INFORMATION SYSTEMS IN SUPPLY CHAIN MANAGEMENT
STUDY NOTES
Introduction
Supply chain management is the systemic, strategic coordination of the traditional business functions
and tactics across these business functions - both within a particular company and across businesses
within the supply chain- all coordinated to improve the long-term performance of the individual
companies and the supply chain as a whole.
In a traditional manufacturing environment, supply chain management meant managing movement
and storage of raw materials, work-in-progress inventory, and finished goods from point of origin to
point of consumption.
It involves managing the network of interconnected smaller business units, networks of channels that
take part in producing a merchandise of a service package required by the end users or customers.
With businesses crossing the barriers of local markets and reaching out to a global scenario, SCM is
now defined as:
Design, planning, execution, control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand and measuring performance globally.
SCM consists of:
operations management
logistics
procurement
information technology
integrated business operations
Objectives of SCM
To decrease inventory cost by more accurately predicting demand and scheduling production
to match it.
To reduce overall production cost by streamlining production and by improving information
flow.
To improve customer satisfaction.
Features of SCM
PREPARED BY MR. ANTONY AMBIA Page 1
,Scope of SCM
SCM Processes
Customer Relationship Management
Customer Service Management
Demand Management
Customer Order Fulfillment
Manufacturing Flow Management
Procurement Management
Product Development and Commercialization
Returns Management
Advantages of SCM
SCM have multi-dimensional advantages:
To the suppliers:
o Help in giving clear-cut instruction
o Online data transfer reduce paper work
Inventory Economy:
o Low cost of handling inventory
o Low cost of stock outage by deciding optimum size of replenishment orders
o Achieve excellent logistical performance such as just in time
Distribution Point:
o Satisfied distributor and whole seller ensure that the right products reach the right
place at right time
o Clear business processes subject to fewer errors
o Easy accounting of stock and cost of stock
Channel Management:
o Reduce total number of transactions required to provide product assortment
o Organization is logically capable of performing customization requirements
Financial management:
o Low cost
PREPARED BY MR. ANTONY AMBIA Page 2
, o Realistic analysis
Operational performance:
o It involves delivery speed and consistency.
External customer:
o Conformance of product and services to their requirements
o Competitive prices
o Quality and reliability
o Delivery
o After sales services
To employees and internal customers:
o Teamwork and cooperation
o Efficient structure and system
o Quality work and delivery.
Electronic Data Interchange (EDI)
EDI is a standard format for exchanging business data between organisations by electronic means. It
is used to transfer electronic documents or business data from one computer system to another as an
electronic equivalent for paper-based orders, confirmation and invoices between trading partners.
Some of the key advantages of EDI include:
The option of storing and manipulating data electronically without the cost of manual entry
Reduced errors, such as shipping and billing errors, due to eliminating the need to rekey
documents on the destination side
Increased speed in which trading partner receives and incorporates the information into their
system thus greatly reducing cycle times
Alternative to/replacement of information flow that requires high levels of human interaction
and material resources
Direct and easy communication of structured business information, on agreed standards,
between parties
Faster delivery due to faster information flow
EDI's saves unneccessary re-capture of data. This leads to faster transfer of data, far fewer errors, less
time wasted on exception-handling, and hence a more stream-lined business process.
PREPARED BY MR. ANTONY AMBIA Page 3
, Electronic Data Interchange (EDI) is an electronic communication method that provides standards
for exchanging data via any electronic means. By adhering to the same standard, two different
companies or organizations, even in two different countries, can electronically exchange documents
(such as purchase orders, invoices, shipping notices, and many others). EDI has existed for more than
30 years, and there are many EDI standards (including X12, EDIFACT, ODETTE, etc.), some of which
address the needs of specific industries or regions. It also refers specifically to a family of standards. In
1996, the National Institute of Standards and Technology defined electronic data interchange as "the
computer-to-computer interchange of strictly formatted messages that represent documents other
than monetary instruments. EDI implies a sequence of messages between two parties, either of whom
may serve as originator or recipient. The formatted data representing the documents may be
transmitted from originator to recipient via telecommunications or physically transported on
electronic storage media." It distinguishes mere electronic communication or data exchange,
specifying that "in EDI, the usual processing of received messages is by computer only. Human
intervention in the processing of a received message is typically intended only for error conditions,
for quality review, and for special situations. For example, the transmission of binary or textual data is
not EDI as defined here unless the data are treated as one or more data elements of an EDI message
and are not normally intended for human interpretation as part of online data processing/
EDI can be formally defined as the transfer of structured data, by agreed message standards, from one
computer system to another without human intervention.EDI provides a technical basis for
automated commercial "conversations" between two entities, either internal or external. The term
EDI encompasses the entire electronic data interchange process, including the transmission, message
PREPARED BY MR. ANTONY AMBIA Page 4
STUDY NOTES
Introduction
Supply chain management is the systemic, strategic coordination of the traditional business functions
and tactics across these business functions - both within a particular company and across businesses
within the supply chain- all coordinated to improve the long-term performance of the individual
companies and the supply chain as a whole.
In a traditional manufacturing environment, supply chain management meant managing movement
and storage of raw materials, work-in-progress inventory, and finished goods from point of origin to
point of consumption.
It involves managing the network of interconnected smaller business units, networks of channels that
take part in producing a merchandise of a service package required by the end users or customers.
With businesses crossing the barriers of local markets and reaching out to a global scenario, SCM is
now defined as:
Design, planning, execution, control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand and measuring performance globally.
SCM consists of:
operations management
logistics
procurement
information technology
integrated business operations
Objectives of SCM
To decrease inventory cost by more accurately predicting demand and scheduling production
to match it.
To reduce overall production cost by streamlining production and by improving information
flow.
To improve customer satisfaction.
Features of SCM
PREPARED BY MR. ANTONY AMBIA Page 1
,Scope of SCM
SCM Processes
Customer Relationship Management
Customer Service Management
Demand Management
Customer Order Fulfillment
Manufacturing Flow Management
Procurement Management
Product Development and Commercialization
Returns Management
Advantages of SCM
SCM have multi-dimensional advantages:
To the suppliers:
o Help in giving clear-cut instruction
o Online data transfer reduce paper work
Inventory Economy:
o Low cost of handling inventory
o Low cost of stock outage by deciding optimum size of replenishment orders
o Achieve excellent logistical performance such as just in time
Distribution Point:
o Satisfied distributor and whole seller ensure that the right products reach the right
place at right time
o Clear business processes subject to fewer errors
o Easy accounting of stock and cost of stock
Channel Management:
o Reduce total number of transactions required to provide product assortment
o Organization is logically capable of performing customization requirements
Financial management:
o Low cost
PREPARED BY MR. ANTONY AMBIA Page 2
, o Realistic analysis
Operational performance:
o It involves delivery speed and consistency.
External customer:
o Conformance of product and services to their requirements
o Competitive prices
o Quality and reliability
o Delivery
o After sales services
To employees and internal customers:
o Teamwork and cooperation
o Efficient structure and system
o Quality work and delivery.
Electronic Data Interchange (EDI)
EDI is a standard format for exchanging business data between organisations by electronic means. It
is used to transfer electronic documents or business data from one computer system to another as an
electronic equivalent for paper-based orders, confirmation and invoices between trading partners.
Some of the key advantages of EDI include:
The option of storing and manipulating data electronically without the cost of manual entry
Reduced errors, such as shipping and billing errors, due to eliminating the need to rekey
documents on the destination side
Increased speed in which trading partner receives and incorporates the information into their
system thus greatly reducing cycle times
Alternative to/replacement of information flow that requires high levels of human interaction
and material resources
Direct and easy communication of structured business information, on agreed standards,
between parties
Faster delivery due to faster information flow
EDI's saves unneccessary re-capture of data. This leads to faster transfer of data, far fewer errors, less
time wasted on exception-handling, and hence a more stream-lined business process.
PREPARED BY MR. ANTONY AMBIA Page 3
, Electronic Data Interchange (EDI) is an electronic communication method that provides standards
for exchanging data via any electronic means. By adhering to the same standard, two different
companies or organizations, even in two different countries, can electronically exchange documents
(such as purchase orders, invoices, shipping notices, and many others). EDI has existed for more than
30 years, and there are many EDI standards (including X12, EDIFACT, ODETTE, etc.), some of which
address the needs of specific industries or regions. It also refers specifically to a family of standards. In
1996, the National Institute of Standards and Technology defined electronic data interchange as "the
computer-to-computer interchange of strictly formatted messages that represent documents other
than monetary instruments. EDI implies a sequence of messages between two parties, either of whom
may serve as originator or recipient. The formatted data representing the documents may be
transmitted from originator to recipient via telecommunications or physically transported on
electronic storage media." It distinguishes mere electronic communication or data exchange,
specifying that "in EDI, the usual processing of received messages is by computer only. Human
intervention in the processing of a received message is typically intended only for error conditions,
for quality review, and for special situations. For example, the transmission of binary or textual data is
not EDI as defined here unless the data are treated as one or more data elements of an EDI message
and are not normally intended for human interpretation as part of online data processing/
EDI can be formally defined as the transfer of structured data, by agreed message standards, from one
computer system to another without human intervention.EDI provides a technical basis for
automated commercial "conversations" between two entities, either internal or external. The term
EDI encompasses the entire electronic data interchange process, including the transmission, message
PREPARED BY MR. ANTONY AMBIA Page 4
