Management Information Systems
Islamia University of Bahawalpur
Delivered by:
Tasawar Javed
Lecture 14
The Role of Information Technology
Overview of Chapter
The Role of Information Technology
UP-Stream SCM
Key activities of upstream SCM are
 Procurement
 Upstream logistics
Example:
Upstream SCM: TESCO
 Largest grocery retailer in the UK
 A typical store stocks 50,000 products
 Over 2,000 suppliers, each of which will supply at most
200 products
Date
Objective
Solution
Comments
1980s
Streamlining store
replenishment
Goods ordered via
Electronic Data
Interchange
1989
Help Suppliers
forecast demand
Suppliers sent EDI
messages
•Supplier receives
messages detailing
•Actual store sales
•Depot stock holdings
•Tesco’s forecasts
1997
•Better two-way
collaboration
•Shift responsibility
for managing
products to suppliers
Tesco information
Exchange (Tie)
allowing suppliers to
view EPOS data
•Suppliers can monitor
actual sales in real
time (almost), allowing
them to identify
changes in demand
(by product, store and
region) and react
accordingly
1999
More Effective
promotions
Promotions
management module
added
Suppliers are involved
in planning and
executing promotions
The Role of Information Technology
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E-Procurement
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Procurement covers all the activities needed to obtain items from
a supplier: the whole purchases cycle
The purchase cycle
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Identifying when items are needed, quantity, authority to gain them
Finding suitable suppliers
Choosing which supplier to order from
Agreeing the price or perhaps a range of prices depending on volumes
Ordering the goods with the chosen suppliers
Receiving goods into the organization
Checking the goods are as ordered and handling queries
Recording the goods are as ordered and handling registrar as appropriate
Storing of goods
Receiving, checking, and processing the supplier invoice
Paying the supplier according to cash flow/cash discount priorities
Role of IT
The benefits of e-procurement
Labour cost will be greatly reduced
 Inventory holding costs will be reduced.
 Production and sales should be higher as there will be fewer stockouts because of more accurate monitoring of demand and greater
ordering accuracy
 Production and sales should be higher
Other benefits includes:
 Wider choice of suppliers
 Greater financial transparency and accountability
 Greater control over inventories
 Quicker ordering, making it easier to operate lean or JiT
manufacturing
 Reduce ordering cost
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Role of IT
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E-sourcing
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Covers electronic methods for finding new suppliers and establishing
contracts
Issuing electronic invitations to tender and requests for quotations
reduces
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Administrative overheads
Potentially costly errors, as the re-keying of information is minimised
The time to respond
E-purchasing
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Covers products selection and ordering
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Buy n sell online procurement and reduces overheads through
spending less on administration time and cutting down
Features: electronic catalogues for core/standard items
Recurring requisitions/shopping lists for regularly purchased items
Electronic purchase orders despatched automatically through an
extranet to suppliers
Detailed management information reporting capabilities
Role of IT
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E-Payment
Includes tools such as electronic invoicing and electronic funds
transfer. Again e-payment can make the payment processes
more efficient for both the purchaser and supplier, reducing costs
and errors that can occur as a result of information being
transferred manually from and into their respective accounting
systems.
Potential Risks of e-procurement
 Technology Risk
 Organizational Risk
 No cost saving realised
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Test your understanding
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XL travel are a tour operator based in the country’s capital. They run
weekly trips to the seaside resort of Black Rock (around 140km
away) for four day visit (typically Friday to Monday)
The tours are very popular-especially with people aged over 65(who
make up over 90% of XL’s customers). The company has traded
profitably for many years on the back of premium pricing. But
recently profits have started to fall, coinciding with a minority of
complaints from regular users. Some users feel that the quality of
the trips have fallen and are not up to previous high standards.
Other users feel that, whilst XL itself has invested ( with plush new
offices, better marketing, more staff, easier booking system etc), this
investment has gone on the wrong areas.
XL has built up a large cash surplus for further investment. One of
the ways that is considering using this cast is to invest and improves
its supply chain.
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Down
Stream
SCM
How E-business affects relationships with customers
The following are the main ways in which e-business can affect an
organization’s relationship with its customers
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Tie-in/switching costs. A good e-business arrangement can make
customers reluctant to switch supplier. Eg time and effort might have
gone into automating most of a customer’s purchase transactions
E-commerce can lead to disintermediation
Process of Re-intermediation is also found
Counter-mediation is where established firms create their own new
intermediaries to compete with established intermediaries.
Continual updates- products, prices, news
Easy, fast, cheap, two way communication
User communities- users of some complex products, such as SW
Tracking customer internet activity
Customer preferences can be acted on
Customers can specify precisely the features they might want in
their products
E-Marketing
E-Marketing
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E-marketing involves extending the original 4Ps of marketing
Product
Price
Promotion and
Place to incorporate the following:
People/participants
Processes
Physical evidence
6Is: Benefits over Traditional Marketing Methods
CRM
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There are 4 stages in the customer life cycle:
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Selection
Acquisition
Retention
Extension
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IT can play a pivotal role in improving all aspects of CRM
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Thank you!!!
 Q&A
GOOD LUCK for Your Brilliant Future!!!
 GOOD LUCK for EXAMS!!!