Chapter 11 Supply Chain Management and Global Information Systems
Learning Objectives <ul><li>Explain the difference between vertical and horizontal markets </li></ul><ul><li>Describe vert...
Sharing Information Systems: The Rise of E-Commerce <ul><li>Interorganizational Information Systems </li></ul><ul><ul><li>...
<ul><li>Vertical market </li></ul><ul><ul><li>A market in which the goods of one business are used as raw materials or com...
Vertical Information Exchange <ul><li>Vertically related </li></ul><ul><ul><li>Output of one organization used in processe...
Vertical Information Interchange (Cont.)
Horizontal Information Systems <ul><li>Horizontal Information Interchange </li></ul><ul><ul><li>Organizations performing s...
Horizontal Information Systems (Cont.)
Electronic Data Interchange <ul><li>What is EDI? </li></ul><ul><ul><li>Exchange of electronic data using interorganization...
Benefits of EDI <ul><li>Cost Savings </li></ul><ul><li>Speed </li></ul><ul><li>Accuracy </li></ul><ul><li>Security </li></...
Benefits of EDI (Cont.)
Benefits of EDI (Cont.)
<ul><li>Supplier’s proposal sent electronically to purchasing organization </li></ul><ul><li>Electronic contract approved ...
<ul><li>5. Manufacturer ships order </li></ul><ul><li>6. Purchasing organization receives packages, scans bar code, and co...
How does EDI work? (Cont.)
Electronic Data Interchange <ul><li>All documents are digital </li></ul><ul><li>Most users are health-care, insurance and ...
<ul><li>Business partners subscribe to service and use VAN’s private communication lines, mailboxes, and special software ...
<ul><li>Advantages: </li></ul><ul><ul><li>Transaction integrity </li></ul></ul><ul><ul><li>Privacy and security </li></ul>...
<ul><li>Majority of EDI still done through VAN lines </li></ul><ul><li>Decreasing rapidly in favor of the Web </li></ul><u...
<ul><li>Advantages </li></ul><ul><ul><li>Lower cost </li></ul></ul><ul><ul><li>More familiar software </li></ul></ul><ul><...
Supply Chain Management <ul><li>Less money being tied to inventory </li></ul><ul><li>Management of supplies throughout the...
Supply Chain Management (Cont.)
Supply Chain Management (Cont.) <ul><li>SCM applications streamline operations from suppliers to customers </li></ul><ul><...
<ul><li>SCM systems most effective when all businesses in the chain link their systems and share all information pertinent...
<ul><li>Saving costs by forcing another business to hold inventory may backfire </li></ul><ul><li>If supply chain is linke...
<ul><li>RFID : Radio Frequency Identification </li></ul><ul><li>Very small microprocessor with antennas </li></ul><ul><li>...
<ul><li>Web enables organizations that are not horizontally or vertically related to streamline operations through collabo...
Multinational Organizations <ul><li>Headquarters in a single country, operation of divisions and subsidiaries in different...
Using the Web for  International Commerce <ul><li>The Web is important for both B2B and B2C commerce </li></ul><ul><li>Opp...
Using the Web for  International Commerce (Cont.)
<ul><li>Increased revenues </li></ul><ul><ul><li>Increased international Web participation </li></ul></ul><ul><ul><li>Pote...
International Web Commerce Benefits (Cont.)
Challenges to Global Information Systems <ul><li>Technological Challenges </li></ul><ul><ul><li>Non-uniform information in...
Challenges to Global Information Systems (Cont.) <ul><li>Language Differences </li></ul><ul><ul><li>Translation delays </l...
Challenges to Global Information Systems (Cont.) <ul><li>Conflicting Economic, Scientific, and Security Interests </li></u...
Challenges to Global Information Systems <ul><li>Different Standards </li></ul><ul><ul><li>Varying standards for date form...
Ethical and Societal Issues Legal Jurisdiction in Cyberspace <ul><li>Global Free Speech </li></ul><ul><ul><li>More than on...
Summary <ul><li>Markets can be viewed as either vertical or horizontal, or both </li></ul><ul><li>There are differences be...
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Edi, supply chain & internet

  1. 1. Chapter 11 Supply Chain Management and Global Information Systems
  2. 2. Learning Objectives <ul><li>Explain the difference between vertical and horizontal markets </li></ul><ul><li>Describe vertical and horizontal information integration among companies </li></ul><ul><li>Articulate the differences between traditional and Web-based EDI </li></ul><ul><li>Recognize the benefits of supply chain management systems </li></ul><ul><li>Explain the role of global information systems </li></ul><ul><li>Cite the legal, cultural, and other challenges to implementing international information systems </li></ul>
  3. 3. Sharing Information Systems: The Rise of E-Commerce <ul><li>Interorganizational Information Systems </li></ul><ul><ul><li>Systems shared by two or more organizations </li></ul></ul><ul><ul><ul><li>Built and owned by one organization </li></ul></ul></ul><ul><ul><ul><li>Increases efficiency and effectiveness </li></ul></ul></ul><ul><ul><ul><li>Organizations use similar systems to serve international sites </li></ul></ul></ul>
  4. 4. <ul><li>Vertical market </li></ul><ul><ul><li>A market in which the goods of one business are used as raw materials or components in the production or sale process of another business </li></ul></ul><ul><li>Horizontal market </li></ul><ul><ul><li>All players in the market buy or sell the same products; they are in competition </li></ul></ul>Sharing Information Systems: The Rise of E-Commerce (Cont.)
  5. 5. Vertical Information Exchange <ul><li>Vertically related </li></ul><ul><ul><li>Output of one organization used in processes of another </li></ul></ul><ul><ul><li>Integrating ISs between vertically related organizations highly beneficial </li></ul></ul><ul><ul><ul><li>Saves time and money </li></ul></ul></ul><ul><ul><ul><li>Better serves customers </li></ul></ul></ul>
  6. 6. Vertical Information Interchange (Cont.)
  7. 7. Horizontal Information Systems <ul><li>Horizontal Information Interchange </li></ul><ul><ul><li>Organizations performing similar activities share information </li></ul></ul><ul><ul><ul><li>Real estate agencies maintain multiple listing service </li></ul></ul></ul><ul><ul><ul><li>Financial institutions share financial information </li></ul></ul></ul><ul><ul><ul><li>Airlines share reservation systems </li></ul></ul></ul><ul><ul><li>Legal implications and risks similar to those of EDI </li></ul></ul>
  8. 8. Horizontal Information Systems (Cont.)
  9. 9. Electronic Data Interchange <ul><li>What is EDI? </li></ul><ul><ul><li>Exchange of electronic data using interorganizational information systems </li></ul></ul><ul><ul><li>Set of hardware, software, and standards that accommodate the EDI process </li></ul></ul>
  10. 10. Benefits of EDI <ul><li>Cost Savings </li></ul><ul><li>Speed </li></ul><ul><li>Accuracy </li></ul><ul><li>Security </li></ul><ul><li>System Integration </li></ul><ul><li>Just-in-time Support </li></ul>
  11. 11. Benefits of EDI (Cont.)
  12. 12. Benefits of EDI (Cont.)
  13. 13. <ul><li>Supplier’s proposal sent electronically to purchasing organization </li></ul><ul><li>Electronic contract approved over network </li></ul><ul><li>Supplier manufactures and packages goods, attaching shipping data recorded on a bar code </li></ul><ul><li>Quantities shipped and prices entered in system and flowed to invoicing program; invoices transmitted to purchasing organization </li></ul>How does EDI work?
  14. 14. <ul><li>5. Manufacturer ships order </li></ul><ul><li>6. Purchasing organization receives packages, scans bar code, and compares data to invoices actual items received </li></ul><ul><li>7. Payment approval transferred electronically </li></ul><ul><li>8. Bank transfers funds from purchaser to supplier’s account using electronic fund transfer (EFT) </li></ul>How does EDI work? (Cont.)
  15. 15. How does EDI work? (Cont.)
  16. 16. Electronic Data Interchange <ul><li>All documents are digital </li></ul><ul><li>Most users are health-care, insurance and retailing </li></ul><ul><li>Others are banking, automotive, petroleum and chemical, and transportation companies </li></ul>
  17. 17. <ul><li>Business partners subscribe to service and use VAN’s private communication lines, mailboxes, and special software </li></ul><ul><li>VAN mediates EDI communication, translates business documents into EDI documents </li></ul><ul><li>Batches transmitted several times per day </li></ul>Value Added Network EDI
  18. 18. <ul><li>Advantages: </li></ul><ul><ul><li>Transaction integrity </li></ul></ul><ul><ul><li>Privacy and security </li></ul></ul><ul><ul><li>Nonrepudiation </li></ul></ul><ul><ul><li>Solid standards </li></ul></ul>Value Added Network EDI (Cont.)
  19. 19. <ul><li>Majority of EDI still done through VAN lines </li></ul><ul><li>Decreasing rapidly in favor of the Web </li></ul><ul><li>All new EDI implementations use Web technologies </li></ul><ul><li>Reduces cost </li></ul><ul><li>Use of XML standards allows business partners to create their own tags </li></ul>Web EDI
  20. 20. <ul><li>Advantages </li></ul><ul><ul><li>Lower cost </li></ul></ul><ul><ul><li>More familiar software </li></ul></ul><ul><ul><li>Worldwide connectivity </li></ul></ul><ul><ul><li>Fast communication </li></ul></ul><ul><ul><li>Real time information exchange </li></ul></ul>Web EDI (Cont.)
  21. 21. Supply Chain Management <ul><li>Less money being tied to inventory </li></ul><ul><li>Management of supplies throughout the manufacturing process, from one organization to the next </li></ul><ul><li>Monitoring and controlling the supply chain is Supply Chain Management (SCM) </li></ul>
  22. 22. Supply Chain Management (Cont.)
  23. 23. Supply Chain Management (Cont.) <ul><li>SCM applications streamline operations from suppliers to customers </li></ul><ul><ul><li>Reduction in inventories </li></ul></ul><ul><ul><li>Reduction in cycle time </li></ul></ul><ul><ul><li>Reduction in production cost </li></ul></ul>
  24. 24. <ul><li>SCM systems most effective when all businesses in the chain link their systems and share all information pertinent to planning production and shipment </li></ul><ul><li>Not all organizations are willing </li></ul><ul><li>Systems can be used beyond the sale </li></ul>The Importance of Trust
  25. 25. <ul><li>Saving costs by forcing another business to hold inventory may backfire </li></ul><ul><li>If supply chain is linked through SCM systems, sharing information enables all in the chain to reduce costs </li></ul>The Musical Chairs of Inventory
  26. 26. <ul><li>RFID : Radio Frequency Identification </li></ul><ul><li>Very small microprocessor with antennas </li></ul><ul><li>With lower cost, will be embedded in many products for tracking </li></ul><ul><li>Microchips communicate with wi-fi devices when in production lines, packed, shipped, unloaded and more </li></ul>The Future of SCM: RFID
  27. 27. <ul><li>Web enables organizations that are not horizontally or vertically related to streamline operations through collaboration </li></ul><ul><li>Examples </li></ul><ul><ul><li>Combine freight with other businesses </li></ul></ul><ul><ul><li>Maximize use of warehouse space </li></ul></ul>Collaborative Logistics
  28. 28. Multinational Organizations <ul><li>Headquarters in a single country, operation of divisions and subsidiaries in different countries </li></ul><ul><li>A company’s nationality is not clear </li></ul><ul><li>NAFTA may result in the internationalization of many corporations </li></ul>
  29. 29. Using the Web for International Commerce <ul><li>The Web is important for both B2B and B2C commerce </li></ul><ul><li>Opportunities for businesses all over the world </li></ul><ul><li>Organizations must be sensitive to local audiences (globalization) </li></ul>
  30. 30. Using the Web for International Commerce (Cont.)
  31. 31. <ul><li>Increased revenues </li></ul><ul><ul><li>Increased international Web participation </li></ul></ul><ul><ul><li>Potential Web participation </li></ul></ul><ul><li>Cost savings </li></ul><ul><ul><li>Printing and shipping costs </li></ul></ul><ul><ul><li>Customer service costs </li></ul></ul>International Web Commerce Benefits
  32. 32. International Web Commerce Benefits (Cont.)
  33. 33. Challenges to Global Information Systems <ul><li>Technological Challenges </li></ul><ul><ul><li>Non-uniform information infrastructures </li></ul></ul><ul><li>Regulations and Tariffs </li></ul><ul><ul><li>Executives concerned about hassle-factor </li></ul></ul><ul><ul><li>Software can reduce confusion </li></ul></ul><ul><li>Differences in Payment Mechanisms </li></ul><ul><ul><li>Non-uniform preferred payment method </li></ul></ul>
  34. 34. Challenges to Global Information Systems (Cont.) <ul><li>Language Differences </li></ul><ul><ul><li>Translation delays </li></ul></ul><ul><ul><li>Laws forbid foreign language accounting and other systems </li></ul></ul><ul><li>Cultural Differences </li></ul><ul><ul><li>Cultural imperialism </li></ul></ul>
  35. 35. Challenges to Global Information Systems (Cont.) <ul><li>Conflicting Economic, Scientific, and Security Interests </li></ul><ul><ul><li>Government restriction on sharing sensitive information </li></ul></ul><ul><ul><li>Varying treatment of trade secrets, patents, and copyrights </li></ul></ul><ul><li>Political Challenges </li></ul><ul><ul><li>Fear that access to information threatens sovereignty </li></ul></ul><ul><ul><li>Government pressure to buy only national software </li></ul></ul>
  36. 36. Challenges to Global Information Systems <ul><li>Different Standards </li></ul><ul><ul><li>Varying standards for date format, measurements, etc. </li></ul></ul><ul><li>Legal Barriers </li></ul><ul><ul><li>Incompatible data privacy laws in U.S. and Europe </li></ul></ul>
  37. 37. Ethical and Societal Issues Legal Jurisdiction in Cyberspace <ul><li>Global Free Speech </li></ul><ul><ul><li>More than one law may govern a business practice or communication of ideas </li></ul></ul><ul><ul><li>No longer is the legal environment confined to national boundaries </li></ul></ul><ul><li>Consumer Protection by Whom? </li></ul><ul><li>Two Approaches to Jurisdiction </li></ul>
  38. 38. Summary <ul><li>Markets can be viewed as either vertical or horizontal, or both </li></ul><ul><li>There are differences between traditional and Web-based EDI </li></ul><ul><li>Supply chain management systems have various benefits </li></ul><ul><li>Global information systems play an important role in business </li></ul>
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