SCM of Samsung Electronics

Table of Contents
1. 2. 3. 4. 5. 6. Introduction Background SCM Case APS SCM Timeline Result of SCM

1. Introduction

SCM - Definition

Supply Chain Management

Suppliers

Purchasing

Production

Distribution

Customers

Supply Chain planning

Supply Chain Execution

Collaborate planning

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

1. Introduction

SCM - Strategies
Collaborative Planning

Supply Chain Planning

To provide stable supplies for any circumstance of market

3 strategies of SCM

Planning immediate Information share with customers and suppliers

Supply Chain Execution To manage timeline for Supply Chain System

1. Introduction

Elements of SCM

Organization: Global Operation Center Planning, Operating, regulating, and Monitoring Process: Forecast-based, daily production planning System: APS (Advanced Planning & scheduling System)

2. Background

Current Status

The world's largest electronics company Global market leader in more than 60 products Business areas: Consumer electronics Telecommunication Semiconductor As of 2007 Revenue $103.4 billion Net income $21.5 billion Employees Over 138,000

2. Background

Business process perspective

Quick reactions in rapidly changing markets

Rapid market growth, price drops, new paradigms, etc.

2. Background

Business process perspective

Demand for centralized supply control

sharing of quick, exact, and useful information about current status & future forecast
Demands Forecast Low reliability of forecasts Lack of management tools on forecast Delivery Due Date Low reliability of delivery due date Need for setting priorities for demands Planning Decentralized planning processes Lack of unified standard information Inventory Control little control over worldwide inventory Lack of tools for strategic planning

Late delivery

Surplus inventory

2. Background

Business process perspective

Strengthening global competitiveness

60~70% of extra values come from supply chain Competitors (Intel, GE, Sony, HP, Toshiba, ) began implementing SCM systems To gain competitive advantage, it was important to enhance supply chain and the way of managing it

2. Background

Information Systems perspective

Difficulties in integrating decentralized local information systems

Decided to develop a stand-alone SCM tool that centralizes and streamlines supply chain management

Preparation for future e-business system

Implementing SCM as a step toward future e-business

3. SCM Case

Samsung Electronics

Samsung Electronics Plans for introducing SCM

PLAN1.
Rapid planning for fast reaction to market changes

PLAN2.
Predicting demands with information integration

PLAN3.
Real-Time delivery to customers

3. SCM Case

PLAN 1
Forecasting / Order Control/Management Selling Plan Allocation Plan Manufacture Plan Salesperson Sales Department Strategy Marketing Merchandise/ Manufacture Manufacture Management Purchase

Rapid planning for fast reaction to market changes

Salesperson Sales Department Strategy Marketing Merchandise/ Manufacture Manufacture Management Purchase

Week Cycle
Forecasting/Order Control/ Management Selling Plan Allocation Plan Manufacture Plan Purchase Plan

Month Cycle

In 1 day, Set-up All Plans

Purchase Plan

Integrates all planning steps Provides real-time business information & Accurate plans and decisions are made for each order Right plans are made quickly

3. SCM Case

PLAN 2

Predicting demands with information integration

Local Marketing

Salesman

Strategy Marketing

Customer

Salesman

Local Marketing

Customer

Bullwhip Effect

Command Center

Command Center

Strategy Marketing

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

3. SCM Case

PLAN 3
Real-Time delivery to customers
Delivery by the local stock Delivery by the supply plan

Lack

Customer If there are no stock and we dont know when can we buy, we will buy from other company!!

Headquarter

Allocation
OnHand InTRANSIT

Manager Salesman Stock Manufacture plan

Customer Material plan

OnHand

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

4. APS

Global Production Planning

Samsung Electronics introduced Global Production Planning, as a specific solution that enables SCM Global Production Planning is a similar concept to APS

4. APS

Effects of implementing APS

Simultaneous planning Reduction in time for planning Shortened planning cycle: Weekly, daily planning Enables making accurate production plans Enhancements on on-time delivery Enables quick responses Enhanced Customer service

5.SCM Timeline

From 1997 To 2007

5.SCM Timeline

In 2009

Global SCM TOP 8

The AMR Research Supply Chain Top 25 for 2009

6.Result of SCM

Improvements on process management

43.6 56

inventory turnover ratio

(day)

sales
(Trillion Won)

33 18.5

inventory..bond
5.2 3.8 (Trillion Won)

Improvements on process management - Shortened process management cycle: monthly -> weekly -> daily - Simultaneous planning/execution of worldwide manufacturing/sales plans as a single system - Reduction of lead time for planning: previously 3 weeks, reduced to less than 1 week

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6.Result of SCM

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