Information technology has enabled channel partners

to trade goods, share information, and integrate their processes, thereby reshaping the inter-organizational dynamics and resulting in more efficient channels. Electronic integration of data and the automation of business practices has driven costs down and built sales by better satisfying consumer needs.

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 Information provides the basis for supply chain management decisions Inventory Transportation Facility

 With the advent of the Internet, e-businesses began to demand different things from their SCM systems Most importantly, SCM systems vendors (largely the same vendors that provide ERP systems software) had to modify their products to include a Web-based interface The ultimate goal of a business ERP system is complete optimization of internal business processes

Information Technology: A Supply Chain Enabler

Information links all aspects of

supply chain E-business

Bar code and point-of-sale

data creates an instantaneous

computer record of a sale

replacement of physical

Radio frequency identification

business processes with electronic ones

(RFID)

Electronic data interchange

technology can send product

(EDI)

data from an item to a reader via radio waves communicate with suppliers, customers, shippers and other businesses around the world, instantaneously

a computer-to-computer

exchange of business documents

Internet allows companies to

Copyright 2006 John Wiley & Sons, Inc.

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 The two basic types of SCM system software are:

Supply Chain Planning software (SCP): uses mathematical models to predict inventory levels

based on the efficient flow of resources into the supply chain Supply Chain Execution software (SCE): is used to automate different steps in the supply chain such as automatically sending purchase orders to vendors when inventories reach specified levels

The Importance of Information in a Supply Chain

allows managers to make decisions that take into

account all stages of the supply chain Allows performance to be optimized for the entire supply chain, not just for one stage leads to higher performance for each individual firm in the supply chain

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 Major Supply Chain Planning (SCP) Players:

i2 Technologies i2s strength began with its powerful Advanced Planning and Scheduling (APS) Manugistics Oracle SAP Advanced Planner and Optimizer (APO)

E-Supply Chains
Managing Supply Chains Managing supply chains can be difficult due to the need to coordinate:

Several business partners Several internal corporate departments Numerous business processes Possibly many customers Information technology provides two types of software solutions: 1. SCM 2. ERP and its predecessors MRP and MRP II

E-business and Supply Chain

Cost savings and price reductions Reduction or elimination of the role of intermediaries Shortening supply chain response and transaction times Gaining a wider presence and increased visibility for companies Greater choices and more information for customers

Copyright 2006 John Wiley & Sons, Inc.

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E-business and Supply Chain (cont.)

Improved service as a result of instant accessibility to services
Collection and analysis of voluminous amounts of

customer data and preferences Creation of virtual companies Leveling playing field for small companies Gaining global access to markets, suppliers, and distribution channels
Copyright 2006 John Wiley & Sons, Inc.
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Computerized Supply Chains

The supply chain process is intertwined with the computerization of its activities. People have wanted to automate the processes along the chain to reduce cost, expedite processing, and reduce errors.

Material requirements planning (MRP) essentially integrates production, purchasing, and inventory management of interrelated products. Manufacturing resource planning (MRP II), enhanced MRP methodology by adding labor requirements and financial planning. Enterprise resource planning (ERP) further integrates the transaction processing as well as other routine activities in the entire enterprise. Integrations continues along several paths

functional areas Combining transaction processing and decision support Business intelligence CRM software

E-Commerce and Supply Chains

E-commerce is emerging as a superb tool for providing solutions to problems along the supply chain. Many supply chain activities, from taking customers' orders to procurement, can be conducted electronically.
E-commerce
can digitize some products

can replace all paper documents

can replace faxes and telephone calls with electronic messaging Enhances collaboration and information sharing typically shortens the supply chain and minimizes inventories facilitates customer service introduces efficiencies into buying and selling enables faster, cheaper, and better communication, collaboration, and discovery of information

Role of Ecommerce in Supply Chain

Supply Chain Management System Order taking done over the Internet.
Fast, inexpensive and accurate.

Electronic payments can expedite payment delivery systems.

Inventories can be minimized

Built to order.

Collaborative Commerce among members of supply chain.

E-Commerce and Supply Chains

A major role of EC is to facilitate buying and selling along all segments of the supply chain.

Upstream Activities improve the upstream supply chain through eprocurement Internal Supply Activities from entering purchase orders, to recording sales, to order fulfillment, to tracking shipments, are usually conducted over a corporate intranet Downstream Activities enhance the activity downstream activities by providing online ordering Vertical exchanges combine upstream and downstream EC supply chain activities. These B2B exchanges, provide a medium where buyers and sellers can meet.

E-Commerce and Supply Chains

Continued

E-Supply Chains
Infrastructure for e-SCM Electronic Data Interchange (EDI) Extranets Intranets Corporate portals Workflow systems and tools Groupware and other collaborative tools

E-Procurement
Direct purchase from suppliers over the Internet Direct products go directly into production process a product, indirect products not E-marketplaces
web sites where companies and suppliers conduct

business-to-business activities

Reverse auction
a company posts orders on the Internet for suppliers to

bid on

Copyright 2006 John Wiley & Sons, Inc.

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The Future of IT in the Supply Chain

At the highest level, the three SCM macro processes

will continue to drive the evolution of enterprise software Software focused on the macro processes will become a larger share of the total enterprise software market and the firms producing this software will become more successful Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success

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Supply Chain Information Technology in Practice

Select an IT system that addresses the companys key

success factors Take incremental steps and measure value Align the level of sophistication with the need for sophistication Use IT systems to support decision making, not to make decisions Think about the future

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