17-1 Ombati Thomas Information Technology and the Supply Chain.
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Transcript of 17-1 Ombati Thomas Information Technology and the Supply Chain.
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17-1
Ombati Thomas
Information Technology and the Supply Chain
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Role of Information Technologyin a Supply Chain
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
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Characteristics of UsefulSupply Chain Information
Accurate Accessible in a timely manner The right kind Provides supply chain visibility
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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
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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.
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Role of Information Technologyin 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
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The Importance of Informationin 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
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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
– Figure 16.1
Why Focus on the Macro Processes? Macro Processes Applied to the Evolution of Software
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Macro Processes in a Supply Chain(Figure 16.1)
Supplier Relationship Management
(SRM)
Internal Supply Chain Management
(ISCM)
Customer Relationship Management
(CRM)
Transaction Management Foundation (TFM)
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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
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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
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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
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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
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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
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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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Summary of Learning Objectives
What is the importance of information and IT in the supply chain?
How does each supply chain driver use information? What are the major applications of supply chain IT
and what processes do they enable?