Supply Chain Management

Information Technology
and the Supply Chain

17-1
Role of Information Technology
in 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

17-2
Characteristics of Useful
Supply Chain Information
 Accurate
 Accessible in a timely manner
 The right kind
 Provides supply chain visibility

17-3
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

17-4
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.

17-5
Role of Information Technology
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

17-6
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

17-7
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

17-8
Macro Processes in a Supply Chain
(Figure 16.1)

Supplier Internal Customer

Transaction Management Foundation (TMF)

17-9
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

17-10
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
17-11
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
17-12
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

17-13
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

17-14
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?

17-15