This document discusses supply chain management (SCM) and provides examples from Perdue Farms and gift card redemption. SCM is defined as using information technology to manage business processes and relationships with suppliers, customers, and partners. The goals of SCM are to create an efficient low-cost network and get products to market quickly. Perdue Farms invests in SCM infrastructure to deliver agricultural products fresh. Gift card redemption poses planning challenges as redemption patterns are unknown. Strategies discussed include online activation discounts and using past redemption data for planning. Effective use of inventory and supplier data can minimize costs. Consumer shopping behaviors show diverse planning approaches within companies.

2.  What is Supply Chain Management (SCM)?
 Goals of SCM
 Perdue Farms
 Case Study Questions
 Real World Activities
 Conclusion

3.  “Cross functional inter-enterprise system
them uses information technology to help
support and manage the links between some
of a companies key business processes and
those of its suppliers, customers, and
business partners”

4.  Create a fast, efficient, low cost network of
business relationships
 Get a product from concept to market

5.  Supplier of agricultural products
 Made critical investments in SCM
infrastructure to make sure products arrive
fresh
 “Getting the turkey from farm to table is a
race against time”

6.  Demand Forecasting
 Accurate
 Realistic
 Collaboration with business partners
 Internal (Marketing, Production)
 External (Suppliers, Distributors)
 Cohesive network
 IT Systems
 Infrastructure
Case Study Question #1

7.  Supplier relationships
 Logistics Systems
 Information Systems
 Accuracy
 Consistency
 Reliability/Stability
Case Study Question #1

8.  Regulations
 Weather
 Natural Disasters
 Government Intervention
 Competitor Action
 Inflation/Deflation
Case Study Question #1

9.  Increasing use of gift cards poses a unique
problem to SCM:
 Know there will eventually redemption and total
dollar amount
 But don’t know when, where, or what will be
redeemed
 Causes issue with demand planning and supply
chain management
 20% redeemed week after Christmas
 80% redeemed January and February
Case Study Question #2

10.  Strategy 1: Require online activation and offer
discount to online products.
 Customer can have the item they want shipped to the
store of their choosing
 No need to carry excessive inventory in store
 Strategy 2: Use information from holiday season
and compare against dollar amount for a rough
estimate of demand post-holiday season
 Offers some rough demand planning based
 Realistic and accurate
Case Study Question #2

11.  http://www.dimpledough.com/corporatecard
 http://www.retailsolutionsonline.com/article.
mvc/DimpleDough-Releases-Total-
Corporate-Gift-0001?VNETCOOKIE=NO

12.  Holiday Season Spending Patterns
 Total of $100 spent at XYZ Inc.
▪ $30 on TVs
▪ $40 on Candy
▪ $25 on Dog Food
▪ $5 on DVDs
 After holiday season spending pattern should
mirror holiday season spending pattern
 We know $100 was purchased as gift cards
 Mixture of smaller and larger goods
Case Study Question #2

13.  The more information that is available, the
more precise a firm can be in managing
inventory
 Location Level
 Category/SKU Level
 Information on category demand, inventory
turnover, and lead times can be invaluable
 Effectively using data can minimize inventory
levels (and free up cash!)
Case Study Question #3

14.  Store A turns over its TV inventory every 3 days,
while Store B turns over its TV inventory ever 12
days
 Look for trends in sales to determine proper inventory
levels
 Monitor for possible changes in trend
 Supplier X lead time for orders in 120 days, while
Supplier Y lead time for orders in 90 days but is
more costly. Both suppliers supply the same
product
 Use Supplier X to satisfy base demand
 Use Supplier Y to satisfy peaks in demand
Case Study Question #3

15.  Best Buy – “Bullwhip Effect”
 Reduced demand forecast for
Electronics
 Reduced demand for Blue Ray Players
 Reduced demand for semiconductors
 Reduction of small
business/manufacturing workforce by
75%
http://online.wsj.com/article/SB124260855682928885.html
Real World Activity #1

16.  Sony PS3 SCM Failure
 Sony launched 400k units of PS3 in USA on November
2006.
 Despite there was a lack of availability of the Blu-Ray
components for its Blu-Ray drive, this feature was a
added value.
 The Demand was higher than expected
 January 2007, 1,000,000 consoles were shipped to
USA
http://mba.tuck.dartmouth.edu/digital/Research/AcademicPublications/GameC
onsoles.pdf

17. How do you do your holiday shopping?

18. Darcy Last minute, not concerned with price at very last minute
Heli Well thought out in advance
Kim Value shopper, goes wherever the sale is
Hermela Last minute value shopper, tough decisions made
Drew Partly skilled and thought out planning, last minute and
haphazard
5 consumers with very different purchasing styles , makes it hard to plan!
Diverse planning practices exist in the same company!
Real World Activity #2