Professional Documents
Culture Documents
Chapter - 6
Information Technology and
The Supply Chain
Strategic Supply Chain
Chapter # 6 Outline
Management
PGDSCM
Role of Information Technology
in a Supply Chain
Information is the driver that serves as the “glue” to create
a coordinated supply chain
Information must have the following characteristics to be
useful:
Accurate
Accessible in a timely manner
Information must be of the right kind
Information provides the basis for supply chain
management decisions
Inventory -Sourcing
Transportation - Pricing & revenue management
Facility
Management
Role of Information Technology
in a Supply Chain
Information provides the basis for supply chain
management decisions
Facility-
Determining location, capacity, and
schedules of a facility requires information.
Management
Role of Information Technology
in a Supply Chain
Information provides the basis for supply chain
management decisions
Management
Characteristics of Useful
Supply Chain Information
Accurate – its not that 100 information will be correct but at
least directionally correct.
Accessible in a timely manner – Accurate information
sometimes exists but when available it is out dated or not
accessible form.
It must be of the right kind- Company must decide what
information to be recorded so that valuable resources are not
wasted collecting meaningless data.
Information must be shared-a supply chain can be
effective only if all its stakeholders share a common view of the
information that they use to make business decision. Otherwise
results in misaligned action plans that hurts supply chain
performance.
Management
Use of Information
In a Supply Chain
Management
Use of Information
In a Supply Chain
Management
Role of Information Technology
In a Supply Chain
Management
The Importance of Information Technology
In a Supply Chain
Management
The Supply Chain IT Framework
The Supply Chain Macro Processes
Customer Relationship Management (CRM)
Internal Supply Chain Management (ISCM)
Supplier Relationship Management (SRM)
Plus: Transaction Management Foundation
Figure 16.1
Why Focus on the Macro Processes?
Macro Processes Applied to the Evolution of Software
Management
Macro process
in a Supply Chain
Internal
Supplier Customer
Supply Chain
Relationship Relationship
Management
Management Management
(ISCM)
(SRM) (CRM)
Management
Customer Relationship
Management
The processes that take place between an enterprise
and its customers downstream in the supply chain
Key processes:
Marketing – Good It systems in the marketing area within
CRM provide analytics that improve the marketing decisions
on pricing, product profitability, among other functions.
Selling – Good It System support sales force automation,
configuration, and personalization to improve the sell process.
Order management - Good It systems enable visibility of
orders across the various stages that an order flows through
before reaching the customer.
Call/Service center – Good It systems have helped call/
service center operations by facilitating and reducing work
done by customer service representative and by routing to
representative who are best suited to service their request.
Management
Internal Supply Chain
Management
Includes all processes involved in planning for and fulfilling a customer order
ISCM processes:
Strategic Planning- It focuses on network design of the supply chain.
Demand Planning – it consists of forecasting demand and analyzing
the impact of demand of demand management tools such as pricing
and promotions.
Supply Planning – Factory planning and inventory planning
capabilities are typically provided by supply planning software.
Fulfillment – Once a plan is in place to supply the demand, it must be
executed. This process links each order to a specific supply source
and means of transportation.
Field Service –Finally, after the product has been delivered to the
customer, it eventually must be serviced. Service processes focus on
setting inventory levels for spare parts as we as scheduling service
calls.
There must be strong integration needed between the ISCM and CRM macro
processes
Management
Supplier Relationship Management
Those processes focused on the interaction between the enterprise and
suppliers that are upstream in the supply chain
Key processes:
Design Collaboration -This software aims to improve the design of
products through collaboration between manufacturers and suppliers.
The software facilitates the joint selection of components that have
positive supply chain characteristics such as ease of manufacturability
or commonality across several end products.
Source - successful software in this area helps analyze supplier
performance and manage contracts.
Negotiate- successful software automates the RFQ process and
execution of auction.
Buy – Successful automation in this area helps the procurement
process and decreases processing time and cost.
Supply Collaboration - Once an agreement for supply is established
between the enterprise and a supplier. Supply chain performance
can be improved by collaborating on forecasts, production plans,
and inventory levels. Good software should be able to facilitate
collaborative forecasting and planning in a supply chain.
There is a natural fit between ISCM and SRM processes
Management
The Transaction Management
Foundation
Enterprise software systems (ERP)
Earlier systems focused on automation of simple
transactions and the creation of an integrated
method of storing and viewing data across the
enterprise
Real value of the TMF exists only if decision making is
improved
The extent to which the TMF enables integration
across the three macro processes determines its
value
Management
The Future of IT the Supply Chain
At the highest level, the three SCM macro processes will continue to drive
the evolution of enterprise software.
The following three important trends will impact on IT in the supply chain
the growth in software as a service ( SaaS)
Increased availability of real time data.
Increased use of mobile technology.
SaaS is defined as software that is owned, delivered, and managed
remotely.
Salesforce.com is one of the best known pure SaaS supply chain software
providers. 2009 –growth 10%, 2014 – 16%
Traditional enterprise software vendors such as SAP, oracle, Microsoft are
increasing the availability of their software using the SaaS model.
Management
Supply Chain Information Technology
In Practice
Select an IT system that addresses the company’s
key success factors
Take incremental steps and measure value
Align the level of sophistication with the need for
sophistication
Use IT systems to support decision making, not to
make decisions
Think about the future
Management
Risk management in IT
Two major categories of Risk
The first risk involved with installing new IT systems- a firm is forced to
transition from old processes to new IT systems.
Trouble might be found in business processes or technical issues.
New system requires to be learned and trained up
Requires the entire organization to be onboard but top
management are not actively involved with the transition.
Tremendous technical hurdles need to be overcome.
Without proper integration the system doesn’t give great
result/outcome as promised earlier.
Supply Chain Information Technology in Practice
The second risk is that the more a firm relies on IT to make decisions,
the higher is the risk that any sort of IT problem, ranging from glitches
to power outrages to viruses can completely shut down a firm.
A firm must plan to face such kind of risk.
Management
PGDSCM
Strategic SCM
Strategic Supply Chain
Management
PART – 5
Characteristics of Forecasts
Characteristics of Forecasts
Components of a Forecast
Past demand
Lead time of product
Planned advertising or marketing efforts
State of the economy
Planned price discounts
Actions that competitors have taken
Key Points
Companies must balance objective and subjective factors when
forecasting demand.
The goal of any forecasting method is to predict the systematic component
of demand and estimate the random component.
Strategic Supply Chain
Management
Forecasting Methods
Forecasting Methods
Simulation – it imitate the consumer choices that give rise to demand to arrive at a
forecast.
using simulation, a firm can combine time-series and causal methods.
It’s rather difficult to decide which method is most appropriate for forecasting. Several studies have indicated that using multiple forecasting methods
to create a combined forecast is more effective than using any one method alone.
Strategic Supply Chain
Management
Forecasting Methods
Forecasting Methods
With Any forecasting method there is always a random element that can
not be explained by historical demand patterns. Therefore, any observed
demand can be broken into a systematic and a random component
Forecasting in Practice
It takes an investment of time and effort to build the relationships with your
partners to begin sharing information and creating collaborative forecast.
Share only the data that truly provide value. The value of data depends
on where one sits in the supply chain. Keeping the data shared to what
is truly required decreases investment in IT and improves the chances of
successful collaboration.
Any Question?
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