17-1 Ombati Thomas Information Technology and the Supply Chain

17-2 Role of Information Technology in a Supply Chain uInformation is the driver that serves as the “glue” to create a coordinated supply chain uInformation must have the following characteristics to be useful: –Accurate –Accessible in a timely manner –Information must be of the right kind uInformation provides the basis for supply chain management decisions –Inventory –Transportation –Facility

17-3 Characteristics of Useful Supply Chain Information uAccurate uAccessible in a timely manner uThe right kind uProvides supply chain visibility

17-4 Use of Information in a Supply Chain uInformation used at all phases of decision making: strategic, planning, operational uExamples: –Strategic: location decisions –Operational: what products will be produced during today’s production run

17-5 Use of Information in a Supply Chain uInventory: demand patterns, carrying costs, stockout costs, ordering costs uTransportation: costs, customer locations, shipment sizes uFacility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.

17-6 Role of Information Technology in a Supply Chain uInformation technology (IT) –Hardware and software used throughout the supply chain to gather and analyze information –Captures and delivers information needed to make good decisions uEffective use of IT in the supply chain can have a significant impact on supply chain performance

17-7 The Importance of Information in a Supply Chain uRelevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain uAllows 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

17-8 The Supply Chain IT Framework uThe Supply Chain Macro Processes –Customer Relationship Management (CRM) –Internal Supply Chain Management (ISCM) –Supplier Relationship Management (SRM) –Plus: Transaction Management Foundation –Figure 16.1 uWhy Focus on the Macro Processes? uMacro Processes Applied to the Evolution of Software

17-9 Macro Processes in a Supply Chain (Figure 16.1) Supplier Relationship Management (SRM) Internal Supply Chain Management (ISCM) Customer Relationship Management (CRM) Transaction Management Foundation (TFM)

17-10 Customer Relationship Management uThe processes that take place between an enterprise and its customers downstream in the supply chain uKey processes: –Marketing –Selling –Order management –Call/Service center

17-11 Internal Supply Chain Management uIncludes all processes involved in planning for and fulfilling a customer order uISCM processes: –Strategic Planning –Demand Planning –Supply Planning –Fulfillment –Field Service uThere must be strong integration between the ISCM and CRM macro processes

17-12 Supplier Relationship Management uThose processes focused on the interaction between the enterprise and suppliers that are upstream in the supply chain uKey processes: –Design Collaboration –Source –Negotiate –Buy –Supply Collaboration uThere is a natural fit between ISCM and SRM processes

17-13 The Transaction Management Foundation uEnterprise software systems (ERP) uEarlier systems focused on automation of simple transactions and the creation of an integrated method of storing and viewing data across the enterprise uReal value of the TMF exists only if decision making is improved uThe extent to which the TMF enables integration across the three macro processes determines its value

17-14 The Future of IT in the Supply Chain uAt the highest level, the three SCM macro processes will continue to drive the evolution of enterprise software uSoftware 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 uFunctionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

17-15 Supply Chain Information Technology in Practice uSelect an IT system that addresses the company’s key success factors uTake incremental steps and measure value uAlign the level of sophistication with the need for sophistication uUse IT systems to support decision making, not to make decisions uThink about the future

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17-17 Summary of Learning Objectives uWhat is the importance of information and IT in the supply chain? uHow does each supply chain driver use information? uWhat are the major applications of supply chain IT and what processes do they enable?