Enterprise Resource Planning, 1st Edition by Mary Sumner Chapter 9: Supply Chain Management and the eMarketplace © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-1 Objectives • Examine the supply chain participants • Acknowledge the interrelationships among business processes that support the supply chain • Understand the role of ERP in supporting eBusiness • Recognize how business intelligence tools are used in decision analysis © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-2 Supply Chain Management (SCM) • • • Integrated planning of the activities in a supply chain Planning and control of flow of goods, services, money, and information Allows customers and suppliers to partner together – Maximize responsiveness and flexibility – Reducing costs and paperwork – Gain sustainable competitive advantage © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-3 Supply Chain Relationships • Can be maintained by manufacturer – – • • Cross-docking Creates linkages between supplier and retailer – – – • Continuous replenishment Can link into POS systems Lower costs Better customer service Increased profitability Information sharing along supply chain – Translates sales transactions into production processes and material requirements © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-4 Supply Chain Management (SCM), continued • Benefits – – – – • Cost reduction Inventory reduction Cycle time improvement Improved customer service Integration requires commitment to strategy, process, organization, and technology – – – What linkages should be established Communications Data integration © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-5 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-6 Partnership Evolution • VMI – – – – – – – – Responsibility of inventory management on supplier Supplier monitors level and replenishes inventories No risk of stockouts Quicker response time Retailer reduces inventory and administration costs Supplier gets more business No expedited orders Returned goods to supplier drops © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-7 SCM Evolution • • Electronic linkages facilitate JIT systems Reduced costs, improved response time, increased responsiveness to customer © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-8 eBusiness Value Chain • Evolution of virtual value chain – Provides information-based channels – Changed from transaction-based to contractbased relationships – Moved from vertically integrated to selective sourcing – Core firm outsources all parts of its business © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-9 eProcurement • eProcurement – – RFBs on web Bidding more competitive • – – Free-market bidding levels playing field Increased choices Reduced transaction costs © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-10 B2B Hubs • B2B hubs – Spot sourcing of operating inputs – Systematic sourcing of inputs – Bring suppliers of similar or complementary products together at one web site • – One-stop shopping Automate transactions and reduce costs © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-11 eSupply Chain • Facilitates real-time updates across chain – – – From consumers to suppliers Greater ability to fill orders Better understanding of customer needs © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-12 Business Intelligence with ERP Data • Data warehouse – – – • Repository for making management decisions Data integrity accomplished by cleaning Consistent formatting applied Data mart – Data storage for specific set of users • • Special data analysis Data mining – Analysis of data for trends, sales forecasting, inventory management • Identifies problem, develops research, collects and analyzes data © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-13 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-14 Future of ERP • • • Increased integration through SCM ASPs will provide cost efficiency and access to latest technology Netsourcing – – – • Renting ERP services, applications, and infrastructure over web Additional risks in migration, contracts Internal IT capabilities must be maintained Application software integration of legacy systems with ERP – – Plug and play Flexible, modular © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-15 Case: Data Solutions • Specializes in network implementation and management – Provides network services to companies with no internal networking analyst or IT manager – Uses legacy accounting software for financial accounting and financial management – Added billing package for client services – Wants CRM © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-16 Case: TechKnowledge • • Disitributor of presentation technologies Wants to netsource back-office functions – Has no internal IT capability – Wants and ERP vendor via hosting arrangement © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-17 Featured Article: Leveraging the ERP Backbone? • Dow Corning implemented SAP’s Business Information Warehouse – Integrate global business processes • • – Improve business intelligence • – – Consolidate internal and external information Replaced legacy systems on mainframes Beta-tested system • – Gain efficiency and reduce costs Wanted to fully automate Important to evaluate software with all details decided Hopes to facilitate rapid scale-up of data warehouse capabilities • Vital to business intelligence infrastructure © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-18 Summary • Supply chain management offers an integrated planning and control of goods, services, money, and information between suppliers and customers – – – • Produces lower costs and reduced inventories Improves customer service Increases profitability Virtual value chains provide informationbased channels – – Contract-based Applies selective sourcing instead of vertical integration © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-19 Summary, continued • • • eProcurement employs web-based RFBs – More competitive and more choices of suppliers eSupply chains facilitate real-time updates, responding to customer needs Business intelligence is increased by mining data warehouses and data marts © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-20 ... Communications Data integration © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-5 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-6 Partnership Evolution • VMI –... collects and analyzes data © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-13 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-14 Future of ERP • • • Increased... analysis © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 9-2 Supply Chain Management (SCM) • • • Integrated planning of the activities in a supply chain Planning and control of flow