Supply Chain Information Systems. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield,

Supply Chain Information

Systems

© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

Supplement 15S, Slide 2

Supplement Objectives

Be able to:Explain why information flows are a

necessary part of any supply chain. Describe in detail how supply chain

information needs vary according to the organizational level and the direction of the linkages (upstream or downstream).

Describe and differentiate among ERP, DSS, CRM, SRM, and logistics applications.



Information Flows

What are some of thekey functions information flows

perform?



Key Functions of Information Flows

• Plan or kick-off physical flows– Customer order, production plan, etc.

• Record and retrieve status and plans– Check inventory levels, shipping schedule, etc.

• Codify decision rules and planning values– Standard costs and times, inventory reorder points,

etc.

• Record and report performance– Quality levels, on-time delivery, actual costs, etc.



Strategic decision making

Tactical planning

Routine decision making

Execution and transactionprocessing

Customer Internal Supply SupplierRelationship Chain Management Relationship Management Management

Supply Chain Information Flows



Supply Chain Information Needs


long-range plans to meet organization’s mission

• Focus on long-term decisions• Least structured of all• Greatest user discretion

• Flexibility

Tactical planning plans to coordinate actions across supply chain

• Focus is on tactical decisions• Plans physical flows• Greater user discretion

• Form • Flexibility

Routine decision making support rule-based decision making

• Fairly short time frames• Limited user discretion

• Accuracy• Timeliness• Limited flexibility

Execution and transaction processing record / retrieve data & control physical / monetary flows

• Very short time frames, very high volumes• Highly automated• Standardized business practices• Ideally no user intervention

• Accuracy• Timeliness

Supply Chain Activity Characteristics Performance Dimensions purpose for Information Flows



Supply Chain Information Systems


Tacticalplanning

Routinedecision

making

Execution andtransactionprocessing

SRMapplications

DSS

CRMapplications

Networkdesign

Warehouse &transportation

planning

Warehousemanagement &transportation

execution

Suppliers Internal supply Customers Logistics chain

ERPapplications



Supply Chain Information SystemsEnterprise Resource Planning (ERP) Systems


Tacticalplanning

Routinedecision

making

Execution &transactionprocessing


SRM

applications

DSS

CRM

applications

Networkdesign


planning

Warehousemanagement &

transportation execution

ERPapplications

Large, integrated computer-based business transaction processing and reporting systems. ERP systems pull together all of the classic business functions such as accounting, finance, sales, and operations into a single, tightly integrated package that uses a common database.

Traditional strengths in routine decision making and in execution and transaction processing

Captures data to support higher-level decision support systems (DSS)



SRM

applications

DSS

CRM

applications

Networkdesign


planning



Supply Chain Information SystemsDecision Support Systems (DSS)


Tacticalplanning

Routinedecision

making



Computer-based information systems that allow users to analyze, manipulate, and present data in a manner that aids higher-level decision making



SRM

applications

DSS

CRM

applications

Networkdesign


planning



Supply Chain Information SystemsSupplier Relationship Management (SRM)


Tacticalplanning

Routinedecision

making



Computer-based information systems designed to plan and manage the firm’s external linkages with its suppliers. Example applications:

Design collaboration

Sourcing decisions

Negotiations

Buy process

Supply collaboration



SRM

applications

DSS

CRM

applications

Networkdesign


planning



Supply Chain Information SystemsCustomer Relationship Management (CRM)


Tacticalplanning

Routinedecision

making



Computer-based information systems designed to plan and manage the firm’s external linkages with its customers. Example applications:

Market analysis

Sell process

Order management

Call/service center management



SRM

applications

DSS

CRM

applications

Networkdesign


planning



Supply Chain Information SystemsLogistics Systems I


Tacticalplanning

Routinedecision

making



Network Design Applications:

Logistics information systems that address such long-term strategic questions as facility location and sizing, as well as transportation networks.



SRM

applications

DSS

CRM

applications

Networkdesign


planning



Supply Chain Information SystemsLogistics Systems II


Tacticalplanning

Routinedecision

making



Warehouse and Transportation Planning Systems:

Logistics information systems that support tactical planning efforts by allocating “fixed” logistics capacity in the best possible way, given business requirements.



SRM

applications

DSS

CRM

applications

Networkdesign


planning



Supply Chain Information SystemsLogistics Systems III


Tacticalplanning

Routinedecision

making



Warehouse Management and Transportation Execution Systems:

Logistics information systems that initiate and control the movement of materials between supply chain partners



Advanced Concepts –

Levels of Value Provided by Information

Visibility Information displays the physical and monetary flows in the supply chain

Mirroring Information can replace physical processes with virtual ones

Creation of new customer relationships Information can create new sources of value / new products and services

“How can we exploit these information flows?”

‘Perfect’ Information

Improving Information Flow Processes



What is “perfect” Information?

• Perfect information is:– Accurate– Timely– Correct in detail and form– Shared– Complete– Other dimensions?



Costs of “imperfect” Information

• What are some of the costs associated with information that is:– Inaccurate? (e.g., inventory or order info.)– Late? (e.g., forecast changes)– Incomplete in detail / form? (e.g., quarterly

sales $ forecast)?

– Not shared? (e.g., engineering changes)



Diagnosing and Improving Supply Chain Information Flows

1. Map the business process(es) containing the information flows of interest

2. Develop an information flow profile that identifies potential performance gaps in the information flows

3. Use continuous improvement techniques to identify the causes of these gaps

4. Use the plan-do-check-act (PDCA) cycle to plan and implement improvements aimed at closing these gaps



1. Map the business process(es) and information flows

2. Identify potential performance gaps in the information flows

3. Identify the causes of these gaps

4. Use the plan-do-check-act cycle to close the gaps

Accuracy

Timeliness

Reliability

Detail and form

Availability

DealerFaxesOrder

PaperOrder

Created

Order SitsIn FaxIn Box

Internal MailDelivers Fax

Order SitsIn Clerk’s

In Box

ClerkProcesses

Order

Is ItemIn Stock?

WorkerPicksOrder

Clerk NotifiesDealer and

Passes OrderOn to Plant

InspectorChecksOrder

Transport FirmDelivers Order

DealerReceives

Order

2 minutes0.5% of orders incorrect1 to 3 hours

2 hours on averageNo history of lost,damaged, or incorrectdeliveries

YES

NO

10 to 45 minutes20 minutes on average

0 to 2 hours1 hour on average0.5 to 1.5 hours

1 hour on average1% of orders lost

0 to 4 hours2 hours on average

4% oforders lost

5 minutes

Diagnosing and Improving Supply Chain Information Flows

Do

Act

Check

Plan

Method Manpower

MaterialMachinery

DrillingDrillingtoo slowtoo slowDrillingDrillingtoo slowtoo slow Overtime/Overtime/Overtime/Overtime/

SteelSteelSteelSteelWoodWoodWoodWood

Lathe not Lathe not calibratedcalibratedLathe not Lathe not calibratedcalibrated

defects







DealerFaxesOrder

PaperOrder

Created

Order SitsIn FaxIn Box

Internal MailDelivers Fax

Order SitsIn Clerk’s

In Box

ClerkProcesses

Order

Is ItemIn Stock?

WorkerPicksOrder

Clerk NotifiesDealer and

Passes OrderOn to Plant

InspectorChecksOrder

Transport FirmDelivers Order

DealerReceives

Order

2 minutes0.5% of orders incorrect1 to 3 hours

2 hours on averageNo history of lost,damaged, or incorrectdeliveries

YES

NO

10 to 45 minutes20 minutes on average

0 to 2 hours1 hour on average0.5 to 1.5 hours

1 hour on average1% of orders lost

0 to 4 hours2 hours on average

4% oforders lost

5 minutes

Improving Information FlowsProcess Mapping







Accuracy

Timeliness

Reliability

Detail and form

Availability

Other

Poor Excellent

Improving Information FlowsIdentify Gaps / Information Flow Profile







Accuracy

Timeliness

Reliability

Detail and form

Availability

Poor Excellent

Improving Information FlowsInformation Flow Profile - II







To what extent is the information flow less than perfect?

What are the benefits and costs associated with closing this gap?

Look for “low-hanging fruit”, not necessarily high-tech solutions

Improving Information FlowsGap Analysis





3. Use continuous improvement techniques to identify the causes of these gaps


Improving Information FlowsRoot Cause Analysis

Root cause analysis – A process by which organizations brainstorm about possible causes of problems (referred to as “effects”) and then, through structured analysis and data-gathering efforts, gradually narrow the focus to a few root causes Process Personnel

Material Equipment

PoorPoordispatchingdispatchingPoorPoordispatchingdispatching

Lack of trainingLack of trainingLack of trainingLack of training

Truck breakdownTruck breakdownTruck breakdownTruck breakdown

Late deliveries







Improving Information FlowsPDCA to Close Gaps

Do

Act

Check

Plan

Documents

Supply Chain Information Systems. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield,