ROLE OF IT IN SCM

SUPPLY CHAIN INTEGRATION

Supply chain integration is nothing but integration of various activities related to logistics system of the firm and its further integration with logistics systems of business partners like vendors, customers and 3PL service providers.

Integration of logistics functions deals with a firm’ s internal network in terms of factories, warehouses, production equipments and service centres.

INFORMATION TECHNOLOGY SOLUTION FOR

SUPPLY CHAIN INTEGRATION

For high level of supply chain integration, it is essential to develop adequate information systems and use information technology that manages product flow, information flow, and cash flow from end to end on real- time basis.

IT INFRASTRUCTURE FOR SUPPLY CHAIN INTEGRATION

ELECTRONIC DATA INTERCHANGE (EDI)

EDI is an inter-organization computer-to-computer exchange of standard business documents in a structured and machine-processable format without human intervention to improve the speed and accuracy of the information flow.

COMPARISON OF PAPER AND EDI FLOWS

COMPONENTS OF EDI

EDI Standard EDI SoftwareCommunication Medium

BENEFITS OF EDI

The major benefits of EDI in supply chain integration are:

Improves customer responsiveness Reduces transaction costs and times Increases accuracy and productivity Strengthens supply chain relationships Increases ability to compete globally Improves quality of decision to exploit

business opportunities.

LIMITATIONS OF EDI

There are two major limitations of EDI that restricts its scope of use, which are:

It needs highly sophisticated and private IT infrastructure resulting into huge costs; and

As EDI is an inter-organization, computer-to-computer exchange of standard business documents in a structured and machine-processable format, hence, day-to-day flexible data cannot be shared between supply chain partners. Supply chain integration needs more flexible information sharing on continuous basis apart from standard business documents.

BAR CODE SYSTEM (BCS)

The bar code system is an identification technology wherein there is placement of computer-readable codes on items, cartons and containers in the form of grouping of parallel bars (usually blocks) of different widths separated by light spaces (usually white), again, of different widths.

It facilitates speedier flow of logistical information such as quick tracking receipts, movement details, product identification, etc., with a lesser probability of error .

CHARACTERISTICS OF A TYPICAL BAR CODE

BENEFITS OF BAR CODE SYSTEM

Speeds up data entry process Enhances data accuracy Reduces material handling labour Minimizes on-hand inventory Monitors labour efficiency Improves customer service

BENEFITS OF BAR CODE SYSTEM

Reduces product recall Verifies orders at receiving and shipping Reduces work-in-process idle time Monitors and controls shop floor activity Improves shop floor scheduling Optimizes floor space Improves product yield or reduces scrap

ENTERPRISE RESOURCE PLANNING (ERP)

ERP is a computerized integrated set of application software modules for different business processes such as production,

distribution, financial, human resources, procurement, supply china management, etc.,

used by firms providing operational, managerial and strategic information for

making decisions strategically to improve the productivity, quality and competitive advantage.

ERP SYSTEM COMPONENTS

CRITICAL ERP IMPLEMENTATION ISSUES

Never-ending implementation Importance of process mapping Process redesign Use of consultants Excessive cost Resistance to change Errors during implementation Rapid technological change

BENEFITS OF ERP

Improving productivity and enhancing a competitive edge

Bringing about a tradeoff between demand and supply

Bringing together people who work on shared tasks

Ensuring a smoother flow of inventory and information at all levels

Reducing the replenishment cycle time Overall organizational look-ahead capability

and control.

COMPONENTS OF EDI Intranet

Intranet is an internal web of a firm, which allows only internal users (firm’ s own employees) to access and share data through electronic messaging.

ExtranetExtranets operate outside of the firm, connecting vendors, channel partners, third-party logistics service providers and/or end users to access and share internal corporate information in restricted manner .

InternetThe internet refers to the firm’ s web site which can be accessed from anywhere in the world by anybody.

INTRANET, EXTRANET AND INTERNET APPLICATIONS IN SUPPLY CHAIN INTEGRATION

EMERGING TECHNOLOGIES IN SUPPLY CHAIN INTEGRATION

Voice Systems It allows people to exchange data with other s through

a computer without the need for key pad entry. It is generally through voice/speech technology.

Memory in a Button They contain multiple microprocessors Several pages of information can be stored in it.

Radio Frequency Technology (RFID) It is a data collection techniques that passes product

information via radio waves to a receiving unit.

WEB-BASED SUPPLY CHAIN

A Web-based supply chain is dynamic, high performance network of customer and vendor partnerships and information flow creating new and unique value proposition mainly due to addition of digital value.

Value Prepositions through Web based supply chain: Super Service Convenient Solution Customization

WEB-BASED SUPPLY CHAIN INTEGRATION

Carriers & 3PL

Vendors

Web-Based Supply chain

Distribution Channels

Distribution Warehouse

Consumer

Advanced Planning

and Scheduling

AgileManufacturing

CollaborativePlanning

Forecasting &Replenishment

OrderManagement

WEB BASED SUPPLY CHAIN & ORDER MANAGEMENT SYSTEM

Flexible Business Process Management

Unified Data Model

Robust Integration Framework

Self-service Tools

ORDER MANAGEMENT APPLICATION

COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT (CPFR) SYSTEM

Collaborative planning, forecasting, and replenishment is a multi-industry that uses the Internet to achieve cooperation across the members of a supply chain to better sense demand, plan, and execute the flow of goods.

CPFR PROCESS MODEL

Develop a front-end agreement Create a joint business plan Create a sales forecast Identify exceptions for the sales forecast Resolve/collaborate on exception items Create all order forecast Identify exceptions for the order forecast Resolve/collaborate on exception items Generate the order

AGILE MANUFACTURING SYSTEM

Agile manufacturing system is an IT enabled process of web-based supply chain integration facilitating firms to support the demand and mass customization requirements.

Its applications support complex flow manufacturing, the just-in-time-based, pulls production method that enables manufacturing in lot sizes of one.

AGILE MANUFACTURING SYSTEM

Benefits in web-based supply chain through agile manufacturing application:

Greater product customization Rapid introduction of new or modified

products Interactive customer relationships Dynamic reconfiguration production

processes

ADVANCED PLANNING AND SCHEDULING (APS) SYSTEM

Advanced planning and scheduling system is high analytical applications software that uses mathematical models and related techniques to find out optimal solutions to complex production and supply problems.

Advantages of APS system: More flexible system handling more varied supply

chain requirements. Mathematical models based supply and support

optimization. Optimization of supply chain structures. Optimization is based in strategic issues of supply

chain such as, costs, customer value and services, and profitability

BENEFITS OF WEB-BASED SUPPLY CHAIN

Delivers cost saving through supply chain integration

Reduce inventory across supply chain network

Reduce procurement costs and improve vendor management

Improve customer value and services Increasing revenues and profitability

CHALLENGES TO WEB-BASED SUPPLY CHAIN

Security issues

Changes to business process

Coping with weaker supply chain links

Sharing of costs and benefits