Supply Chain Information Technology, Second Edition

David L. Olson

• Publisher: Business Expert Press
• Year: 2014
• Print ISBN: 9781631570551
• eBook ISBN: 9781631570568
• Topic: Business
• Subtopic: Operations
• Index: Business

The rapid growth in computer technology providessupply chain managers with valuable tools to bettercoordinate and control their operations. This bookseeks to describe systems available to give supplychains information system support, demonstratingkey tasks with demonstrated analytic techniques.This second edition provides you with newer cases todemonstrate concepts that will allow to better manageyour supply chain management position in one of thefastest growing fields in our economy.

CHAPTER 1

Supply Chain Information Systems

The ability to access global production and services has revolutionized business. Supply chain networks move inventories of various kinds from source to consumption. Being able to work with producers around the world provides opportunities to balance low cost with risk mediation. While logistics usually is associated with moving material, supply chains today can include intangibles such as services as well as inventories of goods. Using the Internet enables linking together supply chain networks in practically any business application, production, or service.

Organizations, such as Dell and Hewlett-Packard, have operated collaborative supply chains with each partner focusing on a few key strategic activities. Supply chains also include organizations, such as the military and nonprofit organizations like the Red Cross and Red Crescent. In the retail arena, Wal-Mart has been very successful in the past in linking thousands of sources with their millions of customers. Organizations such as Bank of America have viewed their service operations as key to their success and evaluated their entire service supply chain seeking to apply the same general principles as lean manufacturing, focusing on providing maximum value at minimum overall cost. Information systems are needed to make these supply chains work.

Supply Chain Management

Supply chain management (SCM) became a common term in the 1980s, heavily influenced by Japanese manufacturing processes like those developed by Toyota, such as just-in-time (JIT) and lean manufacturing. In the 1990s electronic data interchange (EDI) made it possible to coordinate chains of organizations worldwide. This enabled the integration of participant ­supply chain elements into cooperative components sharing information and enabling coordinated planning, operations, and monitoring of performance. There was a focus on core competencies, abandoning the vertical integration of Standard Oil, U.S. Steel, and Alcoa and replacing it with linkages of independent organizations specializing in what they did best. This encompassed the entire product process to include design, manufacture, distribution, marketing, selling, and service. Agile supply chains, such as Motorola and Panasonic, are flexible, enabling changing the set of partners for given markets, regions, or channels, accessing the specific price or quality mix that enable organizations to be competitive.

Original equipment manufacturers (OEMs) shifted from making products to become brand owners. These brand owners needed to know what was going on across their entire supply chain, with the need to control from above rather than from within. Standard Oil in 1900 desired to control everything from within, seeking to own all elements in their supply chain. Conversely, Nike doesn’t make shoes anymore. They coordinate activities from design to retail through communication supported by a variety of information systems linked across their supply chain.

Supply Chain Processes

Collaboration across supply chains requires the integration of all supply chain activities. This requires a continuous flow of information. Key supply chain processes include the following:

• Product development

• Procurement to include outsourcing or partnerships

• Manufacturing

• Physical distribution

• Customer relationship management (CRM)

Product development can be obtained by linking customers and suppliers. Customers can express their needs (desires), while the supply chain organization can contribute what is possible. Communication enables identification of a product with a competitive life cycle.

Procurement (sourcing) involves the selection of supply chain members. This can be for specific products or services, so that an organization like Wal-Mart might have literally millions of temporary sourcing arrangements. A stable supply chain will have relationships benefiting all parties. Outsourcing refers to procuring sources outside the OEM organization. Outsourcing is broader, however, in that it can refer to obtaining any part of a tangible product or intangible service. Information systems can use EDI and web links to communicate rapidly, enabling effective cost and risk management. Procurement generally involves obtaining materials and components. Outsourcing enables many opportunities to develop a more cost-efficient (or lower risk) supply chain. This comes at the cost of requiring significantly more coordination.

A manufacturing process can be developed based on what the OEM organization selects as the best combination of cost and risk over the total product life cycle. Manufacturing processes should be flexible to respond to changes in market conditions. The activities of planning, scheduling, inventory, transportation, and coordination across the supply chain require software coordination.

Physical distribution involves moving products (or services) through the supply chain, ultimately reaching customers. The specific routing is referred to as a channel in marketing and can include a variety of transportation media to move goods. In a service context, the channel can involve the routing of who a customer interacts with to get the service desired.

CRM is the management of the relationships between the providing organization and its customers. Customer service provides information from the customers and has the ability to give customers real-time information on product availability, price, and delivery.

Linking independent elements to work together to deliver goods and/or services is flexible and enables rapid change to comply with new circumstances that are commonly encountered in contemporary business. By expanding beyond the core organization, a need to monitor performance is needed. Some of the key measures of effective SCM include cost, service, productivity, use of assets, and quality. This is often implemented through monitoring customer perceptions, and identifying best practices as benchmarks to evaluate supply chain performance.

Supply Chain Information Systems

Many software applications are available for each step in the supply chain process. Many vendors specialize in particular steps supporting part of any one of the six elements given earlier. Each supply chain organization will find that they are best served by various combinations of these software products. Furthermore, as technology evolves, new software is developed to serve specific needs as information systems continue to evolve.

A SCM stream can be divided into three main streams: product, information, and finances.

• Product—Goods moving from sources through manufacturing processes and ultimately on to a customer, to include services such as customer returns.

• Information—Transmitting orders and updating delivery status.

• Financial—Credit terms, payment schedules, shipment, and contractual relationships.

Because of advances in manufacturing and distribution systems, the cost of developing new products and services is dropping and time to market is decreasing. This has resulted in increasing demand, local and global competition, and increasing strain on supply chains. SCM software links suppliers to databases that show forecasts, current inventory, shipping, or logistics timeframes within the customer organization. By giving this access to suppliers, they can better meet their customers’ demands. For example, the supplier can adjust shipping to make certain that their customers have the inventory necessary to meet their customers’ needs. They also can monitor unexpected supply chain disruptions to organize alternative routing. Suppliers can download forecasts into their own manufacturing systems to automate their internal processes as well.

Planning applications and execution applications are the two primary types of SCM software:

• Planning applications are capable of generating improved plans through use of mathematical algorithms.

• Execution applications enable tracing goods, managing materials, and exchanging financial information.

A number of supply chain systems have evolved over the decades. The first was materials requirements planning (MRP). This was extended to include planning schedules (often labeled MRP-II). Enterprise resource planning (ERP) systems seek to integrate all organizational information systems...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Abstract
• Contents
• Chapter 1: Supply Chain Information Systems
• Chapter 2: Development of ERP and SCM
• Chapter 3: Supply Chain Management Software Option
• Chapter 4: Business Process Reengineering in Supply Chains
• Chapter 5: System Selection
• Chapter 6: Supply Chain Software Installation Project Management
• Chapter 7: Recapitulation
• Notes
• References
• Index
• Ad page
• Backcover