1. Supply Chain Management
(SCM)

2. Supply Chain Management (SCM)
Chapter 8 of Kroenke
Key Feature: SCM is the great example of where an Information system goes beyond one Enterprise.
MIS SCM & RFID Lab

3. Functional Systems vs. Enterprise
Most early information systems were designed for one functional area
Accounting
Finance
Human Resources
Etc.
Enterprise = “Entire Company/Organization”
Today (post 2000) the vast majority of commercial information systems try to be “Enterprise”
Used by all the functional areas within the business.

4. Most Common Enterprise Systems
Enterprise Collaboration Systems (ECS)
Natural for communication to involve enterprise
Customer Relationship Management
Sales (Marketing) is so natually connected to accounting, operations (especially post-sale services)
Enterprise Resource Planning (ERP)
Simply a more integrated CRM (Investment/Finance component, more strategic, long-term process).

5. How Big can an IS be?
Can an Information System be so large that it integrated two or more enterprises/companies?
Why would two or more companies what to share a common Information System?

6. Two companies can share an Information System (WTF?)
Example: Large retailer (Walmart) may force suppliers to use their Supply Chain System.
Example: Three long-time partners (supplier, distributor, retailer) may pool resources to develop their own Supply Chain System

7. The Simple Supply Chain

8. Complex Supply Chains

9. Supply Chain Management = SRM + Inventory Management + CRM

10. SCM may cross enterprise boundaries

11. SCM Planning Functions
Supply Chain Design
optimize network of suppliers, plants, and distribution centers
Forecasting customer demand
by sharing demand and supply forecasts instantaneously across suppliers and distributors
MIS SCM & RFID Lab

12. SCM Execution Functions
Materials Management
share accurate inventory and order information,
ensure materials required for production are available in the right place at the right time.
Collaborative Manufacturing
optimize plans and schedules
while considering resource, material, and dependency constraints
MIS SCM & RFID Lab

13. SCM Execution Functions
Collaborative Fulfillment
order management, vehicle scheduling, etc.
support the entire logistics process,
including picking, packing, shipping, and delivery in foreign countries
Supply Chain Event Management
monitor every stage of the supply chain process
from price quotation to the moment the customer receives the product
receive alerts when problems arise – visibility!
MIS SCM & RFID Lab

14. Business Value of SCM Benefits of SCM:
Reduces production and distribution costs
More information =>
less inventory, less lead times needed
Improves timeliness of shipments
Increases supply chain “velocity”
More accurate fulfillment
Improves “visibility” of supply chain
MIS SCM & RFID Lab

15. SCM Benefits Fewer employees needed to manage supply chain
Better customer satisfaction: less stock-outs
Strategic relationship with suppliers, enables new business partnerships:
Collaborative Planning, Forecasting, and Replenishment systems (CPFR).
Collaborative downstream customer service, marketing, and relationship management.
MIS SCM & RFID Lab

16. Technical Challenges of SCM
Acquisition of secure extranet
Software can be confusing, contradictory and not sculpted to their needs – difficult to implement.
Not everyone follows the same standards
High startup costs for SCM systems
MIS SCM & RFID Lab

17. Organizational challenges
Changes company structure
resistance from employees =>
leads to inadequate collaboration within departments across department
Even companies
Supplier reluctance
Data Incompatibility issues.
Lack of proper demand planning knowledge
It can take time for
Suppliers to understand retailers
Vice versa
MIS SCM & RFID Lab

18. Bullwhip Effect

19. Bullwhip Effect
The variability in size and timing of orders increases at each stage up the chain.

20. Bullwhip Negative Impact
Can create a cycle of stock-outs followed by excess inventory.
Stock-outs = Lost Sales/Revenue
Excess Inventory = High Costs
Difficult to stop the bullwhip cycle
caused by natural delays in the transmission of information through a supply chain
Great example of how an IS can solve a problem that was previously unsolvable.

21. Bullwhip Prevention
It can be eliminated by giving all supply chain participants consumer-demand information directly from retailers through inter-organizational information systems.
Solution can comes in two forms:
Two SCM’s being integrated in real-time
Requires following same data standards
Two companies investing in the same SCM platform
Requires using the same system or technology

22. A major challenge: The Bullwhip effect.
The bullwhip effect in supply chains occurs when
Distributors, manufacturers, and suppliers must carry larger inventories than should be necessary to meet real demand because of the large fluctuations in orders.
It reduces the overall
profitability of a supply
chain.
Fig 8-13 The Bullwhip Effect
© Pearson Prentice Hall 2009

23. Electronic Data Interchange (EDI)
Old-fashioned term that means:
How do different systems share data…
Refers to data format but also
Physical connection
Before the Internet/WWW companies were connecting their computer systems (Private Extranet)
Now, EDI happens over Secure Internet Connections

24. In Lab… You’ll see how Electronic Data Interchange can help
smooth out the communications (compatible data)
increase the velocity of information between Suppliers  Retailers
Investigate XML (Software Technology)
Explore RFID technology (Hardware Technology)