necessary application on a cloud server of the developer which allows saving money and 3.
3. A more powerful and secure IT infrastructure - few organizations can match the infrastructure
quickly introducing the software to the business. It is needless to say that as a result everyone
wins: customers don't need to spend money on system administration, and suppliers, thanks to
software installation on their cloud hosting, quickly provide the clients with the necessary
servIce.
Currently SaaS is considered to be an alternative to the standard scheme of software installation
on the customer's equipment (standard delivery model). These two models do have a lot of
differences. In the case with SaaS the client pays not for possession of the program, but for its
rent. The client makes a small periodic user's payment and is relieved of necessity to invest the
essential sums purchasing the software. You don't have to buy the software, and the hardware
platform for installing it. Don't forget that after the groupware system is implemented in a
company, it needs constant further maintenance. If all these responsibilities are passed on to
SaaS Providers (cloud computing providers), the customer will only need to use the functions
of the cloud app making regular payments for access to the collaboration system and
accompanying services.
Secondly: in SaaS model the customer receives not the software, but only that functions which
it provides (as a web service). And this is implementation of business functions that a customer
needs. Thirdly: in SaaS introduction procedure is reduced to a minimum and is very simple -
the customer simply needs to receive a login/password for the cloud application and to enter it.
SaaS collaboration systems do not require long adjustment, or especially difficult adaptation to
requirements of the customer and expensive consulting services. As a result time of project
performance reduces as well as all the expenses.
Fourthly, the SaaS model provides universal access to the necessary application from any place
where there is Internet. The majority of cloud computing companies (SaaS providers) undertake
to grant ahnost constant access to the service. Fifthly, the SaaS-model allows small and medium
business companies (Sl\1B companies) to use applications which were inaccessible earlier
because of high costs. Instead of purchasing the program the customer for a small payment rents
business functions which it is capable of Does one really need more?
Besides that SaaS model provides automatic updating of software without any additional
expenses for the customer and the possibility to change the volume ofthe functional at any time.
If there is no necessity for certain functions of the collaboration system, it is always possible to
cancel them and to pay only for the ones that are essential for work.
SaaS CRM solutions are a catalyst for how organizations change their use of front office
software systems and put users in control of customer facing business systems for the first time.
SaaS enablement of software utilization without extended implementation time frames,
software modification without IT bottleneck, world class infrastructure without capital
expenditures and 24 by 7 uptime without around the clock staffmg are a few of the compelling
advantages of SaaS. Other key benefits include the following:
Low cost of entry and lower total cost of ownership (TCO) - elimination of capital expenditures
and dramatic reduction in IT salaries
Vested vendor interests - if the application utilization is not successfu~ the vendor loses the
customer revenue opportunity
Much lower risk - faster implementations and outsourced expertise dramatically lower risk
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 9-23
and security investments made by SaaS vendors
4. Why is the supply chain management software dominated by the ERP players like SAP
and Oracle?
Both SAP and Oracle have done a good job in convincing top management ofthe benefits from
ERP solutions. They have dominated the market by showing overall cost improvements in
operations from the installation and use of their software. The have also managed to scale their
solutions for all size companies allowing for not only the biggest fIrms to benefIt, but also small
to medium size fIrms.
5. Identify a few examples of when the availability of real time information has been used to
improve supply chain performance.
The Wal-Mart & P&G experiences demonstrate how information sharing can be utilized for
mutual advantage. Through sound information technologies Wal-Mart shares point of sale
information trom its many retail outlet directly with P&G and other major suppliers.
Lucent technologies was able to achieve a dramatic cut in costs and reduced product delivery
times. This inevitable led to significant improvements in customer satisfaction and increased
market share.
6. Discuss why the high tech industry has been the leader in adopting supply chain IT
systems.
The high tech industry has been the leader in adopting supply chain IT systems because of the
mindset of the decision-makers in this sector. The high tech workforce tends to be early adopters
of new technologies; they understand there is a risk associated with adoption but are willing to
assume the risk and proceed. High tech corporate cultures lend themselves to such ventures;
there is little resistance to change because survival in this sector depends on it.
CHAPTER EIGHTEEN: Sustainability and the supply chain
1. What are some benefits to improved sustain ability of a supply chain?
Reducing risk and improving fmancial performance of the supply chain
Attracting customers who value sustainability
Making the world more sustainable.
2. What are some challenges that limit the effort put in by supply chains to improve
sustainability?
When it requires efforts that do not provide obvious return on investment for a company
Insufficient return on investment
Customer's unwillingness to pay a premium for green products
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 Difficulty evaluating sustainability across a product life cycle
One of the biggest challenges to building sustainable supply chains is that in the short to medium
term, an improved focus on sustainability provides benefits that are shared but costs that may
be local to a firm.
3. Describe the "tragedy of the commons" in the context of supply chain sustain ability. What
are some "mutually coercive" mechanisms that could be implemented to encourage supply
chain sustainability?
3. Other indirect emissions - corning from production of purchased materials,
outsourced activities, contractor-owned vehicles, waste disposa~ and employee
business travel.
5. Study the CSR reports for a couple of firms. Identify actions across a few supply chain
drivers that have improved sustain ability. Which areas has the company found
challenging to improve?
You will find the Campbell's 2010 CSR Executive Summary report as part of this Instructor's
l\1anual in the Chapter 18 discussion folder. Here is a brieffrom that report:

Every company and supply chain faces the challenge of the tragedy of the commons as it
operates in agio bal environment. They must compete against others that may be extracting
benefits from the envirornnental or resource commons without spending to maintain these
commons. They must compete in a market where customers often value low cost and are not
willing to pay the price of a more sustainable solution, either in the form of a higher price or
reduced consumption.

Two potentially "mutually coercive" mechanisms that could be implemented are "cap-and-
trade" and an emission tax. With "cap-and-trade" there would be constrained aggregate
emissions, which would create a limited number of tradeable emission allowances that emission
sources must secure and surrender in proportion to their emissions. With an emission tax, each
entity generating greenhouse gases is charged a tax proportional to the size of the emissions.

4. What are some problems with firms reporting their sustainability performance based on
metrics that do not consider their extended supply chain?

A major challenge relates to the scope over which a supply chain measures in regards to the
following four categories:

Energy consumption
Water consumption
Greenhouse gas emissions
Waste generation.

If a company reports only energy consumption within its own operations, and then decides to
outsource some production to an offshore supplier, its own energy consumption will show a
decline even though the energy consumption of the entire supply chain may have increased. If
it decides to bring some production in-house and onshore, the energy consumption within its
operations will show an increase even if the energy consumption for the entire supply chain has
decreased. Thus companies must defme the scope across which all metrics are measured. The
Greenhouse Gas Protocol defmes three scope levels which companies should report metrics:

1. Direct emissions - refers to emissions from sources that are owned or controlled
by the reporting entity
2. Indirect emissions - from grid-sourced electricity and other utility services
including heat, stearn, and cooling

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 9-25 Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 9-26
 Chapter 7: Demand Forecasting in a Supply Chain

Exercise Solutions:

In addition you will find the Hershey Company 2009 CSR Executive Summary and their Problem 7-1:
Scorecard results for 2010 as previewed below:
We utilize a static model with leve~ trend, and seasonality components to evaluate the forecasts for
year 6. Initially, we deseasonalize the demand and utilize regression in estimating the trend and level
The Hershey Company 2010 Corporate Social Responsibility
CORPORATE Scorecard outlines our progress In advancing the
components. We then estimate the seasonal factors for each period and evaluate forecasts. EXCEL
SOCIAL pnontles we established in our 2009 Corporate SOCIal Worksheet 7-1 provides the solution to this problem.
Responsibility Report
RESPONSIBILITY We understand that operating a sustainable, competitive
bUSIness reqUires a commitment to improvmg our economIC, The model utilized for forecasting is: F,+I = [L + (t + I)T]S'+i
SCORECARD environmental, and social performance.
2010 This scorecard shows how we performed against the goals
published in our 2009 CSR Report as well as against The deseasonalized regression model is:
newer targets established to further advance our priorities.
Within thiSscorecard, we use the following to mdlCate
our progress:
D, = 5997.261 + 70.245 t
:: :~:~~:~~h:~~:~~a::t ;~!c!~~~t within or
The seasonal indices for each of the twelve months are:
•• On track. We expect to achieve the target Within
• the time frame spe<ified
Under development We are working to further
define this target
Month S.I
Needs improvement. We have made some
JAN 0.427
progress but either lack sufficient data or have not FEB 0.475
progressed as we had expected toward achievmg
this target. MAR 0.463
We look forward to COf'lunumg to report on our periOfTTlance, APR 0.398
and we welcome your feedba<k To give us your comments,
please visit http}J\v.NINU- hPrsl !yco,.,.,pany,com'contact-us.
MAY 0.621
JUN 0.834
JUL 0.853
The He rshcy Compa ny
AUG 1.151
SEP 1.733
OCT 1.778
6. Even if a product is designed to be recyclable, discuss some challenges in designing a
closed-loop su pply chain that can recycle sustain ably.
NOV 2.124
DEC 1095

Does a company gain or lose economically by selling remanufactured products along

with new ones
For example, the forecast for January of Year 6 is obtained by the following calculation:
How can a [lfm ensure sufficient access to used products if it plans to remanufacture
Who should be responsible for collecting used products (the retailer, the manufacturer, F61 = [5997.261 + (61) * 70.245] * 0.4266 = 4386
or a third party)
What incentives need to be in place for the economic interests of the entire supply chain
to be aligned The quality of the forecasting method is quite good given that the forecast errors are not too high.
Do any decisions change ifthe product has a short or long life cycle
What incentives need to be in place for suppliers to design and produce durable
products? Problem 7-2:

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