1. Bob Travica MIS 2000 Information Systems for Management Instructor: Bob Travica Class 18 Supply Chain Processes and Systems Updated 2013

2. Bob Travica Outline Supply Chain Concepts (general process, upstream & downstream chain, purchasing and delivery) Supply Chain Process – Single Firm View Supply Chain Process – Multiple Firm View Electronic Supply Chain Summary 2 of 12

3. Bob Travica Supply Chain Process – Single Firm View Definition: Supply chain refers to the players, activities and resources involved in producing and transferring a good or service to a customer. Supply chain management (SCM) is an area of business focused on managing supply chain. SCM usually focuses on inventory, purchasing, & delivery (boxed above). 3 of 12 Plan production Source (Purchase) materials Make product Sell + handle returns Deliver Returns? Y N Inventory proc. Purchasing proc. Delivery proc.: Scheduling, Transporting, Warehousing Supplier firms implied Transport firms Implied; Customer – final or intermediary More

4. Bob Travica Upstream And Downstream Chain, and Key Processes (Purchasing & Delivery) 4 of 12 FIRM Suppliers Purchasing Dept. Purchasing Process Delivery Process (Shipping dept. or 3 rd party) Downstream chain Upstream chain Note that delivery is involved both downstream and upstream delivery from supplier to buyer firm). A very important complex process, composed of several sub-processes (scheduling, shipping, warehousing).* SC is maintained via communication upstream & downstream. Inventory Dept. Data flow Material flow Data flow Material flow Customers

5. Bob Travica 5 of 12 System Inventory Communi- cation, Inventory Communi- cation P&G Suppliers: Inventory, Production, Suppliers: Delivery Walmart’s Supplier Supply Chain Process – A Single Firm View Note the linking on the focal firm’s back-end: on Walmart side, Sales trigger Inventory & Purchasing, which on P&G side triggers Purchasing & Delivery.

6. Bob Travica 6 of 12 Purchasing Process Purchasing is important because it feeds many org. functions. To make all departments work, data need to flow seamlessly through an organization. Integration of depart- mental IS (systems integration) is needed. Inventory Production operations

7. Bob Travica M S D RC 7 of 12 Supply Chain Process – Multiple Firm View M S S D R C Example: SC for a pop (soda) drink More SMDRCSMDRC Upstream chain Down- Stream chain Focal firm All perform Delivery. Logistics firms provide support. Note the complexity! Supplier tiers (3)

8. Bob Travica 8 of 12 Multiple-firm SC example: SC for beer producer Creation and transfer of business documents, and all communication and payments can be supported by IS.

9. Bob Travica Electronic Supply Chain (e-SC) SC costs directly affect profit, thus savings in SC increase profit. The effect is larger than the increased sales have on profit. Trend is the electronic SC (e-SC), which increases these benefits. Communication around SC is electronic, which implies that business documents are also electronic. (See slide 5, Walmart—Proctor & Gamble) Various kinds of IT and IS used in e-SC: –EDI –ERPS=Enterprise Resource Planning System (ERPS)* –private computer networks & Internet –Purchasing & Inventory TPS/MIS –DSS for optimizing delivery (timing, loads, routes) –TPS for delivery tracking 9 of 12 More

10. Bob Travica Electronic Supply Chain (e-SC) E-marketplaces may be involved (part of B2B e-commerce) as connection between the buyer and supplier firms. Logistics firms are important in e-SC (FedEx, UPS, DHL). They connect, track, and perform some special activities for producers.* e-Sc does: –automating processes –connecting SC members –increasing visibility in SC –enabling closer coordination among members 10 of 12 More

11. Bob Travica Electronic Supply Chain (e-SC) The e-SC creates savings for the focal firm by decreasing: –time (production time due to fast supplies*, wait time in warehouses, document transfer time; overall time-to-market) –cost (labor, wasted load space in transport, interest on loans taken for production**) –errors & coordination losses (accuracy of all data increased, better timing of related activities) –likelihood of customer’s switching to a new supplier. From the customer perspective, electronic SC can increase the value by providing products faster and cheaper. Here is an article on SC and SC systems.an article 11 of 12

12. Bob Travica Summary Supply chain (SC) refers to all players, activities and resources involved in producing and transferring a good or service to a customer. SC process is a complex, even in single firm view (many connections in process composition, hierarchical dependencies, and coordination in timing matters). SC savings increase profit for seller and value for customer. Trend is electronic SC (e-SC) which increases these benefits. The e-SC deploys various IS and telecommunications networks (EDI, ERPS, private networks and Internet, TPS for flow tracking, Purchasing TPS/MIS) as well as complex systems structures embedded in e-markets (the master case). 12 of 12