Overview

Supply Chain Management just another shortlived management philosophy? The gains that have been realized when adopting Supply Chain Management (SCM) and Advanced Planning are impressive:

• Hewlett-Packard cut deskjet printer supply costs by 25% with the help of inventory models analyzing the effect of different locations of inventories within its supply chain. This analysis convinced Hewlett-Packard to adopt a modular design and postponement for its deskjet printers (Lee and Billington, 1995).

• Campbell Soup reduced retailer inventories on average by 66% while maintaining or increasing average fill rates by improving forecasts and introducing simple inventory management rules (Cachon and Fisher, 1998).

• IBM applied its Asset Management Tool, consisting of analytical performance optimization and simulation, to its personal systems division, saving material costs and price-protection expenses of more than $750 million in 1998 (Lin et al., 2000).

• BASF introduced vendor managed inventory with five key customers in its textile colours division. With the help of an Advanced Planning System it has been possible to raise the fill rate of its customers' inventory to almost 100%. Customers profited from eliminating safety stocks while it allowed BASF to generate less costly transportation and production schedules (Grupp, 1998).

These impressive gains show the potential of coordinating organizational units and integrating information flows and planning efforts along a supply chain.

Which manager can afford not to present such substantial gains in improving competitiveness? Nowadays, these gains...