SCM Proposal

SCM Proposal

Project Rationale

Implementation of SCM system in replacement with the existing legacy order fulfillment strategies.

SCM synchronizes the functions of a company and its suppliers with the material flow, the services and customer needs. Efficient supply chain work better in the demand forecasting and product or service is stable (Cohen, 1997).

Problem in the Existing System

The order fulfillment team has been using several legacy technology systems to manage inventory and distribution. The current systems do not work together, requiring redundant information input and processing. Because of the redundant processes, work is duplicated requiring multiple data entry points and sometimes results in inaccurate and irreconcilable data. There is a constant overage or shortage of supply due to the time it takes for data to get from one point to another. This causes unhappy customers and inventory carrying costs that could be avoided.

Project Cost

The project will cost approximately $1.2 million including infrastructure and resources to complete the implementation and $250,000 annually to support and maintain the new system with a ten-year lifecycle for the system.

Benefits of the Project

Tangible Benefits

Tangible benefits refer to benefits that can be measured and realized in terms of value (mostly monetary). SCM system would endure reduction in the data entry staff and automation of processes which will reduce the costs up to $100,000/year and improved efficiency would eliminate contingent costs. It will further result in the reduction in inventory carrying costs up to $300,000/year. Further, improved efficiency would result in more revenue due to customer retention, delivery time reduction from 10-20% with improved data accuracy. Legacy system maintenance retirement savings would be $100,000/year.

Intangible benefits

The proposed new system would ensure better productivity as well as efficiency. Improved accuracy will allow the business entity to reap the benefits of better customer retention, maintenance of quality and increase in the good will, improvements in the speed, quality, and efficiency of key processes that help achieve competitive advantage. These intangible benefits would allow the organization to maintain and sustain long term relationships. It would further result in these benefits (Mentzer, 2000);

Reducing the cost of inventory management, transportation, storage, packaging

Increased customer satisfaction through the ability to give online orders and configure

Better service through techniques such as just-in-time and contract manufacturing

Increase revenues through greater availability of products and their adaptation to customer requirements

Shorter product cycles

Increase market share by accelerating the processes from design to production phase

Flexibility to ...