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duction Scheduling Collaborative Product Development Collaborative Demand Planning Collaborative Logistics Planning ? Transportation services ? Distribution center services PricewaterhouseCoopers 10 Full Value Procurement Objective Lowest total cost of ownership ? Quality meeting customer needs ? Ontime delivery ? Acceptable supply risk ? Process efficiency ? Demand reduction Underpinned by procurement infrastructure excellence Purchase Price Acquisition Installation Maintenance Disposal Price is often just the tip of the iceberg! PricewaterhouseCoopers 11 Strategic Souring Traditional Progressive ? Tactical Emphasis ? Acquisition Cost Focus ? Staff Function ? Cost Center ? Reactive ? Strategic Emphasis ? Total Cost Focus ? Profit Center ? Proactive Tactical Strategic Tactical Strategic Evolving Model of Procurement PricewaterhouseCoopers 12 Logistic and Transportation ? Logistics accounts for 812% of sales. In 1998, it accounted for over 10% of the US GDP ? Logistic is one of the glues that holds the supply chain together. The techniques that most manufacturers employ to increase speed and reducing cost is outsourcing ? Average cost reductions from outsourcing is 32% ? The 3PL market has enjoyed explosive growth over the past 5 years. Most 3PLs have reported annual growth rate of 2550% Source: industry week PricewaterhouseCoopers 13 Manufacturing Material . . . . . BOM PRT Customer order Document Work center Routing etc. ? Manufacturing managers view efficiency and flexibility as two objectives which must be balanced in order to arrive the lowest total cost ? Worldclass panies adopt strategies and tactics such as pull system, JIT replenishment, and cycle time reductions that enables a pany to have lower levels of inventory while still driving reductions in production unit cost ? Companies frequently underestimate the mitment required to achieve an effective quality improvement which result in operation cost increases. PricewaterhouseCoopers 14 Strategic Business Planning Forecasting and Planning hours days weeks months year + Operational Tactical Strategic Scheduling Rolling Forecast Demand Planning Manufacturing Planning Scheduling Distribution Planning Transportation Order Promise Source Make Move Store Sell PricewaterhouseCoopers 15 Top Issues Facing SCM Professionals eBusiness is a relatively low priority, ing in sixth of the top issues facing SCM professionals. However, this does not reflect the impact that eBusiness will have on Supply Chain Management Source: AMR Research 2023 eBusiness will fundament