Supply Chain Management

Chapter 16 Information Technology and the Supply Chain

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Role of Information Technology in a Supply Chain

Information is the driver that serves as the glue to create a coordinated supply chain Information must have the following characteristics to be useful:
Accurate Accessible in a timely manner Information must be of the right kind

Usage of Information technology (IT):

Hardware and software used throughout the supply chain to gather, analyze and circulate information This information is the basis for making rational business decisions

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Role of Information Technology in a Supply Chain continued

Information provides the basis for key SCM decisions:
Facility (location, capacity, schedules) Inventory (carrying costs, stock out costs, ordering costs) Transportation (customer locations, shipment sizes) Sourcing (in-house, outsource) Pricing and Revenue management (maximize revenue from available resources)

Information is used at different phases of decision making:

Strategic: Location decisions Operational: What products to manufacture during todays production run?

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The Supply Chain IT Framework

The Supply Chain Macro Processes:
Customer Relationship Management (CRM) Internal Supply Chain Management (ISCM) Supplier Relationship Management (SRM) Transaction Management Foundation (TMF)

Why focus on the Macro Processes?

Performance of a company closely linked to performance of the supply chain Every stage within the supply chain is inter-linked and must work together to increase overall profitability
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Macro Processes in a Supply Chain

Supplier Relationship Management (SRM)

Internal Supply Chain Management (ISCM)

Customer Relationship Management (CRM)

Transaction Management Foundation (TMF)

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Customer Relationship Management (CRM)

Customer Relationship Management (CRM) consists of processes that take place between an enterprise and its customers downstream in the supply chain CRM processes: Marketing Selling Order management Call/Service center

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Internal Supply Chain Management (ISCM)

Internal Supply Chain Management (ISCM) includes all internal processes involved in planning and fulfilling a customer order
ISCM processes:
Strategic Planning overall supply chain network design Demand Planning Forecasting and analyzing demand impact Supply Planning Factory planning, Inventory planning Fulfillment Fulfilling orders, transportation, warehousing Field Service After sales service, spare parts inventory

There must be strong integration between ISCM and CRM processes

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Supplier Relationship Management (SRM)

Supplier Relationship Management (SRM) comprises of processes involving interaction between the enterprise and suppliers upstream in the supply chain SRM processes:
Design Collaboration Source Negotiate Buy Supply Collaboration

There is a natural fit between ISCM and SRM processes

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Transaction Management Foundation (TMF)

Transaction Management Foundation (TMF) is the foundation on which CRM, ISCM and SRM rest Includes Enterprise Resources Planning (ERP) systems and its components TMF is necessary for CRM, ISCM and SRM to function and communicate with each other

The extent to which TMF enables integration across CRM, ISCM and SRM determines its value

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