Supply Chain Management (SCM) Systems. MIS 4133 Software Systems

Transcription

1 Supply Chain Management (SCM) Systems MIS 4133 Software Systems

2 Outline SCM System Definition SCM History SCM Examples SCM Applications RFID Roadblocks Success Factors Business Value Performance Metrics ERP and SCM Systems Integration

3 SCM System Integrate supply chains Provide information to help suppliers, distributors, and so forth, coordinate, schedule, and control business processes for production, inventory management, etc. Are outward facing, focusing on the firm managing its relationship with suppliers Are one type of interorganizational system, automating the information flow across organizational boundaries

4 A Typical Supply Chain Suppliers Plants Distribution Centers/Warehouses Customers

5 SCM (Brief) History MRP Schedule of raw materials and production schedule MRP II Master production schedule, MRP, and shop floor control SCM Going outside of organization to connect members

6 SCM: 5 Basic Components 1. Plan Managing all resources and developing metrics 2. Source Choosing suppliers 3. Make Manufacturing 4. Deliver Logistics 5. Return Return of defective products

7 An Example: Haworth s SCM System Distribution Centers WMS SeeBeyond Middleware Orders and shipping notifications Plans and shipments Back-end systems Contract furniture applications Mid-market furniture applications ERP applications Freight Carriers TMS Laudon and Laudon 2006, p. 58

8 SCM Helps Deliver Thanksgiving Turkeys Perdue Farms produces more than 48 million pounds of chicken products and almost 4 million pounds of turkey products each week. For Thanksgiving, Perdue will ship roughly 1 million whole turkeys and all these turkeys will arrive at the supermarkets within 24 hours of processing. This logistics task is much easier for Perdue because the company invested $20 million in Manugistics supply chain management software, including forecasting and supply chain planning tools. With the aid of the SCM system, Perdue has gotten much better at delivering the right number of turkeys to the right customers at the right time, according to Chief Information Officer Don Taylor. As we get to November, we have live information at our fingertips, he says. Perdue also uses technology to make sure its products arrive fresh. Each of its delivery trucks is equipped with a global positioning system, so dispatchers always know where the trucks are and can send out replacement trucks if necessary. Some supermarkets have vendor-management inventorycontrol systems, which allow Perdue to track sales of its products in real time. We re always looking at new technologies as they come along to see what makes sense for us, Taylor says. And SCM certainly makes sense for Thanksgiving turkeys. (Martin et al. 2005, p. 209)

9 SCM Applications Supply chain planning systems Enables the firm to create demand forecasts and to develop sourcing and manufacturing plans for a product. Supply chain execution systems Manages the flow of products through distribution centers and warehouses. Ensures that products are delivered to the right locations in the most efficient manner.

10 RFID Radio Frequency Identification Provides the ability to track the movement of goods throughout the supply chain Uses tiny tags with embedded microchips containing data about an item and its location

11 How RFID Works Radio waves Host computer Tag RFID Reader

12 SCM System Roadblocks Gaining trust from suppliers and partners Internal resistance to change Many mistakes at first

13 SCM System Roadblock Examples NCR in Dayton, Ohio Spent $7 million on SC system No initial return on investment because employees would not use it Plasti-Line in Knoxville, Tennessee Discovered after SCM system implementation that its ERP system would not integrate with it Eventually, able to slash manufacturing head count by 34%

14 SCM Success Factors 1. Get suppliers on-board 2. Slowly move employees off the phone and fax 3. Prepare for bad initial information from the system 4. Make sure the SCM system can talk to the ERP system 5. Defuse political problems

15 SCM System Business Value Allow supply chains to compete against one another on their ability to reduce costs and time across the chains Help decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory availability and monitor inventory levels Reduce inventory, transportation, and warehousing costs Track shipments Plan production based on actual customer demand Rapidly communicate changes in product design Improve customer service and responsiveness Reduce cost in moving products Improve cash utilization get paid faster because products are delivered faster

16 Supply Chain Performance Metrics Fill rate Average time from order to delivery Number of days of supply in inventory Forecast accuracy Cycle time for sourcing and making a product

17 ERP and SCM Is ERP system software needed before installing SCM system software?

18 Integrating ERP and SCM Systems ERP integrates systems within an organization SCM integrates systems among organizations Market forces are requiring more efficient and effective organizations

19 Types of Integration for ERP and SCM Systems Data integration Data exchange between corporate applications Application integration Technical integration, procedural calls between applications Business process integration Total integrations, all aspects

20 References Auramo, J., Kauremaa, J. and Tanskanen, K. (2005). Benefits of IT in supply chain management: an explorative study of progressive companies, International Journal of Physical Distribution & Logistics Management (35:2), pp Bose, I., Pal, R. and Ye, A. (2008). ERP and SCM systems integration: the case of a valve manufacturer in China, Information & Management (45), pp Hadley, S. (2004). Managing the Supply Chain Management Business Case, Strategic Finance, April, pp Handfield, R.B. and Nichols, Jr., E.L. (1999). Introduction to Supply Chain Management, Prentice-Hall, Inc., Upper Saddle River, New Jersey. Huang, A., Yen, D.C., Chou, D.C. and Xu, Y. (2003). Corporate applications integration: challenges, opportunities, and implementation strategies, Journal of Business and Management (9:2), Spring, pp Laudon, K.C. and Laudon, J.P. (2006). Management Information Systems: Managing the Digital Firm, Pearson Education, Inc., Upper Saddle River, New Jersey. Martin, E.W., Brown, C.V., DeHayes, D.W., Hoffer, J.A. and Perkins, W.C. (2005). Managing Information Technology, 5 th edition, Pearson Education, Inc., Upper Saddle River, New Jersey. McNurlin, B.C. and Sprague, Jr., R.H. (2006). Information Systems Management in Practice, 7 th edition, Pearson Education, Inc., Upper Saddle River, New Jersey.

21 References Motiwalla, L.F. and Thompson, J. (2009). Enterprise Systems for Management, Pearson Education, Inc., Upper Saddle River, New Jersey. Peslak, A.R. (2005). An ethical exploration of privacy and radio frequency identification, Journal of Business Ethics (59), pp Poirier, C.C. and Bauer, M.J. (2000). E-Supply Chain: Using the Internet to Revolutionize Your Business, Berrett-Koehler Publishers, Inc., San Francisco, California. Su, Y. and Yang, C. (2010). Why are enterprise resource planning systems indispensible to supply chain management?, European Journal of Operational Research (203), pp Themistocleous, M., Irani, Z. and Love, P.E.D. (2004). Evaluating the integration of supply chain information systems: a case study, European Journal of Operational Research (159), pp Wailgum, T. (2007). Supply chain management definition and solutions, [accessed: 10 September 2015].