It in-scm

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Information about It in-scm
Business & Mgmt

Published on February 21, 2014

Author: SanjeevDeshmukh



IT is an enabler for streamlining Supply Chains.

Information Technology in Managing the Supply Chain S G Deshmukh


Internal Integration Integrated Systems (e.g. ERP)  Linking various business functions  – – – – – –  Purchasing Manufacturing Inventory Finance Marketing Distribution etc Shared data & integrated processes

External Integration  Inter-organizational Systems (Extranet)  Link firm’s systems with external entities (Suppliers, distributors, retailers etc.)  Shared data & integrated processes

Benefits due to Integrated SCM   Integrated view of resources and constraints Improved channel efficiency by sharing of information between suppliers & customers  Reduced inventory levels  Reduced production costs  Enhanced Quality  Customer driving the entire chain

IT capabilties Capability Organizational impact / benefit Typical example Transactional IT can transform unstructured processes into routine transactions. Accounts receivables and accounts payable procedures, Evaluation of various modes of transport Automatica l IT can replace or reduce human labor in a routine process Preparation of vendor rating reports, goods inspection report etc. Analytical IT can bring complex analytical methods to bear on a process Calculations of economic ordering quantity, supplier evaluation using multi-attribute decision making models Information al IT can bring vast amounts of detailed information into process, Data on extensive profile of customer required for customer relationship management etc. Sequential IT can enable changes in the sequence tasks in a process often allowing multiple tasks to be worked on simultaneously Various steps required for checking credit worthiness of a customer. Tracking IT allows the detailed tracking of task status, inputs, and outputs Tracking the status of a particular purchase order., tracking inventory of an item using bar code in a warehouse etc.

IT Enablers  ERP Information integrated within the organization  Intranet Collaborative working Internet Global linkage of various entities  e-commerce Managing the ‘money’ flow  faster  Datawarehousing/ Data mining Storage of data and tracking of customers

E-commerce application in SC Marketing & Sales On line product information Electronic selling Product offerings/e-supermarkets Procurement/Logistics Electronic auctioning/bidding Low cost transportation Point-to-point selling Point-to-point warehousing Customer Service Repair/return/replacement On-site fixing Technical support Product usage information Inventory Management High visibility Removal of obsolete items On-line status information on inventory Spot sell of items

Advantages of E-procurement solutions Indirect procurement Direct procurement Sourcing Price reduction Visibility demand Unit cost reduction Improved compliance contract of customer Visibility of supply chain capacity Enhanced making Shortened cycle times Accuracy capacity Improved intelligence Reduced admin costs Reduced inv/op costs Enhanced management Shortened proc cycle times inventory of production decision market

INSIGHTS Inventory & Information are inter linked uncertainty inventory Buffer more ( lack of proper information ) Better information Less Inventory Systems that accomplish this :    Forecasting Customer Needs, Tracking of Distributors

IT Applications in SCM  Point - of - sales information systems for customer voice - For better understanding  Tracking of vehicles in Real-Time - For better distribution  Tracking of prices, Government policies, Competition etc. - For better understanding of environment

IT Enables SC to become  Lean by cutting down inventory  Flexible by reorganization of infrastructure  Agile by responding quickly to various needs  Green by reducing / eliminating paper & Recycling

Case: XYZ Tyre Company  Tyre Industry at a glance – – – – 16 Major Players 34 Plants Top 5 companies hold 70% market share Rs 9000 Crore Industry Buyers OEM’s  Replacement  Exports  30 % 60 % 10%

XYZ at a Glance  Product range : Truck Tyres, LCV Tyres , Radial Tyres, Tubes/Flaps etc. Sales Turnover : Rs 1500 Crores.  Manufacturing Plants at Baroda, Cochin, Kolkata etc.  RDC’s at Gujrat, MP, Delhi, UP etc.  DO’s at 98 Locations  Extensive network of Exclusive Dealers 

SWOT Analysis  Strengths       Significant market share. Good Quality Product Lowest cost producer Tie up with Continental for passenger car radials Modernization and expansion plans in progress  Weaknesses     Purchasing actions not coordinated Main business functions work in isolation High inventory levels Currently using a PC based package for solving transportation problem (not taking in to account of all production constraints)

SWOT Analysis (Contd.)  Opportunities     Growing urbanization, change in buying habits Growing automobile market Export Potential Passenger radial market growing  Threats     Competition by rival companies in domestic Increase in input costs, severe power cuts Recessionary pressures Free import under Exim policy

Inbound Logistic Supplier Indigenous – 5 days Imported – 30 days 10 days Raw Material Banbury Master Batch – 1/3 day 2/3 days Manufacturing Link in Supply Chain Ope rations 1 days Di p unit – 2/3 day Dual Extruder – 1/3 day 2.7 days 2/3 days Final B atch – 1/3 day Warehousing 4 Roll cal – 2/3 day 1 days Tyre Buil ding – 0.6 day Dealers Tyre Curing and final Assembly – 1/3 day DO 15 days Outbound Logistic 10 days RDC 15 days

Problems with existing SC  Not having quick response layers in the distribution system  Lack of proper information flow between the echelon and head office  Dispatch schedule based on Transportation model  Various business functions such as Forecasting, Production and, Distribution acting in isolation

IT Enablers…1  Instead of existing TRANSPORTATION Model use of TRANSSHIPMENT Model

Existing SC Plants RDC’s 1 2 DO’s 1 2 ……. F01 3 4 30 F04 5 6 7 8 47 60 80 98 Fig 1(a) : Existing Distribution network model of XYZ

Proposed SC based on TRANSHIPMENT model Plants RDC’s 1 2 DO’s 1 2 ……. F01 3 4 30 F04 5 6 47 60 80 Fig 1(b) : Proposed distribution network model of XYZ 98

Advantages of the proposed approach Any node (plant,RDC,DO) can act as a supply point or demand point  More sharing of information  Supply chain becomes responsive  Overall cost reduces 

IT Enablers…2  Decision Support System – – – Model base Data Base User interface

IT Enablers…2... DSS User Dialogue Module Database Module Model base Forecast Logistics Master production schedule dispatches inventory relocation Fig 2 : A Decision Support System for integrated supply chain

Model base LP model to optimize the costs  Forecasting model for aggregate planning  Inventory model to manage inventory 

Various models and purpose of the model Model Forecast( Trend Analysis) Logistic (Transportation Algorithm) MPS (Linear programming) Dispatches(Transshipment Algorithm) Inventory Reallocation Purpose of the Model Using Trend lines, Moving average to forecast the demand for Do’s Prepare appropriate product mix- Plant wise, item wise taking consideration of total Logistic cost. Prepare the MPS taking in to consideration the contribution and capacities of each item at each plant. Unifying the inventory at various nodes and minimize the transportation cost. Using MPS to find the Material requirement at each plant for a month and to decide whether to place order. To minimize the total distribution cost.

Databases for Various Models Model Forecast (Trend Analysis) Logistic (Transportation Algorithm) MPS (Linear programming) Dispatches(Transshipment Algorithm) Inventory Reallocation Databases AVG9697,AVG9798, COST_MAS,FORE_OUT,FORE_DO TRA_COST,DEMAND,CAP,MFG_Y_N,C OST,LOG_MIN,MPS,CAPACITY VX_TEMP,VX_ICODE,PM_EQ1,PM_TEM P TRANSP,TOT_DEM,TOT_SUP,T_COST,T _COST2,TOT_OUT BOM,RM_DEM,LOG_MIN,MPS,REVIEW, RM_DE_HS, VENDOR,ORDER_P1 RELOCOUT,INPUT1,INPUTR-1

Benefits of the approach  Enhancement of effective Information flow  Better monitoring of Inventory  Reduction in Transportation costs  Reduction in lead time  Reduction in inventory  Reduction in Hidden costs


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