CH 2 - Role of IT in A Supply Chain

Supply chain and Logistic Management
Role of Information Technology in a Supply Chain

0| Supply chain and logistic management
© Dr. Saeed
Learning Objectives
§ Understand the importance of information and information technology in a

supply chain
§ Know at a high level how each supply chain driver uses information
§ Understand the major applications of supply chain information technology and

the processes that they enable

© Dr. Saeed
IT as Central Integrator
Information is the “glue” used to create a coordinated supply chain.
§ Information provides the foundation on which supply chain processes execute

transactions and managers make decisions
§ Information must have the following characteristics to be useful:

- Accurate
- Accessible in a timely manner
- Information must be of the right kind
- Information must be able to be shared

© Dr. Saeed Source: Ross, 2011, p.53
Information provides the basis for supply chain management decisions regarding:
§ Facility
§ Inventory
§ Transportation
§ Sourcing
§ Pricing and Revenue Management

Supply channel decision-making requires a single version of data encompassing:
§ Demand
§ Production and processes
§ Logistics
§ Delivery, and
§ Supplier intelligence
Generating a single view of the supply chain requires information technologies

that enable collection, processing, access, and manipulation of complex views of
data across the whole supply chain.


ISCM and Technology: Success Factors



ISCM and Technology: The Supply Chain Macro Processes
§ Customer Relationship Management (CRM)
§ Internal Supply Chain Management (ISCM)
§ Supplier Relationship Management (SRM)
…… Rest on Transaction Management Foundation (TMF)
When enterprise performance is closely linked to supply chain performance, firms

must focus on macro processes

© Dr. Saeed Chopra and Meindl (2016)
ISCM and Technology: Customer Relationship Management
The processes that take place between an enterprise and its customers
downstream in the supply chain. The key processes under CRM are as follows:
§ Marketing: processes involve decisions regarding which customers to target,
how to target customers, what products to offer, how to price products, and
how to manage the actual campaigns that target customers.
§ Sell: process focuses on making an actual sale to a customer. The sell process
includes providing the sales force with the information it needs to make a sale
and then execute the actual sale.
The five management:
§ Order largest CRM software providers
process of managingin customer
2012 (as orders
reported by Gartner)
as they were
flow through
an enterprise is important for the customer to track an order and for the
Salesforce.com (14.0 %), SAP (12.9 %), Oracle (11.1 %), Microsoft (6.3 %), and IBM
enterprise to plan and execute order fulfillment. This process ties together
(3.6 %). from the customer with supply from the enterprise.
demand
§ Call/service center: is often the primary point of contact between a company
(www.forbes.com)
and its customers. A call/service center helps customers place orders, suggests
products, solves problems, and provides information on order status
11 | Supply chain and logistic management

ISCM and Technology: Internal Supply Chain Management (1/2)
ISCM is focused on operations internal to the enterprise. ISCM includes all

processes involved in planning for and fulfilling a customer order. The various
processes included in ISCM are as follows:
§ Strategic Planning: process focuses on the network design of the supply chain.
Key decisions include location and capacity planning of facilities.
§ Demand Planning: consists of forecasting demand and analyzing the impact on

demand of demand management tools such as pricing and promotions.
§ Supply Planning: process takes as an input the demand forecasts produced by

demand planning and the resources made available by strategic planning, and
then produces an optimal plan to meet this demand. Factory planning and
inventory planning capabilities are typically provided by supply planning software
ISCM and Technology: Internal Supply Chain Management (2/2)
Fulfillment: Once a plan is in place to supply the demand, it must be executed.

The fulfillment process links each order to a specific supply source and means of
transportation. The software applications that typically fall into the fulfillment
segment are transportation and warehousing management applications.
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 well as scheduling service calls.
The top five ISCM vendors in 2012 (as reported by Gartner) were SAP, Oracle, JDA,
§Manhattan
There mustAssociates,
be strong and Epicor. between
integration SAP ($1.721
thebillion)
ISCM and andCRM
Oracle ($1.453
macro billion)
processes
had significantly higher revenues than the other three ($0.724 billion combined)
(www.mmh.com)
ISCM and Technology: Supplier Relationship Management
SRM includes those processes focused on the interaction between the enterprise
and suppliers. The major SRM processes are as follows:
§ Design Collaboration: improve the design of products through collaboration
between manufacturers and suppliers
- It facilitates the joint selection (with suppliers) of components that have
positive supply chain characteristics such as ease of manufacturability or
commonality across several end products
- This eliminates the costly delays that occur when several suppliers are
designing components for the manufacturer’s product concurrently
§ Source: software assists in supplier selection, contract management, and
supplier evaluation
§ Buy: “Buy” software executes the actual procurement of material from

suppliers

ISCM and Technology: The Transaction Management Foundation
The transaction management foundation is the historical home of the largest

enterprise software players.
§ In the early 1990s, when much of the thinking in supply chain management was
just getting off the ground and ERP systems were rapidly gaining popularity.
- According to Gartner, the top five ERP software vendors in 2012 were SAP,
Oracle, Sage Group, Infor Global Solutions, and Microsoft
§ Early ERP systems focused on transaction management and process automation

§ Current focus on improving decision making in the three macro processes

ISCM and Technology: The Transaction Management Foundation
SUPPLY CHAIN VISIBILITY, COORDINATED PLANNING,

FORECASTING, REPLENISHMENT, COLLABORATIVE
PRODUCT DEVELOPMENT, INATED LOGISTICS, AND
PROMOTIONS
SRM
CRM
ISCM
SUPPLIERS COMPANY CUSTOMERS

ISCM and Technology: Tools
Level 1 - the most complex technology toolsets can be found in the utilization of
major business systems, such as enterprise resource planning (ERP) – these seek
to cover the entire enterprise
https://www.youtube.com/watch?v=6qys-562kp4&ab_channel=ArcusUniverse
Level 2 - point technology solutions, such as advanced planning systems (APS)

and transportation management systems (TMS), which seek to optimize specific
functions or provide for cross-channel visibility
Level 3 - technology tools can be found execution solutions, such as electronic

data interchange (EDI), use of cloud computing and the Internet, or radio
frequency identification (RFID)

ISCM and Technology: Tools
Note on ERP: Enterprise resource planning systems take a customer order and
provides a software road map for automating the different steps along the path
to fulfilling it.
When a customer service representative enters a customer order into an ERP
system, he has all the information necessary to complete the order (the
customer’s credit rating and order history from the finance module of the ERP,
the company’s inventory levels from the warehouse module and the shipping
dock’s trucking schedule from the logistics module).
People in these different departments all see the same information and can
update it.
When one department finishes with the order it is automatically routed via the
ERP system to the next department. To find out where the order is at any point,
you need only log in to the ERP system and track it down.

ISCM and Technology: Delivering Advantage
SCM can therefore be redefined as:
„a strategic channel management philosophy composed of the continuous

regeneration of networks of businesses integrated together through information
technologies and empowered to execute superlative, customer-winning value at
the lowest cost through the digital, real-time synchronization of products and
services, vital marketplace information, and logistics delivery capabilities with
demand priorities“.

The Future of IT in the Supply Chain
The three SCM macro processes will continue to drive the evolution of enterprise
software
Three important trends
1. The growth in software as a service (SaaS)
2. Increased availability of real-time data
3. Increased use of mobile technology

ISCM and Technology: Delivering Advantage
The application of information technologies, has influenced:
§ Product and process design
§ Product variety
§ e-Commerce: including e-marketplaces and exchanges
§ Fulfillment management
§ Flexible pricing, promotions, special offers
Simple example: companies can provide customers increasing value by opening

new sales channels as they migrate from “bricks-and-mortar” to “click-and-
mortar” business architectures.
https://www.youtube.com/watch?v=PmIUu4a-N-I
ISCM and Technology: Newer Advantages
Which of these examples do you recognize?

ISCM and Technology: Newer Advantages
Current technological developments influencing supply chain management:
§ Predictive analytics
§ Smart, connected products (Internet-of-Things)
§ Use of advanced materials
§ Smart factories (Internet-of-Things)
§ Digital design, simulation and integration
§ High performance computing
§ Advanced robotics
§ 3D printing and scanning
§ Open-source design / direct customer input
§ Augmented reality

© Dr. Saeed Source: http://www.mhlnews.com : accessed 15.11.17:
Risk Management in IT
§ Installing new systems
- Revised business processes
- Integration
§ Problems can shut down the business
- Software glitches
- Power outages
- Viruses
§ Mitigating strategies
- Install new IT systems in an incremental fashion
- Run duplicate systems to make sure the new system is performing well
- Implement only the level of complexity that is needed

Specialized software in the process of supply chain: Background
Need for Specialized Systems
Almost every company involved in the international movement of its products
makes use of corporate computer software for its general operations.
The software may take the form of Financial, Manufacturing (Marginal Revenue
Product), sales order processing (SOP), purchase order processing (POP),
warehouse management system (WMS) or all encompassing enterprise
resource planning (ERP) systems, employed singly or in combination.
However, because of the intricacies and variations in the data and documentary
requirements of international trade, these systems, which have been designed
primarily for domestic market operations, can rarely deal satisfactorily with
situations involving the export of goods. As a result, specific arrangements
usually have to be made in order to deal with the complexities of shipping
arrangements and export documentation

© Dr. Saeed Branch (2009 p.114)
Risks and Problems for not using Specialized System
• Re-entry of data is inevitably a time-consuming and wasteful process
• Whenever re-entering data is undertaken, errors can arise. Errors, such as omission,
cause serious problems at ports of arrival, rejection of letters of credit, and financial
discrepancies
• Documents produced by individual input or by a variety of systems and in unstructured

environments almost inevitably suffer from inconsistency of format. This not only
projects an unprofessional image, but also risks problems in interpretation by officials
expecting to see data presented in standard international layouts
• The correct completion of a shipment consequently depends solely upon the knowledge
and attention of individuals
• Exporters who produce their export documents using word processing or spreadsheets
suffer from the problem that no historical data is stored in a extractable format

Functions and Objectives of Specialized Export System
The major objectives in the deployment of a specialised export system may be

defined as follows:
• To further integrate corporate systems and eliminate manual operations
• To eliminate re-entering and other repetitive activity
• To reduce potential for errors
• To speed up and control the shipping process
• To permit production of export-related management reports
• To enhance customer service

Dr. Amad Saeed
Riphah International University, Lahore

Riphah School of Business and Management
phone: +92 (0)42-

email: amad.saeed@riphah.edu.pk
web: www.lahore.riphah.edu.pk

© Dr. Saeed

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Supply chain and Logistic Management

Role of Information Technology in a Supply Chain

§ Understand the importance of information and information technology in a

§ Understand the major applications of supply chain information technology and

1| Supply chain and logistic management

Information is the “glue” used to create a coordinated supply chain.

§ Information provides the foundation on which supply chain processes execute

§ Information must have the following characteristics to be useful:

2| Supply chain and logistic management

3| Supply chain and logistic management

Generating a single view of the supply chain requires information technologies

4| Supply chain and logistic management

5| Supply chain and logistic management

6| Supply chain and logistic management

7| Supply chain and logistic management

8| Supply chain and logistic management

§ Customer Relationship Management (CRM)

§ Internal Supply Chain Management (ISCM)

§ Supplier Relationship Management (SRM)

…… Rest on Transaction Management Foundation (TMF)

When enterprise performance is closely linked to supply chain performance, firms

9| Supply chain and logistic management

11 | Supply chain and logistic management

ISCM is focused on operations internal to the enterprise. ISCM includes all

§ Demand Planning: consists of forecasting demand and analyzing the impact on

§ Supply Planning: process takes as an input the demand forecasts produced by

Fulfillment: Once a plan is in place to supply the demand, it must be executed.

§ Buy: “Buy” software executes the actual procurement of material from

14 | Supply chain and logistic management

The transaction management foundation is the historical home of the largest

§ Early ERP systems focused on transaction management and process automation

15 | Supply chain and logistic management

SUPPLY CHAIN VISIBILITY, COORDINATED PLANNING,

SUPPLIERS COMPANY CUSTOMERS

16 | Supply chain and logistic management

Level 2 - point technology solutions, such as advanced planning systems (APS)

Level 3 - technology tools can be found execution solutions, such as electronic

17 | Supply chain and logistic management

18 | Supply chain and logistic management

SCM can therefore be redefined as:

„a strategic channel management philosophy composed of the continuous

19 | Supply chain and logistic management

Three important trends

1. The growth in software as a service (SaaS)

2. Increased availability of real-time data

3. Increased use of mobile technology

20 | Supply chain and logistic management

The application of information technologies, has influenced:

§ Product and process design

§ e-Commerce: including e-marketplaces and exchanges

§ Flexible pricing, promotions, special offers

Simple example: companies can provide customers increasing value by opening

Which of these examples do you recognize?

22 | Supply chain and logistic management

Current technological developments influencing supply chain management:

23 | Supply chain and logistic management

24 | Supply chain and logistic management

25 | Supply chain and logistic management

• Documents produced by individual input or by a variety of systems and in unstructured

26 | Supply chain and logistic management

The major objectives in the deployment of a specialised export system may be

• To further integrate corporate systems and eliminate manual operations

• To eliminate re-entering and other repetitive activity