Information Technology In Supply Chain

Ch 16 Ayushi Kakwani Riddhi Patel

Role of IT in supply chain

Information is crucial to supply chain performance and provide foundation for the same Information serves as a glue that allows other supply chain drivers to work together with the goal of creating an integrated, coordinated supply chain

Role of IT in supply chain

IT consists of hardware, software and people throughout a supply chain that gather, analyze and execute upon information IT captures and analyze information necessary to make a good decision IT is also used to analyze the information and recommend an action IT can set production schedules and inventory levels

Example
IT system at a PC manufacturer May tell a manager how many processors are currently in stock, IT system can take number of processors in inventory, look at demand forecasts, determine whether to order more processors or not etc

Example
Walmart Walmart collects data in real time on what products are being purchased at each of its stores and then sends these data to the manufacturers Walmart analyzes this demand information to determine how much inventory to hold at each store and to decide when to order new loads of product from manufacturer Manufacturers uses this information to set its production schedules to meet Wal-Marts demand on time

Information must have the following characteristics

Information must be accurate Information must be accessible in a timely manner Information must be of right kind Information must be shared

Information used in following supply chain drivers

1. Facality Wal-Mart suppliers use the demand information from Wal-Marts stores to set their production schedules.Wal-Mart uses this information to determine where to place its new store and cross docking facalities

Information used in following supply chain drivers

2. Inventory Wal-Mart collects detailed demand, cost, margin, and supplier information to determine cost of carrying inventory, cost of stocking out, cost of ordering and demand patterns

Information used in following supply chain drivers

3. Transportation Walmart uses information to tightly integrate its operating with its suppliers. This integration allows it to implement crossdocking in its transportation network , saving both inventory and transportation costs

Information used in following supply chain drivers

4. Sourcing Information on product margins, prices ,quality, delivery lead time etc is very important in making sourcing decisions Eg:Dell has started to outsource its retail function to firms like Walmart

Information used in following supply chain drivers

5.Pricing and revenue management Information on demand-(its volume and various customer segments), willingness to pay , product margin , lead time , availability

The Supply Chain Macro Processes

Customer Realtionship Management

Internal Supply Chain Management

Supplier Relationship Management

Customer Relationship Management

Consists of processes that take place between enterprise and its customers downstream in the supply chain Goal of CRM is to generate customer demand and facilitate transmission and tracking of orders

Key processes under CRM

1. Marketing Decisions regarding which customers to target, how to target, what products to offer , how to price products , how to manage campaigns

Key processes under CRM

2. Sell Providing the sales force the information it needs to make a sale and then execute the actual sale Includes Sales force automation, configuration and personalization

Key processes under CRM

3.Order management: This process ties together demand from the customer with supply from the enterprise Process of managing customer order and execute order fulfilment

Key processes under CRM

4.Call/service center: Primary point of contact between company and customer Helps customer place order, suggest products ,solve problems , provides information on order status

Advantages of CRM
Address customers needs when using online or Web based applications. Enable businesses to make informed decisions using intelligence reaped from customers. Provide records of works in progress and reporting on customer service functions. Help organization manage customer performance and take steps to improve performance.

Advantages of CRM
Enable organizations to forecast customer response rates and retention Allow managers to collect and organize customer information and disburse to appropriate departments like marketing or sales Helps organizations schedule environments that enable better customer service delivery. Allows organization to create closer and more intimate customer relationships. Builds greater overall customer satisfaction and loyalty, which in turn boosts customer retention.

Advantages of CRM
Helps manage sales force functions and eliminates time wasting tasks including scheduling and setting appointments with customers. Allows sales and marketing teams to collect customer information and plan enhancements of service delivery. Enables a central resource for business communications regarding customer transactions.

Internal Supply Chain Management

Includes all processes involved in planning for and fulfilling a customer order Focused on operations internal to the enterprise

Various processes included in ISCM

1.Strategic Planning: Focuses on network design in supply chain

2.Demand Planning: Forecasting Demand and analyzing the impact on demand of demand management tools such as pricing and promotions

Various processes included in ISCM

3.Supply planning: It takes demand forecasts produced by demand planning and the resources made available by strategic planning as input and produce optimal plan to meet this demand 4.Fulfillment: Links each order to a specific supply source and means of transportation. Sees that the demand is executed

Various processes included in ISCM

5.Field service : Finally after the product has been delivered to the customer, It eventually needs to be serviced. Service processes involves setting inventory levels for spare parts as well as scheduling service calls

Supplier Relationship Management

Includes those processes that are focused on the interaction between the enterprise and suppliers that are upstream in the supply chain

Macro Processes and their processes

SRM
Design Collaboration Source Negotiate Buy ISCM Strategic Planning Demand Planning Supply Planning Fulfillment CRM Market Sell Call Center Order Management

Supply Collaboration

Field Service

Risks in IT
Process of adding new supply chain capabilities with existing IT system is fraught with dander The larger the change in the IT system , the greater is the risk of a negative impact on operations The major risk is the risk involved in installing the new IT system

During the process of installing new IT system, trouble can be found in both business processes and technical issues

Risks In IT
New IT systems often require employees to operate according to new processes These may be difficult to learn, take training to execute correctly, or even be outright resisted by employees Getting entire organization on board with changes brought by IT , is very difficult

Technical hurdles to overcome in getting the new IT system operational is another issue to be addresed

Supply Chain IT In Practice

1.Select an IT system that addresses the companys key success factors: Two or three elements that determine whether the company is going to be successful or not Eg: ability to set inventory levels optimally is crucial in PC business, where product life cycles are short and inventory becomes obsolete quickly. This is not the case with chemical industry Thus, PC company might pick a package that is strong in setting inventory levels even if it is weak in maximizing utilization of production capacity

Supply Chain IT In Practice

2.Take incremental steps and measure value Instead of installing a complete supply chain system across the company all at once , start by getting the demand planning and then gradually move to supply planning The incremental approach does not mean that one should not take big picture perspective, but rather the big picture perspective should be implemented in digestible pieces

Supply Chain IT In Practice

3.Align the level of sophistication with the need for
sophistication: Management should consider the depth to which an IT system deals with firms key success factors
Trade off between the ease of implementation of system and systems level of complexity

Supply Chain IT In Practice

4.Use IT system to support decision making , not to make decisions A mistake companies can make is installing a supply chain system and then reducing the amount of managerial effort it spends on supply chain issues

Supply Chain IT In Practice

5.Think about the future
Make sure that IT choices take future trends in mind How flexible the IT system can be Viability of supply chain software developer itself Software should not only fulfill companies current needs but also future needs