Carnegie Mellon University © Robert T. Monroe Management Information Systems Supply Chain Management Systems Management Information Systems Robert Monroe September 8, 2010

Carnegie Mellon University © Robert T. Monroe Management Information Systems Quiz 1.SCM is an acronym for _______ ______ ______. 2.Name one specific benefit that companies implementing an SCM system might expect to get from the system -- no more than one sentence for this answer! -- 3.True or false: SCM systems provide many operational benefits (efficiency) but few analytic benefits (effectiveness)

Carnegie Mellon University © Robert T. Monroe Management Information Systems A Framework For CRM, ERP, and SCM ‘Your Company’ Source: O’Brien-Marakas, Management Information Systems, 7 th ed.

Carnegie Mellon University © Robert T. Monroe Management Information Systems After Today's Class You Should Be Able To: Explain what a Supply Chain is, and the role that it plays in a business’s operations Explain how a Supply Chain Management System (SCM) can help a business make their supply chains more efficient and effective Identify and explain the core functionality that an SCM typically provides

Carnegie Mellon University © Robert T. Monroe Management Information Systems Supply Chain Management

Carnegie Mellon University © Robert T. Monroe Management Information Systems Lets Talk Supply Chains…

Carnegie Mellon University © Robert T. Monroe Management Information Systems Let’s consider the pen manufacturer PenCo “We Make Pens” PenCo “We Make Pens” … Ink Supplier Metal Parts Supplier Plastic Resin Supplier Ink Cartridge Supplier Customer 1 Customer 2 Customer 3 Customer 4 Customer n …

Carnegie Mellon University © Robert T. Monroe Management Information Systems A Generalized Supply Chain Model (Simple) Supplier’s Supplier Customer’s Customer Supplier Manufacturer Retailer or Distributor Customer Information Flow Goods, Components, Services, etc. Source: [BPH08]

Carnegie Mellon University © Robert T. Monroe Management Information Systems A Generalized Supply Chain Model (More Complex) Suppliers Supplier Customer’s Customer Supplier Manufacturer Retailer or Distributor Customer Supplier Manufacturer Customer

Carnegie Mellon University © Robert T. Monroe Management Information Systems SCM Definition Supply Chain Management Systems (SCM’s) are cross- functional, inter-enterprise, systems that use IT to help support & manage the links between a company’s key business processes and those of its suppliers, customers, and business partners. The goal of supply chain management is to create a fast, efficient, & low-cost network of business relationships

Carnegie Mellon University © Robert T. Monroe Management Information Systems Five Basic Supply Chain Management Components PlanSourceMakeDeliverReturn Source: [BPH08]

Carnegie Mellon University © Robert T. Monroe Management Information Systems Elements Of An SCM System Source: O’Brien-Marakas, Management Information Systems, 7 th ed.

Carnegie Mellon University © Robert T. Monroe Management Information Systems Selected Supply Chain Management Functions Planning (analytic) Supply chain network design –Optimize network of suppliers, plants, distribution centers Collaborative demand and supply planning –Develop forecasts based on shared forecasts up and down the supply chain –Demand forecasting –Supply availability Supplier performance mgmt Execution (operational) Materials management –Ordering and fulfillment –Inventory management Transportation/logistics –Commit to delivery schedule –Manage deliveries –Tracking/in-transit visibility Supplier event management Supplier performance mgmt

Carnegie Mellon University © Robert T. Monroe Management Information Systems Selected SCM Benefits Faster, more accurate order processing Reductions in inventory levels across the supply chain –Smooth, predictable, flow of goods through the supply chain –Reduced inventory costs (improved working capital, turnover) Improved visibility across the supply chain Greater agility Quicker time to market Lower transaction and materials costs Strategic relationships with suppliers –Who benefits from this closer relationship? –Is this always a better deal for the buyer than the supplier?

Carnegie Mellon University © Robert T. Monroe Management Information Systems Dell Case Study Form teams of students to review the Dell case Your team will play a role assigned by the professor Answer the following questions, be prepared to discuss –What decisions relating to Dell’s supply chain do you need to make to do your job on an hourly, daily, weekly, and monthly basis? In steady state, normal business-mode Before, after, and during the strike –What information do you need to provide to make the supply chain run smoothly? To whom? –What information do you need to know about the supply chain to do your job effectively and efficiently?

Carnegie Mellon University © Robert T. Monroe Management Information Systems Why Are SCM Implementations Difficult? As with ERP and CRM systems, they tend to be big, complex projects Unlike ERP and CRM, they tend to involve multiple companies (this can radically increase complexity) Challenging to properly align all parties interests Much planning, knowledge, and tools required Difficult to “tune” predictions Lack of adequate collaboration –… and sometimes lack of incentive to collaborate

Carnegie Mellon University © Robert T. Monroe Management Information Systems Discussion Questions What role does IT play in making a supply chain efficient? Can you succeed in building an efficient, flexible, high- performing supply chain without huge IT investments? –Will making a large investment in an SCM system guarantee that you have a high performing supply chain? Could a well executed SCM system give a company a sustainable competitive advantage? –Why or why not? Examples? –Does this support or contradict Carr’s claim that IT Doesn’t Matter?

Carnegie Mellon University © Robert T. Monroe Management Information Systems And now for something completely different… Preparing for a case study class

Carnegie Mellon University © Robert T. Monroe Management Information Systems How A Case Study Class Works All participants carefully review and analyze the day’s case study prior to class The students ‘own’ the discussion The professor facilitates the discussion. He asks questions, helps the class explore and refine the issues, frame the problem, propose alternate paths, and debate which path(s) the business should take You need to come well prepared for the class to work! –Read, and think about, the HBS note “Learning By The Case Method” before you read the Cisco case –Plan to spend a couple of hours reading, analyzing, and discussing the Cisco case before coming to class – discussing the case with other students is encouraged!

Carnegie Mellon University © Robert T. Monroe Management Information Systems Eid Mubarak! Enjoy your break. See you next Wednesday

Carnegie Mellon University © Robert T. Monroe Management Information Systems Assignment 1a: Summary Statistics

Carnegie Mellon University © Robert T. Monroe Management Information Systems References [HBP09] Stephen Haag, Paige Baltzan, and Amy Phillips, Business Driven Technology, 3rd Edition, McGraw- Hill Irwin, 2009, ISBN [OM05] James O’Brien, George Marakas, Management Information Systems, 7 th Edition, McGraw-Hill Irwin, 2005.