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Business Process Management in Logistics and Supply Chains

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Business Process Management in Logistics and Supply Chains BusinessBusiness ProcessProcess ManagementManagement inin LogisticsLogistics andand SupplySupply ChainsChains DrDr BillBill KarakostasKarakostas CityCity University,University, LondonLondon 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 1 ContentsContents ofof thisthis PresentationPresentation ConceptsConcepts ofof SupplySupply chainchain SupplySupply ChainChain ManagementManagement TheThe SCORSCOR ModelModel ofof SCMSCM ITIT RequirementsRequirements forfor SCMSCM WhatWhat isis BPMBPM BPMBPM ConceptsConcepts BPMBPM ToolsTools andand ArchitecturesArchitectures HowHow BPMBPM leveragesleverages SCMSCM ConclusionsConclusions 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 2 PartPart II SupplySupply ChainChain ManagementManagement 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 3 WhatWhat isis SupplySupply Chain?Chain? TheThe interconnectedinterconnected setset ofof businessbusiness proceduresprocedures andand businessbusiness partnerspartners thatthat managemanage thethe flowflow ofof goodsgoods andand informationinformation fromfrom thethe pointpoint ofof designdesign toto thethe deliverydelivery ofof thethe productproduct oror serviceservice toto thethe endend consumerconsumer AA supplysupply chainchain isis likelike aa wellwell balancedbalanced andand practisedpractised relayrelay teamteam inin whichwhich thethe entireentire teamteam isis coordinatedcoordinated toto runrun thethe racerace 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 4 AA PicturePicture ofof aa simplesimple SupplySupply ChainChain $ $ $ Purchasing Manufacturing Packaging Shipping 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 5 AA moremore rigorousrigorous definitiondefinition ofof ‘Supply‘Supply Chain’Chain’ Supply Chain (SC) is a system that provides a channel through which companies and organizations deliver their products and services to their final customers. The structure of the SC is linear and consists of the following entities: suppliers, manufacturer, distributors, retail outlets and consumers. The suppliers provide the sources for raw materials and services that the manufacturer will use in order to produce the final product or service. The distributor transports the product from the manufacturer to the retailer quite often through a wholesaler. Stock warehouses are used depending on the location, the type of product, distribution centres and so on. Finally the consumers purchase the product or service from the retailers. 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 6 SupplySupply chainschains andand ValueValue ChainsChains EveryEvery firmfirm cancan bebe understoodunderstood asas aa collectioncollection ofof activitiesactivities thatthat rangerange fromfrom thethe design,design, marketing,marketing, deliverydelivery andand supportsupport ofof aa productproduct ValueValue chainchain activitiesactivities fallfall underunder twotwo genericgeneric categories:categories: primaryprimary andand supportsupport activitiesactivities PrimaryPrimary activitiesactivities constituteconstitute thethe physicalphysical productionproduction ofof thethe product,product, thethe salesale andand transfertransfer toto thethe buyerbuyer andand postpost salessales helphelp assistanceassistance andand soso on.on. SupportSupport activitiesactivities areare allall otherother activitiesactivities involvedinvolved inin supportingsupporting thethe primaryprimary onesones suchsuch asas marketing,marketing, informationinformation systemssystems etcetc 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 7 PrinciplesPrinciples ofof SupplySupply ChainChain IntegrationIntegration ExtendingExtending thethe enterpriseenterprise toto embraceembrace allall aspectsaspects ofof aa productproduct oror serviceservice IntegrateIntegrate businessbusiness systemssystems ofof customerscustomers supplierssuppliers andand partnerspartners toto createcreate aa commoncommon informationinformation basisbasis ProvideProvide realreal timetime supportsupport toto increaseincrease responsivenessresponsiveness StriveStrive forfor executionexecution excellenceexcellence byby fullyfully automatingautomating andand optimisingoptimising businessbusiness practicespractices 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 8 TheThe ‘old‘old style’style’ SupplySupply ChainChain AtAt thethe beginningbeginning ofof thethe Century,Century, supplysupply chainschains werewere paperpaper chains,chains, linearlylinearly connectingconnecting manufacturers,manufacturers, warehouses,warehouses, wholesalers,wholesalers, retailersretailers andand consumers.consumers. TheThe chainchain rangedranged fromfrom oneone oror twotwo toto dozensdozens ofof tierstiers andand logisticslogistics werewere aa nightmare.nightmare. PeoplePeople andand paperpaper physicallyphysically connectedconnected allall ofof thethe tierstiers [of[of thethe chain]chain] together.together. Furthermore,Furthermore, thethe linearlinear naturenature ofof thethe chainchain mademade communicationcommunication betweenbetween thethe front-endfront-end andand back-endback-end ofof thethe chainchain messymessy andand timetime consuming.consuming. 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 9 ModernModern SupplySupply chainschains areare inin factfact networksnetworks TheThe termterm ‘Chain’‘Chain’ suggestssuggests thatthat onlyonly oneone playerplayer isis involvedinvolved atat eacheach stagestage ofof thethe flowflow ofof materials/productsmaterials/products InIn realityreality aa manufacturermanufacturer maymay receivereceive materialsmaterials fromfrom severalseveral supplierssuppliers andand thenthen serveserve manymany customerscustomers throughthrough aa complexcomplex distributiondistribution systemssystems MostMost supplysupply chainschains areare inin factfact ‘networks’‘networks’ 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 10 SupplySupply ChainChain flowsflows Supplier manufacturer Distributor Retailer Consumer 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 11 SupplySupply chainchain conceptsconcepts SupplySupply chainschains areare concernedconcerned withwith thethe flowflow ofof information,information, materialsmaterials andand moneymoney downstreamdownstream (from(from thethe suppliersupplier toto thethe customer)customer) andand upstreamupstream (from(from thethe customercustomer toto thethe suppliersupplier InformationInformation flows:flows: demanddemand forecasts,forecasts, specifications,specifications, purchasepurchase orders,orders, performanceperformance reportsreports MaterialMaterial flows:flows: productsproducts sendsend toto customerscustomers andand returnedreturned byby customerscustomers forfor servicing,servicing, recycling,recycling, disposaldisposal etcetc Money/financialMoney/financial flows:flows: creditcredit cardcard informationinformation paymentpayment scheduleschedule CustomersCustomers cancan bebe bothboth internalinternal andand externalexternal 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 12 SupplySupply chainchain isis aboutabout processesprocesses SupplySupply chainschains areare concernedconcerned withwith thethe flowflow ofof information,information, materialsmaterials andand moneymoney throughthrough tradingtrading partnerspartners SupplySupply chainschains emphasiseemphasise thethe processprocess approachapproach concernedconcerned withwith howhow aa productproduct oror serviceservice isis delivereddelivered toto thethe customercustomer 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 13 MainMain PremisePremise ofof ITIT enablingenabling thethe SupplySupply ChainChain TrueTrue breakthroughbreakthrough inin SCSC performanceperformance areare achievedachieved whenwhen newnew waysways areare identifiedidentified toto substitutesubstitute informationinformation forfor inventoryinventory andand workwork contentcontent.. SuchSuch informationinformation relatesrelates toto demanddemand,, supplysupply,, inventoryinventory andand shipmentshipment andand needsneeds toto bebe availableavailable atat realreal timetime 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 14 SupplySupply ChainChain ManagementManagement (SCM)(SCM) SupplySupply ChainChain ManagementManagement isis concernedconcerned withwith thethe coordinationcoordination ofof information,information, materialmaterial andand financialfinancial flowsflows throughthrough improvedimproved relationshipsrelationships atat allall stagesstages ofof thethe supplysupply chainchain toto obtainobtain aa sustainablesustainable competitivecompetitive advantage.advantage. TheThe aimaim ofof SCMSCM isis toto useuse thethe informationinformation providedprovided byby ITIT toto integrateintegrate aa numbernumber ofof discretediscrete andand fragmentedfragmented processesprocesses intointo aa cohesivecohesive systemsystem capablecapable ofof deliveringdelivering valuevalue toto thethe customercustomer SCMSCM thesethese daysdays isis focusingfocusing onon inter-enterpriseinter-enterprise integrationintegration involvinginvolving collaborativecollaborative partnershippartnership orientedoriented modelsmodels withwith externalexternal supplierssuppliers andand customers.customers. 04/11/09 BPM and SCM Bill Karakostas, CITY University, London 15 TheThe objectivesobjectives ofof supplysupply chainchain managementmanagement ReducedReduced SupplySupply CostsCosts ImprovedImproved ProductProduct MarginsMargins (Profit(Profit perper additionaladditional
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