Table of Content

No.

Part: One

Part: Two

Part: Three

1|Page

Topic

Page No.

Executive Summary

02

Objective of the Report

03

Scope

03

Methodologies

03

Limitation

03

Information system

04

Introduction

04

Information Technology

05

IS and SCM

06

Supply chain management

07

Developments in supply chain management

08

Supply Chain Models

12

Options for restructuring supply chain

13

E-supply chain management

16

IS infrastructure for supply chain management

19

Supply chain process:

20

Information and supply chain management

24

Supply Chain Management Application

25

Supply chain performance measurement

25

Demand driven supply chain:

26

Systems as planned organizational change

27

Strategic analysis or critical success factors

29

Demand planning & Supply Planning

31

The concept

32

The demand planning

33

The supply planning

35

Conclusion

36

Bibliography

37

EXECUTIVE SUMMARY
Supply chain concept is extended to the activities started from the raw materials suppliers
through the organization to the end consumer. Once thought only as the Physical Distribution
Management (PDM), that is the logistics management, has now been the part of Enterprise
Resources Planning (ERP). From a set of activities is now considered a part, module, of an
integrated system.

There has been a change in supply chain management thinking from a push oriented supply
chain that emphasizes distribution of a product to passive customers to a pull-oriented supply
chain that utilizes the supply chain to deliver value to customers who are actively involved in
product and service specifications.

Electronic communications have played a major role in facilitating new models of supply chain
management. Technology applications that have facilitated supply chain management are the Email, Intranets, Extranets, Electronic Data Interchange (EDI) and lately interfacing of ERP
system with B2B intermediary sites or Exchanges.

Over competition in the industry and the cost leadership approach have been making the pace of
change a bit slower and they are still being led by the existing system, we can say legacy system.
They still maintain a good amount of safety level that cost time and hazards. But we see some
improvement in database management that works in downstream arena is helping them a lot.

Since the market driving force is the marketing to doctors and chemist, any sophisticated system,
in their words, is only contributing to curtailed profit. But some part of the industry is doing
better in quality and excellence in export while others whose market share are inside the
boundary are adjusting themselves to the situation.

2|Page

Objective of the report

General objective is to see that how an organization cope with the information system to
effectively make decisions and operate functional activities. Assess the level of importance of
supply chain management of the company and also to determine how well the company meet up
the compliance of information system.

Scope
The scope of this report is limited to the overall description of the company, their information
system-hardware, software & Information technology configuration, information system
planning, supply chain management, their demand planning and supply planning.

Methodologies
In this study, exploratory research was undertaken to gain insights and understanding of their
system and for preparing the assignment. To prepare this term paper, we have collected
information from different sources: company personnel, things provided by the organization,
internet searching and our peer group. Some information, which was not available from any of
the sources, was assumed. After that a more comprehensive conclusive research was undertaken
to fulfill the main purpose of the study.

Limitations of the study

Delays in getting the necessary materials to collect information from different sources
Large-scale analysis was not possible due to constraints of data
Large-scale analysis was not possible due to constraints of time
Some parts on the report were written from individuals perception and may vary from
person to person, thus made hypothetically.
Information provided by the concerned organization was not satisfactory
Some of the internal information is difficult to get

3|Page

Information Systems
Introduction
An entirely new internet business culture is emerging with profound implication for the conduct
of business. We can see this everyday by observing how businesspeople work using high-speed
internet connections for e-mail & information gathering, portable computers connected to
wireless networks, cellular telephones are connected to the internet, and hybrid handheld devices
delivering phone, Internet, & computing power to an increasingly mobile and global workforce.

Information system (IS) can be defined technically as a set of interrelated components that
collect (or retrieve), process, store, and distribute information to support decision making and
control, information systems may also help managers and workers analyze problems, visualize
complex subjects and create new products.

By information we mean data that have been shaped into a form that is meaningful and useful to
human beings. Data in contrast, are streams of raw facts representing events occurring in
organization or the physical environment before they have been organized and arranged into a
form that people can understand and use.

Three activities in an information system produce the information that organizations need to
make decisions, control operation, analyze problems and create new products or services. These
activities are input, processing and output.
Input captures or collects raw data from within the organization or from its external
environment.
Processing converts this raw input into a more meaningful form.
Output transfers the processed information to the people who will use it or to the activities for
which it will be used.

4|Page

Information system can be both formal and informal. Informal information systems such as
office gossip networks rely on unstated rules of behavior. There is no agreement on what is
information or on how it will be stored and processed. Formal information systems are
structured, they operate in conformity with predefined rules that are relatively fixed and are not
easily changed. Formal information system can be either computer based or manual based.
Manual systems are paper based, in contrast Computer-based information systems (CBIS) rely
on computer hardware and software technology to process and disseminate information.

A manager & potential entrepreneur can use information technology & systems to create
differentiation from the competitors and strategic advantage in the marketplace.

Information Technology
Information technology is one of many tools managers use to cope with change. Companies use
Computer hardware, software, and storage and communication technology for IT purpose.
Computer hardware is the physical equipment used for input, processing and output activities in
an information system. Computer software consists of the detailed, preprogrammed instructions
that control and coordinate the computer hardware components in an information system.
Storage technology includes both the physical media for storing data, such as magnetic disk,
optical disc, or tape and the software governing the organization of data on these physical media.
Communication technology, consists of both physical devices and software, links the various
piece of hardware and transfers data from one physical location to another. Network links two or
more computers to share data or resources such as printer.

5|Page

Information System
&
Supply Chain Management

6|Page

Supply Chain Management (SCM) involves the coordination of all supply activities of an
organization from its supplier and delivery of products to its customers. Its essentially the
optimization of material flows and the associated information flows involved with an
organizations operations.

Supply Chain Management (SCM) includes not only supplier and buyer, but also the
intermediaries such as the suppliers suppliers and the customers customers.

It is the

coordination of supply activities of an organization from its suppliers and partners to its
customers. For most commercial and not for profit organization we can distinguish between
upstream supply chain and down stream supply chain.
An organizations supply chain can be viewed from a systems perspective as the acquisition of
resources (inputs) and their transformation (processes) into products and services (outputs)
which are then delivered to customers. Such a perspective indicates that as part of moving to ebusiness, organizations can review the transformation process and optimize it in order to deliver
products to customers with greater efficiency and lower cost.

The position of the system boundary for the SCM extends beyond the organization- in involves
not only improving the internal processes, but also processed performed in conjunction with
suppliers, distributors and customers. The process perspective has also a strategic importance
that provides great opportunities to improve product performance and deliver superior value to
the customers. As a result, Supply Chain Management can dramatically have an impact on the
profitability of a company through reducing operating costs and increasing customer satisfaction
and so loyalty and revenue.

Upstream supply chain is the transactions between an organization and its suppliers and
intermediaries, equivalent to buy side e-commerce.

On the other hand downstream supply chain is the transactions between an organization and its
customers and intermediaries, equivalent to sell side e-commerce.

7|Page

For the companies that have first-tier suppliers, second-tier and even third-tier suppliers or first-,
second- and higher-tier customers maintain a supply chain network. A supply chain network is
the link between an organization and all partners involved in multiple supply chain.

Developments in supply chain management

Over the time modern technology and improved concepts like e-commerce and logistics have
contributed to the development of supply chain. We can shoe it in chronology as following

Physical Distribution Management

THE Physical Distribution Management (PDM) focuses upon the physical movement of
goods by treating stock management, warehousing, order processing and delivery as related
rather than separate activities. Although information systems were developed to manage these
processes they were often paper-based and not integrated across different functions. However,
some leading companies started using EDI at this time. PDM was essentially about the
management of finished goods but not about the management of materials and processes that
impacted upon the distribution process. PDM was superseded by logistics management which
viewed manufacturing storage and transport from raw material to final consumer as integral parts
of a total distribution process.

Material Requirement Planning (MRP) and

Just-In Time (JIT) Logistics Management
The Just-in time (JIT) philosophy is still a relatively recent development of logistics
management, its aim being to make the process of raw materials acquisition, production and
distribution as efficient and flexible as possible in terms of material supply and customer service.
Minimum order quantities and stock levels were sought by the customer and therefore
manufacturers had to introduce flexible manufacturing processes and systems interfaced directly

8|Page

with the customer who could call an order directly against a prearranged schedule with a
guarantee that it would be delivered on time.

Materials Requirement Planning systems were important in maintaining resources at an optimal

level. The design for manufacture technique was used to simplify the number of components
required for manufacture. However, none of the above methods looked at the management of
total supply chain. An associated phenomenon is lean production and lean supply where supply
chain efficiency is aimed at eliminating waste and minimizing inventory and work in progress.

Supply chain management and

Efficient Customer Response
Effective management of supply chain involved much closer integration between the supplier,
customer and intermediaries and in some instances involved one organization in the channel
taking over functions that were traditionally the domain of the intermediary. Bottlenecks or
undersupply/oversupply can have a significant impact on the organizations profitability. The
two primary goals of supply chain management are to maximize the efficiency and effectiveness
of the total supply chain for the benefit of all the players, not bust one section of the channel, and
to maximize the opportunity for the customer purchase by ensuring adequate stock levels at all
stages of the process.

These two goals impact upon the sourcing of raw materials and stockholding. A recent
phenomenon has been the rapid in global sourcing of supplies from preferred suppliers,
particularly amongst multinational or global organizations. The internet will provide increased
capability for the smaller players to globally source raw materials and therefore improve their
competitiveness. The internet will revolutionize the dynamics of international commerce and in
particular lead to the more rapid internalization of small and medium sized enterprise. The web
will reduce the competitive advantage of economies of scale in many industries, making it
smaller companies to compete on a worldwide basis.

9|Page

New integrated information systems such as the SAP Enterprise Resource Planning (ERP)
system have helped manage the entire supply chain. ERP systems include modules which are
deployed throughout the business and interface with suppliers. Technology ha enabled the
introduction of faster, more responsive and flexible ordering, manufacturing and distribution
systems, which has diminished even further the need for warehouses to be located near to
markets that they serve.

Technological Interface Management

The challenges facing suppliers, intermediaries and customers in the supply chain will shift from
a focus on physically distributing goods to a process of collection, collation, interpretation and
dissemination of vast amounts of information. Enterprise resource planning systems are
continuously being updated to support direct data interfaces with suppliers and customers, for
example to support EDI.

A more recent development is interfacing of ERP systems with B2B intermediary sites or
exchanges such as commerce One. SAP has also created mySAP facility to help customers
manage and personalize their interactions with these exchanges. XML is increasingly used as the
technical means by which technological interface management is achieved.(The critical resources
possessed by these new intermediaries will be information rather than inventory. This stage has
been taken a bit further by suggesting that customer information capture will sere customers
rather than vendors in future. Currently customers leave a trail of information behind them as
they visit sires and make transactions. This data can be captured and then used by suppliers and
agents to improve targeting offers. However, as customers become more aware of the value of
information and as technology n the internet enables them to protect private information relating
to site visits and transactions, then the opportunity grows for intermediaries to act as customer
agents not supplier agents.

10 | P a g e

Practice by the Companies

Distribution Channel Management (DCM) that primarily works for the downstream supply chain
that we can relate to Physical Distribution Management (PDM), the earliest phase of supply
chain management. This is responding to the need of the market from the front end, the
distribution channel, and back end, the procurement of raw materials.

The Block list, total procurement needed for a year, is usually made at the beginning of a year
with minor adjustment afterwards. This is determined by a forecasting based on previous years
sale with adjustment for the micro factors, every single response from the field force who visit
doctors and chemists.

The technology used here are simple mail communication for the overall supply chain while
keeping track of every movement of inbound and outbound logistics are kept in custom database.
Since the procurement is designed for once in a year there are tenders to bid by the suppliers, the
management is simple and largely done by the suppliers. For the local supplier the complication
is less and supply can happen as per order at any time.

On downstream supply chain the communication is web. Every performance on delivery of

goods is communicated through web to update database. So present stock level, the delivered lot
and present demand from the customer can be traced at every moment.

11 | P a g e

Supply Chain Models

Two prominent models are very widely used. They are illustrated below

Push supply chain

The push model is illustrated by a manufacturer who perhaps develops an innovative product and
then identifies a suitable target market. A distribution channel is then created to push the product
to the market.

Push to Customer

Supplier

Manufacturer

Distributor

Retailer

Customer

Pull supply chain

This model emphasizes on using the supply chain to deliver the value to customers who are
actively involved in product and service specifications. Here the supply chain is constructed to
deliver value to the customer by reducing costs and increasing service quality.

Supplier

12 | P a g e

Manufacture
rr

Distributor

Retailer

Customer

Options for restructuring supply chain

As part of strategy definition for e-business, managers will consider how the structure of the
supply chain can be modified. These choices arent primarily based on internet technology
choices, rather they are mainly choices that have existed for many years. What internet
technology provides is a mire efficient and enabler and lower cost communications within the
new structure.

Supply chain management options can be viewed as a continuum between internal control of the
supply chain elements and the external control of supply chain elements through outsourcing.
The two end elements of the continuum are usually referred to as vertical integration and
virtual integration.

Vertical integration refers the extent to which supply chain activities are undertaken and
controlled within the organization.

Virtual integration refers the majority of supply chain activities ate undertaken and controlled
outside the organization by third parties.

Vertical
Integration

Vertical

Virtual

integration
Disintegration

Characteristics:
Majority of manufacture inhouse.
Distant relationship with
suppliers.

13 | P a g e

Characteristics:
Move to outsourcing.
Network of suppliers.

Characteristics:
Total reliance on linked
third parties.
Close relationships with
Suppliers.

Applications:
Specialized or proprietary
production

Applications:
Cost reduction and focus
on core capabilities.

Applications:

Rapid market penetration

There was a general trend in during the second half of twentieth century from vertical integration
through vertical disintegration to virtual integration.

A good example is provided by the car manufacturing industry where traditionally car plants
would be located near to a steelworks so that the input to the car plant would be raw materials,
with finished cars produced as the output. Other components of the car such as engine and
passenger equipment would also be manufactured by the company. In addition other value chain
activities such as marketing would also largely performed in house. There has been a gradual
move to sourcing more and more components such as lights, upholstery ad trim and even engines
to third parties. Marketing activities such as web site development, brochure fulfillment and
advertising campaigns are now largely outsourced to marketing agencies.

Another example is the purchase by pharmaceuticals companies of pharmacy benefit managers

(companies that manage drug distribution with private and company health schemes). By
acquiring these companies which are part of pharmaceuticals companys downstream supply
chain the aim is to get closer to the customer while at the same time favorably controlling the
distribution of the companys own drugs.

Hayes and Wheelwright provide a useful framework that summarizes choices for an
organizations vertical integration strategy. The three main decisions are:

1. The direction of any expansion: Should the company aim to direct ownership at the
upstream or downstream supply chain? The pharmaceuticals companies referred to
14 | P a g e

above have decided to buy into the downstream part of the supply network
(downstream vertical integration). This is sometimes refereed to as an offensive
strategic move since it enables the company to increase its power with respect to
customers. Alternatively, if the pharmaceuticals company purchased other research
labs this would be upstream-directed vertical integration which is strategically
defensive.

2. The extent of vertical integration: How far should the company take downstream or
upstream vertical integration? Originally car manufacturer had a high degree of
vertical integration, but more recently they have moved from a wide process span to a
narrow process span. This change is the main way in which e-business can impact
vertical integration by assisting the change from wide to narrow process span.

3. The balance among the vertically integrated stages: To what extent does each
stage of the supply chain focus on supporting the immediate supply chain? For
example, if a supplier to a motor manufacturer also produced components for other
industries this would be an unbalances situation.
Combining these concepts, we can refer to the B2B Company. If it owned the majority of the
upstream and downstream elements of the supply chain and each element was focused on
supporting the activities of the B2B Company, its strategy would be to follow upstream and
downstream directions of vertical integration with a wide process span and a high degree of
balance. Alternatively, if the strategy were to focus on core competencies it could be said to have
a narrow process span.
How, then, often can electronic communication support these strategies? Through increasing the
flow of information between members of the supply chain, a strategy of narrower process span
can be supported by e-commerce. However this relies on all members of the supply chain being
e-enabled. If only immediately upstream suppliers have adopted e-commerce then the efficiency
of the supply chain as a whole will not be greatly increased. It may be difficult for a
manufacturer to encourage companies further up the supply chain to adopt e-commerce. So
companies undertaking offensive strategies will be in a better position to stipulate adoption of ecommerce, and so increase the overall efficiency of the supply chain.
15 | P a g e

Following are two examples of the manufacture of personal computers also illustrate the concept
of the two different supply chain products well.

Approach 1 (IBM Practice)

Manufacture of many components by IBM plants in different locations including IBM processor,
IBM hard disks, IBM cases a IBM monitors and even IBM mice. Distribution to companies by
IBM logistics.

Approach 2 (DELL Practice)

Manufacture of all components by third parties in different locations including Intel processors,
Seagate hard disks, Sony monitors and Microsoft mice. Assembly of some components in final
product by third parties, e.g. adding appropriate monitor to system unit for each order.

E-supply chain management

E-business can be used to improve supply chain management in a number of ways. in that cases
challenges were

Reduce order-to delivery time.

Reduce costs of manufacturing.

Manage inventory more efficiently.

Improve demand forecasting.

Reduce time to introduce new products.

Improve aftermarket/ post-sales operations.

The typical benefits that B2B companies have from e-SCM are as following
16 | P a g e

1. Increased efficiency of individual processes: Here the cycles time to complete a

process and the resources needed to execute it are reduced. If the B2B Company
adopts e-procurement this will result in a faster cycle time and lower cost per order.

Benefits: Reduced cycle time and cost per order.

2. Reduced complexity of supply chain: This is the process of disintegration. Here B2B
Company will offer the facility to sell direct from its e-commerce site rather than
through distributors or retailers.

Benefits: Reduced cost of channel distribution and sale.

3. Improved data integration between elements of the supply chain: The B2B Company
can share information with its suppliers on the demand for its products to optimize the
supply process.

Benefits: Reduced cost of paper processing.

4. Reduced cost through outsourcing: The Company can outsource or use virtual
integration to transfer assets and costs such as inventory holding costs to third
companies. Technology is also enabler in forming value networks, and in making it
faster to change suppliers on the basis of cost and quality.

Benefits: Lower costs through price competition and reduced spend on manufacturing
capacity and holding capacity. Better service quality through contractual
arrangement.

5. Innovation: E-SCM should make it possible to be more flexible in delivering a more

diverse range of products and to reduce time to market. For example, the B2B
Company may use e-commerce to enable its customers to specify the mixture of
17 | P a g e

chemical compounds and additives used to formulate their plastics and refer to a
history of previous formulations.

Benefits: Better customer responsiveness.

Flexibility in adapting to a new business requirements is a key capability of e-SCM systems. For
example, in 2006, e-business system supplier and integrator SAP explained the three key
capabilities of its SCM solution as

Synchronize supply to demand: Balance push and pull network planning processes.
Replenish inventory and execute production based on actual demand.

Sense and respond with an adaptive supply chain network: Drive distribution,
transportation, and logistics processes that are integrated with real-time planning
processes.

Provide network wide visibility, collaboration, and analytics- Monitor and analyze
your extended supply chain.

An alternative perspective on the benefits is to look at the benefits that technology can
deliver to customers at the end of the supply chain. For the B2B company these could
include:
Increased convenience through 24 hours a day, 7 days a week, 365 days a year ordering.
Increased choice of supplier leading to lower costs.
Faster lead times and lower costs through reduced inventory holding.
The facility to tailor product more readily.
Increased information about products and transactions such as technical data sheets and
order histories.

18 | P a g e

IS infrastructure for supply chain management

Information systems need to deliver supply chain visibility to different parties who need to
access the supply chain information of an organization, whether they be employees within the
organization, suppliers, logistics service providers or customers. Information systems have a key
role in providing this visibility. Since a huge volume of information defines supply chain
processes for each organization, users of this information need to be able to personalize their
view of information according to their need- customers want to see the status of their order,
suppliers want to access the organizations database to know when their customer is next likely
to place major order. Security is also important of a company has differential pricing, it will
not want customers to see price differences.

FIG

19 | P a g e

These requirements for delivering supply chain information imply the need for an integrated
supply chain database with different personalized views for different parties. A typical integrated
information systems infrastructure for delivering supply chain management is illustrated in
above figure. It can be seen that applications can be divided into those for planning the chain and
those to execute the supply chain process.

A key feature of modern supply chain infrastructure is the use of a central operational database
that enables information to be shared between supply chain process and applications. This
operational database is usually part of an enterprise resources planning system such as SAP,
Baan or Prism and is usually purchased with the applications for supply chain planning and
execution. Some of the planning applications such as network simulation and optimization are
more likely to be supplied by separate software suppliers.

The use of internet technologies to

deliver information over a TCP/IP protocol is becoming standard to reduce the costs of
proprietary leased line networks. Information needed by managers to intervene in supply chain
process when problems occur is delivered as alerts or through continuous monitoring across
secure private intranets of extranets used to link to partners.

Practice around the world

Todays competitive business environment calls for companies to pay much more attention to
how they manage their supply chains. Customers are insisting on greater value, faster order
fulfillment and more responsive services when they make purchase. Shorter product life cycles,
global sourcing and greater product variety have increased supply chain costs and complexity.
The value of so many businesses are linked together that competitive advantage may be based on
entire supply chains rather than individual firms.

Supply chain process:

Many process and sub processes are involved in managing the supply chain to expedite flow of
information and materials. The Supply Chain Council developed a Supply Chain Operations
20 | P a g e

Reference Model which identifies five major supply chain processes: Plan, Sources, Make,
Deliver and Return

Plan: consist of processes that balance aggregate demand and supply to develop a course of
action to meet sourcing, production, and delivery requirements.

Source: consist of processes that procure goods and services needed to create a specific product
or service.

Make: consists of processes that transform a product into a finished state to meet planned or
actual demand.

Deliver: consists of processes that provide finished goods and services to meet actual or planned
demand, including order management, transportation management and distribution management.

Return: consists of processes associated with returning products or receiving returned products,
including post delivery customers support.

Logistics plays an important role in these processes, dealing with the planning and control of all
factors that will have an impact on transporting the correct product or service to where it is
needed on time and at the least cost.

21 | P a g e

Plan:
Balance resources with requirement
Align supply chain plan with business and financial
plan

Sources:
Identify suppliers
Schedule deliveries
Manage inventory

Make:
Schedule production
Evaluate quality &
performance
Manage work in process

Deliver:
Select carrier
Route shipment
Manage warehouse
Invoice customers

Return:
Automatic return
Schedule return
Receive return
Issue return credit

22 | P a g e

Manager A

Manager B

Manager C

Aggregate + analyze
Individual CSFs

Develop agreement on
company CFSs

Define company
CFSs

Define DSS and database

23 | P a g e

Use CFSs to develop

information systems
priorities

Manager C

Information and supply chain management

Inefficiencies in supply chain such as parts shortages, underutilization of plant capacity,
excessive finished goods inventory are caused by inaccurate or untimely information. These
supply chain inefficiencies can waste as much as 25% of companys operating costs.

If a manufacturing had perfect information about exactly how many units of product customers
wanted, when they could be produced, it would be possible to implement a highly efficient justin-time strategy.

In supply chain uncertainties arise because many events cannot be foreseen- uncertain product
demand, late shipments from suppliers, defective parts of raw material, or product process
breakdowns. One recurring problem in supply chain management is the bullwhip effect, in
which information about demand for a product gets distorted as it passes from one entity to the
next across the supply chain. These changes ripple throughout the supply chain, magnifying what
started out as a small change from planned orders, creating excess inventory, production,
warehousing, and shipping costs.

The bullwhip can be tamed by reducing uncertainties about demand and supply when all
members of the supply chain have accurate and up-to-date information members of the supply
chain could share dynamic information about inventory levels, schedules, forecasts and
shipments, they would have a more precise idea of how to adjust their sourcing, manufacturing
and distribution plans. Supply chain management system provides the kind of information that
can help members of the supply chain make better purchasing and scheduling decisions.

24 | P a g e

Supply Chain Management Application

The central objective of supply chain management systems is information visibility- open and
rapid communication and information sharing between members of the supply chain. Supply
chain management systems automate the flow of information between a company and its supply
chain partners so they can make better decisions to optimize their performance.

The supply chain software can be classified as either software to help businesses plan their
supply chains (supply chain planning) or software to help them execute the supply chain steps
(supply chain execution). Supply chain planning system enables the firm to generate demand
forecasts for a product and develop sourcing and manufacturing plans for that product. Such
system help companies make better operating decisions such as determining how much of a
specific product to manufacture in a given time period. Supply chain execution system manage
the flow of products through distributing centers and warehouses to ensure that products are
delivered to the right location in the most efficient manner.

Supply chain performance measurement

Companies need to be able to measure the performance of their supply chain management efforts
using objective performance information. A metric is a standard measurement of performance.
Important metric for measuring supply chain performance include the fill rate, the average time
from order to delivery, the number of days of supply in inventory, forecast accuracy, and the
cycle time for sourcing and making a product.

Supply chain management and the internet:

In the pre-internet environment, supply chain coordination was hampered by difficulties of
making information flow smoothly among disparate internal supply chain systems as well as
external supply chain partners because the systems of suppliers, distributors or logistics
providers were based on incompatible technology platforms and standards.
25 | P a g e

Some supply chain integration can be supplied inexpensively using internet technology. Firms
can use intranets to improve coordination among their internal supply chain processes, and they
can use extranets to coordinate supply chain processes shared with their business partners.

Demand driven supply chain: from push to pull manufacturing and

efficient customer response
Earlier supply chain management systems were driven by a push based model (also known as
build-to-stock). In push based model, production master schedules are based on forecasts or
best guesses of demand for products, and products are pushed to customers. With new flows of
information made possible by web- based tools, supply chain management can more easily
follow a pull based model. In a pull based model which is also known as demand-driven model
or build- to- order, actual customer orders or purchases trigger events in the supply chain.
Transactions to produce and deliver only what customers have ordered move up the supply chain
from retailers to distributors to manufacturers and eventually to suppliers. Only products to fulfill
these orders move back down the supply chain to the retailer. Manufacturers would use only
actual order demand information to drive their production schedules and the procurement of
components or raw materials.

Business value to supply chain management system

Supply chain management systems enable firms to streamline both their internal and external
supply chain processes and provide management with more accurate information about what to
produce, store, and move. By implementing a networked and integrated supply chain
management system, companies can match supply to demand, reduce inventory levels, improve
delivery service, speed product time to market and use assets more effectively. Effective supply
chain management system enhances organizational performance in the following areas:

26 | P a g e

1. Improved customer service and responsiveness: make the products easily available to
the customers. Having the right product at the right place at the right time will increase
sales.

2. Cost reduction: supply chain management helps companies contain, and often reduce
some or all of the costs associated with moving a product through the supply chain.

3. Cash utilization: the sooner a company delivers a product, the sooner that company will
get paid.

Systems as planned organizational change

Building a new information system is one kind of planned organizational introduction of a new
information system involves much more than new hardware and software. It also includes
changes in jobs, skills, management and organization. When we design an information system
we are redesigning the organization. System builders must understand how a system will affect
the organization as a whole.

Information system plan

1. Purpose of the plan

Overview of the plan contents
Current business organization and future organization
Key business processes
Management strategy

2. Strategic business plan rationale

Current situation
Current business organization
Changing environment

27 | P a g e

Major goals of the business plan

Firms strategic plan

3. Current system
Major systems supporting business functions and process
Current infrastructure capabilities
Hardware
Software
Database
Telecommunication and internet
Difficulties meeting business requirement
Anticipated future demands

4. New developments
New system projects
Project description
Business rationale
Application role in strategy
New infrastructure capabilities required
Hardware
Software
Database
Telecommunication and internet

5. Management strategy
Acquisition plans
Milestones and timing
Organizational realignment
Internal reorganization
Management controls
28 | P a g e

Major training initiatives

Personnel strategy

6. Implementation plan
Anticipated difficulties in implementation
Progress report3

7. Budget requirements
Requirements
Potential savings
Financing
Acquisition cycle
This table is a summarize output of enterprise analysis which shows what information is required
to support a particular process, which processes create the data, and which use them.

Strategic analysis or critical success factors

The strategic analysis, or critical success factors, approaches argue that an organizations
informations requirements are determined by a small number of critical success factors (CFSs)
of managers. If these goals can be attained, success of the firm or organization is assured. CFSs
are shaped by the industry, the firm, the manager, and the broader environment. New information
system should focus on providing information that helps the firm meet these goals.
Examples

Goals

CFSs

Profit concern

Earnings / share

Automotive industry

Return on investment

Styling

Market share

Quality dealer system

New products

Cost control

Energy standards

29 | P a g e

Non-profit concern

Excellent health care

Regional integration with

Meeting government regulation

other hospitals

Future health needs

Improved monitoring of
regulations
Efficient use of resources
An example of critical success factors and organizational goals

The principal method use in CFS analysis is personal interviews- three or four with a number of
top managers identifying their goals and the resulting CFSs. These personal CFSs are aggregated
to develop a picture of the firms CFSs. Then the systems are built to deliver information on
these CFSs.

30 | P a g e

Demand Planning
&
Supply Planning

31 | P a g e

The concept
Demand planners are kind of like weather forecasters -- they rarely get credit for doing their job
correctly, and they're only noticed when they get it wrong. Nevertheless, it's vitally important
that they get it right, or else severe -- and potentially disastrous -- supply chain glitches can
occur.
"The bullwhip effect is as true today as it ever was in modern, elongated global supply chains
where small errors at the front are magnified throughout the process," observes Andrew Kinder,
director of product marketing for supply chain management at Infor, an enterprise software
provider. Kinder offers these 10 tips to gauge your company's demand planning preparedness,
and help guide you to getting the forecasts right.
1. Get the process right. Demand planning is a sub-process within sales and operations
planning or integrated business planning, not a stand-alone activity. Create an integrated
business plan that is a cross-company activity and drives the rest of the business forward for
profitably meeting customer demand.
2. Decide what levels you need to plan demand at that make sense for your business. Some
companies analyze and plan demand at the product family level, customer level or
geographic level. The way you forecast and plan demand is unique to your business. Don't be
dictated by limitations of your IT technologies -- and be prepared to change how you plan
demand according to changes in your business.
3. Demand planning is a collaborative process, not a test of statistical algorithms. The
statistics provide a solid foundation to work with, but the real value comes from over-laying
knowledge that systems cannot possibly know. Deploy internal collaboration before external
collaboration, recognizing that the closer you get to the true demand signal, the better the
forecast will be.
4. Demand planning is not just forecasting. Forecasting is a component of demand planning
and relates to your best estimate of future demand. Companies that excel in this area will
challenge the forecast (and the integrated business plan) and seek opportunities to influence

32 | P a g e

demand through marketing events and promotions to bring the forecast more in line with the
company plan.
5. You can't control what you can't measure. Put the right set of linked key performance
indicators in place and measure regularly against these.
6. Educate before training. Because the demand planning process is cross-functional, many
people input to the forecast without realizing the importance of their contributions. As a
result, the quality of their contributions may suffer. A good educational program will help
everyone understand their contribution and impact on the performance of the demand plan.
7. Cleanse the data so you don't spend all your time questioning it and losing confidence in the
process, which can create a breeding ground for others to second-guess the demand plan and
produce their own version. Demand planning deals with huge quantities of data and robust
processes are required to keep the data cleansed.
8. Trust the numbers and manage by exception. 80% of your return can be achieved by
reviewing 20% of the items.
9. Use the error in your forecast to positive effect. A good statistical forecast will have an
appropriate error which drives an appropriate safety stock target. This leads to good
inventory management and delivers higher service with lower total inventory.
10. Deploy a proven best-in-class solution. A recent Aberdeen study shows that companies that
excel in demand management -- reporting higher forecast accuracies and lower inventories -are two-and-a-half times as likely to have implemented a best-in-class demand planning
system.

The demand planning

This is done at the commencement of every year and absorbs the amendment as needed
throughout the year. They term it as block list based on which suppliers from in and outside of
the country are ordered to provide raw materials on time. Following are the steps the tread when
set the demand.

33 | P a g e

Response from the field force: They have got an efficient field force that visits their
customers, doctors and chemist, in particular make a demand plan that would survive for
the coming period based on their findings.

Make regional demand schedule: As not every region of their market need the same
product in same quantity, they make a regional demand schedule based on the data
coming from the field force that indicate different trends for territory.

Adjustment with the forecasted trend: Once they got the regional demand schedule they
adjust it with the forecasting based on the sales of previous years and quantity the total
needs for that year.

Adjustment with the stock in hand: The finished goods in hand and the returned goods
form the market is subtracted from the total demanded amount for that year. Company
normally holds 8 weeks inventory level in end, front and back, of finished goods and raw
materials.

Technology and time lag: The technology used here is intranet that helps every field force
unit to update the present demand condition at the end of the day, every working day.
Since the downstream supply chain is more updated and automated the time lag is least,
12 hours. This can be checked at any moment.

Field Force

34 | P a g e

District
Sales Manager
(DSM)

Regional
Sales Manager

Sales
Manager

National
Sales Manager

The supply planning

The supply planning starts when the demand schedule is finalized for the upcoming year. As
supply comes from outside of the country, there are regulatory measurements to be followed.
The total demand is placed in a block list that is presented to the related government agency for
approval. So following are the steps, we can say, are treaded in supply planning.

Block list and approval: Once the demand schedule is ready, it is formatted into a block
list and seeks the permission for import. This is done for supplies from outside. For inside
oriented supply no such steps need to be maintained.

Tender float: According to the approved block list the company calls the eligible agents
who can purchase the raw materials in favor of the company. There is a communication
maintained between these agents and company to supply the materials on time. This is
manual.

Segregating into lots: Then suppliers are asked to supply the raw material needed in each
month. The forecasted demand of each month is communicated to the suppliers and they
perform their job.

Monthly production: According to the demand the company goes for monthly production
target. This may vary as per demand.

Distribution: The Company has got 15 sales depots across the country which supplies the
finished product to each district according to their monthly need. There is a central
inventory that keeps connection with the depots and upcoming supply needs.

Technology used: The technology used here to keep connection with suppliers is mail
communication. Since they maintain a safety stocks in both front and back end and
production is segregated into months, this mail communication serves their purpose well.

35 | P a g e

Conclusion
To conclude, we say it is very vital for an organisation to concentrate on the Information System
and Supply Chain Management. The value addition in each stage would be more precise and
quantifiable once they started to use a sophisticated supply chain management. The investment in
this task will surely give and it is much waited for those who are entering into the foreign
territory.

36 | P a g e

Bibliography
A Logistics Approach to Supply Chain Management by Coyle, Langley,
Gibson, Novack, Barti
Supply Chain Information Technology by David L. Olson
Information Technology by Laudon
Google.com
Scribd.com
Supplychainbrain.com
Supplychainmanagement.com

37 | P a g e