Introduction to Management Information Systems Chapter 8 ECommerce and Supply Chain Management

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Introduction to Management Information
SystemsChapter 8 E-Commerce and Supply Chain
Management

• HTM 304
• Fall 07

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Supply Chain Management

• Supply chain network of organizations and
  facilities that transforms raw materials into
  products delivered to customers
• Chain is a mis-cocnept
• implies each organization connected to just one
  company up (toward the supplier) and down (toward
  the customer) the chain
• At each level, an organization can work with many
  organizations both up and down the supply chain
• A supply chain is actually a network!

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Supply Chain Network
Customer is the only source of revenue!

• All the upstream firms are competing to get a
  good share of the pie.
• All the upstream firms are interrelated since
  each decision will affect the total size of the
  pie!
• Supply Chain Management is challenging!

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IS to improve the SC performance

• Four major factors that affect supply chain
  performance
• Facilities
• Inventory
• Transportation
• Information
• The challenge is to design the system that
  maximizes supply chain profitability which in the
  long run improves each partner's profitability
• Maximizing the chain profit does not always
  maximize each organizations profit in isolation
• Successful SCM requires coordination
• ? strategic alliances
• ? inter-organizational IS

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Integration of SRM and CRM

• CRM customer relationship management
• SRM Supplier relationship management

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Supplier Relationship Management

• SRM business process for managing al contracts
  between an organization and its suppliers.
• Three basic processes
• Source
• Purchase
• Settle

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SRM processes (1)

• Source
• Find vendors of needed supplies, materials, or
  services
• Assess the vendors
• Negotiate terms
• Procurement contracts
• Some SRM applications search for product sources
  and find evaluations of vendors and products

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SRM processes (2)

• Purchase
• Request
• information
• quotation
• proposals
• Approve purchases
• Issue orders

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SRM processes (3)

• Settle
• Connect to the cash management subsystem in
  financial management application to make payment
• Some SRM packages include features to support
  procurement auctions.

Secure cash flow (schedule payments, manage cash
flows)
Financial System
bids
bids
bids
SRM Settlement module
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Technology for Data Exchange

• From EDI to XML
• Why not HTML? lack of structure
• EDI (Electronic Data Interchange)
• A standard of formats for common business
  documents.
• Facilitate organizations to exchange documents
  (e.g. purchase order, invoice).
• XML (eXtensible Markup Language)
• Electronic exchange via world wide web.

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EDI

• Require agreement on the data format (standard)
  to be sent
• Popular Standards
• EDI X12 Standard
• American National Standards Institute (ANSI) X12
  committee manages the EDI standard in the U.S.
• includes hundreds of documents with standard
  names, e.g. EDI 850 purchase order, EDI 856
  advance ship notices, EDI 810 electronic
  invoice, etc.
• EDIFACT standard used internationally
• HIPAA standard used for medical records
• Standards do not stand still. ?
• Various versions of each of X12, EDIFACT, and
  HIPAA

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An Example of Data Exchange with EDI X12
FoodSeller, Co.
Buy Snack, Inc.
Internet
Receive Order, Translate EDI 850
Orders Items Generate EDI 850
EDI X12 850 Purchase Order
Generate EDI 997 Acknowledgement
EDI X12 997 Functional Acknowledgement
View EDI 997
Checks supply to fulfill order, EDI 855
View EDI 855 to Check the Changes
EDI X12 855 Purchase Order Acknowledgement
Generate EDI 997 Acknowledge
View EDI 997
EDI X12 997 Functional Acknowledgement
Process Order, EDI 856 Ship Notice
View EDI 856 Awaits Arrival
EDI X12 856 Shipment Notice
Bills for Order EDI 819 Invoice
View EDI 855 to Check the Changes
EDI X12 855 Purchase Order Acknowledgement
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Example Scenario of System Integration
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XML a W3C standard

• eXtensible Markup Language
• A markup just like HTML
• Designed to describe Data, not to display webpage
  (as HTML)
• Has become a significant standard for computer
  processing

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Example

• Using XML Web Service to share sales data with
  business partners

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Problem Solving Guide (P.235a-b)

• Interorganizational Information Exchange
• What should you do in scenario 1-5?