cii institute of logistics virtual class 1 27-aug-15 session 1 supply chain management and role of...

CII Institute of Logistics Virtual Class 1Apr 21, 2023

Session 1 Supply Chain Management and

Role of IT in SCM

CII Institute of Logistics Virtual Class 2

Session 1

Topics

1. Supply Chain Management – Definition, Need , and

Activities

2. Role of IT deployment in Supply Chain

3. Dells Strategy - balancing Demand & Supply – Case

Study

4. Supply Chain Integration – Role of Technology

5. Competitive Strategy Approaches

6. Competitive forces and Competitive strategies


1. SCM – Definition and ActivitiesSCM – DefinitionSCM is the art and science of creating and accentuating synergistic relationships among the trading partners in supply and distribution channels with the common shared objective of delivering products and services to the "right customer," in the "right quantity," and at the "right time."

SCM – ActivitiesCollect, Access, Analyze, share collaborate data/information

Internal Functional Departments, Management and external Partners

SCM ObjectiveLink point of production to the point of delivery or purchase

Information Tracking

Supplier Internal Functional Depts Distribution System Customer


1.1 Goals of SCMCollect information from departments

Access data from single point of contact

Analyze and plan activities and market trade-offs

Collaborate with supply chain partners Optimization and mange uncertainties

Goals are independent

Order of importance dependent on industry vertical


1.2 Structure and Components of SCM

IT standards form rules and proceduresImpact on cost and feasibility of implementation

Integration and Standards

Infrastructure Supply Chain Functional Depts.

E-Business and E‑Commerce

Collect Access Analyze Collaborate


2. Role for IT in SCMSCM – links and information sharing

Internal, external

Simultaneous integration/coordination of all the links in the supply chain is critical

Internet-enabled activities – eBusiness

Technologies are helpful to coordinates the activities

Cost of information is decreased due to the increasing rate of technologies


Role of IT in SCMIT infrastructure capabilities provides a competitive positioning of business initiatives

cycle time reduction,

implementation,

implementing redesigned cross-functional processes

ExampleWal-Mart shares point of sale information from its many retail outlet directly with P&G and other major suppliers.


Advantages of IT in SCMEfficient, accurate and instant data/info sharing

On-demand decision making

Reduced and inventory cost

Bridging the demand-supply gap

Better supplier-customer retention, incentives, satisfaction

Competitive edge

Overall cost reduction


3. Dell’s Case studyBalancing Demand-Supply

Build-to-Order model

Supplier base, participation in Inventory management (valuechain.dell.com)

Automation of Internal processes

Managing supply for customer satisfaction

Efficient Inventory • Low material cost,

• Lean inventory

• Real-time transactions

• Minimize excess/obsolete inventory

Use of latest IT infrastructure


4. Supply chain Integration – Role of Technology


Supply chain Integration – Role of Technology

Data Highway for Manufacturing/Retailing Integration



Advantages (as learnt from Wal-Mart-P&G Collaboration)

Technology solutions to link suppliers and retailers.

Ensure proper staffing of these resources to drive volume and reduce cost.

Data and technology used to understand better the consumer’s needs.

Driving towards common methods of communicating business transactions and data sharing reduces cost for the entire supply chain.

Commitment to Information Sharing for joint decision-making


5. Competitive Strategy Approaches

Low cost provider strategy

Broad Differentiation Strategy

Focused Low Cost Strategy Focused Differentiation Strategy

Best Cost Provider Strategy

Broad Cross section of Buyers

Narrow Cross section of Buyers


Low Cost Provider StrategyMarket very competitive

Companies selling same range of products

Price sensitive customers

Innovation to drive out costs

Example - Dell


Broad Differentiation StrategyCompetitive market

Companies selling identical standard products

Need and Customer behaviour analyzed

Value addition to the products, services

Example – ICICI Bank


Other StrategiesBest Cost Provider Strategy

Hybrid of Cost and Differentiation strategies

Reduce cost and also value addition

Example – Toyota

Focused Strategies Arrow Customer base with unique needs

Ebay – Focused low cost strategy

Cadbury – focused differentiation strategy


6. Competitive forces Competitive Forces

New Market Entrants

Substitute products & Services

Suppliers

Customers

The Company

Traditional Competitors


Competitive StrategiesDifferentiation

IT for new development (Products and Features)IT to focus at niche market products

Cost LeadershipIT for reduction in cost of customers, suppliers and business processes

InnovationNew products servicesRadical changes in processes to cut cost, improve quality and customer service

Growth IT for managing expansion of businessIT for diversification and integration into other products and services

AllianceIT to create virtual organization of business partnersDevelop ERP, links with Intranets and Extranets

Other Strategies


Examples of Applying Competitive Strategies

Strategy Company Strategic Information System

Business benefit

Low Cost eBay.com Online auctions Auction-set prices. Customer base

increase

Differentiation Dell Online Customization Market share increase

Innovation Federal Express Online package tracking and flight

management

Market leadership

Growth ICICI Online banking Market share increase

Alliance Rediff.com & ICICI Direct

Online brokering services

Diversification


Session 2Information System

Fundamentals


Topics

1. Fundamentals of Information Systems

2. IT infrastructure

3. Evolution of Enterprise Information Systems

4. Introduction to E-Commerce

5. Introduction to E-business


1. Fundamentals of Information Systems

Information system resourcesPeople, Hardware, Software, Network, Information System Resources

Computer Hardware and Types

Peripherals

Software resources

Data resources

Network resources

IT infrastructure – Costs and Benefits


Computer Hardware and TypesBlock diagram of Computers

Central Processing Unit

Control Unit Arithmetic and Logical Unit

Cache Memory

Special purpose processors

Primary Storage (RAM)

Input Devices

Output Devices

Secondary Storage Devices


Fundamental Units of Information SystemComputers

Super, Mainframe, Mini, Micro computers

SoftwareSystem SoftwareApplication SoftwareNetworking and Security softwareProcedures

Data sources`Database, Database Management systems

NetworkingLAN,.WAN, wire-lessClient/Server, Web enabled

ApplicationsClient/Server, ERP, Internet (Ecommerce, EBusiness)


2. IT infrastructureNeed

Business drive towards sustainable competitive advantage

Apply ERP, SCM, CRM and others

ROI

(Monetary benefits [tangible and intangible]) - Cost of using technology ROI = ---------------------------------------------------------------------------------------------- x 100 Cost of using technology


IT InfrastructureCosts, Benefits and Risks of IT Infrastructure


3. Evolution of Enterprise Information Systems

1890 – Punch cards and Mechanical computing1939 – Electro mechanical calculators1952 – 2nd Generation Computers for scientific computing1964 – Mainframe Computers – Fast data processing capabilities1971 – Mini computers – data processing at client/server level with LAN1981 – Micro computers – Data processing at desktop level with LAN and powerful database management systems1994 – Software applications at enterprise level (Browser, Internet, Intranet and Extranet) and wireless communication software. For business, CRM, MRP, ERP, SCM, E-Commerce and E-Business


Early components of Enterprise Systems

Inwardly organizedBusiness function centricAccounting• Book-keeping, multi-dimensional accounting

Inventory and Material Management• MRP and Inventory Control

Enterprise applications• Single source ERP and best of breed ERP

Outwardly OrganizedBusiness process centricTrading partner Applications• SCM, CRM

Independent and Govt. bodieseBusiness, EDI, and eSecurity


Growth of Enterprise Information Systems

Wireless Web applications

Mobile computing and information systems

Data convergence – Voice, Video

DemandsHigh band-width optical networking

End-user convenience, multi-lingual applications

Adherence to local laws and global laws

Data security in transmission

Interchangeability and adoptability of business data between organizations


Session 3 Introduction to E-Commerce


Introduction to E-commerce

CONCEPT OF E-COMMERCE A system that includes more than just buying andselling of goods

Includes services which

Directly generate revenue

Support revenue generation transactions

Offer sales support and customer service

Facilitate communication between businesspartners


E-Commerce Cycle

Surf Search Query

Customer

On-line Orders On-line Advertisements

Distribution Soft goods (On-line) Hard goods (Delivery)

Customer Support (On-line)

Payment


Types of E-Commerce

Types of E-Commerce• Business-to-Business (B2B)• Business-to-Consumer (B2C)• Consumer-to-Consumer (C2C)• B2B – Business between two business

partners• B2C – Business between Merchant and a

net user• C2C – Net user selling articles over net,

which is bought by another user


E-Commerce and Business Processes

Five Processes of E-Commerce

Information Sharing

Ordering

Payment

Fulfillment

Service and Support


Benefits of E-Commerce

More Customers can be catered

Business process is more faster

Reduces the paper work of different process

Helps to track customer feedback more fast

Customer needs can be given more focus


Payment in E-Commerce

In traditional business establishmentPayments are done using

Cash, Cheque, Credit Card or Demand Draft

In an E-Commerce business establishmentPayments are done using

Credit Card, Digital Cash, e-Cheque or EDI

What is Electronic Data Interchange (EDI)?


Electronic Date Interchange (EDI)

EDI – System that helps to transfer data in particular format

EDI software used through VAN

Business Application

EDI Standard Changes

VAN

EDI Standard Messages

Business Application

Translation

Store and forward messages


Needs of Payments systems in E-Commerce

Four needs of Payment Systems• Confidentiality

• Integrity

• Authorization

• Assurance• Privacy of Sale


Types of Payment Systems in E-commerce

E-CheckSystem developed by FSTC and Cyber CashFSTC (Financial Services Technology Corporation)Consortium of banks, which designed electronic checkUses Digital Signature for Signing and Endorsing

Cyber Cash Intermediate party for processing the checks

Digital CashHere currency is a string of digitsCurrency are treated as tokensFor each token spent Serial Number generated by bank Serial Number enables no token to be spent twice


Security in E-Commerce

Threat Security Solution

Function

Data intercepted, read or modified

Encryption Encodes data to prevent tampering

Users misrepresent their identity to commit fraud

Authentication Verifies the identities of both sender and receiver

Unauthorized user on one network gains access to another

Firewall Filters and prevents certain traffic from entering the network or server


Introduction to Cryptography

Cryptography techniques Three essential types of services

Identification Verifies the sender of a message

Authentication Verifies sender and also that the message

sent has not been altered

Privacy Ability to shield communication fromunauthorized viewing


Types of Encryption

Symmetric EncryptionUses same key for the Sender and Receiver

Public Key Cryptography (Asymmetric Encryption)

Sender uses a Public/Private Key for EncryptionReceiver uses a Public Key for Decryption

Public Key CryptographyPublic Key Encryption process is slowTo speed up the processDigital Certificate is used instead of Public Key encryption

What is a Digital Certificate?


Digital Certificate

Electronic license to access data

License maintained by Certificate Authority

Certificate Authority Organization which maintains different organizations Digital Certificate

Example: Verisign, Cybertrust, and Nortel


Session 4 Introduction to E-Business


Introduction to E-Business

Definition

Web-enabling core business processes in order to reach a number of critical objectives

Conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners


e-Business Overview

E-BusinessConduct of business on the Internet. Definition from Laudon and Traver

• The digital enablement of transactions and processes within a firm, involving information systems under the control of the firm, which doesn’t include the company’s revenue

E-Business supports e-CommerceRevenue models

• Advertising (Yahoo.com, Rediff.com, etc)• Retailing and Advertisement (Amazon.com)• Subscription (elance.com)

Reports, newspapers, magazines)• Sales (Walmart.com, Amazon.com, shopping.rediff.com)

Click-and-click (Amazon.com), click-and-brick (WalMaert.com)• Transaction fee revenue (Patpal.com, egold.com)• Affiliate revenue (Suite101.com, TechRepublic.com)• Diversified revenue (Amazon.com) – Sales, Advt, subscription

revenue


e-Business Models

B2BBetween companiesAutomated Order entry to suppliersUse of EDI – data sharing through invoices, SKUs, Biils, purchase orders, etcWalmart.com, Amazon.com, Towerhabby.com, etc. Virtual organizations

B2COnline trading to commodities to publicThird parties involved (e.g. payment gateways)

C2CFind and sell goods/services as online market placeEbay.com

P2p Mobile CommerceUsing mobile and hand-held devices


e-Business Activities Integration

Internet

Company

Boundary Supply Chain Management, Procurement, Logistics

Marketing, Sales and CRM

Manufacturing, Production

Engineering, Research uction

Accounting & Finance uction

Intranets

Intranets

Suppliers and Other Business Partners

Consumer and Business Customers

Extranet

Extranet


e-Business Architecture

The architecture of hardware, software. Content and data used to deliver e-business services to employees, customers and partners

Apr 21, 2023

A five-layer model of e-business infrastructure


Technology architecture of e-Business

Data

Client Web Server Application Server

Database Server

Client – Browser – Send Request and receive response

Web Server IIS, Apache, Java Web Server – Receive request forward the request data to Application Server for Business Logic process, Receive response from Application server, build the response (HTML) page and send to client

Application Server ASP.Net, JSP, Servlet, EJB, PHP – Receive request data for processing, invoke the business logic component and execute, return the result to Web Server

Database server Receive data retrieval or update request, retrieve/update data, send response or data set to Application server


Information exchange – Browser and Web Server

Apr 21, 2023


Internet/Intranet/Extranet Relationship

Apr 21, 2023


e-Business and SCM

Effects of e-Business on SCMGDP deficit –America and TW countries

Production point moved to other countries – Cheaper production cost

SCM lengthened –product price reduced

Brokers and agencies in SCM

The Internet did not only give consumers more power to compare products’ prices, but also allowed companies to find more distributors easily.

This change has shaken up the whole supply chain environment because the Internet has collected huge amounts of information together for every one of us.


e-Business – Analyzing Environment

E-Business Patterns – sets the new rules of the gameWhat is the new opportunity based on certain customer and market trends?What are the macro -economic drivers of the business change?Which digital technologies are going to dominant your industry?

E-Business Model – framework allows to compete the marketWhat models are better suited to take advantage of new business opportunities?What business processes need to change? How do you move from existing model to an e-model reflecting your firm’s organizational readiness?What are the challenges management must face when executing the new business model?

E-Business Designs – strategy to tell what is needed to do in the marketWho are your target customers?What is your value proposition?How do you make money?How to finance the company?How do you get and retain customers?How to attract and retain talented people


Structural Patterns in e-Business



E-Channel Pattern Channels between customers companies and their partners (marketing channels)ICICI bank

Choice of e-channel model depends on company Existing channel in different

way (Dell, HP, ICICI)

Eliminates redundant steps (e-ticketing by Airlines)

Lengthens existing channel (payment gateway for

reservation by ICICI, etc.)

Satisfy and anticipate future customer desires Railway,

Airelines reservation system



Click and Brick Pattern

Services by SBI, ICICI and other banks



E-Portal pattern

Eyeball aggregator, Action portals, Mega transaction PortalsYahho, msn ebay.com traveocity.com, expedia.com



E-Market Maker pattern

Advantages

For sellers – reduced sales cost, wide reach of customersFor buyers, reduced purchase cost, convenience, choice of sellers



Pure e-Digital products pattern



Entrepreneurial activities that characterize digital goods market

High quality end-user technologies, services – good interactive experience

Sw and Hw support expanded and sustainable business models

Distribution infrastructure enabling digital products to be delivered quickly, easily and at lower cost.


e-Commerce Vs e-Business

e-Commerce Vs. e-Business

E-commerce covers outward-facing processes that touch

customers, suppliers and external partners, including

sales, marketing, order taking, delivery, customer service,

purchasing of raw materials and supplies for production

and procurement of indirect operating-expense items,

such as office supplies

E-business includes e-commerce but also covers internal

processes such as production, inventory management,

product development, risk management, finance,

knowledge management and human resources



e-Commerce Vs. e-Businesse-Commerce involves new business models and the potential to gain new revenue or lose some existing revenue to new competitors e-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings e-Commerce is ambitious but relatively easy to implementAn e-business strategy is also more difficult to execute



E-CommerceE-commerce covers outward-facing processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating-expense items, such as office supplies. It involves new business models and the potential to gain new revenue or lose some existing revenue to new competitors.Relatively easy to implement and maintain

E-BusinessE-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings. Includes ERP, CRM,. SCM, etcMore difficult to implement


Strategic benefits in E-Business

MarketingPortals and electronic campaigns increase reach into new markets. Data analysis of customer buying patterns can expose new opportunities for marketing, up-selling, cross-selling, and targeted campaigns

Demand PlanningUsing the Internet to share demand forecasts, inventory levels, point of sales data, and production schedules between buyers and suppliers can significantly reduce manufacturing, carrying, and shipping costs. Delivery date adherence can be dramatically improved. Suppliers can also provide buyers with services such as inventory management and product design Demand



Quote to CashThe Internet can greatly streamline the quote to cash process. Bids and quotes can be obtained online using collaborative technology. Electronic catalogs simplify access to product information and shorten the order entry process. Online access to order and shipping status can be provided. Invoicing, reconciliation, and payment processes can be automated.

Product ConsumptionFor end-users, converters, and printers, the Internet can enhance access to product specifications, frequent questions, or discussions with a technical support specialist. Performance information can be returned to the manufacturer to assist in product improvements



SuppliersThe procurement component considers opportunities to streamline and consolidate the purchase of goods and services. Several companies provide procurement packages and services that work well for stock items

CustomerThe customer component considers channel opportunities with direct customers, merchants, distributors, and alliance partners across each product line. Order management packages for stock businesses are readily available, but few address make-to-order complexities

cii institute of logistics virtual class 1 27-aug-15 session 1 supply chain management and role of...

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