Friday, December 7, 2012

MIS final project



FINAL Project
MIS
Supply chain management role in enterprise planning










Submission Date:
10th of August 2012







TABLE OF CONTENTS

1.    Table of Contents ………………………………………………...2

2.    Introduction..………………………………………………………3

3.    Review …………………………………………………………….4

4.    Supply chain management role in enterprise planning .….…..……8

5.    Conclusion ……...….…………………………………….………15

6.    References….……………….……………………………………17










2. INTRODUCTION:
Supply chain management (SCM) is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain.

Also, is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers.

In the past few years, companies have integrated strategic applications at an unprecedented rate. New initiatives in resources planning, electronic commerce and extended supply chain push the trend among corporations towards integrating strategic business applications. EP and SCM have been growing in popularity across various segments of the electronic industry, particularly the manufacturing and distribution sectors. This research examines these two important concepts in business applications in terms of their evolution, function and current development.

Enterprise planning (EP) systems assist enterprises in automating and integrating corporate cross-functions such as inventory control, procurement, distribution, finance, and project management. In recent years as many companies began to search for ways to replace their existing applications running on mainframes that no longer meet the growing corporate needs, EP systems have become fixtures to provide a basis for business process management integration across business functions.

Supply-chain management (SCM) enables supply-chain partners to work in close coordination through information sharing to facilitate supplier-customer interactions and minimize transaction cost. This is how demand for improved supply-chain efficiencies will increase as business enterprises adopt SCM applications.

As the global commercial market involves greater complexity into the management of both internal and external corporate supply chains, the market competition and the benefits from the advance in technology will increasingly encourage the use of SCM system applications.

3. REVIEW: 
What is Supply Chain Management?
Since the term “supply chain” contains the word “supply”, many people naturally assume that supply chain must have something to do with suppliers (i.e. purchasing or procurement). While it is true that supply chain management does encompass the purchasing and procurement functions, supply chain management actually extends well beyond those areas. Supply chain management is the practice of manufacturing and distributing physical goods as efficiently as possible.
Supply chain management encompasses the entire process of manufacturing and distributing physical goods, from supplier’s supplier to customer’s customer. Business functions that are within the realm of supply chain management include: forecasting and planning, procurement and purchasing, manufacturing and assembly, warehousing and distribution, shipping and transportation, returns and refurbishment, inventory management and order management. Or, stated more simply, supply chain management includes the functions: plan, buy, make, store, move, sell and return.
Another definition is provided by the APICS Dictionary when it defines SCM as the "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."
Also, Supply chain management is a complex field encompassing every process involved in manufacturing a product. Supply chain management software assists enterprises in controlling streamlining the process through several logistical areas. 


What is the Supply Chain Management Profession?

How should we define the ideal supply chain management professional? What is the role of this professional? What responsibilities should he or she have? How might supply chain professionals be utilized within a corporation’s supply chain, and what skills and experiences should they have at their disposal?
First and foremost, a SCM professional should have experience in multiple supply chain functions and must be able to lead the design, implementation, and management of cross-functional supply chain solutions. While these solutions could be completely internal, they generally extend outside of the enterprise and involve multiple tiers of suppliers and customers.  These solutions require the integration and coordination of multiple processes including:
                Product/service development launch.
                Supplier relationship collaboration.
                Manufacturing customization.
                Demand planning responsiveness.
                Order fulfillment/service delivery.
                Customer relationship collaboration.
                Life cycle support.
                Reverse logistics.


At a senior level, a SCM professional evaluates the trade-offs between supply chain functions and organizations. To effectively identify and evaluate these trade-offs, he or she must blend sufficient depth of functional knowledge with the understanding of cross-functional and cross-organizational collaboration. For example, a SCM professional must be able to balance customer service and quality with total supply chain costs. To perform this balancing act successfully, the professional must consider all of the supply chain planning, management, and measurement activities involved in purchasing, manufacturing, and logistics management. Importantly, this assessment includes products, services and solutions, and related information.
What is Supply Chain Management Software?
The deciding factor in the success or failure of any given product is in the efficiency with which it can be brought to the market place. If the revenue derived from the sale of a product does not create a required profit margin over the cost of its production then that product is doomed to failure, and the health of the enterprise that manufactures the product will suffer. With that in mind it is clear that the most important factor in the life cycle of a product is the budget and time frame within which it is manufactured. The discipline of supply chain management and the ranges of software used to control it have been developed in order to make this cycle more efficient and cost effective. The Council of Supply Chain Management Professionals (CSCMP) leads the field.

What is Enterprise planning?
Enterprise planning is a methodology (backed up by a system) that assists an organization with creating an overall strategic plan. This system assists the organization in breaking down activities into initiatives that create a road map to assist in planning, monitoring and achieving your annual plan. Before we describe what enterprise planning can do for your organization, let’s talk about what planning is. The definition of planning is; the act of formulating a program for a definite course of action. A planning system is an integrated application that enables companies to effectively implement their strategic and tactical plans. In addition, it helps groups of people agree and align on a set of strategies and objectives. Planning provides a basic process and allows any group working together to easily track their collective efforts to implement their plans.


What is Enterprise Planning Software?
An integrated suite of software applications typically handling the manufacturing, logistics, distribution, inventory, shipping, and invoicing in larger businesses. EP is "back office" software, which focuses on the key business functions of manufacturing, supply chain management, CRM, financial management and Project Management. A well-implemented EP solution will improve the efficiency of the enterprise, reduce money tied up in stock/work in progress, and run a Just in Time inventory system.


Supply chain management is a complex field encompassing every process involved in manufacturing a product. Supply chain management software assists enterprises in controlling streamlining the process through several logistical areas. 









4. SUPPLY CHAIN MANAGEMENT ROLE IN
    ENTERPRISE PLANNING

This study is concluded with the imminent development of SCM and EP systems and the industrial trend toward their integration.

In a global business perspective, companies are actively expanding outside of their original area to seek new opportunities over the world. While the dynamic and fast changing external environment has put great pressures on companies’ operations and decisions, how to react quickly to external changes and how to compete effectively in the global environment become a crucial issue.

Customer Service Management: Customer relations provide information to the manufacturer on the level of demand for the product, and also provide feedback to the customer on promised delivery schedules.

Supply chain management software provides reporting modules to track both current demand and answer a range of ‘what if’ questions to assist in the prediction of future demand depending on changes in strategy. 


Procurement Process: Strategies are developed with suppliers to ensure that materials can be provided on time to meet both current demand and predicted demand for the future, avoiding the bottlenecking of resources that comes with inadequate procurement planning. 

Supply chain management software can assist in resource planning for the manufacture of products, recommending order schedules to reduce manufacturing cycle times. 


Product Development and Commercialization: Product development managers must work to identify customer needs and preferences in developing new products, and then work closely with suppliers and the manufacturers to reduce cycle times and ensure that customer needs are met. While supply chain management software cannot advise on the development of new products it can be used to ensure best practices for their manufacture and distribution.

Manufacturing Flow Management: The primary aim of manufacturing flow management is ensure that the manufacture of goods is optimized to operate on a just-in-time (JIT) basis, manufacturing orders to precisely meet customer demand so as to maximize efficiency and reduce excess stock. Supply chain management software can assist in this process by analyzing past performance and future predictions to suggest the optimal manufacturing schedule, while ensuring that materials to meet that schedule are procured and available in time to synchronize with the manufacturing schedule.

Distribution: Once the product has been manufactured it is vital that there be an adequate structure in place to distribute it to the customer. Supply chain management software should assist in the process of planning and implementing an efficient distribution schedule by optimizing manufacturing schedules to allow for the best possible distribution of the product.

Outsourcing & Partnerships: It is a fact that it is often more cost effective in the development, manufacturing and distribution of a product to form partnerships with other enterprises. Especially in the case of overseas outsourcing, it is often the case that another enterprise can perform a function or process at a lower cost or a higher level of efficiency than the enterprise manufacturing the product. 

In these cases it would be wise from a business standpoint to form a partnership rather than perform the process in-house, enabling the enterprise to focus its attention and resources on those activities in which it has an advantage.

One of the most common usages of partnerships is in the provision of transport and distribution services. Rather than devote effort and resources to building an in-house supply chain it can often be much more cost-effective to form a partnership with a shipping company, and allow them to perform the job of distribution at a lower cost than the enterprise could manage itself.

Supply chain management software can offer financial reporting functions, allowing project managers to analyze areas of the supply chain in which the enterprise could gain be outsourcing to an outside firm.

Performance Measurement: Performance measurement performs a vital function in any supply chain. By continuously analyzing the performance of the enterprise over a range of functions it enables managers to identify areas of weakness and opportunities for improvement. Through customer perception measurement and best practice benchmarking it is possible to create a positive feedback loop, continually improving supply chain processes to deliver improved services and increased profits.

Inside a dispersed company, it requires building integrated information systems, which allow data transmission across the border of a geographic area to another. Furthermore, the enterprise demands more effective communication between head office and local units. Even within an area, companies want to build corporate applications through which different departments can cooperate more efficiently with each other. In one word, they need to establish a streamline business process, which can significantly enhance the communication and cooperation among functional departments.

To achieve this goal, functional integration is required, which is the process of integrating all business functions to work together, e.g. a firm’s logistics or distribution functions must integrate with supply-management, manufacturing, and information technology before the functional integration can be extended to other companies in the supply chain.

From the standpoint of technology, information system architecture has been moving from a two-tier to a three-tier client server. Old legacy systems need to be converted to new, more powerful and flexible systems, and old data need to be migrated into new forms. Faced with all these needs, companies are seeking integrated business and technology solutions. The settlement would fall into EP and SCM, which in essence combines business processes with state-of-the-art technology to provide solutions for the whole enterprise.

EP aims to improve internal efficiency by integrating different parts in the organization, while SCM focuses on external relationships with trading partners in the supply chain. Indeed, the proliferation of EP systems forces companies to provide communication and information flow between supply-chain agents, overcoming natural boundaries. Therefore, integration of EP and SCM is a natural and necessary process in strategic and managerial consideration. Technologically, EP is said to be the backbone of SCM. Because they both rely on very similar framework, such as intranet, extranet and electronic data interchange; it is very possible and feasible for their integration. Most EP system providers have been enhancing their products to include sales-force automation, data warehousing, document management, and after-sales service and support. And the most important trend today is the integration with SCM.


The future of EP is to improve the supply chain and foster greater collaborating across multiple enterprises. The core of ERP, an integrated set of applications that link together such back-office operations as manufacturing, financials and distribution, will become a subclass of a much bigger and broader enterprise business system. EP will extend into transportation, warehousing, sales-force automation, and even beyond that into engineering with computer-aided design and product data management systems (McGee, 1998). Consequently, it is feasible and possible for the integration of these two technologies.

In this sense, EP system applications originally linking back-office applications into a single system would extend beyond their core functionality to include, not only sales-force automation, but data warehousing, document management, and after-sales service but also SCM to increase efficiency and productivity for the key customers.

Major problems associated with EP solutions:
·      Problems with implementation

The time and cost associated with EP implementations can be enormous, EP implementation is more complex due to cross- module integration, data standardization, adoption of the underlying business model, compressed implementation schedule, and the involvement of a large number of stakeholders. The EP industry as discussed earlier has not been performing as originally expected. The average EP implementation takes 23 months (Wheatley, 2000). For example, the implementation of the R/3 system on average takes about one year to one and a half years. Some have even exceeded three years. During this long implementation period, software and user specification change and the technicians who are implementing the package must constantly adapt and make adjustments in order to accommodate these changes.

Another problem associated with implementation is the speed the systems themselves operate at. EP systems run on cycle updates, rather than on real time processing. Accurate analysis necessary for quick decision-making is lost in these cyclical updates. Therefore, the system may become reactive instead of proactive. To be successful enterprises require being proactive and responding to change quickly and effectively with the right information to guide them. A reactive system is more likely to pose a serious threat to a major corporation

·      Problems with hidden cost
Cost is a critical part of an EP implementation for both large and small businesses alike. While the range of EP implementation becomes broader with the introduction of fast upgrading software applications, enterprises adopting EP systems are more costly than before. Companies that install EP systems may underestimate cost that is hidden. In addition to a long implementation time as pointed out previously, an EPR system has an average total cost of ownership of $15 million but rewards the business with an average negative net present value of $1.5 million.

·      Problems with process automation and system complexity
An imperative hidden cost often incurred by businesses implementing EP is the loss of efficient process due to an inability to automate their business processes. Frequently, EP venders offer their system packages as a solution to making the company more efficient without first looking at the corporate business processes per se. Automating an inefficient process would only generate more problems and unnecessary spending. Moreover, removing efficient processes rather than integrating them highlights the problem of inflexibility that can arise with an EP implementation (Mendel, 1999).
As for the complexity of system process, it does not just involve purchasing a software package but rather an extensive and complex business process. In some cases, organizations must change how they do business in order to benefit from a migration to enterprise solutions. Because the systems are complex, organizations typically do not have the required expertise in-house to implement the systems and implementation can take a long time to complete (c.f. Davenport, 1998a; Mendel, 1999). As discussed earlier, they instead must rely on consultants or employees of the software vendor, and such experts’ help would be very expensive.


Methods of integration between SCM and EP:
Many EP providers have quickly recognized the integration of EP and SCM system applications as a necessity to remain competitive and maintain sales. The SCM system applications soon were added to existing EP solutions to act as modular enhancements. Three methods of integrating SCM software with EP packages have been recognized. First is the notion of conformity. It requires all of the members of the supply chain to embrace the same system.

In a large supply chain this form of integration should be viewed as impractical. Issues of trust and security further complicate any chance of success with this method. The second integration method is middleware.

This method, though very practical, is very expensive. Programmers are required to establish links between various systems. The benefits are strong, but the cost must be weighed. The third method, and the latest, is to use specialized integration technologies or software (SIS) to extend EP functionality. The mapping of different packages is already done in these technologies. The software is preprogrammed to integrate SCM software with EP system packages. By doing this, the EP system will become a business-services framework, a central information repository, and a data-distribution facility.

In other words, this integration solution depends upon how data are kept consistent between EP and SCM systems. I2 uses SAP’s application link enabler to exchange data between R/3 and Rhythm (I2’s SCM product suite). Oracle and the other EP vendors also have APIs with which I2 and other vendors can use common denominator middleware to interface.

However, this means that system providers have to change their middleware interface software quite often, which is often a trial and error process and does not usually perform well (Allen, 1998). SIS is designed specifically to allow EP and other systems to share processes and data. It removes the chore of developing an interface to every other vendor’s software. For example, a major company in this area is CrossWorlds Software. This software, which runs on Windows NT, claims to work by simply pointing and clicking on a sending application (such as SAP) and a receiving application (such as Manugistics) and then selecting the processes to link together. Table II summaries the integration methods.

Supply Chain Management solutions:
·      Providing proactive solutions:
Perhaps the principal problem EP system solutions face is their inability to process data real time.

The packages are often overburdened with information and are forced to process information in cycles, rather than in real time. This forces ERP systems to be reactive instead of proactive.

·      Extending B2B relationship:
Today’s business environment is changing rapidly in terms of business relationships that are forming. Companies must have the ability to establish strong partnerships and clear communication to form an effective supply chain.

·      Reviving EP market:
EP market growth has been reduced considerably, with analysts estimating annual rates of 15 per cent to 17 per cent.

Initially the drop was attributed to the Y2K issue, but by now the venders has recognized that the drop may be related to lack of confidence in the systems. Although EP packages strive to integrate all the major processes of a firm, customers have discovered the lack of some essential functionality in EP.

By examining the problem from two perspectives, the product development and marketing challenge for the vendor and the implementation and integration problem for the consumer.

By integrating SCM modules into existing EP systems, a new market is emergent. The benefits of SCM software systems would be added to the value of the existing packages and could help boost many EP venders’ sales. With new business practices such as JIT and SCM taking shape, it becomes even easier for venders to show customers potential uses of the new packaged systems.

The major EPR providers such as SAP and PeopleSoft have put their large stakes in the SCM software industry. SAP as an example has the unique philosophy of allowing its customers to have considerable control over what functions their EP systems perform. The SCM system solutions at SAP are no different. Initially, SAP attempted to partner with I2 on designing and integrating a software package into existing SAP systems.

A benefit is that by linking supply-chain applications with other business systems, users can trim down cycle times, reduce inventory, and better connect with suppliers, distributors, and end customers.

As for cross-enterprise application integration, companies are able to link their EP systems directly to the disparate applications of their suppliers and customers.


5. CONCLUSION:

Current economic recession had impact on almost everything and innovation is supply chain was not something that was insulated from this. Innovation in Supply chain also has been impacted by this recession and it did in 2 ways in my view, I would say - one is negative that due to the cost reduction measures, the Supply Chain Strategies that needed sizeable investments in both technology or otherwise, were put on hold and we know that these strategies are normally the breeding grounds of innovation in the organizations; and the other factor that in-fact is a positive one in terms of its impact especially on innovation in supply chain management – this is the continued outsourcing push from organizations due to recessionary cost reduction pressures.

I largely think that supply chain innovation will bounce back strongly and that time is not too far. The positive difference we will see this time is that we will see focus on improving microelements of supply chain rather than looking to solve the larger pieces. As we see lot of times, executives complaining that inventory turns per annum are far from the target or their service levels are not improving even after increasing the inventory - these statements will now improve to granular statements wherein the measurement will not be done for inventory turns or service levels alone but for the root causes like stock outs, inventory obsolescence, perfect order shipments or on time delivery. This will in turn improve demand for supply chain visibility improvement systems that will evolve further due to this intelligence change.

The movement towards B2B e-commerce and SCM has ultimately forced EP system providers to reevaluate their models. EP venders would have to shift toward more flexible systems to compensate for the need to adapt to changing business cultures. The notion of ``plug and play’’ modules to perform specialized tasks is a very realistic alternative in the near future, as customers increasingly demand more specialized tasks from EP venders. Point and click systems are also a near-term direction to support more user-friendly operation and thus reduce training cost. Perhaps EP venders’ strongest assets are the large customer bases they possess. In the 1980s TQM was the business fad, then came business process reengineering in 1990s, now companies are looking at ER and SCM as the solution.

The trend indicates that EP will adapt through the incorporation of modular upgrades to current systems and the exploitation of the small- to medium-sized markets.

Accordingly, the industrial trend between EP and SCM is that the integration of supply-chain capabilities with EP systems will continue to be enhanced in the near future. One of the main reasons is that cross- enterprise integration will continue to be one of the major organizational goals, especially for those whose business success is directly dependent upon the success of their supply chain. Driven by the market forces such as shifting channel power and demand for fast cycle-time-to-market, SCM has created a critical and influential business success. Consequently, organizations begin to rely on SCM systems as a new source of competitive advantage.

In conclusion, the core of EP, an integrated set of applications that link together back-office operations, will become a subclass of a much larger and broader enterprise business system. The integration of EP and SCM will create a new spectrum in the information industry, i.e. the integration of all core business processes through one comprehensive information system and the cooperation among multiple parties and trading partners in the value chain to create a collaborative business and operational environment.





7.   REFERENCES:
Further information regarding supply chain management can be found at CIO’s supply chain management research centre, NIST and the National Science Foundation.
CIO Magazine: Supply Chain Management Definition and Solutions







Bingi, P., Sharma, M. and Godla, J. (1999), ``Critical issues affecting an EP implementation’’, Information Systems Management, Vol. 16 No. 3, Summer, pp. 7-14.

Davenport, T. (1998a), ``Serving up EP value’’, CIO, Vol. 11 No. 8, February, pp. 26-9.

Davenport, T. (1998b), ``Putting the enterprise into the enterprise system’’, Harvard Business Review, Vol. 76 No. 4, July-August, pp. 121-31.

Ferguson, B. (2000), ``Implementing supply chain management’, Production and Inventory Management Journal, Vol. 41

No comments:

Post a Comment