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Information Technology In Supply Chain

Ch 16 Ayushi Kakwani Riddhi Patel

Role of IT in supply chain
• Information is crucial to supply chain performance and provide foundation for the same • Information serves as a glue that allows other supply chain drivers to work together with the goal of creating an integrated, coordinated supply chain

Role of IT in supply chain
• IT consists of hardware, software and people throughout a supply chain that gather, analyze and execute upon information • IT captures and analyze information necessary to make a good decision • IT is also used to analyze the information and recommend an action • IT can set production schedules and inventory levels

look at demand forecasts.Example • IT system at a PC manufacturer • May tell a manager how many processors are currently in stock. determine whether to order more processors or not etc . IT system can take number of processors in inventory.

Example • Walmart • Walmart collects data in real time on what products are being purchased at each of its stores and then sends these data to the manufacturers • Walmart analyzes this demand information to determine how much inventory to hold at each store and to decide when to order new loads of product from manufacturer • Manufacturers uses this information to set its production schedules to meet Wal-Marts demand on time .

Information must have the following characteristics • Information must be accurate • Information must be accessible in a timely manner • Information must be of right kind • Information must be shared .

Information used in following supply chain drivers 1.Wal-Mart uses this information to determine where to place its new store and cross docking facalities . Facality • Wal-Mart suppliers use the demand information from Wal-Marts stores to set their production schedules.

margin. Inventory • Wal-Mart collects detailed demand. cost of ordering and demand patterns .Information used in following supply chain drivers 2. cost of stocking out. and supplier information to determine cost of carrying inventory. cost.

This integration allows it to implement crossdocking in its transportation network . Transportation • Walmart uses information to tightly integrate its operating with its suppliers.Information used in following supply chain drivers 3. saving both inventory and transportation costs .

Sourcing • Information on product margins. delivery lead time etc is very important in making sourcing decisions • Eg:Dell has started to outsource its retail function to firms like Walmart .quality. prices .Information used in following supply chain drivers 4.

Information used in following supply chain drivers 5.Pricing and revenue management • Information on demand-(its volume and various customer segments). availability . lead time . product margin . willingness to pay .

The Supply Chain Macro Processes Customer Realtionship Management Internal Supply Chain Management Supplier Relationship Management .

Customer Relationship Management • Consists of processes that take place between enterprise and its customers downstream in the supply chain • Goal of CRM is to generate customer demand and facilitate transmission and tracking of orders .

Marketing • Decisions regarding which customers to target. how to target. what products to offer . how to price products . how to manage campaigns .Key processes under CRM 1.

Key processes under CRM 2. Sell • Providing the sales force the information it needs to make a sale and then execute the actual sale • Includes Sales force automation. configuration and personalization .

Key processes under CRM 3.Order management: • This process ties together demand from the customer with supply from the enterprise • Process of managing customer order and execute order fulfilment .

Call/service center: • Primary point of contact between company and customer • Helps customer place order.Key processes under CRM 4. suggest products .solve problems . provides information on order status .

Advantages of CRM • Address customers needs when using online or Web based applications. . • Enable businesses to make informed decisions using intelligence reaped from customers. • Help organization manage customer performance and take steps to improve performance. • Provide records of works in progress and reporting on customer service functions.

which in turn boosts customer retention. .Advantages of CRM • Enable organizations to forecast customer response rates and retention • Allow managers to collect and organize customer information and disburse to appropriate departments like marketing or sales • Helps organizations schedule environments that enable better customer service delivery. • Allows organization to create closer and more intimate customer relationships. • Builds greater overall customer satisfaction and loyalty.

• Allows sales and marketing teams to collect customer information and plan enhancements of service delivery. • Enables a central resource for business communications regarding customer transactions. .Advantages of CRM • Helps manage sales force functions and eliminates time wasting tasks including scheduling and setting appointments with customers.

Internal Supply Chain Management • Includes all processes involved in planning for and fulfilling a customer order • Focused on operations internal to the enterprise .

Strategic Planning: • Focuses on network design in supply chain 2.Demand Planning: • Forecasting Demand and analyzing the impact on demand of demand management tools such as pricing and promotions .Various processes included in ISCM 1.

Various processes included in ISCM 3.Fulfillment: • Links each order to a specific supply source and means of transportation.Supply planning: • It takes demand forecasts produced by demand planning and the resources made available by strategic planning as input and produce optimal plan to meet this demand 4. Sees that the demand is executed .

It eventually needs to be serviced. Service processes involves setting inventory levels for spare parts as well as scheduling service calls .Various processes included in ISCM 5.Field service : Finally after the product has been delivered to the customer.

Supplier Relationship Management • Includes those processes that are focused on the interaction between the enterprise and suppliers that are upstream in the supply chain .

Macro Processes and their processes SRM Design Collaboration Source Negotiate Buy ISCM Strategic Planning Demand Planning Supply Planning Fulfillment CRM Market Sell Call Center Order Management Supply Collaboration Field Service .

Risks in IT • Process of adding new supply chain capabilities with existing IT system is fraught with dander • The larger the change in the IT system . the greater is the risk of a negative impact on operations • The major risk is the risk involved in installing the new IT system • During the process of installing new IT system. trouble can be found in both business processes and technical issues .

or even be outright resisted by employees • Getting entire organization on board with changes brought by IT . is very difficult • Technical hurdles to overcome in getting the new IT system operational is another issue to be addresed . take training to execute correctly.Risks In IT • New IT systems often require employees to operate according to new processes • These may be difficult to learn.

PC company might pick a package that is strong in setting inventory levels even if it is weak in maximizing utilization of production capacity .Supply Chain IT In Practice 1.Select an IT system that addresses the company’s key success factors: • Two or three elements that determine whether the company is going to be successful or not • Eg: ability to set inventory levels optimally is crucial in PC business. This is not the case with chemical industry • Thus. where product life cycles are short and inventory becomes obsolete quickly.

but rather the big picture perspective should be implemented in digestible pieces .Take incremental steps and measure value • Instead of installing a complete supply chain system across the company all at once . start by getting the demand planning and then gradually move to supply planning • The incremental approach does not mean that one should not take big picture perspective.Supply Chain IT In Practice 2.

Supply Chain IT In Practice 3.Align the level of sophistication with the need for sophistication: • Management should consider the depth to which an IT system deals with firms key success factors • Trade off between the ease of implementation of system and systems level of complexity .

not to make decisions • A mistake companies can make is installing a supply chain system and then reducing the amount of managerial effort it spends on supply chain issues .Supply Chain IT In Practice 4.Use IT system to support decision making .

Supply Chain IT In Practice 5.Think about the future • Make sure that IT choices take future trends in mind • How flexible the IT system can be • Viability of supply chain software developer itself • Software should not only fulfill companies current needs but also future needs .