Role of Information Technology in Supply

Chain Management
 Role of Information Technology in Supply
Chain Management
• Information is a key supply chain driver
because it serves as the glue that allows the
other supply chain drivers to work together
with the goal of creating an integrated,
coordinated supply chain.
• Information is crucial to supply chain
performance because it provides foundation
on which supply chain processes execute
transactions and managers make decisions
 Characteristics of Information
• Information must be accurate
• Information must be accessible in a timely
manner
• Information must be of the right kind
 Information-Drivers-Decisions
• Facility
• Inventory
• Transportation
• Sourcing
• Pricing and Revenue Management
 The Supply chain IT Framework
• It is important to develop a framework that
helps a manager understand how this
information is utilized by the various segments
within supply chain.
• Enterprise software collects transaction data,
analyses these data, to make decisions and
executes those decisions both within an
enterprise and across the supply chain.
 Supply Chain Macro processes
• Customer Relationship Management (CRM):
Processes that focus on downstream interactions
between the enterprise and its customers

• Internal Supply Chain Management (ISCM):

Processes that focus on internal operations within
the enterprise

• Supplier Relationship Management (SRM):

Processes that focus on upstream interactions
between the enterprise and its suppliers
Transaction Management Foundation (TMF)

• Transaction Management Foundation (TMF) is the

foundation on which the macro processes rest. IT
includes basic ERP systems (and its components such
as financials and human resources), infrastructure
software, and integration software.

• TMF software is necessary for three macro

processors to function effectively and to
communicate with each other so that performance
of supply chain improves from time to time leading
to attainment of Supply chain objectives
 Supply Chain Macro processes

Supplier Relationship Internal Supply Chain Customer Relationship

Management Management Management

(SRM) (ISCM) (CRM)

Transaction Management Foundation

(TMF)
Macro processes and their processes
SRM ISCM CRM
Design Collaborations Strategic planning Market

Source Demand planning Sell

Negotiate Supply planning Call Centre

Buy Fulfilment Order Management

Supply Collaborations Field service -

TMF
 Supply Chain IT in Practice
• Select an IT system that addresses the
company’s key success factors
• Take incremental steps and measure value
• Align the level of sophistication with the need
for sophistication and attainment
• Use IT systems to support decision making,
not to make decisions
• Think about the future
 Role of Information Technology
• Management Information System (MIS) is defined as a
formal system of gathering, integrating, comparing,
analyzing and dispersing information internal and external
to the enterprise in a timely, effective and efficient
manner.
• MIS has to be tailored to specific needs and may include
routine information, such as monthly reports, information
that points out exceptions, especially critical points, and
information necessary to predict the future
• Electronic equipment permits fast and economical
processing of huge amounts of data
 Use of computes in handling information

• The computers, with proper programming,

process data toward logical conclusions, classify
them, and make them readily available for
managers use.
• In fact, data do not become information until
they are processed into a usable form that
informs
• The computers can store, retrieve and process
information
 Use of computes in handling information

Often distinction is made between kinds of computers

• Mainframe computers: full scale computer, capable of
handling huge database and these supercomputers are used
in Engineering, simulation and manipulation of huge
databases
• Minicomputers: These has less memory and smaller than
mainframe computers. This kind of computer often
connected with peripheral equipment
• Microcomputers: It is even smaller and may be a desk
computer, home computer, personal computer, portable
computer or small computer for business system.
 Application and impacts of computers
• Materials Requirement Panning
• Manufacturing Resource Planning
• Computer aided control or manufacturing machinery
• Project costing inventory control
• purchasing
• Budget preparation
• Graphic presentation
• Electronic spreadsheets
• Financial analysis
• Word processing
• Simulation models
• Forecasting
• Electronic mail
• Tapping into databases
• Time sharing
 Challenges created by
Information Technology
• Resistance to computer application
• Speech recognition devices
• Telecommuting (work from home)
• Customization
• Computer networks