Question

Explain the important role that information system play in supporting a supply chain strategy?

Answer 1

Supply chain management (SCM) is concerned with the flow of products and information between supply chain members' organizations.

SCM is the process of effectively managing the components of an extended value chain- from suppliers, through manufacturing and distribution chain and to the consumers.

Recent development in technologies enables the organization to avail information easily in their premises. These technologies are helpful to coordinates the activities to manage the supply chain.

As the rate of technologies is increases the cost of  information is decreased.

INFORMATION SYSTEM IN SCM:

1)Software Systems:

a)Electronic Data Intechange(EDI)

b)Material Requirements Planning(MRP)

c) Customer Relationship Management(CRM)

d)Enterprise Resource Planning(ERP) and etc..

2)Network Infrastructure:

a)Wide Area Network(WAN)

b)Internet (for E-commerce)

A typical SCM might address the following issues:

a)Planning

b)Vendor Selection

c)Manufacturing

d)Logistics

e)Customer Relationship

The two basic types of SCM system softwares are:

Supply Chain Planning Software(SCP): It uses mathematical modelsto predict inventory levels based on the efficient flow of resources into the supply chain

Supply Chain Execution software(SCE): It is used to automate different steps in the Supply Chain such as automatically sending purchase orders to vendors

Information and Technology: Application of SCM:

In the development and maintenance of Supply chain's information systems both software and hardware must be addressed. Hardware includes computer's input/output devices and storage media. Software includes the entire system and application programme used for processing transactions management control, decision-making and strategic planning. Recent development in Supply chain management software is:

1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution Sciences Inc. which is useful for computing freight costs, compares transportation mode rates, analyze cost and service effectiveness of carrier.

2. A new software programme developed by Ross systems Inc. called Supply Chain planning which is used for demand forecasting, replenishment & manufacturing tools for accurate planning and scheduling of activities.

3. P&G distributing company and Saber decision Technologies resulted in a software system called Transportation Network optimization for streamlining the bidding and award process.

4. Logitility planning solution was recently introduced to provide a programme capable managing the entire supply chain.

Electronic Commerce:

It is the term used to describe the wide range of tools and techniques utilized to conduct business in a paperless environment. Electronic commerce therefore includes electronic data interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic/optical data capture. Companies are able to automate the process of moving documents electronically between suppliers and customers.

Electronic Data Interchange:

Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business documents in a standard format. EDI describe both the capability and practice of communicating information between two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI are:

1. Quick process to information.
2. Better customer service.
3. Reduced paper work.
4. Increased productivity.
5. Improved tracing and expediting.
6. Cost efficiency.
7. Competitive advantage.
8. Improved billing.

Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information.

Bar coding and Scanner:

Bar code scanners are most visible in the check out counter of super market. This code specifies name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants.

Data warehouse:

Data warehouse is a consolidated database maintained separately from an organization's production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated.

Enterprise Resource planning (ERP) tools:

Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data.