Process Map for Procurement

Forecasting Method for Soft drink and Justification

Products Forecasting Method & Justification
Soft Drinks Qualitative method
Toothpaste Qualitative method
Laptop Time Series / Historical Projection
Mobile Phone Causal / Relationship Method
Air conditioners Qualitative method

In forecasting for demand there are two predominant methods of modeling available: deterministic and probabilistic. Normally just saying the names of these techniques is enough to turn someone off from the topic, however, it is important to understand the strengths and weaknesses of each.
Deterministic is simply defined as a forecast in which the results of the model are completely determined by present conditions (Lewis 2005). Simply stated, forecasted demand is completely and solely dependent on what we know right here and now. This sounds somewhat absurd since we know market volatility and global economic conditions can change the demand outlook almost daily. Although this is true, it is the technique that many companies employ for forecasting demand. Examples of this include linear regression (extrapolation) and exponential smoothing models.
The other type of modeling technique, probabilistic, provides model output in ranges with degrees of confidence. This technique takes into account imprecision and uncertainty when appropriate (Abramsia & Finizza 1995). By incorporating a range of values there is room for error and you can better plan for a range of outcomes. This modeling technique can also take into account multiple scenarios as it has for the oil industry.
Post Gulf War I, the oil industry started to incorporate probabilistic forecasting so it could account for decisions that OPEC made concerning the levels of oil production (Abramsia & Finizza 1995). These decisions involved the probability that OPEC would increase, decrease, or maintain supply levels. The most popular modeling technique for this type of forecast is the Monte Carlo simulation.
So, if probabilistic forecasting is such a flexible tool for more accurately planning procurement, production, and logistics demand, why don’t more companies use it? There are three main factors that discourage many companies from leveraging this capability: First, retraining and a new understanding of forecasting techniques and analysis. Second, a paradigm shift in the way S&OP is conducted. And third, a full understanding of what impacts their demand.
New Forecast Technique and Analysis
When many people see forecast output, they think in terms of an exact number of units sold (or produced) during a period of time (500 units in January). The problem with this is that when that exact number isn’t reached, natural instinct tells us the forecast should lose credibility and eventually become ignored. Instead of an exact number that may be correct 70% of the time, what if we used a range of output to plan off of (400-600 units in January)?
Now we are planning for the potential to see a little more or less. If we end up actually needing 550 units instead of 500, it’s not as difficult to produce. We can also give planners and idea of how certain we are in this projection by attaching a confidence level with it (90% confident January demand will be 400-600 units). As uncertainty in markets and the economy increases, confidence level decreases signaling to the S&OP team that variation to the plan is highly likely.
Now teams are empowered with much more information than just a number attached to a month and can plan accordingly. When considering a range of 200 units, such as in the example given, the thought of material shortages and inventory surpluses comes up. The goal of the demand planning team is to narrow this range as much as possible (no easy task given all the uncertainties already mentioned above).
S&OP Paradigm Shift
Now that S&OP teams have this new format of forecast information, how do they fully leverage it? The first step is to fully understand what the forecast is saying. Yes, the confidence level may be lower than last month, but what is this really telling us? Where is there more uncertainty? Is the uncertainty in demand or available supply? Having identified that uncertainty is increasing, we can begin to diagnose and prepare for that increased uncertainty. This tool enables a new way to view S&OP, not just as a plan for production and sales, but also as a risk mitigation process.
What impacts demand?
The results will also better help a company understand much of what impacts their demand. Initially, a company has to account for all the proper uncertainties for the model to produce an acceptable range. In many cases, companies may have an idea what impacts their demand but it’s similar to forecasting the weather, just when you think you have a handle on it, something happens to shake things up. With deterministic models, inaccuracy of the model could be the result of any change in the in the environment, industry, or economy from the time the model is run until now.
With probabilistic models, inaccuracy is the result of not accounting for the proper factors impacting your demand. The more accurate the model, the better understanding you have of what is impacting the demand (or even to what extent certain variables impact it).
How to implement
This process can impact everything from future inventory levels, response time, delivery time, production variability, and quality control (Min & Zhou 2002). While this requires a shift in thought about the forecast, there is an easier way to transition to it. In the weather community a modeling technique called ensemble forecasting is used to capture variations in future outcomes.
This technique involves looking at one forecasting technique, linear regression for example, and running the forecast multiple times under different conditions. In the case of linear regression, the forecast is defined as: y=mx+b Where m is the rate of change in demand and b is the initial demand the model starts with. If we run the model using pessimistic, most likely, and optimistic scenarios for m and b, we will have 9 different outputs for the forecast. In this “ensemble” of forecasts we get a variety of output that looks similar to Figure 1. From this we can gather a potential range of solutions or we can consolidate this output by finding the ensemble average solution and highlighting one standard deviation above and below that (Figure 2).
Now we have a range of solutions that we can feel more confident about than just one model producing one forecast. Interpreting the results of this is fairly easy. We have the average solution which gives us the deterministic value, the standard deviation solutions which give us a “most likely” range, and we can judge uncertainty based on the difference between the standard deviation solutions (the larger the difference, the more uncertain the forecast).
Soft Drink

• 1. Distribution Trends in Soft Drinks: On-Premise vs Off-Premise Dynamics & Forecasts to 2015 Indonesia Synopsis Soft drinks trends and developments in on- vs off-premise - volume and value Summary"Distribution Trends in Soft Drinks: On-Premise vs Off-Premise Dynamics & Forecasts to 2015INDONESIA is a special focus report from . Comprising of data tables, charts and text, the report provides an overview of the latest soft drinks trends and developments in on- vs off-premise volume and value. Competitively priced at just £500, the report includes discussion on distribution trends and market valuation/pricing plus on- vs off-premise data for total soft drinks: volume million liters 2006 to 2010 forecast, % growth to 2015, and local currency value data 2006 to 2010 forecast .On- vs off-premise 2009 vs 2010F % growth and 2010F average price per liter by individual soft drinks category are also provided .Distribution Trends in Soft Drinks: On-Premise vs Off-Premise Dynamics & Forecasts to 2015reports are available on an individual country basis for 53 markets (East Europe: Belarus,Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania,Macedonia, Poland, Romania, Russia, Serbia, Slovak Republic, Slovenia, Turkey, Ukraine; West Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Ireland(Republic), Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK; Asia: China, India,Indonesia, Japan, Kazakhstan, Malaysia, Philippines, Singapore, Thailand, Vietnam; North America: USA; Latin America: Argentina, Brazil, Chile, Colombia, Mexico, Peru, Venezuela;Africa: Nigeria) Scope Soft drinks trends and developments in on- vs off-premise - volume and value Reasons To Buy"Published by : Distribution Trends in Soft Drinks: On-Premise vs Off-Premise Dynamics &Forecasts to 2015 INDONESIA Provides an overview of on- vs off-premise trends and developments in the Indonesian soft drinks market Compiled from extensive global soft drinks databases which are researched individually by country using specialist researchers on-the-ground Priced at just £500 and available on an individual country basis enabling data comparisons across markets
• 2. Key Highlights"Distribution trends Market valuation/pricing Soft drinks on-premise vs off-premise volume and value data, 2006 to 2010FSoft drinks on-premise vs off-premise % growth, 2009-2015FOn-premise vs off-premise 2009 vs 2010F % growth by individual soft drinks category Soft drinks on-premise vs off-premise, 2009, 2010F & 2015F % market share On-premise vs off-premise average price per liter by individual soft drinks category 2010 F Keywords distribution trends channel soft drinks on-premise off-premise forecasts INDONESIA market research volume value local currency Table of Contents :Distribution Trends in Soft Drinks: On-Premise vs Off-Premise Dynamics & Forecasts to 2015 –INDONESIA Distribution Trends Market Valuation/Pricing Chart - Soft Drinks On-Premise vs Off-Premise – Volume, 2006-2010F (% Growth)Chart - Soft Drinks On-Premise vs Off Premise – Value, 2006-2010F (% Growth)Table - Soft Drinks On-Premise vs Off-Premise – Volume & Value, 2006-2010F (M Liters /Local Currency)Chart - Soft Drinks On-Premise vs Off-Premise by Category, 2009 vs 2010F (% Growth)Table - Soft Drinks On-Premise vs Off-Premise, 2009 vs 2010F (% Growth)Chart - Soft Drinks On-Premise vs Off-Premise, 2009, 2010F & 2015F (% Share)Soft Drinks On-Premise vs Off-Premise Average Price Per Litre by Category, 2010F (Local Currency)Soft Drinks Product Definitions Glossary Forecast Methodology

Mobile

• 2. Trends Spotting Market Research is now running its third annual prediction reports following major trends in six categories. We will be featuring the predictions of digital and marketing experts on the big changes awaiting us in the coming year. This year we are adopting a new “tweet style” format, easier for you to focus on, comprehend and forward. More in this series > Social Media | Video | e Marketing | Technology | Consumer Trends
• 3. Findings: Major trends in 2010 Mobile: Across many of these predictions, we have identified the following trends suggested to influence Mobile in 2010: #payment #commerce #metrics #Ad: SMS, display, search, premium #Apple #iPhone #Apps #Google #Android #GPS #location #AR #gaming #music #video
• 4. Smart-phone: Market Share and Devices @frost_sullivan FROST & SULLIVAN In 2010, nearly 1.3 billion mobile phones will ship globally, and 250 million of them will be smart-phones. In the U.S., where smart-phone growth is robust, virtually all phones sold will be smart phones within five years. Smart-phone will continue to be the most vital computing/communication device people carry in 2010. Smart-phones won't be the only computing devices we have or use. Smart-phone displays will never be large enough or clear enough to use for hours of reading or video viewing.. Source: Computer-world
• 5. On Android @frost_sullivan FROST & SULLIVAN The Android operating system is expected to ship globally - 8.2 million in 2010. The total number of Android devices to be introduced in 2010 (will grow) to 36. Android could start to dominate the smart-phone OS market by 2014. Android could be the 3rd most popular OS, shipping on 65 million phones. That would put it behind Symbian OS projected to ship on 233 million phones that year, and RIM which will be on 92 million phones. Source: Computer-world
• 6. On Regulations @frost_sullivan FROST & SULLIVAN Government regulators in 2010 will begin to view wireless networks as similar to toll roads, where drivers pay a premium for, presumably, roads that are less congested and better maintained than toll-free highways. Source: Computer-world
• 7. Mobile Internet is Ram-ping Faster than Desktop Internet More users may connect to the Internet via mobile devices than desktop PCs within 5 years. Smart-phones will out-ship the global notebook + net-book market in 2010E and out-ship the global PC market (notebook + netbook + desktop) by 2012E. Five IP-based products are growing: 3G adoption + social networking + video + VoIP + impressive mobile devices. Apple + Face book platforms serving to raise the bar Decade-plus Internet usage / monetization ramps (Japan) Massive mobile data growth is driving transitions for carriers and equipment providers Source: Morgan Stanley
• 8. Mobile Internet is Ramping Faster than Desktop Internet Emerging markets have material potential for mobile for EM users and SMEs, the Internet will be mobile. Game-Changing Communications / Commerce Platforms: Social Networking + Mobile Emerging Very Rapidly •Game-Changing Communications / Commerce Platforms Real-time, cloud-based services – including emerging LBS. Regulators Can Help Advance Mobile Internet Evolution… Or Slow It Source: Morgan Stanley
• 9. Mobile Devices Are On A Path to Eclipse PC @fgens FRANK GENS Senior VP & Chief Analyst IDC For the first time, there will be over 1 billion mobile devices accessing the Internet by year-end, gaining quickly on the 1.3 billion PCs accessing the Internet (the former are growing at 2.5X the rate of the latter). 2010 will see 500,000 mobile phone applications, setting up, a "developer war like you've never seen”. Source: IDC
• 10. On Mobile Advertising IMRAN KHAN Managing Director & Web Analyst J.P.Morgan In 2010, mobile advertising is forecast to grow 45 % to $3.8 billion, with the breakdown being $3.2 billion SMS advertising, $253 million mobile display, and $321 million mobile search. Source: Tech-crunch
• 11. Mobile Penetration 2010-2015 By year-end 2010, 1.2 billion people will carry handsets capable of rich, mobile commerce, providing a rich environment for the convergence of mobility and the Web. By 2013, mobile phones will overtake PCs as the most common Web access device worldwide. The combined installed base of smart-phones & browser-equipped enhanced phones will exceed 1.82 billion units. by 2014, there will be a 90% mobile penetration rate and 6.5 billion mobile connections. Penetration will not be uniform, as continents like Asia (excluding Japan) will see a 68% penetration and Africa will see a 56% mobile penetration. . By 2015, context will be as influential to mobile consumer services and relationships as search engines are to the Web. Source: Gartner
• 12. On Android Android will take second place behind Symbian OS as early as 2012. Android will benefit from being an open operating system Wireless carriers and manufacturers will also offer Android devices that differentiate themselves from one another. It's possible that some Android phones will be designed for business users while others will be geared toward consumers. Consumer market can be segmented: social networking; music. Source: Computer-world
• 13. Commerce and Ad Spending @eMarketer eMARKETER Digital Intelligence @eMarketer Mobile commerce‟s time has arrived - consumers are using their devices to buy books, apparel and other items associated with online shopping on a PC.. Mobile Is moving into the mainstream - Mobile ad spending will rise from $416 million in 2009 to $593 million in 2010 as more brands and agencies integrate mobile into their marketing mix. Source: eMarketer.com
• 14. iPhone, Android, Games and AR SARAH PEREZ Writer, Read Write Start DANA OSHIRO @sarahintampa @suzyperplexus Read Write Web Writer, Read Write Start @sarahintampa: The iPhone still rules and grabs more mobileWrite Web Read market share than ever before, Android becomes the number two mobile platform by year-end. @sarahintampa: iPhone app backlash begins: Apple surprises us with a brand-new feature that can help us find new and useful apps via iTunes. @suzyperplexus: Geo-locational games and AR will come together in 2010. We're going to see strange behavior from those playing zombie shooter games on their commutes.. Source: ReadWriteWeb
• 15. Location, Augmented Reality, Payments @petecashmore PETE CASHMORE Founder, CEO Mashable Fueled by the ubiquity of GPS in modern smartphones, location-sharing services .. may become the breakout services of the year ... provided they're not crushed by the addition of location-based features to Twitter and Facebook. Augmented reality: The challenge for such services is to prove their utility: They have the "cool factor," but can they be truly useful? 2010 will be the breakthrough year of the much-anticipated mobile payments market. Source: CNN
• 16. Mobile Ads @venturebeat One of the most attractive characteristics of mobile for advertisers is the opportunity for more accurate ad targeting. Typical parameters include carrier, device type and mobile channel, with the possibility to add location, behavioral, and demographic information. Frequency of use, reach and usage context are the important factors when inserting ads into applications... Advertisers still like to see things like TV spots, which they understand, even though this is often not rational in terms of return on investment. Maybe 2010 will be the year when advertisers start seeing mobile less as an experiment and more as a serious part of their campaigns. Source: Venture Beat
• 17. Location and Projectors @venturebeat Facebook will enable location in its mobile apps Growing penetration by smartphones has made consumers comfortable with revealing where they are for socializing. The hottest phone feature of 2010 will be tiny projectors: The projector drives people wild. Source: Venture Beat
• 18. Mobile Marketing MICHAEL BOLAND Senior Analyst The Kelsey Group, Mobile Local Media Mobile gets you closer to the point of purchase because it goes with you to the store, When we come out of this, we’ll see a sudden interest and demand in mobile marketing Advertisers will still need a “point of entry,” like an advertising network. No company has truly packaged local mobile search for advertisers yet. Total U.S. spend on mobile marketing will grow from $1.7 billion (2009) to $2.16 billion in 2010. Local mobile advertising will be the next hot trend, particularly in terms of local mobile search, BIA’s... Local mobile ad revenue will hit more than $3.1 billion in 2013, up from $160 million last year. Mobile search will reach $2.3 billion. Local searches (27.8% of all searches in 2008), expected to hit 35.1% in 2013. Source: Media Buyer Planner
• 19. Virtual Goods, Palm & Email @jeremysliew JEREMYS LIEW Managing Directore Light Speed Venture Partner Virtual goods means real revenue in mobile. Virtual goods can help eliminate the friction to adoption. The virtual-goods business model has proven to be a very scalable one, bodes well for the entire ecosystem. Still waiting for “off-deck” to (really) happen - still a long way off from mobile- app developers being able to create true direct-to-consumer offerings like their cousins in the web world. Nokia or RIM buys Palm (and the next round of big battles begin) The enterprise moves past using mobile data for just email. Source: Light Speed Blog
• 20. Apple, LBS, and Regulations JACK GOLD Founder & Principal Analyst J.Gold Associates AT&T is certain to lose the iPhone exclusive within a year, Apple is nuts to keep it with one carrier. 2010 will finally be the year of LBS. Business people will be able to use location-based services embedded on their smart-phones to track down delivery or service workers more quickly and easily than they can today. The FCC will end up listening to the carriers who do have some legitimate concerns regarding overtaxed networks Source: Computer-world
• 21. Smart-phones & Carriers @jkontherun JAMES KENDRICK Editor,jkontherun GigOm Network Smartphone adoption will start driving down data plan costs. More consumers than ever will demand the ability to interact fully with the mobile web on their phones. Smartphone sales will continue to skyrocket, and carriers are going to realize that they must make the mobile web available at low cost, or lose customers. Major carriers making pricing concessions on data plans..and figure out ways to generate other revenues. Source: jkontherun
• 22. Mobile in Asia @rohitdadwal ROHIT DADWAL MD, Asia Pacific Mobile Marketing Association @rohitdadwal: 1/3rd of global mobile subscribers come from Asia. Affordability, functionality will drive regional mobile growth. @rohitdadwal: Mobile data users in Asia will increase as services like video or peer- to-peer applications become more popular. @rohitdadwal: Smartphone applications will drive mobile Internet growth, pushing subscribers to add mobile data VAS.. @rohitdadwal: With the Google-Admob merger, the industry will see integrated marketing campaigns across web, mobile, print & other channels. .. @rohitdadwal: New policies will be implemented to address privacy concerns arising from social media going mobile.
• 23. Mobile in Asia @rohitdadwal ROHIT DADWAL MD, Asia Pacific Mobile Marketing Association @rohitdadwal: Mobile payment will be the most lucrative mobile functionality in the medium term across Asia. @rohitdadwal: By 2010 the APAC mobile healthcare business will be worth about USD 1 bn with 70% of users in more advanced economies. @rohitdadwal: It is expected that at the current growth rate mobile music sales should hit USD 500 mn by 2015. .. @rohitdadwal: Advertising within mobile games creates revenue that can be used to subsidise mobile gaming services.
• 24. Smart Phone, LBS, Mobile Apps & Android @matthamblen MATT HAMBLEN Senior Writer Computer World Smartphones will grab an even bigger share of the overall mobile phone market. AT&T will lose its exclusive rights to sell the iPhone The Android mobile OS will take off.2010 global shipment could be 8.2M for 36 Android based phones. The OS to become no#2 by 2012. Mobile app stores will continue to balloon. Location-based services will get their due on smartphones.. Source: ComputerWorld
• 25. Networks, Targeting, Brand Metrics, Soft Sell KEN MALLON DUNCAN SOUTHGATE Sr V.P., Custom Solutions Global Innovation Director Dynamic Logic Millward Brown @kpmallon @millward_brown Google's $750 million purchase of mobile ad network Admob reinforces that 2010 will be a significant year for mobile. With Apple's iPhone, Google's Android and RIM's BlackBerry platforms making the smartphone choices more attractive and cost of access slowly coming down, mobile web usage numbers will increase. Mobile provides the ability to target by site, phone model, demographics and location, all of which can be useful to advertisers. Mobile is two to five times better at driving brand metrics than online. We expect this differential to remain consistent in 2010. . Advertisers will initially favor the soft-sell approach of providing useful content in this space, rather than pushing hard-sell messaging. Source: Advertising Age
• 26. On Augmented Reality In Information & Games @iandouglas IAN DOUGLAS Head of Digital Production Telegraph Your phone screen will become a much more interesting place in 2010. Location-based games will spread, littering the landscape with puzzles, monsters and easter eggs, and navigation displays will move from bird's-eye-view map-based diagrams to arrows on the road. Forgetful people will find their lives transformed as their phones remind them of the names of the people they meet and blank walls will become huge, constantly- updated displays. Source: Telegraph
• 27. On Microsoft and Mobile @johnbattelle JOHN BATTELLE Founder & Chairman Federated Media @johnbattelle: Microsoft will have a major success in the phone market.
• 28. Cellphones, The Next Tobacco? @mariansalzman MARIAN SALZMAN President, N.America,Euro PR Trend Spotter & Author @mariansalzman: Cell phones, the Next Tobacco?/Heading Off Angst- Awarenss of brain hlth & injuries will rise; links b/w cell phnes & brain cancer will make ppl ask: R they the nxt tobacco?
• 29. On Mobile Internet @equalman ERIK QUALMAN Author Socialnomics @equalman: Mobile phones will continue to increase as the users’ device of choice to consume Internet content
• 30. On Android @pgillin PAUL GILLIN Writer, Author & Social Media Consultant Principal at Paul Gillin Communications @pgillin: Android is the mobile story of the year, vaulting Google into the uncontested role of iPhone spoiler.
• 31. „App‟ Deletion @adambroitman ADAM BROITMAN Partner & Ringleader Circ.us @adambroitman: App deletion stats will be as staggering as app adoption were in 2009.
• 32. Commerce, Android, Augmented Reality, Experiences MOBILE INTERACTIVE GROUP Ad Funded Interactive Services M-Commerce and Micro Payments Return of SMS Voting to P-TV The year of Google Android Augmented Reality is set to gain ground rapidly in 2010. brands will be more willing to experiment with mobile to interact with consumers at a time that is convenient to them, whilst also providing interactive, memorable and engaging experiences to consumers. Source: Mobile Interactive Group
• 33. Coupons, Monetisation, Ad Formats MOBILE INTERACTIVE GROUP Mobile Coupons-- Loyalty programmes could be launching onto the mobile platform in 2010. Smartphone Growth --Increased adoption and use of smarthphone devices will lead more and more consumers to access the internet spontaneously, whenever they want to, wherever they are. Monetisation of Social Media--Adoption of social media services via mobile will continue to grow throughout 2010. New channels for monetisation will be introduced throughout 2010, making it the year of social media and mobile Rich Media Ad Formats --4th Screen Advertising is pioneering in developing new rich media ad formats to help brands engage with their target audience. There will be more new formats announced in 2010 incorporating „Dynamic Feed‟ and „SMS Ad Network‟. Source: Mobile Interactive Group
• 34. 2010 Mobile Media Trends THE MOBILE ENTERTAINMENT FORUM Fragmentation and variance amongst handsets and now application stores will continue to plague the industry, however the growth of applications on the Android platform will close the gap on Apple’s App Store Operator enabling services will start to be widely deployed, facilitating the growth of rich media content that is simpler, faster and offers a better user experience Media publishers will start to experiment with micro-payments, subscription service models and alternative payment methods which challenge the operators‟ dominance.. Books will emerge as a new and popular content category for smartphones Technology innovation will continue, with content developers experimenting with 3D mobile video viewers and augmented reality for mobile Source: M-E-F
• 35. 2010 Mobile Media Trends THE MOBILE ENTERTAINMENT FORUM The emerging risk of illicit charging by in-app billing will be met by firm regulatory action.. Significant tightening of premium rate regulation in the Atlantic region will spread across the world 2010 will be the year of multiplatform dual-delivery of content including music, video and games, across mobile phones, TVs and PCs The growing consumer demand for data-heavy services will put greater pressure on networks, with flat rate data tariffs increasingly subjected to stringent download limits.. Complexity, confusion and ambiguity in the application of rights to the mobile platform will be addressed seriously in 2010 Source: M-E-F
• 36. 2010 Android Predictions @devindra DEVINDRA HARDAWAR Tech Blogger Many more phones to choose from-- 2010 will see the release of more Android phones than we’ve ever seen before. The most promising upcoming Android phone is Sony Ericsson‟s XPERIA X10 App development will take off, and iPhone apps will cross over. Android will show up on many other devices.. A more polished and stable Android OS Android hardware will improve faster than the iPhone.. Source: Royal Pingdom
• 37. 2010 Android Predictions @devindra DEVINDRA HARDAWAR Tech Blogger More exclusive content from Google--Google Maps Nav on future Android 2.0 devices, Apple will end up bringing it over to the iPhone as well. No more multi-touch hesitation.. Ramped-up Android marketing Expect converts from the Blackberry and Windows Mobile camps --RIM and Microsoft are struggling to keep pace with rapid evolution of modern smartphones. We won’t see a decent modern Windows Mobile OS until 7.0 comes out in 2010. More custom interface tweaks Source: Royal Pingdom
• 38. Clouds & Premium Advertising Jasper de Vreught Ashu Mathura Director Of Sales Founder & CEO MADS MADS Two business models: the “long tail model” like AdWords and AdMob, and the “premium model” like Doubleclick and MADS, which are aiming to build a network of premium publishers and attract premium advertisers. while there is a lot of focus on downloaded apps right now, most of this functionality is likely to move into the cloud, and there’ll be a corresponding impact on how advertising is done.. Source: Venture Beat
• 39. Security & Mobile.. @websenselabs Smartphones are hackers‟ next playground. Poor security for applications on smartphones can put users‟ and organizations‟ data at risk. Hackers will begin more dedicated targeting of smartphones in 2010. Source: Websense
• 40. Smartphones, GPS, Videos, QVGA @mobilegazette MOBILE GAZETTE Smartphone features will be found increasingly in mid-market devices, with key products: Samsung's Bada platform and Symbian S60. GPS is everywhere these days, although basic GPS functionality will remain limited for most users Google's free turn-by-turn navigation will really start to eat into the market for standalone devices. Companies such as TomTom are looking increasingly vulnerable, and we might see some interesting strategic moves in this area. The emphasis on cameras shifts from still photos to video capabilities (with direct uploads to YouTube). Consumers will be more interested in getting HD video from their phones. Expect QVGA displays to be the standard in all but the very cheapest phones.. Source: Mobile Gazette
• 41. HSDPA, Blogging & Video Sharing, TV @mobilegazette MOBILE GAZETTE HSDPA high-speed downloads and uploads - growth will continue. Expect to see a rapid growth in mobile blogging and video sharing. 2010 will not be the year of mobile TV. Source: Mobile Gazette
• 42. Less Social, More “Social Aware” @trendsspotting Dr. Taly Weiss CEO and Head of Research TrendsSpotting.com Trends Research @trendsspotting: 2010- the year “you‟re being followed”. @trendsspotting: Influenced by mobile location abilities, social networks at large will lose their globalization. @trendsspotting: People will learn new functionalities for maps: from “where” to “what” and “who”. @trendsspotting: QR codes everywhere.
• 43. ? Do You Follow This QR Codes Everywhere Read more on “QR Codes and Real Time Marketing”
• 44. @trendsspotting Discover more Trends Insights:
• 45. TrendsSpotting offers Trend consulting, Customized Trend Research Reports & Syndicated Trend Reports, published at top market research databases. TrendsSpotting research serves leading international brands. TrendsSpotting’s insights are presented at The TrendsSpotting Blog and quoted in the news media. Visit us here: www.trendsspotting.com

• 1. Case Analysis: Apple Inc., 2008 Sairam Iyer XLRI GMP 034 11/6/2008
• 2. 1) Competitive Advantages: -Design and innovation oriented -Greater horizontal and vertical Integration -Designing from scratch to finish bundled with applications and peripherals. -‘’Plug and Play” solutions -R&D oriented -An everything ready device Firm Infrastructure HRM Technology Development PROCUREMENT Inbound Outbound Operations Marketing/Sales Service Logistics Logistics Alliances with Design & Horizontal & Plug and play I-tunes gives a major suppliers Innovation vertical solutions major edge Integration Linkages with Technology Complete bundle Operating system independent Driven of applications more secure, and software vendors less prone to virus attacks Collaborating I-pod—I-tunes Apple’s retail with other combo gives experience, new leaders. brand awareness mac consumers a push. bought more. Apple has been able to command a premium in the market and gain above average returns owing to its innovation and differentiation of technologically superior products. This learning and innovation in its products has led apple to leverage its expertise in the i-pod,i-phone, i-tunes, i-works suite of products. Over due course of time Apple has been able to perfect the chain of activities in Innovation and design leading to a fit between the activities which is difficult to imitate and hence offers them an edge over competitors. Diffusing products New products: Ideation Designing/funding Product Creation across company
• 3. 2) Analysis of the PC Industry based on Porter’s 5 Forces. Low 5-Forces Threat of new Entrants Current Bargaining Bargaining Low Competition: Power of Power of High Very Intense Suppliers Customers Threat of Substitute products Very High. -Current Rivalry: Very intense and fierce and the PC industry also has very low switching costs. This makes current rivalry very high. Apple faces stiff competition from Dell, HP, IBM etc. -Threat of new Entrants: Since there are considerable investments to be made for setting up this industry, new entrants would be reluctant. Though there is scope for White-box PC’s having a share of 36% world -wide in 2006, but since the existing companies have created strong branding awareness, this threat would be low. -Bargaining power of Suppliers: Two types of suppliers- microprocessors and OS: very few suppliers but memory chips, keyboards, disk drives: many suppliers. Suppliers will adjust pricing and quality to make their products more attractive so competition is high leaving them in a low supplier power position. -Bargaining power of buyers: Switching costs are low. This situation places the buyer power in a strong position that can only be countered by companies with strong product differentiation that would increase the switching costs
• 4. -Threat of substitute products: The more differentiation of product the less likely the switch to a substitute will occur. If prices are higher then the company with the higher price has to provide justification for the increase. Apple's operating system differentiation can command higher pricing when it is presented to the creative designer community but not to the individual computer buyer unless they are specifically looking for such enhanced graphic capabilities. Overall the PC Industry is a very competition intense sector and with technology undergoing paradigm shifts, coping with these changes can make life difficult for the players in the sector. These dynamics do not look favourable for Apple, but at the same time Apple has been able to manage to retain its technologically savvy and designer approach to come out of this quagmire. Apple could convert some of these problematic features into opportunities by looking at its SWOT analysis which is discussed further. 3) Apple’s difficulty in the PC industry. -Strengths -Brand awareness/ Halo effect from the i-pod to the PC -Product differentiation- The system continues to be strength for the company since its closed operating system is not subject to the computer viruses and hacking that affects the Microsoft Windows operating system. -Complete package of hardware and software-enabling plug and play and aesthetics by designing unusual shapes for its computer chassis. -Weaknesses -Heavy Investment in Research- As compared to other players this forms a major cost for Apple. -Not a lean operations management- Unlike Dell, where the forecasting is accurate and inventory costs are minimal, Apple has to bear the cost of components and parts that it purchases before-hand. -Not completely independent- Apple is reliant on Motorola and IBM for processor chips so if these companies run short or increase the price on the chips Apple must either absorb the cost or pass it along to consumers. Either of the two scenarios is can make Apple vulnerable. -Opportunities -Taking Microsoft head-on with its image- Apple has always come up with innovative ways to ridicule and expose the shortcomings of the Microsoft OS- Reference: http://in.youtube.com/watch?v=FxOIebkmrqs. Apple should finally take the plunge and go all out with its brand image to attack Microsoft. -Taking advantage of the MAC OS-Since the Mac OS is seen as a safe, reliable and secure system, apple should leverage the differences over competing OS. The latest launch
• 5. of its Leopard-OS received rave reviews with sales totalling 4 million copies, and creating 20% of the Mac installed base. -The i-pod-i-tunes combo- The halo effect of the i-pod needs to be capitalised to the maximum extent. The difficulty Apple started off as a straight out of the box machine which was easy and simple to use. When IBM-PC entered the market in 1981, Apple was confident of its position owing to its proprietary designs and graphics. But this “closed” system was their undoing, as the IBM- PC started to spawn clones, who started to collaborate. With windows 3.0 the ease of the apple products was questioned, and apple was also burdened with maintaining high costs required for research for premium computers. In 1991 alliances were being forged IBM, which did not materialise later. Shifting manufacturing costs were also not enough to sustain profitability. The frequent changes in strategies were responsible for some of the problems that Apple found itself in. What Apple needed to realise was that it was actually operating in a Niche market of premium and high end PC’s and it was earning handsome profits per unit sold, but its penetration was an issue. Closed system of the Apple Mac, Frequent changes of strategies and application software not easily leaders at the helm available. Reasons for facing difficulties Niche market operator, less Premium segment, research penetration oriented, hence costly
• 6. 4) Apples Mac business: In his second stint with Apple as CEO Steve jobs had his task cut out. He had to turn around CEO, teve the Apple mac business and he undertook multiple steps to achieve it. -Agreement with Microsoft to invest $150 Million in Apple Agreement -Macintosh licensing program was abolished, thus restricting clones and cannibalizing Macintosh restricting -Consolidated product range from 15 to 3 Consolidated -Launched the iMac, plug and play with multiple colours Launched -outsourcing and restructuring, while expanding to national chains outsourcing -Direct selling through website and streamlining operations Direct -Pared down inventory and increased spending on R&D ed -Re-energized apples image as a hip brand energized Notebook Products Launched: Macbook • 1099 1099-1499 USD Macbook Pro • 1999 1999-2799 USD Macbook Air • 1799 1799-2598 USD Technology and Innovation: -Integrated with the Intel platform Integrated -Mac users able to operate both windows and Mac based applications Mac -Leopard OS launched -Built independent applications (iLife suite) Built -Web browser Safari -MS-Office suite for MAc Office Distribution and Sales: -Retail stores opened
• 7. -Collaboration with Best buy -i-Pod halo effect benefitted sales Owing to all these measures, the Mac sales grew thrice as fast as the overall PC market, which increased by about 14% in 2007. Apple had become the third-largest PC maker within the US market with a market share of 8.5%. But to continue the robust trend of the Mac growth saga, Apple will need to look outward. Since the US market is not growing at a great pace, Apple will have to look at the emerging asian markets and tap its potential. 5) Sustainable competitive advantage: Exploitation Launch Counterattack As Apple is operating in a Fast-cycle market in which the firms capabilities that contribute to competitive advantage aren’t shielded from imitation and where imitation is often rapid and inexpensive, its strategic decisions need to be undertaken quickly and in an effective manner. The i-pod-itunes business has been a spectacular success for Apple. The Razor/Blade strategy in Apple’s case is even more profitable unlike in the case of a printer-toner relation, as in Apples case its a reverse Razor/Blade, and the returns will be even higher for Apple, as it is the devices like the i- pod, i-phone which would require replacement. Apple has always differentiated itself on its innovation and design, and the same is the case for the i- phone i-tune combination. But this is not a competitive advantage which will last for long, and hence Apple will have to adapt and offer new services to keep itself one-up from the competition. Steve Jobs has perfected the art of coming up with a innovative product to keep this advantage from falling over. It is difficult for firms competing in fast-cycle markets to maintain a competitive advantage. However, Innovation plays a dominant role in the competitive dynamics in fast cycle markets, and here is where Apple is able to leverage its skills.
• 8. Threats and Competitors: DRM free copies- Amazon Creative, Threats/Competition MS-Zune Samsung, Sony Objection from music labels 6) I-Phone: Initial Strategy Phone: Rationale to launch i-Phone: To integrate the i Pod with a mobile phone service and to Phone: i-Pod reinvent the phone as a multifunction communication device. Version1 • 8GB $399, 16GB $499 • AT&T plan $59.99 • Service revenue sharing model • No third party distribution • Edge network 2-2.5G • Battery life affected by 3G • 19.5% share during first quarter • Gray markets in China russia- a concern - • Los of service-share revenue
• 9. Version 2 • 8GB $199 16GB $299 • AT&T plan $69.99 • Fixed premium model • Best buy retail channel • 3G bandwidth • Google, youtube partnership • i-tunes integration • New application packages • Launched in 22 markets The initial launch of the i-phone at a high price band and with exclusivity around it was a good move by Apple. The aura of exclusivity built a tremendous hype and expectation over the launch of the product. The early adopters (Fad) were ready to shell out the price which was definitely on the higher side. Apple capitalised on this and was thus able to offer better prices in its second version. Reasons for changing its strategy: -Availability of 3G bandwidth and battery life upgradation -Revenue-sharing model was not generating profit -Price band was on the higher side, and the early adopters were not interested -Retail channels were a better option than single distribution channel -Exclusivity to carriers was affecting the growth -Design improvements -By launching i-phone officially in 22 markets and making it available in 70 markets including most of the countries which had a gray market presence, Apple is trying to safe-guard its interests.
• 10. 7) Strategies for India: The demographics of India can be a major factor for apple to succeed in India. The cost premium attached to apple products could play a hindrance, and hence Apple would have to devise a cost leadership strategy while maintaining the product differentiation. Apple would need to devise a Supply chain initiative to maintain its operation. The following segments could be targeted by Apple. - There is a huge demand for better processing powers in Business analytics and Market research firms in India. Apple could target these companies, by demonstrating its technical expertise over Microsoft. - By leveraging its expertise in the education segment K-12, Apple could enter into tie-ups with major educational institutes in India. This would lead to mass awareness of its products, other than the i-pod. - Animation is another segment which is picking up in India,

• 1. Adva nce Supply Chain Management Holistic Overview with respect to an ERP and Control Systems Rahul Guhathakurta, Associate Consultant – SCM Email: [e-mail] or [e-mail]
• 2. Contents Inventory System Design Inventory Costs Independent vs. Dependent Demand Basic Fixed-Order Quantity Models Basic Fixed-Time Period Model- we will omit. Economic Production Quantity Model- we will omit. Single Time Period Model- we will omit. Quantity Discounts-also known as price break models.
• 3. Purposes of Inventory 1. To maintain independence of operations. 2. To meet variation in product demand . 3. To allow flexibility in production scheduling. 4. To provide a safeguard for variation in raw material delivery time. 5. To take advantage of economic purchase-order size.
• 4. Types of Inventory Costs Holding (or carrying) costs. Costs for storage, handling, insurance, etc. Setup (or production change) costs. Costs for arranging specific equipment setups, etc. Ordering costs. Costs of someone placing an order, etc. Shortage costs. Costs of canceling an order, etc.
• 5. Independent vs. Dependent Demand Independent Demand (Demand not related to other items or the final end-product) Dependent Demand (Derived demand items for component parts, subassemblies, raw materials, etc.)
• 6. Inventory System Design ERP » sells » delivers » collects purchases « pays « receives « payments/collections « » products Client Supplier Bank Logistics
• 7. Participants of the Process Client Supplier Bank Private Accountancy IRS Logistics W W W
• 8. Inventory System Design: EBS Integration Introduction of the ERP Platform Local non-intrusive integration devices Private Accountancy Receivables W W W Client Supplier Bank Logistics Purchase Process Electronic Invoice Collection & Reconciliation Central Repository
• 9. Purchase Process 1) The Company requests a quote 2) The Supplier sends the estimate 3) The Purchase Order is issued Private Accountancy Rec. W W W Logistics Supplier Client Bank Quote Purchase Order I.ERP I.ERP
• 10. Purchase Process 4) Supplier requests the delivery to Logistics 5) It issues the Packing Slip 6) Logistics delivers the products with the packing slip Private Accountancy Rec. W W W Supplier Packing Slip Client Bank Logistics
• 11. Purchase Process 8) The Company pays the purchase 9) Supplier receives notification of the payment 7) The Invoice is sent $ Private Accountancy Rec. W W W Invoice Supplier Invoice Integration with Receivables Client Bank Logistics
• 12. Purchase Process 10) Other entities related to the process may be integrated into the Platform and receive relevant information Private Accountancy Rec. W W W Client Supplier Bank Logistics
• 13. Electronic Invoice Documents are available from any web access, anytime Visualization, printing, editing, forwarding capabilities, and more Costs and time optimization Centralized storage Informs IRS Supplier Client Invoice XXX XXX XXX Invoice
• 14. Collection and Reconciliation The Client decides how and where to pay Notification to the Reconciliation module Information sent to the Supplier Integration with other entities available Supplier Bank Client IRS W W W Private Accountancy
• 15. Central Repository They can be reviewed and retrieved from a web access All documents created are stored on a Central Repository Private Accountancy Rec. W W W Client Supplier Bank Logistics Quote Purchase Order Packig Slip Invoice REPOSITORY
• 16. Basic Fixed-Order Quantity Model and Reorder Point Behavior R = Reorder point Q = Economic order quantity L = Lead time L L Q Q Q R Time Number of units on hand R = Reorder point Q = Economic order quantity L = Lead time L L Q Q Q R Time Number of units on hand
• 17. Cost Minimization Goal Ordering Costs Holding Costs Q OPT Order Quantity (Q) C O S T Annual Cost of Items (DC) Total Cost
• 18. Deriving the EOQ
• 19. EOQ Example Problem Data Annual Demand = 1,000 units Days per year considered in average daily demand = 365 Cost to place an order = $10 Holding cost per unit per year = $2.50 Lead time = 7 days Cost per unit = $15 Given the information below, what are the EOQ and reorder point?
• 20. EOQ Example Solution “ WITH NO SAFETY STOCK”
• 21. Safety Stock Safety stock reduces risk of Stock-out during lead time LT Time Expected demand during lead time Maximum probable demand during lead time ROP Quantity Safety stock
• 22. Reorder Point The ROP based on a normal Distribution of lead time demand ROP Risk of a stockout Service level Probability of no stock-out Expected demand Safety stock 0 z Quantity z-scale
• 23. Special Purpose Model: Price-Break Model Formula Based on the same assumptions as the EOQ model, the price-break model has a similar Q opt formula: i = annual percentage of unit cost attributed to carrying inventory C = cost per unit
• 24. Price-Break Example Problem Data (Part 1) Order Quantity(units) Price/unit($) 0 to 2,499 $1.20 2,500 to 3,999 1.00 4,000 or more .98 Start at lowest price per unit
• 25. Price-Break Example Solution (Part 2) Annual Demand (D)= 10,000 units Cost to place an order (S)= $4 First, start with the lowest price per unit. Carrying cost % of total cost (i)= 2% Cost per unit (C) = $1.20, $1.00, $0.98 Interval from 0 to 2499, the Q opt value is feasible. Interval from 2500-3999, the Q opt value is not feasible. Interval from 4000 & more, the Q opt value is not feasible. Next, determine if the computed Q opt values are feasible or not.
• 26. Price-Break Example Solution (Part 3) TC(1826)=(10000*1.20)+(10000/1826)*4+(1826/2)(0.02*1.20) = $12,043.82 TC(2500) = $10,041 TC(4000) = $9,949.20 Next, Compare total cost for the feasible root Q and price break Q values.
• 27. Price-Break Example Since the feasible solution occurred in the first price-break, it means that all the other true Q opt values occur at the beginnings of each price-break interval. Why? 0 1826 2500 4000 Order Quantity Total annual costs Because the total annual cost function is a “u” shaped function. EOQ Not EOQ Not EOQ
• 28. ABC Classification System Items kept in inventory are not of equal importance in terms of: dollars invested profit potential sales or usage volume stock-out penalties 0 30 60 30 60 A B C % of $ Value % of Use So, identify inventory items based on percentage of total dollar value, where “A” items are roughly top 15 %, “B” items as next 35 %, and the lower 65% are the “C” items.

• 1. Supply Chain Management
• 2. Business Trends
• 3. What is a Supply Chain ? All activities associated with the flow and transformation of goods from raw materials to end users. The term supply chain refers to the entire network of companies that work together to design, produce, deliver, and service products. A network of facilities including: Material flow from suppliers and their “ upstream ” suppliers at all levels, Transformation of materials into semi-finished and finished products ( internal process ) Distribution of products to customers and their “ downstream ”customers at all levels .
• 4. Components of the Supply Chain
• 5. Example of SC 2 nd Tier Supplier Upstream Internal Downstream 2 nd Tier Supplier 2 nd Tier Supplier 1 st Tier Supplier 1 st Tier Supplier Assembly/ Manufacturing and Packaging Distribution Centers Retailers Customers Grain Producer Processing Facility Packaging Distributor Store Customers Corrugate Manufacturer Lumber Company Label Manufacturer Grain Cereal Packaged Cereal Labels Word Paperboard
• 6. Complex-nonlinear Supply Chain
• 7. Three Flows in SC There are three kinds of flows in a supply chain: material , information , capital . Downstream Material: Products, Parts Information: Capacity, Delivery Schedules Finance: Invoices, Pricing, Credit Terms Upstream Material: Returns, Repairs, After-sales Services Information: Orders, Point-of-sale Data Finance: Payments
• 8. Push vs. Pull in supply chains Push or Building-to-stock(BTS): Producing stock on the basis of anticipated demand. Demand forecasting can be done via a variety of sophisticated techniques (some from the Operations Research area and some using Data Mining). Pull or Building-to-order(BTO): Producing stock in response to actual demand (firm orders). The Push-Pull Point: In many supply chains, upstream units employ BTS, while downstream units employ BTO strategies. The point in the supply chain where the switch-over (from BTS to BTO) occurs is called the Push-Pull point. Optimally locating the Push-Pull point is a key determinant of supply chain performance. Examples ?
• 9. The Push vs. Pull Model
• 10. Major Concepts Order fulfillment Deliver right order on time Front office operations: order taking, advertisement, CRM Back office operations: Accounting, finance, inventor, packaging, logistics Logistics: Managing the flow of goods, information and money along the supply chain
• 11. The Process of Order Fulfillment
• 12. The Steps of Order Fulfillment 7. Purchasing, warehousing 8. Demand forecast 9. Accounting, billing 10. Customer contacts 11. Returns (Reverse logistics) 1. Payment Clearance 2. In-stock availability 3. Packaging, shipment 4. Insuring 5. Production (planning, execution) 6. Plant services
• 13. Supply Chain Management (SCM) A set of processes and sub-processes which attempt to implement and optimize the functions, connected entities, and interacting elements of a supply chain. Involves: Organizations, procedures, people. Activities: Purchasing, delivery, packaging, checking, warehousing, etc. Establishment of long-term relationships with suppliers (supply alliances) and distributors Effective flow of information through the supply chain Supply chain optimization
• 14. Key Business Areas Enterprise performance Customer service Order management Demand planning Warehouse distribution Partnerships Supplier/supply base management
• 15. Benefits of SCM Reduce uncertainty along the chain Proper inventory levels in the chain Minimize delays Eliminate rush (unplanned) activities Provide good customer service
• 16. Global Supply Chain Can be very long Possible cross-border problems Need information technology support for: communication and collaboration Possible delays due to: customs, tax, translations, politics
• 17. Problems along the Supply Chain Delays in production, distribution etc. Expensive Inventories Lack of partners’ coordination Uncertainties in deliveries Poor demand forecast Interference with production Poor quality
• 18. More Challenges Complexity of the supply chain network e.g. large numbers of suppliers and distributors Complexity in product structure and manufacturing process How much product differentiation/ customization/ localization should be supported ? Where do you customize a product (upstream or downstream) ? decentralized control/organizational "silos" increasing pressure for customer service and asset utilization
• 19. Variability in the supply chain Demand variability Even the most sophisticated demand forecasting tools often fail to anticipate demand Examples of demand variability problems ? Process variability Production unit downtimes Unexpected staff absences Supply variability e.g., late deliveries from suppliers
• 20. The Bullwhip Effect Slight changes in actual demand create problems Babies Distributors Proctor & Gamble 3M Retailers
• 21. Common Causes of the Bullwhip Effect Demand forecast mismatches Demand forecasting distributed across units in the supply chain Order Batching Sometimes helps achieve economies of scale Price Fluctuations “ forward buy” inducements through lower prices Others: partners build “just in case” inventories lack of trust among partners cannot order material from suppliers
• 22. Product design The product has been designed so that localization (or customization or differentiation) can occur as close as possible to the local market. The product is built for a specific market before it is shipped out of the factory Upstream differentiation Downstream differentiation Example: The Hewlett-Packard Deskjet Printer. How might you localize ?
• 23. Technology in the SC The internet and the web can be very effective communication enhancers Software includes demand forecasting tools and planning tools to allow all SC members to coordinate their activities and adjust their production levels. Software can allow members to: review past performance monitor current performance predict future production levels of products .
• 24. Web SCM Share information about consumer demand Receive rapid notification of product design changes and adjustments Provides specs and drawings more efficiently. Increase speed of processing transactions. Reduce cost of handling transactions. Reduce errors in entering transaction data Share information about defect rates and types.
• 25. Example 1: Cisco Making use of the internet in its own supply chain. Products are manufactured by contract manufacturers (CM) Integrated well with both its CM’s and its component suppliers. Communicates a single forecast through both levels of suppliers, reducing the bullwhip effect. Display their product and component requirements to their entire chain.
• 26. Example 1: Benefits for Cisco Eliminated paper purchase orders and invoices Communicate engineering change orders electronically to all partners 90% of sales are made over the internet US$875 million annual internet savings (more than 50% due to SC initiatives) Lead times reduced 75% Low manufacturing manpower requirements despite rapid growth Cost reductions of 20%-28% every year.
• 27. Example 2: Dell Create “Virtual integration” : the entire supply chain acts like a single integrated company. Upstream partners: contract manufacturers (CM) and component suppliers Downstream partners/customers (most are business corporations) Share information with suppliers on inventory levels. Maintain long-term relationships with key suppliers for design collaboration.
• 28. Example 2: Benefits for Dell Dell and Suppliers work together as a “Virtual Enterprise” BTO benefits (low inventory) Dynamic pricing: change prices rapidly in response to demand and availability Strong links to corporate customers
• 29. Example 3: Covisint B2B Supply Chain Benefits Automated procurement lower procurement costs lower inventories Collaboration: complete visibility less bullwhip Efficient market More profits Sell unused capacity
• 30. Supply chain integration: Benefits Tangible benefits Inventory reduction, personnel reduction, productivity improvement, order management improvement, financial cycle improvements. Intangible benefits Information visibility, new / improved processes, customer responsiveness, standardization, flexibility, globalization, and business performance.
• 31. Evolution of Software Integration Completely Independent of each other MRP = Material Requirements Planning: Inventory, production MRPII =Manufacturing Requirements Planning more integrated, MRP+Finance+labor ERP =Enterprise Resources Planning All functional areas Extended ERP =Include suppliers, customers
• 32. MRP Core Concepts Key questions: How much of an item is needed to meet demand? When? What parts and components are required? When? When to order parts and components? Dependent demand production (or procurement) of parts and materials is directly linked to demand for the final product. Time-phased scheduling parts and components must be ordered in advance to accommodate lead times between order placement and receipt.
• 33. Enterprise Resource Planning (ERP) ERP = Integrating business processes and activities in real time Solves many supply chain problems Necessary for medium to large corporations May be useful for SMEs too Need to interface with EC order taking system Manages all routine transactions in the Enterprise
• 34. Post ERP (2nd Generation) 1st generation - transaction processing orientation 2nd generation including decision making capabilities EC requires decision support EC requires business intelligence SCM software: Production Planning, Manpower utilization, Profitability models, market analysis. Integration of SCM capabilities Other added functionalities: CRM, KM
• 35. ASP Leasing information systems application Back to the days of “time sharing” A risk prevention strategy Very popular with ERP (expensive, cumbersome)
• 36. Supply chain optimization Business objective: improve supply chain efficiency (velocity ?), optimize operation of the supply chain Metrics for efficiency - what do we optimize ? Define the problem in terms of decision variables Define an objective function in terms of the decision variables. The goal would be to maximize or minimize the value of this function, i.e., to find an allocation of values to the decision variables such that the value of this function is either maximized or minimized. Supply chain optimization is the continuous process of seeking optimal allocations of values to decision variables
• 37. Common optimization problems: I Long-term planning (time-frame: several months/years): Questions: How much of each product type should I manufacture ? When ? Where ? (Assumes a network of manufacturing centers with potential duplication of manufacturing capability) How much should I keep in inventory (both for manufacturing inputs and outputs) ? Where ? (Assumes a distributed network of warehouses) Constraints: Capacity constraints (both manufacturing and inventory) Demand profile Process constraints (downtimes, planned outages) Supply variability Objectives: Profit/revenue maximization, maximizing asset utilization, minimization of deviation from demand profile, minimization of deviation from target inventory profile
• 38. Common optimization problems: II Medium-term planning/scheduling (time-frame: a few months/weeks) : Similar to long-term planning, but with scheduling constraints and objectives added Unit scheduling/reactive scheduling: Questions: In what sequence should orders/jobs be manufactured ? Which job should I process on a given production unit at a given point in time ? Should I go into overtime ? Constraints: Capacity constraints Sequencing constraints Orders + deadlines Process constraints (downtimes etc.) Objectives: Minimize makespan (i.e., maximize asset utilization), minimize deviation from order deadlines, maximize profit/revenue
• 39. Common optimization problems: III Shipping: How do I allocate orders to trucks ? What routes should trucks travel on ? How do I allocate truck to routes ?
• 40. Major classes of optimization techniques: From the field of operations research (OR) Linear programming Integer programming…. From the field of artificial intelligence (AI) Constraint programming Heuristic search techniques
• 41. Supply Chain Mgt. Software Includes demand forecasting tools and planning capabilities to allow all supply chain members to coordinate their activities and adjust their production levels Firms offering SCM software: i2 Technologies RHYTHM Manugistics
• 42. Purchasing, Logistics & Support Software Enterprise Resource Planning (ERP) software is designed to integrate manufacturing, finance, distribution, and other internal business functions into one information system Major ERP vendors include - Baan J.D. Edwards Oracle PeopleSoft SAP
• 43. B2B E-Commerce Software Designed to help companies build Web sites that host: Catalog Marketplace and other commercial sales activities Major software packages include: Netscape - SellerXpert & ECXpert, OpenMarket Transact, IBM’s Websphere. MS Site Server, and Ariba
• .