Surviving

1
SCM
Welcome
Surviving Strategies for
3 Tier 11/20/2001
Hwang,SunJung(MIS) Lee,SungWook(MIS) Shin,HaeJeong
(Techno)
2
SCM
Contents
3
SCM

1
SCM Overview
4
SCM
What is SCM?
SCM is a business network covering from buying,
making, moving, warehousing to selling
Making

Moving
Buying


What is SCM?
Selling
Ware housing


5
SCM
Supply Chain Status
Yet existing supply chain is managed manually,
causing serious loss of efficiency and cost
T I E R 1
T I E R 2
T I E R 3
Supplier
Supplier
Supplier
OEM
Supply Chain Status
Prospect of supply chain

• Manual communication (Phone/Fax/EDI)
• Spontaneous planning
• Hypothetical planning
• Tier To Tier
• Enormous inventory buffer

2000
2002
Fax/ E-mail
60
78
60
65
EDI
88
On-line
28
Forrester Research, 2000
6
SCM
Background of SCM and its effect
The change in the industrial environment demands
the business to adopt to SCM and it can bring the
following effects
Background
Effects
Emerging new channel
Channel integration
Standardization of product and tech
Speedy adaption to change supply chain
Competition among supply chains not among
companies
Severe competition
Enhanced customer satisfaction
Speed management
Supply chain integration thru web
Internet booming
Shorter product life cycle
Product life cycle management
7
SCM
Components of SCM
SCM is devided by SCP to offer optimized
planning, SCE to stable execution platform, CP to
collaborate
Supply Chain Execution
Timely execution for buying, moving, making and
ordering

• Warehouse Management
• Transportation Management
• Inventory Management
• Order Management

Supply Chain Planning
Optimized planning for balanced supply for varied
demands

• Supply Chain Network Design
• Demand Planning Forecasting
• Supply Planning
• Distribution Planning
• Manufacturing Planning
• Scheduling

Collaborative Planning
Facilitating collaboration among participants

• Design Collaboration
• Demand Collaboration
• Procurement Collaboration
• Retailer Collaboration

Arther Andersen Korea
8
SCM

2
SCM Architecture
9
SCM
SCP Service
SCP analyze, forecast and determine the process
of buying, making, transporting, warehousing and
selling for balanced supply
Move
Objectives
Enhancement of customer services
Reduction of inventory and increasing sales
Effective acquisition of raw material
Effective management of product resources
Function
Demand Planning Fulfilment
Distribution Planning
Manufacturing Planning
Material Planning
-Collaboration for cost reduction -Reducing
VMI (Vendor managed inventory)
-Production planning considering
constraints -Optimizing production scheduling
-Differentiated inventory management according
to demands -Prevention of missing the sales
opp.
-Demand forecasting based on statistics -Predict
ion of sales point on excess demand (ATP, CTP)
Arther Andersen Korea
10
SCM
SCE Consulting
The effective SCE requires re-designing of supply
chain to enhance management capability
Logistics consulting
Seamless System
-Re-engineering of logistics process -Analysing
and designing supply chain -Logistics cost
diagnosis -Management of logistics
center -Checking cycle time and lead time
- Flow management of ordering, logistics and
transfering
Logistics center system

• Work management
• Process designing
• Standardization
• Packaging simulation

-E-business of logistics -Solution for integrated
logistics info and seamless service
Transport system

• Transportation scheduling
• Location system

Cyber logistics consulting
Arther Andersen Korea
11
SCM
CP Flow
Collaboration is realized in each stage of
stategy, management and transaction of SCM
Tactical
Tactical
Demand Forecasting
Optimizing product mix
Collaboration on Forecasting
Collaboration on Forecasting
Matching demand -supply
Capacity Planning
Collaboration on Capacity Planning
Analyzing Supply Chain
Resource Planning
Operational
Operational
Production Planning
Demand Management
Shipping Optimization
Analyzing Supply Chain
Inventory Planning
Status Management
Transcctional
Transcctional
Shippment Tracking
Collaboration on Resource Planning
Shop Floor Control
Warehousing Management
Ordering Administration
Order Shipments
Inventory Tracking
Accenture
12
SCM

3
i2 SCM Review
13
I2 Mission Vision
Foundation
Vision
Mission
-Founder Sanjiv Sidhu Ken Sharma in
1988 -Principle Manufacture planning could
not only be executed faster but also be
based on business goals and enterprise
conditions
The Leader in supply chain management and
intelligent eBusiness
Continuous Innovation, Quantifiable
results for our Customers Growth Resulting
in i2 Re-investment
14
I2 SCM Solutions
i2 SCM Solutions a family of solutions
providing complete supply chain management from
sourcing and manufacturing to distribution,
logistics and transportation planning
15
i2 Scope of SCM
Strategic Planning
Collaborative Planning

• Demand planning
• Demand collaboration
• Merchandise planning

• Network design and
• scenario analysis
• KPI analysis
• Service budget optimization

Collaborative Supply Planning
Supply chain execution

• Multi-enterprise multi-tier
• collaborative supply planning
• Supply/inventory collaboration
• Profit optimization
• Factory/Allocation planning
• Replenishment/Transportation
• planning
• Scheduling
• Enterprise project planning

• End-to-end logistics and fulfillment
• process with supply chain
• event management
• Transportation management
• Fulfillment center management
• International trade management
• Supply chain event management

16
System Architecture of i2 SCM
i2 SCM System Architecture
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(No Transcript)
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I2 Bleeds In Shark-Infested Waters
On the first quarter of this year, the revenue of
i2 fell for the first time since the foundation
of the company
19
Stock price
Stock price which skyrocketed to about 120 last
year, is currently priced at 7. 25
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SCM

4
Competition
21
SCM

Gartner Groups SCM Magic Quadrant
i2 was a dominant market leader in SCM market,
but the gap with competitors has been reducing
recently.
Source Gartner Group (12/21/99)
22
SCM
Complementary Relation SCM ERP
SAP thought SCM and ERP are in complimentary
relationship
Integrated Planning
SCM
Integrated Planning
Integrated Transaction Management
Order Fulfillment
Procure -ment
Human
Financing
Inventory
Manufac- turing
Delivery
ERP
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SCM
Transformation of SCM and ERP Vendors
so, SAP made mySAP SCM by adding deficient
functions of their R/3

• Logistics
• ATP (Avialable
• To Promise)
• -CTP (Capable
• To Promise)
• Order Assignment

SCM R/3

• Forecasting
• Resource
• Management
• Procurement
• Manu. Scheduling
• Risk Management
• Optimization

Tight integration
mySAP SCM
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Configuration - R/3, mySAP SCM
mySAP SCM fills up planning function for supply
chain which lacks in SAP R/3.
Plan
Do
See
Analysis
Sales Management
My SAP SCM
SAP R/3 core
Business warehouse
Manufacturing Management
Procurement /Raw material Management
25
SCM

Plug-In Intergration with ERP
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Architecture mySAP SCM
27
SCM

GAP Analysis
SAP and i2 have some differences on their SCM
solutions, and we can find their strategies by
analysing gap
i2 SCM
mySAP SCM

• based on Factory Planner
• Advanced Planning and
• Scheduling Function
• SCE from EXE technologies
• for large and mid market
• High product flexibility

• based on SAP R/3
• Inferior Planning and
• Scheduling Function
• SCE Single source
• mainly for large company
• Low product flexibility

28
SCM

5
Starategy for i2
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SWOT Analysis
Strength
Weakness

• Proven function and
• know-how
• Knowledge of various industries
• Cross platform by open system architecture
• Corporate image of expertise

• Lack of infra and capital compared to SAP
• Failure case of NIKE projects
• Lack of SCE solutions

• Increasing interest in supply chain management
• Hightened negative view on ERP
• Emerging network-distributed environment

• Slowdown on B2B and IT industry
• Severe Competition of SCM marekt

Opportunity
Threat
30
Strategy for i2 Technological Innovation
i2 is pursuing technological innovation to
solidate the leading status and i2.Five.Two is
introduced in such efforts
Enhanced Function

• Adding new strong functions
• XML based API
• Including SRM, CRM products

Module based Architecture
Flexible Collaboration

• Set up new standard for collaboration
• Flexible framework to bridge between planning and
  execution

• Designed to be rolled out incrementally
• Able to build critical part first
• Yield highest ROI

31
Strategy for i2 New Business Solution
i2 should make efforts to transform itself into
solution provider for B2B marketplace in the
longrun, and has high possibility to succeed
considering open system architecture.
Limitation of current e-marketplace
Capabilities of i2 on e-marketplace

• Best expertise in supply chain
• Open system for integration of various
  participants
• Technologies for integration like SIS, EAI
• Experience in alliance with other business

• The Low integration level among suppliers
• Focused on pricing-centered transaction
• Lack of information sharing
• No infra for collaboration

Softbank research, 2001
Providing infrastructure and optimization
features for online marketplace
32
Strategy for i2 New Business Solution
i2 offer solutions enabling the maximized
effectivity by internal function and platform for
collaboration with external entities
- Flexible participants control
Supplier
Supplier
Supplier
Seller

• intelligent marketplace having SCM, CRM,
  e-procurement solutions

Buyer
end- customer
Distriutor
end- customer
- Effective collaboration platform
-Flexible integration of different systems
33
SCM
Strategy for i2 New Business Solution
Any participants in i2 marketplace can access
functions for SCM, CRM just by linking and
perform collaboration with their own ERP
ERP
CRM
eProcurement
Vendor of Vendor
Vendor
Customer of Customer
Customer
i2 B2B Marketplace
34
Strategy for i2 Mid-market Strategy
i2 should target mid-market strategically.
Because solution vendors (SAP, Oracle) in
extended-ERP have tendency to expand market in
the companies using their ERP product with
certain size.
Charateristics of mid-market
Strength of i2 in mid-market

• Experience of mid-market with FP
• Core tech in SCM ASP
• compared to competitors
• Experience of integration of various software

• Lack of ERP like software
• No room for large investment
• Prefer to fast ROI

Mid-Market Leader
35
Strategy for i2 Mid-market Strategy
In mid-market, i2 has already complicated
i2-pronto and established alliace with ERP ASP
vendors for aggressive market expansion.

• ASP service with installing core on i2 server
• Enable to cut initial cost
• Ensure to fast ROI by module based architecture

ERP ASP
i2 SCM ASP

• Tight Data Link Between SCM-ERP
• In-out Process Integration

• Alliance with ERP ASP vendor
• Defeat the limit of non ERP based i2

36
Summary
i2 will be the ultimate winner by persistent
technological innovation and various strategies.
No.1 IT Company
Strategic Alliance

• ERP Vendor
• Various for progress

Endless Innovation
New business

• Function Development
• Sealess Integration

• Solution for B2B exchange
• Open System Strategy

Mid-market Debut

• i2 proto
• Asp bz model develop

37
Q A
Are there any questions?