Chapter 6 E- SCM

E-Supply Chains Supply chain: The flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers E-supply chain: A supply chain that is managed electronically, usually with Web technologies

E-Supply Chains (cont.) Supply chain parts Upstream supply chain activities of a manufacturing company with its suppliers Internal supply chain in-house processes for transforming the inputs from the suppliers into the outputs Downstream supply chain activities involved in delivering the products to the final customers

E-Supply Chains Management (E-SCM) Managing supply chains E-supply chain management (e-SCM): The collaborative use of technology to improve the operations of supply chain activities as well as the management of supply chains

E-Supply Chains (cont.) The success of an e-supply chain depends on: The ability of all supply chain partners to view partner collaboration as a strategic asset Information visibility along the entire supply chain Speed, cost, quality, and customer service Integrating the supply chain segments more tightly

Push and pull approaches to supply chain management Figure 6.3  Push and pull approaches to supply chain management

Push and pull approaches to supply chain management Figure 6.3  Push and pull approaches to supply chain management

E-Supply Chains (cont.) E-supply chain consists of six processes: Supply chain replenishment E-procurement Collaborative planning Collaborative design and product development E-logistics Use of B2B exchanges and supply webs

E-Supply Chains (cont.) Major infrastructure elements and tools of e-supply chains are: Extranets Intranets Corporate portals Workflow systems and tools Groupware and other collaborative tools EDI and EDI/Internet

Supply Chain Problems and Solutions Typical problems along the supply chain Slow and prone to errors because of the length of the chain involving many internal and external partners Large inventories without the ability to meet demand Insufficient logistics infrastructure Poor quality

Supply Chain Problems (cont.) Bullwhip effect: Erratic shifts in orders up and down supply chains Creates production and inventory problems Stockpiling can lead to large inventories Effect is handled by information sharing—collaborative commerce

Supply Chain Problems (cont.) Need for information sharing along the supply chain including issues on: product pricing inventory shipping status credit and financial information technology news

Supply Chain Problems (cont.) Information systems are the links that enable communication and collaboration along the supply chain Information and information technology are one of the keys to the success, and even the survival in today’s economy

Supply Chain solutions (cont.) Major solutions provided by an EC approach and technologies Order taking Order fulfillment Electronic payments Inventories can be minimized Collaborative commerce

Virtual Organizations (VOs) ‘simply, it is an organizational form that enables companies to reduce their physical assets (large headquarters, centralised plants and so on), relying instead on small decentralised units linked by a strong communications network. In other words, the old physical constraints of the plant and office building are broken down, and activities of co-ordination and control, which used to take place face-to-face, are now handled remotely 'over the wire'.’

VO characteristics Lack of physical structure: virtual organisations have little or no physical existence. Reliance on knowledge: the lack of physical facilities and contacts means that knowledge is the key driving force of the virtual organisation. Use of communications technologies: it follows that virtual organisations tend to rely on information technology. Mobile work: the reliance on communications technologies means that the traditional office or plant is no longer the only site where work is carried out. Increasingly, the office is wherever the worker is. Boundaryless and inclusive: virtual companies tend to have fuzzy boundaries. Flexible and responsive: virtual organisations can be pulled together quickly from disparate elements, used to achieve a certain business goal and then dismantled again.

Benefits of applying IS to SCM Increased efficiency of individual processes. Benefit: reduced cycle time and cost per order Reduced complexity of the supply chain. Benefit: reduced cost of channel distribution and sale. Improved data integration between elements of the supply chain. Benefit: reduced cost of paper processing. Reduced cost through outsourcing. Benefits: lower costs through price competition and reduced spend on manufacturing capacity and holding capacity. Better service quality through contractual arrangements? Innovation. Benefit: Better customer responsiveness.

Benefits to buying company Increased convenience through 24 hours a day, 7 days a week, 365 days ordering. Increased choice of supplier leading to lower costs. Faster lead times and lower costs through reduced inventory holding. The facility to tailor products more readily. Increased information about products and transactions such as technical data sheets and order histories.

A typical IS infrastructure for supply chain management Figure 6.11  A typical IS infrastructure for supply chain management