IS 466 ADVANCED TOPICS IN INFORMATION SYSTEMS

LECTURER : NOUF ALMUJALLY

17 – 10 – 2011

College Of Computer Science and Information, Information Systems Department

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Objectives

• Components of a Supply Chain• The Importance of Supply Chain Management• Supply Chain Strategies• SCM software• E-business and Supply Chain• Measuring Supply Chain Performance

3 Supply Chain Management

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What is a Supply Chain?• A supply chain is the system of

organizations, people, activities, information and resources involved in moving a product or service from supplier to customer.

• Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer.

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Supply Chain Management (SCM)

• Supply Chain Management is the design and management of processes across organizational boundaries with the goal of matching supply and demand in the most cost effective way.

Supply

Demand

Mission impossible: Matching Supply and Demand

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Supply Chain for

Denim Jeans

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Supply Chain for Denim Jeans (cont.)

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Components of a Supply Chain• External Suppliers– source of raw

material• Tier one supplier supplies directly to the

processor• Tier two supplier supplies directly to tier one• Tier three supplier supplies directly to tier two

• Internal Functions include – processing functions• Processing, purchasing, planning, quality,

shipping

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Components of a Supply Chain• External Distributors transport finished

products to appropriate locations• Logistics managers are responsible for

managing the movement of products between locations. Includes;

• traffic management – arranging the method of shipment for both incoming and outgoing products or material

• distribution management – movement of material from manufacturer to the customer

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The Importance of Supply Chain Management

• Dealing with uncertain environments – matching supply and demand• U.S Surgical Corporation announced a $22

million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals”

• Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake

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The Importance of Supply Chain Management

• Better information sharing among the partners

• The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners• If you don’t do it, your competitor will

• Availability of SCM technologies on the market• Firms have access to multiple products (e.g.,

SAP, Baan, Oracle, JD Edwards) with which to integrate internal processes

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Top 25 Supply Chains

• The Top 25 supply chains report comes out in Novembers.

• The table on the right-hand side is from The Second Annual Supply Chain Top 25 prepared by Kevin Riley and Released in November 2005.

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Dell Computer• Classic case in supply chain management.• Established in 1984, Dell experienced

supply problems in 1993 and thereupon completely redesigned its supply chain process along the lines of what its founder, Michael Dell, called the “direct” model.

• Between 1993 and 1998, Dell's earnings grew at 65 percent per year.

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Dell Computer (con.)• Dell's supply chain redesign was based on the following

elements: • First, Dell sells directly to customers, eliminating the

wholesaler and retailer.• Second, Dell also takes advantage of new information

technologies in their communications with suppliers who can access Dell's component inventories, production plans, and forecasts in real time and thus keep their production exactly matched to Dell's needs.

• Third, Dell maintains absolute minimum inventory levels at every stage of production, averaging 4 days overall

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Supply chain strategies• Various supply chain strategies

• Push strategies• Pull strategies• Push-pull systems

Push Strategy Pull StrategyRaw

MaterialsEnd

Customer

Push-Pull

Boundary

Supply chain time line

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Push-Pull Systems• A push–pull system in business describes

the movement of a product or information between two subjects.

• On markets • The consumers usually “pulls” the goods or

information they demand for their needs, • The suppliers "pushes" them toward the

consumers.

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Push-Pull Systems

Push Strategy Pull StrategyRaw

MaterialsEnd

Customer

Push-Pull

Boundary

Supply chain time line

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Push-pull systems• A supply chain is often described in terms of

push or pull systems.• A push process is forecast driven and executed

in anticipation of demand => Push-Based Supply Chains

• A pull process is demand driven and is initiated in response to real demand => Pull-Based Supply Chains

• The interface between these stages is called the push –pull boundary 

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SCM Software• Enterprise Resource Planning (ERP)

• software that integrates components of a company by sharing and organizing information and data

• SAP was first ERP software• mySAP.com • web enabled modules that allow collaboration

between companies along the supply chain

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Extended ERPs (1990s)• During the 1990s ERP vendors added

more modules and functions as “add-ons” to the core modules giving birth to the “extended ERPs.”

• These ERP extensions include advanced planning and scheduling (APS), E-business solutions such as customer relationship management (CRM) and supply chain management (SCM).

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Core and Extended ERP Components• Core components – support primary internal

activities• Extended components – support primary external

activities

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E-business and Supply Chain• What does internet change for a supply chain?

• Enables a whole new business model.• Online purchasing, direct shipping, auctioning

• Cost savings and price reductions• Gaining a wider presence and increased visibility for

companies• Greater choices and more information for customers• Improved service as a result of immediate

accessibility to services• Creation of virtual companies• Gaining global access to markets, suppliers, and

distribution channels

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Measuring Supply Chain Performance

• Key performance indicators• inventory turnover

• cost of annual sales per inventory unit• inventory days of supply

• total value of all items being held in inventory• Process Control

• used to monitor and control any process in supply chain

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Questions ??

What should you do this week ?• Review the lectures.• Do the Tutorial and submit it as hard copyDue date: Saturday during the lecture.• Quiz result is online• If you have any question related to the

assignment please ask me during the tutorial, by email or during the consultation hours.

• Form the group and send it this week Please• My consultation hours: check the wiki