Summary of chapter 10 'coordinated product and supply chain design' of the book Designing and managing the supply chain
Summary of chapter 6 'supply chain integration' of the book Designing and managing the supply chain
Summary of chapter 5 'the value of information' of the book Designing and managing the supply chain
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Tilburg University (UVT)
Supply Chain Management
Supply Chain Design and Planning (325239M6)
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HC7 Information technology and business processes
Information technology (IT) an important enabler of effective supply chain management.
It typically spans the entire enterprise and beyond, encompassing suppliers on one end and
customers on the other.
We can look at the link between IT strategy, sound business processes, and supply chain
performance. Companies that invest mostly in business processes do better than those who
invest in IT only and lack the appropriate business processes; appropriate business
processes are thus needed before IT investments work. Moreover, investments only in
technology without the appropriate business processes lead to negative returns.
Om te kijken naar de correlatie tussen de maturity of the business process, the amount of
investment in IT infrastructure and supply chain performance, moet je met challenges
dealen, namelijk hoe je alles meet:
Identify measures to characterize supply chain effectiveness
It is relatively easy to measure supply chain performance. In the last few years, many
companies have used key performance indicators (KPis) to identify opportunities and
challenges in their supply chains. SCOR model is another objective way to measure
supply chain effectiveness.
Develop measures to characterize the level of maturity of the business process and
the information technology (IT) employed by the company
Measuring the level of maturity of the business process or the information
technology infrastructure that a company possesses is much more difficult. It is more
difficult because different portions of the company's business can be at different
levels of maturity.
We can look at categorizations of different levels of both maturity of the firm’s business
processes and the firm’s IT:
Business processes maturity
The overall level of maturity of the firm's business processes is based on the SCOR
model. There are four categories of business processes:
1. Level I: Disconnected processes
Companies at this level are characterized by the proliferation of many independent
processes. Companies are organized functionally with no or a low degree of
integration. Supply chain planning is typically done for each site independently of
other sites. Characteristic of this level are:
o Funtional strategies
o Lack of clear, consistent supply chain management processes
o No measurements, or measurements not aligned with company objectives
2. Level II: Internal integration
At this level, companies are organized functionally, with a high degree of integration.
Decisions are made through the integration of key functional areas, that is, sales,
manufacturing, and logistics. Common (= dezelfde) forecasts are applied throughout
the organization. Characteristics of this level include:
o Integration of some functional information
o Documented processes followed across the entire organization
, o Key measurements that are used departmentally
3. Level III: Intracompany (= within) integration and limited external integration
At this level, companies are cross-functionally organized. Organizations at this stage
involve key suppliers and customers in decision-making processes. Characteristics of
this level include:
o Decisions optimized across the internal supply chain
o Sophisticated processes that involve all affected internal organizations
o Key suppliers and customers are included in supply chain planning
4. Level IV: Multi enterprise integration
Organizations at this level apply multi enterprise processes, use common business
objectives, and have an extensive knowledge of the suppliers' and customers'
business environments. Collaboration links trading partners and enables them to
operate as one virtual corporation. Characteristics of this stage include:
o Collaboration across the entire supply chain
o Internal and external collaborative supply chain management focus on key
service and financial goals
o Measures directly linking supply chain results to company goals
Planning areas
We kunnen 7 planning areas onderscheiden:
Strategic planning: Network design, Inventory positioning and Manufacturing
strategy
Demand planning: Demand forecasts and Promotional planning
Supply planning: Coordination of manufacturing, inventory and transportation
activities across the supply chain
Supply-demand balancing: Trade off between suppliers capability and customer
demand are considered; Pricing and promotional activities are applied systematically
to better match supply and demand
Procurement planning: Materials and commodities sourcing strategy
Manufacturing planning: Single site vs. Enterprise wide strategy
Delivery planning: Commitments to customers are based on forecast, available
capacity, or real-time inventory and manufacturing information
Voor elke planning area kan vervolgens worden gekeken wat de maturity level is, zoals we
die net hebben omschreven. The final maturity of a supply chain business process is
determined as the average of the seven scores on each of the planning dimensions.
Consequently, the business process maturity level of a supply chain is a number between 1
and 4. We noemen een business process mature wanneer deze een score hoger dan 2 heeft.
IT infrastructure maturity
The different levels of business processes need to be supported by a corresponding maturity
level of information technology infrastructure. We thus also have four different categories
of IT systems:
1. Level I: Batch processes, independent systems, and redundant data across the
organization. Focus is on spreadsheet and manual manipulation of data for decision
making.
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