1. Information Systems in Organizations 4
Information Systems in Organizations 4.1 Supply Chain Management Systems

2. Learn IT Assignment #4 : An Hour of Code (EC)
All done on
This is where you learn what coding is all about
Complete three activities:
Animate your name (JavaScript)
About me (HTML)
Sun and earth (HTML and CSS)
Must be submitted by Nov. 14

3. Supply chain management
Supply chain management (SCM) is the management of the flow of and
The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory and the velocity of inventory movement.
As organizations strive to focus on core competencies and become more flexible, they reduce their ownership of raw materials sources and distribution channels.
Successful SCM requires a change from managing to integrating activities into key supply chain processes.
Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems, and shared
goods
services
visibility
Individual functions
information

4. Just get the class talking about what they have heard about supply chain. See if anyone has any idea what kind of money is involved in this area. There are lots of different pieces to this puzzle and there are gross inefficiencies for many organizations in all of these area if they really don’t focus time and energy on their supply chain.

5. Supply Chain Management Definition and Solutions
Five basic components of SCM are: Plan, , Make, Deliver, and Return
SCM applications benefit from having a single major source to go to for information.
Companies can connect their supply chain with the supply chains of their suppliers and customers together in a single vast network. The goal of these projects is greater supply chain
It is important for a company to keep track of what is happening in its supply chain because a supplier or a supplier's supplier could end up having an impact on you.
Many SCM applications are reliant upon the kind of information that is stored inside software and, in some cases, some CRM packages
Source
up-to-date
visibility
extended
ERP

6. At its highest level, this is what it is all about
At its highest level, this is what it is all about. This is about as simple as it gets. Remember that there may be many different suppliers providing a wide range of raw materials to a manufacturer. The manufacturer can purchase the same raw material form a variety of suppliers and will make the decision about who will source the raw materials after considering a range of factors ranging from price to lead time. Products can be sent via a variety of distributors to a variety of retailers.
Students should think of a variety of products going through this supply chain. Things get even more complicated when raw materials and/or finished goods have shelf lives.

7. Where is your iPhone “made”? What happens in Shenzhen, China
if there are any
delays?
Most students know that their iPhones are finally assembled in China but the major components are built all over the world. The people that build each of these components have their own supply chains because their finished goods are Apple’s raw materials.
Get people thinking about what happens to Apple’s supply chain if any of their suppliers experience any problems with their supply chains. If they can’t reliably supply their components, can Apple deal with them?

8. Question Who works for a company which manufactures a product?
What kind of product is it?
What stuff do you need to make your product?
Where do you get this stuff?
What happens if they run out of this stuff?
See if you can find a student that works for a company that makes some product (other than a restaurant). Have them tell the class what their company makes and what goes into their products. Ask them where they purchase their raw materials and if they have multiple suppliers for the same raw materials. For raw materials that are only sourced from one supplier, what happens to their company if their supplier has problems filling their orders. For raw materials that are supplied by multiple suppliers, ask how they decide which supplier they will purchase from.

9. ?
How difficult is it to get the right product on the right shelf at the right time and the lowest possible cost?
This is far more difficult than most student believe. As the number of products an organization produces goes up and as the number of raw materials in each product goes up, the problem can become more complex geometrically, not linearly.
Keep in mind how challenging this can get if raw materials or finished goods have a shelf live and the shorter the shelf life, the bigger the challenge.

10. Safety Stock – That’s the Answer!
Here’s what the people in
order fulfilment see
Here’s what the people in
accounting see
Stocking up on raw materials and/or finished goods might sound like a good idea so that you don’t stock out but safety stock costs money. Costs include:
Buying the raw materials.
Labor and other direct costs in making finished goods.
Distribution costs to get products out to distribution centers and retail locations.
Storage of finished goods.
Do all of these costs outweigh the benefits? What else could you be doing with all of that money you have tied up in safety stock?
What if a product has a shelf life? Keep in mind that some technology products have a “shelf life” related to how quickly “new technologies” become “old technologies” and if “old technologies” need to be sold at a discount for them to move, that will also impact your bottom line.

11. What else could I do with this cash?
If this goes up
then this goes down…
What else could I do
with this cash?
To follow up on the previous slide…I had to spend cash to create the finished goods that are sitting in inventory. Sure, they’re both assets on the balance sheet but “cash is king” and what else can I do with cash???

12. SCM Architecture SCM modules support two functions.
Supply chain planning—development of resource plans to support production.
Supply chain execution—efficient flow of products, information, and financing.
Supply chain planning is all about figuring out what you are going to need, when you are going to need it and where you are going to need it and working backwards from there (Demand Forecast). To get the right product on the right self at the right time, when do your products need to be out at your distribution centers and which products need to be at which distribution centers (Transportation Schedule). To get these products to the right distributions facilities at the appropriate time you need to figure out what products you are going to make and when you are going to make them (Production Plan). In order to execute the production plan you need to figure out when you are going to order raw materials and who you are going to order them from based on your production plan, lead times, costs and other factors (Sourcing Plan).
Supply chain execution then rolls forward in time (Product Flow). Purchase orders are generated at the appropriate time and sent to the best supplier who can get the raw materials you need to your manufacturing plants in time to meet the needs of the production plan. Finished goods are then produced and shipped out to the various distribution centers who then get the finished goods to their last stop before the customer acquires them.
Note that information flows both ways things like purchase orders going to suppliers from the manufacturer and invoices going from the suppliers to the manufacturers. In addition, payments flow in the opposite direction from the product flows (manufacturers pay the suppliers for raw materials)
Copyright © 2014 Pearson Education, Inc.

13. This is another view of the same thing
This is another view of the same thing. Note the product flows are going from left to right…information flows are going in both directions (purchase orders, invoices, status information, etc.) and that cash flows in the opposite direction to the product flows.

14. Channels of Distribution
How products get to market
Traditional Channels:
- manufacturer
- distributor/wholesaler
- retailer
- consumer
Disintermediation

15. SCM and the Income Statement
In-Class Activity…
SCM and the Income Statement

16. Just-in-Time Manufacturing
Just-in-Time Manufacturing lets manufacturers purchase and receive components just before they're needed on the
In the high-tech area, companies are turning to a process in which a product is customized and manufactured according to specific customer requests
Dell is able to achieve a four-hour production cycle time using an based supply-chain management system.
Just-in-Time manufacturing doesn't mean a company is on its supply chain. Often, companies just have a distributor or supplier maintain a warehouse.
assembly line
build-to-order
Internet
saving money

17. Let’s talk a little bit about “Just in Time” manufacturing
Let’s talk a little bit about “Just in Time” manufacturing. This approach was first introduced by Toyota way back in 19??. This works best for businesses that have “Make to Order” businesses. It doesn’t work quite as well for businesses that “Make to Stock”. The goal is to dramatically reduce costs by not having much money tied up in raw materials and/or finished goods. It doesn’t work well if you have long lead times for raw materials; your suppliers need to be very responsive. It also doesn’t work well if your supply and manufacturing pipeline is not super reliable; any problems in supply chains or manufacturing can have a serious impact and cause real problems.

18. Dell’s Supply Chain Dell Internal Supplier Customer Order
Manufacturing
Storing
Merging
Customer
Supply on demand every two hours
Taken by Internet or phone
Taken by Internet or phone
Taken by Internet or phone
Dell has been a leader in JIT manufacturing in the technology field. Remind students that “technology obsolesces” is a form of “shelf life”. Think about how long it takes the typical computer manufacturer and the pipeline of finished goods that are in warehouses, in distribution centers and on the shelves of retailers. How long do these items sit and what happens to their value with each day this sit somewhere in the pipeline because technology gets old pretty quick and if this stuff doesn’t move quickly they will need to be sold at a discount. Think about how rapidly technology prices have been dropping? What does a 1TB hard drive or a gig of memory cost today compared to just a year ago. Any time a technology company buys a raw material too early, they’re paying too much for that raw material and it will cost less tomorrow than it does today.

19. What else could I do with this cash?

20. Direct Store Delivery (DSD)
Vendor-Managed Inventory (VMI): What is it and When Does It Make Sense to Use It
VMI relates to the tasks associated with managing the inventory supplied by a vendor, while ____________relates to ownership of the inventory.
A specific may cover a single task, all tasks, or any combination of tasks.
Vendors choose to offer VMI because they feel it gives them a advantage or because VMI is expected in their industry.
describes a distribution method used in grocery/retail where the supplier delivers product directly to the stores. This bypasses the retailers’ distribution network.
consignment
VMI program
marketing
Direct Store Delivery (DSD)

21. Running out of raw materials can shutdown an entire manufacturing plant which can drive costs through the roof. In many cases suppliers will store their products at the manufacturing plants of their customers. While the items are sitting on the shelf they are owned by the supplier. As soon as the manufacturer pulls the item off the shelf they bought it. The supplier LOVES being the primary (if not only) supplier of a raw material but part of the deal is that they can NEVER run out of stock. When the manufacture needs an item it MUST be there. The manufacturer is usually willing to pay a premium for this level of service and the supplier is willing to cover these extra costs because they’re charging a premium. Everyone is happy.

22. Not only does Dell to JIT manufacturing but in many cases they also do VMI where suppliers own the components and store the components at Dell’s manufacturing facility until Dell needs them. As soon as Dell pulls the components off the shelf, Dell bought them. The suppliers LOVE to be the primary suppliers to Dell and Dell loves to have them as long as their prices are reasonable (Dell is willing to pay a small premium) and as long as what Dell needs is always waiting for them.

23. enterprise management
What is RFID?
RFID is a type of technology that lets you identify objects that have been fitted with special RF identification tags.
The RFID system comprises an RFID reader (or RFID scanner) and an RFID tag (or RFID label) for each item that you’ll want to be able to identify.
RFID can help you manage materials or assets easily, improve productivity, eliminate errors and stock-outs, and significantly reduce costs.
For management, RFID is currently the best practical way to track items in transit.
RFID readers might push their identified item data to a special computer for processing into useful information that can be sent to, and used by the company’s _____________________ system.
wireless
simplest
labor
asset
enterprise management

24. Radio Frequency Identification (RFID)
RFID tags will soon replace standard bar codes.
RFID is the use of electromagnetic energy to transit energy between a reader (transceiver) and the tag (antenna).
Line-of-sight reading is not necessary.
RFID tags can contain more information than bar codes.
Tags are programmable, so there is a vast array of potential uses.
Scanning can be done from greater distance.
Passive tags—inexpensive, range of few feet.
Active tags—more expensive, range of hundreds of feet.
Source: METRO AG.
RFID is the most efficient way to provide incredible visibility through the supply chain. If this information is shared between manufacturing companies, distributors and retailers, everyone can see where everything is through the entire pipeline. This can reduce costs and create value for everyone along the pipeline. If you want to be a serious supplier to any of the largest companies in the world like Walmart or Target and even to organizations like the Department of Defense, you’re going to need to put RFID tags on at least every case and pallet of product so it can be tracked all the way through the pipeline.

25. The Big Picture
Here we have an example of a bottling company that is putting tags on their products and shows their ability to track their products through the pipeline all the way to the shelves of the retailer. If the retailer shares sales information with the manufacturer, based on how long it takes to get product through the pipeline, the manufacture can make and ship the optimal amount of product at just the right time to meet customer demand at the minimal cost.

26. In-Class Activity…
SCM Sourcing Planning