SCM of Samsung Electronics MIS Group 1 1. What is SCM? Definition: SCM is the management management of a network of interconnecte interconnected d businesses involved in the ultimate ultimate provision of product and service packages reuired b! end customers. "t is related with efficienc! of a compan!#s suppl!$ the goal of SCM is$ to reduce cost caused b! bullwhip effect$ or other dumm! cost in suppl! chain. SCM Strategies: Man! companies use these % strategies for reducing cost. Samsung &lectronics also innovate S&#s suppl! chain b! this strategies 1' Suppl! Chain (lanning )SC(' SC( is a strateg! to provide stable supplies for an! circumstance of market. "t#s related to compan! and suppliers. SC( includes: Suppl! Chain *etwork Design Demand (lanning + ,orecasting Suppl! (lanning Distribution (lanning Manufacturing (lanning + Scheduling -' Collaborative (lanning )C(' C( is pla plann nnin ing g imme immedi diat ate e "nfo "nforma rmati tion on sha share re wit with h custo custome mers rs and and sup suppl plier ier.. "t#s "t#s related to compan! and customer. C( includes: Design Collaboration Demand Collaboration (rocurement Collaboration etailer Collaboration %' Supplier Chain &/ecution )SC&' SC& is to manage timeline for Suppl! Chain S!stem. SC& includes: Warehouse Management 0ransportation Management "nventor! Management rder Management %(2$ 3(2 S!stem SCM &lements: SCM has % elements$ rgani4ation$ (rocess$ and S!stem. rgani4ation is the controller$ means means the compan! compan! who manage manage SCM. SCM. (rocess (rocess is about about suppl! suppl! chain$ chain$ foreca forecast5 st5base based$ d$ dail! dail! production planning in compan!. 6(S)advanced planning + scheduling'is the s!stem of SCM$ based on &(. Demand Manager$ Master (lanner$ Demand ,ulfillment$ ,actor! (lanner is included. -. 7ackground -.1 Samsung &lectronics Samsung &lectronics is the world#s largest electronics compan!. 6s of -889$ its revenue is 18%.3 billion ;SD and its net income is -1.< billion ;SD$ making it one of the largest companies in the world. Samsu Samsung ng &lect &lectro roni nics# cs# busin busines ess s area areas s are Semi Semico cond nduct uctor ors$ s$ 0elec 0elecom ommu muni nicat catio ion$ n$ and and Consumer &lectronics. "t is the market leader in more than =8 markets$ including mobile phone$ television$ digital displa!s$ home appliances$ D6M$ flash memor!$ and etc.
-.- Wh! did the! need SCM "n 1>8s Samsung &lectronics began to enter the global marketplace as a small consumer electronics compan!. 6fter that$ information technolog! related markets were getting bigger and bigger in the late 1>>8s$ and Samsung &lectronics eventuall! grew up as one of the largest electronics compan! in the world. 6s a rapidl! grown compan!$ it had to discard previous s!stem$ and build a new s!stem that fits the newer$ bigger Samsung &lectronics. ne of these ke! innovations was implementation of SCM. 0o describe it in detail$ the background of doing SCM can be e/plained with two perspectives: 7usiness (rocess (erspective and "nformation S!stems (erspective. -.-.1 7usiness (rocess (erspective ,irst of all$ there were needs for uick reactions in rapidl! changing markets. 6s business areas with a lot of innovations$ information technolog! related markets suffer freuent changes. ,or e/ample$ the price of D6M and *6*D ,lash memories fell more than >< percents in < !ears$ from -881 to -88=. 6lso$ the si4e of mobile phone market has been constantl! growing at a remarkable rate in the last decade. "n these freuent$ rapid$ dramatic changes$ Samsung &lectronics need to be more reactive and proactive$ b! introducing SCM to its suppl! chains. Secondl!$ as a global corporation with worldwide divisions$ Samsung &lectronics needed a centrali4ed suppl! control. 7efore doing SCM$ suppl! chains of Samsung &lectronics were controlled b! regional divisions and these decentrali4ed suppl! control had numerous disadvantages. ;nreliable demands forecast$ lack of unified standard information$ no strategic planning for inventor! and low reliabilit! of deliver! due date were the most important problems of Samsung &lectronics# suppl! control s!stem. 0herefore$ in order to solve these problems$ Samsung &lectronics need to centrali4e its suppl! management with SCM. 0hirdl!$ Samsung &lectronics# competitors were alread! implementing SCM$ and it was necessar! for Samsung &lectronics to follow them in order to compete with them. "n the late 1>>8s$ Samsung &lectronics# competitors such as Son!$ @&$ and A( were researching about SCM$ and some of them alread! started to do SCM. 6s a result of doing SCM$ the! got shorter lead times$ cheaper logistics costs$ and more price competitiveness. 0herefore$ in pursuit of getting continuous competitive advantage against them$ Samsung &lectronics decided to follow its competitors$ and started to implement SCM to its suppl! chains. -.-.- "nformation S!stems (erspective Samsung &lectronics decided to implement SCM because it was an efficient wa! to integrate decentrali4ed suppl! controls. 7ecause the decentrali4ed suppl! control s!stem had man! problems$ Samsung &lectronics chose to integrate the suppl! s!stems and there were two wa!s to do it. ne of the possible wa!s was to integrate all the regional &( s!stems around the world b! networks. Aowever$ it need more than one !ear of time with <88 developers$ which would be too e/pensive. 6lso$ managing and monitoring centrali4ed sales B manufacturing B logistics plans were too difficult in that &( network s!stem. 0herefore Samsung &lectronics chose to make a stand5alone SCM s!stem that centrali4es and streamlines suppl! chain management. 6lso$ another reason for doing SCM was that SCM was a step toward future e5business. @rowth in the development and application of e5business technologies in the 1>>8s made e5business a promising future trend. Since e57usiness and SCM are closel! related$ man! companies started to do SCM as a step ahead to future e5business$ and Samsung &lectronics was one of them. %. SCM Case Samsung &lectronics "t is summari4ed that Samsung &lectronics introduced SCM with three plans. 7! three plans$ Samsung &lectronics could accomplish SCM and reduce a lot of costs. 0hese three plans are presented below. (26*1. apid planning for fast reaction to market changes (26*-. (redicting demands with information integration
(26*%. eal50ime deliver! to customers
%.1 apid planning for fast reaction to market changes Demands prediction b! salesperson and order information can be distorted or lost b! unsuitable support of the middle organi4ation. 7ecause a compan!#s future proects are based on this distorted market information$ these wrong information can directl! lead to wrong$ inefficient proect plans. 7! integrating all the planning steps into one concurrent planning$ Samsung &lectronics could get real5time business information and make right proect plans uickl!.
E,igure %.1F apid planning for fast reaction to market changes
%.- (redicting demands with information integration "nformation for sales and predicting demands are made b! local marketing group who contact with customers$ and this information is controlled b! strateg! marketing group in the headuarter. "nformation management s!stem in this kind of s!stem is ver! likel! to cause incorrect demands prediction$ without the help of concurring collection of demands data. 7! integrating dispersed local information managements into one centric management process$ it was possible to perform simultaneous management on information$ and eliminate all the inefficiencies originated from inaccurate forecasts.
E,igure %.-F (redicting demands with information integration
%.% eal50ime deliver! to customers Gualit!$ time limit for deliver!$ and price of products are euall! applied to high5tech products.
"n order to deliver the products that sustain high5ualit! within the contract term$ it was important for Samsung &lectronics to acuire the credible date that a compan! can guarantee. 0hus$ allocation of resources in advance based on current situation was essential for on time deliver! through reliable information sources$ and it was possible with SCM.
E,igure %.%F eal50ime deliver! to customers
3. 6(S 5 @lobal (roduction (lanning 6s a specific solution that enables SCM$ Samsung &lectronics introduced H@lobal (roduction (lanningI. @lobal (roduction (lanning is a similar concept to 6(S. With this @lobal (roduction (lanning$ Samsung &lectronics could make plans simultaneousl!$ reduce time needed for planning$ and shorten the planning c!cle J weekl! or even dail! planning. 6lso$ it enabled Samsung &lectronics to make precise production plans$ enhance its on5time deliver!$ response uickl! to circumstances$ and enhance its customer service. <. SCM 0imeline ,rom 1>>9 to -889 ,igure < is 0ime line of S&#s SCM from 1>>9 to -889. (ink arrow shows design for SCM. 7lue section is SCM process. range area is shown about 6(S. 6nd gra! thing is about @C)@lobal peration Center'. @reen arrow is about organi4ation. ,inall! in -88> Samsun &lectronics become SCM World anking 0op .
E,igure <.1F 0imeline of S&#s SCM 1>>9K-889
E,igure <.-F SCM World 0op S&
=. esult of SCM 5 "mprovements on process management Samsung &lectronics improve on process management. ,igure = show us following things: 5 Shortened process management c!cle: monthl! 5L weekl! 5L dail! 5 Simultaneous planningBe/ecution of worldwide manufacturingBsales plans as a single s!stem 5 eduction of lead time for planning: previousl! % weeks$ reduced to less than 1 week
