SUPPLY CHAIN MANAGEMENT INFORMATION SYSTEM (SCMIS)
A CASE STUDY IN VAMCO (AXLE MANUFACTURING FACTORY)
MOHAMMADREZA KHOEI
A thesis submitted in fulfillment of the
requirements for the award of the degree of
Master of Science (Industrial Engineering)
Faculty of Mechanical Engineering
University Technology Malaysia
JULY 2010
iii
Dedication page
To my beloved mother and father.
iv
ACKNOWLEDGEMENT
In preparing this thesis, I was in contact with many people, researchers,
academicians, and practitioners. They have contributed towards my understanding and
thoughts. In particular, I wish to express my sincere appreciation to my main thesis
supervisor, Professor Dr. ASHRAF HAFIZ RADWAN, for encouragement, guidance,
critics and friendship. Without his continued support and interest, this thesis would not
have been the same as presented here.
v
ABSTRAK
Pasaran masakini yang semakin berdaya saing memerlukan kecekapan,
tindakbalas segera, pantas, mudah untuk mengikuti perkembangan proses permintaan,
berkeupayaan untuk berinteraktif dalam talian selama 24 jam dan 7 hari dan sebagainya.
Bagi pengkaji, model ini menyediakan pendekatan antara displin untuk memahami
keupayaan SCM IS. Dengan kajian lanjutan, model dan konsep ini juga boleh diadaptasi
bagi penggunaan IS yang strategik. Pengguna boleh mencapai kefahaman yang lebih
mendalam terhadap penggunaan SCM IS dan juga jangkaan keupayaan yang boleh
diberikan oleh SCM IS di masa hadapan. Pengurusan sistem rantaian bekalan adalah
sistem maklumat di antara syarikat yang menguruskan maklumat dan teknologi
komunikasi dikalangan ahlinya seperti pelanggan, penjual, pembekal dan pengedar yang
terlibat di dalam penggunaan dan pembekalan barangan atau servis.
Syarikat
kebiasaanya menggunakan portfolio sistem pengurusan rantaian bekalan di mana secara
umumnya mengandungi sistem pengesan yang menghubungkan data elektronik, pakej
pertukaran maklumat atau idea berdasarkan laman layar dan sesuatu kombinasi
teknologi capaian maklumat.
Oleh itu, matlamat penulisan ini adalah untuk
membangunkan model bersepadu SCM IS yang disokong oleh bukti empirik yang
spesifik kepada penggunaan SCM IS. Model yang dibangunkan adalah menggunakan
teori bersepadu seperti strategi bersaing, pengurusan rantaian bekalan dan sistem
maklumat antara organisasi.
vi
ABSTRACT
Today high competitive market needs fast, effective, high responsiveness, online
interactive, 24 hours 7 days availability, easy to follow up orders processing, etc. For
researchers, the model provides an interdisciplinary approach to understanding the range
of Supply Chain Management Information System (SCMIS) capabilities. With further
study, the model and concepts could also be adapted for other strategic IS applications.
Practitioners can gain a better understanding of the capabilities of their implemented
SCMIS and the expected capabilities that future SCMIS may provide. Supply chain
management information systems are the information systems between companies that
employ information and communication technology to arrange information inside and
among the participator of a supply chain such as clients, sellers, providers, and
distributors.
Companies frequently use a portfolio of supply chain management
information systems, which characteristically contain legacy systems linked by
electronic data interchange, packaged applications employing Web-based exchange of
information or ideas, or some other blend of information connection technology. Thus,
the goal of this thesis is to identify the system’s main elements, analyze the system’s
operational issues, identify the inputs and outputs for each element of the system, define
the interfaces between the related activities in the system, design relation data model and
develop a prototype SCMIS. It is hoped that the model that will be developed is able to
integrate and enrich theories of competitive strategy, supply chain management, and
interorganizational information systems.
vii
TABLE OF CONTENTS
CHAPTER
1
TITLE
PAGE
DECLARATION
ii
DEDICTION
iii
ACKNOWLEDGEMENTS
iv
ABSTRAK
v
ABSTRACT
vi
TABLE OF CONTENTS
vii
LIST OF TABLES
xi
LIST OF FIGURES
xii
INTRODUCTION
1
1.1.
Background of Study
1
1.1.1. What is Supply Chain Management?
2
1.1.2. The Importance of Information System to
Supply Chain Management in Strategy
3
1.1.3. The Importance of Information System to Supply
Chain Management in Procedure Planning
1.1.4. Supply Chain Management Information Systems
6
7
1.1.5. Type of Information systems in supply chain operations 9
1.2. Problem Statement
10
1.3. Objective of Study
11
viii
2
3
1.4. Significance of Study
12
1.5. Scope of the Study
13
LITERATURE REVIEW
15
2.1
Introduction
15
2.2
Supply Chain Management Information Systems (SCMIS)
16
2.3
Knowledge gap in SCMIS
18
2.4
Advantages of SCMIS
19
2.5
Usage of Supply Chain Management Information Systems
(SCMIS)
20
2.6
Architecture of SCMIS
22
2.7
Information exchange categories in SCM of production
26
2.7.1
27
The production information exchange categories
2.8
Scope of modeling the SCM
2.9
Modeling of Supply Chain Management Information Systems
27
(SCMIS)
31
2.9.1
Decision making models
32
2.9.2
Information modeling
34
2.9.3
Decision making model and Information model
35
2.9.4
Perception modeling
40
2.9.5
The unified modeling language
41
2.9.6
Process modeling
43
2.9.7
Supply chain operations reference model
44
2.9.8
Integration definition for information
modeling (IDEF1X)
46
2.9.8.1
48
The basic constructs of an IDEF1X model
2.10 Conclusion
49
RESEARCH METHODOLOGY
51
3.1
Introduction
52
3.2
Profile of Vehicle Axle Manufacturing Company (VAMCo.)
54
ix
3.2.1
Bill of material (BOM)
3.3
Supply Chain Management Information System in VAMCo.
3.4
Current flow of information in the factory with
55
56
Microsoft Visio 2003
59
3.5
SCMIS Modeling
59
3.6
Data Requirements for SCMIS Modeling
60
3.7
Data Collection
61
3.8
Designing VAMCo. database
62
3.9
Problems associated with developing the VAMCo. database
62
3.10 Data flow diagram (DFD)
63
3.11 Entity relationship diagram (IDEF1X)
65
3.12 Data relationship
66
3.13 Operation manual
67
3.13.1 Operation manual for customers
67
3.13.2 Procedures to be followed by personnel-in-charge
at VAMCo. Factory
3.13.3 Operation manual for suppliers
3.14 Running the database
71
77
79
3.14.1 Steps to order from customer
79
3.14.2 Steps to entering data by factory
83
3.14.3 Steps to view the factory order by suppliers
100
3.14.4 Steps to see the information about order
release time by customers
4
101
FINDINGS AND DISCUSSION
106
4.1
Comparison of order cycle time between old and new system
107
4.2
Developed flow of information in the factory
109
4.3
The successes of applying this new database to the company
110
4.3.1
Ordering cycle time is shortened
110
4.3.2
Product inventory decreased
110
4.3.3
Transportation cost decreased
111
x
4.3.4
4.3.5
5
The amount of production lane stop
decrease to almost zero
111
The cost of production lane stop become almost zero
111
4.4
Charts of the developed system
112
4.5
Comparison between Old System and Developed system
119
CONCLUSION
121
5.1
Introduction
121
5.2
Summary of Research
122
5.3
Discussion of findings
125
5.3.1
Summary of the major findings
125
5.3.1.1
Ordering cycle time is shortened
125
5.3.1.2
Product inventory decreased
126
5.3.1.3
Transportation cost decreased
126
5.3.1.4
The amount of production lane stop
decrease to almost zero
5.3.1.5
127
The cost of production lane stop
become almost zero
127
5.4
Recommendation
127
5.5
Limitations of the study
128
REFERENCES
129
xi
LIST OF TABLES
TABLE NO.
4.1
TITLE
Comparison between old system and new system
PAGE
120
xii
LIST OF FIGURES
FIGURE NO.
TITLE
1.1
production of higher value for customers, decrease cycle times
2.1
Flow of information and integrating business processes across
the supply chain
2.2
PAGE
4
17
The closed loop interactions between transaction processing
and decision making
21
2.3
Architecture of the supply chain management information system
23
2.4
Production operations model
26
2.5
The configuration of this supply chain modeling
29
2.6
Overview of the information model of the supply chain
30
2.7
Interactions between information systems development
and decision modeling
36
2.8
Sample of IDEF1X diagram
49
3.1
Flow chart of research methodology
53
3.2
Cover of light rear axle
55
3.3
Bill of Material
56
3.4
Business process for rear axle cover
57
3.5
Factory Layout
58
3.6
Current flow of information in the factory
59
3.7
Data Flow Diagram
64
3.8
IDEF1X diagram of the company
65
xiii
3.9
Data relationship. Microsoft Access
66
3.10
Customer; Behran Mehvar Saipa Order Steps
68
3.11
Customer; Gama Khodro Order Steps
69
3.12
Customer; Mehvar Karan-e-Kosha Order Steps
70
3.13
To enter the production detail for today
72
3.14
To enter the product release for today
73
3.15
To enter the raw material order receive for today
74
3.16
To enter the material additional order for today
75
3.17
To send the estimate release date to the customer for today order
76
3.18
Steps to see the raw material requested by VAMCo.
78
3.19
Customer order steps 1
80
3.20
Customer order steps 2
81
3.21
Customer order steps 3
82
3.22
Customer order steps 4
82
3.23
Customer order steps 5
83
3.24
Factory data entering steps 1
84
3.25
Factory data entering steps 2
85
3.26
Factory data entering steps 3
86
3.27
Factory data entering steps 4
86
3.28
Factory data entering steps 5
87
3.29
Factory data entering steps 6
88
3.30
Factory data entering steps 7
89
3.31
Factory data entering steps 8
89
3.32
Factory data entering steps 9
90
3.33
Factory data entering steps 10
91
3.34
Factory data entering steps 11
91
3.35
Factory data entering steps 12
92
3.36
Factory data entering steps 13
93
3.37
Factory data entering steps 14
93
3.38
Factory data entering steps 15
94
3.39
Factory data entering steps 16
95
xiv
3.40
Factory data entering steps 17
95
3.41
Factory data entering steps 18
96
3.42
Factory data entering steps 19
97
3.43
Factory data entering steps 20
97
3.44
Factory data entering steps 21
98
3.45
Factory data entering steps 22
99
3.46
steps to view the factory order by supplier 1
100
3.47
steps to view the factory order by supplier 2
101
3.48
Steps to see the information about order release time 1
102
3.49
Steps to see the information about order release time 2
103
3.50
Steps to see the information about order release time 3
104
3.51
Steps to see the information about order release time 4
105
4.1
Flow the data Gantt chart in old system
107
4.2
Flow the data Gantt chart in new system
108
4.3
Developed flow of information in the factory
109
4.4
Behran Mehvar Saipa Order chart
112
4.5
Gama Khodro Order chart
113
4.6
Mehvar Karan Order chart
113
4.7
Total Order chart
114
4.8
Factory production plan chart
114
4.9
Production of factory chart
115
4.10
Factory reject chart
115
4.11
Press Part Total order chart
116
4.12
Role sheet Total order chart
116
4.13
Press Part Total order chart
117
4.14
Product Inventory chart
117
4.15
Press factory inventory chart
118
4.16
Role sheet factory inventory chart
118
4.17
Welded Nuts factory inventory chart
119
CHAPTER 1
INTRODUCTION
1.1
Background of Study
The background of the present study will discuss the following areas, next we
will discuss about each in turn.

What is Supply Chain Management?

The Importance of Information System to Supply Chain Management in Strategy

The Importance of Information System to Supply Chain Management in
Procedure Planning

Supply Chain Management Information Systems

Type of Information systems in supply chain operations
2
1.1.1
What is Supply Chain Management?
Supply chain management is an advance that has evolved out of the combination
of these considerations. Supply chain management is known as the combination of key
business procedures from last part user through original providers that present products,
services, and information and therefore adds value for customers. Supply chain
management is an increasingly useful procedures pattern for increasing overall
organizational competitiveness. (A. Gunasekaran , E.W.T. Ngai,2004)
A latest study of supply chain linked executives found that 92% of those studied
were scheduling to execute one or more supply chain ideas in 1999 (Bradley, 1999).
Supply chain management is based on the combination of all behaviors that increase the
value to customers, staring from designing the product to delivery of it. Supply chain
management is a point of approaches applied to efficiently combine suppliers,
manufacturers, warehouses, and stores, so that products is created and spread at the
exact amounts, to the precise positions, and at the correct time, to reduce system broad
cost in order to pleasing service stage conditions. (A. Gunasekaran , E.W.T. Ngai,2004)
Today’s companies are in contest for civilizing their organizational
competitiveness in order to participate in the latest century worldwide marketplace. This
market is electronically linked and active in nature. Hence, companies are demanding to
improve their nimbleness stage with the purpose of being supple and responsive to face
to the changing marketplace requirements. In an attempt to reach this, many companies
have spread out their value-adding actions by outsourcing and increasing virtual
enterprise.
3
1.1.2
The Importance of Information System to Supply Chain Management in
Strategy
Raising an information system for supply chain management involves with a
cooperative work with business associates for the restore and clearing up of a pure
infrastructure for the supply chain and the plan and execution of the information system.
A supply chain as mentioned earlier is a group of providers, producers, stores,
distributors and sellers who, during synchronized strategies and behaviors, develop
products by changing raw substances to completed products. The supply chain covers
all organizations and actions related with the flow and alteration of goods from raw
resources to the end product user and the data flows related with it.
Supply chain management engage different approaches used to combine
suppliers, producers and distributors in performing their purposes: materials obtain
materials transformation in middle and finished goods, the sharing of these products to
clients in the proper amounts, to the exact place and at the correct time to meet the
essential service level with minimum cost.
During cooperation and information
distribution firms create high presenting value systems, supplying part organizations a
significant competitive advantage. The value system is a joined chain of organizations,
resources and understanding channels included in the producing and delivery of value to
the end client.
(Figure 1.1) shows the production of higher value for customers,
decrease cycle times for improving new products at inexpensive price in a company.
(Handfield and Nichols, 2002).
4
The information flow
suppliers
Manufacturer
Distributers
engineer
operation
Figure 1.1
F
I
N
A
L
C
O
N
S
U
M
E
R
production of higher value for customers, decrease cycle times
(Handfield and Nichols, 2002).
Clients demand new products on the function that the most current technologies
and suitable to various market niches. By analyzing the picture of events as they are
now in the market, we can understand that administers have to make determinations in a
short period of time, with fewer information and with higher fine expenses. So that by
administering these appearances, firms raise their responsiveness and elasticity in their
performance, giving high concentration to time.
Information systems help to decrease delivery lead time admit stock costs, fewer
re work, higher quality, and fewer operating expenses across the supply chain. It could
be made by the execution of an information system which can raise the rate of all the
activities from the supply chain. There are outdoor profits caused from concentration to
time: higher quality, faster client reaction, higher products. Interior profits are: more
effective procedures, shorter scheduling times, and enhanced reactiveness, exchange of
information or ideas, harmony, working together among acts.
5
Substances and data flows upon supply chain are potential founded upon
organizational connections between supply chain components.
To make these
connections better, exchange of information or ideas and solving the problems actions
like enterprise or venture undertaken in collaboration, distributed drilling schedules,
staff gathering are required. Firms have to distribute much information: production data,
predicting data or expense information for distinguishing non-value added parameters as
illustrated in Figure 1.1. (Handfield and Nichols, 2002).
The development of information systems is an element that allowed the
combination of supply chains within value systems. Electronic business technologies
uphold current's client centric situation which providers use the web to connect their
business information systems and to raise the productivity of the decision making
procedures for their providers and clients.
Discerning supply chains information systems allow quality enlargement of
products, and services, information services and electronic business connects, stock
decrease, client service enhancement. Earlier than executing a multifaceted information
system for supply chain management, firms have to make a new preliminary sketch for
their supply chain, produce an infrastructure to enable the utilizing of these up to date
technologies. In order that make an incorporated value system, it is essential to execute
a chain of activities that we mentioned in following.
6
1.1.3 The Importance of Information System to Supply Chain Management in
Procedure Planning
Advantageous supply chain policies must stay considerate to the active
interaction of malleability and effectiveness in order to equilibrium product-centricity
against the focus on purchaser’s demand for choices with attention paid to unpredictable
such as cost, quality, service and sequence time. An important policy district is the
creation of a sturdy supply network plan which includes the following items, suppliers,
producers, distributers, stores.
Other region includes origins, sinks, centralized in
comparison to decentralized, straight delivery, pull in comparison to push and convey
(Shoumen Palit Austin Datta, 2006).
The measurable decision field includes definition of amount and position of stock
involving raw substances, products that are still being manufactured (WIP) and products
that have been produced and are ready for sale. Supply chain management information
systems usually rotate around these decision fields. Productivity and advantageousness
may conditional upon the range to which systems and procedures of the supply chain are
capable to distribute real time information about claim, predicted, stock and conveyance
(Shoumen Palit Austin Datta, 2006).
The “Bullwhip effect” as we know demands fickleness has influence on supply
chain fields. For instance, little alters in client order at retailers might bring about bulky
changes in the stock at distributors or producers. Therefore, near real time information
regarding little alters together with the chain have to be accounted in supply chain
models. Science of engineering, like radio frequency identification, may be helpful for
acquisition of stock information at the point stage if there is adequate business worth for
like granularity of information (Shoumen Palit Austin Datta, 2006).
7
Information models explain the problems from an information processing
viewpoint. Information modeling can be mentioned as illustrative modeling and had the
function of an interface for information systems progress. Information modeling of
supply chains is under the influence of business procedure reengineering models,
information systems driven models and the application of up to date information systems
methods and techniques for the combination of supply chain decision making models
(Shoumen Palit Austin Datta, 2006).
1.1.4
Supply Chain Management Information Systems
The acronym SCMIS will be used throughout the study to refer to Supply Chain
Management Information Systems. Supply chain management information systems are
progressively important to the prosperity of many companies (Chopra and Meindl 2001;
Kumar 2001), but have received inadequate consideration in experiential information
system study (Subramani 2004).
Few researches have investigated the profits and
abilities of various kinds of supply chain management information systems such as EDI
(Lee et al. 1999; Mukhopadhyay et al. 1995), electronic market (Dagenais and Gautschi
2002; Kaplan and Sawhney 2000), or extended enterprise resource scheduling (Green
2001) systems.
Nevertheless, there are few experimentally extracted models appropriate for
examining the scope of supply chain management information systems options.
Similarly, companies face complicated and dangerous determination analyzing and
choosing a suitable supply chain management information systems solution or
guaranteeing that their executed systems are organized with their competitive policies
(Reddy and Reddy 2001). While the improved policies suitable model is operationalized
8
particularly for supply chain management information systems, the fundamental
hypothesis and methodology could be accept in coming studies for analyzing other kinds
of information systems.
Supply Chain Management Information Systems have an extremely vital role in
the ability of companies to decrease expenses and increase the accessibility of their
supply chain. Supply Chain Management Information Systems are information systems
used to organize information between indoor and outdoor customers, providers,
distributors, and other members in a supply chain. Few researches have explored the
benefits and potential of dissimilar Supply Chain Management Information Systems like
Electronic Data Interchange, Electronic Marketplace, or Enterprise Resource Planning
systems.
However, there are some experimentally form fit for evaluating the
organizational skill held up by the ambit of Supply Chain Management Information
Systems alternatives.
Due to that, companies face complicated and perilous
determinations appraising and picking up a suitable Supply Chain Management
Information Systems solution or guaranteeing that their executed systems are organized
with their business policies (Reddy and Reddy 2001). An organizational skill is the
aptitude of an organization to attain its objectives by leveraging its different resources
(Ulrich and Lake 1990).
Information system abilities are organizational abilities which are capable by
information system. Correspondingly, supply chain management information systems
abilities are organizational abilities capable by supply chain management information
system. Through the years, study on the estimation of information system has improved
in abstraction from matching information system abilities with practical necessities
9
(Lucas 1981), to desired formation (Allen and Boynton 1991), to competitive policies
(Henderson et al. 1996).
Despite politic alignment has received important Concentration in current
researches of generally information systems policies (Kearns and Lederer 2001; Reich
and Benbasat 2000; Sabherwal and Chan 2001), models have not yet been advanced to
an adequately itemized stage to interrogate the organizational abilities allowed by
peculiar kinds of information system, like supply chain management information
systems.
1.1.5
Type of Information systems in supply chain operations
Stephen Hays Russel (n.d) lists four types of information systems in sustaining
supply chain operations:
• Enterprise Resource Planning (ERP) software.
Enterprise resource planning software procedures all the deals in every useful area and
suppliers provide real time approach to an enterprise wide data base.
Enterprise
resource planning substitute for the inheritance information systems which after passing
the years have been matched together by performance, finance, selling, engineering,
purchase, and so forth. Inheritance systems are ability repressed, hard to connect to
other Operational stages, and cannot support supply chain activities.
10
• Electronic Data Interchange (EDI).
Electronic data interchange and the Internet make easy a connected to each other
business environment that enables members to distribute decision pertinent information
all over the supply chain.
• Electronic Product Code Technologies.
Electronic product code technologies contain optical scanners, radio frequency
identification and bar codes technologies. Electronic product code enables for situation,
item, pallet, and vehicle tagging for a track and trace ability in a supply chain.
• Supply Chain Analytics.
Supply chain analytics is any software planed to estimate and progress supply chain
execution. Supply chain analytics can do that things as appraise capacity, substances,
and client order instabilities; or recognize which carriers and allotment centers are more
responsive.
1.2
Problem Statement
Supply Chain Management Information System acting an increasingly vital role
in the skill of factories to decrease costs and raise the responsiveness of their supply
chain.
Supply chain management information systems used to organize the data
between interior and outdoor customers, producers, distributors, and other associates in a
supply chain.
11
Nevertheless, there is a very few study articles that show the influence of
information system in supply chain management. However, it is impossible to reach to a
successful supply chain without information system. While providers are placed all over
the global, it is necessary to combine the behaviors both in and out part of an
organization. This needs a general-purpose information system for sharing data on
sundries value adding behaviors participant to supply chain. Information system is like a
chord system for supply chain management. In this research we try to develop a system
that shows the vital role of information system in supply chain Management.
1.3
Objective of Study
The objective of the study is as follows:
1. To identify the system’s main elements
2. To analyze the system’s operational issues
3. To identify the inputs and outputs for each element of system
4. To define the interfaces between the related activities in the system
5. To design relation data model
6. To develop a prototype SCMIS.
The primary objective of the study is to design and develop a Supply Chain
Management Information System (SCMIS). It is hoped that the model that will be
developed is able to integrate and enrich theories of competitive strategy, supply chain
management, and interorganizational information systems.
12
1.4
Significance of Study
Today high competitive market needs fast, effective, high responsiveness, online
interactive, 24 hours 7 days availability, easy to follow up orders processing, etc. For
researchers, the model provides an interdisciplinary approach to understanding the range
of SCM IS capabilities. With further study, the model and concepts could also be
adapted for other strategic IS applications. Practitioners can gain a better understanding
of the capabilities of their implemented SCM IS and the expected capabilities that future
SCM IS may provide.
The next section describes the initial SCM IS capabilities model and its
theoretical foundations. The third section describes the research methodology and the
fourth presents the findings and the emergent SCM IS capabilities model. The final
section discusses the implications of the findings for research and practice.
Supply chain management information systems are the information systems
between companies that employ information and communication technology to arrange
information inside and among the participator of a supply chain like the clients, sellers,
providers, and distributors included in the utilization and supply of a special product or
service. Companies frequently use a portfolio of supply chain management information
systems, which characteristically contain legacy systems linked by electronic data
interchange, packaged applications employing Web-based exchange of information or
ideas, or some other blend of information connection technology.
13
1.5
Scope of the Study
While strategic coalition has received substantial consideration in latest
researches of generally information systems policies (Kearns and Lederer 2001; Reich
and Benbasat 2000; Sabherwal and Chan 2001), models have not so far been advanced
to a adequately itemized stage to tested the organizational ability, capable by particular
kinds of information system, such as supply chain management information system.
Find out that how well supply chain management information systems facilitate
different organizational potential in a company can decrease the complexity of
estimating different supply chain management information system.
Earlier studies
models of the organizational powers, accomplished by dissimilar types of information
system (Bensaou 1997; Sabherwal and Chan 2001; Venkatraman and Ramanujam 1987;
Zviran 1990).
Nevertheless, there isn’t any single model that is appropriate for investigative
and evaluating the potential facilitated by supply chain management information system
specifically.
Tim S. McLaren et.al. (2004) found existing generic IS capabilities
constructs such as “analysis” (Sabherwal and Chan 2001; Venkatraman 1989) did not
sufficiently discriminate between internal and external analysis, which subsequent
interviews showed to be an important distinction in SCM IS.
In addition, current researches of information systems abilities have various
shortages when used to model the abilities allowed by supply chain management
information systems particularly. For instance, vagueness in the current hypothesis
makes it indistinct whether or how a model of supply chain management information
14
systems abilities should differentiate among complicated concepts like functional
competence, functional elasticity, and interior or exterior business procedure harmony.
Thus, the goal of this paper is to develop an integrated model of SCM IS
capabilities that is supported by empirical evidence specific to SCM IS implementations.
The model developed integrates and enriches theories of competitive strategy, supply
chain management, and interorganizational information systems.
CHAPTER 2
LITERATURE REVIEW
2.1
Introduction
This chapter presents summary of previous studies on the following areas:

Supply Chain Management Information Systems (SCMIS)

Knowledge gap in Supply Chain Management Information Systems (SCMIS)

Advantages of Supply Chain Management Information Systems (SCMIS)

Usage of Supply Chain Management Information Systems (SCMIS)

Architecture of Supply Chain Management Information Systems (SCMIS)

Information exchange categories in SCM of production

Scope of modeling the SCM

Modeling of Supply Chain Management Information Systems (SCMIS)

Conclusion
16
2.2
Supply Chain Management Information Systems (SCMIS)
Supply chain management and information systems are firmly attached.
Execution of supply chain strategies will be extremely complicated with no supporting
of information systems. Simultaneously, a lot of progresses in information systems have
appear from necessities set by enterprises seeking cooperate with their members in the
supply chain area. For example, the progression of internet services has been driven by
a must for pliability and more open information systems interfaces to uphold
reconfigurability (Charu Chandra and Jānis Grabis, 2007).
The supply chain is an expression that utilized progressively by logistics
specialists.
Supply chain covers each attempt entangled with manufacturing and
delivering a last product, from the providers to the clients. the basic factors of the
supply chain procedure are source, plan, create and deliver which this factors completely
describe these attempts, that contain administer provide and request, sourcing raw
substances and components, production and assembly, storage and stock pursuing,
demand entrance and demand organization, allocation all over the channels, and
transference to the clients (Arrianto Mukti Wibowo, et.al. 1999).
Due to its broad range, supply chain management has to show complicate mutual
dependence, in effect making an extended enterprise that achieves over to the industrial
unit door.
Nowadays, substance providers, channel supply members and clients
themselves, all have important role in supply chain management. So that efficiently and
impressively administer a supply chain, and also to achieve competitive benefit, supply
chain management information system is more and more become very significant
(Arrianto Mukti Wibowo, et.al. 1999).
17
Supply chain management information systems are the information systems
between companies that employ information and communication technology to arrange
information inside and among the participator of a supply chain like the clients, sellers,
providers, and distributors included in the utilization and supply of a special product or
service. Companies frequently use a portfolio of supply chain management information
systems, which characteristically contain legacy systems linked by electronic data
interchange, packaged applications employing Web-based exchange of information or
ideas, or some other blend of information connection technology (Tim McLaren et.al.
2004). Figure 2.1 shows the flow of information and integrating and managing business
processes across the supply chain.
Figure 2.1
Flow of information and integrating business processes across the supply
chain (Cooper, M.C., Lambert, D.M., & Pagh, J. 1997).
18
2.3
Knowledge gap in SCMIS
Supply chain management information systems are progressively important to
the prosperity of many companies (Chopra and Meindl 2001; Kumar 2001 cited in Tim
McLaren et.al. 2004), but have received inadequate consideration in experiential
information system study (Subramani 2004, cited in Tim McLaren et.al. 2004). Few
researches have investigated the profits and abilities of various kinds of supply chain
management information systems such as Electronic Data Interchange (EDI) (Lee et al.
1999; Mukhopadhyay et al. 1995, cited in Tim McLaren et.al. 2004), electronic market
(Dagenais and Gautschi 2002; Kaplan and Sawhney 2000, cited in Tim McLaren et.al.
2004), or extended enterprise resource scheduling (Green 2001, cited in Tim McLaren
et.al. 2004) systems.
Nevertheless, there are few experimentally extracted models appropriate for
examining the scope of supply chain management information systems options.
Similarly, companies face complicated and dangerous determination analyzing and
choosing a suitable supply chain management information systems solution or
guaranteeing that their executed systems are organized with their competitive policies
(Reddy and Reddy 2001, cited in Tim McLaren et.al. 2004). While the improved
policies suitable model is operationalized particularly for supply chain management
information systems, the fundamental hypothesis and methodology could be accept in
coming studies for analyzing other kinds of information systems.
19
2.4
Advantages of SCMIS
Companies have identified the advantages of using supply chain management
information systems to synchronies information between the customers and producers of
a supply chain since the Electronic Data Interchange (EDI) discovered. Supply chain
management information systems are interring organizational methods used to
synchronize information among the customers, producers, distributors, and other
members in a supply chain (Tim S. McLaren, Milena M. Head and Yufei Yuan, 2004).
Current improvements in extra flexible e-business technologies have led to a
puzzling diversity of supply chain management information system approaches like
extended ERP systems, business-to-business electronic market, enterprise function
combination, and network services.
Forecasting which type of supply chain
management information system will best fit an organization’s policies is difficult by a
shortage of a theory for find out that how the different potentials of supply chain
management information system should be allied with an organization’s policies.
Usually, information systems execution researchers have advised matching information
system capabilities with a company’s functional needs, vital victory elements, or desired
structure (Tim S. McLaren, Milena M. Head and Yufei Yuan, 2004).
Nevertheless, with the intricacy of enterprise systems packs like supply chain
management information system, it has turn into more and more impracticable to choose
a system that will face to all of a company’s necessities or even to know what those
necessities are. As an outcome, companies may select a supply chain management
information system result based on its earlier achievements in other supply chains, with
no a full study of whether it strictly fits the necessities for sustaining the company’s
precise environment and policies.
20
The fit among supply chain management information system and the competitive
policies they maintain leftovers a significant so far often overlooked issue in the victory
of supply chain management information system executions (Tim S. McLaren, Milena
M. Head and Yufei Yuan, 2004).
The among of supply chain management information system options makes it
complicated for factories to define which answer is best for their exclusive
circumstances.
The complicatedly of cross enterprise supply chain management
information system necessities study, execution, and combination has resulted in regular
unsuccessful match among the strategic scopes of an organization and the abilities of
then information system executed.
For instance, Nike’s disturbed supply chain management information system
execution has been blamed on a difference among their particular necessities for nimble
allocation and the system’s further standardized abilities (Tim S. McLaren, Milena M.
Head and Yufei Yuan, 2004).
2.5
Usage of SCMIS
In the background of the supply chain information problem, the supply chain
management information system is employed to preserve information required for
mentioned and implementation of decision making models, to supply suitable data
sources, and to perform online decision making factors. The upkeep of the information
required for progression and accomplishment of decision making models principally
21
interest upkeep of storeroom, warehouse and models of information systems
(Charu Chandra and Jānis Grabis, 2007).
Decision making models employ information due to different sources in the
supply chain management system, different is demanded to supply mechanisms to guide
the necessitated data from their sources to decision making models. Although decision
making results are often described in the supply chain information system in an offline
way, on a case by case base, few of the decision making results are executed as online
decision making factors, like, a provider choosing factor. In this situation, the supply
chain management information system assists the execution of this decision making
factors and guarantees its accomplishment on an everyday basis. In this manner, there
are closed loop communication among transaction processing and supply chain
formation decision making, as illustrated in Fig. 2.2 (Charu Chandra and Jānis Grabis,
2007).
Figure 2.2
The closed loop interactions between transaction processing and decision
making. (Charu Chandra and Jānis Grabis, 2007).
22
The right-side of the loop in Fig. 2.2 describes the inventory replenishment
processes. In this case, suppliers are vigorously chosen base on case by case. Suppliers
are chosen in accord with decision making regulations elaborated during the supply
chain configuration studies and implemented in the integrated manner. The left-side
loop describes the supplier selection processes within the decision-making component of
the supply chain information system. Demand planning and inventory tracking are also
involved in some other transaction processing or decision-making processes
(Charu Chandra and Jānis Grabis, 2007).
The supply chain information system is demanded to uphold this type of
communication.
From the background of operating reconfigurable supply chains, the
supply chain management information system is accountable for processing transactions
inside distinct supply chain units, in addition to between these units. It also has to
uphold the combination of new supply chain units (Charu Chandra and Jānis Grabis,
2007).
2.6
Architecture of SCMIS
The structure of supply chain management information systems displays the
chief factors of this system. It draws upon the service-oriented architecture reference
model (Er, 2005 cited in Charu Chandra and Jānis Grabis, 2007). This kind of structure
is creating to predict changes in the system, which is vital to uphold supply chain
reconfigurability.
The structure demonstrates accentuate appearance of the service
oriented structure significant to supply chain management with a scope on decision
making necessities (Charu Chandra and Jānis Grabis, 2007).
23
Figure 2.3
Architecture of the supply chain management information system
(Charu Chandra and Jānis Grabis, 2007).
The central components of the architecture (Fig. 2.3) are business processes and
the decision-making system.
The decision making system composed of different
analytical applications. It, together with the business intelligence factor, supplies
instruments for decision making objective. The business process factor make possible
incorporation of decision making factors to the generally supply chain management
information system.
It supplies a method for assembling business processes
(Charu Chandra and Jānis Grabis, 2007).
Factors and applications of the supply chain information system can be requested
while implementation of the business processes. Information flows between factors and
applications are as well determined by method of an exchange of messages. It consents
to the web abilities business process execution language (or BPEL, is a business process
modeling language that is executable.
The origins of BPEL can be traced
24
to WSFL and XLANG. It is serialized in XML and aims to enable programming in the
large. The concepts of programming in the large and programming in the small
distinguish between two aspects of writing the type of long-running asynchronous
processes that one typically sees in business processes). (Thatte et al. 2003, cited in
Charu Chandra and Jānis Grabis, 2007).
The business integration factor supplies real time information exchange between
factors and applications. It fundamentally performs cross functional and cross enterprise
business procedures.
The information combination factor connected the decision
making model system with the other components of the supply chain information system
to supply connect to set aside information sources and targets. It is also accountable for
guaranteeing information firmness across enterprise applications (Charu Chandra and
Jānis Grabis, 2007).
Extraction Transformation Loading (or ETL is a process in data warehousing that
involves extracting data from outside sources, transforming it to fit business needs
(which can include quality levels), and ultimately loading it into the end target, i.e. the
data warehouse. ETL is important, as it is the way data actually gets loaded into the
warehouse. This article assumes that data is always loaded into a data warehouse,
whereas the term ETL can in fact refer to a process that loads any database. ETL can
also be used for the integration with legacy systems. Usually ETL implementations
store an audit trail on positive and negative process runs (Charu Chandra and
Jānis Grabis, 2007).
In almost all designs, this audit trail is not at the level of granularity which would
allow reproducing the ETL's result if the raw data were not available) instruments are
principally employed to supply data exchange abilities. Technical methods like data
hubs are utilized to support and modernize master data across enterprises and supply
25
chains. The final customer admission to business procedures and to the decision making
system is furnished by the supply chain management gateway, which can be composed
from current modules and present an individualized consumer interface (Charu Chandra
and Jānis Grabis, 2007).
In the situation of reconfigurable supply chains, the supply chain administration
entrance can be proportionately easily adjusted to represent information and procedures
relevant to the present condition of the supply chain arrangement. Enterprise Resource
Planning, legacy systems, specialist applications, and the other enterprise applications
principally was use as data origins in the situation of supply chain formation problems.
These applications can as well be invoked from business procedures composed to
combine online decision making ingredients.
Service and ingredients are shown
individually (Charu Chandra and Jānis Grabis, 2007).
All major salesmen of Enterprise Resource Planning systems have modules for
supply chain interaction processing, and these systems are being reestablished to consent
to the necessities of the service oriented approach to enterprise computing. In the
background of supply chain formation, the main application of progression tools is
elaboration and upkeep of models of the supply chain information system.
These
models are utilized to make easy progress of decision making models. The structural
design of the supply chain information system and the structural design of the supply
chain formation decision support system portion numerous factors, for example, ETL
instruments are employed in both situations (Charu Chandra and Jānis Grabis, 2007).
26
2.7
Information exchange categories in SCM of production
The SCM information exchange categories between the enterprise control
domain and the operations control domain are defined (Gerhard Greeff and Ranjan
Ghoshal, 2004). The object models are specified in Figure 2.4
Figure 2.4
2004).
Production operations model (Gerhard Greeff and Ranjan Ghoshal,
27
2.7.1 The production information exchange categories are the following:
Product definition information
Product life cycle management information exchanged on how to make a product.
Production capability information
Information exchanged on required and available production resource capability and
capacity.
Production schedule information
Information exchanged on what to make when and where to make it and resources to
use.
Production performance information
Information exchanged on what was made and what resources were used. This includes
feedback information needed to respond to the business system request to make product
(Gerhard Greeff and Ranjan Ghoshal, 2004).
2.8
Scope of modeling the SCM
The characteristics of the scope of the supply chain modeling are:

Span across multiple businesses and organizations.

Simulate multiple levels of manufacturing systems.

Use a hybrid push-pull distribution system for product distribution.
28

Comprise multiple functional modules, such as simulation engines, display
systems, and analysis tools (Y. Tina Lee, Charles McLean and Shigeki Umeda,
2008).
The following manufacturing activities are within the scope of the supply chain
modeling:

Production planning, scheduling, and control.

Transportation planning and scheduling.

Materials/parts/products flow within the final assembly plant (and possibly
suppliers).

Inventory control.

Cost control.

Data communications between business functions (Y. Tina Lee, Charles McLean
and Shigeki Umeda, 2008).
The chain in the modeling includes supply chain members, information flows,
and product flows. There are seven major types of organizational units included in the
supply chain: a supply chain headquarters, parts suppliers, warehouse, retailers,
distributor, a final assembly plant, and a transportation network. Figure 2.5 shows the
configuration of this supply chain modeling. The modeling system consists of suppliers,
manufacturing centers, warehouses, distributors, and retailers, as well as raw materials,
parts, finished products, and outsourcing companies, such as transportation providers (Y.
Tina Lee, Charles McLean and Shigeki Umeda, 2008).
The headquarters manages the information flows and provides the products to the
customers through the retailers. The final assembly plant assembles finished goods from
the components provided by the suppliers. At least two production lines within the
assembly plant will be modeled in detail.
The final assembly plant manufactures
29
products by using the parts provided from the parts suppliers; the finished products are
then sent to the warehouse or to the distributor. The warehouse stores inventory and
supplies products to the retailers. Other supply chain members, including the part
suppliers, distributors, retailers, and transportation providers, may be independent firms
(Y. Tina Lee, Charles McLean and Shigeki Umeda, 2008).
The part suppliers provide manufacturing parts to the final assembly plant. The
distributors provide finished products to the retailers as required or according to other
independent contracts. The retailers receive the finished products from the warehouses
or from the distributors, and the finished products are then shipped to the customers.
The transportation providers deliver the parts or finished products to the required
destinations. This supply chain model uses a hybrid push-pull distribution system (Y.
Tina Lee, Charles McLean and Shigeki Umeda, 2008).
Figure 2.5
The configuration of this supply chain modeling (Y. Tina Lee, Charles
McLean and Shigeki Umeda, 2008).
30
Result of performing a communication data flow analysis of the supply chain
modeling showing that a set of data requirements used to communicate among the
supply chain members. These data requirements are a set of messages or objects; they
are grouped into five units of functionality: headquarters, manufacturing plant,
warehouse/distributor, transportation network, and retailer.
Figure 2.6 shows the
overview of the information model of the supply chain (Y. Tina Lee, Charles McLean
and Shigeki Umeda, 2008).
Figure 2.6
overview of the information model of the supply chain (Y. Tina Lee,
Charles McLean and Shigeki Umeda, 2008).
31
A transportation network is represented by three sets of information:
transportation status, transportation order, and truck dispatch. A transportation order is
represented by an order identification (id), a pickup location id, an order originator id, a
tracking number, a delivery location, a status code, a request delivery date, a request
pickup date, and a set of shipment data including a list id, total weight, cost, container
count number, and value (Y. Tina Lee, Charles McLean and Shigeki Umeda, 2008).
2.9
Modeling of SCMIS
Its long time that, researchers have recommended and discussed models for
investigate the appropriate of competitive policies with different high stage information
systems concepts. Nonetheless, the growth of itemized equipped models for evaluating
the strategic appropriate of the abilities capable by a company’s information system has
been prevented by restrictions of the hypothesis occupied (Ciborra 2000. Cited in Tim
McLaren et.al. 2004).
The expression supply chain management is frequently employed as a synonym
for planning, execution, procuring or some blend of these actions. Successful supply
chain management relies on across a stage of faith among partners, particularly in the
case of quickly developing supply chain architectures. Obviously distinct and severely
imposed security strategy has a significant position in faith creating. Clearly,
information systems solutions must also uphold all general information security
necessities. A high level of information systems accessibility is necessary to uphold
cooperative decision making and execution of decisions(Charu Chandra and
Jānis Grabis, 2007).
32
The strength of product and flow of information can alter rapidly, together with
alters create in the supply chain formation. Information systems solutions should be
capable of fit these alters Functional necessities for supply chain information systems
depend across a particular supply chain formation problem. These necessities, together
with the previous distinct key necessities, ascertain the design of the supply chain
information system. Numerous overall qualities of such a design can be recognized.
Information system solutions are creating by pairing hardware, connections, and
software (Charu Chandra and Jānis Grabis, 2007).
2.9.1
Decision Making Models
Information systems solutions are incongruous, both inside an enterprise and in
every part of the supply chain. The interior incongruousness is caused by utilizing
different applications for solving different supply chain management problems. For
example, decision making is presented utilizing an advanced scheduling system while
determinations are executed employing the Enterprise Resource Planning system of
different supplier because an enterprise efforts to utilize highest quality selections
solutions (Charu Chandra and Jānis Grabis, 2007).
The external supply chain incongruousness is because of supply chain partners
utilizing different information systems structure design, which are despite powerfully
affected by local tradition. It is significant to notice that incongruousness is feature to
all stages of information system solutions. Different software packages are utilized at
the execution stage and different platforms and a means of communication are utilized at
the infrastructural level (Charu Chandra and Jānis Grabis, 2007).
33
Reconfigurable supply chain management information systems employ common
communication channels and the web, especially, widely.
These communication
channels present a fundamentally higher level of elasticity and lower expense although
up to date technologies can supply a sufficient stage of safety. Web based access to
supply chain management information systems supplies a high stage of approachability.
In the case of supply chain formation problems, this characteristic upholds cooperative
decision making (Charu Chandra and Jānis Grabis, 2007).
Different kinds of information systems are utilized in supply chain management.
Information systems entangled with supply chain formation decision making uphold and
execution can be sorted.
for instance Independent wide-ranging purpose decision
making model are utilize to progress and solve different kinds of decision making
problems, counting the supply chain formation problem.
Another example is the
individual problem oriented decision making model software contains particular
solutions for specific decision making problems Examples of such packages are LORD
and modules of i2 (Charu Chandra and Jānis Grabis, 2007).
Decision making model implementations are complement with different service
components, principally for information handling, administration of experiments, and
appearance of results. Having the knowledge of information flows and procedures
functions in the firms is necessary for any decision-maker modeling effort. Usually,
these information flows are explained in terms that are detailed to particular decisionmaker modeling methods. On the other hand, in the varied supply chain environment,
that results in mainly varied and often mismatched data functions (Charu Chandra and
Jānis Grabis, 2007).
34
2.9.2
Information Modeling
Information modeling is an essential part of the information systems modeling
procedure, where models undergo different stages of elaboration starting with common
necessities for information systems down to semi feasible models straight used in the
execution stage (Charu Chandra and Jānis Grabis, 2007).
The major point of these models is to make simple the progress and upkeep
complexity of huge information systems by identifying the system using fewer abstract
concepts.
That is particularly significant for controlling user necessities to system
developers. Likewise, information modeling can be used to explain difficult decisionmaking model problems.
Also the expressive potential of information modeling
methods helping to know the problem, developed information models present a
connection among decision-making model and the enterprise wide information system
(Charu Chandra and Jānis Grabis, 2007).
Information modeling discovers many functions that can be used in supply chain
modeling and different modeling methods. One of the major purposes of using
information modeling is to present a comparatively simply comprehensible
demonstration of a problem. Numerous information modeling methods are usually
applied to gain an inclusive demonstration of the problem. The alternative of methods
and modeling concepts depends ahead of purposes of the information modeling function.
In the structure of supply chain arrangement, several purposes can be recognized
(Charu Chandra and Jānis Grabis, 2007).
35
Information modeling techniques are used to achieve a better understanding of a
specific decision-making model problem. They can be particularly useful for describing
the decision- making setting. This approach is being used in relative to modeling though
it’s not often measured in relative to investigative modeling (Charu Chandra and
Jānis Grabis, 2007).
2.9.3
Decision making Model and Information Model
If decision-making is to be executed regularly, a software application have to be
progress. Information modeling is a necessary fraction of about any software progress
plan. Decision-making models link to information presented from other branches of the
information system and can also use some functions presented by the supply chain
information system. Information modeling is used to design information among factors
and recognize existing functions (Charu Chandra and Jānis Grabis, 2007).
The major problem is guarantee that alters made in both decision-making factor
and supply chain information system are correctly portrayed in related factors. In this
situation of execution the decision-making factors, information modeling techniques are
used in an alike way as in the progress of information systems. This approach is mostly
appropriate in decision-making factors are executed using all purpose programming
languages.
If a particular decision-making model circumference and programming
languages are used, application of information modeling is not general and the most of
existing tools do not support such an approach (Charu Chandra and Jānis Grabis, 2007).
36
Modeling of the supply chain arrangement problem is considered in the
information system progress structure (Fig. 2.7) in order that uphold the integration of
decision making model factors and the other components of the information system.
The process of creating a model describing the problem to be solved provides additional
information systems’ progress procedures with primary input information, like common
supply chain explanation and modeling purpose (Charu Chandra and Jānis Grabis,
2007).
Figure 2.7
Interactions between information systems development and decision
modeling (Charu Chandra and Jānis Grabis, 2007).
Methods, like utilizes case modeling can be utilize to identify necessities. For
the supply chain arrangement problem, important necessities for the information system
are implementation of decision-making procedures and integration of decision-making
consequences through the supply chain information currents (Charu Chandra and
Jānis Grabis, 2007).
37
Examination and design stage, mechanisms for facing to these necessities.
Technique and tool definite modeling and object oriented modeling (or OOM, is
a modeling paradigm mainly used in computer programming. Prior to the rise of OOM,
the dominant paradigm was functional programming, which emphasized the use of
discreet reusable code blocks that could stand on their own, take variables, perform a
function on them, and return values) are illustrious (Charu Chandra and Jānis Grabis,
2007).
The object oriented model of the supply chain arrangement problem is enlarged
to illustrate the decision making problem in relative on the whole of the supply chain
management information system.
To attain that, the model is enlarged utilizing
perceptions and models definite in the supply chain warehouse.
That progresses
consistency, integrity, and progress pace of the model. The technique and tool definite
modeling related to requirement of the logic of decision making models (Charu Chandra
and Jānis Grabis, 2007).
For example, though information required for solving an optimization problem
are illustrated utilizing object oriented modeling, the optimization model by his own is
illustrated utilizing particular objective mathematical programming languages (An
operations research technique that solves problems in which an optimal value is sought
subject to specified constraints.
Mathematical programming models include linear
programming, quadratic programming, and dynamic programming) (Charu Chandra and
Jānis Grabis, 2007).
If models are appropriately described, model producers can be utilized to
implement executable models. The object oriented models enlarged sustain connecting
the decision modeling factors with the supply chain management information system.
Modifies prepared someplace in the information system in reaction to discrepancies in
38
the operating environment or other components would be broadcasted to collaborated
decision modeling factors (Charu Chandra and Jānis Grabis, 2007).
The major differentity among the progress of enterprise wide information
systems and decision making factors is that the second are utilized by a little outturn of
specialist professionals. Usage of information modeling for decision modeling reasons
is also powerfully manipulated by interplays among decision modeling and other
modeling endeavors at an enterprise (Charu Chandra and Jānis Grabis, 2007).
There are two cases that we can separate them from each other:

First that the decision modeling is executed separately from information system
modeling procedures in an enterprise.

Second that the decision modeling is dependent upon existing enterprise
information system models. In following we explain these.
Autonomous Decision making Model is the customary case when decision
models are progressed base on a case by case (Charu Chandra and Jānis Grabis, 2007).
Model particular modeling concepts are employed. Design and illustration of the
modeling problem and information necessities are minor and progressed information
models, if any, are not adequately elaborated. If beforehand progressed information
models are not accessible, then autonomous decision modeling is earlier by scoping only
on matters straight related to the decision making problem. Nevertheless, subsequent
this approach, no foundation will be formed to decrease the workload of prospect
decision making model behavior and execution of decision making model factors
(Charu Chandra and Jānis Grabis, 2007).
39
The approach is possible for unadulterated arrangement problems when
influences among the decision making model and other parts of the information system
are insignificant. Though, the raise in the scope goes to hardship in combine other
factors and distinguishing related information in the enterprise information system.
Models advanced while autonomous decision making model do not assist execution of
decision making factors and their combination into the supply chain-wide information
system (Charu Chandra and Jānis Grabis, 2007).
Supplementally, modernizing of models is difficult as no formalistic relations
among decision making model and other parts of the information system are recognized,
and tracking of changes can be mechanized. Beginning at the information modeling
outlook, decision making model base on a case by case does not expedite the reutilize of
existent models, compromises persistence of models progressed, present limited
trackability, and does not present execution assists (Charu Chandra and Jānis Grabis,
2007).
Decision making Model dependent upon presented Information Models of
decision making factors are progressed founded upon presented supply chain wide
information systems models, indirectly suggest that the same thoughts are used in
decision making oriented information models, like in the supply chain wide information
system. Furthermore, parts of information models can be composed from presented
information models. That permits decreasing model progress workload and enhancing
modeling steadfastness. Information models progressed for decision making objectives
can be attached with analogous factors in the supply chain wide information systems
(Charu Chandra and Jānis Grabis, 2007).
40
That permits the tracking of replaces transpiring in the supply chain information
systems and the modernizing of decision making models. Execution of decision making
model factors as an element of the supply chain wide information system can be simple
and easier to understand.
Problems with this approach are amplified preliminary
workload, the problem of putting simultaneously information technology and decision
making employees, illustration of particular decision making features, and combination
of both rationally and technically information models (Charu Chandra and Jānis Grabis,
2007).
There is a huge diversity of information-modeling methods. Whit pursues the
customary information systems progress life-cycle, the first step is necessities
engineering. This step is utilized not only to recognize necessities of the projected
information systems, but also to achieve a more common perception of an enterprise or
set of enterprises, like the supply chain and its dealing. Procedure modeling, perception
modeling and scopes modeling are often utilized modeling methods at this step
(Charu Chandra and Jānis Grabis, 2007).
2.9.4
Perception Modeling
Supply chain arrangement scopes are supposed to be given at the start of the
arrangement procedure. Thus, scope modeling techniques are not assumed. Perception
modeling is essential if the supply chain is recognized from the beginning or an
arrangement problem solving is try for the initial time. Besides, further detailed data
modeling approaches are able to be utilized (Charu Chandra and Jānis Grabis, 2007).
41
2.9.5
The Unified Modeling Language
The problem domain analysis (the process of creating a model describing the
problem to be solved) is pursued by application domain analysis and plan. The Unified
Modeling Language has turn into one of the major information modeling tools for these
steps. It contains an amount of interconnected models. Unified Modeling Language
recognizes the rules governing the arrangement of instructions in a programming
language modeling while it does not administrate the model growth procedures. Hence,
it can be utilized for facing up to a various series of problems (Charu Chandra and
Jānis Grabis, 2007).
Whole Unified Modeling Language plans are not equally significant for supply
chain arrangement and decision making in universal. For example, the use case plan,
which illustrates usefulness from the end utilize outlook, generally is not significant due
to the fact that the amount of users for decision making model factors prevalently is
trivial. The static arrangement illustration is one of the principal appearances of object
oriented modeling held up by Unified Modeling Language (Charu Chandra and
Jānis Grabis, 2007).
Likewise, as conceptual models, class diagrams portray subjects characterizing a
problem domain. In the supply chain background, the class diagram is chiefly useable
for data modeling objectives. Likewise entity relation diagrams can be utilized for data
modeling procedures. These diagrams are particularly applicable for portray decision
making model data base and distinguishing data sources in the supply chain
management information system.
Anyway, the class diagram can portray more
information than entity relation diagrams (Charu Chandra and Jānis Grabis, 2007).
42
Hence, the utilizing of class diagrams for data modeling objectives is supported.
Class diagrams are also consequential for preparing procedure combination general
ability and supporting execution of decision making model factors (Charu Chandra and
Jānis Grabis, 2007).
Mechanized alteration tools among class and entity relation diagrams are existed.
The Integrated definition language is information modeling approach surrounding
instruments for both data and procedure modeling.
It is common for many
manufacturing applications. A benefit of Unified Modeling Language over Integrated
definition language is its combination with software progress procedures. Itemized
design and forthright execution assistances are prepared by such Unified Modeling
Language diagrams as state, sequence, and deployment diagrams (Charu Chandra and
Jānis Grabis, 2007).
The state and sequence diagrams present dynamic interactions between objects.
The deployment diagram provides a high-level description of interactions among
components. These models are needed principally for attaining the fourth purpose of
employing information modeling for supply chain decision making To corroborate
combination of decision making factors with other part of the information system,
decision making model factors require to be formed subsequent pleasant software
engineering performs, with a highlighting on being modular
(Charu Chandra and
Jānis Grabis, 2007).
A few of the modeling techniques have been useable to modeling supply chains
or allocated manufacturing systems. Decision making model factors with imitationbased decision making abilities are frequently advanced utilizing the object oriented
approach. Nonetheless, imitation models in a general manner are separate from other
parts of the information system. A superior standard level of wholeness has been
43
attained in the modeling of manufacturing systems (Charu Chandra and Jānis Grabis,
2007).
Al-Ahmari and Ridgway (1999, cited in Charu Chandra and Jānis Grabis, 2007)
employ the GRAI enterprise modeling technique for illustrative high level analysis of
the manufacturing system. While their thesis scopes on achieving the simulation model
as a system scheduling instrument, the procedure model also could be employed for
execution of the manufacturing automation system and the other information systems.
Gayialis and Tatsiopoulos (2004 cited in Charu Chandra and Jānis Grabis, 2007) also
use GRAI, along with the ARIS system structural design to describe the vehiclescheduling problem.
The models acquired are employed to chosen suitable geographical information
systems and enterprise resource planning systems for execution of the decision making
model factor. Kang and Kim (1998 cited in Charu Chandra and Jānis Grabis, 2007)
develop an integrated modeling framework for a manufacturing system, where
representations of physical processes and information systems are integrated. The object
oriented approach is accustomed to illustrate the static structure of the manufacturing
system. There are as well numerous works on object oriented modeling in the supply
chain formation structure.
2.9.6
Process Modeling
Procedure modeling can be accustomed to obtain all four of the stated
information modeling application purposes. However, explanation and investigation of
44
the decision making problem is the largest amount of traditional application objective.
The supply chain formation procedure modeling held up by two significant information
sources:

First is the supply chain operations reference model and;

Second is the enterprise resource planning reference model.
Reference models are significant to attain a general comprehending of supply
chain procedures (Charu Chandra and Jānis Grabis, 2007).
2.9.7
Supply Chain Operations Reference Model
The Supply Chain Operations Reference Model was recommended by the Supply
Chain Council as a reference model for depicting supply chains. The reference model
clarifies expected, standard supply chain management procedures, and execution metrics
and best practices connected to these procedures. It has arranged according to rank
structure comprise of three levels and a fourth execution stages, which is provide
additional details for particular supply chain management problems (Charu Chandra and
Jānis Grabis, 2007).
The first level illustrates general supply chain management procedures, namely
Plan, resource, prepare, convey and given back. In additional, the Enable procedures
classify is contained to show procedures of make it ready, preserving, and administering
the information or connections indispensable for the implementation of other
procedures. These principal procedures are more disintegrate in procedure categories,
45
which in turn are disintegrate to procedure main component (Charu Chandra and
Jānis Grabis, 2007).
A depiction of each procedure component contains a short explanation, metrics
for all of the regular execution characteristics, most successfully practices describe by
their characterize, procedure inputs, and procedure outputs. Procedures supplying inputs
and consumption outputs are recognized.
The Supply Chain Operations Reference
model explains trustworthiness, reactiveness, pliability, expense and assets as standard
execution quality, characteristics. The supply chain operations reference model chiefly
concentrates practices appropriate for supply chain execution and accomplishment while
decision making methods are not covered.
The supply chain operations reference
model, also another time, can be employed for two objectives:

First to illustrate the supply chain under consideration;

And second to comprehend procedures related to supply chain formation.
(Charu Chandra and Jānis Grabis, 2007).
If the supply chain operations reference model be accustomed to illustrate supply
chain formation, supply chain operations reference procedures are employed as creating
blocks to improve an illustrative model. Like an access has been taken by Huang et al.
(2005, cited in Charu Chandra and Jānis Grabis, 2007) which composed a supply chain
from procedures determined in the Supply Chain Operations Reference model utilizing a
client create formation instrument. This illustrative model presents either the present
supply chain or a visualized supply chain arrangement.
The formation model
advantages of employing widely approved supply chain modeling concepts. However, it
shortages in the stage of detail wanted for additional modeling and execution objectives.
Hence, another modeling layer is necessary (Charu Chandra and Jānis Grabis, 2007).
46
Supply chain broad employment and suitability of this layer would be extremely
enhanced by using a broadly approved procedures modeling technique, like IDEF or
Event Process Chains. As mentioned before, the Supply Chain Operations Reference
model also can be employed to progress comprehending of supply chain formation
problems (Charu Chandra and Jānis Grabis, 2007).
These procedures principally help in recognition of issues to be mentioned
throughout supply chain formation decision making and in recognition of suitable
strategies like cooperative scheduling, outsourcing, exchange of data and third person
services. Employ of Supply Chain Operations Reference metrics substantially facilitates
explanation of the supply chain formation focus. For example, a broker can recognize
pertinent expense factors (Charu Chandra and Jānis Grabis, 2007).
Furthermore, a broker can effort to structure the generally supply chain
scheduling procedures in accord with the Supply Chain Operations Reference
guidelines, and describe position of formation decision making in this procedure. Table
1 includes a few execution processes because these are more relevant to operational
planning and daily supply chain execution. Nevertheless, a lot of these procedures can
be employed if a supply chain formation simulation model is created (Charu Chandra
and Jānis Grabis, 2007).
2.9.8
Integration definition for information modeling (IDEF1X)
IDEF1X is the semantic data modeling technique. The IDEF1X technique was
developed to meet the following requirements:
47
1)
Support the development of conceptual schemas.
The IDEF1X syntax supports the semantic constructs necessary in the development of a
conceptual schema. A fully developed IDEF1X model has the desired characteristics of
being consistent, extensible, and transformable.
2)
Be a coherent language.
IDEF1X has a simple, clean consistent structure with distinct semantic concepts. The
syntax and semantics of IDEF1X are relatively easy for users to grasp, yet powerful and
robust.
3)
Be teachable.
Semantic data modeling is a new concept for many IDEF1X users. Therefore, the
teachability of the language was an important consideration. The language is designed
to be taught to and used by business professionals and system analysts as well as data
administrators and database designers. Thus, it can serve as an effective communication
tool across interdisciplinary teams.
4)
Be well-tested and proven.
IDEF1X is based on years of experience with predecessor techniques and has been
thoroughly tested both in Air Force development projects and in private industry.
5) Be automatable.
IDEF1X diagrams can be generated by a variety of graphics packages. In addition, an
active three-schema dictionary has been developed by the Air Force which uses the
resulting conceptual schema for an application development and transaction processing
in a distributed heterogeneous environment. Commercial software is also available
48
which supports the refinement, analysis, and configuration management of IDEF1X
models (itl.nist.gov. 1993 December 21).
2.9.8.1 The basic constructs of an IDEF1X model are:
1) Things about which data is kept, e.g., people, places, ideas, events, etc.,
represented by a box;
2) Relationships between those things, represented by lines connecting the boxes;
and
3) Characteristics of those things represented by attribute names within the box
(itl.nist.gov. 1993 December 21).
IDEF1X methodology can show the communication data flow of the supply
chain simulation, and after that we can analyze the data requirement between supply
chain members. This analysis focuses on the minimal set of data that needs to be
exchanged between members of the supply chain. As a result, a set of data requirements
used to communicate among the supply chain members has been identified. Local data
required by supply chain members is not contained within the requirements list.
These data requirements are a set of messages or entities; they are grouped into
nine units of functionality: Generic Order, Generic Order Response, Shipping Order,
Shipping Order Response, Product Forecast, Product Forecast Response, Manufacturing
Production Report, Truck Dispatch Order/Log, Shipment Report, Transport Request, and
Transport Request Response.
The information model is presented in the IDEF1X
diagrams (Y. Tina Lee and Shigeki Umeda, October 01, 2002).
49
Figure 2.8
Sample of IDEF1X diagram (Y. Tina Lee and Shigeki Umeda,
October 01, 2002).
2.10
Conclusion
We learnt from previous findings that supply chain management information
systems are progressively important to the prosperity of many companies. The
advantage of SCMIS among others is that it synchronizes information among the
customers, producers, distributors, and other members in a supply chain. Albeit the
advantages SCMIS has to offer there are only a few experimentally extracted models
appropriate that examines the scope of supply chain management information systems
options.
50
Among the investigations carried out on SCMIS is the EDI the profits and
abilities of various kinds of supply chain management information systems, electronic
market or extended enterprise resource scheduling systems.
Besides that, we have also looked at the usage and architecture of SCMIS on
Finding 2.4 and 2.5 Modeling is an essential part of the SCMIS. Among the models that
have been described in this chapter are: a) Decision Making Models, b) Information
Modeling, Perception Modeling, c) The Unified Modeling Language, d) Process
Modeling, and e) Supply Chain Operations Reference Model. These models undergo
different stages of elaboration starting with common necessities for information systems
to feasible models that will be used in the execution stage.
CHAPTER 3
RESEARCH METHODOLOGY
The research methodology of the present study will discuss the following areas:

Introduction

Profile of Vehicle Axle Manufacturing Company (VAMCo.)

Supply Chain Management Information System in VAMCo.

Current flow of information in the factory with Microsoft Visio 2003

SCMIS Modeling

Data Requirements for SCMIS Modeling

Data Collection

Designing VAMCo. database.

Problems of developing the VAMCo. database

Data flow diagram (DFD)

Entity relationship diagram (IDEF1X)

Database management system (DBMS)

Operation manual

Running the database
We will looking at each area in turns.
52
3.1
Introduction
The Research Methodology section of this study presents data on the use of
SCMIS in one of the manufacturing companies in Iran. Therefore, the data that will be
presented in this study are on the basis of a case study. The following parts of this
chapter will be looking at VAMCo. company, a vehicle part manufacturing company in
Iran, in which it becomes the scope of this research. We will also be looking at various
data collection and how the problems are solved with the use of Electronic Data
Interchange (EDI) to simplify the system. The Figure 3.1 summarizes how the present
study is carried out.
53
Flow Chart Of Research Methodology
Start
Finish
Background
Information
Implementation
YES
Problem
Statement
Validation
Objective
Customize The
System To The
Company
NO
YES
Scope
Verification
NO
Assumption
Construct The System
Using EDI To Improve
The Problem
Significance Of
The Research
Developing The Model
Of Supply Chain
Management Information
System
Visit Company
Figure 3.1
Flow chart of research methodology (Author, 2010)
54
3. 2
Profile of Vehicle Axle Manufacturing Company (VAMCo.)
In this research we will be evaluating a case study in which I have developed a
VAMCo. database to be used in one of the vehicle parts manufacturing companies in
Iran. The company that has agreed to cooperate with me in this study is Vehicle Axle
Manufacturing Co. (V.A.M.Co.).
This company was established in 1986 and it is
located in Nazar Abad, an industrial city in Iran. In 1996, the Industrial Ministry of Iran
through Industrial Development and Renovation Organization (I.D.R.O) decided to
change the policy and management of the company. They also decided to change the
company’s product to front, rear, independent, portal axles and cover of axles for 3 main
ranges of commercial vehicles as follow:
A- Light vehicles such as mini buses, light trucks.
B- Buses such as intercity buses, city buses, coaches.
C- Medium and heavy trucks.
In this research we will be only evaluating the cover of light rear axle
manufacturing (Figure 3.2). For this product, the company takes its raw materials from
three manufacturing companies:
1) The company that supplies roll sheet size 20 from Folad-e-Mobarakeh,
2) The company that supply welds nuts in size 10 from Tehran bazaar and,
3) One pressing required part from a company located in Dolat Abad,
Major customers of VAMCO Company are: Mehvar Karan-e- Kosha co., Behran
Mehvar Saipa co. and Gama Khodro co.
55
Figure 3.2
3.2.1
Cover of light rear axle (VAMCo., 2010).
Bill Of Material (BOM)
Bill of Materials is a list of the raw materials, subassemblies, intermediate
assemblies, subcomponents, components, parts and the quantities of each needed to
manufacture a final product. The bill of material of rear axle cover for VAMCo. can be
found in figure 3.3.
56
Bill Of Material (BOM)
Cover
Rear Axle Cover
1
22
Role
Role Sheet
Sheet 20
20
size
Press
Press Part
Part
Figure 3.3
3.3
1
12
Welded Nuts
Nuts
Welded
Bill of Material (Author, 2010)
Supply Chain Management Information System in VAMCo.
The objective of this research is to improve the data flow between members in a
supply chain system. For this purpose, I have developed a database called VAMCo.
57
database in which after a certain period of revising and improving the new system, we
expect to see a decrease in terms of costs and data flow time. This study aims that with
the development of such SCIMS software increases the efficiency of the work tasks in
the manufacturing company Business process and layout of the manufacturing company
can be found in Figure 3.4 and Figure 3.5.
Business Process
VAMCO
Suppliers
Customers
Figure 3.4
Business process for rear axle cover (Author, 2010)
58
Figure 3.5
Factory Layout (VAMCo., 2010)
59
3.4
Current flow of information in the factory with Microsoft Visio 2003
Figure 3.6 shows the flow of information in the factory before developing the database.
Current Flow of Information In the Factory
Receive the customer order
Raw material order
Order Forecasting
Factory
First supplier
Figure 3.6
3.5
Second supplier
Third Supplier
Current flow of information in the factory (Author, 2010)
SCMIS Modeling
The first step is designing a model for information system in supply chain to
identify the supply chain elements. Then, the input and the output measurement are
60
carried out and the perceptual models are shaped. After that the quantitative step starts
in which this step consists of working on technical problems like progression and
evaluation of mathematical and simulation models and control theory techniques.
3.6
Data Requirements for SCMIS Modeling
To run and to model SCMIS, three different levels are involved.
These levels
consist of tactical, operational and strategic. The focus of this research is on strategic
modeling of a supply chain management information system. Strategic decisions are
long term decisions and they are connected to the company’s strategy. They usually
engage most of the supply chain members. One of the basic necessities for supply chain
implementation is visibility of appropriate information in the exact time and in the exact
arrangement.
In stock control strategy these elements might be used at the level of inventory
safety, reorder point, stock level of finished goods, raw material and middle parts and
inventory location. When it comes to purchase and logistics significant factors are like
provider lead time, supply lot size, provider capacity, purchase purview and purchase
time. Significant order information consists of parameters such as due date, preference,
start and end information and order pattern. Strategic information consists of order
control policies and dispatch policies.
61
In the design modeling step of the supply chain the first mission is to find the
most significant variables like inputs and outputs and the effect of these variables on the
supply chain system. Next, to design the mentioned prototype we will use simulation in
the physical and information parts of SCMIS. At the end of the modeling, we will
present the key parameters to evaluate this simulation system. We will try to design an
efficient information system for SCMIS which utilizes access and Ms Project software
that will show the flow of information and regard to that concludes the final result.
3.7
Data Collection
To develop the VAMCo. database these data are collected:
1. Production data:
Production rate, part number, product number, product price, product type, part
type.
2. Customer data:
Customer order, due date, order date, order number.
3. Supplier data:
Part description, supplier list, part price.
4. Information flow
Information within supplier, manufacture and customer
62
3.8
Designing VAMCo. database
VAMCo. database created with Microsoft Access, and its utilize to improve the
flow of information between suppliers, manufacture and customers.
This database
should be installing in server inside the VAMCo. factory, regard to that the only way to
access the database is by VAMCo. operators and customers can only enter their data by
internet but. Customers can order online at any time they want via using internet, and
the order data will automatically goes to the database and after less than 8 hours their
order will be procedure in VAMCo. factory. The users of the database are the customers
of rear axle cover, VAMCo. manufacturing company and the suppliers of rear axle cover
for the VAMCo. company.
This database helps to improve the flow of data and
information between the supply chain members of VAMCo..
3.9
Problems associated with developing the VAMCo. database
Developing this database and installing in VAMCo. factory needs cooperation
between supply chain members, it was too hard that convince the supply chain members
that this database will improve their manufacturing cycle and it makes a lot of
decreasing in cost of stock out and inventory. I spend one mount in this factory to
collect the required data and develop this database, but I could only convince one of
suppliers and the factory to give me the require data and try this database on their
company, until today I receive the customer’s order and production of the factory every
day.
63
Developing this database showed that utilizing the information system in supply
chain management, helps the manufacturing company to decrease the cost of production,
and also helps to the customers and suppliers to send product order and receive material
order in the fastest possible way.
3.10
Data flow diagram (DFD)
Data flow diagram approach can be used as tool to identify a system (John
Azzolini ,2000) Therefore; data flow diagram is a graphical representation of the flow of
data through an information system. It can also be used for the visualization of data
processing. Figure 3.7 shows the data flow diagram of the company in improved
condition.
64
Customer
Product
Order
Server
Send
Order
Data
Factory
Delivery
Product
Planning
For
Order
Production
Production
Management
Production
Management
Order
Inventory
Produce
Report
Purchase
Order
Front Office
Inventory
Report
Figure 3.7
Raw Material
Storage
Delivery
Part
Data Flow Diagram (Author, 2010)
Suppliers
65
3.11
Entity relationship diagram (IDEF1X)
IDEF1X is a data modeling language for the developing relational database. It is
used to produce graphical information model which represents the structure and relate of
information within an environment or system. It can be found in figure 3.8.
Supplier
PK
Supplier_ID
PK
Supplier_Name
Supplier_Phone
Supplier_Fax
Supplier_Address
Supplier_Email
Note
FK1
Product_ID
Production_Date
Unit_On_Product
Unit_On_Reject
Note
Factory
Factory Product
Product_Of_Factory
FK1
PK
Product_ID
Factory_ID
Factory_Name
Working_Days_Per_Week
Factory_Phone
Factory_Fax
Factory_Address
Factory_Email
Note
Product_Name
Factory_ID
Mean_Daily_Product_Rate
Unit_Price
Unit_Price
Material_Inventory
Raw_Material
PK
FK1
Material_ID
Material_Inventory
Material_ROP
Inventory_Date
Note
FK1
Customer
Material_ID
PK
Material_Name
Supplier_ID
Unit_Use_In_Product
Production_Rate (Day)
Lead time (Day)
Note
Customer_ID
Customer_Name
Order_Lead_Time (Day)
Customer_Phone
Customer_Fax
Customer_Address
Customer_Email
Note
Material_Order_Receive
Product_Order_By_MKEK
FK1
Material_ID
Receive_Date
Unit_On_Receive
Note
PK
FK1
FK2
Materia_Additional_Order_by_Factory
FK2
FK1
Customer_Order_ID
Customer_Order_Date
Customer_ID
Unit_On_Customer_Order
Product_ID
Note
MKEK_Order_Release
Material_ID
Factory_Order_Date
Unit_On_Factory_Order
Factory_ID
Note
FK1
Figure 3.8
Customer_Order_ID
Unit_On_Release
Release_Date
Note
Product_Order_By_GKH
PK
FK1
FK2
Customer_Order_ID
Customer_Order_Date
Customer_ID
Unit_On_Customer_Order
Product_ID
Note
Product_Order_By_BMS
PK
FK1
FK2
GKH_Order_Release
FK1
Customer_Order_ID
Unit_On_Release
Release_Date
Note
IDEF1X diagram of the company (Author, 2010)
Customer_Order_ID
Customer_Order_Date
Customer_ID
Unit_On_Customer_Order
Product_ID
Note
BMS_Order_Release
FK1
Customer_Order_ID
Unit_On_Release
Release_Date
Note
66
3.12
Data relationship
Figure 3.9 shows the relationship between supply chain members. This figure
created with Microsoft access 2007.
Figure 3.9
Data relationship Microsoft Access (Author, 2010)
67
3.13
Operation manual
The users of this database need to have Microsoft Access 2007, Microsoft
Outlook 2007 and Microsoft Info path 2007 in their computers. The Operation Manual
of the database is explained in the following for all the supply chain members.
3.13.1 Operation manual for customers
The database is designed to help the customers in dealing with their order
request. By following these steps as explained in figures 3.10 to 3.12, customers are
able to request their order at any time that they want.
68
To Enter Product_Order_By_BMS Data
start
Open Microsoft
Outlook 2007
Open The Inbox
Double Click On
BMS E-Mail Inside
Inbox
Enter The
Unit_On_Customer
Order
Click On Submit
Button
Click On Send
Button
Click On Close
Button
Click On Yes
Button
Finish
Figure 3.10
Customer; Behran Mehvar Saipa Order Steps (Author, 2010)
69
To Enter Product_Order_By_GKH Data
start
Open Microsoft
Outlook 2007
Open The Inbox
Double Click On
GKH E-Mail Inside
Inbox
Enter The
Unit_On_Customer
Order
Click On Submit
Button
Click On Send
Button
Click On Close
Button
Click On Yes
Button
Finish
Figure 3.11
Customer; Gama Khodro Order Steps (Author, 2010)
70
To Enter Product_Order_By_MKEK Data
start
Open Microsoft
Outlook 2007
Open The Inbox
Double Click On
MKEK E-Mail
Inside Inbox
Enter The
Unit_On_Customer
Order
Click On Submit
Button
Click On Send
Button
Click On Close
Button
Click On Yes
Button
Finish
Figure 3.12
Customer; Mehvar Karan-e-Kosha Order Steps (Author, 2010)
71
3.13.2 Procedures to be followed by personnel-in-charge at VAMCo. factory
At the end of each working day, the personnel-in-charge is required to key in the
essential data such as daily rear axle cover product and reject, daily order release to the
customer and daily receive the raw material and etc. to the database. The steps are
explained in figures 3.13 to 3.17.
72
To Enter The Production Detail For Today
start
Open Vamco
Database
Press On Rear
Axle Cover
Today_Production
Button
Enter Product/
Reject
Detail For Today
Press On Close
Botton
Exit From Vamco
Database
Finish
Figure 3.13
To enter the production detail for today (Author, 2010)
73
To Enter The Rear_Axle_Cover
Today_Release
start
Open Vamco Data
Base
Press on
Rear_Axle_Cover_Today
Release
Press On
Behran_Mehvar_Saipa
Order_Release
Boutton
Press On Gama_Khodro
Order_Release
Boutton
Press On Mehvar_Karan-eKosha
Order_Release
Boutton
Enter Today’s Order Release
Detail To
Behran_Mehvar_Saipa
Enter Today’s Order Release
Detail To Gama_Khodro
Enter Today’s Order Release
Detail To Mehvar_Karan-eKosha
Press On
Mail_Release
Report Button
Press On
Mail_Release
Report Button
Press On
Mail_Release
Report Button
Click On Close
Button
Click On Close
Button
Click On Close
Button
Click On Close
Button
Finish
Figure 3.14
To enter the product release for today (Author, 2010)
To Enter The
Raw_Material_Today_Order_Receive
Detail
74
start
Open Vamco Data
Base
Press on
Raw_Material_Today
Order_Receive
Button
Press On
PRPA_Today
Order_Receive
Boutton
Press On
RS20_Today
Order_Receive
Boutton
Press On
WN10_Today
Order_Receive
Boutton
Enter Today’s
Unit_On_Receive
Enter Today’s
Unit_On_Receive
Enter Today’s
Unit_On_Receive
Click On Close
Button
Click On Close
Button
Click On Close
Button
Click On Close
Button
Finish
Figure 3.15
To enter the raw material order receive for today (Author, 2010)
75
To Enter The
Raw_Material_Today_Additional_Order
Detail
start
Open Vamco Data
Base
Press on
Raw_Material_Today
Additional_Order
Button
Press On
PRPA_Additional
Order
Boutton
Press On
RS20_Additional
Order
Boutton
Press On
WN10_Additional
Order
Boutton
Enter Unit_On_Factory_Order
(Notice That You Should Enter >=
“Today_Rejected”)
Enter Unit_On_Factory_Order
(Notice That You Should Enter >=
“Today_Rejected”)
Enter Unit_On_Factory_Order
(Notice That You Should Enter >=
“Today_Rejected”)
Press On
Mail_Order
Report Button
Press On
Mail_Order
Report Button
Press On
Mail_Order
Report Button
Click On Close
Button
Click On Close
Button
Click On Close
Button
Click On Close
Button
Finish
Figure 3.16
To enter the material additional order for today (Author, 2010)
76
To Send Report To The Customer About
Estimate Release Order Date
start
Open Vamco
Database
Press On Rear
Axle Cover
Today_Customer
Order Button
Press On Mail_Release
Date_Report Button For All
The Customers
Press On Close
Botton
Exit From Vamco
Database
Finish
Figure 3.17
(Author, 2010)
To send the estimate release date to the customer for today order
77
3.13.3 Operation manual for Suppliers
Suppliers should know about the amount of orders they requested by VAMCo.
manufacturing company. In figure 3.18 the steps are explained.
78
To see the VAMCo. Raw material report for today
start
Open Microsoft
Outlook
Click on inbox
Open the bms
Email
Inside Inbox
Press On open
Exit From
Microsoft Outlook
Finish
Figure 3.18
Steps to see the raw material requested by VAMCo. (Author, 2010)
79
3.14
Running the database
To run the database each of the supply chain members should follow their steps
which are explained in below:
3.14.1Steps to order from customer
To have a capability to order, the customer needs to have Microsoft Outlook and
Microsoft Info Path 2007. The steps could be finding n the figures 3.19 to 3.23.
80
3
1
2
Figure 3.19
Customer order steps 1 (Author, 2010)
With having all this two, first step is to Open Microsoft Outlook, Click On Inbox
and open the Customer _Order File then click on bms E-Mail inside inbox, After that
click on Open Form.
81
2
1
Figure 3.20
Customer order steps 2 (Author, 2010)
5
82
3
Figure 3.21
Customer order steps 3 (Author, 2010)
4
Figure 3.22
The
above
window
Customer order steps 4 (Author, 2010)
will
be
appear
Unit_On_Customer_Order and click on Submit button,
after
that,
then
enter
the
83
5
Figure 3.23
Customer order steps 5 (Author, 2010)
After that the massage that the form submitted successfully will occur, then click
on Ok button and you can see another window will be open that you should press on Yes
button on that window.
After
doing all this steps,
customer will done with the order, the order
automatically via internet goes to the database in server and after that factory have the
detail order information from each customer separately.
3.14.2 Steps to entering data by factory
Now that factory receives the today’s order from customers, its factory turn to
entering the needed data to the database, which the steps describe in
Follow:
First the operator should open the VAMCO database, after that this window will
be occurring automatically. The steps can be find in figures 3.24 to 3.45.
84
1
2
Figure 3.24
Factory data entering steps 1 (Author, 2010)
This is the main page (Home Page) for the database, the element number 1
which I marked in the window show the production plan for today, it means follow the
planning the factory should produce this much of the rear axle cover for today. This
number will automatically calculating and showing on this box.
The formula for calculation this box is:
Maximum amount of raw material lead time = 2 Days
Testing the raw material before send them to the production line = 1 Day
Production plan for today= Total order for (Today’s Date – 3 Days)
85
Second step is that at the end of the day operator should key in the amount of
product and reject in today’s production. For doing that operator should click on the
Rear_Axle_cover Today’s Production Button.
Figure 3.25
Factory data entering steps 2 (Author, 2010)
After that this window will occur. Then operator should enter the amount of
product and reject for today.
86
3
Figure 3.26
4
Factory data entering steps 3 (Author, 2010)
The third step is to enter the amount of product release for today. The following
steps show the procedure of doing that. Operator should click on the Rear_Axle_cover
Today’s Release button.
Figure 3.27
Factory data entering steps 4 (Author, 2010)
87
This window will occur.
3
1
2
Figure 3.28
Factory data entering steps 5 (Author, 2010)
The numbers that marked with number 1 in this page shows the amount of order
that follow the plans still factory didn’t release to the specific customers. The formula
for this item calculates as follow:
Customer_Remains_Order = Total Customer Order until today – Total Customer
Order Release until Today
88
The other numbers which marked with number 2 in the page shows the amount
of order which should be release on today follow the plan. To calculate this item we
have this formula:
Maximum Raw Material Lead Time = 2 Days
Tasting the Raw material and final product = 1 Day
Produce the Rear_Axle_cover Days = (Total Order for 4days ago+ Remains Order) /
Production Rate
Customer_Order_Plan_Release_For_Today = amount of order in this date
{Today’s Date – (2+1+ (Total Order for 4days ago+ Remains Order) / Production
Rate))}
After that regard to the amount of actual today’s order release operator should
click on each customer_Order_Release button to key in the release data. Each of the
following buttons are for one specific customer.
Figure 3.29
Factory data entering steps 6 (Author, 2010)
89
Then this window will occur (for each of the customers there are different pages):
7
4
5
Figure 3.30
Factory data entering steps 7 (Author, 2010)
To send a report to the customer about releasing his order, operator should press
on the Mail_Release Report button.
Figure 3.31
Factory data entering steps 8 (Author, 2010)
90
After that this page will be appearing, for all the customers, operator should repeat the
above steps.
6
Figure 3.32
Factory data entering steps 9 (Author, 2010)
The forth step is to enter the amount of raw material which receive from supplier
to
the
factory
in
today.
To
do
Raw_Material_Today_Order_Receive button.
that
operator
should
press
the
91
Figure 3.33
Factory data entering steps 10 (Author, 2010)
Then we can see this page will be appearing.
5
2
1
Figure 3.34
Factory data entering steps 11 (Author, 2010)
Mark number 1 shows the amount of raw material which follows the plan should
receive in today. The formula is as follow:
92
Raw material today receive plan = The order in this date (Today’s Date- (Raw
material lead time days))
To enter the actual today’s raw material receive, Operator should click on
Raw_Material_Today Order_Receive button.
Figure 3.35
Factory data entering steps 12 (Author, 2010)
Then operator could enter the data on this page. (For each raw material there is
specific page that operator should enter the data for them separately).
93
Figure 3.36
Factory data entering steps 13 (Author, 2010)
The Fifth step is to enter the raw material additional order for today.
operator should press on raw material today additional order.
Figure 3.37
Factory data entering steps 14 (Author, 2010)
After that this page will be appearing.
The
94
1
2
Figure 3.38
Factory data entering steps 15 (Author, 2010)
Mark number one shows the tree important element in entering the amount of
additional order.
1. Raw material today reject, which it take the data from Product/reject for today
2. Raw material today inventory, which the formula is as follow:
Raw material today inventory = total raw material ordered until today – total raw
material used until today
95
3. Raw material ROP
This is the ROP for the specific raw material. Now operator should key in the additional
order for today which is >= raw material reject for today. To do that operator should
press on the raw material additional order buttons. (There are three buttons for all three
raw materials)
Figure 3.39
Factory data entering steps 16 (Author, 2010)
After pressing this three buttons separately you can see this page will occur.
4
2
Figure 3.40
1
Factory data entering steps 17 (Author, 2010)
96
After entering the raw material additional order detail for today, to sending the
order report to the supplier’s operator should press on the mail order report button.
After that in the next page operator should press on send button to send the report.
3
Figure 3.41
Factory data entering steps 18 (Author, 2010)
All the above steps should repeat for all the raw materials separately.
The last part is to send the report to the customers and tell them the estimate
release date for their today’s order. To do that operator should press on rear axle cover
today customer order.
97
Figure 3.42
Factory data entering steps 19 (Author, 2010)
Then after the next window appeared, operator should press the mail release
report date button to send release report to the customers.
2
1
Figure 3.43
Factory data entering steps 20 (Author, 2010)
98
Next there are the new window that operator should click on send button to send
the report to the customers.
Figure 3.44
Factory data entering steps 21 (Author, 2010)
99
At the end operator should leave the database with clicking on close bottom.
Figure 3.45
Factory data entering steps 22 (Author, 2010)
100
3.14.3 Steps to view the factory order by suppliers
Now suppliers should know about the detail of VAMCo. Raw material order. To
do that they should have Microsoft outlook 2007 and Adobe acrobat reader. The steps
can be finding in figures 3.46 to 3.47.
First they should open the Microsoft Outlook 2007 and after that they should
click on inbox and open the bms E-Mail inside the inbox.
3
2
1
Figure 3.46
steps to view the factory order by supplier 1 (author, 2010)
101
Figure 3.47
steps to view the factory order by supplier 2 (author, 2010)
3.14.4 Steps to see the information about order release time by customers
Customers also to see the information about release time for their order should
have Microsoft outlook 2007 and Adobe acrobat reader.
They should open the Microsoft Outlook 2007 and click on inbox then open the bms
E-Mail inside inbox. These steps can be finding in figures 3.48 to 3.51.
102
A. To see the released order in today
2
1
Figure 3.48
3
Steps to see the information about order release time 1 (author, 2010)
103
Figure 3.49
Steps to see the information about order release time 2 (author, 2010)
104
B. To see the estimate date for releasing the order for today
2
1
Figure 3.50
3
Steps to see the information about order release time 3 (author, 2010)
105
Figure 3.51 Steps to see the information about order release time 4 (author, 2010)
CHAPTER 4
FINDINGS AND DISCUSSION
This study will present data on the functional use of VAMCo. database in vehicle
axle manufacturing company. We will be looking at these following areas:

Comparison of order cycle time between old and new system

Developed flow of information in the factory

The successes of applying this new database to the company

Charts of the developed system

Comparison between Old System and Developed system
107
4.1
Comparison of order cycle time between old and new system
After the researcher develop the new system and installed it in the factory for one
mount, the researcher noticed that the respond time for order decreased from 7 days
1/5/2010 to 8 hours 6/6/2010 this decrease has influenced the inventory and as a result,
this saves the cost of production. As you can see in figure 4.1 the flow of data order
from customer to the supplier in old system, and in figure 4.2 you can see the flow of
data order in the developed system.
Figure 4.1
Flow the data Gantt chart in old system (Author, 2010)
108
In this figure you can see the whole ordering procedure takes almost 7 working
days, so the factory in order to avoid the stock out costs, has to try to keep the inventory
for seven days product. Keeping the inventory for seven days makes the inventory cost
high, which in the following part we will discuss about it in detail.
Figure 4.2
Flow the data Gantt chart in new system (Author, 2010)
This Gantt chart shows the ordering cycle time in newly developed system,
which as you can see the order cycle in comparison to the old system, decreased from
seven working days to 8 hours. With this order cycle, it’s no longer essential for the
factory to have seven days inventory for avoiding the stock out, so the factory’s
inventory in newly developed system decreased to one day product.
109
4.2
Developed flow of information in the factory
Figure 4.3
Developed flow of information in the factory (Author, 2010)
In this figure you can see the developed flow of information in the factory. In the
developed system, the factory use EDI for the flow of information between supply chain
members, so the transportation for data between supply chain members become fast, and
with having that the cycle order time will be decreased.
110
4.3.
The successes of applying this new database to the company
4.3.1 Ordering cycle time is shortened
The time order cycle in the newly developed system decreased in comparison to
the old system. This is because time spent on paper work in the newly developed system
is removed. Supply members connect with each other via the internet.
4.3.2
Product inventory decreased
Prior to the implementation of the VAMCO, the factory in this study keep their
stock for 7 days to avoid out-of-stock problems in inventory. This led to high cost for
inventory and maintenance. The implementation of VAMCO enables the factory to
reduce the number of days from 7 to 1, which results in reduction of cost for inventory
and maintenance.
111
4.3.3
Transportation cost decreased
The factory of the study had spent considerably huge amount of money on
transportation. They had to send their customer’s order in different parts because they
couldn’t meet the release time of the order, so they send the order in different points of
time until the order is completely sent out. The newly developed system allows the
production of total order finished at specific point of time so that when the factory sends
the product to the customer, they can save their cost on transportation and constant
delivery of product.
4.3.4 The amount of production lane stop decrease to almost zero
In the newly developed system, factory receives the required raw material from
suppliers on time and in the right amount, but in the old system because of lack of
information flow between suppliers and the factory, usually there was a lacking of raw
material in the production lane which that makes the production lane stop.
4.3.5 The cost of production lane stop become almost zero
In the newly developed system when we don’t have the production lane being
stopped, we also don’t have to bear the cost for production lane stop.
112
4.4
charts of the developed system
After applying the new system on the factory, the following results have been
taken from the data.
Behran Mehvar Saipa Order
Unit_On_Customer_Order
21
19
17
15
Mean=14.8
13
11
9
7
5
Figure 4.4
Behran Mehvar Saipa Order chart (Author, 2010)
113
Gama Khodro Order
Unit_On_Customer_Order
21
19
17
15
Mean=14.9
13
11
9
7
5
Figure 4.5
21
Gama Khodro Order chart (Author, 2010)
Mehvar Karan-e-Kosha Order
19
17
Unit_On_Customer_Order
Mean=15.4
15
13
11
9
Figure 4.6
Mehvar Karan Order chart (Author, 2010)
1/1/1900
2/1/1900
3/1/1900
4/1/1900
5/1/1900
6/1/1900
7/1/1900
8/1/1900
9/1/1900
10/1/1900
11/1/1900
12/1/1900
13/1/1900
14/1/1900
15/1/1900
16/1/1900
17/1/1900
18/1/1900
19/1/1900
20/1/1900
21/1/1900
22/1/1900
23/1/1900
24/1/1900
25/1/1900
26/1/1900
27/1/1900
28/1/1900
29/1/1900
Unit_On_Production_Plan
Unit_On_Order
114
60
Total Order
55
50
45
Mean=44.9
40
35
Figure 4.7
Figure 4.8
Total Order chart (Author, 2010)
Factory Production Plan
60
55
50
Mean=45.3
45
40
35
factory production plan chart (Author, 2010)
115
Production Of Factory
Unit_On_Product
55
50
Mean=44.5
45
40
35
Figure 4.9
Production of factory chart (Author, 2010)
Factory Reject
4.5
Unt_On_Factory_Reject
4
3.5
3
2.5
2
1.5
1
0.5
0
Figure 4.10
factory reject chart (Author, 2010)
Mean=0.8 ~0
116
Press Part Total Order
Unit_On_Factory_Order
60
55
50
Mean=45.6
45
40
35
Figure 4.11
Press Part Total order chart (Author, 2010)
Role Sheet Size 20 Total Order
115
105
100
95
Mean=91.3
90
85
80
Figure 4.12
Role sheet Total order chart (Author, 2010)
31/5/20…
29/5/20…
27/5/20…
25/5/20…
23/5/20…
21/5/20…
19/5/20…
17/5/20…
15/5/20…
13/5/20…
9/5/2010
7/5/2010
5/5/2010
3/5/2010
70
11/5/20…
75
1/5/2010
Unit_on_Factory_order
110
117
Welded Nuts total Order
700
Unit_On_Factory_Order
650
600
550
Mean=548.2
500
450
400
Figure 4.13
Press Part Total order chart (Author, 2010)
Product Inventory
Unit_On_Product_Inventory
55
53
51
49
47
Mean=44
45
43
41
39
37
35
Figure 4.14
Product Inventory chart (Author, 2010)
118
Presse Part Factory Inventory
Unit_On_Factory_Inventory
110
105
100
Mean=87.9
95
90
85
80
75
Figure 4.15
Press factory inventory chart (Author, 2010)
Role Sheet Factory Inventory
Unit _On_Factory_Inventory
115
110
105
100
Mean=85.03
95
90
85
80
75
70
Figure 4.16
Role sheet factory inventory chart (Author, 2010)
119
Welded Nuts Factory Inventory
1300
1250
1200
Mean=1055.2
1150
1100
1050
1000
Figure 4.17
4.5
31/5/2…
29/5/2…
27/5/2…
25/5/2…
23/5/2…
21/5/2…
19/5/2…
17/5/2…
15/5/2…
13/5/2…
11/5/2…
9/5/20…
7/5/20…
900
5/5/20…
950
3/5/20…
Unit_On_Factory_Inventory
1350
Welded Nuts factory inventory chart (Author, 2010)
Comparison between Old System and Developed system
The end result of this study, as you can see in the table below is that VAMCo.
has decreased the cost of production by employing the VAMCo. database within one
months. The comparison between the old system and the newly developed system can be
seen in table 4.1.
120
Table 4.1
Comparison between old system and new system (Author, 2010)
Comparison Between Old System And New One
Element
Old System
New System
Unit
Product inventory
400
44
Skid
Respond Time
7 Days
Maximum 8 Hours
-----
Transport Cost
55000000
10000000
IR Rial
Production Lain Stop
1.5
Almost Zero
Hours
Cost Of Production Lain Stop
5000000
Almost Zero
IR Rial
CHAPTER 5
CONCLUSION
In this Chapter we will discuss about following items:
5.1

Introduction

Summary of Research

Discussion of findings

Recommendation

Limitations of the study
Introduction
Supply chain management and information systems are firmly attached.
Execution of supply chain strategies will be extremely complicated with no supporting
of information systems. Simultaneously, a lot of progresses in information systems have
122
been appeared from necessities set by enterprises seeking cooperate with their members
in the supply chain area.
For example, the progression of internet services has been driven by a must for
pliability and more open information systems interfaces to uphold reconfigurability
Arrangement data using computer system can support business process. Therefore,
information flows manage all of record data that related with the system.
In this
particular case, implementation information technology can help manager to manage the
data not only with supplier, but also with customer.
5.2
Summary of Research
Today high competitive market needs fast, effective, high responsiveness, online
interactive, 24 hours 7 days availability, easy to follow up orders processing, etc. For
researchers, the model provides an interdisciplinary approach to understanding the range
of SCM IS capabilities. With further study, the model and concepts could also be
adapted for other strategic IS applications. Practitioners can gain a better understanding
of the capabilities of their implemented SCM IS and the expected capabilities that future
SCM IS may provide.
Find out that how well supply chain management information systems facilitate
different organizational potential in a company can decrease the complexity of
estimating different supply chain management information system.
Earlier studies
models of the organizational powers, accomplished by dissimilar types of information
123
system (Bensaou 1997; Sabherwal and Chan 2001; Venkatraman and Ramanujam 1987;
Zviran 1990).
Supply chain management information systems are the information systems
between companies that employ information and communication technology to arrange
information inside and among the participator of a supply chain like the clients, sellers,
providers, and distributors included in the utilization and supply of a special product or
service.
Companies frequently use a portfolio of supply chain management information
systems, which characteristically contain legacy systems linked by electronic data
interchange, packaged applications employing Web-based exchange of information or
ideas, or some other blend of information connection technology.
Nevertheless, there isn’t any single model that is appropriate for investigative
and evaluating the potential facilitated by supply chain management information system
specifically. Tim S. McLaren et.al. (2004) found existing generic IS capabilities
constructs such as “analysis” (Sabherwal and Chan 2001; Venkatraman 1989) did not
sufficiently discriminate between internal and external analysis, which subsequent
interviews showed to be an important distinction in SCM IS.
While strategic coalition has received substantial consideration in latest
researches of generally information systems policies (Kearns and Lederer 2001; Reich
and Benbasat 2000; Sabherwal and Chan 2001), models have not so far been advanced
to a adequately itemized stage to tested the organizational ability, capable by particular
kinds of information system, such as supply chain management information system.
124
In addition, current researches of information systems abilities have various
shortages when used to model the abilities allowed by supply chain management
information systems particularly. For instance, vagueness in the current hypothesis
makes it indistinct whether or how a model of supply chain management information
systems abilities should differentiate among complicated concepts like functional
competence, functional elasticity, and interior or exterior business procedure harmony.
Thus, the goal of this paper is to develop an integrated model of SCM IS
capabilities that is supported by empirical evidence specific to SCM IS implementations.
The model developed integrates and enriches theories of competitive strategy, supply
chain management, and interorganizational information systems.
We learnt from previous findings that supply chain management information systems are
progressively important to the prosperity of many companies. The advantage of SCMIS
among others is that it synchronizes information among the customers, producers,
distributors, and other members in a supply chain. Albeit the advantages SCMIS has to
offer there are only a few experimentally extracted models appropriate that examines the
scope of supply chain management information systems options.
Among the
investigations carried out on SCMIS is the EDI the profits and abilities of various kinds
of supply chain management information systems, electronic market or extended
enterprise resource scheduling systems.
125
5.3
Discussion of findings
This study has five major findings and we will be discussing each in turns:
1
Ordering cycle time is shortened
2
Product inventory decreased
3
Transportation cost decreased
4
The amount of production lane stop decrease to almost zero.
5
The cost of production lane stop become almost zero.
5.3.1
Summary of the major findings
5.3.1.1 Ordering cycle time is shortened
The time order cycle in the newly developed system decreased in comparison to
the old system. This is because time spent on paper work in the newly developed system
is removed. Supply members connect with each other via the internet.
126
5.3.1.2 Product inventory decreased
Prior to the implementation of the VAMCO, the factory in this study keep their
stock for 7 days to avoid out-of-stock problems in inventory. This led to high cost for
inventory and maintenance. The implementation of VAMCO enables the factory to
reduce the number of days from 7 to 1, which results in reduction of cost for inventory
and maintenance.
5.3.1.3 Transportation cost decreased
The factory of the study had spent considerably huge amount of money on
transportation. They had to send their customer’s order in different parts because they
couldn’t meet the release time of the order, so they send the order in different points of
time until the order is completely sent out. The newly developed system allows the
production of total order finished at specific point of time so that when the factory sends
the product to the customer, they can save their cost on transportation and constant
delivery of product.
127
5.3.1.4 The amount of production lane stop decrease to almost zero
In the newly developed system, factory receives the required raw material from
suppliers on time and in the right amount, but in the old system because of lack of
information flow between suppliers and the factory, usually there was a lacking of raw
material in the production lane which that makes the production lane stop.
5.3.1.5 The cost of production lane stop become almost zero
In the newly developed system when we don’t have the production lane being
stopped, we also don’t have to bear the cost for production lane stop.
5.4
Recommendation
In addition, if company wants to develop business, manager also can control all
of branch using network system. In conclusion, implement Information system in supply
chain management can manage system efficiently and effectively to provide information
and communication properly. In this particular case, computer system only covers
activity within manufacturing system.
Networking only covers about relationship
between main office and each branch and also how company manages customer and
supplier.
128
5.5
Limitations of the study
By developing this database and installing VAMCo. , a factory needs cooperation
among all supply chain members. One of the problems the present study encountered is
that it was rather difficult to convince the supply chain members that this database will
improve their manufacturing cycle and that it could possibly decrease their costs in
terms of stock out and inventory. I spend one month in this factory to collect the
required data and to develop this database, but I could only convince one of the suppliers
and the factory to give me the required data to try the database out. Ever since the
implementation of the database I have received numerous customers’ order and
production of the factory every day. Another limitation of the study, though it doesn’t
give much significance to the findings of the study, is the duration in which the study is
carried out. I developed and implemented the database over a course of one month and
result has proved success. I believe with longer duration of implementation, I could
provide with ample examples of success and plenty of data to support my stance on the
success of the program.
129
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