Introduction to Information Technology
2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
Computer-based Supply Chain
Management and Information Systems
Integration (continue …)
Prepared by:
Roberta M. Roth, Ph.D.
University of Northern Iowa
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-1
How IT Supports the Supply Chain
 Material Requirements Planning (MRP)
 Early model that integrated production,
purchasing, and inventory management
 Manufacturing Resource Planning (MRP II)
 MRP plus financial and labor planning
 Enterprise Resource Planning (ERP)
 Extension to entire enterprise, plus external
business partners
 In short, Integration is the key
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-2
How IT Supports the Supply Chain
 Integrated Value Chain
 Multiple enterprises within a shared market
channel collaborate throughout the entire
shared chain to enhance perceived customer
value
 Chain members act as an extended enterprise
 Benefits to each chain member occur as entire
chain is optimised
 Idealized goal only achieved in a few cases at
present
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-3
How IT Supports the Supply Chain
 Enterprise Resource Planning (ERP)
Systems
 Initially focused on integrating all
departments and functions within an
organization
 Recently have extended to suppliers and
customers
 Focus was on transaction processing, not
decision support and continuous planning
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-4
How IT Supports the Supply Chain
 Supply Chain Management (SCM)
Software
 Standalone software targeting the planning
and decision making needed for supply chain
management
 Integrated ERP and SCM
 Build linkages between ERP package and
SCM package
 Extend ERP to incorporate needed SCM
functions
 Addition of business intelligence (analysis)
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-5
Extending Supply Chain through e-Commerce
 Upstream
 Change procurement methods
 Internal
 Use of intranet to enhance internal processes
 Downstream
 Alter (streamline) selling practices through
direct Web selling, auctions, or exchanges
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-6
e-Commerce Supply Chain Issues
 EC has generated problems in the order
fulfilment part of the supply chain
 Delivering what the customer ordered in a
timely way
 Providing customer support
 EC must continue to improve through
 More efficient order processing
 Better fulfilment processes, such as automated
warehouses
 Provide simple mechanism for customers to
return products
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-7
Chapter Summary
 Understanding and managing the supply
chain is critical to success
 Many supply chain problems can be
resolved through improving information
flows
 IT can supply needed support to supply
chain management
 Electronic commerce may reshape the
supply chain
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-8
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Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
10-9