Introduction to Management Information Systems Chapter 8 E-Commerce and Supply Chain Management HTM 304 Fall 07

2 Supply Chain Management Supply chain – network of organizations and facilities that transforms raw materials into products delivered to customers Chain is a mis-cocnept implies each organization connected to just one company up (toward the supplier) and down (toward the customer) the chain At each level, an organization can work with many organizations both up and down the supply chain A supply chain is actually a network!

3 Supply Chain Network All the upstream firms are competing to get a good share of the pie. All the upstream firms are interrelated since each decision will affect the total size of the pie! Supply Chain Management is challenging! Customer is the only source of revenue!

4 IS to improve the SC performance Four major factors that affect supply chain performance: Facilities Inventory Transportation Information The challenge is to design the system that maximizes supply chain profitability which in the long run improves each partner's profitability Maximizing the chain profit does not always maximize each organization’s profit in isolation Successful SCM requires coordination  strategic alliances  inter-organizational IS

5 Integration of SRM and CRM CRM: customer relationship management SRM: Supplier relationship management

6 Supplier Relationship Management SRM – business process for managing al contracts between an organization and its suppliers. Three basic processes: Source Purchase Settle

7 SRM processes – (1) Source Find vendors of needed supplies, materials, or services Assess the vendors Negotiate terms Procurement contracts Some SRM applications search for product sources and find evaluations of vendors and products

8 SRM processes – (2) Purchase Request information quotation proposals Approve purchases Issue orders

9 SRM processes – (3) Settle Connect to the cash management subsystem in financial management application to make payment Some SRM packages include features to support procurement auctions. Financial System Secure cash flow (schedule payments, manage cash flows) SRM Settlement module bids

10 Technology for Data Exchange From EDI to XML Why not HTML? – lack of structure EDI (Electronic Data Interchange) A standard of formats for common business documents. Facilitate organizations to exchange documents (e.g. purchase order, invoice). XML (eXtensible Markup Language) Electronic exchange via world wide web.

11 EDI Require agreement on the data format (standard) to be sent Popular Standards: EDI X12 Standard American National Standards Institute (ANSI) X12 committee manages the EDI standard in the U.S. includes hundreds of documents with standard names, e.g. EDI 850 – purchase order, EDI 856 – advance ship notices, EDI 810 – electronic invoice, etc. EDIFACT standard – used internationally HIPAA standard – used for medical records Standards do not stand still.  Various versions of each of X12, EDIFACT, and HIPAA…

12 An Example of Data Exchange with EDI X12 Buy Snack, Inc. FoodSeller, Co. Internet Orders Items: Generate EDI 850 EDI X Purchase Order Receive Order, Translate EDI 850 View EDI 997 EDI X Functional Acknowledgement Generate EDI 997 Acknowledgement View EDI 855 to Check the Changes EDI X Purchase Order Acknowledgement Checks supply to fulfill order, EDI 855 Generate EDI 997 Acknowledge EDI X Functional Acknowledgement View EDI 997 View EDI 856 Awaits Arrival EDI X Shipment Notice Process Order, EDI 856 Ship Notice View EDI 855 to Check the Changes EDI X Purchase Order Acknowledgement Bills for Order EDI 819 Invoice

13 Example Scenario of System Integration

14 XML – a W3C standard eXtensible Markup Language A markup just like HTML Designed to describe Data, not to display webpage (as HTML) Has become a significant standard for computer processing

15 Example: Using XML Web Service to share sales data with business partners

16 Problem Solving Guide (P.235a-b) Interorganizational Information Exchange What should you do in scenario 1-5?