Transcript Chapter 1 Information Technology and Supply Chain Management
Chapter 1
Information Technology and Supply Chain Management
SCM 614 Dr. Huei Lee Eastern Michigan University
Copyright© 2003-2007, Huei Lee
Supply Chain Management (SCM) Systems
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. SCM information systems use technology to more effectively manage supply chains
I. What is SCM?
Why Supply Chain Management?
1950-1980s Manufacturing
• 50 years ago, U.S. is the only country that can manufacture cars.
● You buy a car from GM, all the money will go to the GM.
1980-2000s Supply Chain Management
• Today, foreign parts and labors are much cheaper than that in US.
● You buy a car from GM, only a portion of money will go to the GM.
Parts Labor Overhead Management Marketing Total Cost $5,000 4000 2000 3000 $14,000
Value Chain Analysis
Benefits of Value Chain Analysis Disintermediation to the Consumer Manufacturer Distributor Retailer Manufacturer Customer Cost/ Sweate r $48.50
Retailer Customer $40.34
Manufacturer Customer $20.45
Service
The concept of Supply Chain Management is also applied to Service.
Business Process Management or Business Process Reengineering
Stockless Inventory Compared to Traditional and Just-in-time Supply Methods
Business Process Reengineering From an article published in Harvard Business Review Radical business redesign initiatives that attempt to achieve dramatic improvements in business processes by questioning the assumptions, or business rules of the company.
II. Information Systems for SCM
Information Technology for Supply Chain Management
Software Systems Electronic Data Interchange (EDI) Material Requirements Planning (MRP) Manufacturing Resource Planning (MRP II) Enterprise Resource Planning (ERP) Supply Chain Management Systems (SCM) Customer Relationship Management (CRM) Internet-based Software Network Infrastructure Wide Area Network Internet (for E-commerce: B2B, B2C)
III. ERP
Enterprise Resource Planning (ERP) Systems
Enterprise resource planning (ERP) is a term used to refer to a system that links individual applications (for example, accounting and manufacturing applications) into a single application that integrates the data and business processes of the entire business.
Origins of ERP Systems
ERP systems grew out of a function called materials requirements planning (MRP) which was used to allocate resources for a manufacturing operation MRP systems software ultimately became very complex allowing for efficiencies of scale not previously possible Even more sophisticated MRP II systems began to replace MRP systems in the 1980s By the early 1990s, other enterprise activities were being incorporated into ERP systems
Origins of ERP Systems
Today, an ERP system can encompass, but is not limited to, the following functions: Sales and order entry Raw materials, inventory, purchasing, production scheduling, and shipping Accounting Human resources Resource and production planning
Major ERP Systems
SAP R/3 Oracle PeopleSoft (have been merged by Oracle) Toyota uses PeopleSoft and SAP Microsoft Dynamics (formerly Microsoft Business Solutions - Great Plains)
E-Business and ERP Systems
An e-business must keep track of and process a tremendous amount of information Businesses realized that much of the information they needed to run an e-business — stock levels at various warehouses, cost of parts, projected shipping dates — could already be found in their ERP system databases A major part of the online efforts of many e businesses involved adding Web access to an existing ERP system
E-Business and ERP Systems
Many e-businesses want the same things from their business infrastructure Thus, rather than custom build applications, many companies prefer to use prepackaged ERP system software, which is often more efficient and less expensive to implement
Cost of Implementing ERP Systems
Most businesses need extensive help from consultants to configure their ERP system software around their existing business practices, or to suggest changes in business practices in order to better fit the ERP system requirements This process of mutual adaptation is called systems integration The consultants who supervise the integration process are often referred to as systems integrators
Outsourcing ERP Systems
One response to the challenge of managing a complex ERP system is to outsource it Some businesses choose to outsource not only the installation but also the ERP system software
IV. Supply Chain Systems
Supply Chain Management (SCM) Systems
A typical SCM system might address the following issues: Planning Vendor selection Manufacturing Logistics Customer relationship
Supply Chain Management (SCM) Systems
Supply Chain Management (SCM) Systems
With the advent of the Internet, e-businesses began to demand different things from their SCM systems Most importantly, SCM systems vendors (largely the same vendors that provide ERP systems software) had to modify their products to include a Web-based interface The ultimate goal of a business ERP system is complete optimization of internal business processes
Supply Chain Management (SCM) Systems
The two basic types of SCM system software are:
Supply Chain Planning software (SCP):
supply chain uses mathematical models to predict inventory levels based on the efficient flow of resources into the
Supply Chain Execution software (SCE):
when inventories reach specified levels is used to automate different steps in the supply chain such as automatically sending purchase orders to vendors
Major Supply Chain Planning (SCP) Players
i2 Technologies i2’s strength began with its powerful Advanced Planning and Scheduling (APS) Manugistics Oracle SAP Advanced Planner and Optimizer (APO)
SAP Advanced Planner and Optimizer (APO)
Levels of SAP APO Supply Network Design (SND) The Supply Chain Cockpit (SCC) Demand Planning (DP) Supply Network Planning (SND) Collaborative Planning, Forecasting, and Replenishment (CPFR) … SAP R/3
Oracle Supply Chain Planning
Oracle Supply Chain Planning is part of the Oracle E-Business Suite's family of Supply Chain Management solutions It includes Demand Planning Collaborative Planning Inventory Optimization Manufacturing Scheduling, and Global Order Promising
Customer Relationship Management (CRM) Systems
Customer relationship management (CRM) systems, sometimes called e-CRM systems, use technology to help an e-business manage its customer base CRM allows an e-business to match customer needs with product plans and offerings, remind customers of service requirements, and determine what products a customer has purchased
V. CRM
Salesforce.com
Muiti-channels CRM
Data Mining/Web Mining/Business Intelligence
Data mining is the process of using mathematical techniques to look for hidden patterns in groups of data, thereby discovering previously unknown relationships among the many pieces of information stored in a database A data warehouse is a database that contains huge amounts of data, such as customer and sales data
What does Data Mining Do?
Explores Your Data Finds Patterns
Query, Reporting, Analysis What Performs Predictions Data Mining Why How
Integrate Analyze Report
Data acquisition from source systems and integration Data transformation and synthesis
Data enrichment, with business logic, hierarchical views Data discovery via data mining
Data presentation and distribution Data access for the masses
SQL Server 2005 Algorithms
Decision Trees Clustering Time Series Sequence Clustering Association Naïve Bayes Neural Net
Plus: Linear and Logistic Regression
Relationship among SCM, ERP, CRM
SCM ERP Broader SCM CRM
V. SAP R/3
References: available on request
PARTIAL SAP CLIENT LIST
Spacenet
BEFORE SAP R/3
Systems didn’t talk to the extent processes required, in spite of 20 years of IS labor Human glue was required: to fill-in where systems don’t talk to reconcile multiple views of data to arrive at an “answer” to monitor “hold-points” to ensure procedures are followed amidst the disorganization of being part paper and part automated to bridge systems and paper processes
Artemis Project Fund Accounting Primavera Schedules Paper Purchase Requisition Paper milestone definitions Catalog DOE DISCAS Purchasing batch file Pump/Motor Run Time Work Order System Paper parts order Paper Contract Fixed Assets Paper receivers Inventory Control System General Ledger batch file Paper Stock level decision Logistics Support Analysis Engineering Change Control Log Paper ECP Paper Invoices Accounts Payable Journal Entry Request Paper Real Property Payroll Personnel Paper Training Off-site Vendor Custody Bar Coding Bench Stock Control MRP Models Legend Legacy System batch file batch file Disbursements Security Centra EDM/PDM Paper checks DOE FIMS
Artemis Project Fund Accounting Primavera Schedules Paper Purchase Requisition Paper milestone def nitions Catalog DOE DISCAS Purchasing batch f ile Pump/Motor Run Time Work Order System Paper parts order Paper Contract Fixed Assets Paper receivers Inventory Control System General Ledger batch f ile Paper Stock level decision Logistics Support Analysis Engineering Change Control Log Paper ECP Paper Invoices Accounts Payable Journal Entry Request Paper Real Property Payroll Personnel Paper Records Training Of f -site Vendor Custody Bar Coding Bench Stock Control MRP Models Legend Legacy System Disbursements batch f ile batch f ile Human Glue Security Centra EDM/PDM Paper checks DOE FIMS
PROCESS EFFICIENCY
Realized through ability to reduce the personnel requirements to perform the process Transfer into processes that were able to meet customer requirements
THE KEY ENABLER: ONE SYSTEM
MM SD
Sales & Distribution
FI
Financial Accounting
CO PP
Materials Mgt.
Production Planning Quality Mgt.
Controlling SAP R/3 Single Central Database Fixed Assets Mgt.
Project System
AM QM
Plant Maintenance
PM
Human Resources Workflow Exec.
Information & Report Writer
WF PS HR
SAP R/3 Omni-functional Fully integrated Process-oriented Off-the-shelf
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Some SAP Products
R/3 APO Customer Relationship Management (CRM) Business process improvement (BPI) Strategic Enterprise Management (SEM) Business Warehouse (BW)
VI. SCM/ERP for Small Businesses – Microsoft Dynamics
Microsoft Dynamics Screenshot
Microsoft Dynamics
Formerly Microsoft Business Solutions – Great Plains
With Microsoft Dynamics, you can bring supply-chain functions online and make information available for team collaboration—wherever your employees, vendors, partners and suppliers are. Business portal functionality lets you provide supply chain functions, documents, and information to people across the chain, both inside and outside of the organization. And you can use the same portal technology to let your executives review and augment performance— when, where, and how they need to.
Why Microsoft Dynamics is for small businesses?
Hardware considerations Database requirements
VI. Information Technology for for E-Business
TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCE
Languages: HTML CGI (Common Gateway Interface) CSS (Cascading Style Sheets) Javascript Java (Java Applet) XML/XSL Software: Front Page Microsoft Word Macromedia Flash Player http://www.macromedia.com/software/flash/ Macromedia Dreamweaver
V. Hardware Considerations for SCM systems
Intranet vs. Extranet
Intranet is to use Internet technology and protocol (TCP/IP) for the internal communications Extranet is to use Internet technology and protocol for the internal and suppliers’ communications
Network Infrastructure: Wide Area Networks (WANs) WAN Technologies
Ordinary telephone line and telephone modem.
Point-to-Point Leased lines (such as T1 line)
Public switched data network (PSDN)
Such as ATM, Frame Relay Send your data over the Internet securely, using Virtual Private Network (VPN) technology
PSDN VPN
Global Considerations in Using SCM/ERP Systems
Time differences Language issues Currency exchange rates Tax Different accounting systems Internet and security restrictions Culture and religion holidays