1. Information Technology and the Supply Chain
Sana Ullah Khan

2. Outline The Role of Information Technology in the Supply Chain
The Supply Chain IT Framework
Customer Relationship Management
Internal Supply Chain Management
Supplier Relationship Management
The Transaction Management Foundation
The Future of IT in the Supply Chain
Supply Chain Information Technology in Practice

3. Role of Information Technology in a Supply Chain
Information is the driver that serves as the “glue” to create a coordinated supply chain
Information must have the following characteristics to be useful:
Accurate
Accessible in a timely manner
Information must be of the right kind
Information provides the basis for supply chain management decisions
Inventory
Transportation
Facility

4. Characteristics of Useful Supply Chain Information
Accurate
Accessible in a timely manner
The right kind

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

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

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

8. The Importance of Information in a Supply Chain
Relevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain
Allows 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

9. The Supply Chain IT Framework
The Supply Chain Macro Processes
Customer Relationship Management (CRM)
Internal Supply Chain Management (ISCM)
Supplier Relationship Management (SRM)
Plus: Transaction Management Foundation
Figure 16.1
Why Focus on the Macro Processes?
Macro Processes Applied to the Evolution of Software

10. Macro Processes in a Supply Chain (Figure 16.1)
Supplier Relationship Management (SRM)
Internal Supply Chain Management (ISCM)
Customer Relationship Management (CRM)
Transaction Management Foundation (TFM)

11. Customer Relationship Management
The processes that take place between an enterprise and its customers downstream in the supply chain
Key processes:
Marketing
Selling
Order management
Call/Service center

12. Internal Supply Chain Management
Includes all processes involved in planning for and fulfilling a customer order
ISCM processes:
Strategic Planning
Demand Planning
Supply Planning
Fulfillment
Field Service
There must be strong integration between the ISCM and CRM macro processes

13. Supplier Relationship Management
Those processes focused on the interaction between the enterprise and suppliers that are upstream in the supply chain
Key processes:
Design Collaboration
Source
Negotiate
Buy
Supply Collaboration
There is a natural fit between ISCM and SRM processes

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

15. The Future of IT in the Supply Chain
At the highest level, the three SCM macro processes will continue to drive the evolution of enterprise software
Software 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
Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

16. Supply Chain Information Technology in Practice
Select an IT system that addresses the company’s key success factors
Take incremental steps and measure value
Align the level of sophistication with the need for sophistication
Use IT systems to support decision making, not to make decisions
Think about the future

17. COMPONENT OF SUPPLY CHAIN
Upstream- It is mainly concerned with procurement of raw material
Internal-Contains conversion part
Downstream-Concerned with the delivery of finished goods to final consumers

18. TYPES OF SCM Supply chain Integrated made-to-stock supply chain
Continuous replenishment supply chain
Build to order supply chain
Channel assembly supply chain

19. IMPORTANT DECISION IN SCM
Production-What products does the market want? How much of which products should be produced and by when?
Inventory-What inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials, semi finished, or finished goods?
Location-Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory?
Transportation-How should inventory be moved from one supply chain location to another?
Information-How much data should be collected and how much information should be shared?

20. BENEFITS OF SUPPLY CHAIN MANAGEMENT
Supply chain management bridges the gaps between suppliers and customers.
It allows businesses to conduct operations at an appropriate time and place for the benefits of suppliers and customers.
Due to it, wholesalers get the best prices from manufacturers, retailers get the best prices from wholesalers and the lead time is reduced.
Retailers get a choice of goods and can also offer good services to customers.
It makes movements simple, cost-effective and efficient as transport is simpler.
Expertise can be developed in a particular type of operation.

21. PROBLEM ALONG THE SCM
Poor customer service- The customer does not get what he requires at right time or he receives it late,
High inventory costs- If a company has high inventory cost and no synchronization between stocks and demand, its product are bound to have higher costs.
Loss of revenues- A company has too many non-valued activities.
Extra cost of expediting shipments- If customer orders are not shipped at time or shipped using costly means, customer would be unhappy.
Bullwhip effect- If a company has erratic shifts in orders (Bullwhip effect). It is bound to face production and inventory problems.
Phantom stock outs- Customers are told that the product is out of stock but in reality it is available.

22. IT TOOLS SUPPLY CHAIN PROBLEM
Artificial Neural Networks (ANN)
Electronic Data Interchange (EDI)
Electronic Document management Systems
Genetic Algorithms
Intelligent Systems
There is a need to derive Meanings from complicated and imprecise data .ANNs replace the need to build complex formulas manually. They can be also used to complete complex logistical challenges such as truck routing.
Show delivery of paper documents
Repeated process activities due to wrong shipments, poor quality and accumulated work orders etc.
Need for inventory optimizations and scheduling problems etc.
Learn about delays after they occur or learn about then too late

23. Cont…. The Internet And Internet 2 ---------------------------
Intranets And Extranets
JIT Systems
Robotics
Groupware
Lack of information or flow is too slow, Redundancies in the supply chain, too many purchasing orders, too much handling and packaging.
Waiting time between chain segments is excessive.
High inventory costs and poor workflow due to improper scheduling.
Delays in shipments from warehouses
Waiting time between chain segments is excessive, poor coordination, cooperation and communication. Decline in the value of parts and components that stay too long in storage.

24. Various Software Packages-
Service provider
==================
SAP
Microsoft
Solution/s
My SAPTM Supply Chain Management
Microsoft dynamics GP, Microsoft dynamics NAV, Microsoft dynamics SL, Microsoft dynamics AX, Small business manager, Business Network
Description
The world’s number one SCM solutions. Gives the power to dramatically improve the planning, responsiveness and execution
Organize single or multiple site warehouses, handle order promising, demand planning and online collaborations with suppliers.

25. Impact of IT Firm Logistic Impact of IT on SCM Vendor relationship
. Disciplined
· Size of the firm
· Location
· Learning
· Tight-Loose
Firm
Logistic
.Transportation .scheduling
. Vehicle tracking
· Fulfilling
Impact of IT on
SCM
Vendor relationship
management
.Relationship
· Trust
· Information sharing
· Long-term commitment
Procurement
.Order processing
· Purchasing
Operation
.Inventory management
· Production scheduling
Customer relationship
management

26. Information Technology for Supply Chain Management
Software Systems
Electronic Data Interchange (EDI)
Material Requirements Planning (MRP)
Manufacturing Resource Planning (MRP II)
Enterprise Resource Planning (ERP)
Supply Chain Management Systems (SCM)
Customer Relationship Management (CRM)
Internet-based Software
Network Infrastructure
Wide Area Network
Internet (for E-commerce: B2B, B2C)

27. Summary of Learning Objectives
What is the importance of information and IT in the supply chain?
How does each supply chain driver use information?
What are the major applications of supply chain IT and what processes do they enable?

28. Bonus Notes
Other Sources

29. Role of IT in SCM

30. SUPPLY CHAIN INTEGRATION
Supply chain integration is nothing but integration of various activities related to logistics system of the firm and its further integration with logistics systems of business partners like vendors, customers and 3PL service providers.
Integration of logistics functions deals with a firm’ s internal network in terms of factories, warehouses, production equipments and service centres.

31. INFORMATION TECHNOLOGY SOLUTION FOR SUPPLY CHAIN INTEGRATION
For high level of supply chain integration, it is essential to develop adequate information systems and use information technology that manages
product flow,
information flow,
and cash flow from end to end on real- time basis.

32. IT Infrastructure for Supply Chain Integration

33. Electronic Data Interchange (EDI)
EDI is an inter-organization computer-to-computer exchange of standard business documents in a structured and machine-processable format without human intervention to improve the speed and accuracy of the information flow.

34. Comparison of Paper and EDI Flows

35. Components of EDI
EDI Standard
EDI Software
Communication Medium

36. Benefits of EDI
The major benefits of EDI in supply chain integration are:
Improves customer responsiveness
Reduces transaction costs and times
Increases accuracy and productivity
Strengthens supply chain relationships
Increases ability to compete globally
Improves quality of decision to exploit business opportunities.

37. Limitations of EDI
There are two major limitations of EDI that restricts its scope of use, which are:
It needs highly sophisticated and private IT infrastructure resulting into huge costs; and
As EDI is an inter-organization, computer-to-computer exchange of standard business documents in a structured and machine-processable format, hence, day-to-day flexible data cannot be shared between supply chain partners. Supply chain integration needs more flexible information sharing on continuous basis apart from standard business documents.

38. Bar Code System (BCS)
The bar code system is an identification technology wherein there is placement of computer-readable codes on items, cartons and containers in the form of grouping of parallel bars (usually blocks) of different widths separated by light spaces (usually white), again, of different widths.
It facilitates speedier flow of logistical information such as quick tracking receipts, movement details, product identification, etc., with a lesser probability of error .

39. Characteristics of a Typical Bar Code

40. Benefits of Bar Code System
Speeds up data entry process
Enhances data accuracy
Reduces material handling labour
Minimizes on-hand inventory
Monitors labour efficiency
Improves customer service

41. Benefits of Bar Code System
Reduces product recall
Verifies orders at receiving and shipping
Reduces work-in-process idle time
Monitors and controls shop floor activity
Improves shop floor scheduling
Optimizes floor space
Improves product yield or reduces scrap

42. Enterprise Resource Planning (ERP)
ERP is a computerized integrated set of application software modules for
different business processes such as production, distribution, financial, human resources, procurement, supply china management, etc.,
used by firms providing
operational, managerial and strategic information for making decisions strategically to improve the productivity, quality and competitive advantage.

43. ERP System Components

44. Critical ERP implementation issues
Never-ending implementation
Importance of process mapping
Process redesign
Use of consultants
Excessive cost
Resistance to change
Errors during implementation
Rapid technological change

45. Benefits of ERP
Improving productivity and enhancing a competitive edge
Bringing about a tradeoff between demand and supply
Bringing together people who work on shared tasks
Ensuring a smoother flow of inventory and information at all levels
Reducing the replenishment cycle time
Overall organizational look-ahead capability and control.

46. Components Of EDI Intranet
Intranet is an internal web of a firm, which allows only internal users (firm’ s own employees) to access and share data through electronic messaging.
Extranet
Extranets operate outside of the firm, connecting vendors, channel partners, third-party logistics service providers and/or end users to access and share internal corporate information in restricted manner .
Internet
The internet refers to the firm’ s web site which can be accessed from anywhere in the world by anybody.

47. Intranet, Extranet and Internet Applications in Supply Chain Integration

48. EMERGING TECHNOLOGIES IN SUPPLY CHAIN INTEGRATION
Voice Systems
It allows people to exchange data with other s through a computer without the need for key pad entry.
It is generally through voice/speech technology.
Memory in a Button
They contain multiple microprocessors
Several pages of information can be stored in it.
Radio Frequency Technology (RFID)
It is a data collection techniques that passes product information via radio waves to a receiving unit.

49. WEB-BASED SUPPLY CHAIN
A Web-based supply chain is dynamic, high performance network of customer and vendor partnerships and information flow creating new and unique value proposition mainly due to addition of digital value.
Value Prepositions through Web based supply chain:
Super Service
Convenient Solution
Customization

50. Web-Based Supply Chain Integration
Carriers & 3PL
Vendors
Web-Based Supply chain
Distribution Channels
Distribution Warehouse
Consumer
Advanced Planning
and Scheduling
Agile
Manufacturing
Collaborative
Planning
Forecasting &
Replenishment
Order
Management

51. Web Based Supply Chain & Order Management System
Flexible Business Process Management
Unified Data Model
Robust Integration Framework
Self-service Tools

52. Order Management Application

53. Collaborative Planning, Forecasting and Replenishment (CPFR) System
Collaborative planning, forecasting, and replenishment is a multi-industry that uses the Internet to achieve cooperation across the members of a supply chain to better sense demand, plan, and execute the flow of goods.

54. CPFR process model Develop a front-end agreement
Create a joint business plan
Create a sales forecast
Identify exceptions for the sales forecast
Resolve/collaborate on exception items
Create all order forecast
Identify exceptions for the order forecast
Generate the order

55. Agile Manufacturing System
Agile manufacturing system is an IT enabled process of web-based supply chain integration facilitating firms to support the demand and mass customization requirements.
Its applications support complex flow manufacturing, the just-in-time-based, pulls production method that enables manufacturing in lot sizes of one.

56. Agile Manufacturing System
Benefits in web-based supply chain through agile manufacturing application:
Greater product customization
Rapid introduction of new or modified products
Interactive customer relationships
Dynamic reconfiguration production processes

57. Advanced Planning and Scheduling (APS) System
Advanced planning and scheduling system is high analytical applications software that uses mathematical models and related techniques to find out optimal solutions to complex production and supply problems.
Advantages of APS system:
More flexible system handling more varied supply chain requirements.
Mathematical models based supply and support optimization.
Optimization of supply chain structures.
Optimization is based in strategic issues of supply chain such as, costs, customer value and services, and profitability

58. Benefits of Web-based Supply Chain
Delivers cost saving through supply chain integration
Reduce inventory across supply chain network
Reduce procurement costs and improve vendor management
Improve customer value and services
Increasing revenues and profitability

59. Challenges to Web-based Supply Chain
Security issues
Changes to business process
Coping with weaker supply chain links
Sharing of costs and benefits