ROLE OF Information TECHNOLOGY IN

SUPPLY CHAIN MANAGEMENT

Presented By :
Kirti Mishra
Naveen Tyagi
 Introduction

Information is crucial to the performance of

supply chain because it provides the basis on
which supply chain managers make decisions.
Information Technology consists of the tools
used to gain awareness of information,
analyze the information and execute on it to
increase the performance of the supply chain.
 Role of IT in a Supply Chain
 Information is a key supply chain driver
because it serves as the glue that allows
other drivers to work together with the goal
of creating an integrated, coordinated
supply chain.
 Information makes the supply chain visible
to a manager. With the visibility, a manager
can make decisions to improve the supply
chains performance.
 ….Contd
 Managers must understand how information
is gathered and analyzed. This is where IT
comes into play as IT consists of the
hardware, software and people throughout a
SC that gather, analyze and execute upon
information.
 Thus, the organization needs to be connected
and become able to share information in real
time and instantaneously. This is not
achievable without IT and the tools it offers
for organization wide collaboration.
 Functional Roles of IT in SCM

Functional Roles Of IT

Transaction Decision
Execution Support
Collaboration &
Coordination
 ….Contd
 The most typical role of IT in SCM is
reducing the function in transactions
between supply chain partners through
cost-effective information flow.
 IT is viewed to have a role in supporting
the collaboration & coordination of
supply chains through information sharing.
 It can be used for Decision Support. In this
instance the analytical power of computers
is used to provide assistance to managerial
decisions.
 Objectives of IT in SCM

1) Providing information, Availability &

Visibility.
2) Enabling single point of contact of data.
3) Allowing decisions based on total supply
chain information.
4) Enabling collaboration with supply chain
partners.
 Information Technology for Supply
Chain Management
• Software Systems

• Enterprise Resource Planning (ERP)

• Electronic Data Interchange ( EDI )
• Supply Chain Management Systems (SCM)
• Customer Relationship Management (CRM)

• Network Infrastructure

• Internet
 Origins of ERP Systems
ERP systems grew out of a function called materials
requirements planning (MRP) which was used to allocate
resources for a manufacturing operation
MRP systems software ultimately became very complex
allowing for efficiencies of scale not previously possible
Even more sophisticated MRP II systems began to
replace MRP systems in the 1980s
By the early 1990s, other enterprise activities were
being incorporated into ERP systems
Enterprise Resource Planning Systems

Enterprise resource planning (ERP) is a term

used to refer to a system that links individual
applications (for example, accounting and
manufacturing applications) into a single
application that integrates the data and
business processes of the entire business.
Contd…...
ERP is a s/w that aims to serve as a backbone for
the whole business.
It integrates key business & management
processes to provide an integrated view of the
entire organization & the activities that take place
within it.
ERP systems have emerged to automate business
functions and offer an integrated data solution
across an org’s infrastructure.
 ….contd
It provides the capability to manage & integrate
the information & services of departments
throughout an entire enterprise.
This allows org’s to better manage all their
resources, thus achieving cost reduction and
efficiency through the integration of all
information among various business processes.
By combining all the operations within the firm,
ERP allows co’s to view the information, cash
and material flow.
 Major ERP Systems
• SAP R/3
• Oracle
• PeopleSoft (have been merged by Oracle)
• Toyota uses PeopleSoft and SAP
• Microsoft Dynamics (formerly Microsoft
Business Solutions )
 Electronic Data Interchange (EDI)

 EDI is the computer-to-computer exchange of business

data in standard formats.
 In EDI, information is organized according to a specified
format set by both parties, allowing a “hands-off”
computer transaction that requires no human intervention
at either end.
 EDI standards are developed & managed by the
Accredited Standards Committee (ASC) X12. The
standards are designed to work across industry & co.
boundaries.
Contd …..
 It permits hundreds of unrelated co’s to communicate &
process business transactions electronically.
 EDI works because it relies on a standard system that
everyone can use, developed under the guidelines of the
American National Standard Institute (ANSI), USA.
 The ANSI committee ensures that everyone using a
process such as EDI follow the same rule & methods,
making the Programme Universally accessible.
 Benefits of EDI
Following are the benefits of using EDI:-

• Better inventory management.

• Increased productivity.
• Reduced costs.
• Improved business relationships.
• Improved accuracy.
• Enhanced customer service.
• Increased sales.
Supply Chain Management Systems

• SCM is the process of effectively

managing the components of an extended
value chain—from suppliers, through
manufacturing and distribution chain, and
to the consumers.

• SCM information systems use technology

to more effectively manage supply chains
Continued….
• A typical SCM system might address the
following issues:
• Planning
• Vendor selection
• Manufacturing
• Logistics
• Customer relationship
Continued…..
• The two basic types of SCM system software are:
• Supply Chain Planning software (SCP): Uses
mathematical models to predict inventory levels
based on the efficient flow of resources into the
supply chain
• Supply Chain Execution software (SCE): is used
to automate different steps in the supply chain such
as automatically sending purchase orders to
vendors when inventories reach specified levels
Major Supply Chain Planning
Players
 i2 Technologies
 i2’s strength began with its powerful

Advanced Planning and Scheduling

(APS)
 Manugistics
 Oracle
 SAP
 Advanced Planner and Optimizer

(APO)
SAP ( System, Applications and Products in Data
Processing )
PARTIAL SAP CLIENT LIST

Spacenet
THE KEY ENABLER: ONE SYSTEM
SD FI
MM Sales &
Distribution
Financial
Accounting
SAP R/3
CO
PP Materials
Mgt.
Controlling
AM
 Omni-functional
Production
Planning
Fixed
Assets
 Fully integrated
Mgt.
SAP R/3  Process-oriented
Single Central
Database System

1
Quality Project
Mgt.
Plant
QM Maintenance Workflow PS
Exec.
Human
PM Information
Resources & Report WF
Writer
HR
Customer Relationship Management
Systems
Customer relationship management (CRM)
systems, sometimes called e-CRM systems, use
technology to help an e-business manage its
customer base .
CRM allows an e-business to match customer
needs with product plans and offerings, remind
customers of service requirements, and
determine what products a customer has
purchased .
Relationship among SCM, ERP, CRM

SCM ERP
CRM

Broader SCM
 INTERNET

 Internet has a profound impact on SCM. The backbone

of SCM is communication & real-time information
exchange between various parties involved in the
production & distribution of materials.
 Following are the various SCM activities that have
created new Internet opportunities:-
• Online Vendor Catalogue (without human contact).
• The ability to schedule outbound logistics.
 Contd ….
• Provide world wide customer service (24X7).
• Receive orders from all over the world all the time.
• Place bids on projects.
• Pay invoices electronically.
• The ability to directly communicate.
• The ability to be more responsive to customer service
problems.
• To reduce service costs & response time.
 SCM Software's

 The SCM data in a SC resides in several different basic

systems, so it is essential to carefully examine the ability
of a software package to be integrated with existing
systems.
 The greatest advantage of SCM software is to be able to
execute & evaluate decisions real time.
 It is especially important that users can perform ‘what-if’
scenarios & evaluate the effects of changes. This requires
planning & control of SC’s. SCM s/w provides these
features.
Examples …..

o CISCO reported savings of $500m by restructuring its

internal operations & integrating processes with suppliers
& customers with the help of web-based tools. Currently
90% of CISCO’s sales are facilitated online.
o Intel replaced hundreds of order clerks by an automated
on-line ordering application.
o Godrej & Boyce’s 28 locations view their account status
and sales order delivery status online by enabling
stockists to directly access information from the Baan
system.
 The Use & Benefits of IT

1) Successful companies have developed focused

E-business solutions for improving customer
service elements that are most important in their
business.
2) Improved efficiency allows company personnel's
to focus more on the critical business activities.
3) E-business solutions support planning
collaboration & improved agility of the supply
network.
Contd …..

4) The use of E-business solutions

improve the information quality.
5) To gain strategic benefits, the use
of IT has to be coupled with
process re-design.
Conclusion….

SCM & IT are inseparable &

incomplete without one another. IT,
Internet & it’s tools have enabled supply
chain to prosper & become an aid to the
SCM manager. The IT tools combined
with each other provide an ability to the
supply chain manager to take informed
decisions in real time.