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Chapter 9

Chapter 9






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    Chapter 9 Chapter 9 Presentation Transcript

    • Chapter 9Interorganizational andGlobal InformationSystems 1
    • Learning Objectives Define and Classify Interorganizational and virtual organizations information systems Describe interorganizational activities, particularly order fulfillment Define and classify global information systems Present the major issues surrounding global information systems 2
    •  Describe Demand-driven networks and RFID as supply chain factors Describe B2B exchanges, hubs, and directories Describe Interorganizational integration issues Describe EDI and EDI/Internet Describe extranets, XML and Web services 3
    • Terms related to new businessenvironment On-demand enterprise  Manufacturing will start only after an order is received.  Build-to-order On-Demand/Real-time  No production step would be ahead or behind as the fulfillment cycle would be primed to respond to real- time conditions.  No backorders 4  No safety stock, lag time
    • Common Interorganizational activities Buying and Selling  Finding a partner  Viewing catalogs  Negotiating  Order taking  Order fulfillment  Billing  Payment  After sales services n more.. 5
    • Common Interorganizational activities Joint Ventures  A contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Collaboration  It just means the coming together of 2 or more parties for the purpose of brainstorming and sharing of expertise. 6
    • Common Interorganizational activities Other  Working jointly on standards  Conducting research etc. 7
    • Order FulfillmentIt is: Providing customer with what they have ordered On time With all related customer servicesDelivery of materials / services at the right time, to the right place and at the right costSometimes includes: Exchange or return of product 8
    • Order Fulfillment Part of Back-office operations (supporting activities, e.g. accounting, inventory mgmt) Also related to Front-office operations (visible to customers, e.g. sales n advertising) 9
    • Typical order fulfillment process Step 1: Making sure the customer will pay  Depending on payment method & prior arrangements, validity of each payment is determined.  In B2B: company’s finance department will do it.  In B2C: customer usually prepay.  Any hold up may cause shipment delay, loss of goodwill or loss of customer. 10
    •  Step 2: Checking for availability  Order information needs to be connected to the information about in-stock inventory availability.  For small orders, intelligent s/w agent may be used  Buyers can also check availability 11
    •  Step 3: Arranging Shipments  If product (digital/physical) available ship to the customer otherwise go to step 5.  Whether product is available or unavailable corresponding information needs to flow among several partners 12
    •  Step 4: Insurance  Sometimes contents of a shipment need to be insured.  Information should flow inside the company as well as to and from customer & insurance agent. 13
    •  Step 5: Replenishment  Some manufacturing or assembly operations may be required to satisfy needs of customized orders.  If standard items are out of stock they need to be procured or produced.  Production can be in-house or by contractors/ suppliers. 14
    •  Step 6: In-house production  Requires planning of –  People & material  Components & machines.  Financial resources  Suppliers n subcontractors  Also includes services such as collaboration with business partners, scheduling of people n 15 equipments etc.
    •  Step 7: Use suppliers  Buy products /subassemblies from suppliers  If supplier is retailer, he must purchase products from manufacturers.  Appropriate receiving and quality assurance is needed 16
    •  Step 8: Customer contacts  Constant contacts with customers are required  Starting with notification of order received , ending with notification of shipment or change in delivery date 17
    •  Step 9: Returns  Customer may want to return or exchange items  Movement of returns from customers back to vendors is called Reverse Logistics. 18
    • Problems Delays and transportation Human errors / misunderstanding Over / Under Inventories Misdirected Shipments Late / Incorrect delivery reporting Slow / Incorrect Billing Difficult / Complex Production Incompatibility of systems (communication) High cost of expenditures / shipments 19
    • Why these problems occur? It involves  material,  information,  money and  many people- Located at different places. 20
    • Solution Automate as many of the activities as possible using IT Results:  Increased speed  Reduced cost of administering the process  Reduced errors  Minimized delays  Reduced inventories 21
    • InterOrganizational Information System (IOS)  Connects two or more organizations.  Mostly sellers and buyers.  Ordering, billing and payment done electronically.  Local or global  Dedicated to one activity (transfer of funds) or supporting several activities (trade, research, 22 communication & collaboration)
    • 23
    • Purpose of IOS To reduce cost To improve the effectiveness and timeliness of business processes 24
    • Advantages of IOS Reduce cost of routine business transaction. Improve quality of information flow by reducing or eliminating errors Compress cycle time in the fulfillment of business transaction Eliminates paper processing and its associated inefficiencies and cost Makes the transfer and processing of information easy to users Customer-supplier relationship is determined in advance 25
    • Virtual Corporation Category of IOS Two or more business partners at different locations share cost and produce product / service Can be temporary or permanent Each partner creates a portion of product / service in which they have special advantage Resources of business partners remain in their location but are integrated for use 26
    • Types of IOS B2B trading systems  Facilitate trading between business partners located in same / different countries B2B support systems  Nontrading systems like hubs directories and other services Global systems  Connect two or more companies in one or more countries Electronics fund transfer (EFT)  Telecommunication networks transfer money among financial 27
    •  Groupware  Facilitate communication and collaboration between organizations (email, fax etc.) Shared databases  Trading partners share databases and other information to reduce time in communicating information System that support virtual companies 28
    • IOS Infrastructure Technologies Electronic Data Interchange (EDI) Extranets XML Web Services 29
    • Electronic Data Interchange (EDI) Communication standard that enables electronic transfer of routine documents (e.g. purchase order) the structured transmission of data between organizations by electronic means Documents are formatted according to agreed upon standards 30
    • Components of EDI EDI Translators  Convert data into standard format before transmitting and from standard to original format after receiving Business Translation Messages  Include purchase orders, invoices, credit approvals, shipping notices, confirmation etc. Data Formatting Standards 31  E.g. ANSI X.12
    • Process of EDI Messages are coded using standards before transmitting them These coded messages travel over a Value Added Network (VAN) or internet When received, message is automatically translated into business language. 32
    • Benefits of EDI Data entry errors are minimized Length of messages can be shorter and secured Reduced cost and delay Enhanced customer services Minimized paper usage and storage Increased cash flow 33
    • Limitations of traditional EDI Significant initial investment High operating cost due to use of expensive private VANs Cost of converter Not flexible – difficult to make quick changes such as adding business partners, long start up period 34
    •  Business processes must be sometimes restructured to fit EDI requirements Multiple EDI standards exist. So one company may have to use several standards to communicate with different business partners 35
    • Internet based EDI Solution to traditional EDI- Better infrastructure Accessibility  Publicly accessible  Large scale connectivity Reach  Global n/w connections makes it to reach widest possible no. of business partners Cost  40 to 70% lower than VAN 36
    •  Use of Web Technology  Consistent with the growing interest of business in delivering ever increasing variety of products and services via web Ease of use  Browsers and search engines are user friendly  Sensitive data can be transmitted with security 37
    • Types of Internet based EDI Email Extranet Web based EDI hosting service 38
    • Prospects of Internet based EDI Cheaper Affordable for small transactions 39
    • Extranet Necessary to connect internal systems of different business partners which are usually connected to the partner’s corporate intranet Intranet of partners accessed via internet They link business partners over the internet by providing access to certain areas of each others intranets Uses virtual private network (VPN) to make communication over internet more secure 40
    •  Extranet is open to selected B2B suppliers, customers and other business partners Enables them to enter the corporate intranet via the internet to access data, place orders, check status, communicate and collaborate 41
    • The structure of extranet 42
    • Types of Extranet A company , its dealers , customers, suppliers  Centered around one company An industry’s extranet  Major players in industry team up to benefit all Joint venture of other business partnerships  Partners in joint venture use it for communication and collaboration 43
    • Benefits of extranet Faster processes and information flow Improved order entry and customer services Lower cost (for communication, travel, administrative overhead) Overall improvement in business effectiveness 44
    • XML (eXtensible Markup Language) Extensible Markup Language (XML) is a markup language that defines a set of rules for encoding documents in a format that is both human- readable and machine-readable. Improves compatibility between disparate systems of business partners by defining the meaning of data in business documents It is extensible because the markup symbols are unlimited and self defining 45
    •  Difference between HTML and XML  HTML helps to build web pages and display data on web pages (how data can be displayed)  XML describes data and information (what data can be send) 46
    • Benefits of XML Flexibility  Allows new requirements and changes to be incorporated into messages  Hence not rigid as EDI Understandability  Message contents can be easily read and understood using standard browsers  Thus no need of special translators 47
    • Benefits of XML (Contd…) Less specialized  Requires less specialized skills in contrast to EDI (requires highly specialized knowledge of EDI translators) 48
    • Web services Universal prefabricated business process s/w modules delivered over internet Users can select and combine them through almost any device, enabling disparate systems to share data and services Support IOS by providing easy integration for different internal and external systems 49
    • Global Information System (GIS) Category of IOS Needed by  Multinational companies  International companies  Virtual global companies 50
    •  Multi-national company- company which operates in more than one country i.e. Company may have sales offices and/or production facilities in several countries International company- company that does business with other companies in different countries 51
    •  MNCs conduct operations where  factory workers are plentiful and inexpensive  Highly skilled employees available at low cost  There is a need to be close to the market 52
    •  Virtual global companies  Joint venture whose business partners are located in different countries  Formed for the specific purpose of producing a product/service  Temporary/Permanent 53
    • Benefits of GIS Effective communication at reasonable cost  Through email, EDI, web services and extranet  Intelligent IT systems can provide automatic language and web page translation 54
    • Benefits of GIS (Contd..) Effective collaboration to overcome differences in distance, time, language and culture  With the help of groupware software, group decision support system, extranets and teleconferencing devices 55
    • Benefits of GIS (Contd..) Access to database of business partners and ability to work on same projects while their members are in different locations  E.g. video conferencing 56
    • Issues in GIS design & Implementation  Differences in  cultures,  regulations,  economics &  politics among parties in different countries. 57
    •  Cultural Differences:  Culture consists of objects, values & other characteristics of a particular society  Ranging from traditional to legal & ethical issues 58
    •  Localization:  Localization is the process of adapting a product or service to a particular language, culture, and desired local "look-and-feel."  Use of different names, colors, sizes and packaging for overseas products and services  Also should be followed in the design and operation of supporting IS 59
    •  E.g. Offer different languages and/ or currency options as well as special contents Extensive research and survey is usually done before launching the product, in order to assess the opportunities and the obstacles. 60
    • Localization (continued..)  Variables considered in localization:  Pricing  Promotions (types, discount level)  Vendor policies  Management programs  Consumer characteristics  Special demand drivers  Competitor characteristics  Company’s own stores’ characteristics vs. others 61
    •  Economic and political differences:  Results in different information infrastructure from country to country  Compliance with software copyright is also a major issue.  Gross violation- illegal copying and use of software.  Some countries control the contents of internet, 62 some may restrict the language
    •  Legal issues:  Legal systems differ considerably  E.g. copyrights, patents, computer crimes, file sharing, privacy and data transfer  This affects what is transmitted via Global IS(transfer of data across international borders) 63
    • Legal issues (cond..) Countries justify their laws as protecting privacy of their citizens.  Intellectual property protection  Keeping job within country by requiring that data processing be done there Whose laws have jurisdiction when records are in different countries for reprocessing and retransmission purpose? 64
    •  Designing web sites for global audience:  60% of all internet users are non English speaking  Hence, doing business on internet must include localization Globalization and offshoring of s/w and other IT activities:  Initially offshore outsourcing of programming  Now other activities ranging from call centers to s/ 65 w research and development
    •  Globalization and personnel issues:  Orientation and training of personnel/ hiring them  Companies may need to send their employees to other countries and also hire local personnel  Use of special s/w for training personnel across the globe. 66
    • Global Supply Chain Supply chain that involve suppliers and/or customers in other countries Longer and more complex than domestic ones Issues in GSC are:  Legal issues  Custom fees and taxes  Language and cultural differences  Fast changes in currency exchange rate 67  Political instabilities
    • How IT helps? IT provides EDI and other communication infrastructures, online expertise IT helps to solve language problems through use of automatic web page translation E.g. Infoscope : a device by IBM  composed of a digital camera and wireless internet access.  Translate foreign languages by photographing the text then sending the image to a remote computer via the internet for translation. 68
    • Demand Driven Supply Networks Traditional supply chain  Is driven from back- by producers and manufacturers  Driving products to market  Dominant actions are  Forecast demand  Make-to-stock  Push products downstream toward end customer  No view into true market demands 69
    •  Demand could be unpredictable and hence hard to predict Items could undergo under stock or overstock (bullwhip effect) No timely and accurate information 70
    • DDSN (Contd..) Driven from front- by customer demand Products are pulled to market by customers DDSN defines that companies in a supply chain will work more closely to shape market demand by sharing and collaborating information DDSN, uses a system of technologies and processes to sense demand and react to it in real time, across a network of linked customers, suppliers, and employees. 71
    • Benefits of DDSN More accurate and detailed demand forecasting Lower supply chain cost (with reduced inventories) Order is delivered complete, accurate, on time and in perfect condition Reduced days of inventory  avg. days of inventory on hand including raw materials, components; work in process and finished goods 72
    •  Improved cash to cash performance  Length of time between company spends cash to buy raw material and the time the cash flows back into company Provides customer centric approach and not factory centric approach Provides agility, adaptability and alignment 73
    •  Alignment is Key DDSN is not something one company can do in isolation. Some methods businesses can use to promote alignment: 1. Exchange information and knowledge freely with vendors and customers. 2. Lay down roles, tasks, and responsibilities clearly for suppliers and customers. 3. Equitably share risks, costs, and gains of improvement 74 initiatives.
    • Real time Demand Driven Manufacturing Organizations must respond quickly and efficiently on demand Provides customers with what exactly they want, when and where they want it Partnership must be focused on  reducing costs through shared quality goals,  shared design responsibilities,  on time deliveries and 75  continuous performance reviews
    • What is RFID?  Radio-frequency identification (RFID) is an automatic identification method using radio waves.RFID also began to see use in wildlife monitoring and research.RFID tags can be used to monitor animal movement withoutadversely affecting the animal,
    • Applications Supply chain automation Asset tracking Medical applications People tracking Manufacturing Retail Warehouses Livestock Timing 77
    • The RFID Systemn Tag.n Reader.n Reader antenna.n Controller.n Host and software system.n Communication infrastructure.
    • Tag An RFID tag is a device that can store and transmit data to a reader in a contact less manner using radio waves. RFID tags can be classified in three different ways. Passive
    • Reader???? An RFID reader can read from and write data to compatible RFID tags. A reader thus doubles up as a writer. The act of writing the tag data by a reader is called creating a tag.
    • A reader has the following main components:TransmitterReceiverMicroprocessorMemoryController (which may reside as an externalcomponent)Communication interfacePower
    • Working A radio device called a tag is attached to the object that needs to be identified. When this tagged object is presented in front of a suitable RFID reader, the tag transmits this data to the reader (via the reader antenna). 82
    •  The reader then reads the data and has the capability to forward it over suitable communication channels. This application can then use this unique data to identify the object presented to the reader. It can then perform a variety of actions 83
    • RFID in manufacturer-retailer supply chain 84
    • B2B Exchanges A B2B exchange is an online marketplace, where buyers, sellers and intermediaries form communities, exchange views, offer products and services, and conduct business transactions. Support B2B supply chains Can be private (one buyer and many sellers or one seller and many buyers) Can be public ( many sellers and many buyers) 85
    •  In private exchange IOS is controlled by sole seller or buyer, usually using extranet or EDI In public exchange IOS can be extranet or internet 86
    • Interconnected public exchanges 87
    • Electronic hubs Definition  Commercial website that provides coordination and synchronization services to electronic commerce (e- commerce) its users or partners. Facilitate communication and collaboration among business partners along the supply chain Each partner can access website usually a portal for an exchange of information Each partner can deposit new information, make changes 88
    • 89
    • Directory services Helps buyers and sellers to find potential partners Usually include catalogues of product offered by each sellers, list of buyers and what they want and other industry or general information Appear as B2B information portal Also offering additional services that support trading 90
    • Interorganizational information integration Most of the companies’ technologies are proprietary Hence difficult to connect IS of different organizations and transfer data in IOS and GIS Things to be followed while integrating IS are.. 91
    •  Establish an IT leadership team to direct the integration For customer facing applications select the option with lowest business integration risks Customer facing applications must have priority over back-office applications 92
    •  Offer generous retention package for top talented IT personnel to ensure they don’t leave Maintain high morale among IT personnel Increase the company’s normal level of project risk to achieve aggressive business integration goals 93
    • Facilitating IS integration Steps:  Check the business processes, understand them and make improvements if necessary  Plan necessary IT infrastructure Various technologies available for integration are:  EDI, EDI/Internet  Extranet  XML and related Web services  Portals, converters etc. 94
    • Partner Relationship Management Definition:  Business strategy that recognizes the need to  develop long term relationships with business partners ,  by providing each partner with the services that are most beneficial to that partner 95
    •  PRM solutions connect companies with their business partners (suppliers, customers, services ) using web technology to securely distribute and manage information 96
    •  Specific functions of PRM are  Partner profile  Partner communications  Management of customer leads  to generate new potential business clientele  Targeted information distribution etc. 97
    •  include key features for  selling,  commission,  opportunity,  marketing campaigns,  inventory access, and  other features designed to facilitate the relationship between manufacturers and their channel partners. 98
    • Supplier Relationship Management (SRM) major category of PRM where partners are suppliers The supply chain processes are connected, decisions are made collectively, performance metrics are based on common understanding, information flows in real time 99
    • Major steps of SRM Model 100
    • 101
    • Steps in SRM Access :  Identify all the resources required to meet the product or service needs of the enterprise Identify suppliers:  Availability of large pool of suppliers improve options down the road Access supplier performance:  Check past performance, testimonials and stated 102 capabilities
    •  Negotiate:  Prices and other relevant terms count only when combined Contract:  Identify and register trading partners. Award contracts to the appropriate suppliers 103
    •  Connect:  Bridge the enterprise and supplier through procurement procedures. Facilitate collaboration. 104
    •  Engage and share:  Enable interaction between enterprise and suppliers.  Show suppliers your forecasted needs and their performance ratings  Look at their inventory and projections.  Transmit purchase orders using tendering and 105 RFQ
    •  Transact:  Collect orders from across the enterprise. Create purchase orders and check them against budgets 106
    •  Deliver:  Goods are pulled from supplier’s stock  Wireless barcode readers update inventory level  Shipping invoices are generated  Goods are delivered 107
    •  Receive:  Wireless devices help in determining whether everything ordered arrives as planned, in good conditions and right quantities 108
    •  Resolve:  Resolve any disputes and pay only if satisfied  Explain why payment is withheld Pay:  Settle up with the supplier and check actual cost against projected cost Analyze:  Access results, design improvements and decide 109 which suppliers to keep
    • Collaborative Commerce (C-Commerce) Non-selling/buying electronic transactions within, between and among the organizations E.g. company collaborating electronically with vendor that is designing a product or part for the company Communication, collaboration information sharing done electronically by means of tools such as groupware and specially designed collaboration tools 110
    • Some areas of collaboration using IS Retailer-supplier  Large retailers collaborate with their major supplier to conduct production and inventory planning and forecasting of demand Product design  Parties involved in a specific product design may use s/w tools that enable them to share data and collaborate in product design  E.g. of such tool is screen sharing 111
    •  Collaborative manufacturing  Dynamic collaborative production networks can be created by manufacturers 112