Role of IT in supply chain management

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Role of IT in supply chain management

  1. 1. RECENT ISSUES IN SUPPLY CHAINMANAGEMENT AUTHOR Neelam Yadav
  2. 2. Role of IT/Computer in SCM Introduction A well managed supply chain links the suppliers, manufacturers, distributers and customers by a suitable information system for controlling across boarder in order to achieve optimum productivity, overall satisfaction and joyful relation at cheaper cost.
  3. 3.  Quick and effective information system helps manager to understand the customer response, their demands, inventory in the stock, how much to be produced and where to deliver and when? Here comes the role of internet, which is considered as a cheapest inter-organizational information system, which helps in aligning the interdependent strategies to achieve cooperative rather than competitive role of SCM partners.
  4. 4. Need of IT Information technology offers many opportunities for companies to cut cost and improve responsiveness to customer’s needs. Some of the positive points of IT enabled services are: IT is comparatively less capital intensive. It is environmental friendly and clean. It is not location specific and can be undertaken from anywhere. It does not require expensive infrastructure facilities.
  5. 5. Various IT solutionsI. CommunicationsII. Electronic mail (e-mail)III. Electronic data interchange (EDI)IV. Enterprise resource planning (ERP)
  6. 6. Results of IT solution We have observed that the Indian automobile industry is booming and internet is being utilized in automobile industry in a big way. Internet trying to interlink suppliers, manufacturers , wholesalers and retailers to have : Better control on inventory at various levels of supply chain. Better utilization of manpower. It keeping track of inventory.
  7. 7. Contind…… But it is fact that internet has influenced the whole business strategy whether it is policy or it is physical implementation. Some of the areas where’s greater effect felt are given below:a) Communicationb) Selection of vendors or partnersc) Cost savingd) Reduction of lead timese) Improves product promotional activities
  8. 8. Contind………a) Communication 24 hours communication throughout the year all over the world. because of internet communication there are saving in manpower, stationary, postage and journey fare. Quick exchange of ideas and expertise, customers’ feedback collection becomes easierb) Selection of vendors or partners Suitable vendor selection from many vendors from any part of the world Since whole world is connected through internet, it becomes easier to select business partners for the joint ventures
  9. 9. Contind….c) Cost saving Reduce cost of preparing letters and sending letters, saves postage cost Achieving order and placing order become less costly d) Reduction of lead times Reduce lead time of material supply Reduce retrieval time of documented information e) Improves product promotional activities Reduce the expenditure for market expansion and also reduce market mediation Improve relation with customer and helps in promotion of products in the form of advertisement
  10. 10. LimitationThere are also some limitation recorded: Lack of manager awareness with the system and lack of management’s full commitments. Development of electronic data interchange is a costly affair Problems of security and privacy Since no face to face contact is there hence, lack of trust Customers also need awareness for effective utilization of internet in the business
  11. 11. BENCHMARKINGBenchmarking is the practice of being humbleenough to admit that someone else is better atsomething, and being wise enough to learn howto match them and even surpass them at it.
  12. 12. Other definitions- Benchmarking is the process of comparing the cost, cycle time, productivity or quality of specific process or method to another that is widely considered to be an industry standard or best practice. It is the process for improving performance by constantly identifying, understanding and adapting best practices and processes followed inside and outside the company and implementing the results.
  13. 13. The core of the current interpretation ofbenchmarking is: Measurement Comparison Learning Improvement
  14. 14. Contind….1. Measurement- In the benchmarking, we measure the performance level of own and the benchmarking partner, both for comparison and for registering improvements.2. Comparison- We compare the performance levels, processes, practices etc.3. Learning- We can learn from the benchmarking partners to introduce improvements in your own organization.4. Improvements- It is the ultimate objective of any benchmarking study.
  15. 15. Benchmarking modelThere are a number of models describing thedifferent steps that constitute a benchmarkingstudy. One such model is the so-called benchmarkingwheel( Andersen, 1995)
  16. 16. 5.Adapt 1.Plan Choose best practice adapt Critical factors select a to the company’s condition process for and implement changes benchmarking, document the process and develop performance measures 4. Analyze Identify the gaps in 2. Searchperformance and find the Find benchmarking root causes for the partners performance gap 3. Observe Understand and document the partners’ process, both performance and practice
  17. 17. Why the benchmarking is required in thebusiness- Benchmarking helps in identifying the factors that are critical for success. It also portrays the factors that are less important and thus need a smaller share of resources. Since the business environment is changing rapidly, there is a need for continuously setting new benchmarks. The need for benchmarking arises when a company wishes to improve its operations or supply chain wants to bring about organizational changes Enter into some mergers and acquisitions
  18. 18. Types of benchmarking Industry InternalCompetitive Generic
  19. 19. Contind….1. Internal benchmarking- If one analyses the existing process and practices within various departments of an organization, it is known as internal benchmarking. the benefit of this benchmarking is that it enables an organization to focus on specific functions and processes in order to learn from its own best practices This is often called the first step in the benchmarking process and is the easiest kind of benchmarking to organize.
  20. 20. 2. Competitive benchmarking- If a company analyses how its competitors are performing then its known as competitive benchmarking. It is also done for comparing the processes. The benefit is that it helps organization in strategic decision making by giving them a view of the strengths and weaknesses of its competitors..
  21. 21. 3. Industry benchmarking- if one analyses the trends and best practices that are prevalent in the industry and tries to imitate them in one’s organization then it is called industry benchmarking4.Generic benchmarking- if one makes comparison between processes and operations with industries from other fields then it is called generic benchmarking.
  22. 22. BENCHMARKING METHDOLOGYBenchmarking involves the following steps: Scope and definition Choose benchmark partners Determine measurement method Data collection Analysis of discrepancies Presenting results, discussing improvement areas and making improvement plans Monitoring progress and planning ongoing benchmarking
  23. 23. Walters model (2003) of Benchmarking1. Identify- process to benchmark2. a) Find- a better performer b) Collect- data on its operations3. a) Compare- process b) Find- performance gap4. a) Reason- performance gap b) look- ways to look overcome5. a) Redesign- process b) Establish- new performance goals6. a)Implement- plans b) Monitor- progress
  24. 24. Outsourcing in SCMIn order to understand the concept of outsourcing, there is a good example of “Nike” It is a fact that Nike is a virtual corporation The actual manufacturing is done by Nike sub contractors working out of Taiwan, Hong Kong. The actual manufacturing plants are located in Indonesia, China and Vietnam. The logistics, which involves transportation and storage, is handled by third party companies. And the stores that sell the final products are franchisee outlets.
  25. 25. Contind…. Nike is a virtual corporation that has outsourced almost all activities, it has retained two processes in-house “designing and brand management”. Amazon.com is an online bookstore, it delivered and brokered bookstore services without a physical retail store presence Flipcart.com
  26. 26. Concept The decision of a firm to perform its activities internally or get those activities done from an independent firm is known as make vs. buy decisions. This involves the following key decisions:a) What activities should be carried out by the firm and what activities should be outsourced?b) How to select the entities/ partners to carry out outsourced activities and what should be the nature of the relationship with those partners?c) Should the relationship be transactional in nature or should it be a long term partnership?
  27. 27. Decisions in Outsourcing1. Make vs. Buy decisions2. Identifying the core process i) The business process route ii) The product architecture route
  28. 28. What is CRM? CRM stands for Customer Relationship Management. It is a strategy used to learn more about customers needs and behaviors in order to develop stronger relationships with them. Good customer relationships are at the heart of business success.
  29. 29.  There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a strategic process that will help you better understand your customers’ needs and how you can meet those needs and enhance your bottom line at the same time. This strategy depends on bringing together lots of pieces of information about customers and market trends so you can sell and market your products and services more effectively.
  30. 30. CRM (customer relationship management) CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.
  31. 31.  For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased
  32. 32. According to one industry view, CRM consists of: Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team. Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices)
  33. 33.  Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service. Providing employees with the information and processes necessary to know their customers, understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners.
  34. 34.  Many organizations turn to CRM software to help them manage their customer relationships. CRM technology is offered on-premise, on- demand or through Software as a Service. Recently, mobile CRM and the open source CRM software model have also become more popular.
  35. 35. CRM vs. SCM SCM-CRM integration is getting closer to becoming an everyday business imperative.“The reason for this is simple: company survival” SCM has been around considerably longer than CRM. As a result, the two disciplines have matured independently. Examples- Dell company, Herman Miller a furniture manufacture.
  36. 36. Conclusion CRM-SCM integration strives to satisfy and promptly deliver products to customers, ensuring availability of the product and maintaining profitability of the manufacture. Ensure better customer service is offered Implement technology Extend the connection from the customer to the supplier( build to build)
  37. 37. Value addition in SCM- Concept of Demand management
  38. 38.  1. The Supply chain 2. The Demand chain 3.Demand and Supply chain process: The value chain
  39. 39. THANKYOU

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