ROLE OF INFORMATION
IN
SUPPLY CHAIN MANAGEMENT
Lt Gen (Retired) D V Kalra, PVSM, AVSM
Importance of information and IT in
a supply chain
Information is essential to making good
supply chain decisions because it provides
the global scope needed to make optimal
decisions. IT provides the tools to gather
this information and analyze it to make the
best supply chain decisions.
How each supply chain driver uses
information
Each of the supply chain drivers (inventory,
transportation, and facilities) require the fourth
driver, information, for decisions to be made.
Information is the factual component on which
decisions about each of the other drivers are
based. In essence, information is the glue that
holds the entire supply chain together and allows
it to function, making information the most
important supply chain driver.
Major applications of supply chain
IT
A company’s supply chain processes can be grouped into
three main macro processes. CRM includes processes that
enable interaction between an enterprise and its customers.
ISCM includes processes focused on the internal
operations of an enterprise. SRM includes processes that
enable interaction between an enterprise and its suppliers.
IT is a large enabler of these processes as well as enabling
integration across these processes. Good IT systems not
only allow the collection of data across the supply chain,
but also the analysis of decisions that maximize supply
chain profitability.
OBSTACLES TO
COORDINATION
• Local optimisation
• Information Distortion
INFORMATION SHARING
By sharing INFORMATION "upstream" (with
a company's suppliers) and "downstream"
(with a company's clients), SCM applications
have the potential to improve the time-tomarket of products, reduce costs, and allow all
parties in the supply chain to better manage
current resources and plan for future needs.
Information:
Role in the Supply Chain
• The connection between the various stages in
the supply chain -- allows coordination
between stages
• Crucial to daily operation of the each stage in a
supply chain -- e.g., production scheduling,
inventory levels
Components of Information
Decisions
• Coordination and information sharing
• Enabling technologies
–
–
–
–
EDI
Internet
ERP systems
Supply Chain Management software
• Overall trade-off: Responsiveness versus
efficiency
Information:
Role in the Competitive Strategy
• Allows supply chain to become more efficient
and more responsive at the same time
– reduces the need for a trade-off
• Information technology investments
• What information is most valuable?
Considerations for Supply Chain
Drivers
Driver
Inventory
Transportation
Facilities
Information
Efficiency
Responsiveness
Cost of holding
Availability
Consolidation
Speed
Consolidation/
Proximity/
Dedicated
Flexibility
What information is best suited for
each objective
LEVELS OF VISIBILTY
Data is Exchanged
Information is Shared
Sharing is Collaboration
Collaboration brings Visibility
LOGISTICS AND STRATEGIC
COST REDUCTION
In operation “Desert Storm”(1991), the
logisticians tried to build up 60 days of
supplies before launching the attack.
LOGISTICS AND STRATEGIC
COST REDUCTION
In the more recent operations, they used
a much more streamlined approach
where they looked at the time it took to
get supplies from the port to the front,
and that determined how many days'
supplies were needed to maintain the
forces in the field.
LOGISTICS AND STRATEGIC
COST REDUCTION
Based on this approach, U.S. forces kept
five to seven days of supplies on hand.