1. © 2004 Prentice-Hall, Inc. 17-1 Chapter 17 Information Technology in the Supply Chain Supply Chain Management (2nd Edition)

2. © 2004 Prentice-Hall, Inc. 17-2 Outline u The Role of Information Technology in the Supply Chain u The Supply Chain IT Framework u Customer Relationship Management u Internal Supply Chain Management u Supplier Relationship Management u The Transaction Management Foundation u The Future of IT in the Supply Chain u Supply Chain Information Technology in Practice

3. © 2004 Prentice-Hall, Inc. 17-3 Role of Information Technology in a Supply Chain u Information is the driver that serves as the “glue” to create a coordinated supply chain u Information must have the following characteristics to be useful: –Accurate –Accessible in a timely manner –Information must be of the right kind u Information provides the basis for supply chain management decisions –Inventory –Transportation –Facility

4. © 2004 Prentice-Hall, Inc. 17-4 Characteristics of Useful Supply Chain Information u Accurate u Accessible in a timely manner u The right kind u Provides supply chain visibility

5. © 2004 Prentice-Hall, Inc. 17-5 Use of Information in a Supply Chain u Information used at all phases of decision making: strategic, planning, operational u Examples: –Strategic: location decisions –Operational: what products will be produced during today’s production run

6. © 2004 Prentice-Hall, Inc. 17-6 Use of Information in a Supply Chain u Inventory: demand patterns, carrying costs, stockout costs, ordering costs u Transportation: costs, customer locations, shipment sizes u Facility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.

7. © 2004 Prentice-Hall, Inc. 17-7 Role of Information Technology in a Supply Chain u 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 u Effective use of IT in the supply chain can have a significant impact on supply chain performance

8. © 2004 Prentice-Hall, Inc. 17-8 The Importance of Information in a Supply Chain u Relevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain u 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. © 2004 Prentice-Hall, Inc. 17-9 The Supply Chain IT Framework u The Supply Chain Macro Processes –Customer Relationship Management (CRM) –Internal Supply Chain Management (ISCM) –Supplier Relationship Management (SRM) –Plus: Transaction Management Foundation –Figure 17.1 u Why Focus on the Macro Processes? u Macro Processes Applied to the Evolution of Software

10. © 2004 Prentice-Hall, Inc. 17-10 Macro Processes in a Supply Chain (Figure 17.1) Supplier Relationship Management (SRM) Internal Supply Chain Management (ISCM) Customer Relationship Management (CRM) Transaction Management Foundation (TFM)

11. © 2004 Prentice-Hall, Inc. 17-11 Customer Relationship Management u The processes that take place between an enterprise and its customers downstream in the supply chain u Key processes: –Marketing –Selling –Order management –Call/Service center

12. © 2004 Prentice-Hall, Inc. 17-12 Internal Supply Chain Management u Includes all processes involved in planning for and fulfilling a customer order u ISCM processes: –Strategic Planning –Demand Planning –Supply Planning –Fulfillment –Field Service u There must be strong integration between the ISCM and CRM macro processes

13. © 2004 Prentice-Hall, Inc. 17-13 Supplier Relationship Management u Those processes focused on the interaction between the enterprise and suppliers that are upstream in the supply chain u Key processes: –Design Collaboration –Source –Negotiate –Buy –Supply Collaboration u There is a natural fit between ISCM and SRM processes

14. © 2004 Prentice-Hall, Inc. 17-14 The Transaction Management Foundation u Enterprise software systems (ERP) u Earlier systems focused on automation of simple transactions and the creation of an integrated method of storing and viewing data across the enterprise u Real value of the TMF exists only if decision making is improved u The extent to which the TMF enables integration across the three macro processes determines its value

15. © 2004 Prentice-Hall, Inc. 17-15 The Future of IT in the Supply Chain u At the highest level, the three SCM macro processes will continue to drive the evolution of enterprise software u 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 u Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

16. © 2004 Prentice-Hall, Inc. 17-16 Supply Chain Information Technology in Practice u Select an IT system that addresses the company’s key success factors u Take incremental steps and measure value u Align the level of sophistication with the need for sophistication u Use IT systems to support decision making, not to make decisions u Think about the future

17. © 2004 Prentice-Hall, Inc. 17-17 Summary of Learning Objectives u What is the importance of information and IT in the supply chain? u How does each supply chain driver use information? u What are the major applications of supply chain IT and what processes do they enable?