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Presentation on theme: "SUPPLY CHAIN AND INFORMATION MANAGEMENT SYSTEMS"— Presentation transcript:


The development of radically new information and communication technologies driven by internet have enabled companies to deploy revolutionary methods of building levels of competitive advantage. With the advent of e-commerce, new business models can be architected leveraging supply chains to create new regions of strategic advantage and market place value. Responsiveness to customer demand, and overall customer satisfaction, cannot be achieved without proper management of both the goods movement and information flow throughout the supply chain.

3 The Importance of Information
This CTR relates to the material on p. 99 and provides a context for discussing marketing research and marketing information systems. Instructor’s Note: This information is extra- textual. Dynamic Marketing Environment Why Information Is Needed The Importance of Information A marketing information system is valuable for the information tools it provides in relation to the following areas: The Marketing Environment. Companies compete in an environment of social, legal, cultural, technological, natural, and competitive forces. Information on each aspect of the environment is crucial to effective market planning. Discussion Note: You may wish to discuss the role of environmental monitoring or scanning in class. Information gathering can be serendipitous or it can be planned. While not all environmental information needs can be identified in advance, it is possible to approach research and information systems planning with an eye to setting up ways of collecting information in an on-going fashion. Customer Needs and Wants. If environmental forces cause the company to seek information in a larger context, customer needs and wants focus the attention on the target market. Without information, identifying need and wants is guesswork -- or fortune telling. Competitors. The actions of competitors cannot go unnoticed by the company. Innovative companies not only identify competitive actions and offerings, they also consume competitors products -- in small quantities of course! For example, to understand the value of a competitors automobile it makes sense to drive it for awhile as a customer would and evaluate it in that fashion. Strategic Decision Making. Strategy formulation depends upon accurate & timely information most of all. Competition Customer Needs Strategic Planning


5 MR - MARKET RESEARCH Market research is the process of systematically gathering, recording and analyzing data and information about customers, competitors and the market. Its uses include to help create a business plan, launch a new product or service, fine tune existing products and services, and expand into new markets. Market research can be used to determine which portion of the population will purchase a product/service, based on variables like age, gender, location and income level.

What is happening in the market? What are the trends? Who are the competitors? How do consumers talk about the products in the market? Which needs are important? Are the needs being met by current products?

Primary market research involves testing such as focus groups, surveys, field tests, interviews or observation, conducted or tailored specifically to that product. In secondary research, the company uses information compiled from other sources that appears applicable to a new or existing product.

Study of market trends Customer analysis Competitor analysis Risk analysis Product research Advertising research

9 The Marketing Research Process
Defining the Problem and the Research Objectives Developing the Research Plan The Marketing Research Process The Marketing Research Process This CTR corresponds to Figure 4-2 on p. 104 and relates to the material on pp Instructor’s Note: The CTR presents an overview of the research process. Details of each step are presented on subsequent CTR’s. Implementing the Research Plan Interpreting and Reporting the Findings The Research Process Defining the Problem and Research Objectives. Before researcher can provide managers with information, they must know what kind of problem the manager wishes to solve. Specifying a behaviorally-based information problem clearly is often hard to do. Objectives for research may be exploratory, descriptive, or causal. Discussion Note: One key is to remind students that people report problem symptoms more often than they identify problems. Objectives for research can only be linked to clear problem definitions. Developing the Research Plan and Collecting Information. Developing the plan includes the following steps: (1) Determining specific information needs; (2) Surveying secondary information sources; (3) Planning the primary data collection if necessary; (4) Choosing the contact method and sampling procedure appropriate; and (5) Presenting the plan to the client for approval. Implementing the Plan - Collecting and Analyzing the Data. In implementing the plan care must be taken that all personnel involved in collecting and analyzing data understand clearly the purpose of the research and are adequately trained and experienced to complete it professionally. Interpreting and Reporting the Findings. Interpreting research findings may involve statistical analyses or not but these tools of analysis should not be confused with the action-oriented information needed by marketing managers. Research is valuable only in its use to make better marketing decisions. Reports of findings should always be in the style and language of how the information will be used by the manager.

10 Marketing Research Process Step 1. Defining the Problem &
Marketing Research Process Step 1. Defining the Problem & Research Objectives Gathers preliminary information that will help define the problem and suggest hypotheses. Exploratory Research Descriptive Research Describes things such as consumers’ attitudes and demographics or market potential for a product. Causal Research Test hypotheses about cause- and-effect relationships.

11 Marketing Research Process Step 2. Develop the Research Plan
This CTR relates to the material on pp Teaching Tip: Students may not realize research seeks both primary and secondary information for marketing decision making. The need for careful and complete research information requires attention to both kinds of information. Determine the Specific Information Needed Secondary Data Data collected from other sources for other reasons serves as secondary data. Key factors to consider when using secondary information include: Relevant. Secondary research must fit the needs of the project. It is especially important that categories used previously match the same definitions you are using (like target market). Also, measurement units must be the same. Teaching Tip: For example, you cannot determine an “average” income from secondary research that reports respondents as having incomes as: Group 1: $10,000 to $14,999; 10 members Group 2: $15,000 to $19,999; 20 members Group 3: $20,000 to $24, members This is categorical, not interval-scaled data. An average cannot be determined. Accurate. You must be able to determine that the data were reliably collected and reported. Current. The information must be up-to-date enough for the current project decisions. Impartial. The information must have been objectively collected and reported. Discussion Note: Impartiality also refers to ensuring that the researcher had no a priori agenda. For example, the Tobacco Institute continues to fund research projects designed to not find a relationship between cigarette smoking and lung cancer. Secondary Primary Information collected for the specific purpose at hand. Information that has been previously collected. Both Must Be: Relevant Accurate Current Impartial

12 Primary Data Collection Process Step 1. Research Approaches
This CTR relates to information on pp Observational Research Gathering data by observing people, actions and situations (Exploratory) Primary Data Decisions on primary information needs include: Research Approaches. There are three common approaches for gathering primary data. Observations are linked to actual behaviors but may not help in understanding why people act as they do. Surveys can help describe reasons for people's behavior and provide the research with flexibility. But surveys can be plagued by problems in completion and demand characteristics from several factors. Experimental methods help identify cause and effect relationships but controlling for extraneous variables is usually difficult in real world situations. Survey Research Asking individuals about attitudes, preferences or buying behaviors (Descriptive) Experimental Research Using groups of people to determine cause-and-effect relationships (Causal)

13 Primary Data Collection Process Step 2. Contact Methods
Collecting Information This CTR corresponds to the material in Table 4-3 on p. 112 and relates to the material on pp Contact Methods Data Collection Methods Mail Questionnaires. This method provides excellent control over the effects of having an interviewer influencing the respondents answers. Since no interviewer is present, no interpersonal influences are possible. Mail questionnaires may elicit more honest and in-depth information. Discuss with your class the kind of problems that may require this kind of information, such as social marketing issues on health care concerns. Still, lack of ability to distinguish respondents from nonrespondents makes inference to the general population difficult. Telephone Interviewing. Being able to control the sample and complete the data collection quickly are assets of telephone interviewing. Many marketing contexts, such as person marketing in political campaigns, need almost overnight information on the effectiveness of the latest promotions. Telephone technology can reach diverse geographic markets of interest and can be linked to computers for easy data analysis. Problems with respondent cooperation may becoming increasingly important over time. Personal Interviewing. Personal interviewing is very flexible and can provide a rich and deep volume of data for the researcher. Also, personal interviewers can follow-up unexpected or unusual responses that other collection methods are not prepared to handle. Using groups in personal interviews can also reveal social influences that may be important in consumer decision making.

14 Primary Data Collection Process Step 3. Developing a Sampling Plan
Who is to be surveyed? Probability or Non-probability sampling? Sample - representative segment of the population How should the sample be chosen? How many should be surveyed?

15 Primary Data Collection Process Step 4. Research Instruments
Questionnaire What to ask? Form of each question? Wording? Ordering? Mechanical Devices People Meters Grocery Scanners Galvanometer Tachistoscope

16 Marketing Research Process Step 3. Implementing the Research Plan
Collection of Data Research Plan Processing of Data Analyzing the Data

17 Marketing Research Process Step 4. Interpreting and Reporting Findings
Interpret the Findings Draw Conclusions Report to Management

Distribution Resource Planning (DRP) is a method used in business administration for planning orders within a supply chain. DRP enables the user to set certain inventory control parameters (like a safety stock) and calculate the time-phased inventory requirements.

the on-hand inventory at the end of a period. the backordered demand at the end of a period. the required quantity of product needed at the beginning of a period. the constrained quantity of product available at the beginning of a period. the recommended order quantity at the beginning of a period.

the demand in a future period. the scheduled receipts at the beginning of a period. the safety stock requirement for a period. the on-hand inventory at the beginning of a period.

21 ERP - What is it? ERP is a generic term used to describe a comprehensive information system designed to integrate all the business processes found in an enterprise. Efficiency and productivity are improved through the integration of information and the removal of duplicate information and processes.

The term ERP originally implied systems designed to plan the use of enterprise-wide resources. Enterprise Resource Planning (ERP) systems integrate (or attempt to integrate) all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

23 The Current Scenario Islands of Information
Difficult to get timely & accurate information Heterogeneous Hardware & Software platforms & practices Poor connectivity between different organizational locations Sticking with obsolete technology Resist to change Lack of proven man-power to develop integrated software Enterprise Resource Planning

24 Why ERP? For Management – to know what is happening in the company
One solution for better Management For cycle time reduction To achieve cost control & low working capital To marry latest technologies To shun the geographical gaps To satisfy the customers with high expectations To be Competitive & for survival Enterprise Resource Planning

25 Evolution of ERP 1960’s - Systems Just for Inventory Control
1970’s - MRP – Material Requirement Planning (Inventory with material planning & procurement) 1980’s - MRP II – Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.) Mid 1990’s - ERP – Enterprise Resource Planning (Covering all the activities of an Enterprise) 2000 onwards – ERP II – Collaborative Commerce (Extending ERP to external business entities) Enterprise Resource Planning

26 ERP – Expectations Integrating all the functions
Integrating the systems running in all the locations Transparency of information using a single data source across the organization Software must be responsive Modular Flexible Easy to add functionalities Provide growth path Enterprise Resource Planning

27 ERP – Options Enterprise Resource Planning
OPTION 1 – MAKE [Using Internal resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of the in-house IT department OPTION 2 - BUY Going for Tailor-made ERP packages available in the market like SAP, Oracle applications, Baan, PeopleSoft etc. OPTION 3 – MAKE [using External resources] requirements of the organization, with the help of a software solution provider Enterprise Resource Planning

Manufacturing - Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow Supply Chain - Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation Financials - General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets

29 Customer Relationship Management (CRM) - Sales and Marketing, Commissions, Service, Customer Contact and Call Center support Human Resources - Human Resources, Payroll, Training, Time & Attendance, Rostering, Benefits Data Warehouse Management - Self-Service interfaces for Customers, Suppliers, and Employees Decision Support System.

30 ERP: Operations Integration

31 ADVANTAGES design engineering (how to best make the product).
order tracking from acceptance through fulfillment. the revenue cycle from invoice through cash receipt. managing interdependencies of complex Bill of Materials tracking the 3-way match between Purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced). the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.

32 DISADVANTAGES Personnel turnover; companies can employ new managers lacking education in the company's ERP system, proposing changes in business practices that are out of synchronization with the best utilization of the company's selected ERP. Customization of the ERP software is limited. Some customization may involve changing of the ERP software structure which is usually not allowed. Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage. ERP systems can be very expensive to install often ranging from 30,000 US Dollars to 500,000,000 US Dollars for multinational companies.

33 ERP vendors can charge sums of money for annual license renewal that is unrelated to the size of the company using the ERP or its profitability. ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure. Systems can be difficult to use. Systems are too restrictive and do not allow much flexibility in implementation and usage.

34 Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software. Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc, and consolidation into a single enterprise may yield limited benefits. There are frequent compatibility problems with the various legacy systems of the partners. The system may be over-engineered relative to the actual needs of the customer.

Product Data Management (PDM) is a category of computer software used to control data related to products. PDM creates and manages relations between sets of data that define a product, and store those relationships in a database. Product Data Management is focused on capturing and maintaining information on products and/or services through its development and useful life.

36 PDM MODULE INCLUDES Part Number Part Description Supplier/Vendor
Vendor Part Number and Description Unit of Measure Cost/Price Schematic or CAD Drawing Material Data Sheets

37 PDM ADVANTAGES Track and manage all changes to product related data
Accelerate return on investment with easy setup; Spend less time organizing and tracking design data; Improve productivity through reuse of product design data; Enhance collaboration.

38 FIELDS OF USE NPD—New Product Development: Design, manufacture and R&D of new products e.g. consumer appliances, automotive, automotive components, aerospace and defence. CPD—Customised Product Development: Design and manufacturing of customised products as per customer requirement e.g. heavy engineering. EPC: Engineering, procurement and construction industries e.g. infrastructure projects.

An enterprise information portal (EIP) is a software package that gives an enterprise a relatively easy and systematic way to create a Web site that will serve as a single gateway to a company's information and knowledge base for employees and possibly for customers, business partners, and the general public as well.

40 Portal Characteristics
Presenting information to the user that the user requires in a standard format with a standard interface. Secure delivery of information while making the complexities of security, as well as access to disparate information sources, transparent to the user. Transmitting information. Support for user interactivity.

An enterprise portal, is a framework for integrating information, people and processes across organizational boundaries. It provides a single point of entry, often in the form of a web-based user interface, and is designed to aggregate information through application-specific portlets. Enterprise Information Portals enable users to jump from business intelligence systems to ERP applications to sales reports, all without leaving their browsers.


43 Enterprise Information Portal goals:
Establish a competitive advantage Increase ROI Improve business processes Increase employee productivity Enable collaboration between employees, suppliers, and customers Provide universal access to corporate resources Maintain a consistent view of corporate data and information

44 ELEMENTS OF EIP Access/search: Access/search allows a user to get all the information needed (but no more) in the desired context. For example, a loan officer does not need marketing information to approve a loan. An EIP makes sure the loan officer gets only the information needed. Categorization: An EIP categorizes all information so that it is delivered to the user within the context needed (think of the subject structure on Yahoo) Collaboration: An EIP allows individuals to collaborate regardless of geographical location. Personalization: The information provided to individuals using an EIP is personalized to that person’s role, preferences, and habits.

45 Expertise and profiling: Expertise and profiling is essential for the collaboration element of an EIP. Individuals within an enterprise are profiled according to their experience and competencies. If an individual needs to collaborate with others, he can choose those that are qualified for the project. Application integration: This allows individuals to deliver, access, and share information regardless of applications used. Security: This provides information to users based on security clearance. The user logs on and is given access only to information that the user is authorized to access.

46 User Management and Security
Single sign-on and authentication. Automatically identifying users and their roles. Secure database access. Connecting to other systems.

47 Single Sign-On and Authentication
To logon to a computer users must be authenticated by the Active Directory. The user’s credentials are then passed transparently to the portal and through to other back office systems.

48 User Identification When a user enters the portal the only information known about them is their username Active Directory Portal database A linked data source was created between the SQL Server and the Active Directory. This link facilitates retrieving information about the user the first time they access the portal, and also keeps the user’s active directory information up to date.

49 User Identification User Information Active Directory The user information in the Active Directory is maintained according to corporate standards. The information retrieved from the Active Directory is analyzed and then used to deliver the appropriate content to the user’s customized home page.

50 Secure Database Access
The web server communicates with the portal database through a set of stored procedures. This strategy allows for a separation between database access and the user interface. Users are granted access to certain stored procedures, but are not granted any access to the underlying data in the database except through the stored procedures.

51 Secure Database Access
Users can only access data through stored procedures. The stored procedure enforces which data is returned to the user. Users cannot directly access the database or the Underlying tables directly.

52 Connecting to other systems
The web server can either create a secure connection to obtain resources from another system; Or, the user’s credentials can be passed through to the remote database or system if the system supports this type of authentication.

Collaborative Planning, Forecasting and Replenishment (CPFR) is a business practice that combines the intelligence of multiple trading partners in the planning and fulfillment of customer demand. Links sales and marketing best practices to supply chain planning and execution processes Objective is to increase availability to the customer while reducing inventory, transportation and logistics costs

54 FEATURES OF CPFR CPFR is a concept that aims to enhance supply chain integration by supporting and assisting joint practices. CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between manufacturers and retailers aids in planning and satisfying customer demands through a supportive system of shared information. Efficiency is created through the decrease expenditures for merchandising, inventory, logistics, and transportation across all trading partners.

55 CPFR evolved from Efficient Consumer Response (ECR).
A Brief History CPFR evolved from Efficient Consumer Response (ECR). ECR: Improve supply chain performance through better coordination of marketing, production, and replenishment activities.

56 Prior to ECR Relationships often adversarial. Little or no joint planning Lack of information sharing results in “unpredictable” ordering patterns, excessive inventories, service failures,…     In 1987, P&G and Wal-Mart pioneered in Continuous Replenishment Process (CRP) Information sharing Joint demand forecasting Coordinated shipments.

57 CPFR extends ECR’s business processes to include:
Information systems for capturing and transferring POS, inventory, and other demand & supply information between trading partners Formalized sales forecasting and order forecasting processes Formalized exception handling processes Feedback systems to monitor and improve supply chain performance

58 Why CPFR? Reduce variance between your Supply and your customers Demand through jointly derived plans. Increase Revenue. Competitive Advantage: Win with your partner mentality - “My chain is better than your chain”. More accurate collaborative plans equates to more accurate/automatic execution transactions.

59 CPFR Benefits: Demand Enhanced Relationship Greater Sales
Implicitly, CPFR strengthens an existing relationship and substantially accelerates the growth of a new one. Buyer and seller work hand-in-hand from inception through fruition on business plan, base, and promotional forecasts. Continual CPFR meetings strengthen this relationship. Greater Sales The close collaboration needed for CPFR implementation drives the planning for an improved business plan between buyer and seller. The strategic business advantage directly translates to increased category sales.

60 Improved Technology ROI
Through the CPFR process, technology investments for internal integration can be enabled with higher quality forecast information. Your company will benefit by driving internal processes with common, high-quality data. Improved Overall ROI As other processes improve, the return on investment from CPFR can be substantial. Increased Customer Satisfaction With fewer out-of-stocks resulting from better planning information, higher store service levels will prevail, offering greater consumer satisfaction.

61 CPFR Benefits: Supply Improved Order Forecast Accuracy
CPFR enables a time-phased order forecast that provides additional information, greater lead time for production planning, and improved forecast accuracy vs. either stand-alone VMI/CRP or other industry tools. Inventory Reductions CPFR helps reduce forecast uncertainty and process inefficiencies. How much inventory does your company hold to “cover up” for forecasting errors or a trading partner’s inability to have the product available in a timely manner? With CPFR, product can be produced to actual order instead of storing inventory based on forecast.

62 Improved Product Offering
Category Management Before beginning CPFR, both parties inspect shelf positioning and exposure for targeted SKUs to ensure adequate days of supply, and proper exposure to the consumer. This scrutiny will result in improved shelf positioning and facings through sound category management. Improved Product Offering Before CPFR implementation, the buyer and seller collaborate on a mutual product scheme that includes SKU evaluation and additional product opportunities.

63 CPFR ACTIVITIES Strategy & Planning Establish the ground rules for the collaborative relationship. Determine product mix and placement, and develop event plans for the period. Demand & Supply Management Project consumer (point-of-sale) demand, as well as order and shipment requirements over the planning horizon. Execution Place orders, prepare and deliver shipments, receive and stock products on retail shelves, record sales transactions and make payments. Analysis Monitor planning and execution activities for exception conditions. Aggregate results, and calculate key performance metrics. Share insights and adjust plans for continuously improved results.

64 The CPFR Process Once Qtr. Wk, Mo Wk, Mo 1. Front-End Agreement
Collaborative Planning Qtr. 2. Joint Business Plan Seller Order Forecast 3. Create Sales Forecast 4. Identify exceptions 5. Resolve exceptions Collaborative Forecasting Wk, Mo 6. Create Order Forecast 7. Identify exceptions 8. Resolve exceptions Collaborative Replenishment Wk, Mo Buyer 9. Generate Order Sales Forecast


66 MEANING OF BPR The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. - Hammer and Champy, 1993

67 OBJECTIVES OF BPR Streamlining management processes and formalising communications, Eliminating unproductive activities in the operational processes, Improving decision making capability, Improving collaborative creation of work products such as documentation, specifications, designs, etc., Strengthening synergy in the team member’s approach to problem solving and taking cognizance of important changes.

68 BPR - Steps Understand Simplify/Improve Automate Step 1 Step 2 Step 3
Understand the existing systems associated with all the functionalities Draft & frame the possibilities & ways to simplify or Improve or eliminate the processes Implement with the help of ERP Business Process Re-engineering

69 BPR AND SCM The primary strategies of SCM are intra and inter organizational synergy while the primary aspect of BPR is lean, core process synergy. Both have the common denominator of customer focus. SCM and BPR are two complementary philosophies. After full and successful BPR, functional and internal integration, in SCM jargon will be fulfilled.

Area for change BPR terminology SCM terminology Process Elimination of waste Speed up core processes Concentration on core processes Reduce non value added activities Lead time reduction To do what it does best People Board level commitment Multi-skilled & inquisitive workforce Attitudinal changes SCM champion at board level Technology Technological changes IT-a key to BPR Treat vendors as adversaries IT-a key to SCM Partnership sourcing Innovation Customer focus Constant product/process innovation Streamline processes Constant innovation at the interfaces of the company Analysis No Analysis by paralysis Take a holistic view Use aggregate modeling to redesign and take a systems view

71 NEED OF BPR IN SCM To transform a business from an inward looking to flexible outward looking business. Giving a wider perspective to the organization, seeking core processes and creating learner structures. To identify the bottlenecks in the systems and areas requiring change which are essential to remain competitive.

Create a climate of commitment for its members to a higher purpose. Foster organic partnership through knowledge networking. Install an environment for taking responsible leadership. Encourage and empower the members for developing extra-ordinary breadth of perspectives. Create capacity for change and involve in eventuating total quality and productivity in every endeavour.


74 BPR in the Supply Chain scenario
Harrington’s (1991) steps to streamlining: Bureaucracy elimination Duplication elimination Value-added assessment Simplification Process cycle time reduction Error proofing Upgrading Simple language Standardization Supplier partners Big picture improvement Automation and/or mechanization

BPR Scenario Process based on adverse relations within processes. Poor information flow. Limited concept of customer Process identification Process simplification Automate if possible Finding the customer Learn processes Business process oriented Continual search for Customer focused chain Improvements Possible Implement Changes Improvement Realized SCM Scenario Process based on adverse relations within processes. Poor information flow. Limited concept of customer. Process identification Process simplification Automate if possible Finding the customer Learn processes Business process oriented Continual search for Customer focused chain

76 CONCLUSION Re-engineering the supply chain shows significant improvements in cost reductions and thereby helps in gaining competitive advantage. BPR continually searches for step changes and strategically phase these ideas in the supply chain.




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