use of EDI.
Multiple Choice Question:
What is the advantage of using an integrated process throughout a supply chain?
A. updated production plans in real-time
B. time efficiency and ability to quickly react to change in consumer plans
C. information is able to be passed along the supply chain in a more efficient and rapid manner
D. All of the above are advantages of an integrated process in a supply chain
Correct answer is (D).
I totally agree with you that an unintergrated supply chain is a major setback for a company, especially for the one producing perishable goods like FS. If the company is too slow to respond to an increase in demand, there would be two consequences. Firstly, the company loses its customers as they switch to other branches. Secondly, at the time FS boosts up the production to respond to the lack of supply,it is already too late. Therefore, by the time FS produces more energy bars, there would be no need for them anymore. This demonstrates the important of real time information.
I agree that companies who have a strong integration between production and the supply chain are operating at a strong advantage over those companies who lack integration, such as Fitter Snackers. Without real-time information, there is a good chance that the information is not even accurate. By the time FS realizes that there has been an increase in demand and that more production is necessary, it may be too late. An ERP would definitely benefit FS.
As we learned in the game today, the forecasting of sale is very important and can make or break your company. Fitter Snacker would greatly benefit from an integrated system that linked marketing and sales to production for easier forecasting. This way they can easily acquire an accurate amount of raw materials on time.
Fitter Snacker’s unintegrated system seems to be lacking more with the passing of every chapter, and as new facets of operating the business is examined. They need to have real time information that integrates the data between all the different departments in Fitter Snacker. With an integrated ERP system, the company would be better suited to react to events that occur both inside and outside the company.
For Fitter Snacker, supply chain management is essential to the selling process because they have such a small window to sell their product. If their is a time lag because of communication issues, Fitter Snacker could be forced to not sell their product or send stale product to the customers. A company would be forced to lower their supply, which would make the company not be prepared for rises in demand, which would then cause either a time lag to make the product or the customer would simply leave your company and go somewhere else. An ERP system allows for REAL-TIME communication, which will keep each aspect of the company up-to-date, this is pivotal in order to have a quick turn-over for a product, which is necessary for customer satisfaction. Although expensive, an ERP system would greatly enhance most companies if integrated properly.
Well I belive that answer (D) is a no brainer for people who did not read the text. Well explain and in you paragraph I don’t see how anyone could dispute this the answers are in the text. Love the examples that were giving.
The traditional supply chain has really started to fade out with the implementation of these systems. I think that’s why as a class we see how inefficient fitter snacker really is. Meghan made a good point saying that some times its too late to realize how bad you’re doing since you have been doing it for so long.
The Measure of Success
“Cash-to-cash cycle time” is one of the performance measurements, metrics, used. It refers to the time between paying for raw materials and collecting cash from customers. The key to this system is that companies with efficient SCM processes can complete the transaction in a month, oppose to the others without SCM would take about 100 days.
Total SCM cost is another measurement. Those costs include buying and handling inventory, processing orders, and information systems support. An efficient SCM processes would save cost for the company.
Question:
An efficient SCM processes can effectively reduce the Cash-to-cash cycle time to what extend?
a.It can save 2/3 of its time
b.It can save 1/3 of its time
c.It can save 1/2 of its time
d.It does not reduce any of the Cash-to-cash cycle time
Answer is a.
I think that using the cash-to-cash cycle time is one of the better options for measuring a company’s efficiency and overall the effectiveness of their supply chain management. When the process of purchasing the raw materials, producing the product, and selling it to the customer is done in a relatively shorter amount of time, that is a good indicator that the company is benefiting from a more integrated and efficient supply chain. This is extremely important even from a customer standpoint, because the efficiency of the supply chain will have an effect on how long it will take for the customer to receive their order.
I agree with that also because it seems logical that in order to measure the success of a business process the cash inflow and outflow will measure the company’s operations
Three important metrics in the SCM are the initial fill rate, initial order lead time, and the on-time performance of suppliers in this chain. The initial fill rate is the percentage of the order that the supplier is able to provide in the first shipment. The initial order lead time is the time needed for the supplier to fill the order. The on-time performance is how often the supplier actually met the dates it set for delivery. All three of these factors are tracked by other members of the supply chain to make sure suppliers are acting as efficiently as possible. If not, it is very easy for someone to take their business elsewhere (depending on the type of supplier…)
Which is not one of the three metrics affecting the SCM that deals specifically with suppliers?
a)on-time performance
b)cash-to-cash cycle time
c)initial fill rate
d)initial order lead time
Integrated supply chain gives company huge advantages. The system updates production plan in real time and quickly react to the change in consumer plans. And the imformation can be passed through supply chain channels more efficient and rapid.
I like your post because it is easy to understand. It focuses on three aspects of the ordering process: initial fill rate, initial order lead time, and the on-time performance of suppliers. The initial fill rate is what the supplier can give you on the first shipment. This is important because the more shipments you have the greater the shipping costs, initial order lead time is how long it will take to receive the products and finally the on-time performance is what actually occurred in the ordering process. If the supplier cannot perform any three of these aspects to your satisfaction, a company can use a competitor supplier either as leverage or a replacement if needed. A supplier is extremely important because it directly effects when and for how much a customer can get their final product.
answer is b
Working with suppliers in a collarative fashion requires rust amoung all parties. A company opens its records to its suppliers and suppliers can read the company’s data because of common data formats. In a traditional supply chain, information is passed through the supply chain reactively as participants increase their product orders. Because of time lags inherent in traditional supply chain, it might take weeks or even months – for information about FS’s increased need for raw materials to reach FS’s suppliers. By contrast, if the participants in the supply chain are part of an integrated process, information about the increased customer demand can be passed quickly trhough the supply chain so each link in the chain can react quickly to the change.
Identify the Correct Order of Supply Chain Management from raw materials to consumer
A. RM – Supplier – Retailer – Manufacurer – Wholesaler – Customer
B. RM – Wholesaler- Supplier – Retailer – Manufacturer – Customer
C. RM – Manufacturer – Supplier – Wholesaler – Retailer – Customer
D. RM – Supplier – Manufacturer – Wholesaler – Retailer – Customer
D
I agree… an unintegrated process could lead to disaster. As we saw in the game on Friday, constant communication is necessary to function. If the different parts of the supply chain aren’t communicating, they will be unable to react to a sudden change in customer demand, or a sales promotion that marketing is running.
I also agree that traditional supply chain might take days to get it finish. This is because I was in the Supply Chain Game on Friday that time and I was totally got lost and my team is arguing with each other. It is really a CHAOTIC!!!
The order in which they go in sometimes can be a bit confusing. I say that becasue before reading your paragraph and understand the Supply Chain Mangament I all way thought that manufacturer went vise versa with wholesaler. I’m still going to have them mixed up later on or during the exam. I need to make sure I really understand this one.
After implementing ERP and a SCM system, you must know how to tell if it is being used successful. There are several performance measurements, or “metrics”, available to use. Cash-to-cash cycle time tracks the time between paying for raw materials and collecting cash from customer. Total SCM costs measures all the costs involved in SCM (buying and handling inventory, processing information, information systems support). Initial fill rate tells the percentage of the orders the supplier provided in first shipment, and initial order lead time measures the time needed by supplier to fill orders. Lastly on-performance tracks how often supplier meets requested delivery date.
These measures of success are important for a company to use. It is not enough to just have a SCM system. They must know that it is being utilized well, and cutting costs and increasing efficiency for the company. If there are no improvements, then they know that they are not using their SCM correctly. These metrics make it apart or not if there are improvements or if the company is doing the same in the various areas.
Cash-to-cash cycle time refers to…
A. The percentage of the order that supplier provided in first shipment
B. The time needed for the supplier to fill the order
C. How often the supplier actually meets dates of requested delivery
D. The time between paying for the raw materials and collecting cash from customer
D
I completely agree with Alicia that having a SCM system alone will not make the company more efficient. Like complex DSS and ERP Systems, management must property train staff in how to use these systems and how to take on the various tasks they perform. One of the main goals of a SCM system is to cut costs and attain efficiency. If neither are being achieved, then management needs to reevaluate the utilization of the system and how employees are handling various projects and duties. In using the metrics as described above, a company can determine if the system is being utilized efficiently. For example, if management determines that the time between cash outflow and cash inflow of a particular product is rather high, the cash-to-cash cycle is not being fully maxmized. Another great metric is the analyzing on-performance tracks to see which suppliers are reliable, fast, and the most efficient in meeting delievry standards. Shipping discounts are also taken into consideration. Companies who fully utilize the benefits of a SCM system with proper management are at a competitive advantage, being able to minimize operational costs and maximize profits.
Having a well integrated supply chain can increase response time to changing consumer moods as well as reduce costs and increase efficiency. For instance, in the event of a recession, people may demand less NRG-A bars. The retailer must realize demand has dropped and order less from the wholesaler. The wholesaler must also realize that demand has dropped and order less from Fitter Snacker who will take time to also realize demand has dropped and order less raw materials. By the time all of this has happened Fitter Snacker may be left with a surplus of NRG-A bars which will more than likely spoil, resulting in a loss for Fitter Snacker. At the same time, when demand picks up again, it will take time for Fitter Snacker to produce more bars and will miss out on possible profit. With an integrated supply chain, these realization times will be shortened, thus decreasing the losses and increasing the profits that come with a changing consumer mood.
Which of the following should happen with an integrated supply chain?
A) Fitter snacker will be more likely to reduce losses and increase profit based on changing demand.
B) Fitter Snacker’s time to react to a drop in demand will increase
C) Fitter Snacker’s time to react to an increase in demand will increase
D) More people will demand NRG-A bars.
Answer: A
The example you described here was exactly what we saw in class today. One group of people made finished goods before the order was known. When the order didn’t match what they had completed, they couldn’t go back and change it. They needed more money to buy materials but did not have it. As a result they could not finish the order and lost to their competitors.
I found that the main benefit you focused on was real-time access to information. Because the system is integrated, each department is able to access orders and understand how the business is progressing and whether manufacturing should slow down production or speed it up. Especially with perishable goods, decreasing the time lag between orders and customer delivery is essential to keeping customers happy and giving them the best product available.
The information that you provide were so helpful I say that becasue Mr Doyle was talking about this in class not to long ago and I kinda understood what he was talking about but never followed up to go ask him. I do belive that Fitter snacker will be more likely to reduce losses and increase profit based on changing demand. This is the best possible answer for this type of question the other opoions I never even hear disscussed.
Through the example of Fitter Snacker it can be seen how an integrated ERP system improves a company. It improves time efficiency because things are being recorded in real time. Accounting can immediately see the impact of a material transaction without having to communicate with other departments that possibly don’t have up to date information.
Which is not considered a benefit provided by a SAP ERP?
A. The system can work with 3rd party hardware
B. Real time entry of data
C. Adjusts all records when data is enter and does not require re-adjustment of records manually
D. None of the above
Answer: D
Well even though this was short paragrah I would also assume that it was D with out evening reading the book or notes. The 3party hardware does really talk about the benefits. So my next opoion would be D. None of the above best fit question when dealing with SAP.
Based on all of the information, we can see that implementing an ERP system will outweigh all of the prices related with the implementation. Even though some of the potential problems can involve large monetary costs, the implementation has the possibility to dramatically increase profits. I agree with Gerard because the time efficiency will be one of the key benefits in the whole process.
After reading all the informations,examples,and comments, it really improved my understanding of the ERP system and the supply chain. And the questions are quite helpful.thanks so much!:)
I agree with that also because it seems logical that in order to measure the success of a business process the cash inflow and outflow will measure the company’s operations
Yeah its simply found from reading a company’s audited reports or taking a look at their statement of cash flows, and or income statement.