IT in Logistics and Supply Chain

Management
Prof P.P.Sengupta

1
 What is Supply Chain Management ?
• Optimization of all processes starting from supplier's supplier to
customer’s customer so as to :
• Reduce supply chain cost
• Reduce Supply chain cycle time
• It is the management of the flow of goods and services and
includes all processes that transform raw materials into final
products till it reaches the ultimate customer
• SCM attempts to centrally control or link the production,
shipment, and distribution of a product. By managing the supply
chain, companies can cut excess costs and deliver products to the
customers faster. This is done by keeping tighter control of
internal inventories, internal production, distribution, sales, and
the inventories .
2
Objectives of Supply Chain Management

• Supply chain management is all

about producing the right product in the right
quantity and sending them to the right place
at the right time.

3
Organization , Suppliers , Customers

Supplier Organization Customer

Organizati
Supplier Supplier Customer Customer
on

4
 3 Rs of Information
• Information serves as the glue that allows the other supply chain
drivers to work together with the goal of creating an integrated,
coordinated supply chain.
• Without information, a manager cannot know what customers
want, how much inventory is in stock, and when more product
should be produced or shipped.
• In short, information provides supply chain visibility, allowing
managers to make decisions to improve the supply chain’s
performance
• Right Information
• Right Time
• Right Cost
5
 Only IT can provide with the 3 Rs
• Right Information – Due to great speed of
Computers and Telecommunication , accuracy and
reliability of information obtained by processing
raw data is ensured.
• Right Time – Advancement of hardware, software
and Telecom makes it possible to identify the right
point of time when decision is taken and then
deliver the information.
• Right cost – Cost of computer processing and data
transmission is falling down every day .
6
 Why IT is Important ?
• Business processes have been digitalized in the past couple of
decades, and it has become a necessity rather than an option.
• IT integrates various operations carried out by different
companies in the supply chain.
• It speeds up the business processes and prevents bottlenecks.
• Companies are closer to achieving on-time procurement,
shorter inventory, and better efficiency, especially in
manufacturing.
• IT allows companies in the supply chain to meet the needs of
consumers.

7
Role of IT in Supply Chain Management
Integrated and Coordinated Supply Chain
• A supply chain can only work efficiently when it is
properly integrated and well-coordinated.
• IT performs this crucial task by bringing in multiple
technologies and combining them to optimise the
supply chain. These technologies make data
collection possible and much easier and more
accurate. In turn, this allows precise and detailed
data analysis leading to sound business decisions.

8
Role of IT in Supply Chain Management
Increased Productivity
• Smooth flow of information, new technologies and
effective communication increase the productivity
of all entities in the supply chain. It is like a trigger
for product movement.
• Instead of going back and forth, IT provides the link
that passes the needed information continuously.

9
Role of IT in Supply Chain Management
Cost Reduction
• IT permits optimum utilisation of resources and assets.
Old data is used to study the trends, and technology is
used to analyse it for improving performance. When
resources are used optimally, they result in cost
reduction.
• In a supply chain, the role of IT becomes more
prominent because it motivates all parties to use their
respective resources in the most cost-efficient manner.
When IT is used as it should be, there is a dramatic fall in
overall expenses.
10
Role of IT in Supply Chain Management
Product Improvement
• IT consists of tools and applications which can be
used to gain early awareness. In a market where
consumers always want something new, the
product will either have to evolve or it will go out
of demand. To stay in business, you must
introduce product improvement and innovation
sooner rather than later. The kind and extent of
product improvement can be validated with the
help of IT.
11
Role of IT in Supply Chain Management

Supply Chain Visibility

• Information makes the entire supply chain
visible to supply chain managers. The manner
in which the information flows from one
collaborator to the other and the impact it has
on others is used by the managers in making
strategic decisions.

12
 How Suppliers Can Utilize Information
Technology
• The supply chain starts with the supplies. With a reliable
supply chain software that allows real-time information
sharing, manufacturers and suppliers can collaborate
better and avoid production delays due to insufficient raw
materials.
• Normally, manufacturers initiate transactions with suppliers
but if you are a supplier, you can monitor your clients'
inventory, forecast future demands, and make sure that
you're ready to fulfil orders for raw materials. Suppliers can
also use historical data to make informed decisions in
aspects like partnership and contract management.

13
 How Manufacturers Benefit From IT

• IT offers better visibility and transparency that

lead to better accountability and control over the
production of goods.
• Manufacturers that have clear visibility on
production can make adjustments to make the
process more efficient as well as foresee problems
and prevent them. F
• For example, with IT, a manufacturer can foresee
delays and make changes in the production
schedule.
14
 How Information Technology Helps
Shippers
• Timely delivery is essential in any industry. Delivery that's done
on time usually results in customer satisfaction, and customer
satisfaction normally leads to customer retention.
• As a shipper or logistics provider, one can ensure customer
satisfaction by improving order tracking and delivery.
• Keeping the manufacturers and distributors informed of the
entire delivery process and possible delays already puts you a
step closer to repeat business.
• What more if you can avoid delays by utilizing data from the
tools. Many supply chain management tools for delivery and
shipping service providers also let you give clients access to a
platform where they can enjoy a sense of control.
15
How Distributors Can Take Advantage of IT

• Distributors that are spending a lot of time

and wasting money on inventory management
can rely on supply chain management tools
for some badly needed assistance.
• With the right tool and documented process,
distributors no longer have to worry
about excess or insufficient stock.
• Instead, they can predict demands and
effectively manage inventory and orders.
16
 How Retailers Can Use Information
Technology
• In the supply chain, retailers are the ones who
face consumers. They need flexibility and
visibility as well as integration.
• Retailers can integrate their POS systems, which
capture their sales, with their tool for
monitoring the stock level, which is also visible
to the distributor.
• Retailers can also set a reorder point that when
reached will automatically generate an order.
17
The Functional Roles of IT in Supply Chain
Management
Transaction Execution
• When information flows efficiently between
the participants of the supply chain, the
number of transactions between them is
reduced. IT increases the efficiency of
repetitive data exchanges. This data is usually
appropriate for delivery verification, order
processing, billing, and dispatch advice.

18
The Functional Roles of IT in Supply Chain
Management
Collaboration and Coordination
• IT renders the flow of information. This makes
for easier planning, coordination and
improved collaboration between all
participants. Demand forecasts make it
possible to plan for the future, and order
tracking makes knowing the physical location
of each order a reality. Neither of these
activities is possible without IT.
19
The Functional Roles of IT in Supply Chain
Management
Decision Support
• Good decisions cannot be pulled out of thin
air. They are and should be based on data. IT is
a huge benefit in decision support. It can
collect even the most complicated set of data
and convert it to easy-to-understand charts
and reports. In this context, IT extends
decision support to all managers.

20
 Software for Supply Chain Management
Enterprise Resource Planning
• Materials requirement planning, which was earlier used to
distribute resources for a manufacturing operation, resulted in
enterprise resource planning (ERP), a system that links individual
IT applications into a single one. This results in the integration of
the data and the processes of the complete business.
• When all operations are consolidated, information related to
cash flow and material flow starts making more sense. ERP has
now become the backbone of the supply chain and provides an
integrated view of the organisation as a whole. Today, ERP has
also led to the automation of many functions so that there is
minimal human intervention.

21
 Software for Supply Chain Management

Electronic Data Interchange

• Electronic Data Interchange (EDI) is the exchange of
business data from one computer to another. It is
usually done in a standard format so that all concerned
parties can use it according to their need without having
to constantly ask for it. EDI allows companies, across the
industry, to communicate with one another.
• Everyone who uses EDI follows the same rules and
methods. This makes for efficient inventory
management, better business relationships, and
improved customer service.
22
Software for Supply Chain Management

Supply Chain Management Systems

• An ideal supply chain management system will
help in planning, selecting the vendor,
manufacturing, logistics, and building the
customer relationship.
• To provide the necessary assistance Supply
Chain Planning (SCP) software and Supply
Chain Execution (SCE) software are used.

23
 Software for Supply Chain Management

Customer Relationship Management

• CRM or e-CRM uses IT to assist an e-business
in managing its customer base. It matches
customer needs with the product plans to
increase sales.

24
 Software for Supply Chain Management

Supplier Relationship Management

• SRM or e-SRM uses IT to assist an e-business
in managing its Supplier base. It matches
Suppliers needs with the product plans to
reduce procurement cost and also to reduce
the lead time .

25