1. Supply Chain Information Systems

2. Supplement Objectives
Be able to:
Explain why information flows are a necessary part of any supply chain.
Describe in detail how supply chain information needs vary according to the organizational level and the direction of the linkages (upstream or downstream).
Describe and differentiate among ERP, DSS, CRM, SRM, and logistics applications.
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

3. What are some of the key functions information flows perform?
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

4. Key Functions of Information Flows
Plan or kick-off physical flows
Customer order, production plan, etc.
Record and retrieve status and plans
Check inventory levels, shipping schedule, etc.
Codify decision rules and planning values
Standard costs and times, inventory reorder points, etc.
Record and report performance
Quality levels, on-time delivery, actual costs, etc.
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

5. Supply Chain Information Flows
Strategic decision making
Tactical planning
Routine decision making
Execution and transaction processing
Customer Internal Supply Supplier Relationship Chain Management Relationship Management Management
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

6. Supply Chain Information Needs
Supply Chain Activity Characteristics Performance Dimensions purpose for Information Flows
Strategic decision making
long-range plans to meet organization’s mission
Focus on long-term decisions
Least structured of all
Greatest user discretion
Flexibility
Tactical planning plans to coordinate actions across supply chain
Focus is on tactical decisions
Plans physical flows
Greater user discretion
Form
Routine decision making support rule-based decision making
Fairly short time frames
Limited user discretion
Accuracy
Timeliness
Limited flexibility
Execution and transaction processing record / retrieve data & control physical / monetary flows
Very short time frames, very high volumes
Highly automated
Standardized business practices
Ideally no user intervention
Note that supply chain information needs differ at various levels of the organization, from long-term strategic decision making at the top to day-to-day, routine activities at the bottom
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

7. Supply Chain Information Systems
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Strategic decision making
Tactical planning
Routine decision making
Execution and transaction processing
ERP
applications
ERP: Enterprise Resource Planning systems
DSS: Decision Support Systems
SRM: Supplier Relationship Management
CRM: Customer Relationship Management
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

8. Supply Chain Information Systems Enterprise Resource Planning (ERP) Systems
Large, integrated computer-based business transaction processing and reporting systems. ERP systems pull together all of the classic business functions such as accounting, finance, sales, and operations into a single, tightly integrated package that uses a common database.
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
ERP
applications
Suppliers Internal supply Customers Logistics chain
Traditional strengths in routine decision making and in execution and transaction processing
Captures data to support higher-level decision support systems (DSS)
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

9. Supply Chain Information Systems Decision Support Systems (DSS)
Computer-based information systems that allow users to analyze, manipulate, and present data in a manner that aids higher-level decision making
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

10. Supply Chain Information Systems Supplier Relationship Management (SRM)
Computer-based information systems designed to plan and manage the firm’s external linkages with its suppliers. Example applications:
Design collaboration
Sourcing decisions
Negotiations
Buy process
Supply collaboration
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

11. Supply Chain Information Systems Customer Relationship Management (CRM)
Computer-based information systems designed to plan and manage the firm’s external linkages with its customers. Example applications:
Market analysis
Sell process
Order management
Call/service center management
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

12. Supply Chain Information Systems Logistics Systems I
Network Design Applications: Logistics information systems that address such long-term strategic questions as facility location and sizing, as well as transportation networks.
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

13. Supply Chain Information Systems Logistics Systems II
Warehouse and Transportation Planning Systems: Logistics information systems that support tactical planning efforts by allocating “fixed” logistics capacity in the best possible way, given business requirements.
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

14. Supply Chain Information Systems Logistics Systems III
Warehouse Management and Transportation Execution Systems: Logistics information systems that initiate and control the movement of materials between supply chain partners
Strategic decision making
Tactical planning
Routine decision making
Execution & transaction processing
SRM
applications
DSS
CRM
Network design
Warehouse & transportation planning
Warehouse management & transportation execution
Suppliers Internal supply Customers Logistics chain
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

15. Advanced Concepts – Levels of Value Provided by Information
Visibility Information displays the physical and monetary flows in the supply chain
Mirroring Information can replace physical processes with virtual ones
Creation of new customer relationships Information can create new sources of value / new products and services
Visibility – Point of sales data, inventory status, job status
Mirroring – creating computer simulation models rather than physical mock-ups for wind tunnel testing
New products – creating virtual, customized textbooks with hotlinks to Web sites and spreadsheets
“How can we exploit these information flows?”
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

16. ‘Perfect’ Information
Improving Information Flow Processes

17. What is “perfect” Information?
Perfect information is:
Accurate
Timely
Correct in detail and form
Shared
Complete
Other dimensions?
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

18. Costs of “imperfect” Information
What are some of the costs associated with information that is:
Inaccurate? (e.g., inventory or order info.)
Late? (e.g., forecast changes)
Incomplete in detail / form? (e.g., quarterly sales $ forecast)?
Not shared? (e.g., engineering changes)
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

19. Diagnosing and Improving Supply Chain Information Flows
Map the business process(es) containing the information flows of interest
Develop an information flow profile that identifies potential performance gaps in the information flows
Use continuous improvement techniques to identify the causes of these gaps
Use the plan-do-check-act (PDCA) cycle to plan and implement improvements aimed at closing these gaps
See chapter 3 for process mapping techniques
See chapter 4 for continuous improvement techniques such as root cause analysis, fishbone diagrams, and Pareto analysis
See chapter 4 for plan–do–check–act (PDCA) cycle
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

20. Diagnosing and Improving Supply Chain Information Flows
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps
Accuracy
Timeliness
Reliability
Detail and form
Availability
Method
Manpower
Material
Machinery
Drilling too slow
Overtime/
Steel
Wood
Lathe not calibrated
defects Do
Act
Check
Plan
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

21. Improving Information Flows Process Mapping
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps
Process mapping serves several purposes:
- it creates a common understanding of the content of a process (its activities, results and participants)
- it defines the scope of a process, as well as its boundaries in relation to adjacent processes
- it provides a baseline against which to measure future improvements
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

22. Improving Information Flows Identify Gaps / Information Flow Profile
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps
Accuracy
Timeliness
Reliability
Detail and form
Availability
Other
Poor
Excellent
Reliability refers to the dependability of the information flows – information flows that lose important data or are subject to unexpected interruptions are unreliable
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

23. Improving Information Flows Information Flow Profile - II
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps
Accuracy
Timeliness
Reliability
Detail and form
Availability
Poor
Excellent
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

24. Improving Information Flows Gap Analysis
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps
To what extent is the information flow less than perfect?
What are the benefits and costs associated with closing this gap?
Look for “low-hanging fruit”, not necessarily high-tech solutions
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

25. Improving Information Flows Root Cause Analysis
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Use continuous improvement techniques to identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps
Root cause analysis – A process by which organizations brainstorm about possible causes of problems (referred to as “effects”) and then, through structured analysis and data-gathering efforts, gradually narrow the focus to a few root causes
Process
Personnel
Material
Equipment
Poor dispatching
Lack of training
Truck breakdown
Late deliveries
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN:

26. Improving Information Flows PDCA to Close Gaps
Map the business process(es) and information flows
Identify potential performance gaps in the information flows
Identify the causes of these gaps
Use the plan-do-check-act cycle to close the gaps Do
Act
Check
Plan
Act – the phase where the organization incorporates the changes into its standard operating procedures
Why is the PDCA a cycle? Once a set of changes has been implemented, the process starts over again, perhaps focusing on a different area or dimension of quality
© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: