MANAGEMENT

INFORMATION
SYSTEM TO
MANAGE SUPPLY
CHAINS

AMARDEEP KAUR
MBA SEMSTER III

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 Enrol No. 1491563908

ACKNOWLEDGEMEN

On the successful completion of this project I would like to express gratitude

to all the people who have helped me in completion of this project. I wish to
extend my deep and sincere gratitude to Ms.Shweta, lecturer, MBA to take
out time from her busy schedules to provide me with her valuable guidance
at the time of need and helped me whole heartedly to achieve the ultimate
goal of the study.

I would also like to express my gratitude towards my friends and other

associates for providing me with this valuable inputs.

AMARDEEP KAUR
MBA

2
 Enrol No.
1491563908

INTRODUCTION TO
SUPPLY CHAIN MANAGEMENT

Supply Chain Management or SCM is concerned with the efficient integration of

suppliers, factories, warehouses and stores so that merchandise is produced and
distributed:
– In the right quantities
– To the right locations
– At the right time

in order to
– Minimize total system cost
– Satisfy customer service requirements

Fierce competition in today’s global markets, the introduction of products with shorter
life cycles, and the heightened expectations of customers have forced business
enterprises to focus attention on, their supply chains. This has been made easier by the
use of software for managing the demand and supply chain. Using supply chain software,
a manufacturer can communicate with his suppliers constantly about the raw materials
required for production. This enables the supplier to plan and supply the raw materials
according to the manufacturer’s demand. On the other hand, demand chain software
provides the channel members and the employees of a manufacturer with accurate and
up-to-date information about the goods and services available with the manufacturer,
their prices, the distributors and the suppliers in a particular region.

Supply chain management is a set of processes which helps organizations develop and
deliver products. A supply chain comprises of multiple companies working together as a
single entity with complete transparency of information and accountability between

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them. Through the supply chain, the flow of information, material and payment between
the business entities takes place. The product flow describes the processes involved in
transforming raw materials into finished goods. The information flow describes the
future requirements (raw material, tools, products etc.) and the order delivery status.
Supply chain management also involves the integration of ad hoc and fragmented
processes into a consolidated system. Process optimization helps organizations reduce the
total cost of the order to delivery process by trading off inventory, transportation and
distribution costs. Though traditional optimizations methods help reduce costs, they can’t
handle real life interdependencies between processes. If the business applications are not
integrated retailers, manufacturers, distributors and other business entities will only be
able to reduce their direct cost and not the operational costs.

Till large scale optimization models were developed, the visibility of information
required to synchronize supply chain operations was minimal. Inadequate information
visibility led to excess inventory and huge transportation costs. But now organizations
are well equipped with sophisticated tools like Rhythm from i2 technologies and
advanced planning and optimization tool from SAP. These technologies help the
organizations predict demand, convey inventory levels and solve transportation costs.

Thus we can say , Supply chain management is a cross-function approach including

managing the movement of raw materials into an organization, certain aspects of the
internal processing of materials into finished goods, and the movement of finished goods
out of the organization and toward the end-consumer. As organizations strive to focus on
core competencies and becoming more flexible, they reduce their ownership of raw
materials sources and distribution channels. These functions are increasingly being
outsourced to other entities that can perform the activities better or more cost effectively.
The effect is to increase the number of organizations involved in satisfying customer
demand, while reducing management control of daily logistics operations. Less control
and more supply chain partners led to the creation of supply chain management concepts.
The purpose of supply chain management is to improve trust and collaboration among
supply chain partners, thus improving inventory visibility and the velocity of inventory
movement.

Several models have been proposed for understanding the activities required to manage
material movements across organizational and functional boundaries. SCOR is a supply
chain management model promoted by the Supply Chain Council. Another model is the
SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain
activities can be grouped into strategic, tactical, and operational levels .

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SupplyChain

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SUPPLY CHAIN MANAGEMENT
INFORMATION SYSTEM

Supply chain management helps a company get the right products to the right place at the
right time, in the proper quantity and at the acceptable cost. The goal of SCM is to
efficiently manage this process by forecasting demand, controlling inventory, enhancing
the network of business relationships a company has with customers, suppliers,
distributors and others, and recieveing feedback on the status of evry link in the supply
chain.

Supply chain management is a Cross- Functional Interentreprise System that uses

information technology to help support and manage the links between some of a
company’s key business processes and those of its suppliers, customers and business
partners. The goal of SCM is to create a fast, efficient and low cost network of business
relationship, or supply chain to get a company’s products from concept to market.

The objective is to significantly reduce costs, increase efficiency, and improve their
supply chain cycle times. SCM software can also help to improve interenterprise
coordination among supply chain process players. The result is much more effective
distribution and channel networks among business partners.

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 OBJECTIVES OF SCM IS

Supply Chain Management (SCM) enables collaboration, planning,

execution, and coordination of the entire supply network, empowering firms
to adapt your supply chain processes to an ever-changing competitive
environment. SCM can help transform a linear, sequential supply chain into
a responsive supply network – in which communities of customer-centric,
demand-driven companies share knowledge, intelligently adapt to changing
market conditions, and proactively respond to shorter, less predictable life
cycles.

• To maximize the overall value generated. The value a supply chain

generates is the difference between what the final product is worth to
the customer and the effort the supply chain expends in filling the
customer’s request.

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 • To achieve maximum supply chain profitability . supply chain
profitability is the total profit to be shared acrpss all supply chain
stages.
• To reduce the supply chain costs to the minimum possible level.
• To ensure smooth flow of material, information and financial between
and among stages in a supply chain to maximize total profitability .

The basic objective of SCM IS is to ensure value for both the business and
the customers.

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 ROLE OF SCM IN CORPORATE
STRATEGY

A company’s competitive strategy defines the set of customer demands that it seeks to
satisfy through its products and services. A supply-chain strategy determines the nature
of procurement of raw materials, transportation of materials to and from the company,
manufacture of the product or operation to provide the service and distribution of the
product to the customer, along with any follow-up service. The ultimate objective of
SCM is to achieve a ‘strategic fit’ between the company’s competitive strategy and
supply-chain strategy. This strategic fit can be achieved by Understanding the customer
demand, which helps the company to define costs and service requirements and
understanding the supply chain that helps the company to design and manage its supply
chain in accordance with the customer’s demand. If any mismatch exists between what
the supply chain is capable of doing with respect to customer demands, the company can
either alter the structure of the supply-chain design or alter its strategies

With the globalization of the world economy, the diversity and environmental factors that
influence a company’s global strategies and approach, supply-chain drivers influencing
the companies to become increasingly global. Different approaches to globalization
require different degrees of supply-chain integration, as well as different supply-chain
strategies and structures. Whatever approaches to globalization and global supply-chain
management are adopted, companies face the challenges of understanding and managing
the greater complexity and risks inherent in the global environment

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 BENEFITS OF SCM IS

• Increase in overall efficiency

• Fast order processing

• Reduction in cycle time

• Eliminate wastage

• Provides flexibility

• Provides competitive advantage

• Eliminate inventory quality problem

• Provides business intelligence tools like Data Mining etc.

• Gives new ways to access te enterprise information for daily activities

• Enhances inter enterprise and intra enterprise coordination

• Strengthens firms relationships with suppliers, distributors, wholesalers, retailers.

• Reduction in cost

• Order tracking made easy

• Quicker transportation of material to market

• Strategic relationships with suppliers

• More accurate order processing

• Demand forecast made easy

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 DECISION TO BE TAKEN IN SCM
INFORMATION TO BE CONATAINED IN SCM
IS

1. Production — What products does the market want? How much of which products
should be produced and by when? This activity includes the creation of master
production schedules that take into account plant capacities, workload balancing, quality
control, and equipment maintenance.

2. Inventory—What inventory should be stocked at each stage in a supply chain? How

much inventory should be held as raw materials, semi-finished, or finished goods? The
primary purpose of inventory is to act as a buffer against uncertainty in the supply chain.
However, holding inventory can be expensive, so what are the optimal inventory levels
and reorder points?

3. Location—Where should facilities for production and inventory storage be located?

Where are the most cost efficient locations for production and for storage of inventory?
Should existing facilities be used or new ones built? Once these decisions are made they
determine the possible paths available for product to flow through for delivery to the
final consumer.

4. Transportation—How should inventory be moved from one supply chain location to

another? Air freight and truck delivery are generally fast and reliable but they are
expensive. Shipping by sea or rail is much less expensive but usually involves longer
transit times and more uncertainty. This uncertainty must be compensated for by stocking
higher levels of inventory. When is it better to use which mode of transportation?

5. Information—How much data should be collected and how much information

should be shared? Timely and accurate information holds the promise of better
coordination and better decision making. With good information, people can make

Thus an SCM IS should consist of information regarding the above mentioned

components via each supply chain member i.e. manufacturer, supplier, distributor,
warehouse, retailer and customer.

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 COMPONENTS OF SCM INFORMATION
SYSTEM OF TATA MOTORS

PEOPLE RESOURCES
People who use the supply chain information system are the top level and middle level
managers, quality inspectors, accountants, engineers, inventory department employees,
suppliers of raw material, distributers , retailers and wholesalers. These are the entities
who also enter data regarding product, inventory and other information into the
information system.

HARDWARE RESOURCES
The hardware resources include all physical materials used in information processing. So
hardware resources used in SCM IS are the computer systems, laptops and desktops.
Also other tangible material like magnetic disk, CDs, optical disk etc.
Each of the Computer system require certain hardware and software specifications

DATA RESOURCES
Data regarding the following flows is stored in SCM IS :
Materials flows. These are all physical products, new materials, and supplies that flow
along the chain. Included in the materials flows are returned products, recycled products,
and materials or products for disposal.

Information flows. All data related to demand, shipments, orders, returns, schedules,
and changes in the above are information flows.

Financial flows. Financial flows include all transfers of money, payments, credit card
information and authorization, payment schedules, e-payments and credit-related data

NETWORK RESOURCES
The network resources involve use of internet, intranet , extranet or VPNs etc to connect
the various parties involved in the supply chains through electronic means.

INFORMATION RESOURCES

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Prior to 1980s the information flow between functional areas with in an organization and
between supply chain member organizations were paper based. The paper based
transaction and communication is slow. During this period, information was often over
looked as a critical competitive resource because its value to supply chain members was
not clearly understood.
IT infrastructure capabilities provides a competitive positioning of business initiatives
like cycle time reduction, implementation, implementing redesigned cross-functional
processes. Several well know firms involved in supply chain relationship through
information technology. Three factors have strongly impacted this change in the
importance of information. First, satisfying in fact pleasing customer has become
something of a corporate obsession. Serving the customer in the best, most efficient and
effective manner has become critical. Second information is a crucial factor in the
managers' abilities to reduce inventory and human resource requirement to a competitive
level. Information flows plays a crucial role in strategic planning.
Thus information is enetered into the SCM IS by all parties –manufacturer, retailer,
distributer, wholesalers, logistics etc to maintain the efficiency of IS throught information
flow.

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 IT TECHNOLOGIES USED IN SCM IS

1. EDI – Electronic Data Interchange

Electronic Data Interchange (EDI) refers to the structured transmission of data
between organizations by electronic means. It is used to transfer electronic documents
from one computer system to another, i.e. from one trading partner to another trading
partner. It is more than mere E-mail; for instance, organizations might replace bills of
lading and even Cheque with appropriate EDI messages. EDI describe both the capability
and practice of communicating information between two organizations electronically
instead of traditional form of mail, courier, & fax. The benefits of EDI are:

1. Quick process to information.

2. Better customer service.
3. Reduced paper work.
4. Increased productivity.
5. Improved tracing and expediting.
6. Cost efficiency.
7. Competitive advantage.
8. Improved billing.
Though the use of EDI supply chain partners can overcome the distortions and
exaggeration in supply and demand information by improving technologies to facilitate
real time sharing of actual demand and supply information.

2. EFT – Electronic Fund Transfer

Electronic funds transfer or EFT refers to the computer-based systems used to perform
financial transactions electronically. The various benefits of EFT are:

• EFT payments are safer than checks, and should eliminate time and cost loss in
forged, counterfeit, and altered checks.
• EFT eliminates lost or stolen checks.
• EFT payments are faster than checks, with funds available on the date the
payment is due.
• EFT payments are easy and convenient.
• EFT payments eliminate the need to obtain and deposit your paycheck or cash
your paycheck each payday.

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3. Bar coding and Scanner:

Bar code scanners are most visible in the check out counter of super market. This code
specifies name of product and its manufacturer. Other applications are tracking the
moving items such as components in PC assembly operations, automobiles in assembly
plants.

4. Data warehouse:

Data warehouse is a consolidated database maintained separately from an organization's

production system database. Many organizations have multiple databases. A data
warehouse is organized around informational subjects rather than specific business
processes. Data held in data warehouses are time dependent, historical data may also be
aggregated.

5. Enterprise Resource planning (ERP) tools:

Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core of
their IT infrastructure. ERP system have become enterprise wide transaction processing
tools which capture the data and reduce the manual activities and task associated with
processing financial, inventory and customer order information. ERP system achieve a
high level of integration by utilizing a single data model, developing a common
understanding of what the shared data represents and establishing a set of rules for
accessing data.

6. Advanced Planning and Scheduling Systems:

Developed in the early 1990s, Advanced Planning and Scheduling (APS) systems work
on the principles that if the information relating to all the entities in a supply chain –
suppliers, manufacturers, retailers and business partner – is integrated and made available
to all other entities, it will result in the production of the right production the required
quantity with the required number of people and on-time delivery to the customer. These
applications aim to reduce the inventory that a company stocks through accurate
forecasting, near perfect scheduling and reduced cycle times. Customer satisfaction
levels are increased as the good are delivery on-time due to increased efficiency in the
distribution process.
APS consists of information technologies – software and hardware, business processes,
and tools for measuring performance. The information technology allows communication
flow between the manufacturer and the supplier. An APS system is implemented either
as a stand-alone solution or integrated with an enterprise system. The enterprise system

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for smaller companies may be accounting packages, while for medium and large
companies they could be ERP systems. An APS systems includes a number of software
solutions for different problems.

7. Forecasting and Inventory Management Softwares

Manufacturers invest substantial amount on maintaining inventory which consists of raw

materials and finished goods. Thus managing inventory forms an integral part for any
organization. Inventory management can be defined as the process of planning and
controlling inventories in the supply chain of an organization. In other words it is about
maintaining a preferred stock of certain specified products. The objective behind
inventory management is to optimize inventory investment, manufacturing, profitability,
distribution, operations and return on investment. Forecasting of inventory is another
problem that the companies face which leads to excess or insufficient inventory. Hence,
forecasting inventory is requirements accurately forms the core of an efficient inventory
management system.

It is important for a company to make appropriate decisions as far as its inventory is

concerned. This affects the company’s strategic goals i.e. its profitability and
competitiveness. A company which has good inventory management system can utilize
opportunities to improve its bottom line.

A number of inventory forecasting software’s are available in the market which enable a
manufacturer to forecast, plan and optimize inventory quickly accurately. Valogix and
SmartForecast are examples of same

8. RFID Technology

Radio frequency identification (RFID) is a technology through which stored data can be
remotely retrieved. The use of RFID technology to track the movements of goods started
in the 1980s and quickly became popular. RFID technology uses a small device called a
tag which contains a microchip and an antenna. There are several methods of
identification, but the most common is to store a serial number that identifies a person or
object, and perhaps other information, on a microchip that is attached to an antenna (the
chip and the antenna together are called an RFID transponder or an RFID tag). The
antenna enables the chip to transmit the identification information to a reader. The reader
converts the radio waves reflected back from the RFID tag into digital information that
can then be passed on to computers that can make use of it.

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Key components of RFID:

• An RFID tag consists of a microchip attached to an antenna. RFID tags are

developed using a frequency according to the needs of the system including read
range and the environment in which the tag will be read. Tags are either active
(integrating a battery) or passive (having no battery). Passive tags derive the
power to operate from the field generated by the reader.
• An RFID reader, usually connected to a Personal Computer, serves the same
purpose as a barcode scanner. It can also be battery-powered to allow mobile
transactions with RFID tags. The RFID reader handles the communication
between the Information System and the RFID tag.
• An RFID antenna connected to the RFID reader can be of various sizes and
structures, depending on the communication distance required for a given
system's performance. The antenna activates the RFID tag and transfers data by
emitting wireless pulses.

Frequency Band Description Range

125 - 134 KHz Low Frequency To 18 inches

13.553 - 13.567 MHz * High Frequency 3 - 10 Feet

400 - 1000 MHz Ultra-high Frequency 10 - 30 Feet

2.45 GHz Microwave 10+ Feet

• An RFID station, made up of an RFID reader and an antenna. It can read

information stored into the RFID tag and also update this RFID tag with new
information. It generally holds application software specifically designed for the
required task. RFID stations may be mounted in arrays around transfer points in
industrial processes to automatically track assets as they are moving through the
process.

RFID tags are attached to manufactured products. The tags emit signals that are read
using transmitters. These transmitters are connected to the ERP systems in the company.
When the product with the RFID tag passes through an electro-magnetic zone, the tag
responds to the reader’s signal and transmits the information back to the reader. Thus,
accurate information reading the movement of goods from the suppliers’ plants to the
distribution centers and finally to retail stores, is captured in real time.

RFID is most commonly used in retail businesses. RFID provides benefits to both
retailers and their suppliers by tracking the movement of a product from the time of

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production stage to the stocking stage, to the point where the end-customers purchases it.
By keeping products with RFID tags on shelves with built-in readers, the movement of
the tagged product is monitored and communicated to the computers in the stores. Thus
the stock situation is brought to the notice of the concerned department constantly and
replenished accordingly. This reduces the amount time the employees put into
monitoring stock levels.

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 SUMMARY AND CONCLUSION

World is shrinking day by day with advancement of technology. Customers'

expectations are also increasing and companies are prone to more and more
uncertain environment. Companies will find that their conventional supply
chain integration will have to be expanded beyond their peripheries. The
strategic and technological innovations in supply chain will impact on how
organizations buy and sell in the future. However clear vision, strong
planning and technical insight into the Internet's capabilities would be
necessary to ensure that companies maximize the Internet's potential for
better supply chain management and ultimately improved competitiveness.
Internet technology, World Wide Web, electronic commerce etc. will
change the way a company is required to do business. These companies
must realize that they must harness the power of technology to collaborate
with their business partners. That means using a new breed of SCM
application, the Internet and other networking links to observe past
performance and historical trends to determine how much product should be
made as well as the best and cost effective method for warehousing it or
shipping it to retailer.

One of the biggest benefits technology has given to the supply chain concept
is the ability for companies to collaborate. These collaborations are designed
for the mutual benefit of all parties.

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 BIBLIOGRAPHY

BOOKS:

• Sunil Chopra and Peter Meindel. Supply Chain Management: Strategy,

Planning, and Operation, Prentice Hall of India, 2002.
• Sridhar Tayur, Ram Ganeshan, Michael Magazine (editors). Quantitative
Models for Supply Chain Management. Kluwer Academic Publishers,
1999.
• Effective SCM: Concepts and Cases by Londhe B R.
• Essentials of Supply Chain Management, 2nd Edition by Michael Hugos.
• Lean Logistics: The Nuts And Bolts of Delivering Materials and Goods
by Michel Baudin.
• World Class Production and Inventory Management, 2nd Edition by
Darryl V. Landvater.

WEBSITES:

• lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html
• www.scmlowdown.com
• www.studentwebstuff.com/mis
• www.esnips.com
• www.businessinsights.biz
• www.sap.com
• www.cis.gsu.edu

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