Adobe Scan 08 Apr 2023
Adobe Scan 08 Apr 2023
INFORMATION
TECHNOLOGY FOR SUPPLY
CHAIN MANAGEMENT
Learning Objectives
After studying this chapter, you will be able to understand:
Role of Information Technology in Supply Chain Management
Benefits of IT in SCM and its importance
Various IT solutions available to transform supply chain
Invoice
Suppliers' Intermal
Buyer's System
Internal System
The most common documents exchanged via EDI are purchase orders, invoices and
advance ship notices. For these documents a standard format must be used so that the computer
will be able to read and understand the document. The exchange of EDI documents is typically
between two different companies, referred to as business partners or trading partners.
" How Does EDI Work?
There are three steps to sending EDi documents - Prepare the documents, Translate the
documents into EDI format and then Transmit the EDIdocuments to your partner.
(1) Prepare the Documents to be Sent: The first step is to collect and organise the
data. For example, instead of printing a purchase order your systen creates an
electronic file with the necessary information to build an EDI document. The sources
of data and the methods available to generate the electronic documents can include:
Human data entry via screens
* Exporting Pc-based data from spreadsheets or databases
Reformatted electronic reports into data files
* Enhancing existing applications to automatically create output files that are ready
for translation into an EDI standard.
Purchasing application software that has built-in interfaces for EDI fles.
(2) Translate the Documents into EDI Format: The next step is to feed your
electronic data through translator software to convert your internal data format into
the EDl standard format using the appropriate segments and data elements. You can
purchase EDItranslation software that you manage and maintain on your premises.
This requires specialized mapping enterprise in order to define how your internal data
is to be mapped (i.e. correlated) to the EDI data.
Information Technology for Supply Chain Management 113
2. Translate the
EDI
EDI documents
Network EDI
Translator into EDI
format Service Provider
Translator
C o m m u n i c a t iV
o ni a
Benefits of EDI
Greater effectiveness
Gives competitive advantage
Helps to keep customers happy
3 Leads to an extension of buying/selling centres
Make relationships stronger
3 Leads to co-operation at industrial level
* Supplements other types of communication
3 Reduces transaction cost and time
Increased accuracy
114 Supply Chain Management
Optimized inventory
Improved Decision making
Enterprise Resource Planning (ERP)
ERP is the integrated management of main business processes often in real-tirne and
mediated by software and technology. ERP is usually referred lo as a category of busines5
management software-typically asuite of integrated applications--that an organisation can se
to collect, store, manage and interpret data from these many business activities.
ERP provides and integrated and continuously updated vlew of core business processes
using conmmon databases maintained by adatabase management system. ERP systems track
business resourcescash, raw materials, production capacity and the status of business
commodities: orders, purchase orders and payroll. The applications that make up the systern
share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that
provide the data. ERP facilitates information flow between all business functions and
management connections to outside stakeholders. In ERP system, all departments have their
Own systems but through this system departments can share their information.
Financial
Applications
S Sales and
Distribution
Central Database Manufacturing
M Applications
Service
E Applications
R
R
S Inventory
Management
Human resource
management
Executive Information
Project Management
System
Fnancial consolidation
General Ledger
Purchasing
Quality Management
Profitability analysis
Shipping
Standard costing Vendor Evaluation
Benefits of ERP
Focused IT costs
o Total visibility
* Improved Reporting and planning
Complete customization
* Improved Efficiency
Customer Service
Data Security & Quality
o Improved Collaboration and Workflow
" Standardized Business Processes
Improved Supply Chain Management
"Disadvantages
High cost of ERP software
High cost of implementation and Maintenance
* Difficulty in customization according to your need
* Complexity and Difficult to use.
Intranet/Extranet and Internet
In global manufacturing environments, competitive pressures are ever increasing. So,
systems are required that document processes and distribute factory information. Internet is a
global system of interconnected computer networks that use standard internet protocol suit to
link several devices worldwide. It is an international network of networks, linked by optical,
wireless and electronicnetwork technologies which consist of busines,public, educational and
government networks. It carries an extensive range of information, resources and services. It
utilises:
* IP Addressing scheme
Transmission Control Protocol
* Peer to Peer (P2P) networks for file sharing and telephony.
116 Supply Chain Managemert
The main reasons for its establishment was to transmit data, share
communicate remotely.
resources and
An Extranet is a private network that use Internet technology and the
telecommunication system to securely share part of a business's information or operationspublic
with
suppliers, vendors, partners, customers or other businesses. It has also been described:sa"State
of Mind" in which the internet is perceived as away to do business with other companies as well
as to sellproducts to customers.
It is an extension of info system of the company to its partners outside. It uses intern ot
protocols to link intranets over the public internet.
An Intranet is a private network that is contained within an enterprise. It may consist of
manuy interlinked local area networks and also use leased lines in the wide area netuicr
Typically an intranet includes connections through one or more gateway computers to the
outside internet. The main purpose of an intranet is to share company's information and
Computing resources among employees. An intranet can also be used to facilitate working in
groups and for teleconferences. When intranet is made accessible to customer, partners,
suppliers or others outside the company, it becomes an extranet.
" Benefits
1. Better collaboration by means of real-time communication of information between
functional area of the firm, suppliers, customers, third party logistical servic
providers, etc.
2. Reduced transaction costs, communication costs and response time across the supply
chain.
3. Bringing about a proper balance between demand and supply resulting into lower
inventory level and prevention of stock-out position.
4. Enhanced supply chain relationships.
5. Competitive advantage.
Data Warehouse or Data Mining
Data warehousing isa technique for collecting and managing data from varied sources to
provide meaningful business insights. It is a blend of technologies and components which allows
the strategic use of data. Data warehouse is electronic storage of a large amnount of information
by abusiness which is designed for query and analysis instead of transaction processing. It is a
process of transforming data into information and making it available to users for analysis. Data
Mining is looking for hidden, valid and potentially useful patterns is huge data sets.The insights
extracted via Data Mining can be used for marketing, trend detection and scientific discovery, etc.
Why use Data Mining?
* Establish relevance and relationships amongst data.
* Business can make informed decisions quickly.
nformation Technology for Suppy Chain Management 117
ISBN 855267869-4
qll788 56278L91
In terms of logistics supply chain management, barcode technology can be applied tet
allaspects of product production to finished product offine, sales, transportation, warehousiy
retail and other links to facilitate convenient and quick management. Barcode technology like d
link, connects the information that occurs at all stages of the life of the product. The barcode
technology is widely used in the logistics industry, which is main reflected in:
Information Technology for Supply Chain Management 119
Production Management
Sales Information System
Warehouse management
Inventory management
Repository management
< Single piece management of goods
Sorting management
For decades, barcodes were scarcely used outside of retail point of sale systems. Now the
technology is nearly applicable across the industries and points along supply chains. The
information stored on both 1D(linear) and 2D(such as QR codes) barcodes helps businesses
identify inventory in a timely and efficient manner, with markedly fewer errors than seen in
manual systems. As long as the businesses along the Supply Chain all have access to barcode
creating and scanning technology, information about a product can be seamlessly integrated
and tracked throughout its journey into hands of a paying customer.
RFID (Radio-Frequency ldentification)
RFID is the use of radio waves to read and capture information stored on a tag attached to
an object. Atag can be read from up to several feet away and does not need to be within direct
line-of-sight of the reader to be tracked.
RFID uses electromagnetic fields to automatically identify and track tags attached to a
product. The tagcontains electronically saved information. Passive tags collect energy from a
nearby RFID reader's interrogating radio waves. Active tags have a local power source (such as a
battery) and may operate hundreds of meters from the RFID reader. Unlike a barcode, the tag
need not be within the line of sight of the reader, so it may be embedded in tracked object, RFID
is one method of automatic ldentification and data capture.
RFID tags are used in many industries. For example, an RFID tag attached to an
automobile during production can be used to track its progress through the assembly line. RFID
tagged pharmaceuticals can be tracked through warehouses. Tags can also be used in shops to
expedite checkout, and to prevent theft by customers and employees.
" Advantages
1. Information about movement of materials is available real time.
2. Theft of expensive materials is controlled.
3. Eficient supply chain policies.
120
Supply Chain Management
Antenna
Tag or
Transponder
Computer
R.F.I.D. System
Questtene
. Short Answer Type Questions
1. What are the benefits of Interorganisational information system?
2. Write a short note on Electronic Data Interchange.
3. Write a short note on Enterprise Resource Planning.
4. Write a short note on Data Mining.
5. What do you mean by E-procurement?
6. What is Barcoding Technology?
7. What is Radio Frequency ldentification (RFID)?
8. Writea short note on Imaging.
I. Long Answer Type Questions
1. Howsupplychain management has developed due to Information Technology? What
are the benefits of Interorganisational information system?
2. What are the various IT Solutions which assist Supply Chain Management?
3. What are the recent developments in Supply Chain Management?
4. Information Technology has helped in development of Supply Chain Management
substantially. Explain any three IT solution which have influenced Supply Chain
Management.