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Information Technology for Supply Chain Management


Information Technology for Supply Chain Management Designing & Managing the Supply Chain Chapter 11 Dang Quang Vinh Integrating Supply Chain ... – PowerPoint PPT presentation

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Title: Information Technology for Supply Chain Management

Information Technology for Supply Chain Management
  • Designing Managing the Supply Chain
  • Chapter 11
  • Dang Quang Vinh

  • Case Backup in the Espresso Lane
  • Case ERP Brews Instant Success
  • Introduction
  • Goals of Supply Chain Information Technology
  • Standardization
  • Information Technology Infrastructure
  • Supply Chain Management System Components
  • Integrating Supply Chain Information Technology

Case Backup in the Espresso Lane
  • Background
  • Starbuck Corp. runs coffee business with 2,000
  • Chose a best-of-breed approach over an integrated
  • Three years project is now slated to five years.
  • Recipe for growth
  • Since 1992, the company opened 1235 retail
  • Starbuck Corp. can handle the growth because of
    ambitious and impassioned employees.
  • Initially, when the company had the problem with
    BOM, they chose ERP package.
  • Eventually, best-of-breed approach is selected
    due to the functional flexibility.

Case Backup in the Espresso Lane
  • Best-of-breed challenges
  • Extend supply chain overhaul
  • Overall length of the project is longer because
    they had to spend more time selecting and
    integrating packages
  • Create extra works, build bridge between
  • The upside
  • Flexibility approach
  • Reduction in overall inventory, overtime hours
    and emergency orders
  • Best-of-breed is working

Case ERP Brews Instant Success
  • Background
  • Small coffee roaster has the same double
    cappuccino-size supply chain problems
  • 47 million went with ERP compared with 700
    million of Starbuck Corp.
  • No more homegrown
  • Now using homegrown system that integrated its
    financial, manu-facturing and distribution
  • Finding a new suitable ERP systems because of
  • Purchased 17 modules of the Enterprise Solutions
    from People-Soft Inc.

  • Information technology (IT) is an important
    enabler of effective supply chain management.
  • IT for supply chains includes internal and
    external systems that facilitate
    information between various company and
  • For many firms, IT provides a competitive
  • In many cases, current IT that supports the
    components in the supply chain process is
    diverse and disconnected.
  • Various strategies are utilized by companies to
    overcome these problems and create
    systems that can use the multitude of data in
    the system effectively.

  • What are the goals of IT from the perspective of
    supply chain management?
  • What IT components are needed to achieve the
    goals of supply chain management?
  • What are the supply chain component systems and
    how should they be approached?
  • What are the trends in IT and how do they affect
    supply chain management?
  • What are the stages I the development of
    enterprise IT?

Goals of Supply Chain Information
  • Collect information on each product from
    production to delivery or purchase point and
    provide complete visibility for all parties
  • Access any data in the system from a single point
    of contact.
  • Analyze, plane activities, and make trade-offs
    based on information from the
    entire supply chain.
  • Collaborate with supply chain partners.

Goals of supply chain information
  • The primary goal of IT in the supply chain is to
    link the point of delivery or purchase. The idea
    is to have an information trail that follows
    the products physical trail.

Goals of supply chain information
  • Collect information
  • The retailer needs to know the status of its
    orders and the suppliers need to be able to
    anticipate an incoming the manufacturer
  • The availability of information regarding the
    status of products and material is the basic on
    which intelligent supply chain
    decisions can be made.
  • This goal requires standardization of product
    identification (e.g. bar coding) across
    the companies and industries.

Goals of supply chain information
  • Access to data
  • The single-point-of-contact concept all the
    available information, either information
    provided to a customer or required internally,
    can be access to the same , regardless of the
    mode of inquiry use or who is making the inquiry.
  • Ideally, everyone who needs to use certain data
    should have access to the same real-time
    data through any interface device.

Goals of supply chain information
Current information systems
Goals of supply chain information
New generation of information
Goals of supply chain information
  • Analyze based on supply chain data
  • Analyzing the data, especially in a way that
    takes into account the global supply chain
  • The information system must be utilized to find
    the most efficient ways to produce, assemble,
    warehouse and distribute.
  • Collaborate with supply chain partners
  • The ability to collaborate with supply chain
    partners is essential to a companys success.
    This requires not only sophisticated
    alignment of IT systems but also the integration
    of business processes.
  • Collaboration has become the focus supply chain
    systems Supplier relationship management
    (SRM) and Customer relationship
    management (CRM).

Goals of supply chain information
  • It is hard to predict in an ever-changing field
    such as information technology. Primary is the
    push toward IT standards. The IT field is
    evolving to a high level of standardization for
    the following reasons
  • Market forces
  • Interconnectivity
  • New software models
  • Economies of scale

  • Standardization of IT has 4 major phases
  • Proprietary There was little communication
    between systems and that was performed through
    private networks or physical media.
  • Stand alone For business networks, some standard
    were developed, but mostly private networks were
    used for filed transfers. Electronic data
    interchange (EDI), a common transaction format,
    was introduced at this time. A future
    development, client/serve technology,
    integrated the Pc capabilities and standards with
    business systems.
  • Communications The Internet provided the missing
    link in communications and display
    standards beyond the local networks.

  • Collaboration The major issue is specifying a
    common language format that will enable diverse
    systems to understand each other. A new phase
    of collaboration increases the important of ERP
    systems that are involving into the so-called
    ERP II
  • Role
  • Domain
  • Function
  • Process
  • Architecture
  • Data

  • One of the cornerstones of all new IT standards
    development in the eXtensible Markup Language
    (XML), which is the language
    description format that is the fast becoming the
    standard for Internet transactions.
  • The Web services architecture is based on
    standards such as XML, UDDI, a directory service
    for applications and
    communication protocols such as SOAP.
  • Web services are offered as components, companies
    can purchase only the functionality they
    need, possibly in the form of services purchase
    over the Internet.
  • Web service applications will make collaboration
    easier by deploying a loose-coupling approach to
    integration since the integr-ation methods are
    the part of the service and do not need to be
    tailored for each two applications that are being

  • For all the obvious advantages of
    standardization, a few of its drawbacks and
  • Availability Problem surround the cost of
    creating a standard and the power of
    those who hold standards, especially if
    these standards are proprietary.
  • Security The easy access to the Internet exposes
    systems that are connected to attacks by hackers
    and conceivably industrial spies.
  • Scalability Standards that work in a certain
    context or size of problem may not be adequate
    for a for a different set of industries or for
    a large number of users.

Information technology infrastructure
  • The information technology (IT) infrastructure is
    a critical factor in the success or failure of
    any system implementation. The infrastructure
    forms the base for data collection
    transactions, system access and communications.
  • IT infrastructure consists of
  • Interface/presentation devices
  • Communications
  • Databases
  • System architecture

Information technology infrastructure
  • Interface devices
  • Personal computers, voice mail, terminals,
    Internet devices, bar-code scanners and personal
    digital assistants (PADs) are some of the
    interface devices most commonly utilized.
  • A key trend in IT is toward uniform access
    capability anytime and anywhere and the interface
    devices clearly play a major role in this
  • Auto-ID technology will embed intelligence in
    physical objects that will allow them to
    communicate with each other and with businesses
    and customers.
  • Electronic Product Code (ePC)
  • Product Markup Language (PML)
  • Object Naming Service (ONS)

Information technology infrastructure
  • Communications
  • There are two major trends in communication
    wireless communication, and the single point of
    contact for communications.
  • Electronic mail (e-mail)
  • Data exchange
  • Groupware
  • Transportation product tracking
  • Supply Chain Event Management (SCEM)
  • Exchange platforms

Information technology infrastructure
  • Databases
  • Data need to be organized in some form of a
    database including transaction information,
    status information, general information,
    forms and group work.
  • Legacy databases These systems are used to built
    around a hierarchical or net-work database.
  • Relational databases These databases allow the
    storage of related data in such a way that
    standardized reporting and querying of
    related data are facilitated.
  • Object databases These can hold not only numeric
    and character data but more
    sophisticated objects such as pictures graphic
  • Data warehouse These databases combine data from
    other systems databases to allow query by
    sophisticated analysis tools.

Information technology infrastructure
  • Datamarts These are smaller versions of data
  • Groupware databases These are specialized
    databases designed to accommodate group
    functions, such as keeping track of
    updates, allowing multiple-users access and so

Information technology infrastructure
  • System Architecture
  • Systems architecture encompasses the way the
    components-databases, interface devices and
    communication- are configured.

Information technology infrastructure
  • Electronic Commerce
  • Replacing of physical processes with electronic
    one and the creation of new models for
    collaboration with customer and supplier.
  • Facilitating the interaction between different
    companies as well as the interaction of
    individuals within companies.
  • Companies use Internet standards intranets,
    extranets and exchanges
  • Also, companies develop the portal a role-based
    entry into a companys systems that aggregates
    all the applications and sources of
    information employees need in order to perform
    their job into a single desktop environment.

Information technology infrastructure
  • Electronic Commerce Levels

Information technology infrastructure
  • Electronic Commerce Levels
  • Supplier relationship management (SRM) drives
    the optimization goods and
    materials for manufactures.
  • Strategic supply management
  • Supply Chain Collaboration
  • Direct materials procurement execution
  • Customer relationship management (CRM) aim to
    drive and optimize the interaction with clients.
  • Sales-force automation
  • Sales-pitch customization
  • Managing and using customer information
  • CPFR sharing process of collaboration planning,
    forecasting, and replenishment.

Supply Chain Management
System Components
  • The DSS that various companies and industries
    employ depends, among other things, on
    manufacturing charact-eristics, demand
    fluctuation, transportation costs and
    inventory costs.
  • The DSS will support the strategic, tactical and
    operation-al levels.
  • The main IT capabilities required for supply
    chain excellence as well as
    relationships between the different capabilities.
  • Strategic network design
  • Supply chain master planning
  • Operational planning demand planning,
    production scheduling, inventory management and
    transportation planning

Supply Chain Management
System Components
  • Operational execution enterprise resource
    planning, customer relationship management,
    supplier relationship management, supply
    chain management, transportation systems
  • Planning horizon
  • Return on investment
  • Implementation complexity

Integrating Supply Chain
Information Technology
  • The key is to analyze what each component can
    contribute to the enterprise and then
    plan the investment according to the
    specific needs of the company and the demands of
    the industry.
  • SAPs Stages of Excellence model designed for
    evaluating a companys stage of
    development in IT and its impact on SCM.
  • Stages of Development
  • Stage 1 Disconnected systems
  • Companies functions and tasks.
  • Organization internal process standardization
    address Internet readiness.

Integrating Supply Chain
Information Technology
  • Stage 2 Internal and external interfaces
  • Companies e-business solutions, disparate
    information systems, flow through of data,
    decentralized external links
  • Organization transaction-focused on both
    buy-side and sell-side
  • Stage 3 Internal integration and limited
    external integration efficiency
  • Companies cross-functionally organized,
    integrated systems within the enterprise, limited
    external value chain integration.
  • Organization link supplier to their back-end
    systems and buyer front-end systems.
  • Stage 4 Multi-enterprise integration
  • Companies cross-functionally organized, maximum
    external value chain integration.
  • Organization link trading partners.

Integrating Supply Chain
Information Technology
Integrating Supply Chain
Information Technology
  • Implementation of ERP and DSS

Integrating Supply Chain
Information Technology
Integrating Supply Chain
Information Technology
  • Best-of-Breed versus Single-Vendor ERP

  • Standardization of processes, communications,
    data and interfaces bring about cheaper and
    easier methods to implement the basic
  • Data display and access in various forms are
    becoming more integrated in systems that do not
    require any specialized knowledge.
  • Various systems will interact in a way that will
    blur the current boundaries.
  • Electronic commerce is changing the way we work,
    interact, and do business.