Role of I.

T
In
Supply Chain Management
Supply chain management (SCM) is
concerned with the flow of products and
information between supply chain members'
organizations.
Development in technologies enables
organization to manage the activities and the
cost of information is also comes down.
The bi-directional arrows shows the
accommodation of reverse materials and
information feedback flow.
Managers need to understand information
technology is more than just computers.
 Importance of Business
Processes
Recent studies shows there is a link between IT strategy,
business processes and supply chain performance.
Investment only in technology without the appropriate
business processes lead to negative results.
Companies who invest mostly in business processes do better
than those who invest in IT only and lack the appropriate
business processes.
 How to measure
Performance?
Last few years companies has used KPI to identify
opportunities and challenges in their supply chain.
It has been the main motivation behind development of
methodologies like SCOR model.
Supply Chain Operations Reference is a process which
enables users to address, improve and communicate supply chain
management practices within and between all interested parties.
 Difficulties in
Measurement
Measuring the level of maturity of business processes or IT
infrastructure is difficult.
 Different portions of the company has different level of
maturity.
Sometimes same level of business may be out of balance and
IT do not compliment each other.
Thus, two questions developed: to characterize the level of
business maturity and to characterize the level of maturity of the
IT.
 Four categories of business
processes
Level I: Disconnected Process
Level II: Internal Integration
Many independent processes.
Companies organized functionally
Organized functionally with no or
with high level of integration.
low degree of integration.
Decisions made through
Supply chain done for each site
integration of key functional areas.
independently.

Level III: Intra company integration Level IV: Multi enterprise

and limited external integration
Companies are cross functionally
organized.
Organizations involve key suppliers
and customers in decision making
process
integration
Multi enterprise processes.
Use common business objectives
and have extensive knowledge of
suppliers and customers.
 Four categories of IT systems

Level I
Leve Level Level
l II III IV
●
Batch processes
●
Shared data
●
Complete
●
Independent
across supply visibility of ●
Data and
systems
internal data. processes are
●
Manual chain. ●
Key suppliers shared
manipulation of Decisions made and customers internally and
●

data for using planning have access to externally.

decision tools. these data.
making
 Areas of SCOR Model
 Strategic Planning: Network design, inventory position,
and manufacturing strategy.
 Demand Planning: Demand forecasts and promotional
planning.
 Supply Planning: Coordination of manufacturing,
inventory, and transportation activities across the supply
chain.
 Supply Demand Balancing: Trade offs between
supplier’s capability and customer demand are considered;
pricing and promotional activities are applied
systematically to better match supply and demand.
Procurement Planning: Materials and commodities sourcing
strategy.
Manufacturing Planning: Single site versus enterprise wide
strategy.
Delivery Planning: Commitments to customers are based on
forecast, available capacity, or real time inventory and
manufacturing information.
For each planning area team identified both systems and
processes according to maturity level.
Company is having a mature business process system if its
business process maturity level is at least two.
 Results
Companies with mature business processes have lower
level of inventory.
Improvements in certain areas demand IT investments.
BICS(best-in-class-systems) companies with mature
processes achieve superior financial performance.
Investing only in IT infrastructure leads to significant
inefficiencies.
Priority in IT investments depends on your objectives.
Linking Processes and
Systems
Box A represents:
Companies immature business processes and IT systems.
Supply chain suffers from below average business
performance.

Box B represents:
Mature business processes and immature systems.
Perform better than those who did not invest in either
processes or systems.
Box C represents:
Supply chains with mature systems and processes.
Enjoy significant improvements in operational
performance.

Box D represents:
Supply chains with mature IT systems but not processes.
Performance even worse than those with immature systems
and processes.
IT infrastructure requires investment.
 SCM Goals in IT
•Collect information on each product from production to
delivery or purchase point.
•Access any data in the system from a single point of contact.
•Analyze, plan activities, and make trade-offs based on
information from the entire supply chain.
•Collaboration with supply chain partners.