Chapter 16: Information technology
and business process
1. Introduction
− Information technology (IT) an important enabler of effective supply chain management
− Typically spans the entire enterprise and beyond, encompassing suppliers on one end
and customers on the other
− Includes systems that are:
• Internal to an individual company
• External which facilitate information transfer between various companies and
individuals
2. Business maturity
2.1 The important of business processes
− Study by MIT, PRTM and SAP
− Companies that invest mostly in business processes do better than those who invest in IT
only and lack the appropriate business processes
− Investments only in technology without the appropriate business processes lead to negative
returns
2.2 Challenges
− Identify measures to characterize supply chain effectiveness
• KPIs and SCOR Model are objective ways
− Develop measures to characterize the level of maturity of the business process and the
information technology employed by the company
• Much more difficult because of variations across companies
2.3 Characteristics of the level of business maturity
Based on the SCOR (Supply-Chain Operations Reference) model:
Consists of four stages
1. Level I: Disconnected processes
, 2. Level II: Internal integration
3. Level III: Intracompany integration and limited external integration
4. Level IV: Multi enterprise integration
Level I: Disconnected processes
− Many independent processes
− Organized functionally with no or low degree of integration
− Supply chain planning typically done for each site independently of other sites
− Characteristics:
• Functional (silo) strategies
• Lack of clear, consistent supply chain management processes
• No measurements, or measurements not aligned with company objectives
Level II: internal integration
− Organized functionally, with a high degree of integration
− Decisions made through the integration of key functional areas
− Common forecasts applied throughout the organization
− Characteristics:
• Integration of some functional information
• Documented processes followed across the entire organization
• Key measurements that are used departmentally
Level III: Intra-company integration and limited external
integration
− Cross-functionally organized
− Involves key suppliers and customers in decision making processes
− Characteristics:
• Decisions optimized across the internal supply chain
• Sophisticated processes that involve all affected internal organizations
• Key suppliers and customers are included in supply chain planning
and business process
1. Introduction
− Information technology (IT) an important enabler of effective supply chain management
− Typically spans the entire enterprise and beyond, encompassing suppliers on one end
and customers on the other
− Includes systems that are:
• Internal to an individual company
• External which facilitate information transfer between various companies and
individuals
2. Business maturity
2.1 The important of business processes
− Study by MIT, PRTM and SAP
− Companies that invest mostly in business processes do better than those who invest in IT
only and lack the appropriate business processes
− Investments only in technology without the appropriate business processes lead to negative
returns
2.2 Challenges
− Identify measures to characterize supply chain effectiveness
• KPIs and SCOR Model are objective ways
− Develop measures to characterize the level of maturity of the business process and the
information technology employed by the company
• Much more difficult because of variations across companies
2.3 Characteristics of the level of business maturity
Based on the SCOR (Supply-Chain Operations Reference) model:
Consists of four stages
1. Level I: Disconnected processes
, 2. Level II: Internal integration
3. Level III: Intracompany integration and limited external integration
4. Level IV: Multi enterprise integration
Level I: Disconnected processes
− Many independent processes
− Organized functionally with no or low degree of integration
− Supply chain planning typically done for each site independently of other sites
− Characteristics:
• Functional (silo) strategies
• Lack of clear, consistent supply chain management processes
• No measurements, or measurements not aligned with company objectives
Level II: internal integration
− Organized functionally, with a high degree of integration
− Decisions made through the integration of key functional areas
− Common forecasts applied throughout the organization
− Characteristics:
• Integration of some functional information
• Documented processes followed across the entire organization
• Key measurements that are used departmentally
Level III: Intra-company integration and limited external
integration
− Cross-functionally organized
− Involves key suppliers and customers in decision making processes
− Characteristics:
• Decisions optimized across the internal supply chain
• Sophisticated processes that involve all affected internal organizations
• Key suppliers and customers are included in supply chain planning
