Supply Chain Information System

Supply Chain Management (SCM) 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.
 Information system: A set of interrelated components
that collect (or retrieve), process, store, and distribute
information to support decision making, coordination,
and control in an organization
 SCM information systems use technology to
more effectively manage supply chains
 Impact of IT on SCM
 Visibility – Allows managers to “see” the physical and
monetary flows in the supply chain and better manage
them.
 Mirroring – Replaces certain physical processes with
virtual ones.
 Creation of new customer relationships – Taking raw
information and organizing, selecting, synthesizing, and
distributing it in a manner that creates whole new sources
of value.
A Map of Supply Chain Information
Systems
Information Technology for Supply Chain
Management
 Software Systems
 Electronic Data Interchange (EDI)
 Material Requirements Planning (MRP)
 Manufacturing Resource Planning (MRP II)
 Enterprise Resource Planning (ERP)
 Supply Chain Management Systems (SCM)
 Customer Relationship Management (CRM)
 Internet-based Software
 Network Infrastructure
 Wide Area Network
 Internet (for E-commerce: B2B, B2C)
Enterprise Resource Planning (ERP) 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.
 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
 Major ERP Systems
 SAP R/3
 Oracle
 PeopleSoft (have been merged by Oracle)
 Toyota uses PeopleSoft and SAP
 Microsoft Dynamics
 (formerly Microsoft Business Solutions - Great Plains)
Supply Chain Management (SCM)
Systems
 A typical SCM system might address the following
issues:
 Planning
 Vendor selection
 Manufacturing
 Logistics
 Customer relationship
Supply Chain Management (SCM) Systems
 Supply Chain Management (SCM) Systems
 The two basic types of SCM system software are:
1. Supply Chain Planning software (SCP):
uses mathematical models to predict inventory levels
based on the efficient flow of resources into the
supply chain
2. 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
SAP Advanced Planner and Optimizer (APO)
Levels of SAP APO
• Supply Network Design (SND)
• The Supply Chain Cockpit (SCC)
• Demand Planning (DP)
• Supply Network Planning (SND)
• Collaborative Planning,
Forecasting, and Replenishment
(CPFR)

SAP R/3
Oracle Supply Chain Planning
 Oracle Supply Chain Planning is part of the Oracle
E-Business Suite's family of Supply Chain
Management solutions
 It includes
 Demand Planning
 Collaborative Planning
 Inventory Optimization
 Manufacturing Scheduling, and
 Global Order Promising
 Customer Relationship Management
(CRM) 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
Salesforce.com
Muiti-channels CRM
Data Mining/Web Mining/Business Intelligence

 Data mining is the process of using mathematical

techniques to look for hidden patterns in groups of data,
thereby discovering previously unknown relationships
among the many pieces of information stored in a
database
 A data warehouse is a database that contains huge
amounts of data, such as customer and sales data
Relationship among SCM, ERP, CRM

SCM ERP CRM

Broader SCM
Global Considerations in Using SCM/ERP
Systems
 Time differences
 Language issues
 Currency exchange rates
 Tax
 Different accounting systems
 Internet and security restrictions
 Culture and religion holidays
Diagnosing and Improving Supply Chain Information Flows

1. Map the business process(es) and information flows

Dealer Paper Order Sits Order Sits Clerk

Order Internal Mail
Faxes In Fax In Clerk’s Processes
Created Delivers Fax
Order In Box In Box Order

4% of 0 to 4 hours 0 to 2 hours 5 minutes

orders lost 2 hours on average 0.5 to 1.5 hours 1 hour on average
1 hour on average
1% of orders lost

10 to 45 minutes
20 minutes on average

Dealer Inspector Worker YES

Transport Firm Is Item
Receives Checks Picks
Delivers Order In Stock?
Order Order Order

NO
2 minutes
1 to 3 hours 0.5% of orders incorrect
2 hours on average Clerk Notifies
No history of lost, Dealer and
damaged, or incorrect
deliveries
Passes Order
On to Plant
2. Identify potential performance gaps in the
information flows

Poor Excellent
Accuracy
Timeliness
Reliability
Detail and form
Availability
Other
3. Use continuous improvement techniques to identify the
causes of these gaps
 Root cause analysis – A process by which organizations
brainstorm about possible causes of problems (referred to as
“effects”) and then, through structured analysis and data-gathering
efforts, gradually narrow the focus to a few root causes

Process Personnel

Poor Lack of training

dispatching
Late
deliveries

Truck breakdown

Material Equipment
4. Use the plan-do-check-act cycle to close
the gaps

Do

Plan Check

Act
 End of the Chapter
Question & Discussion?