IST 301: Process Integration III-B Supply Chain Management and Logistics

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1 IST 301: Process Integration III-B Supply Chain Management and Logistics Learning Objectives Understand how information technology can improve a supply chain. Classify the supply chain processes in a firm. Understand the strategic role of the supply chain management in the success of a firm. Abdullah Konak School of Information Sciences and Technology Penn State Berks A. Konak IST 301/Supply Chain 2 What is a Supply Chain? A supply chain consists of all parties involved, directly and indirectly, in fulfilling customer request. A typical supply chain includes several stages: customers, retailers, wholesalers/distributors, manufacturers, component/raw material suppliers. Timber Company Paper CFG Packaging General Mills Distribution Center Wal-Mart Store What is Supply Chain Management? Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements of customers. Producer Wholesaler ADM Stages of a Cereal Supply Chain A. Konak IST 301/Supply Chain 4 A. Konak IST 301/Supply Chain 3 Decisions In a Supply Chain Supply chain strategy and design Supply chain planning Supply chain operation A. Konak IST 301/Supply Chain 5 Why is Supply Chain Management Important? Brief history: excellence in technologies and organizations (No room for improvement). In 1997 American companies spent $862 billion, or about 10% of the GNP, on supply related activities. Many opportunities exist to cut costs (waste) in supply chain. It takes a typical new car, on average, 15 days to travel from the factory to the dealership, and actual travel time is no more than four to five days. A. Konak IST 301/Supply Chain 6 1

2 Challenges in Supply Chain Process View of a Supply Chain Integration different and conflicting objectives dynamic system Complexity a large network Matching supply and demand Cycle A. Konak IST 301/Supply Chain 7 A. Konak IST 301/Supply Chain 8 Cycle Facilitate the contact between customer and products Ensure that order entry is quick Arrival Entry Fulfillment Consider these three cases: A grocery store A web site A mail order center Reliable and fast orders to customers on time at lowest possible cost A. Konak IST 301/Supply Chain 9 Balancing product availability, customer satisfaction and inventory related costs is entered accurately and conveyed quickly Retail Trigger Entry Fulfillment Update inventories quickly and accurately orders to retailer on time at lowest possible cost A. Konak IST 301/Supply Chain 10 Arrival It is important to link manufacturer's production schedule to the suppliers' based on 's Schedule or 's Stocking Needs at Maximize the proportion of the orders filled on time while keeping costs down BOM Production Scheduling Shipping orders to the next level on time at lowest possible cost A. Konak IST 301/Supply Chain 11 Production Scheduling Component Shipping A. Konak IST 301/Supply Chain 12 2

3 Push/Pull View of Supply Chain L.L. Bean Supply Chain With pull processes, execution is initiated in response to a customer order (reactive processes) With push processes, execution is initiated in anticipation of customer orders (speculative process) PULL order arrives PUSH Cycle L.L.Bean A. Konak IST 301/Supply Chain 13 A. Konak IST 301/Supply Chain 14 Dell Supply Chain IT for Supply Chain Management PULL order arrives and (Dell) Current IT that supports components in the supply chain process is diverse and disconnected, rarely integrated. PUSH s A. Konak IST 301/Supply Chain 15 A. Konak IST 301/Supply Chain 16 Goals of Supply Chain IT Collect Information on each product from production to delivery or purchase points, and provide complete visibility for all parities involved. Access any data in the system from a single point of contact. Analyze, plan activities, and make-trade offs based on information from entire supply chain. Collaborate with supply chain partners. How to Achieve These Goals Standardization IT Infrastructure Electronic Commerce Supply Chain System Components Integration Related Issues A. Konak IST 301/Supply Chain 17 A. Konak IST 301/Supply Chain 18 3

4 Standardization extensible Markup Language (XML): a language/data description format Electronic Data Interchange (EDI) Web Services: Web services enable applications and components to talk to other applications no matter where they're located. XML Example <?xml version="1.0" encoding="utf-8"?> <level0> <name>t</name> <quantity>1</quantity> <level1> <name>u</name> <name>w</name> <quantity>1</quantity> <name>x</name> </level1> <level1> <name>v</name> <quantity>3</quantity> <name>w</name> <name>y</name> </level1> </level0> T End item U(2) V(3) W(1) X(2) W(2) Y(2) A. Konak IST 301/Supply Chain 19 A. Konak IST 301/Supply Chain 20 IT Infrastructure Interface/presentation devices Communications s System architecture IT Infrastructure : Interface/presentation devices Bar-codes, PDAs, radio frequency tags (RF), Auto-ID center, Product Markup Language (PML), Object Naming Service (ONS) A. Konak IST 301/Supply Chain 21 A. Konak IST 301/Supply Chain 22 IT Infrastructure : Communications Electronic Data interchange (EDI) Transportation product tracking (GPS) Groupware Exchange platforms IT Infrastructure :s Legacy databases Relational databases Object databases Data warehourses Datamarts A. Konak IST 301/Supply Chain 23 A. Konak IST 301/Supply Chain 24 4

5 IT Infrastructure : System Architecture Centralized legacy systems Client/Server A. Konak IST 301/Supply Chain 25 5

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