2 Supply Chain Management (SCM) Chapter 8 of KroenkeKey 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 areaAccountingFinanceHuman ResourcesEtc.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 enterpriseCustomer Relationship ManagementSales (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
11 SCM Planning Functions Supply Chain Designoptimize network of suppliers, plants, and distribution centersForecasting customer demandby sharing demand and supply forecasts instantaneously across suppliers and distributorsMIS SCM & RFID Lab
12 SCM Execution Functions Materials Managementshare accurate inventory and order information,ensure materials required for production are available in the right place at the right time.Collaborative Manufacturingoptimize plans and scheduleswhile considering resource, material, and dependency constraintsMIS SCM & RFID Lab
13 SCM Execution Functions Collaborative Fulfillmentorder management, vehicle scheduling, etc.support the entire logistics process,including picking, packing, shipping, and delivery in foreign countriesSupply Chain Event Managementmonitor every stage of the supply chain processfrom price quotation to the moment the customer receives the productreceive alerts when problems arise – visibility!MIS SCM & RFID Lab
14 Business Value of SCM Benefits of SCM: Reduces production and distribution costsMore information =>less inventory, less lead times neededImproves timeliness of shipmentsIncreases supply chain “velocity”More accurate fulfillmentImproves “visibility” of supply chainMIS SCM & RFID Lab
15 SCM Benefits Fewer employees needed to manage supply chain Better customer satisfaction: less stock-outsStrategic 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 extranetSoftware can be confusing, contradictory and not sculpted to their needs – difficult to implement.Not everyone follows the same standardsHigh startup costs for SCM systemsMIS SCM & RFID Lab
17 Organizational challenges Changes company structureresistance from employees =>leads to inadequate collaboration within departments across departmentEven companiesSupplier reluctanceData Incompatibility issues.Lack of proper demand planning knowledgeIt can take time forSuppliers to understand retailersVice versaMIS SCM & RFID Lab
19 Bullwhip EffectThe 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/RevenueExcess Inventory = High CostsDifficult to stop the bullwhip cyclecaused by natural delays in the transmission of information through a supply chainGreat example of how an IS can solve a problem that was previously unsolvable.
21 Bullwhip PreventionIt 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-timeRequires following same data standardsTwo companies investing in the same SCM platformRequires using the same system or technology
23 Electronic Data Interchange (EDI) Old-fashioned term that means:How do different systems share data…Refers to data format but alsoPhysical connectionBefore 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 RetailersInvestigate XML (Software Technology)Explore RFID technology (Hardware Technology)