Supply Chain Technology Foundations

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1 Supply Chain Technology Foundations

2 The implementation of information technology has become an absolute requirement for success in today s business environment.

3 The application of integrative information technology has caused a revolution in the concept and practice of supply chain management (SCM)

4 Driver Factors Companies have had to turn to computerized applications in order to deal with the increasingly complex requirements of doing business in a fast-paced global environment. Customers and suppliers have continued to demand instantaneous response and full information visibility, online, in real-time.

5 Driver Factors The rapidly changing contours of dealing with shrinking life cycles for everything have made the ability to closely link customers, producers, and suppliers a requirement for competitive survival. The integrative power of the Internet is requiring supply chains to have the ability to rapidly transfer transaction information and marketplace intelligence from buyer to supplier. Information technology has become a competitive advantage.

6 Technology automates complex tasks, generates useable information, and networks supply chain nodes tightly together to manage complexity and expand competitive advantage. Example Wal-Mart s satellite-connected systems, American Airline s Sabre System, Federal Express s package-tracking systems, Cisco s virtual manufacturing environment

7 The real-time networking of channel trading partners, Collaborative design, Social networking, E-commerce, Radio Frequency Identification (RFID), etc

8 Role of Information Technology in a Supply Chain Information is the driver that serves as the glue to create a coordinated supply chain Information provides the basis for supply chain management decisions Inventory Transportation Facility

9 Characteristics of Useful Supply Chain Information Accurate Accessible in a timely manner The right kind Provides supply chain visibility

10 Use of Information in a Supply Chain

11 Use of Information in a Supply Chain Information used at all phases of decision making: strategic, planning, operational Examples: Strategic: location decisions Operational: what products will be produced during today s production run

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

13 Role of IT in a Supply Chain 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 Effective use of IT in the supply chain can have a significant impact on supply chain performance

14 The Importance of Information in a Supply Chain Relevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain 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

15 The Supply Chain IT Framework The Supply Chain Macro Processes Customer Relationship Management (CRM) Internal Supply Chain Management (ISCM) Supplier Relationship Management (SRM) Plus: Transaction Management Foundation

16 Macro Processes in a Supply Chain Why Focus on the Macro Processes? Macro Processes Applied to the Evolution of Software Supplier Relationship Management (SRM) Internal Supply Chain Management (ISCM) Customer Relationship Management (CRM) Transaction Management Foundation (TFM)

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

18 Internal Supply Chain Management Includes all processes involved in planning for and fulfilling a customer order ISCM processes: Strategic Planning Demand Planning Supply Planning Fulfillment Field Service There must be strong integration between the ISCM and CRM macro processes

19 Supplier Relationship Management Those processes focused on the interaction between the enterprise and suppliers that are upstream in the supply chain Key processes: Design Collaboration Source Negotiate Buy Supply Collaboration There is a natural fit between ISCM and SRM processes

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

21 The Future of IT in the Supply Chain At the highest level, the three SCM macro processes will continue to drive the evolution of enterprise software 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 Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

22 Supply Chain Information Technology in Practice Select an IT system that addresses the company s key success factors Take incremental steps and measure value Align the level of sophistication with the need for sophistication Use IT systems to support decision making, not to make decisions Think about the future

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