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. 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

5. The Simple Supply Chain

6. Complex Supply Chains

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

8. SCM may cross enterprise boundaries

9. 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

10. SCM Execution Functions
Materials Management – share accurate inventory and procurement 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

11. SCM Execution Functions
Collaborative Fulfillment –order management, vehicle scheduling, and 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, and receive alerts when problems arise – visibility!
MIS SCM & RFID Lab

12. 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

13. 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

14. Technical Challenges of SCM
Acquisition of secure extranet
Software can be confusing, contradictory and not sculpted to their needs – difficult to implement.
Emerging standards, high costs.
MIS SCM & RFID Lab

15. Organizational challenges
Changes company structure: resistance from employees wedded to traditional processes, leads to lack of adequate collaboration among marketing, production, and inventory management departments within a company
Supplier reluctance or incompatibility issues.
Lack of proper demand planning knowledge: leading to inaccurate or overoptimistic demand forecasts. Need new tools and guidelines.
MIS SCM & RFID Lab

16. A major challenge: The Bullwhip effect.
The bullwhip effect in supply chains occurs when the variability in size and timing of orders increases at each stage up the chain.
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.
It can be eliminated by
giving all supply chain
participants consumer-
demand information directly
from retailers through
interorganizational
information systems
Fig 8-13 The Bullwhip Effect
© Pearson Prentice Hall 2009

17. How EDI can help …
In lab,
You’ll see how Electronic Data Interchange can help
smooth out the communications
Investigate HTML and XML
Explore RFID technology