Chapter 10: Extending the Organization — Supply Chain Management
I. Information Technology’s Role in the Supply Chain
a. SCM systems can increase profitability across an organization 3 main business processes i. Materials flow from suppliers and their upstream suppliers at all levels ii. Material are transformed into semi-finished and finished products organization’s own production process iii. Products are distributed to customers and their downstream customers at all levels b. SCM is only as strong as its weakest link use to measure the performance of supply chains to identify weak links quickly c. Back order: an unfilled customer order for a product that is out of stock d. Inventory cycle time: the time it takes to manufacture a product and deliver it to the retailer e. Customer order cycle time: The agreed-upon time between the purchases of a product and the delivery of the product f. Inventory turnover: the frequency of inventory replacement g. Companies evolve into extended organizations roles of supply chain participants are changing i. Common for suppliers to be involved in product development and distributors to act as consultants in brand marketing h. IT primary role: creating the integrations or tight process and info linkage between functions within a firm and between functions i. Allow smooth, synchronized flow of both info and product between customers, suppliers, and transportation providers across the supply chain i. Supply chain design: determines how to structure a supply chain including the product, selection of partners, the location and capacity of warehouses, transportation methods, and supporting MIS i. Results in superior supply chain capabilities and profits j. Supply chain visibility: ability to view all areas up and down the supply chain in real time i. Improve visibility across the supply chain use planning systems and supply chain execution systems ii. Supply chain planning systems: use advanced mathematic algorithms to improve the flow and efficiency of the supply chain while reducing inventory iii. Supply chain execution systems: ensure supply chain cohesion by automating the different activities of the supply chain k. Electronic data interchange (EDI): standard format for the electronic exchange of info between supply chain participants l. Bullwhip effect: occurs when distorted product-demand info ripples from one partner to the next throughout the supply chain II. Technologies Reinventing the Supply Chain a. Procurement: purchasing of goods and services to meet the needs of the supply chain i. Key supply chain strategy because the capability to purchase input prices at the right price is directly correlated with the company’s ability to operate b. Logistics: processes that control the distribution, maintenance, and replacement of materials and personnel to support the supply chain i. Inbound logistics: acquires raw materials and resources and distributes them to manufacturing as required ii. Outbound logistics: distributes goods and services to customers iii. Cradle-to-grave: provides logistics support throughout the entire system of life or prod. c. Materials Management: activities the govern the flow of tangible, physical materials through the supply chain such as shipping, transport, distribution, and warehousing. i. Focuses on handling all materials safely, efficiently, and in compliance with regulatory requirements and disposal requirements. d. 3-D Printing: (additive manufacturing) builds, layer by layer in an additive process, a three dimensional solid object from a digital model potential to be more disruptive than the internet i. Brings production closer to users eliminates steps in the supply chain ii. Promotes mass customization, small production batches, & reduction in inventory e. Computer-aided design/computer aided manufacturing (CAD/CAM): systems are used to create the digital designs and then manufacture the products i. Have a major impact on how businesses operate and interact on a global scale f. Maker movement: cultural trend that places value on an individual’s ability to be a creator of things as well as a consumer of things i. Make own products instead of getting brand name products from stores
1. Makerspaces: community center that provides
technology, manufacturing equipment, and educational opportunities to the public that would otherwise be inaccessible or unaffordable g. Radio-frequency identification (RFID): uses electronic tags and labels to identify objects wirelessly over short distances replaces existing id tech such as bar code i. RFID’s electronic product code (RFID EPC): promotes serialization or the ability to track individual items by using unique serial number associated with RFID tag h. Drone: an unmanned aircraft that can fly autonomously, or without a human i. Robotics: focuses on creating AI devices that can move and react to sensory input i. 3 Laws of Robotics: 1. A robot may not injure human being, or through inaction, allow a human being to come to harm 2. A robot must obey orders given to it by human beings except where such orders would conflict with the First Law 3. A robot must protect its own existence as long as such protection does not conflict j. SCM market matures becomes more sophisticated and incorporate additional functionality