Supply Chain Management 2 nd Edition Chapter 17

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

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 © 2004 Prentice-Hall, Inc. 2

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

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

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 © 2004 Prentice-Hall, Inc. 5

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. © 2004 Prentice-Hall, Inc. 6

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 © 2004 Prentice-Hall, Inc. 7

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 © 2004 Prentice-Hall, Inc. 8

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 © 2004 Prentice-Hall, Inc. 9

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) © 2004 Prentice-Hall, Inc. 10

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 © 2004 Prentice-Hall, Inc. 11

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 © 2004 Prentice-Hall, Inc. 12

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 © 2004 Prentice-Hall, Inc. 13

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 © 2004 Prentice-Hall, Inc. 14

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 © 2004 Prentice-Hall, Inc. 15

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 © 2004 Prentice-Hall, Inc. 16

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? © 2004 Prentice-Hall, Inc. 17