Role of Information technology in supply chain management

Role of Information Technology
in
Supply Chain Management
Presented by
Deepak Gupta
Onkar Surve
Shubham Lahupachang
October 7,2020

Contents
1. Introduction to SCM
2. Importance and benefits of IT in SCM
3. Areas in which IT is used for optimizing SCM
4. Types of IT used in SCM
5. MRP, e-SCM, Barcode, GPS, RFID,ERP,CPFR
6. Future of IT in SCM

Introduction to SCM
 SCM is the design, planning, execution, control,
and monitoring of supply-chain activities.
 Objective
 Creating net value
 Building a competitive infrastructure
 Leveraging worldwide logistics
 Synchronizing supply with demand
 Measuring performance globally.
1

Traditional View of SCM
• Focus on competition
• Products are handled too many times
• Physical carriers struggle to maintain costly
equipment on slim margin
• Limited information to each player
Traditional view
• Lack of knowledge of end to end demand
function.
• Unstable variations in demand (Bull whip
effect)
• Lack of process integration with partners
• Fragmented processes and operations
Consequences of traditional view
2

Importance and Benefits of IT in SCM
 Competitive advantage
 Gathering and evaluating
information
 Report generation and
decision making
 Coordinating processes of
SC
 Quick Response
Importance Benefits
 Information availability and
visibility
 Single point of contact for
data
 Allows decision making
based on SC
 Enables collaboration with
partners
3

Areas in which IT is used for Optimizing SCM
4
 Warehousing
 Logistics
 e-Commerce
 Sales
 Transaction Processing & Management
 Supply chain planning and collaboration

5
II. Logistics
• Smart Inventory Management
• Damage Detection
• Real time visibility
• Accurate inventory control
I. Warehousing
• Load Optimization
• Space Utilization
• Shipment Tracking
• Reverse Logistics
• Yard and dock management
III. e-Commerce
• Electronic data interchange
• e-mail
• Electronic fund transfers
• Electronic publishing
• Image processing
IV. Transaction Processing & Management
• Exchange information
• Order processing
• Billing
• Delivery verification
• Generating and sending dispatch
advices
• Producing order codes

6
V. Sales
• Business to business
• Business to customer
VI. Supply chain Planning and
collaboration
• Unpredictable and logistically
demanding environment
• Ensuring final shipments

Macro- processes of SCM in which IT is used
7
 Supplier Relationship Management (SRM)
• Supply chain procurement management:
• Order and accounts payable management
 Internal Supply chain Management (ISCM)
• Supplier management
• Supplier on boarding and contract management
• B2B integrations with supplier
 Customer Relationship Management (CRM)
• Operational CRM
• Collaborative CRM
• Analytical CRM
SUPPLIER
FIRM
CUSTOMER

Types of IT system used in SCM
8
Barcoding GPS RFID Tags QR codes Sensors
Tracking and
Tracing
EDI CRM MRP e-SCM
Extranet
ERP

 An identification technology with computer-readable
codes
 Codes on items, cartons and containers in the form
of grouping of parallel bars (usually blocks)
 Bars of different widths separated by light spaces
(usually white), again, of different widths
 Used widely in healthcare and hospital settings
Barcode System [BCS]
9

• Speeds up data entry process
• Verifies orders at receiving and
shipping
• Improves customer service
• Enhances data accuracy
• Minimizes on-hand inventory
Benefits Of Barcode System
10

RFID Tags
• Wireless non-contact use of radio frequency waves to transfer data.
• Tagging items with RFID tags allows users to automatically and uniquely identify and track inventory and
assets.
Increased speed and
agility in locating the
products
Product
Forecasting and
Management
Asset Tracking
and
Management
Automatic records
the input and
output of the
materials
Improved
Inventory and
Order
Management
Shipping and
Receiving
Increase
efficiency and
cut-down
reworks
Benefits of RFID tags
11

e-Commerce
Definition: e-Commerce, also known as electronic commerce or internet commerce, refers to the buying
and selling of goods or services using the internet, and the transfer of money and data to execute these
transactions.
Comprises
• Electronic data interchange
• e-mail
• Electronic fund transfers
• Electronic publishing
• Image processing
• Electronic bulletin boards
• Shared databases
Magnetic/optical data capture.
Benefits
• Reach and attract new customers
• Accessibility and easiness
• Faster customer response
• Sell across globe
• Cost efficient
• Eye’s on buyer
12

GPS for Vehicle Tracking
13
 To keep track of where your vehicles are on the map
 Monitoring vehicle speed, routes, engine start up and
shut down, idling and routes.
Advantages of GPS Tracking
1. Fleet management
2. Resource optimization
3. Driver safety & performance
4. Reduce administrative resources
5. Cost analysis/assessment
6. Minimal theft risks

Forecasting
Functions of MRP
Waste Reduction
Scheduling
Advantages Disadvantages
• Reduced lead time
• Reduced Inventory costs
• Increased efficiency
• Effective Inventory
Management
• Increased Inventory costs
• Lack of flexibility
• Data Integrity requirements
Computer based Inventory control and Production planning System
Materials Requirement Planning
14

INPUT
• Bill of material
• Inventory record
• Master production schedule
PROCESS
• Transformation process
• Procurement process
OUTPUT
• Primary reports
• Secondary reports
Materials Requirement Planning
15

4th
It is the use of web-based technology
to support the key procurement
processes, including requisitioning,
sourcing, contracting, ordering, and
payment
e-procurement
3rd
Combines business knowledge and
forecasts of multiple players along a
supply chain to improve the planning
and fulfillment of customer demand
Collaborative Planning
2nd
It is the use of web-based
technologies to support the
material acquisition, warehousing,
and transportation processes
e-logistics
1st
Supply chain replenishment
encompasses the integrated
production and distribution
processes..
Supply Chain Replenishment
e-SCM
16

Advantages of e-SCM
Helps in reducing excess inventory to reduce
inventory cost.
Reduces Inventory
Improves efficiency of the Supply Chain.
Improves Efficiency
Increase ON-Time delivery increasing customer
satisfaction.
Just In-time Delivery
Reducing cycle time to increase revenue and
improve order fulfillment
Reduce Cycle Time
Helps in reducing costs.
Reduces Cost
e-SCM
17

CPFR
Definition: Collaborative Planning, Forecasting and Replenishment (CPFR) is an approach which aims to
enhance supply chain integration by supporting and assisting joint practices. CPFR seeks cooperative
management of inventory through joint visibility and replenishment of products throughout the supply chain.
Benefits
• Improving customer service levels
• Reducing or eliminating stock outs
• Reducing over-buying of inventory
• Delivering right time, right place inventory
• Optimizing forecast accuracy
Four phases of CPFR18

Definition: Enterprise resource planning (ERP) is cross suite functional enterprise system driven
by an integrated suite of software modules that support the basic internal business processes of
a company.
ERP
Need
• Problems in daily communication and
exchange of data
• High inventory and material cost
• Inconsistencies and duplication of data
• Individual information systems integration
• Decentralized system
Benefits
• Reduce stock to a minimum
• Enlarge product assortment
• Improve product quality
• Reliable delivery dates
• Coordination of global demand, supply
and production
19

There are certain limitations to the use of Information Technology in SCM which are stated below
Limitations
 Lack of Manager awareness with the system
 Lack of management’s full commitments
 Development of electronic data interchange is a costly affair
 Problems related to data security and privacy
 Lack of face to face contact may bring lack of trust
 Customers also need awareness for effective utilization of internet in
the business
20

Future of IT in SCM
21
Percentage increase in
adoption rate of IT in SCM in
the next 6 years
Source: MHI Annual Industry Report

Role of Information technology in supply chain management

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