MIS SCM & RFID Lab
Supply Chain Management (SCM) Chapter 8 of Kroenke
Key Feature: SCM is the great example of where an Information system goes beyond one Enterprise.
Functional Systems vs. Enterprise Most early information systems were designed
for one functional area Accounting Finance Human Resources Etc.
Enterprise = “Entire Company/Organization” Today (post 2000) the vast majority of
commercial information systems try to be “Enterprise” Used by all the functional areas within the business.
Two companies can share an Information System (WTF?)
Example: Large retailer (Walmart) may force suppliers to use their Supply Chain System.
Example: Three long-time partners (supplier, distributor, retailer) may pool resources to develop their own Supply Chain System
MIS SCM & RFID Lab
SCM Planning Functions
Supply Chain Design – optimize network of suppliers, plants, and distribution centers
Forecasting customer demand by sharing demand and supply forecasts instantaneously across suppliers and distributors
MIS SCM & RFID Lab
SCM Execution Functions Materials Management – share accurate
inventory and procurement order information, ensure materials required for production are available in the right place at the right time.
Collaborative Manufacturing – optimize plans and schedules while considering resource, material, and dependency constraints
MIS SCM & RFID Lab
SCM Execution Functions Collaborative Fulfillment –order
management, vehicle scheduling, and support the entire logistics process, including picking, packing, shipping, and delivery in foreign countries
Supply Chain Event Management – monitor every stage of the supply chain process, from price quotation to the moment the customer receives the product, and receive alerts when problems arise – visibility!
MIS SCM & RFID Lab
Business Value of SCM
Benefits of SCM: Reduces production and distribution
costs More information => less inventory, less lead times needed
Improves timeliness of shipments Increases supply chain “velocity” More accurate fulfillment Improves “visibility” of supply chain
MIS SCM & RFID Lab
SCM Benefits
Fewer employees needed to manage supply chain
Better customer satisfaction: less stock-outs
Strategic relationship with suppliers, enables new business partnerships: Collaborative Planning, Forecasting, and
Replenishment systems (CPFR). Collaborative downstream customer
service, marketing, and relationship management.
MIS SCM & RFID Lab
Technical Challenges of SCM
Acquisition of secure extranet Software can be confusing, contradictory
and not sculpted to their needs – difficult to implement.
Emerging standards, high costs.
MIS SCM & RFID Lab
Organizational challenges
Changes company structure: resistance from employees wedded to traditional processes, leads to lack of adequate collaboration among marketing, production, and inventory management departments within a company
Supplier reluctance or incompatibility issues.
Lack of proper demand planning knowledge: leading to inaccurate or overoptimistic demand forecasts. Need new tools and guidelines.
A major challenge: The Bullwhip effect. The bullwhip effect in supply chains occurs when the variability
in size and timing of orders increases at each stage up the chain. Distributors, manufacturers, and suppliers must carry larger
inventories than should be necessary to meet real demand because of the large fluctuations in orders.
It reduces the overall
profitability of a supply
chain. It can be eliminated by
giving all supply chain
participants consumer-
demand information directly
from retailers through
interorganizational
information systems
Fig 8-13 The Bullwhip Effect
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