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Published on January 15, 2009

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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 : 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? : I. What is SCM? Why Supply Chain Management? : 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. Value Chain Analysis : Value Chain Analysis Slide 6: Benefits of Value Chain Analysis - Disintermediation to the Consumer Service : Service The concept of Supply Chain Management is also applied to Service. Business Process Management or Business Process Reengineering Slide 8: Stockless Inventory Compared to Traditional and Just-in-time Supply Methods Business Process Reengineering : 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 : II. Information Systems for SCM Information Technology for Supply Chain Management : 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 : III. ERP Enterprise Resource Planning (ERP) Systems : 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 : 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 : 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 : 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 : 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 : 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 : 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 : 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 : IV. Supply Chain Systems Supply Chain Management (SCM) 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 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 : Supply Chain Management (SCM) Systems The two basic types of SCM system software are: Supply Chain Planning software (SCP): uses mathematical models to predict inventory levels based on the efficient flow of resources into the supply chain Supply Chain Execution software (SCE): is used to automate different steps in the supply chain such as automatically sending purchase orders to vendors when inventories reach specified levels Major Supply Chain Planning (SCP) Players : 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) : SAP Advanced Planner and Optimizer (APO) Slide 29: Supply Network Design (SND) The Supply Chain Cockpit (SCC) Demand Planning (DP) Supply Network Planning (SND) Collaborative Planning, Forecasting, and Replenishment (CPFR) … Levels of SAP APO SAP R/3 Oracle Supply Chain Planning : 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 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 : V. CRM Salesforce.com : Salesforce.com Muiti-channels CRM : Muiti-channels CRM Data Mining/Web Mining/Business Intelligence : 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? : What does Data Mining Do? What Slide 38: 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 : SQL Server 2005 Algorithms Plus: Linear and Logistic Regression Relationship among SCM, ERP, CRM : Relationship among SCM, ERP, CRM SCM ERP CRM Broader SCM V. SAP R/3 : V. SAP R/3 References: available on request Slide 44: PARTIAL SAP CLIENT LIST BEFORE SAP R/3 : 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 PROCESS EFFICIENCY : 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 : 1 SAP R/3 Omni-functional Fully integrated Process-oriented Off-the-shelf THE KEY ENABLER: ONE SYSTEM Some SAP Products : 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 : VI. SCM/ERP for Small Businesses – Microsoft Dynamics Microsoft Dynamics Screenshot : Microsoft Dynamics Screenshot Microsoft Dynamics : 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? : Why Microsoft Dynamics is for small businesses? Hardware considerations Database requirements VI. Information Technology for for E-Business : VI. Information Technology for for E-Business TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCE : 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 : V. Hardware Considerations for SCM systems Intranet vs. Extranet : 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) : 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 VPN Global Considerations in Using SCM/ERP Systems : 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

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