1. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Supply Chain Management Systems 70-451 Management Information Systems Robert Monroe September 20, 2011

2. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Quiz 1.True or false: Information in a supply chain management system (SCM) flows in both directions, from supplier to manufacturer, and also from manufacturer to supplier. 2.True or false: Supply chain management systems often use the internet to connect suppliers information systems to manufacturers information systems. 3.True or false: Supply chain management systems can provide both analytic benefits (effectiveness) as well as operational benefits (efficiency).

3. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems A Framework For CRM, ERP, and SCM ‘Your Company’ Source: O’Brien-Marakas, Management Information Systems, 7 th ed.

4. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems After Today's Class You Should Be Able To: Explain what a Supply Chain is, and the role that it plays in a business’s operations Explain how a Supply Chain Management System (SCM) can help a business make their supply chains more efficient and effective Identify and explain the core functionality that an SCM typically provides

5. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Supply Chain Management

6. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Lets Talk Supply Chains…

7. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Let’s consider the pen manufacturer PenCo “We Make Pens” PenCo “We Make Pens” … Ink Supplier Metal Parts Supplier Plastic Resin Supplier Ink Cartridge Supplier Customer 1 Customer 2 Customer 3 Customer 4 Customer n …

8. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems A Generalized Supply Chain Model (Simple) Supplier’s Supplier Customer’s Customer Supplier Manufacturer Retailer or Distributor Customer Information Flow Goods, Components, Services, etc. Source: [BPH08]

9. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems A Generalized Supply Chain Model (More Complex) Suppliers Supplier Customer’s Customer Supplier Manufacturer Retailer or Distributor Customer Supplier Manufacturer Customer

10. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems SCM Definition Supply Chain Management Systems (SCM’s) are cross- functional, inter-enterprise, systems that use IT to help support & manage the links between a company’s key business processes and those of its suppliers, customers, and business partners. The goal of supply chain management is to create a fast, efficient, & low-cost network of business relationships

11. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Five Basic Supply Chain Management Components PlanSourceMakeDeliverReturn Source: [BPH08]

12. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Elements Of An SCM System Source: O’Brien-Marakas, Management Information Systems, 7 th ed.

13. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Selected Supply Chain Management Functions Planning (analytic) Supply chain network design –Optimize network of suppliers, plants, distribution centers Collaborative demand and supply planning –Develop forecasts based on shared forecasts up and down the supply chain –Demand forecasting –Supply availability Supplier performance mgmt Execution (operational) Materials management –Ordering and fulfillment –Inventory management Transportation/logistics –Commit to delivery schedule –Manage deliveries –Tracking/in-transit visibility Supplier event management Supplier performance mgmt

14. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Selected SCM Benefits Faster, more accurate order processing Reductions in inventory levels across the supply chain –Smooth, predictable, flow of goods through the supply chain –Reduced inventory costs (improved working capital, turnover) Improved visibility across the supply chain Greater agility Quicker time to market Lower transaction and materials costs Strategic relationships with suppliers –Who benefits from this closer relationship? –Is this always a better deal for the buyer than the supplier?

15. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Dell Case Study Form teams of 2 - 4 students to review the Dell case Your team will play a role assigned by the professor Answer the following questions, be prepared to discuss –What decisions relating to Dell’s supply chain do you need to make to do your job on an hourly, daily, weekly, and monthly basis? In steady state, normal business-mode Before, after, and during the strike –What information do you need to provide to make the supply chain run smoothly? To whom? –What information do you need to know about the supply chain to do your job effectively and efficiently?

16. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Dell Case Study Discussion Questions What actions did Dell take to deal with the strike? How effective were those actions? Which of these actions were: –Done purely by their information systems? –Done without the help of information systems? –Done with a combination of information systems, human expertise, and good processes?

17. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Discussion Questions What role does IT play in making a supply chain efficient? Can you succeed in building an efficient, flexible, high- performing supply chain without huge IT investments? –Will making a large investment in an SCM system guarantee that you have a high performing supply chain? Could a well executed SCM system give a company a sustainable competitive advantage? –Why or why not? Examples? –Does this support or contradict Carr’s claim that IT Doesn’t Matter?

18. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems Why Are SCM Implementations Difficult?

19. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems For Next Class We will look at another popular enterprise system: Customer Relationship Management systems Reading and preparation questions are posted on the wiki

20. Carnegie Mellon University ©2006 - 2011 Robert T. Monroe 70-451 Management Information Systems References [HBP09] Stephen Haag, Paige Baltzan, and Amy Phillips, Business Driven Technology, 3rd Edition, McGraw- Hill Irwin, 2009, ISBN 978007337645. [OM05] James O’Brien, George Marakas, Management Information Systems, 7 th Edition, McGraw-Hill Irwin, 2005.