10-11) IT & Supply Chain Management

7/24/2019 10-11) IT & Supply Chain Management

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Understanding the supply chain

Lecture Presentation | Dr. A. K. Kar22-07-2015 2

Involves integrated purchasing strategy, integrated logistics,

supplier integration, buyersupplier partnerships, strategic

supplier alliances, supply chain synchronization and lots more


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primary

secondary

tertiary


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Nature of IT Adoption & Impact in E-SCM


Subramani, M. (2004). How do suppliers benefit from information technology use in supply chain relationships?. MISQ, 45-73.


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22-07-2015 Lecture Presentation | Dr. A. K. Kar 5


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Stage No: 1 2 3 4 5

Stakeholdermanagement

Utilisation of e-businessto support operations

Stakeholderacquisition

Integrating supply-side activities

Integrated E-SCMand Value Web

Increasing level of digitization

Croom, S. R. (2005). The impact of e-business on supply chain management: an empirical study of key developments. IJOPM, 25(1), 55-73.


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Main Benefits of E-SCM

Improved cost performance (from lower input prices)

Improved customer service (service quality)

Improved process capability (quality consistency)

Improved productivity (from increased control of material flow)

Improved dependability (from increased control of information flow)


Tan, K.C. (2001), A framework of supply chain management literature, EJOPSM, Vol. 7 No. 1, pp. 39-48.


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Supply Chain Collaboration enabled using IT


Fawcett, S.E., Magnan, G.M., & McCarter, M.W. (2008). Benefits, barriers, and bridges to effective supply chain management. SCM-AIJ, 13(1), 35-48.


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Gunasekaran, A., & Ngai, E. W. (2004). Information systems in supply chain integration and management. EJOR, 159(2), 269-295.

IT in SCM

ToTruly E-SCM


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Traditional Procurement Management

Procurement management: The planning, organizing, and coordination of all theactivities relating to purchasing goods/services needed to accomplish a firms mission

Maverick buying: Unplanned purchases of items needed quickly, often at non pre-

negotiated higher prices than that is expected from a market



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Lecture Presentation | Dr. A. K. Kar22-07-2015

Snapshot of different vendor evaluation criteria used across industriesProduct quality Delivery reliability Warranties

Exporting status Packaging capability Intellectual Property Rights

Product pricing Production capability Technical capability

Management capability Vendor reputation Financial position

Labor relations Service quality experience Past business recordsReciprocal arrangements Cultural fitment Communication barriers

Inventory position Electronic data interchange Value-added productivity

Geographical distance Foreign exchange rates Trade tariffs

Acceptable parts per million Service design Order acknowledgements

Trade restrictions Buyers commitment E-Transaction capability

Documentation Design capability Supply variety

Rejection rate during inspection Dollar value of performance Purchase order stabilityLead time Indirect costs Response flexibility

Innovation Facility planning Safety adherence

Domain experience Exporting status Conflict resolution systems

Customs duties Product line diversity Intimacy of relationships

Quality management IT standards Cost reduction capability

Electrical capacity Judgment Response time

Total cost of acquisition Risk perception Certification and standards

Research and development Organizational culture Availability of parts

Sub-component pricing Regulatory compliance Self-audits

Rejection from customers Education level of personnel Receiving inspection

Billing accuracy Cost reduction performance Indirect costs

Data administration Improvement commitment Procedural compliance

Service quality credence Vendors commitment Skill level of staffKar, A.K., & Pani, A.K. (2014). Exploring the importance of different supplier selection criteria. Management Research Review, 37(1), 89-105.


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e-Tendering

E-Tendering is the process of making an offer, bid or proposal, or expressinginterest in response to an invitation or request for tender online.Organisations will seek other businesses to respond to a particular need, suchas the supply of goods and services, and will select an offer or tender thatmeets the needs the best way.

Tender request documents; also referred to as invitations to tender, Requests

for Tender (RFT), Requests for Proposal (RFP) etc outline what is required. Thedocument also outline the requirements, criteria, and instructions that are tobe followed.

Interested suppliers will then prepare a tender/bids; the documents thatoutline the offer that they are making, and will include pricing, schedules aswell as their eligibility for the project or procurement.

The submitted tenders are then evaluated with regard to defined criteria. Theoffer that best meets all of the requirements outlined in the request, andprovides value for money should win the contract.


E.G. TradeInterchange provides an online solution available on pay-per-use


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e-Sourcing

E-Sourcing is the process of obtaining bids from different suppliers via a

single online portal. The benefits of e-Sourcing include streamlining the

sourcing process, reducing prices by maximizing supplier competition,

and creating a repository for sourcing information.

Typically followed for regular Business-as-Usual operations and not forexceptional purchasing requirements or maverick buying

It is an institutional procurement process that continuously improves and

re-evaluates the purchasing activities of a company.

Strategic sourcing techniques are also applied to non-traditional areas

such as services or capital.


E.G. Ariba, Delta-eSourcing, TradeInterchange


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e-Reverse auction

A e-Reverse Auction is a type of auction in which the roles of buyer andseller are reversed. In an ordinary auction (also known as a forward auction), buyers compete to obtain a

good or service by offering increasingly higher prices.

In a reverse auction, the sellers compete to obtain business from the buyer and priceswill typically decrease as the sellers undercut each other.

It is typically part of the financial bid, in the e-Tendering process. Lowestbidder wins the bid, from among the parties who have cleared thetechnical prequalification

One of the major strategies used by purchasing and supply management

organizations to reduce spending as part of strategic sourcing


E.g.: Epic Technologies, ARIBA, Kennisportal E-Procurement Portal


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e-Informing

e-Informing is receiving , editing and dissemination of procurement information

for internal and external customers and suppliers using web based technologies.

Purchasing information is used in the procurement process and the handling thereof, such as

contracts, invoices, need plans, performance indicators, goods receipt information and so on.

Gathering purchasing information: for example, to find information about products and

services , consult the financial status of a supplier or comparing data between similar

suppliers via the web.

Dissemination of procurement information: for example, contracted suppliers & managers

gain insight into performance metrics such as delivery time, delivery reliability and the

proportion of correct invoices.


E.g. Kennisportal E-Procurement (e-procurement.nu)

The main types of e-Informing are :

Purchasing Intelligence: The processing of operational data to structure purchasing. Linked to this

is are performance indicators , to measure /achieve improvements

E - Contract Management: Finding ( framework) contracts within the organization that meet an

operational need, but also manage compliance and expiring contracts .


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e-MRO (Maintenance, Repair and Operations)

MRO involves fixing any sort of mechanical, plumbing or electrical deviceshould it become out of order or broken.

Manage the entire business process of defining, planning and executing themaintenance of complex configurable and regulated equipment systems.


E.g. Oracle Complex MRO Release 2.1

e-MRO ensures the scheduling, initiation, monitoring such activities usinginternet based technologies It also includes performing routine actions which keep the device in working order

or prevent trouble from arising (preventive maintenance).

The actions include the combination of all technical and correspondingadministrative, managerial, and supervision actions.

Often, this requires partnering with third party MRO service providers throughautomated portals and trigger gateways


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E-Fulfilment

E-Fulfilment is in the most general sense the complete process from point ofsales inquiry to delivery of a product to the customer. Order fulfilment is used to describe the more narrow act of distribution or the

logistics function, however, in the broader sense it refers to the way firms respondto customer orders.

Fulfilment of services involves a series of supply chain activities responsible for

assembling and making services available to consumers.


DHLs E-Fulfilment Service

Involves activities like

Network design including determining where to locate facilities, justifying economics of

supplementing the network with fast moving, bulk and/or seasonal operations

Process modelling and optimization including determining the ideal level of mechanization for the

operations

Facility design and layout including working with racking, material handling equipment and

automation vendors during implementation

Systems setup and integration including installation support, configuration and modifications

Peak season planning including ramp-up, outside storage operations and leveraging warehouse sites


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Different Sources of Costs

Manufacturing

Costs

Direct materials cost

Direct labour cost

Manufacturing overhead / Indirect costs

Transac

tion

Costs

Coordination costs / Search costs

Cost of fit

Agency costs / Risk of opportunism

Costs of incomplete contracts



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RFID implementation at Walmart



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E-SCM

Infrastructure

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10-11) IT & Supply Chain Management

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