Lecture 7 Supply Chain Technology - Managing Information Flows

SCM20003 Global Logistics and Supply
Chain Management
Lecture 7: Supply Chain Technology- Managing Information Flows
CRICOS 00111D
TOID 3059
The importance of information
Modern information technologies make supply

chain integration possible.
Information technologies have facilitated

business globalisation.
Information technologies make differentiation

along new vectors possible.
Supply Chain Information Flows
Source: Brian J. Gibson, Ph.D.
3.3
The importance of information
 Real-time information regarding availability, delivery, shipping,

and invoices allows for improved customer satisfaction.
 Substituting information for inventory or other resources reduces

costs.
 Information can be used to increase flexibility.
 Information sharing is redefining supply chain relationships.
3.4
Information requirements
 Perfect information is:

 Accessible
 Relevant
 Accurate
 Timely
 Transferable
 It also needs to be:

 Correct in detail and format
 Shared
 Complete
3.5
Information Systems: A History
“DarkAges” Era of Material Era of Supply Chain

Management Management
1960s-1970s 1980 1985 1991 1995 2000 2006
RFID
EOQ MRP EDI JIT TOC ERP APS ERPII
ROP MPR II QR VMI MES XDM ECM
DRP CPR ARP CPFR
FAX ECR RF CRM
Adapted from Davis and Spekman “The Extended Enterprise” 3.8

Key functions of information flows
 Plan or kick-off physical flows

 Customer order, production plan, etc.
 Record and retrieve status and plans

 Check inventory levels, shipping schedule, etc.
 Codify decision rules and planning values

 Standard costs and times, inventory reorder points, etc.
 Record and report performance

 Quality levels, on-time delivery, actual costs, etc.
3.7
Information Requirements
 Information connects the
extended supply chain,
providing cross-chain insights
regarding demand, customer
orders, delivery status,
inventory stock levels, and
production schedules.
 Three principle supply chain

information requirements:
Meet quality
standards
Support
multidirectional
flows Source: Figure 14-1
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8
Information Requirements (continued)
Support
Meet Quality
Multidirectional Provide Decision Support
Standards
Flows
Seven information  Internal information  Strategic decisions: Long-

quality standards: sharing range supply chain plans
 Accuracy  External information  Tactical planning: Cross-
 Accessibility sharing organization linkages and
 Relevancy  Suppliers supply chain activity
 Timeliness  Logistics service coordination.
 Transferability providers  Routine decisions: Rules-
 Usability  Financial institutions based decision making.
 Reliability  Government agencies  Execution and transaction
processing: Completion of
fulfillment activities
Systems
Capabilities
Enable Process Link Network Mitigate Technology

Excellence Elements Risks
Systems Capabilities
Enable Process Excellence
The system must facilitate excellent performance across the plan, buy, make,
move, and return processes of a supply chain.
7 1 Supports process variability reduction,

performance optimization, & cost control.
Cross-
Optimiza- chain 1 2 Support analytics that help to understand
6 tion visibility volatility and respond appropriately.
3 Adjust speeds according to situations.

Agility
Segmenta-
tion 4 Facilitates data synchronization & real-time
2 information sharing between partners.
5 5 Enable strategic adaptation of supply chain

Adapta- Velocity
design & capabilities to evolving conditions.
bility
Synchroni- 6 Help define customer segments, understand
zation 3 cost to serve & prioritize service execution.
4
7 Enable consideration of trade-offs, effectively
deploy resources, & make decision.
Link Network Elements
A cohesive network of integrated technologies, skilled people, and
robust processes must be established.
Source: Figure 14-2
Mitigate Technology Risks
Common risks must be identified and mitigated to maximize the
return on technology investments.
The pitfalls associated with systems adoption or

upgrades
 Unrealistic assumption that supply chain technologies
will readily solve or fix flawed supply chains.
 Weak technology-process alignment, leading to ill-
fitting solutions that fail to achieve their promise
 Technology gaps as a result of piecemeal purchases and
deployment of technologies
 Challenges in cross-chain systems integration with
suppliers, service providers, and customers
 Poor planning and preparation for technology
implementation
Supply Chain
Management (SCM)
Software
SCM Software
Four Software Categories
Source: Figure 14-3
SCM Software: Planning Applications
SCM planning applications help organizations shift from autonomous
planning activities to synchronized planning processes that use real-
time data for collaboration across departments, suppliers & customers.
Available/capable to promise Production/multiplant capacity

Sales and operations planning
planning/integrated business Production/factory planning and
planning scheduling
Collaborative planning, forecasting, Vendor-managed inventory/direct
and replenishment point of sale
Event planning (promotion, life cycle) Distribution planning
Demand planning Strategic network design
Supply planning Inventory strategy optimization
Inventory planning
Source: Table 14-1
SCM Software: Execution Applications
Companies deploy a variety of execution software to facilitates desired
performance of day-to-day operating tasks required to support
customer demand.
Warehouse Management Systems Transportation Management Systems

Inventory management Mode and carrier selection
Labor management Route planning and optimization
Order processing Dispatching and scheduling
Yard/dock management Freight audit and payment
Returns management Performance analysis
Order Management Systems Global Trade Management
Sales order entry Trade compliance
Pricing and credit checks International logistics
Inventory allocation Global order management
Invoice generation Global trade financial management
Distributed Order Management Manufacturing Execution Systems
Order assignment Work-in-process management
Source: Table 14-2
SCM Software: Event Management Tools
Supply chain event management tools collect data in real time from
multiple sources across the network and convert them into information
that allows companies to automate the monitoring of supply chain
events as they occur on a day-to-day basis.
Provide the cross-chain Built-in work flow rules Integrated into other
visibility needed to initiate automated applications, event
detect, evaluate, and responses that are management solutions
adapt to changing either preemptive or help to close the loop
conditions before they reactive. between planning and
snowball into major execution to support
problems. synchronization of end-
to-end activities.
SCM Software: Business Intelligence Tools
BI Capabilities BI Opportunity Areas
The data collection & “big data” analytics  Generating valuable

insights about complex
Self-service reporting global operations
 Providing more
Performance scorecarding versus goals granular visibility
of spending
Development of graphical dashboards  Improving
S&OP & demand
Activity monitoring supporting event mgnt. forecasting
 Resolving logistics
Access to data residing on multiple SCIS bottlenecks
SCM Software: Facilitating Tools
Facilitating systems and applications provide critical links between supply
chain processes, the organization, and external stakeholders. Collectively, they
create a holistic view of the supply chain.
Enterprise resource planning (ERP) systems

• Incorporate internal and external systems into a single unified solution
that spans the enterprise.
Supplier relationship management (SRM)

• A controlled and systematic approach to managing an organization’s
sourcing activities for goods and services.
Customer relationship management (CRM)

• Focuses on practices, strategies & technologies used to manage and
analyze customer interactions & data throughout relationship lifecycle
Automatic identification (auto-ID) & data capture technologies

• Recognize objects, collect relevant information, and feed the data
directly into the SCIS.
SCM Technology
Implementation
SCM Technology Implementation
The key to harnessing the capabilities of supply chain technology within a
reasonable time frame is informed decision making, with a clear vision
regarding how technology spending will facilitate supply chain strategy and
satisfy specific requirements.
3 1 Understand the supply chain that the

technology is intended to support.
Need
Mitigate
Implementa-
Assessment 2 A multifaceted decision, involving
development alternatives (off the shelves
tion Issues vs. in-house), types of applications
(individual applications vs. integrated
suite), and purchase options (on-premise
1 vs. SaaS)
2 Software Selection
3 Training, cultural change, systems
interoperability, data synchronization,
data standardization, and application
integration
SCM Technology Implementation
10 Golden Rules for Success
1 Secure commitment of senior

management.
6 Follow a proven implementation
methodology.
2 Remember that it is not just an

information technology project.
7 Take a step-by-step approach for
incremental value gains.
3 Align the project with business 8 Be prepared to change business

goals. processes.
4 Understand the software 9 Keep end users informed and

involved.
capabilities.
10 Measure success with key

5 Select partners carefully.
performance indicators (KPIs).
Supply Chain
Technology
Innovations
Supply Chain Technology Innovations
Internet of Things Mobile Connectivity Functional Automation
(IoT)
 Connected devices, with  Advancements in GPS  Automation has long

sensors, on/off switches, technology, auto-ID, been a part of the
& Internet linkages, wireless connectivity, manufacturing plant.
allowing intelligent tablets, and  Warehouse automation
connection of people, smartphones improve has gained tremendous
processes, data, and visibility, asset control, traction.
equipments. and agility of supply  Connective technologies
chain. needed to support
driverless vehicles are
under rapid
development.
Images courtesy of Aria Systems, Eric D. Brown, Fathom
Information strategy
Information technology strategies are comprised of two

components:
 Connectivity – technology makes it possible for various people,

teams, functions, and organizations to work together.
 Willingness – information is power, sharing information means

relinquishing some power.
3.26
Information strategy - WARNING
 Information technology is an enabler, not a

silver bullet.
 Automating bad processes simply helps to

make mistakes faster.
 The wrong technology strategy adds neither

real value or improves customer satisfaction.
3.27
Bar Codes
3.28
Bar Codes
What is a bar
code?
 A bar code is an optical machine- readable represent
of data, the data being represented as parallel lines an
spacings.
Bar code
is a type of font  A bar code is a type of font
A70X465Q  Bar codes represent characters
Font in Arial •Alpha
•Numeric

Font in Wingding •Alpha/numeric
 Bar codes enable automatic data
3.29
capture by a scanning device
GS-1 Bar Code Types
• Also called Data Carriers
EAN/UPC
ITF-14 GS1-128
GS1 DataBar
3.30
Definition of a Retail Item
• A retail item is a good or a commodity sold in small
quantities directly to consumers, that will be scanned
at point of sale (POS).
• Some items (eg: a box of 6 bottles of wine) can be both scanned

at POS and in a General Distribution environment. These items
have to be considered as retail items in regards to identification
and bar coding.
3.31
Bar Codes for Retail Items
• Must be used for any retail

trade items scanned at the
point of sale
EAN-13 • Can be used throughout
the entire supply chain
3.32
Definition of a Non-Retail Item
• Any item that will never be scanned at point of sale (will

only be scanned in a General Distribution environment
or in a hand-scanning environment) is considered to be
a non-retail trade item
• It is a trade item or, more commonly, a grouping of trade

items that is created to facilitate the operations of
handling, storing or ordering, etc
3.33
Retail or non-retail??
3.34
Reading Bar Codes
3.35
Reading Bar Codes
•The scanner decodes the bar code

by moving across from one side to
the other (left to right or right to left)
and analyses the width pattern of
bars and spaces.
•The decoded data can either:

•Be transmitted directly to an attached
computer via Automatic Data Capture
(ADC) and optical readers
•Be stored locally for later processing
•Interact with other application
computer systems
3.36
RFID
3.37
Radio Frequency Identification Devices (RFID)
Radio Frequency Identification Device (RFID) is a method of identifying

unique items using radio waves.
The technology behind it involves tags

that emit radio signals and devices called readers that pick up the signals.
3.22
Radio Frequency Identification Devices (RFID) are used for automatic
identification in a wide range of applications: from smart card applications
to proprietary tracking systems.
RFID technology is gaining more drive as companies are implementing,

piloting, and partnering on RFID initiatives. Organisations are at work
constantly to create industry-wide global standards, while the cost of the
technology is continuing to decrease, therefore making it more
commercially viable.
3.23
The hardware of RFID consists of the following three items: Tags
(Transponders), Readers (Electronic Interrogators) and Middleware.
Tags
There are two types of tags, active and passive
Active tags:
Have their own power supply
Can transmit data over long ranges
Battery can last up to 10 years.
Larger storage capacities
Can also store information from the readers (making them read and write
enabled)
3.40
Tags
Passive tags:
 Do not have their own power supply; (Communication with the reader is
caused by minute electrical current or magnetic field induced by the
antenna of the reader. The incoming radio frequency carries enough
power for the tag to send a response back to the reader for
verification and exchange of data)
 Can only transmit information over short distances.
 Relatively inexpensive to manufacture
 Ideal for tracking low cost items.
3.41
Readers
Readers are electronic devices that use radio frequency to read or interrogate
the tags. When an RFID reader and tag communicate, they share energy in the
form of radio frequency which allows the exchange of information.
Middleware
Middleware refers to the hardware, software and technologies that collect and
process the information generated by RFID.
 A tag is scanned by a RFID reader that is connected to a central server
 The reader reads the info written in PML on tag’s embedded memory
 The reader passes the information to the server. The software then sorts and
analyses the data, making it relevant and useful for management decisions
3.42
RFID Technology
1. Radio frequency transmissions between computer systems and

mobile operators.
• Used extensively in warehouse and distribution center operations
• Improves picking efficiency and accuracy
2. Radio frequency identification tags (RFID) - coded electronic chips

embedded in the product or in product packaging.
3.43
 Unlike barcodes, RFID does not require line of sight to be scanned.

 Simultaneous Reading
 RFID tags can hold much more information than bar codes.
 RFID information can be unique to every product, not just a specific

type of item or UPC code.
 Helps combat counterfeiting

 Can be expensive
 Problems with reading certain items
3.44
3.29
3.46
RFID technologies are at work in casinos, highlighting the benefits

of chip authenticity verification, tracking and inventory
management.
(Gaming Partners International Corporation, 2009)
3.47
Livestock can be RFID tagged for purposes such as disease

control, breeding management and stock management.
(Ng et al, 2006)
3.48
Lyngsoe Systems has supplied the world's first RFID on Baggage solution
for Hong Kong International Airport and the first in Europe for Milan
Malpensa Airport.
The solutions are dedicated to elevating the passengers’ travel experience and optimizing
airport logistics through streamlining operational processes, identifying and removing
bottlenecks, increasing flow transparency and capacity, and reducing the quantity of
mishandled bags, trolleys and other assets.
(Lyngsoe Systems, 2009)
3.49
Baja Beach Club is an exclusive nightclub in Barcelona, Spain

Club patrons can have a rice grain-sized RFID device implanted in their hand or arm. Once
the unique 10-digit identification number in the device is entered into the system, the patron
can pay for drinks with a wave of the hand. Access to special VIP sections of the club can
also be obtained without resortingto badges or other means of identification.
http://news.bbc.co.uk/2/hi/technology/3697940.stm 3.34
Benefits of RFID
3.35
3.36
How auto-id system will automate the S.C.
With Auto-ID technology, physical objects will have embedded intelligence that will allow them to communicate with each other
and with businesses and consumers. Auto-ID technology offers an automated, numeric system of smart objects that
revolutionizes the way we manufacture, sell, and buy products. Here’s how it works:
The palettes of cola arrive at the shipping
Cherry Hydro,
send totruck
34
service’s distribution center.Thanks to RFID

1
SuperCola, Inc. adds a Radio Frequency readers in the unloading area, there’s no
Identification (RFID) tag to every cola can it produces. need to open packages and examine their
Each tag is cheap – it costs about five cents – and contents. Savant provides a description of
contains a unique Electronic Product Code, or EPC. the cargo, and the cola is quickly routed to
This is stored in the tag’s microcomputer which, at 400 the appropriate truck.
microns square, is smaller than a grain of sand. The tag
also includes a tiny radio antenna.
Cherry Hydro
for aisle2
The delivery arrives at
2 These tags will allow the cola cans to be identified, SpeedyMart, who has been
counted and tracked in a completely automated, cost- tracking the shipment thanks
effective fashion. The cans are packed into cases – to its own Savant
which feature their own RFID tags – and loaded onto connection. SpeedyMart also
tagged palettes. Need more has loading dock readers. As
3 As the palettes of cola
leave the manufacturer, an
Cherry Hydro soon as the cola arrives,
SpeedyMart’s retail systems
RFID reader positioned are automatically updated to
above the loading dock include every can of Cherry
door hits the smart tags Hydro that arrived. In this
with radio waves, manner, SpeedyMart can
powering them. locate its entire Cherry Hydro
inventory automatically,
4 broadcasting their individual EPCs.
The tags “wake up” and start accurately and without
Yourtotal
is $5.95 incurring cost.
Like a good kindergarten
teacher, the reader only allows one What’s more, SpeedyMart’s retail shelves also feature
tag to talk at a time. It rapidly integrated readers. When the cans of cola are
switches them on and off in stocked, the shelves “understand” what’s being put in
them. Now, when a customer grabs a six-pack of
sequence, until it’s read them all.
Cherry Hydro, the diminished shelf will route a
message to SpeedyMart’s automated replenishment
This second server uses PML, systems – which will order more Cherry Hydro from
or Physical Markup Language, SuperCola, Inc. With such a system, the need to Auto-ID makes the customer’s life easier, too.
to store comprehensive data maintain costly “safety volumes” of Cherry Hyrdo in Rather than wait in line for a cashier, she
Look under Can of Cherry Hydro about manufacturers’ products. remote warehouses is eliminated. simply walks out the door with her purchases.
EPC: SuperCola, Shipped fromBoston,
Inc. MA
It recognizes the incoming A reader built into the door recognizes the
F127C238.DF17CC EPCs as belonging to cans of items in her cart by their individual EPCs; A
SuperCola, Inc.’s Cherry Ad Added 6can s
ded 6cans
of Cherry
of
swipe of the debit or credit card and the
Hydro. Because it knows the Hydro
Cherry Hydr o customer is on her way.
location of the reader which
sent the query, the system now
also knows which plant
Servant computer ONS server PML sever
produced the cola. If an
incident involving a defect or
5
The reader is wired into a computer system running Savant. It sends
Savant the EPCs it’s collected, and Savant goes to work. The system tampering arose, this When the cola cans hit the
sends a query over the internet to an Object Name Service (ONS) information would make it easy recycling center, RFID readers
database, which acts like a reverse telephone directory – it receives a to track the source of the will automate the process of
number and produces an address. problem – and recall the At home, the refrigerator updates its sorting them into the
The ONS server matches the EPC number (the only data stored on an products in question. records to reflect the influx of Cherry appropriate recyclable
RFID tag) to the address of a server which has extensive information Hydro. As the cola is depleted, the category – eliminating
about the product. This data is available to, and can be augmented by, fridge will add the beverage to its expensive manual sorting. The
Savant systems around the world. automated grocery list. cans can even be routed to
their manufacturer for reuse at
the plant.
3.37
Technology guide www.autoidcenter.org
Integrating People & Technology
3.38
Integrating People and Technology
• Organisation’s needs must be matched with technology. As

a general rule, the simplest technology that will meet
product and process needs should be given priority.
• Organisation’s technology strategy should support a long-

term approach to building world-class value-added
processes.
6.55
 Adequate support must be in place to implement and

support new technologies.
 The following technology pitfalls should be avoided:

 The “follow-the-leader” mentality
 The “shiny-hardware” syndrome
 The “island of automation” - A system or other automatically
operating machine that functions independently of any other machine
or process.
6.56
 Workforce must be viewed as a critical resource and the necessary
capital for training programs must be committed. Once a firm invests in
workers, it must give them the responsibility and opportunity to use their
increasing skills.
 Managers must develop familiarity with value-added processes and key

technologies. Appreciation and understanding of the abilities of line
workers and managers in other disciplines is needed to coordinate and
integrate competitive efforts.
 Appropriate performance measures that do not penalize workers and

that promote “revolutionary” enhancement should be adopted.
6.57
“Knowledge is
experience,
everything else is
just information”
Albert Einstein
6.42
Knowledge is a justified personal belief that
increases an individual’s capacity to take
effective action (Nonaka, 1994).
knowledge is information that has been

authenticated and thought to be true (Vance,
1997).
 Data is raw numbers and facts,

 Information is processed data,
 Knowledge is information made actionable
(Maglitta, 1996)
6.43
Discussion Questions
Question 1
How do modern day supermarkets employ loyalty cards to collect

information about their customers?
How can that information be used?
3.45
Discussion Questions
Video
Media Cart: (http://www.youtube.com/watch?v=qWEOlLNua-U)
3.46
Summary
To produce actionable knowledge, supply chain

information must be high quality, readily flow between
organizations, and support a variety of decision types.
A well-designed SCIS links people, processes, and
technology in a manner that provides actionable
information and enhances decision making.
four general categories of supply chain software are: (1)
planning tools for forecasting and related activities, (2)
execution systems for management of day-to-day
processes, (3) event management tools to monitor
supply chain flows, and (4) business intelligence
applications used to analyze performance.
To maximize SCIS investment success, managers must
effectively assess the SCM requirements, understand
software options, and address the technical issues.

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SCM20003 Global Logistics and Supply

Modern information technologies make supply

Information technologies have facilitated

Information technologies make differentiation

Source: Brian J. Gibson, Ph.D.

 Real-time information regarding availability, delivery, shipping,

 Substituting information for inventory or other resources reduces

 Information can be used to increase flexibility.

 Information sharing is redefining supply chain relationships.

 Perfect information is:

 It also needs to be:

“DarkAges” Era of Material Era of Supply Chain

1960s-1970s 1980 1985 1991 1995 2000 2006

Adapted from Davis and Spekman “The Extended Enterprise” 3.8

 Plan or kick-off physical flows

 Record and retrieve status and plans

 Codify decision rules and planning values

 Record and report performance

 Three principle supply chain

Seven information  Internal information  Strategic decisions: Long-

Enable Process Link Network Mitigate Technology

7 1 Supports process variability reduction,

3 Adjust speeds according to situations.

5 5 Enable strategic adaptation of supply chain

Source: Figure 14-2

The pitfalls associated with systems adoption or

Source: Figure 14-3

Available/capable to promise Production/multiplant capacity

Source: Table 14-1

Warehouse Management Systems Transportation Management Systems

Source: Table 14-2

BI Capabilities BI Opportunity Areas

The data collection & “big data” analytics  Generating valuable

Enterprise resource planning (ERP) systems

Supplier relationship management (SRM)

Customer relationship management (CRM)

Automatic identification (auto-ID) & data capture technologies

3 1 Understand the supply chain that the

1 Secure commitment of senior

2 Remember that it is not just an

3 Align the project with business 8 Be prepared to change business

4 Understand the software 9 Keep end users informed and

10 Measure success with key

 Connected devices, with  Advancements in GPS  Automation has long

Information technology strategies are comprised of two

 Connectivity – technology makes it possible for various people,

 Willingness – information is power, sharing information means

 Information technology is an enabler, not a

 Automating bad processes simply helps to

 The wrong technology strategy adds neither

• Some items (eg: a box of 6 bottles of wine) can be both scanned

• Must be used for any retail

• Any item that will never be scanned at point of sale (will

• It is a trade item or, more commonly, a grouping of trade

•The scanner decodes the bar code

•The decoded data can either:

Radio Frequency Identification Device (RFID) is a method of identifying

The technology behind it involves tags

RFID technology is gaining more drive as companies are implementing,

There are two types of tags, active and passive

 Can only transmit information over short distances.

 Relatively inexpensive to manufacture

 Ideal for tracking low cost items.