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OME752
SUPPLY CHAIN MANAGEMENT
Department: CSE
Batch/Year : 2020-24/IV
Created by : Ms. M. Raja Suguna ,Assistant Professor
Ms.D.Lekha, Assistant Professor
Table of Contents
Unit 5 SUPPLY CHAIN AND INFORMATION TECHNOLOGY 9

1. The role IT in supply chain

2. The supply chain IT frame work

3. Customer Relationship Management

4. Internal supply chain management

5. Supplier relationship management

6. Future of IT in supply chain

7. E-Business in supply chain.

Course Objectives
To provide an insight on the fundamentals of supply chain networks, tools and
techniques.

To understand how Managers, take decisions – strategic, tactical and operations

and how they are taken into business.

To focus on coordination and integration among the various partners of the supply
chain to provide greater value to the customers.
Syllabus
OME752 SUPPLY CHAIN MANAGEMENT LTPC3003

Unit I INTRODUCTION 9
Role of Logistics and Supply chain Management: Scope and Importance- Evolution of
Supply Chain - Decision Phases in Supply Chain - Competitive and Supply chain
Strategies – Drivers of Supply Chain Performance and Obstacles.

Unit II SUPPLY CHAIN NETWORK DESIGN 9

Role of Distribution in Supply Chain – Factors influencing Distribution network design

– Design options for Distribution Network - Distribution Network in Practice-Role of
network Design in Supply Chain – Framework for network Decisions.

Unit III LOGISTICS IN SUPPLY CHAIN 9

Role of transportation in supply chain – factors affecting transportations decision –
Design option for transportation network – Tailored transportation – Routing and
scheduling in transportation.

Unit IV SOURCING AND COORDINATION IN SUPPLY CHAIN 9

Role of sourcing supply chain supplier selection assessment and contracts- Design
collaboration - sourcing planning and analysis - supply chain co-ordination - Bull
whip effect – Effect of lack of co-ordination in supply chain and obstacles – Building
strategic partnerships and trust within a supply chain.

Unit V SUPPLY CHAIN AND INFORMATION TECHNOLOGY 9

The role IT in supply chain- The supply chain IT frame work Customer Relationship
Management – Internal supply chain management – supplier relationship
management – future of IT in supply chain – E-Business in supply chain.
Course Outcomes
CO# COs K Level
CO1 Understand fundamental supply chain management concepts. K2

CO2 Understand the design factors and various design options of K2

distribution networks in industries
CO3 Understand the framework of supply chain networks and functions K2

CO4 Understand the foundational role of logistics as it relates to K2

transportation and warehousing.
CO5 Understand the various sourcing decisions in supply chain K2

CO6 Understand the supply chain management in IT industries K2

PO PO PO PO PO PO PO PO PO PO PO PO PSO PSO PSO

CO #
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
CO1 2 3 3 3

CO2 1 2 3 3 3

CO3 2 3 3 3

CO4 1 2 3 3 3

CO5 1 2 3 3 3

CO6 1 1 1 3
UNIT V : SUPPLY CHAIN AND INFORMATION TECHNOLOGY 9

The role IT in supply chain- The supply chain IT frame work Customer Relationship
Management – Internal supply chain management – supplier relationship management

– future of IT in supply chain – E-Business in supply chain.

Session Mode of Referenc

Topics to be covered
No. delivery e
1 The role IT in supply chain PPT 1
2 The supply chain IT frame work PPT 1
3 Customer Relationship Management PPT 1
4 Internal supply chain management PPT 1
5 Supplier relationship management PPT 1
6 Future of IT in supply chain PPT 1
7 E-Business in supply chain PPT 1
8 E-Business in supply chain PPT 1
9 Risk Management in IT PPT 1
CONTENT BEYOND THE SYLLABUS : - Risk Management in IT
NPTEL/OTHER REFERENCES / WEBSITES : -

Sunil Chopra, Peter Meindl and Kalra, ‖Supply Chain Management, Strategy, Planning,
and Operation―, Pearson Education, 2010.

NUMBER OF PERIODS : Planned: 9 Actual:

DATE OF COMPLETION : Planned: 10.11.2023 Actual:

REASON FOR DEVIATION (IF ANY) :

CORRECTIVE MEASURES :

Signature Of The Faculty Signature Of HoD

Activity Based Learning
Seminar Presentation On:

Q. Question CO K Level
No. Level
Supply chain, distribution and transportation network CO1,C
1 O2,CO K4
of Flipkart, Amazon and Walmart 3,CO4
Supply chain, distribution and transportation network CO1,C
2 O2,CO K4
of Swiggy 3,CO4
Supply chain, distribution and transportation network CO1,C
3 O2,CO K4
of Toyota and Ford
3,CO4
5.1. THE ROLE OF IT IN A SUPPLY CHAIN

Information is a key supply chain driver because it serves as the glue that allows the
other supply chain drivers to work together with the goal of creating an integrated,
coordinated supply chain. Information is crucial to supply chain performance
because it provides the foundation on which supply chain processes execute
transactions and managers make decisions. Without information, a manager cannot
know what customers want, how much inventory is in stock, and when more
product should be produced or shipped. information provides supply chain visibility,
allowing managers to make decisions to improve the supply chain’s performance.

IT consists of the hardware, software, and people throughout a supply chain that
gather, analyze, and execute upon information. IT serves as the eyes and ears (and
sometimes a portion of the brain) of management in a supply chain, capturing and
analyzing the information necessary to make a good decision. For instance, an IT
system at a PC manufacturer may show the finished goods inventory at different
stages of the supply chain and also provide the optimal production plan and level of
inventory based on demand and supply information.

Using IT systems to capture and analyze information can have a significant impact
on a firm’s performance. For example, a major manufacturer of computer
workstations and servers found that most of its information on customer demand
was not being used to set production schedules and inventory levels. The
manufacturing group lacked this demand information, which essentially forced it to
make inventory and production decisions blindly. By installing a supply chain
software system, the company was able to gather and analyze demand data to
produce recommended stocking levels.
Using the IT system enabled the company to cut its inventory in half, because
managers could now make decisions based on customer demand information rather
than manufacturing’s educated guesses.

Availability and analysis of information to drive decision making is a key to the

success of a supply chain. Companies that have built their success on the availability
and analysis of information include Seven-Eleven Japan, Walmart, Amazon, UPS, and
Netflix. To support effective supply chain decisions, information must have the

following characteristics:

1.Information must be accurate. Without information that gives a true picture

of the state of the supply chain, it is difficult to make good decisions. That is not
to say that all information must be 100 percent correct, but rather that the data
available paint a picture that is at least directionally correct.

2.Information must be accessible in a timely manner. Accurate information

often exists, but by the time it is available, it is either out of date or it is not in an
accessible form. To make good decisions, a manager needs to have up-to-date
information that is easily accessible.

3.Information must be of the right kind. Decision makers need information

that they can use. Often companies have large amounts of data that are not
helpful in making a decision. Companies must think about what information
should be recorded so that valuable resources are not wasted collecting
meaningless data while important data go unrecorded.

4.Information must be shared. A supply chain can be effective only if all its
stakeholders share a common view of the information that they use to make
business decisions. Different information with different stakeholders results in
misaligned action plans that hurt supply chain performance.
Information is used when making a wide variety of decisions about each supply
chain driver, as discussed next.

1.Facility. Determining the location, capacity, and schedules of a facility

requires information on the trade-offs among efficiency and flexibility, demand,
exchange rates, taxes, and so on (see Chapters 4, 5, and 6). Walmart’s suppliers
use the demand information from Walmart’s stores to set their production
schedules. Walmart uses demand information to determine where to place its new
stores and cross-docking facilities.

2.Inventory. Setting optimal inventory policies requires information that includes

demand patterns, cost of carrying inventory, costs of stocking out, and costs of
ordering (see Chapters 11, 12, and 13). For example, Walmart collects detailed
demand, cost, margin, and supplier information to make these inventory policy
decisions.

3.Transportation. Deciding on transportation networks, routings, modes,

shipments, and vendors requires information about costs, customer locations, and
shipment sizes to make good decisions (see Chapter 14). Walmart uses
information to tightly integrate its operations with those of its suppliers. This
integration allows Walmart to implement cross-docking in its transportation
network, saving on both inventory and transportation costs.

4.Sourcing. Information on product margins, prices, quality, delivery lead times,

and so on, are all important in making sourcing decisions. Given sourcing deals
with inter-enterprise transactions, a wide range of transactional information must
be recorded in order to execute operations, even once sourcing decisions have
been made.

5.Pricing and revenue management. To set pricing policies, one needs

information on demand, both its volume and various customer segments’
willingness to pay, and on many supply issues, such as the product margin, lead
time, and availability. Using this information, firms can make intelligent pricing
decisions to improve their supply chain profitability.
Information is crucial to making good supply chain decisions at all three levels of
decision making (strategy, planning, and operations) and in each of the other supply
chain drivers (facilities, inventory, transportation, sourcing, and pricing). IT enables
not only the gathering of these data to create supply chain visibility, but also the
analysis of these data so that the supply chain decisions made will maximize
profitability.

5.2. THE SUPPLY CHAIN IT FRAMEWORK

IT provides access and reporting of supply chain transaction data. More advanced IT
systems then layer on a level of analytics that uses transaction data to proactively
improve supply chain performance. Good IT systems will record and report demand,
inventory, and fulfillment information for Amazon. IT systems that provide analytics
then allow Amazon to decide whether to open new distribution centers and how to
stock them.

The Supply Chain Macro Processes

The emergence of supply chain management has broadened the scope across which
companies make decisions. This scope has expanded from trying to optimize
performance across the division, to the enterprise, and now to the entire supply
chain. This broadening of scope emphasizes the importance of including processes
all along the supply chain when making decisions. From an enterprise’s perspective,
all processes within its supply chain can be categorized into three main areas:

• Processes focused downstream,

• Processes focused internally

• Processes focused upstream.

We use this classification to define the three macro supply chain as follows:
• Customer relationship management (CRM). Processes that focus on

downstream interactions between the enterprise and its customers.

• Internal supply chain management (ISCM). Processes that focus on internal

operations within the enterprise. Note that the software industry commonly calls
this ―supply chain management‖ (without the word ―internal‖), even though the
focus is entirely within the enterprise. In our definition, supply chain management
includes all three macro processes, CRM, ISCM, and SRM.

• Supplier relationship management (SRM). Processes that focus on upstream

interactions between the enterprise and its suppliers.

All operation and analytics related to the macro processes rest on the transaction
management foundation (TMF), which includes basic enterprise resource planning
(ERP) systems (and its components, such as financials and human resources),
infrastructure software, and integration software. TMF software is necessary for the
three macro processes to function and to communicate with one another. The
relationship between the three macro processes and the transaction management
foundation can be seen in Figure 5.1.

Figure 5.1. The Macro Processes in a Supply Chain

Why Focus on the Macro Processes?
As the performance of an enterprise becomes more closely linked to the
performance of its supply chain, it is crucial that firms focus on these macro
processes. ood supply chain management is not a zero-sum game in which one
stage of the supply chain increases profits at the expense of another. Good supply
chain management instead attempts to grow the supply chain surplus, which
requires each firm to expand the scope beyond internal processes and look at the
entire supply chain in terms of the three macro processes to achieve breakthrough
performance. A good supply chain coordinates all the macro processes across all
stages.

Apple is an example of a company that has coordinated all macro processes to

introduce and sell blockbuster products such as the iPad2. Apple has been very
successful in its interactions with customers both in designing products that meet
their needs but also in operating Apple retail as a successful and profitable endeavor.
All its products are designed in-house but manufactured by a third party. Despite
this, Apple managed the release of the iPad2 to effectively meet huge demand.
Strong coordination across all the macro processes has been fundamental for the
level of success achieved by Apple.

5.3 Customer Relationship Management

The CRM macro process consists of processes that take place between an
enterprise and its customers downstream in the supply chain. The goal of the CRM
macro process is to generate customer demand and facilitate transmission and
tracking of orders. Weakness in this process results in demand being lost and a poor
customer experience because orders are not processed and executed effectively.
The key processes under CRM are as follows:

•Marketing. Marketing processes involve decisions regarding which customers to

target, how to target customers, what products to offer, how to price products, and
how to manage the actual campaigns that target customers.
Good IT systems in the marketing area within CRM provide analytics that improve
the marketing decisions on pricing, product profitability, and customer profitability,
among other functions.

•Sell. The sell process focuses on making an actual sale to a customer. The sell
process includes providing the sales force with the information it needs to make a
sale and then to execute the actual sale. Executing the sale may require the
salesperson to build and configure orders by choosing among a variety of options
and features. The sell process also requires such functionality as the ability to quote
due dates and access information related to a customer order.

Good IT systems support sales force automation, configuration, and personalization

to improve the sell process.

•Order management. The process of managing customer orders as they flow

through an enterprise is important for the customer to track his order and for the
enterprise to plan and execute order fulfillment. This process ties together demand
from the customer with supply from the enterprise.

Good IT systems enable visibility of orders across the various stages that an order
flows through before reaching the customer.

•Call/service center. A call/service center is often the primary point of contact

between a company and its customers. A call/service center helps customers place
orders, suggests products, solves problems, and provides information on order
status.
Good IT systems have helped improve call/service center operations by
facilitating and reducing work done by customer service representatives and by
routing customers to representatives who are best suited to service their request.

Amazon has done an excellent job of using IT to enhance its CRM process.
The company customizes the products presented to suit the individual customer
(based on an analysis of customer preferences from past history and current clicks).
Quick ordering is facilitated by systems that allow one-click orders. The order is then
visible to the customer until it is delivered. In the rare instances when a customer
uses the call center, systems are in place to support a positive experience including
offering a callback in case the call center is heavily loaded.

The five largest CRM software providers in 2008 (as reported by Gartner)
were SAP (22.5 percent), Oracle (16.1 percent), Salesforce.com (10.6 percent),
Microsoft (6.4 percent), and Amdocs (4.9 percent).

5.4. Internal Supply Chain Management

ISCM is focused on operations internal to the enterprise. ISCM includes all

processes involved in planning for and fulfilling a customer order. The various

processes included in ISCM are as follows.

•Strategic planning. This process focuses on the network design of the supply

chain.
•Demand planning. Demand planning consists of forecasting demand and
analyzing the impact on demand of demand management tools such as pricing
and promotions.

•Supply planning. The supply planning process takes as an input the demand
forecasts produced by demand planning and the resources made available by
strategic planning, and then produces an optimal plan to meet this demand.
Factory planning and inventory planning capabilities are typically provided by
supply planning software.

•Fulfillment. Once a plan is in place to supply the demand, it must be executed.

The fulfillment process links each order to a specific supply source and means of
transportation. The software applications that typically fall into the fulfillment
segment are transportation and warehousing applications.

•Field service. Finally, after the product has been delivered to the customer, it
eventually must be serviced. Service processes focus on setting inventory levels
for spare parts as well as scheduling service calls. Some of the scheduling issues
here are handled in a similar manner to aggregate planning, and the inventory
issues are the typical inventory management problems.

Given that the ISCM macro process aims to fulfill demand that is
generated by CRM processes, there needs to be strong integration between the
ISCM and CRM macro processes. When forecasting demand, interaction with CRM
is essential, as the CRM applications are touching the customer and have the
most data and insight on customer behavior. Similarly, the ISCM processes should
have strong integration with the SRM macro process. Supply planning, fulfillment,
and field service are all dependent on suppliers and therefore the SRM processes.
It is of little use for your factory to have the production capacity to meet
demand if your supplier cannot supply the parts to make your product. Order
management, which we discussed under CRM, must integrate closely with
fulfillment and be an input for effective demand planning. Again, extended supply
chain management requires that we integrate across the macro processes.

Successful ISCM software providers have helped improve decision making within
ISCM processes. Good integration with CRM and SRM, however, is still largely
inadequate at both the organizational and software levels. Future opportunities
are likely to arise partly in improving each ISCM process, but even more so in
improving integration with CRM and SRM.

Like CRM, today's ISCM landscape consists of three categories-the former

best-of-breed winners, the best-of-breed start-ups, and the ERP players. The ERP
players dominate this segment, although this was not always the case. There
were two best-of-breed winners, i2 Technologies and Manugistics, which were
ISCM pioneers and basically built the category. They showed the power of IT in
supply chain management. However, they grew too quickly and spread their
product lines across too many products, causing them to lose focus. This allowed
the ERP players to improve their functionality relative to the best-of-breed players
and eventually to take the supply chain leadership role away from them. Today,
these ERP players are the only large players in supply chain IT. Manugistics, i2,
and some start-ups still exist, but the landscape looks to be dominated by SAP
and Oracle for the foreseeable future.
5.5 Supplier Relationship Management
Supplier Relationship Management SRM includes the processes that are
focused on the interaction follows:

Design collaboration: Between the enterprise and suppliers that are upstream
in the supply chain. There is a natural fit between SRM processes and the ISCM
processes, as integrating supplier constraints is crucial when creating internal
plans. The major SRM processes are as

This software aims to improve the design of products through

collaboration between manufacturers and suppliers. The software facilitates the joint
selection (with suppliers) of components that have positive supply chain
characteristics such as ease of manufacturability or commonality across several end
products. Other design collaboration activities include the sharing of engineering
change orders between a manufacturer and its suppliers. This eliminates the costly
delays that occur when several suppliers are designing components for the
manufacturer’s product concurrently.

Source:
Sourcing software assists in the qualification of suppliers and helps in
supplier selection, contract management, and supplier evaluation. An important
objective is to analyze the amount that an enterprise spends with each supplier,
often revealing valuable trends or areas for improvement. Suppliers are evaluated
along several key criteria, including lead time, reliability, quality, and price. This
evaluation helps improve supplier performance and aids in supplier selection.
Contract management is also an important part of sourcing, as many supplier
contracts have complex details that must be tracked (such as volume-related price
reductions). Successful software in this area helps analyze supplier performance and
manage contracts.
Negotiate:
Negotiations with suppliers involve many steps, starting with a request for
quote (RFQ). The negotiation process may also include the design and execution of
auctions. The goal of this process is to negotiate an effective contract that specifies
price and delivery parameters for a supplier in a way that best matches the
enterprise’s needs. Successful software automates the RFQ process and the
execution of auctions.

Buy:
―Buy‖ software executes the actual procurement of material from
suppliers. This includes the creation, management, and approval of purchase orders.
Successful software in this area automates the procurement process and helps
decrease processing cost and time.

Supply collaboration:
Once an agreement for supply is established between the enterprise and a
supplier, supply chain performance can be improved by collaborating on forecasts,
production plans, and inventory levels. The goal of collaboration is to ensure a
common plan across the supply chain. Good software in this area should be able to
facilitate collaborative forecasting and planning in a supply chain.

Significant improvement in supply chain performance can be achieved if

SRM processes are well integrated with appropriate CRM and ISCM processes. For
instance, when designing a product, incorporating input from customers is a natural
way to improve the design. This requires inputs from processes within CRM.
Sourcing, negotiating, buying, and collaborating tie primarily into ISCM, as the
supplier inputs are needed to produce and execute an optimal plan. However, even
these segments need to interface with CRM processes such as order management.
Again, the theme of integrating the three macro processes is crucial for improved
supply chain performance.
The SRM space is highly fragmented in terms of software providers and
not as well defined as CRM and ISCM. Among the larger players, SAP and Oracle
have SRM functionality in their software. There are many niche players, however,
who focus on different aspects of SRM. All three macro processes and their
processes can be seen in Figure 5.1.

Fig. 5.1: The Macro Processes and Their Processes

5.6 The Future of IT in the Supply Chain

At the highest level, we believe that the three SCM macro processes will
continue to drive the evolution of supply chain IT. While there is still plenty of room
to improve the visibility and reporting of supply chain information, the relative focus
on improved analysis to support decision making will continue to grow.
The following three important trends will impact IT in the supply chain:

1. The growth in software as a service (SaaS)

2. Increased availability of real-time data

3. Increased use of mobile technology

SaaS is defined as software that is owned, delivered, and managed
remotely. Salesforce.com is one of the best-known pure SaaS supply chain software
providers (in CRM). Gartner has predicted that SaaS (which comprised about 10
percent of the enterprise software market in 2009) will grow to about 16 percent of
global software sales by 2014. This shift is likely to occur because SaaS provides
lower startup and maintenance costs compared to applications that are deployed
onsite. These factors are particularly important for small and midsized companies.
Traditional enterprise software vendors such as SAP, Oracle, and Microsoft are
increasing the availability of their software using the SaaS model.

The availability of real-time information has exploded in most supply

chains. Whereas current supply chain software is primarily focused on improving
strategy and planning decisions (often at the corporate level) that are revisited
infrequently, significant opportunity exists to devise software that will use real-time
information to help frontline supply chain staff (such as in transportation and
warehousing) make smarter and faster decisions that are revisited frequently. The
opportunity is to design systems that enable rapid insight based on real-time data.

The increased use of mobile technology coupled with real-time information offers
some supply chains an opportunity to better match demand to supply using
differential pricing. An example is an initiative by Groupon titled Groupon Now,
which offers mobile users deals that are time and location specific. Businesses can
improve profitability by offering deals when business is slow at specific locations.
Consumers benefit from getting a deal when and where they want it. Such an
approach is likely to be applicable in many supply chain settings.
5.7 E- Business in Supply Chain
E-Business has emerged as a key enabler to drive supply
chain integration. Businesses can use the Internet to gain global visibility across
their extended network of trading partners and help them respond quickly to
changing customer demand captured over the Internet.

E-business can be loosely defined as a business process that uses the

Internet or other electronic medium as a channel to complete business transactions.
As classified by Geoffrion and Krishnan (2001), e-business consists of three areas:
(1) consumeroriented activity and (2) business-oriented activity supported by (3) the
e-business technology infrastructure. The consumer-oriented activities consist of
business-to-consumer, consumer-to-consumer, and government-to-consumer
activities. The business oriented activities comprise business-to-business, business-
to-government, and government-to-business activities. The technology infrastructure
relates to network infrastructure, network applications, decision technologies, and
software tools and applications. Within this broad definition of e-business activities,
we will restrict our attention mainly to consumer oriented and business-oriented
activities, as well as decision technologies that are employed for supply chain
management.

The Internet has influenced the usage of supply chain models in three ways. First,
the Internet has facilitated increased use of enterprise resource planning (ERP) and
advanced planning and optimization solutions (APS). Second, the ability to obtain
real time information and the access to large computer systems is enabling firms to
develop detailed (high granularity) supply chain models that can be utilized to make
real-time decisions. Last, the Internet has created opportunities to integrate
information and decision making across different functional units, thereby creating a
need for supply chain models that go beyond a business unit to study the extended
enterprise.
This has elevated the role of supply chain models from being decision-
making enablers for a single business unit to being enablers for driving corporate
strategy. Thus, the Internet has greatly elevated the role of supply chain modeling
and analysis within a firm. The advent of e-business has also created several
challenges and opportunities in the supply chain environment. First and foremost,
the Internet has increased the opportunity for consumers to buy products and
services without going to a store. Though the practice of direct selling through
catalogs and phone was in use earlier by a few firms, the Internet has made this
form of sales more significant.

In a direct sales environment, the fulfillment process determines how long

customers will wait between sale and delivery. This has made the back-end
fulfillment process—which mostly depends on supply chain management—extremely
important. Further, in the electronic environment, customer expectations in terms of
quick and timely delivery have also increased. At the same time, the Internet has
opened up opportunities for firms to share information and efficiently coordinate
their activities with other entities in the supply chain.

This has created several new avenues in traditional supply chain areas. For example,
in supplier selection and procurement, firms have to decide if they should join
private or public exchanges or develop highly-integrated supply partnerships. They
need to determine if they should use auction and bidding for contracts and, if so,
which type would be most beneficial. In distribution, they need to decide if the firm
will offer products through the Internet channel and, if so, how this method would
differ from the traditional channel. This raises the question of how the synergies
would be realized in terms of inventory, transportation, and distribution.
Similarly, the availability of real-time information has raised important
questions such as the degree to which information sharing protocol should be
standard or proprietary; the amount and type of information that should be shared
with the rest of the supply chain partners; and the types of collaborative processes
that may be beneficial. The degree of change in issues related to the supply chain
spans a huge spectrum from concepts and issues that have been marginally affected
to a whole set of new issues that have emerged as a result of e-business. First,
several issues related to supply chain management have not necessarily changed in
principle, although e-business may have had an impact on some of their parameters.
For example, to maintain given levels of service, a firm still needs buffer inventory or
buffer capacity. This has not changed as a result of the Internet, although the
uncertainty involved in the decision making may have decreased with the availability
of more information. Similarly, a firm still needs to take into account the interplay
between fixed and variable costs, while making decisions related to procurement or
setting up additional capacity. With the prevalence of the Internet, the firm might
more easily be able to obtain a lower procurement price or salvage excess capacity
through market mechanisms. Next are existing supply chain issues that have
become important as a result of e-business.

For example, leveraging risk-pooling concepts can greatly benefit Internet channels
because products may be stored at fewer locations as compared to a traditional
distribution channel. Amazon.com can store all inventory for the entire U.S. market
in five warehouses as opposed to several hundred retail outlets (hence, stocking
points) that would be needed for similar coverage in the traditional channel.
Similarly, mass customization has gained a lot of momentum with the Internet
because firms can allow customers to interactively specify customizations of their
offerings.
It has become more important for firms to understand how to cope with
customization in an effective manner. Finally, in the last few years, a third category
of issues new to supply chain management has emerged. One example is linking the
dynamic pricing of products to the inventory and capacity decisions. Another is
coordinating Internet and traditional distribution channels in terms of prices as well
as information and product flows. Additionally, the advent of electronic marketplaces
and auctions has opened a whole new set of issues related to procurement and
supplier relationships.
Content Beyond Syllabus
Risk Management in IT
Several risks are associated with the use of IT in the supply chain, and the process
of adding new supply chain capabilities with IT can be fraught with danger. The
larger the change in the IT system, the greater is the risk of a negative impact on
operations. The more ingrained IT becomes in companies, the greater is the risk
that the firm will not be able to function properly if IT suffers a major failure.

The major areas of risk in IT can be divided into two broad categories. The first, and
potentially the greater, is the risk involved with installing new IT systems. During the
process of getting new IT systems running, a firm is forced to transition from the old
processes it used in its operations to the new processes in its IT system. new IT
systems often require employees to operate according to new processes. These may
be difficult to learn, take training to execute correctly, or may even be resisted
outright by employees who prefer the old way of doing business. Getting the entire
organization on board with the changes brought about by a new IT system is
particularly difficult because top management is often not actively involved in
making this transition.

In addition to business process adjustments, tremendous technical hurdles need to

be overcome in getting new IT systems operational. The amount of integration that
needs to take place between disparate systems is often overwhelming. When a firm
switches to a new system without proper integration, the new system is often
unable to perform all that was promised and sometimes even performs worse than
the system it replaced. Even when the employees are bought into the new process
and all the technical hurdles are overcome, it is often a delicate balance to actually
make the transition over to the new system.

The second category of risk is that the more a firm relies on IT to make decisions
and execute processes, the higher is the risk that any sort of IT problem, ranging
from software glitches to power outages to viruses, can completely shut down a
firm’s operations. These are serious risks that a firm must plan to face.
Each of the major risk categories has its own mitigation strategies. With regard to
implementing IT systems, keep three ideas in mind. The first is to install new IT
systems in an incremental fashion rather than in a ―big bang‖ approach. This allows
a firm to limit the damage should things go wrong and to pinpoint problem areas
during the installation process. Second, firms can run duplicate systems to make
sure the new system is performing well. By this, we mean that the firm can keep its
old system running at the same time the new one is running. If the new system
runs into trouble or if the results seem too far off from the old one, the old system
can be utilized as it still exists.

These proposed actions can be monitored to test how the new system will perform
when it is actually activated. Finally, implement only the level of complexity that is
needed. If certain capabilities or added complexities are unnecessary, they should be
left out, as they can often increase the risk of the project without increasing the
potential benefits.

On the operational side, mitigation strategies include data backup systems, systems
running in parallel in case one should suffer a problem, and a range of security
software products that can help keep a company’s systems safe. In addition, picking
systems that have the flexibility to change if need be can be important.
Video Link

Information Technology in The Supply Chain

https://www.youtube.com/watch?v=XUm9fH64hbQ

Supplier Relationship Management

https://www.youtube.com/watch?v=4x8MLrCyFd8
Quiz
1. In order to better serve its customers, a retail store will need to have
information on the:
a) Store inventory level.
b) Past data on customer demand.
c) Supply lead time.
d) Delivery and shipping locations.
e) Store inventory level, customer demand data & supply lead time
Ans: d)

2. Which functional role does IT not play in SCM?

a) Performance measurement and reporting

b) Decision support for supply chain planning

c) Transaction execution

d) Supply chain restructuring

e) Collaboration and coordination

Ans: d)

3. IT in supply chain transaction execution is concerned with:

a) Cooperation and collaboration with suppliers, partners, etc. via the internet.
b) Collection, generation, and storage of vast data and tracking of the same through
automated means.

c) Enabling managers to process and evaluate SCM-related decisions using different

optimization techniques.

d) Measurement of the supply chain performance through data analysis tools.

Ans: b)
4. IT in supply chain decision support is concerned with:
a) Collection, generation, and storage of vast data and tracking of the same through
automated means.

b) Cooperation and collaboration with suppliers, partners, etc. Via the internet.
c) Enabling managers to process and evaluate scm-related decisions using different
optimization techniques.

d) Measurement of the supply chain performance through data analysis tools.

Ans: c)

5. IT in supply chain measurement and reporting is concerned with:

a) Enabling managers to process and evaluate scm-related decisions using different
optimization techniques.

b) Measurement of the supply chain performance through data analysis tools.

c) Collection, generation, and storage of vast data and tracking of the same through
automated means.

d) Cooperation and collaboration with suppliers, partners, etc. Via the internet.

Ans: b).

6. Which of the following cannot be categorized under supply chain

transaction execution?
a) Point of sale tracking system
b) Manufacturing execution system
c) Customer relationship management
d) Inventory management system
e) Warehouse management system

Ans: c).
7. An ERP system falls under:
a) Supply chain transaction execution
b) Supply chain decision support
c) Supply chain collaboration and coordination
d) Supply chain performance measurement and reporting

Ans: a).

8. Which of the following does CPFR fall under?

a) Supply chain transaction execution
b) Supply chain collaboration and coordination
c) Supply chain decision support
d) Supply chain performance measurement and reporting
e) both supply chain collaboration & coordination and supply chain decision support

Ans: b).
9. Which of the following does not characterize ERP II?
a) ERP II crosses all sectors and segments of business, including service,
government and asset-based industries.
b) In an ERP II system, the same information is available across the whole supply
chain to the authorized participants.
c) ERP II enables extended portal capabilities that help an organization involve its
customers and suppliers to participate in the workflow process.
d) ERP II is concerned with optimization of supply chain through
collaboration with trading partners.
e) ERP II systems are monolithic and closed.

Ans: e).
10. DSS in a supply chain helps managers in taking decisions of:
a) Strategic level.
b) Tactical level.
c) Operational level
d) both strategic level and tactical level
e) both strategic, tactical and operational level

Ans: e).
11. Supply chain decision support pertaining to specific products produced
at specific plants in a specific quantity falls under:
a) Supply chain decision support at strategic level.
b) Supply chain decision support at tactical level.
c) Supply chain decision support at operational level.
d) Either at strategic level or at tactical level
e) Neither at strategic, tactical or at operational level

Ans: b).

12. Which of the following does not fall under supply chain measurement
metrics?
a) ERP metrics
b) Transport planning metrics
c) Supply chain planning metrics
d) SRM metrics
e) CRM metrics

Ans: b).

13. Dwell time through supply chain’ is categorized under:

a) Supply chain planning metrics.
b) SRM metrics.
c) Transport planning metrics
d) ERP metrics.
e) CRM metrics.
Ans: a).
14. ‘Cash to cash cycle time’ is categorized under:
a) Supply chain planning metrics.
b) CRM metrics.
c) SRM metrics.
d) ERP metrics.
Ans: d)
15. Which of the following is not a dashboard?
a) Divisional dashboard
b) Process/activity monitoring dashboard
c) Enterprise performance dashboard
d) Data warehouse
e) Ad hoc query capability
Ans: d)
16. For ensuring effective adoption of IT in SCM, a firm should go through
the six stages in which the following sequence?
a) Strategy formulation → Determination of functional requirements → Business
process design → Business case preparation → Implementation → Post-
implementation audit
b) Strategy formulation → Business case preparation → Business process design →
Determination of functional requirements → Implementation → Post-
implementation audit
c) Strategy formulation → Business process design → Determination of functional
requirements → Business case preparation → Implementation → Post-
implementation audit
d) Strategy formulation → Determination of functional requirements → Business
case preparation → Business process design → Implementation → Post-
implementation audit
e) Strategy formulation → Business process design → Business case preparation →
Determination of functional requirements → Implementation → Post-
implementation audit

Ans:c)
17. When the management decides to implement a new system and totally
remove the old one, which of the following approach should be
adopted?
a) Big bang or cold turkey approach
b) Phased approach
c) Parallel approach
d) Pilot approach

Ans: a)

18. The dimension of e-commerce that enables commerce across national

boundaries is called .

a) interactivity
b) global reach
c) richness
d) ubiquity

Ans: b)
19. The primary source of financing during the early years of e-commerce
was .

a) bank loans
b) large retail firms
c) venture capital funds
d) initial public offerings

Ans: c)

20. The source of revenue in a subscription revenue model is

.
a) Fees from advertisers in exchange for advertisements
b) Fees for business referrals
c) Fees from subscribers in exchange for access to content or services
d) Fees for enabling or execution a transaction

Ans: c)
Assignments

Q. Question CO K Level
No. Level
Discuss why the high-tech industry has been the
1 CO6 K4
leader in adopting supply chain IT systems.

Are manufacturers better candidates for IT enablement

2 CO6 K4
than service organizations? Why or Why not?

What are the key advantages that large software

3 CO6 K4
companies, such as the ERP players, provide?
Part-A Questions and Answers
1. How Information is helpful in supply chain? (K1, CO6)
Information is crucial to supply chain performance because it provides the
foundation on which supply chain processes execute transactions and managers
make decisions.

2. List out characteristics of information. (K1, CO6)

• Information must be accurate.

• Information must be accessible in a timely manner.

• Information must be of the right kind

• Information must be shared.

3. How information is used in making decision on supply chain driver
facility ? (K1, CO6)

Determining the location, capacity, and schedules of a facility requires information

on the trade-offs among efficiency and flexibility, demand, exchange rates, taxes,
and so on. Walmart’s suppliers use the demand information from Walmart’s stores to
set their production schedules. Walmart uses demand information to determine
where to place its new stores and cross-docking facilities.

4.How information is used in making decision on supply chain driver

inventory ? (K1, CO6)

Setting optimal inventory policies requires information that includes demand

patterns, cost of carrying inventory, costs of stocking out, and costs of ordering.

5. How information is used in making decision on supply chain driver

transport ? (K1, CO6)
Deciding on transportation networks, routings, modes, shipments, and vendors
requires information about costs, customer locations, and shipment sizes to make
good decisions.
6.How information is used in making decision on supply chain driver
sourcing? (K1, CO6)

Information on product margins, prices, quality, delivery lead times, and so on, are
all important in making sourcing decisions. Given sourcing deals with inter-enterprise
transactions, a wide range of transactional information must be recorded in order to
execute operations, even once sourcing decisions have been made.

7. What are the three macro supply chain process? (K1, CO6)

• Customer relationship management (CRM).

• Internal supply chain management (ISCM).

• Supplier relationship management (SRM).

8. What is customer relationship management ? (K1, CO6)

Processes that focus on downstream interactions between the enterprise and its
customers.

9. What is internal supply chain management ? (K1, CO6)

Processes that focus on internal operations within the enterprise. Note that the
software industry commonly calls this ―supply chain management‖, even though the
focus is entirely within the enterprise. In our definition, supply chain management
includes all three macro processes, CRM, ISCM, and SRM.

10. What is supplier relationship management ? (K1, CO6)

Supplier relationship management (SRM). Processes that focus on upstream in

teractions between the enterprise and its suppliers.

11. What is Transaction Management Foundation? (K1, CO6)
All operation and analytics related to the macro processes rest on the transaction
management foundation (TMF), which includes basic enterprise resource planning
(ERP) systems (and its components, such as financials and human resources),
infrastructure software, and integration software. TMF software is necessary for the
three macro processes to function and to communicate with one another.

12.Draw the relationship between the three macro processes and the
transaction management foundation (K1, CO6)

13. How the function of three macro process affects the supply chain
performance ? (K1, CO6)
Good supply chain management instead attempts to grow the supply chain surplus,
which requires each firm to expand the scope beyond internal processes and look at
the entire supply chain in terms of the three macro processes to achieve
breakthrough performance. A good supply chain coordinates all the macro processes
across all stages.
12. List out various processes included in ISCM (K1, CO6)
• Strategic planning.
• Demand planning.
• Supply planning.
• Fulfillment.
• Field service.

13. What is Strategic planning ? (K1, CO6)

This process focuses on the network design of the supply chain. Key decisions
include location and capacity planning of facilities.
14. What is Demand planning? (K1, CO6)
Demand planning consists of forecasting demand and analyzing the impact on
demand of demand management tools such as pricing and promotions.

15. What is Supply planning ? (K1, CO6)

The supply planning process takes as an input the demand forecasts produced by
demand planning and the resources made available by strategic planning; then it
produces an optimal plan to meet this demand. Factory planning and inventory
planning capabilities are typically provided by supply planning software.

16.What is Fulfillment ? (K1, CO6)

Once a plan is in place to supply the demand, it must be executed. The fulfillment
process links each order to a specific supply source and means of transportation.
The software applications that typically fall into the fulfillment segment are
transportation and warehousing management applications.

17. What is Field service ? (K1, CO6)

After the product has been delivered to the customer, it eventually must be serviced.
Service processes focus on setting inventory levels for spare parts as well as
scheduling service calls. Some of the scheduling issues here are handled in a similar
manner to aggregate planning, and the inventory issues are the typical inventory
management problems.
18. What is Supplier Relationship Management? (K1, CO6)
Ans. Supplier Relationship Management SRM includes the processes that are focused
on the interaction between the enterprise and suppliers that are upstream in the
supply chain.

19. List the major SRM processes. (K1, CO6)

Ans. The major SRM processes are as follows:

Design collaboration

Source

Negotiate

Buy

Supply collaboration
20.What are the three important trends that impact IT in the supply
chain? (K1, CO6)

Ans. The following three important trends will impact IT in the supply chain:

The growth in software as a service (SaaS)

Increased availability of real-time data

Increased use of mobile technology

21. How the Suppliers are evaluated? List them. (K1, CO6)
Ans. Suppliers are evaluated based on following key criteria. They are Lead Time,
Reliability, Quality and Price. This evaluation helps improve supplier performance
and aids in supplier selection.
22. Define SaaS. (K1, CO6)
SaaS is defined as software that is owned, delivered, and managed
remotely. Salesforce.com is one of the best-known pure SaaS supply chain software
providers (in CRM). Gartner has predicted that SaaS (which comprised about 10
percent of the enterprise software market in 2009) will grow to about 16 percent of
global software sales by 2014. This shift is likely to occur because SaaS provides
lower startup and maintenance costs compared to applications that are deployed
onsite. These factors are particularly important for small and midsized companies.
Traditional enterprise software vendors such as SAP, Oracle, and Microsoft are
increasing the availability of their software using the SaaS model.

23. What is e business in supply chain? (K1,CO6)

Businesses can use the Internet to gain global visibility across their
extended network of trading partners and help them respond quickly to changing
customer demand captured over the Internet.

24. Define Customer Relationship Management (CRM).(K1,CO6)

The CRM macro process consists of processes that take place between an
enterprise and its customers downstream in the supply chain. The goal of the CRM
macro process is to generate customer demand and facilitate transmission and
tracking of orders. Weakness in this process results in demand being lost and a poor
customer experience because orders are not processed and executed effectively.

25. Mention the key processes under CRM. (K1,CO6)

The Key Processes under CRM are (i) Marketing (ii) Sell (iii) Order
Management (iv) Call/Service Center.

26. Mention the largest CRM Software providers. (K1,CO6)

The five largest CRM software providers are SAP , Oracle , Salesforce.com,
Microsoft, and Amdocs.
Part-B Questions
Q. No. Questions CO Level K level

1 What is Supplier Relationship Management? Explain CO6 K2

the major SRM processes in detail with diagram.
2 Explain in detail about the important trends that will CO6 K2
impact IT in the supply chain.
3 Explain in detail about E business in supply chain. CO6 K2

4 Discuss in detail about customer Relationship CO6 K2

Management.
5 Explain the role of IT in Supply Chain Management CO6 K2
Supportive Online Courses

Sl. Courses Platform

No.
1 Supply Chain Management Specialization Coursera

2 Supply Chain Logistics Coursera

3 Supply Chain Operations Coursera

4 Supply Chain Planning Coursera

5 Supply Chain Sourcing Coursera

6 Supply Chain Management SWAYAM

Text & Reference Books

Sl. Book Name & Author Book

No.
1 Sunil Chopra, Peter Meindl and Kalra, Supply Chain Text Book
Management, Strategy, Planning, and Operation, Pearson
Education, 2010.
2 Jeremy F.Shapiro, Modeling the Supply Chain, Thomson Reference
Duxbury, 2002. Book
3 Srinivasan G.S, Quantitative models in Operations and Supply Reference
Chain Management, PHI, 2010 Book
4 David J.Bloomberg , Stephen Lemay and Joe B.Hanna, Reference
Logistics, PHI 2002. Book
5 James B.Ayers, Handbook of Supply Chain Management, Reference
St.Lucle press, 2000. Book
Thank you

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