IT is an enabler for streamlining Supply Chains.

1. Information Technology in
Managing the Supply Chain
S G Deshmukh

2. Advanced use of IT
DATA AND INFORMATION FLOW READILY TO ALL
PARTS OF THE SUPPLY CHAIN. COMPUTER-AIDED
DECISION-SUPPORT SYSTEMS USE THIS
COMPLEX INFORMATION TO ENABLE BETTER,
FASTER DECISIONS THAT THEN ARE QUICKLY
COMMUNICATED THROUGHOUT THE SUPPLY
CHAIN

3. Internal Integration
Integrated Systems (e.g. ERP)
 Linking various business functions

–
–
–
–
–
–

Purchasing
Manufacturing
Inventory
Finance
Marketing
Distribution etc
Shared data & integrated processes

4. External Integration

Inter-organizational Systems (Extranet)

Link firm’s systems with external
entities
(Suppliers,
distributors,
retailers etc.)

Shared data & integrated processes

5. Benefits due to Integrated SCM


Integrated view of resources and
constraints
Improved channel efficiency by sharing
of information between suppliers &
customers

Reduced inventory levels

Reduced production costs

Enhanced Quality

Customer driving the entire chain

6. IT capabilties
Capability
Organizational impact / benefit
Typical example
Transactional
IT can transform unstructured processes into
routine transactions.
Accounts receivables and accounts payable
procedures, Evaluation of various modes of
transport
Automatica
l
IT can replace or reduce human
labor in a routine process
Preparation of vendor rating
reports, goods inspection report
etc.
Analytical
IT can bring complex analytical
methods to bear on a process
Calculations of economic ordering
quantity, supplier evaluation using
multi-attribute
decision
making
models
Information
al
IT can bring vast amounts of
detailed information into process,
Data on extensive profile of
customer required for customer
relationship management etc.
Sequential
IT can enable changes in the
sequence tasks in a process often
allowing multiple tasks to be worked
on simultaneously
Various steps required for checking
credit worthiness of a customer.
Tracking
IT allows the detailed tracking of
task status, inputs, and outputs
Tracking the status of a particular
purchase order., tracking inventory
of an item using bar code in a
warehouse etc.

7. IT Enablers

ERP
Information integrated within the
organization

Intranet
Collaborative working
Internet
Global linkage of various entities
 e-commerce Managing the ‘money’ flow

faster

Datawarehousing/
Data mining
Storage of data and tracking of
customers

8. E-commerce application in SC
Marketing & Sales
On line product information
Electronic selling
Product offerings/e-supermarkets
Procurement/Logistics
Electronic auctioning/bidding
Low cost transportation
Point-to-point selling
Point-to-point warehousing
Customer Service
Repair/return/replacement
On-site fixing
Technical support
Product usage information
Inventory Management
High visibility
Removal of obsolete items
On-line status information on inventory
Spot sell of items

9. Advantages of E-procurement
solutions
Indirect procurement
Direct procurement
Sourcing
Price reduction
Visibility
demand
Unit cost reduction
Improved
compliance
contract
of
customer
Visibility of supply chain
capacity
Enhanced
making
Shortened cycle times
Accuracy
capacity
Improved
intelligence
Reduced admin costs
Reduced inv/op costs
Enhanced
management
Shortened proc cycle times
inventory
of
production
decision
market

10. INSIGHTS
Inventory & Information are inter linked
uncertainty
inventory
Buffer
more
( lack of proper information )
Better information
Less Inventory
Systems that accomplish this :



Forecasting
Customer Needs,
Tracking of Distributors

11. IT Applications in
SCM

Point - of - sales information systems for
customer voice - For better understanding

Tracking of vehicles in Real-Time - For
better distribution

Tracking of prices, Government policies,
Competition etc. - For better understanding
of environment

12. IT Enables SC to become

Lean by cutting down inventory

Flexible
by
reorganization
of
infrastructure

Agile by responding quickly to various
needs

Green by reducing / eliminating paper
& Recycling

13. Case: XYZ Tyre Company

Tyre Industry at a glance
–
–
–
–
16 Major Players
34 Plants
Top 5 companies hold 70% market share
Rs 9000 Crore Industry
Buyers
OEM’s
 Replacement
 Exports

30 %
60 %
10%

14. XYZ at a Glance

Product range : Truck Tyres, LCV Tyres ,
Radial Tyres, Tubes/Flaps etc.
Sales Turnover : Rs 1500 Crores.
 Manufacturing Plants at Baroda, Cochin,
Kolkata etc.
 RDC’s at Gujrat, MP, Delhi, UP etc.
 DO’s at 98 Locations
 Extensive network of Exclusive Dealers


15. SWOT Analysis

Strengths






Significant market
share.
Good Quality Product
Lowest cost producer
Tie up with Continental
for passenger car radials
Modernization and
expansion plans in
progress

Weaknesses




Purchasing actions not
coordinated
Main business functions
work in isolation
High inventory levels
Currently using a PC
based package for
solving transportation
problem (not taking in
to account of all
production constraints)

16. SWOT Analysis (Contd.)

Opportunities




Growing urbanization,
change in buying habits
Growing automobile
market
Export Potential
Passenger radial market
growing

Threats




Competition by rival
companies in domestic
Increase in input costs,
severe power cuts
Recessionary pressures
Free import under Exim
policy

17. Inbound Logistic
Supplier
Indigenous – 5 days
Imported – 30 days
10 days
Raw
Material
Banbury Master
Batch – 1/3 day
2/3 days
Manufacturing Link in Supply Chain
Ope rations
1 days
Di p unit –
2/3 day
Dual Extruder
– 1/3 day
2.7 days
2/3 days
Final B atch
– 1/3 day
Warehousing
4 Roll cal –
2/3 day
1 days
Tyre Buil ding
– 0.6 day
Dealers
Tyre Curing and
final Assembly –
1/3 day
DO
15 days
Outbound Logistic
10 days
RDC
15 days

18. Problems with existing SC
 Not
having quick response layers in the
distribution system
 Lack of proper information flow
between the echelon and head office
 Dispatch schedule based on
Transportation model
 Various business functions such as
Forecasting, Production and,
Distribution acting in isolation

19. IT Enablers…1

Instead of existing TRANSPORTATION
Model use of TRANSSHIPMENT Model

20. Existing SC
Plants
RDC’s 1
2
DO’s 1
2
…….
F01
3
4
30
F04
5
6
7
8
47
60
80
98
Fig 1(a) : Existing Distribution network model of XYZ

21. Proposed SC based on
TRANSHIPMENT model
Plants
RDC’s 1
2
DO’s 1
2
…….
F01
3
4
30
F04
5
6
47
60
80
Fig 1(b) : Proposed distribution network model of XYZ
98

22. Advantages of the proposed
approach
Any node (plant,RDC,DO) can act as a
supply point or demand point
 More sharing of information
 Supply chain becomes responsive
 Overall cost reduces


23. IT Enablers…2

Decision Support System
–
–
–
Model base
Data Base
User interface

24. IT Enablers…2... DSS
User
Dialogue
Module
Database
Module
Model base
Forecast
Logistics
Master production schedule
dispatches
inventory
relocation
Fig 2 : A Decision Support System for integrated supply chain

25. Model base
LP model to optimize the costs
 Forecasting model for aggregate planning
 Inventory model to manage inventory


26. Various models and purpose of the
model
Model
Forecast( Trend Analysis)
Logistic (Transportation Algorithm)
MPS (Linear programming)
Dispatches(Transshipment
Algorithm)
Inventory
Reallocation
Purpose of the Model
Using Trend lines, Moving average to
forecast the demand for Do’s
Prepare appropriate product mix- Plant
wise, item wise taking consideration of
total Logistic cost.
Prepare the MPS taking in to consideration
the contribution and capacities of each item
at each plant.
Unifying the inventory at various nodes
and minimize the transportation cost.
Using MPS to find the Material
requirement at each plant for a month and
to decide whether to place order.
To minimize the total distribution cost.

27. Databases for Various
Models
Model
Forecast (Trend Analysis)
Logistic (Transportation Algorithm)
MPS (Linear programming)
Dispatches(Transshipment Algorithm)
Inventory
Reallocation
Databases
AVG9697,AVG9798,
COST_MAS,FORE_OUT,FORE_DO
TRA_COST,DEMAND,CAP,MFG_Y_N,C
OST,LOG_MIN,MPS,CAPACITY
VX_TEMP,VX_ICODE,PM_EQ1,PM_TEM
P
TRANSP,TOT_DEM,TOT_SUP,T_COST,T
_COST2,TOT_OUT
BOM,RM_DEM,LOG_MIN,MPS,REVIEW,
RM_DE_HS, VENDOR,ORDER_P1
RELOCOUT,INPUT1,INPUTR-1

28. Benefits of the approach
 Enhancement
of effective Information
flow
 Better monitoring of Inventory
 Reduction in Transportation costs
 Reduction in lead time
 Reduction in inventory
 Reduction in Hidden costs

29. THANK YOU