role of it in scm
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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
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