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Chapter 6E- SCM

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E-Supply Chains

Supply chain: The flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers

E-supply chain: A supply chain that is managed electronically, usually with Web technologies

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E-Supply Chains (cont.)Supply chain parts

Upstream supply chain activities of a manufacturing company with its suppliers

Internal supply chain in-house processes for transforming the inputs from the

suppliers into the outputsDownstream supply chain

activities involved in delivering the products to the final customers

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E-Supply Chains Management (E-SCM)

Managing supply chainsE-supply chain management (e-SCM): The collaborative use of technology to improve the operations of supply chain activities as well as the management of supply chains

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E-Supply Chains (cont.)

The success of an e-supply chain depends on:

The ability of all supply chain partners to view partner collaboration as a strategic asset

Information visibility along the entire supply chainSpeed, cost, quality, and customer serviceIntegrating the supply chain segments more tightly

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Push and pull approaches to supply chain management

Figure 6.3  Push and pull approaches to supply chain management

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Push and pull approaches to supply chain management

Figure 6.3  Push and pull approaches to supply chain management

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E-Supply Chains (cont.)

E-supply chain consists of six processes:

1. Supply chain replenishment2. E-procurement3. Collaborative planning4. Collaborative design and product development5. E-logistics6. Use of B2B exchanges and supply webs

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E-Supply Chains (cont.)

Major infrastructure elements and tools of e-supply chains are:ExtranetsIntranetsCorporate portalsWorkflow systems and toolsGroupware and other collaborative toolsEDI and EDI/Internet

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Supply Chain Problems and SolutionsTypical problems along the supply chain

Slow and prone to errors because of the length of the chain involving many internal and external partners

Large inventories without the ability to meet demand

Insufficient logistics infrastructurePoor quality

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Supply Chain Problems (cont.)

Bullwhip effect: Erratic shifts in orders up and down supply chainsCreates production and inventory problemsStockpiling can lead to large inventories

Effect is handled by information sharing—collaborative commerce

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Supply Chain Problems (cont.)

Need for information sharing along the supply chain including issues on:

product pricinginventoryshipping statuscredit and financial informationtechnology news

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Supply Chain Problems (cont.)

Information systems are the links that enable communication and collaboration along the supply chain

Information and information technology are one of the keys to the success, and even the survival in today’s economy

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Supply Chain solutions (cont.)

Major solutions provided by an EC approach and technologiesOrder takingOrder fulfillmentElectronic paymentsInventories can be minimizedCollaborative commerce

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Virtual Organizations (VOs)

‘simply, it is an organizational form that enables companies to reduce their physical assets (large headquarters, centralised plants and so on), relying instead on small decentralised units linked by a strong communications network. In other words, the old physical constraints of the plant and office building are broken down, and activities of co-ordination and control, which used to take place face-to-face, are now handled remotely 'over the wire'.’

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VO characteristicsLack of physical structure: virtual organisations have little

or no physical existence. Reliance on knowledge: the lack of physical facilities and

contacts means that knowledge is the key driving force of the virtual organisation.

Use of communications technologies: it follows that virtual organisations tend to rely on information technology.

Mobile work: the reliance on communications technologies means that the traditional office or plant is no longer the only site where work is carried out. Increasingly, the office is wherever the worker is.

Boundaryless and inclusive: virtual companies tend to have fuzzy boundaries.

Flexible and responsive: virtual organisations can be pulled together quickly from disparate elements, used to achieve a certain business goal and then dismantled again.

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Benefits of applying IS to SCM Increased efficiency of individual processes.

Benefit: reduced cycle time and cost per order Reduced complexity of the supply chain.

Benefit: reduced cost of channel distribution and sale. Improved data integration between elements of the

supply chain. Benefit: reduced cost of paper processing.

Reduced cost through outsourcing. Benefits: lower costs through price competition and

reduced spend on manufacturing capacity and holding capacity. Better service quality through contractual arrangements?

Innovation. Benefit: Better customer responsiveness.

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Benefits to buying companyIncreased convenience through 24 hours a day, 7 days

a week, 365 days ordering.Increased choice of supplier leading to lower costs.Faster lead times and lower costs through reduced

inventory holding.The facility to tailor products more readily.Increased information about products and

transactions such as technical data sheets and order histories.

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A typical IS infrastructure for supply chain management

Figure 6.11  A typical IS infrastructure for supply chain management