This document discusses how information technology can enable and improve supply chain management. It covers various technologies used in supply chains, including electronic data interchange (EDI), radio frequency identification (RFID), enterprise resource planning (ERP) systems, and collaborative planning tools. It also describes how these technologies help achieve benefits like reduced costs, improved information accuracy and integration across the supply chain.

1. Dr. Mohammad Hamsal, MBA
Session 6

2. 2
Topics in SC Technology
• Classifications
• Characteristics
• Benefits
• Functional Dimensions
• Commonly Used Technology Tools
• Electronic Communication
• E-Procurement
• SCM Software

3. 3
• Information connects various supply chain
stages and allows them to coordinate activities.
• Information is crucial to the daily operations of
each stage of the supply chain.
• An information system can enable a firm to get
a high variety of customized products to
customers rapidly.
• An information system can enable a firm to
understand changing consumer needs more
quickly (e.g., Dell Computer).
Technology’s Role

4. 4
Information Systems
ESS Sales Planning Opr. Planning Financial Forecast Corporate Budget HR Planning
MIS Sales Management Inventory control Capex Analysis Annual Budget Emp. Relocation
Analysis
DSS Reg. Sales Analysis Prod. Scheduling SKU Profitability
Analysis
Cost Analysis Union Contract
Cost Analysis
KWS Engineering
Workstations
Graphics Workstations Managerial
Workstations
OAS Word Processing Document Imaging Electronic
Calendars
TPS Order Tracking
Order Processing
Machine Scheduling
Material Control
Securities Trading
Cash Management
Acc. Receivables
Account Payable
Payroll
Emp. Records
Strategic-Level Systems
Management-Level Systems
Knowledge-Level Systems
Operational-Level Systems
Sales & Marketing Operations Finance Accounting Human Resources
ESS = Executive Support Systems; MIS = Management Information Systems; DSS = Decision Support Systems
KWS = Knowledge Work Systems; OAS = Office Automation Systems; TPS = Transaction Processing Systems

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Characteristics of IT in SC
• Vision for the customers
• Accuracy of data, information, and systems
• Relevance of data over time
• Adapted to the diversity of physical flows
• Capability for mobility

6. 6
Benefits of IT in SC
• Cost reduction and efficiency
• Quick and easy access to data in real time
• Speedier communication with suppliers
• Improved information accuracy
• Integration of systems
• Enterprise systems provide control over how
and when the money is spent

7. 7
Functional Dimensions of IT in SC
• Push Flow Functionalities
– Sales Forecasts
– Production Planning
• Pull Flow Functionalities
– Replenishing Subsidiaries’ Inventory
– Managing Replenishment Transportation
– Handling Customers’ Orders

8. Using IT to Drive the SC
• The four primary drivers of supply chain
management
1. Facilities
2. Inventory
3. Transportation
4. Information
• Organizations use these four drivers to support
either a supply chain strategy focusing on
efficiency or a supply chain strategy focusing on
effectiveness.

9. Using IT to Drive SC

10. 10
Commonly Used Technologies
• Facsimile transmissions
• Fax/modem
• e-mail
• Voice mail
• Bar coding 0
214800 232087768

11. 3 PL Technology
Third Party Logistics providers have developed technology that enables optimization, supports
consistent process management, and provides transparency for all modes of shipping.

12. 12
Electronic Communication
• Electronic Data Interchange (EDI)
• eXtensible Markup Language (XML)
• Intranets and Extranets
• E-Marketplaces
• Electronic/Online Catalogs
• Radio Frequency Identification (RFID)

13. 13
The direct transmission of inter-organizational
transactions, computer-to-computer, including
purchase orders, shipping notices, and debit
or credit memos.
EDI

14. Comparing Purchase Order Fulfillment
Without EDI
Source: Drawn by E. Turban

15. Comparing Purchase Order Fulfillment
With EDI
Source: Drawn by E. Turban

16. 16
• Increased productivity
• Reduction of paperwork
• Lead time and inventory reduction
• Facilitation of just-in-time systems
• Electronic transfer of funds
• Improved control of operations
• Reduction in clerical labor
• Increased accuracy
Benefits of EDI

17. 17
• The use of electronic technology to facilitate
business transactions
• Applications include:
– Internet buying and selling
– e-mail
– Order and shipment tracking
– Electronic data interchange
E-Commerce

18. 18
Build-to-order cars over
the Internet

19. 19
• Direct purchase from suppliers over the Internet
• Direct products go directly into production process
a product, indirect products not
• E-marketplaces
– web sites where companies and suppliers conduct
business-to-business activities
• Reverse auctions
– a company posts orders on the Internet for suppliers to
bid on
E-Procurement

20. 20
Online Sourcing/Procurement Process

21. 21
Online Sourcing/Procurement Process (cont.)

22. 22
Online Sourcing/Procurement Process (cont.)

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Reverse Auctions
• An online, real time, declining-price auction
between one buying organization and a group of
prequalified suppliers.
• The bidding process is dynamic, where the
suppliers compete for business by bidding against
each other online using specialized software.
• Suppliers are given information concerning the
status of their bids in real time and the supplier with
the lowest bid or (lowest total cost bid) is usually
awarded the business.

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 Manufacturers generate orders, not
distributors or retailers
 Stocking information is accessed using EDI
 A first step towards supply chain
collaboration
 Increased speed, reduced errors, and
improved service
Vendor-Managed Inventory (VMI)

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Collaborative Planning, Forecasting &
Replenishment
• Process for two or more companies in a supply
chain to synchronize their demand forecasts into
a single plan to meet customer demand
• Parties electronically exchange
– past sales trends
– point-of-sale data
– on-hand inventory
– scheduled promotions
– forecasts

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Collaborative Logistics & Distribution
Outsourcing
 Collaborative planning, forecasting, and
replenishment create greater economies of
scale
 Internet-based exchange of data and
information
 Significant decrease in inventory levels and
more efficient logistics
 Companies focus on core competencies

27. Radio Frequency (RFID) Tags

28. 28
RFID Capabilities

29. 29
RFID Capabilities (cont.)

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SCM Software
• Enterprise Resource Planning (ERP)
– software that integrates components of a
company by sharing and organizing information
and data
– SAP was first ERP software
– mySAP.com
• web enabled modules that allow collaboration between
companies along the supply chain

31. 31
Procurement Production
Customer
Retailer
Wholesaler
Distribution
SAP
Baan
Oracle
WMS SAP WMS
JDE
SAP
Baan
Source: Viewlocity
Software Systems
Supplier 3
Supplier 2
Supplier 1

32. • ERP systems are multimodule application software
platforms that help organizations manage the important
parts of their businesses.
• ERP systems branch out to include supplier relationship
management, customer relationship management, and
other supply chain components, the connections
between SCIS and ERP grow stronger.
• ERP system provides a mechanism for supply chain
members to efficiently share information.
Enterprise Resource Planning (ERP)

34. ERP Integration of SC Technology
Capabilities
Source: SAP AG

35. 35
Linking Supply Chain with SAP