The Internet Changes

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The Internet Changes

• Some Things

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Better Enterprise Systems Better E-business
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• If you buy a book or a car on the Net, the
  critical part of the transaction is still the
  book or the car. Especially in business-to-busines
  s commerce, the Internet may improve efficiency
  through more price competition and supplier
  choice. But these are changes of degree, not
  kind
• Robert J. Samuelson, World View - The Internet
  and Gutenberg, Newsweek, January 24,2000

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• While Net markets make it easy for buyers to
  find suppliers and complete transactions online,
  those things do not happen in a vacuum. They are
  driven by data, forecasts and analyses housed in
  and created by ERP and supply-chain systems.
  That intelligence represents the true keys to the
  e-business kingdom.
• Richard Karpinski, Time has Come for B to B Net
  Markets, Internet Week

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We may be dinosaurs, but dinosaurs ruled the
Earth for millions of years
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Been e-shopping lately?

• Adventure 1
• Ordered some specialty beef
• Was told delivery by week-end
• Did not arrive - I called them
• Told it would arrive next Saturday
• Did not - they called me
• Told that forecasts had been way low - not
  possible by Christmas
• Said I needed it by New Years Eve
• Arrived 30 December

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• Adventure 2
• Ordered some caviar
• Was told delivery by Christmas
• Got a call 23 Dec - wont arrive, But were
  sending you some cookies(?) by Christmas
• Said I needed it by New Years Eve
• Cookies arrive 27 December (?)
• Caviar arrives 30 December

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Began to think about...

• General Planning Practices
• Order Scheduling
• Available to Promise
• Demand Management
• Customer Service planning

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Dinosaur Idea
Forecast
Shipment Planning
Fulfillment Planning
Procurement Planning
Actual Delivery
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MRP
MRP2
ERP
Supply Chain
eERP???
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Dinosaur Idea

• Put data where it belongs.

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Planning Data belongs in the Enterprise System

• Much has accounting reality -POs, On hand,
  Customer Orders, Confirmed Supplier Schedules
• Some interacts closely with the above -
  Forecasts, MPS/MRP output
• Computation engine are mature - or maturing
• Components must work together real time

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What Works Best Outside the Enterprise System?

• Communication with third parties
• Moving information - not processing it
• Collecting Intelligence
• Abstract information with no accounting reality

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Dinosaur Idea

• Order Management

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Bound for the Bone Pile
Customer Orders
Shipped Orders
On Hand Inventory
Create Backorders
Clear Backorders
Inventory Replenished
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Why?

• Customers interacting online
• Raised Expectations
• No Downtime
• 24X7 operation - Difficult to establish cutoff
  for backorder clearing
• Disruption to Internet enabled process
• No order scheduling
• Order ships now or perhaps not at all

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Dinosaur Idea

• Available to Promise (ATP)

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Traditional ATP (APICS 101)
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ATP with Accumulation
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So What?

• Orders can schedule in advance
• With reliable data - 100 reliable order
  scheduling
• Accumulation and ATP calculations can profoundly
  affect customer service and revenue
• Enterprise systems already have these
  sophisticated engines -no need to duplicate

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Orders Can Schedule in Advance
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Everybody talks about Supply Chain...
Customer
Costs
Inventory
Distributor/Manufacturer
Costs
Inventory
Supplier
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Customer
Costs
Inventory
Distributor/Manufacturer
Inventory
Costs
Supplier
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Costs go down with advance planning...
Customer
Costs
Inventory
Distributor/Manufacturer
Inventory
Costs
Supplier
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But lets talk about the Internet

• Web application prompts customer for request
  date
• Instant feedback for promise date
• Measure abandons
• Vital data for understanding customer service and
  revenue impact of inventory and procurement
  policies

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But what about that reliable information?
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How the Internet can help

• Provide replenishment schedules to suppliers via
  the Web
• Request and receive rapid feedback for assured
  supply
• (In the Enterprise system) Only count confirmed
  supply as supply

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For business to business order taking applications

• Customer forecasts come into the Enterprise
  system via the Web
• Confirmations returned to customers
• In Enterprise system use ATP rules and
  disciplines to give priority to forecast amounts

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Sophisticated ATP mechanisms already in
Enterprise systems

• Create different rules for different customers
• Priority to forecast amount
• Some customers can bump other customers
• Since Web interactions take place without humans
  - ATP rules help automate customer service rules

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The Tar Pit of ATP
ATP is a self fulfilling Prophesy
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How Enterprise systems can help

• Forecast consumption occurs at greater than
  normal rate in future periods

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How Web applications can help

• Keep track of quantity (or value) of orders
  being scheduled after request date
• Keep track of abandons
• email an alert to appropriate individual at
  tolerance

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The Improved Dinosaur

• Capable to Promise
• More adaptable
• Fundamental data still the same
• More data required

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Dinosaur Concept
Make a plan and manage to attain it.
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Dinosaur Data
Sales forecast
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How Web applications can help

• Variable Pricing
• Market Price concept - manage demand via
  pricing
• Custom Marketing
• Dont just market for the customer - market to
  forecast and current demand

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Dinosaur Concept
Provide value add - Do it right or make it right
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Dinosaur Data
Product categories, Product families,
substitutions
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How Web applications can help

• Dont just give promise date - suggest similar
  products available earlier
• Collect data on switches and abandons
• Solve problems with customer service gifts

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To summarize

• There is powerful functionality in the Enterprise
  system - use it
• Use Web applications to enhance customer
  interaction
• Keep enterprise data in Enterprise systems
• Use auxiliary (Web) applications for more
  abstract data collection

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Watch out for asteroids...