SHARING INFORMATION ACROSS THE SUPPLY CHAIN

Dr. Ron Lembke

Supply Chain TechnologiesASN -- lets customer know exactly what has been sentDrop Shipping -- Supplier sends directly to the store, not to store’s warehouse

Computer sent to house via UPS3PL: Third-party Logistics Provider

Trucking companies, manage inventories, anything you don’t want to do

Bullwhip Effect

Lack of information sharing can cascade through the supply chain.Small changes at retail level lead to huge swings at manufacturing, like a bullwhipSeveral retailers order all at once, distributor thinks sales have jumped, orders a much bigger order, etc.Better: sales info shared along “Value Chain.”

Graph: Disney & Towill, 2006, Supply Chain Mgt: An Intl J

Electronic Data Interchange

My computer talks to yours, tells you exactly what I want to order, whenYou fill out a form, very compressed message sent, viewed as formSoftware, hardware expensive to implement

Sample Purchase TransactionST88850*1 Transaction Set identifierBEG*00*NE*00498765**010698 Beginning of SegmentPID*X*08*MC**Large Widget Description of ProductP01**5*DZ*4.55*TD Baseline Item DataCTT*1 Transaction TotalsSE*1*1 End of Segment

XML

eXtensible Markup LanguageStandard for E-BusinessXML provides self-describing information.Easier to implement or modify than EDI.Expected to eventually, replace EDI, but not nearly as fast as was expected.Standardization through RosettaNet efforts

XBRL

Standardized set of tags for financial transaction

Identifies data as being Q3 EBITDA, 2011, for WidgetCo.No rekeying, fewer errors, easier research

2009 - SEC required for external reporting, 500 largest public cos.XBRL.org

Video conferencingNothing can go wrong now

Summary

Bullwhip effect: small changes can have huge consequences

Sharing information can be very valuableTechnologies:

EDI, XML, XBRLImportance of face to face