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Role of InformationTechnology

in the Supply Chain

Manoj Kr ParasM.FTech(AP)

NIFTB

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Introduction

70s: Economics of Scale Low Cost

80s: Quality Consciousness TQM, Productreliability, Customer Satisfaction

90s: Increased Complexity IncreasedCompetition, Demand, Product life Cycle,Varieties & Volume.

2ks: Flexibility & Responsiveness -

Information sharing in Business, LocationIT ASSUME GREATER SIGNIFICANCE

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IT Enabled SCM

Integrating People & Technology

Reduce Response Time

Business Transformation Process redesign

& Continuous improvements.

Achieving Global Standards & Market

Streamlining across Supply Chain to reduce

cost & Increase efficency.

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Changing Role Of IT in SCM

Over Period of Time IT has evolved from

Support Function to tools of decision making.

Stage I: Financial Automation

Introduction to Computers

Automated Routine fn: Clerical System

Application Package: Payroll, Order Entry

SAVE: clerical & admin saving

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Stage II: Cross Functional Integration

Use of IT become more Sophisticated

Effective use of assets & expenses control

Focus on functional Co-ordination

Cost reduction

Not Revenue Enhacement.

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Stage III: Firm wide Integration

Created new opportunity

Extensive Information Networks

Data Storage & Retrieval techniques

Real Time Information flow

Business transformation & process re-design:

ERP, On-line catalog shop, Credit cards, JIT

Inventory Management Increase Market Sharing & profitability

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Stage IV: Supply Chain Integration

Decision making Tool

Supplier & Customer Integration

Prime Focus: agility

E.g. EDI, Intranet

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IT Solution Options

IT resulted into many alternative Possible

Solution for Supply Chain Management.

Some are:

EDI

ERP

Intranet/ Extranet

Internet Commerce

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Electronic Data Interchange (EDI)

EDI is the computer-to-computer transfer

of business information between two

businesses EDI compatible firms are firms that

exchange data in specific standard

formats

Business information exchanged is oftentransaction data

Most B2B electronic commerce is an

adaptation of EDI or based on EDI

principles

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How EDI Works

EDI is diff from sending mail & sharing file.

Straight transfer require common format at

both end

EDI not requires Identical file processing

system.

Buyer Generate PO & pass data through

translator for standard format conversion.

Document ID indicates the intended deptt.

Commun. program dial VAN & place mail.

Seller Computer Modem Call VAN, receive

mail & pass it to appropriate deptt.

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Information Flows in the Paper-Based

Purchasing Process

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Information Flows in an EDI

Purchasing Process

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Value-Added Networks

Direct connection EDI

Requires each business in the network to

operate its own on-site EDI translatorcomputer

EDI translator computers are connected

directly to each other using modems and dial-up telephone lines or dedicated leased lines

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Direct Connection EDI

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Value-Added Networks

(continued) Indirect connection EDI

To send an EDI transaction set to a trading

partner

VAN customer connects to the VAN then

forwards an EDI-formatted message to the

VAN

VAN logs the message and delivers it to the

trading partners mailbox

Trading partner then dials in to the VAN and

retrieves its EDI-formatted messages

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Indirect Connection EDI

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Benefits of EDI

Reduced Transaction Cost & Time

Increased Accuracy

Optimized Inventory

Improved Decision Making

Increased Business opportunities

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Enterprise Resource Planning (ERP)

A complex set of software programs

Integrates most of the business functions in an

organization

Accounting

Human resources

Purchasing

Production

Logistics

E-Business

and more

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Evolution of Technology & Management

Order

Entry

Payroll

Accounting

Engineering

Manufacturing

Purchasing

Functional integration starts taking place!

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Integration of Business (MRPII)

Business Plans

Material Planning

Capacity

?

Capacity Planning

BOM

Inventory

Routing

Master Scheduling

Sales & Ops. Planning

Resource

?

Forecast

Orders

Factory Management

PurchasingHR

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ERP System, Corporate

Warehouse Mgt.

System

Customer Service

Mgt.

Inventory

SalesReturns

Forecast

Distribution

Management

Orders

Order Entry

Purchasing

Financial

Management

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Enterprise Model

Plant 2

Plant 1

Local DC

Retailer

Customers

Corporate

Distribution

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COSTING &SAMPLING PLANNING PRODUCTION DELIVERIES

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Benefits of ERP

Increased Customer Focus

Increased CustomerOrientation

Linking Market with manufacturing

Rapid New Product Development

Enhance Overall Performance

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Intranet/ Extranet

Intranet is internal web of an organization

Share data through: Messaging or Publishing

Enclosed firewalls: Outside access restricted

Extranet is extended to external user:

Channel partner, client, customer, supplier

Member has unique ID to access acrossworld.

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Internet Commerce

Internet is transforming the entire nature ofsupply chain by:

eliminating middleman

making commerce more democratic Creating frictionless economy

BENEFITS

Increased Revenues

Lower selling & Customer Servicing Cost

Faster time to market

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Other Enabling Technologies

BAR CODING

Tracking availability of Inventory

Auto- Identification System

Quickly Track & Communicate movement

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Communication System

IT enhance SC performance through faster

Communication System.

Product movement problem is overcome by:

RF, Satellite Commn., Image processing

Quicker Transport tracing, Faster Transfer of

sale & Inventory Information

Shared Information increase efficiency &effectiveness

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Materials-Tracking Technologies RFID

Radio frequency identification devices

(RFIDs)

Small chips that use radio transmissions to

track inventory New development is the passive RFID tag

Passive RFID tag does not need a power

source

Small enough to be installed on the face of

credit cards or sewn into clothing items

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RFID across industry sectors

Industrial

Field Service

Healthcare

Retail

Logistics

Governme

nt

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Artificial Intelligence (AI)

Grouped of technology making computer human

being

Symbolic Reasoning rather than Numeric Processing

EXPERT SYSTEM Experienced logistics application

Capture Store Logistics Knowledge as rules, Policies,

Check Lists & logics

Easier to modify, update & enlarge Application: Carrier Selection, logistics, Inventory

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SCM Solutions: Advance Planning

i2: SCM, SRM

mySAP: SCM

Oracle

Manugistics Logility

E3

Escalate

Optum

Provia Software

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SCM Solution Providers: A Glance

Dynasis i2 logility Manugistics JD Edwards Web Planner

Electronics

Automotive

Mech. Engg.

Metals

Pharma

Chemicals

Paper/Print

il and Gas

FMCG

TextilesFood

Transportation

INDUSTRY F CUS A/C T VEND R

INSTALLATI NS EXISTING A/C T VEND R

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Conclusion

IT solution for Supply Chain increasing

competitiveness by improving business By:

Data Capture

Real time information flow by Networking &

Electronic data transfer.

Faster response time

Timely availability of information

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The End