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Chapter 1 InformationTechnology and Supply
Chain Management
SCM 614Dr. Huei Lee
Eastern Michigan University
Copyright 2003-2007, Huei Lee
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Supply Chain Management
(SCM) Systems SCM is the process of effectively
managing the components of an
extended value chain--from suppliers,through manufacturing and distribution
chain, and to the consumers.
SCM information systems use technology tomore effectively manage supply chains
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I. What is SCM?
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Why Supply Chain
Management?Parts $5,000
Labor 4000
Overhead 2000
Management
Marketing 3000
Total Cost $14,000
1950-1980s Manufacturing
50 years ago, U.S. is the only countrythat can manufacture cars.
You buy a car from GM, all the moneywill go to the GM.
1980-2000s Supply ChainManagement
Today, foreign parts and labors aremuch cheaper than that in US.
You buy a car from GM, only a portionof money will go to the GM.
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Value Chain Analysis
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Benefits of Value Chain Analysis -
Disintermediation to the Consumer
Manufacturer
Manufacturer
Manufacturer
Distributor Retailer
Retailer
Customer
Customer
Customer
Cost/Sweate
r
$48.50
$40.34
$20.45
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Service The concept of Supply Chain
Management is also applied to Service.
Business Process Management orBusiness Process Reengineering
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Stockless Inventory Compared to Traditional andJust-in-time Supply Methods
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Business Process Reengineering From an article published in Harvard
Business Review
Radical business redesign initiatives thatattempt to achieve dramaticimprovements in business processes byquestioning the assumptions, orbusiness rules of the company.
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II. Information Systems forSCM
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Information Technology for
Supply Chain Management Software Systems
Electronic Data Interchange (EDI)
Material Requirements Planning (MRP)
Manufacturing Resource Planning (MRP II) Enterprise Resource Planning (ERP)
Supply Chain Management Systems (SCM)
Customer Relationship Management (CRM)
Internet-based Software
Network Infrastructure Wide Area Network
Internet (for E-commerce: B2B, B2C)
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III. ERP
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Origins of ERP Systems ERP systems grew out of a function called materialsrequirements planning (MRP) which was used toallocate resources for a manufacturing operation
MRP systems software ultimately became verycomplex allowing for efficiencies of scale notpreviously possible
Even more sophisticated MRP II systems began to
replace MRP systems in the 1980s By the early 1990s, other enterprise activities were
being incorporated into ERP systems
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Origins of ERP Systems
Today, an ERP system can encompass,but is not limited to, the following
functions: Sales and order entry
Raw materials, inventory, purchasing,production scheduling, and shipping
Accounting
Human resources
Resource and production planning
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Major ERP Systems
SAP R/3
Oracle
PeopleSoft (have been merged byOracle)
Toyota uses PeopleSoft and SAP
Microsoft Dynamics (formerly MicrosoftBusiness Solutions - Great Plains)
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E-Business and ERP Systems
An e-business must keep track of and process atremendous amount of information
Businesses realized that much of the information theyneeded to run an e-business stock levels atvarious warehouses, cost of parts, projected shippingdates could already be found in their ERP systemdatabases
A major part of the online efforts of many e-businesses involved adding Web access to an existingERP system
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E-Business and ERP Systems
Many e-businesses want the samethings from their business
infrastructure Thus, rather than custom build
applications, many companies prefer
to use prepackaged ERP systemsoftware, which is often more efficientand less expensive to implement
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Cost of Implementing ERPSystems
Most businesses need extensive help fromconsultants to configure their ERP systemsoftware around their existing businesspractices, or to suggest changes in businesspractices in order to better fit the ERP systemrequirements
This process of mutual adaptation is calledsystems integration
The consultants who supervise theintegration process are often referred to as
systems integrators
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Outsourcing ERP Systems
One response to the challenge ofmanaging a complex ERP system is to
outsource it Some businesses choose to outsource
not only the installation but also the
ERP system software
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IV. Supply Chain Systems
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Supply Chain Management(SCM) Systems
A typical SCM system might address thefollowing issues:
Planning
Vendor selection
Manufacturing
Logistics Customer relationship
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Supply Chain Management(SCM) Systems
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Supply Chain Management(SCM) Systems
With the advent of the Internet, e-businessesbegan to demand different things from their
SCM systems Most importantly, SCM systems vendors
(largely the same vendors that provide ERPsystems software) had to modify their
products to include a Web-based interface
The ultimate goal of a business ERP system iscomplete optimization of internal business
processes
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Supply Chain Management(SCM) Systems
The two basic types of SCM system software are:
Supply Chain Planning software (SCP): usesmathematical models to predict inventory levelsbased on the efficient flow of resources into thesupply chain
Supply Chain Execution software (SCE): is usedto automate different steps in the supply chain such
as automatically sending purchase orders to vendorswhen inventories reach specified levels
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Major Supply Chain Planning(SCP) Players
i2 Technologies
i2s strength began with its powerful
Advanced Planning and Scheduling (APS)
Manugistics
Oracle
SAP
Advanced Planner and Optimizer (APO)
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SAP Advanced Planner andOptimizer (APO)
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Supply Network Design (SND)
The Supply Chain Cockpit (SCC)
Demand Planning (DP)
Supply Network Planning (SND)
Collaborative Planning,Forecasting, and Replenishment(CPFR)
Levels of SAP APO
SAP R/3
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Oracle Supply Chain Planning
Oracle Supply Chain Planning is part of theOracle E-Business Suite's family of Supply
Chain Management solutions It includes
Demand Planning
Collaborative Planning
Inventory Optimization
Manufacturing Scheduling, and
Global Order Promising
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Customer RelationshipManagement (CRM) Systems
Customer relationship management (CRM)systems, sometimes called e-CRM systems,
use technology to help an e-business manageits customer base
CRM allows an e-business to match customerneeds with product plans and offerings,
remind customers of service requirements,and determine what products a customer haspurchased
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V. CRM
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Salesforce.com
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Muiti-channels CRM
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Data Mining/WebMining/Business Intelligence
Data mining is the process of usingmathematical techniques to look for
hidden patterns in groups of data,thereby discovering previously unknownrelationships among the many pieces of
information stored in a databaseA data warehouse is a database that
contains huge amounts of data, such as
customer and sales data
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What does Data Mining Do?
ExploresYour Data
FindsPatterns
PerformsPredictions
Query, Reporting,Analysis
Data Mining
Why
HowWhat
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Data acquisition fromsource systems andintegration
Data transformationand synthesis
Data enrichment,with business logic,hierarchical views
Data discovery viadata mining
Data presentationand distribution
Data access forthe masses
Integrate Analyze Report
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SQL Server 2005 Algorithms
Decision Trees Clustering Time Series
SequenceClustering
Association Nave Bayes
Neural NetPlus: L inearand Logist ic Regression
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Relationship among SCM, ERP,CRM
SCM ERP CRM
Broader SCM
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V. SAP R/3
References: available on request
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PARTIAL SAP CLIENT LIST
Spacenet
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BEFORE SAP R/3
Systems didnt talk to the extent processesrequired, in spite of 20 years of IS labor
Human glue was required: to fill-in where systems dont talk
to reconcile multiple views of data to arrive at ananswer
to monitor hold-points to ensure procedures are
followed amidst the disorganization of being partpaper and part automated
to bridge systems and paper processes
Primavera
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Pump/Motor RunTime
Work OrderSystem
Catalog
Accounts Payable
Disbursements
Real Property
DOE FIMS
DOE DISCAS
Purchasing
General LedgerBench Stock
Control
Bar Coding
Fixed Assets
Inventory ControlSystem
Off-site VendorCustody
Payroll PersonnelPaper
JournalEntry
RequestPaper
Paperreceivers
PaperInvoices
Paperpartsorder
PaperPurchaseRequisition
Legacy System
Legend
Centra EDM/PDM
EngineeringChange Control
Log
PaperECP
PaperContract
MRP Models
batch file
batch filebatch file
batch file
PaperStocklevel
decision
Security
Training
Paperchecks
Artemis ProjectFund Accounting
PrimaveraSchedules
Papermilestonedefinitions
Logistics SupportAnalysis
Primav era
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Logistics Support
Analys is
Pump/Motor RunTime
Work Order
System
Catalog
Accounts Payable
DisbursementsSecurity
Real Property
DOE FIMS
DOE DISCAS
Purchasing
General Ledger
Bench StockControl
Bar Coding
Fixed Assets
Inventory Control
System
Off -site Vendor
Custody
Payroll
Personnel
Paper
Records
JournalEntry
Request
Paper
Paper
receivers
Paper
Invoices
Paper
partsorder
PaperPurchaseRequisition
Legacy Sy stem
Legend
Centra EDM/PDM
Engineering
Change Control
Log
Paper
ECP
PaperContract
MRP Models
batch file
batch filebatch file
batch file
PaperStock
leveldecision
Training
Paperchecks
Artemis Project
Fund Accounting
Primav era
Schedules
Papermilestone
defnitions
HumanGlue
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PROCESS EFFICIENCY
Realized through ability to reduce thepersonnel requirements to perform the
processTransfer into processes that were able tomeet customer requirements
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1SAP R/3
Omni-functional
Fully integrated
Process-oriented
Off-the-shelf
THE KEY ENABLER: ONE SYSTEM
SAP R/3Single Central
Database
FinancialAccounting
ControllingFixed
Assets
Mgt.
Workflow
Exec.Information& Report
Writer
MaterialsMgt.
Sales &Distribution
ProductionPlanning
QualityMgt. ProjectSystem
PlantMaintenance
Human
Resources
FICO
AM
PS
MM
PMHR
WF
PP
SD
QM
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Some SAP Products
R/3
APO
Customer Relationship Management(CRM)
Business process improvement (BPI)
Strategic Enterprise Management (SEM)
Business Warehouse (BW)
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VI. SCM/ERP for Small Businesses Microsoft Dynamics
f
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Microsoft DynamicsScreenshot
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Microsoft Dynamics
Formerly Microsoft Business Solutions GreatPlains
With Microsoft Dynamics, you can bring supply-chainfunctions online and make information available forteam collaborationwherever your employees,vendors, partners and suppliers are.
Business portal functionality lets you provide supply-chain functions, documents, and information topeople across the chain, both inside and outside ofthe organization.
And you can use the same portal technology to letyour executives review and augment performancewhen, where, and how they need to.
Wh Mi f D i i f
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Why Microsoft Dynamics is forsmall businesses?
Hardware considerations
Database requirements
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VI. Information Technologyfor for E-Business
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TOOLS FOR WEB PAGE DEVELOPMENT &SITE MAINTENANCE
Languages: HTML CGI (Common Gateway Interface) CSS (Cascading Style Sheets) Javascript Java (Java Applet) XML/XSL
Software: Front Page Microsoft Word Macromedia Flash Player
http://www.macromedia.com/software/flash/
Macromedia Dreamweaver
http://www.macromedia.com/software/flash/http://www.macromedia.com/software/flash/7/28/2019 ch01 SCM
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V. Hardware Considerationsfor SCM systems
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Intranet vs. Extranet
Intranet is to use Internet technologyand protocol (TCP/IP) for the internal
communications Extranet is to use Internet technology
and protocol for the internal and
suppliers communications
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Network Infrastructure: WideArea Networks (WANs)
WAN Technologies
Ordinary telephone line and telephone modem.
Point-to-Point Leased lines (such as T1 line)
Public switched data network (PSDN)
Such as ATM, Frame Relay
Send your data over the Internet securely, usingVirtual Private Network (VPN) technology
PSDN
VPN
Gl b l C id ti i U i
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Global Considerations in UsingSCM/ERP Systems
Time differences
Language issues
Currency exchange rates
Tax
Different accounting systems
Internet and security restrictions
Culture and religion holidays