Information Technology in Supply Chain Management

ABSTRACT :

Information is one very important aspect of supply chain management as a basis for managers in making decisions. Information technology is a tool used to investigate the information, analyze the information, and then use it to improve the performance of the Supply Chain Management.
Keywords: Supply Chain Management, Information Technology, ERP INTRODUCTION Information is critical to the performance of supply chain or supply chain as the basis for the implementation of the information supply chain processes and the basis for managers in making decisions. Without that information, a manager can not know the demands of the customer, how the material is available and the amount and type of products to be made. As shown in Figure 1, the flow of information between divisions within a company as well as between companies in a supply chain manager supply chain will provide visibility or a view of the entire supply chain so that they can make better decisions. Information also allows a manager to make decisions with a wider coverage is not limited to a single function, and on-site manager of the company's work, but also take into account the business partners in the supply chain. If we go back to the example of making decisions about the most economic order size, then the manager of a company tend to determine the size of your order based solely on the costs that they should spend their own. This decision can be optimal only for the company, but not necessarily optimal for the entire supply chain. In fact, if the same managers take into account information about the costs of the supplier then the decision may be more optimal for the entire supply chain. In addition, various information about the manufacturing, distribution and retail as well as demand will help the managers make better decisions to achieve the success of the entire supply chain. According to Chopra and Meindl (2007) the information must have several characteristics that could be useful in decision-making supply chain: Accurate. Information should describe the actual conditions so managers can make good decisions. Of course there is always the possibility that the information provided contains errors. But at least it should give you the information most do not lead to the truth. Right. A company can easily drown in a sea of

Figure 1. The information in the supply chain

information, but can not make good decisions because the information is not in accordance with the needs. Companies should really consider what information is needed so as not to waste resources to collect, store and maintain information that is not needed. Can be accessed when needed. Often what happens is the information actually exists, but can not be accessed when needed. The information accurate but can not be accessed in times of need can not help make decisions. INFORMATION TECHNOLOGY FOR SUPPLY CHAIN Given the important role of information in supporting the performance of supply chain managers need to understand how information is collected and analyzed. SimchiLevi et al (2004) interpret the information technology (IT) as tools, either hardware or software, which is used to determine the presence of information and analyzes that information to take the best decision for the supply chain. Chopra and Meindl (2007) termed IT as the eyes and ears, and even a portion of the brain, from the management in a supply chain that capture and analyze the information required for decision making. Simchi-Levi et al (2004) said that the purpose of the application of IT in supply chain management are: a. Collecting information about a product from production to delivery and purchasing and supply pattern of view of all parties in the supply chain. b. Provides access to all data and information in the system through a single point of contact (single-point-of contact). The goal is all the information that is available either for customers or for internal needs to be accessible in one step and remains the same regardless of the way to access

the data either by phone, fax, or internet, or anyone who needs the data. c. Analyze, plan and make a tradeoff based on information from all components in a supply chain. d. Collaboration with partners to address the uncertainties, among others, through the sharing of information, and achieve lobal optimization. According to Simchi-Levi et al (2004) The fourth goal should not be achieved at the same time and not necessarily dependent on each other. These objectives can be targeted simultaneously with the level of importance depending on the industry, company size, internal priorities and the consideration of return on investment. A shipping company, will be more emphasis on the ability of IT to provide the latest information on products ranging from shipping points until the product reaches the customer. Meanwhile, the banks are requiring IT support to provide access to information through contact points Sahi. The company manufactures a daily basis to manage complex production activities will emphasize the availability of IT to assist in the analysis and planning. The discussion on the implementation of IT in the supply chain in this chapter will be done with the framework shown in Figure 2. It begins by reviewing the necessary infrastructure in the implementation of IT in the enterprise and supply chain. Once the basic infrastructure, the IT implementation also requires special components used to support the supply chain requirements such as Enterprise Resource Planning, or application software supply chain and ebusiness.

KOMPONEN KOMPONEN TEKNOLOGI INFORMASI DALAM RANTAI PASOK

E-BUSINESS ANALYTICAL TOOLS ENTERPRESE RESOURCE PLANING

that users can share files, e-mail and other applications. Furthermore, the various separate office of a company is then connected via Wide Area Networks (WAN). With the development of the computing power of a PC and a better interface comes new system is a client / server where the PC is the client and the server can be either mainframe or server system. Both client and server run by the operating system. The concept of client / server distributed processing that involves the client deal with the demands of local employment data bit while the mainframe / server doing public work with large data requests to the company. The architecture of the operating system today generally are client / server system despite the sophistication and cost of the client, the number and types of servers as well as various other design parameters vary considerably from one system to another system. Chain of suppliers and customers in general are currently operating through the internet which is a form of the structure of distributed client / server, or the network of networks in which the web browser is the client connected to a web server. A Virtual Private Network (VPN) is an internet-based transmission method that is cheap and safe to enable communication between users and the supply chain. VPNs use encryption protocol to ensure secure communications. External VPN users see the system as if they were in the facility using LAN. b. Database (Database) Data and information flows in the supply chain such as information about the transaction, status, etc. should be arranged in the form of data base. The database is a repository of data that is structured to serve specific needs. The database is currently in

INFORMATI OPERAT DATAB PRESENTA ON ING ASE TION TECHNOLO SYSTEM GY INFRASTRU CTURE Figure 2. Implementation of IT in supply chain IT Infrastructure Critical factors that determine the success of IT implementation in a system is the infrastructure. There are several levels within a company's IT infrastructure: a. Operating Systems and Networks IT infrastructure needs such as software programs or documentation needed to use the computer. Operating System (Operating System) such as Windows, Unix, Linux and Mac OS is a collection of software that regulates the use of hardware and application programs. The system architecture includes how the components of the IT infrastructure is configured. The system architecture has evolved from legacy systems into the architecture of client / server. Simchi-Levi et al (2004) explains that the legacy systems to evolve from the solution using a mainframe sekap departments that are accessed via the terminal. Initially, personal computer (PC) is used for special applications such as word processing and spreadsheets, separate from the main system of the company. However, in its development of computers in an office connected via Local Area Networks (LAN) so

need of a database management system (Database Management Systems / DBMS) is a software designed to organize data and provides a mechanism to store, maintain and retrieve data on a physical medium (database). A DBMS separates the data from the application program and the use data and allows a different view of the data. Data structure varies from flat files such as a simple Excel table to a relational database consists of many tables and flat files, each of which resembles an Excel table. File types from the database include: - Relational Database is the most common form of database that allows users to get the information from two or more databases consisting of two-dimensional data array. Figure 11.4 shows an example of a sales order information set forth in relational databases. In this case the information about the customer and the product does not need to be displayed for each sales order, but only the number of customers and number of products. More detailed information can be obtained by looking at the related tables using the customer number and the product.

stored is not limited to numerical data or character data but also more complex such as images and video. - Data Warehouse is a repository of data that is specially prepared to support the decisionmaking applications. Data warehouse combines data from multiple databases and transaction processing systems for specific needs. Data warehouses are often made to consolidate information on a particular subject such as history or projected sales demand when the information is located in various incompatible databases. Type of database is also used for ad hoc querying and analysis so that unplanned transactional database can be used specifically for the transaction. The data warehouse is best used for planning decisions such as where or how much inventory should be kept, while the most appropriate transactional database for real-time decision as the movement of inventory. - Datamarts is a small version of a data warehouse is used for a particular department. Smaller data set that allows querying and analytical applications work faster than the full database. - Groupware Database is a database that is generally used to restrict access to data on a group of users that have been defined. This type of database is designed to accommodate group functions such as track changes, enables access by multiple users and others. The database is especially important for the supply chain as it enables companies to control the data that is shared with a particular partner without sacrificing the primary database. In addition the data base is also very important in the era of virtual enterprise teleconunuting and shared data bases which are needed to ensure that each party to get the latest information.

Figure 3 Information Sales Orders - Object-Oriented Database similar to a relational database's just the type of data

c. Application Application level of the infrastructure system includes all software applications that are used to plan, create, organize, calculate, send and return the product and services. These applications include systems at the level of strategic, tactical and operational. Applications related to supply chain management will be discussed in the IT components in the supply chain. d. Presentation Another part of the infrastructure is a presentation that includes a graphical user interface (GUI) for all applications and communication technologies. Some of the most commonly used GUI is a PC, voice mail, terminal, internet devices, bar code scanners, and Personal Digital Assistants (PDA).Development of the Internet has led to a internet browser interface that is widely used to access the information. The device interface is connected to the internal systems (such as LAN, mainframe, intranet) or external networks both private company network or the Internet. Sometimes use direct links to other enterprise systems for efficiency and safety. Today the trend in communication lead to wireless communications and a single point of contact. Besides recent developments in the field of technology is Radio Frequency Identification (RFID) is rapidly evolving as the standard in presentation tools. These technologies include the intelligence of the physical object that allows objects to communicate with each other and with businesses and consumers. When compared with traditional barcode technology, RFID has many advantages such as large storage capacity, remote reading, writing, and reading again, better data security and the ability to read many tags simultaneously (Lin, 2009). All industries

should pay attention to this new technology, especially the logistics and retail industries. Components of IT in Supply Chain Discussion of the components of IT in the supply chain in this book combines perspectives from Simchi-Levi et al (2004) by Chopra and Meindl (2007). Both Simchi-Levi et al (2004) and Chopra and Meindl (2007) considers both the IT components in the supply chain as an application or software that supports various managerial processes in the supply chain. As the basis of this application is the Enterprise Resource Planning (ERP). ERP is now regarded as the backbone of the IT companies are able to integrate various functions and make the company more efficient. However, ERP's main function is to provide data and information from a single source in real time. ERP has traditionally been unable to help companies make decisions about what to make, where, when and to whom (Simchi-Levi et al, 2004). For the needs of the planning, implementation and control of the enterprise and supply chain requires a range of analytical tools (Analytical Solutions) as a decision support system (Decision Support Systems). Simchi-Levi et al (2004) then describes the capability of IT to achieve perfection in supply chain networks. Capability is divided into four layers, namely strategic, tactical, operational planning and operational execution. Meanwhile, Chopra and Meindl (2007) group support software supply chain based on three processes that they refer to as a macro process that supplier relationship management, internal supply chain management and customer relationship management. The three macro-processes including the lining of the operational implementation of the grouping Simchi-Levi et al (2004). Therefore, these two perspectives can be synthesized into a framework of supply

chain components Each component will be described in more detail in the next section begins with an explanation of the ERP. Enterprise Resource Planning One part of IT in the enterprise and supply chain network today is the Enterprise Resource Planning (ERP). ERP is a major advancement in IT has changed the way the various departments within the organization to manage data and information. Historically, each department or function within the organization has its own system for managing data and information they need. ERP is a software package that attempts to integrate all departments and functions of a company into a single computer system that can serve the needs of the various departments (Botta-Genoulaz & Millet, 2006). According to O'Leary (2000) ERP system is assumed to have the following characteristics: o vang software package designed for client / server environments both traditional and web-based o Integrate most business processes o process the most transactions of an organization o Using a database of companies that are generally keep each piece of data as much as one-time o Allows access to data in real time o In some cases, allows the integration of ERP transaction processing and planning activities such as production planning. In a further development, ERP expanded by integrating internal processes with the company's suppliers and customers to

enhance the functionality of the supply chain (Olhanger and Selldin, 2003). IT Development for Supply Chain After discussing the components of IT in supply chain issues need to be discussed further. The problem first appeared is how to unite all the IT components? Basically, supply chain management is so complex that there is no simple and inexpensive solution to cover all aspects of supply chain management has been described previously. In addition, the lack of standards related to IT in supply chain management led the company to decide whether to get the IT components from a single vendor (single integrator) or use a "best-of-breed". Standardization There is encouragement and a strong trend for the emergence of IT standards. Standards in IT arise due to a variety of encouragement. First, is the encouragement of a competitive market that supports the standard cost for perigadaan, development, maintenance of IT and especially the cost of connecting the various systems become cheaper. In addition, the standard allows for connectivity between the various users of IT systems. The existence of a standard made the development, integration and maintenance become simpler, and technology can be launched into the market more quickly. Standards in IT originally evolved from propriPfary standards using only paper-based data transfer between computer systems into a standard stand-nlone such as Microsoft Windows, client / server model, and standard Electronic Data Interchange (EDT) to transfer data. The advent of the Internet, a distributed and open interfaces, encouraging open communication standards and distributed.

CONCLUSION In implementing information technology for supply chain management, information providers and enterprises requiring components to process analytical information into the right decisions for the supply chain. The implementation of the components of the supply chain will require quite a bit of resources. Considering most of the companies has a limited source of Dava, the question that then arises is how the company decided to implement the components of the supply chain? Which were the first to be implemented? Should companies buy from the same vendor? Ideally, the company will implement ERP first to integrate all the data and information within the company. After that the company conducted an analysis of the entire process in the supply chain by using analytical tools. However, ERP implementation requires no small investment, long time, and affect many parts within a company. Therefore, the company may choose to integrate multiple databases to provide information for analytical tools that are implemented. The company does not have to wait before implementing the ERP implementation of analytical tools. Surely the company should implement analytical tools that will deliver results quickly and clearly. Type of analytical tools or decision support system applied will terganttmg the industry and the potential impact of these tools on the business. The next issue to consider is what approach should be used in the holding company for the various components of the IT supply chain. The alternative is to buy all the components of the company (both ERP and supply chain analytical tool) as a single

solution from a single vendor, or company to build solutions "best-ofbreed" by buying the most suitable solution in each category from different vendors. Each method has advantages and disadvantages. Approach to best-of-breed potentially provide a better solution to the problem and provide longterm flexibility. However, the solution is more complex and more time consuming thereby potentially reducing the benefits of the implementation and pose a challenge to maintain the enthusiasm of the staff to the project. Many companies take the middle ground by using a dominant ERP provider, then the functionality is not provided by the provider or do not fit with the company are held through a best-of-breed or independently developed by the company. There are also companies like Wal-Mart who chose to develop proprietary software internally. Surely this can be done by large companies that have competent IT departments and systems that can serve the company well. REFERENCES

[1] Botta-Genoulaz & Millet (2006).An Investigation Into the Use of ERP System in the Service Sector, International Journal of Production, Vol 99, PP 202-221 [2] Chopra,S & Meindl,P (2007), Supply Chain Management : Strategy, Planning and Operations, Third Edition, Pearson Education Inc. [3] I Nyoman Pujawan & Mahendrawati (2010) Supply Chain Management,Guna Widya, Surabaya.

[4] Simchi-Levi dkk (2004), Managing The Supply Chain : The Definitive Guide for the Business Professional, McGraw-Hill