16

Information
Technology in a
Supply Chain

PowerPoint presentation to accompany

Chopra and Meindl Supply Chain Management, 5e
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall.

17-1
1-1
 Learning Objectives
1. Understand the importance of information
and information technology in a supply
chain
2. Know at a high level how each supply
chain driver uses information
3. Understand the major applications of
supply chain information technology and
the processes that they enable

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 Role of IT in a Supply Chain

A) Information
Information provides the foundation on which supply
chain processes execute transactions and managers
make decisions
- without information, a manager cannot know what
customer want, how much inventory in stock etc
- information provides supply chain visibility , allowing
managers to make decision to improve supply chains
performance.

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 Role of IT in a Supply Chain

B) Information Technology
Consists hardware, software, and people throughout a
supply chain that gather, analyze, and execute upon
information
IT serves as eyes & ears of management in a supply
chain , capturing and analyzing the information
necessary to make a good decision
Example : RFID

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 Role of IT in a Supply Chain

To support effective supply chain decisions, information

must have the following characteristics:
1. Information must be accurate
- unclear information difficult to make good decisions
2. Information must be accessible in a timely manner
- up to date information & easily accessible
3. Information must be of the right kind
- accurate data
- reliable sources
4. Information must be shared
- stakeholders share a common view of the information
- different information with different stakeholders misaligned actions
plan

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 Role of IT in a Supply Chain
Information is used when making decisions
about:
1. Facility- location, capacity and schedules of facility
2. Inventory- cost of carrying inv, costs of stocking out,
ordering
3. Transportation- costs, customer location , shipment
sizes
4. Sourcing- product margins, prices, quality, lead times
5. Pricing and revenue management- demand,
customer segment on willingness to pay

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 The Supply Chain IT Framework
Provides access and reporting of supply
chain transaction data
Advanced systems layer a level of
analytics that uses transaction data to
proactively improve supply chain
performance
Enterprise software forms the foundation
of a supply chain IT system

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 The Supply Chain
Macro Processes

Customer Relationship Management (CRM)

Internal Supply Chain Management (ISCM)
Supplier Relationship Management (SRM)
Rest on Transaction Management Foundation
(TMF), basic enterprise resource planning (ERP)
systems
When enterprise performance is closely linked to
supply chain performance, firms must focus on
macro processes

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 The Supply Chain
Macro Processes

Figure 17-1

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 Customer Relationship Management

The processes that take place between an

enterprise and its customers downstream in
the supply chain
Key Processes:
Marketing
Sell
Order management
Call/service center

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 Internal Supply Chain Management

Includes all processes involved in planning

for and fulfilling a customer order
ISCM processes:
Strategic Planning
Demand Planning
Supply Planning
Fulfillment
Field Service
There must be strong integration between
the ISCM and CRM macro processes

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 Supplier Relationship Management
Those processes focused on the interaction
between the enterprise and suppliers that are
upstream in the supply chain
Key processes:
Design Collaboration
Source
Negotiate
Buy
Supply Collaboration
There is a natural fit between ISCM and SRM
processes

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 Supplier Relationship Management

Figure 17-2

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 The Transaction Management Foundation
ERP software system
Earlier systems focused on automation of simple
transactions and the creation of an integrated method of
storing and viewing data across the enterprise
Current focus on improving decision making in the three
macro processes
Real value of the TMF exists only if decision making is
improved
The extent to which the TMF enables integration across
the three macro processes determines its value

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 The Transaction Management Foundation

Figure 17-3

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 The Future of IT in the Supply Chain

Three important trends impact IT in supply chain :

1. The growth in software as a service (SaaS)
- software that is owned, delivered and manage
remotely.
2. Increased availability of real data
- make smarter & faster decisions
3. Increased use of mobile data

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 Risk Management in IT
Installing new systems
Revised business processes
Integration
Software glitches
Power outages
Viruses

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 Supply Chain IT in Practice

1. Select an IT system that addresses the

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

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