Information Technology and the Supply Chain Supply Chain Management Lecture 5

Outline uThe Role of Information Technology in the Supply Chain uThe Supply Chain IT Framework uCustomer Relationship Management uInternal Supply Chain Management uSupplier Relationship Management uThe Transaction Management Foundation uThe Future of IT in the Supply Chain uSupply Chain Information Technology in Practice

Role of Information Technology in a Supply Chain uInformation is crucial to the performance of supply chain because it provides the basis on which supply chain managers make decision. uInformation technology contains tools to gain the awareness of information, analyze this information, and execute it to increase the performance of the supply chain. uInformation is the driver that serves as the “glue” to create a coordinated supply chain uIT is the eyes and ears of SC and sometimes part of brain.

Role of Information Technology in a Supply Chain uInformation must have the following characteristics to be useful: –Accurate –Accessible in a timely manner –Information must be of the right kind uInformation provides the basis for supply chain management decisions –Inventory »Optimal inventories, Cost carrying inventories, Cost of stock out etc. –Transportation »Transportation networks, routes, customer locations, shipment sizes etc. –Facility »Location, capacity and schedules of a facility, tradeoffs etc.

Characteristics of Useful Supply Chain Information uAccurate uAccessible in a timely manner uThe right kind uProvides supply chain visibility

Use of Information in a Supply Chain uInformation used at all phases of decision making: strategic, planning, operational uExamples: –Strategic: location decisions –Operational: what products will be produced during today’s production run

Use of Information in a Supply Chain uInventory: demand patterns, carrying costs, ordering costs uTransportation: costs, customer locations, shipment sizes uFacility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.

Role of Information Technology in a Supply Chain uInformation technology (IT) –Hardware, software used throughout the supply chain to gather and analyze information –Captures and delivers information needed to make good decisions uEffective use of IT in the supply chain can have a significant impact on supply chain performance

The Importance of Information in a Supply Chain uRelevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain uAllows performance to be optimized for the entire supply chain, not just for one stage – leads to higher performance for each individual firm in the supply chain

The Supply Chain IT Framework uThe Supply Chain Macro Processes –Customer Relationship Management (CRM) –Internal Supply Chain Management (ISCM) –Supplier Relationship Management (SRM) –Transaction Management Foundation uWhy Focus on the Macro Processes? –Firm must expand the scope beyond internal processes up to entire SC. –No Zero Sum Game but Positive Sum Game. uMacro Processes Applied to the Evolution of Software

Macro Processes in a Supply Chain Supplier Relationship Management (SRM) Internal Supply Chain Management (ISCM) Customer Relationship Management (CRM) Transaction Management Foundation (TMF)

Customer Relationship Management uThe processes that take place between an enterprise and its customers downstream in the supply chain uKey processes: –Marketing (how to) –Selling (actual) –Order management (Tracking, visibility of orders, ERP) –Call/Service center (POC b/w Customer & Company)

Internal Supply Chain Management uIncludes all processes involved in planning for and fulfilling a customer order uISCM processes: –Strategic Planning (network planning) –Demand Planning –Supply Planning –Fulfillment –Field Service (service, spare parts) uThere must be strong integration between the ISCM and CRM macro processes

Supplier Relationship Management uThose processes focused on the interaction between the enterprise and suppliers uKey processes: –Design Collaboration –Source –Negotiate –Buy –Supply Collaboration uThere is a natural fit between ISCM and SRM processes

The Transaction Management Foundation uEnterprise software systems (ERP) uEarlier systems focused on automation of simple transactions and the creation of an integrated method of storing and viewing data across the enterprise uReal value of the TMF exists only if decision making is improved uThe extent to which the TMF enables integration across the three macro processes determines its value

The Future of IT in the Supply Chain uAt the highest level, the three SCM macro processes will continue to drive the evolution of enterprise software uSoftware focused on the macro processes will become a larger share of the total enterprise software market and the firms producing this software will become more successful uFunctionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

Assignment 5 uRisk Management in IT w.r.t. Supply Chain Management –What is Risk Management –What are Risks in Supply Chain –How to mitigate those risks –(Assignment in bullet points) –(Don’t copy and don’t let others copy your assignment) –(Positive discussions & all resource utilization is allowed)