Assignment 2

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Part 2

Strategy and applications

Chapter 6

Supply chain and demand

Digital Business and E-Commerce Management Seventh Edition

Learning outcomes

Identify the main elements of supply chain management and e-procurement

Assess the potential of information systems to support supply chain management and e-procurement

Analyse procurement methods to evaluate cost savings

Management issues

Which technologies should we deploy for supply chain management e-procurement and how should they be prioritised?

Which elements of the supply chain should be managed within and beyond the organisation and how can technology be used to facilitate this?

Which method(s) of e-procurement should we adopt?

What are the practical issues with online supply chain management and e-procurement?

Figure 6.3 Members of the supply chain: (a) simplified view; (b) including intermediaries

SCM – some definitions

Supply chain management (SCM) The coordination of all supply activities of an organisation from its suppliers and partners to its customers

Upstream supply chain Transactions between an organisation and its suppliers and intermediaries, equivalent to buy-side e-commerce

Downstream supply chain Transactions between an organisation and its customers and intermediaries, equivalent to sell-side e-commerce

Value Chain Focus on the ‘value add’ in the physical supply chain

Table 6.2 Objectives and strategies for effective consumer response (ECR)

Figure 6.5 A typical supply chain for a B2B company

Figure 6.6 Push and pull approaches to supply chain management

(Continued)

odel. Traditional Value Chain Model

Objective: add value and reduce cost at all points (including interfaces) in the chain.

Value = (benefit for each value chain activity –its cost) + (benefit of each interface –cost of each interface)

Efficient information systems are key to supporting primary value chain activities, and in particular the interface points between the links in the chain.

Value = (benefit for each value chain activity –its cost) + (benefit of each interface –cost of each interface)

Efficient information systems are key to supporting primary value chain activities, and in particular the interface points between the links in the chain.

Source: Adapted from Deise et al. (2000) Figure 6.4(b).

Source: Adapted from Deise et al. (2000).

Members of the value network of an organization

Members of the value network (not chain, not one directional) of an organisation

NOTE: IS partners important, including ASP’s (application service providers)

Figure 6.9 The characteristics of vertical integration, vertical disintegration and virtual integration

Figure 6.10 A typical IS infrastructure for supply chain management

Figure 6.11 Alternative strategies for modification of the digital business supply chain

How important is procurement?

‘We estimate that for every dollar a company earns in revenue, 50 cents to 55 cents is spent on indirect goods and services – things like office supplies and computer equipment.

That half dollar (referenced above) represents an opportunity: By driving costs out of the purchasing process, companies can increase profits without having to sell more goods.’ Hildebrand (2002)

The five rights of e-procurement

At the right price

Delivered at the right time

Are of the right quality

Of the right quantity

From the right source

Baily et al. (1994)

Figure 6.2 Key procurement activities within an organisation

Table 6.5 Process flow analysis for traditional procurement (typical cycle time, Long)

Note: See Table 6.6 on p. 285 for key to symbols

Table 6.6 Process flow analysis for new

e-procurement (typical cycle time, Short)

Figure 6.14 Use of different information systems for different aspects of the Fulfilment cycle

Figure 6.15 The three main e-procurement model alternatives for buyers

Figure 6.16 Integration between

e-procurement systems and catalogue data

Questions

How can information systems support the effective functioning of the supply chain?

Think of a specific business situation which has a complex supply chain and hypothesis about how IT/IS either supports or could be used to improve the supply chain. You could choose a retailer.

Discuss RFID technology. In what situations is it useful? What are the issues with RFID? Discuss applications where it can be effective.

Discuss the connections between supply chain management and disintermediation and reintermediation

Discuss the issues that virtual organisations have with the management of the supply chain.

What are the advantages of buy-side supply chains being digital?

Questions (continued)

Discuss the particular issues that arise in supply chain management when parts of the chain are outsourced.

Particularly focusing on the distribution side there are many outsourcing options for various functions. What are the issues with these decisions? eg warehousing, picking, packing, delivery, customer service call centre etc

8. Could software agents (intelligent agents) take over procurement?

Software agents act consistent with defined rules, and can learn rules that together govern the purchasing process.

How could the subjective aspects of determining supplier suitability be assessed eg trustworthiness, cultural compatibility.

Summary

You should be able to identify the main elements of supply chain management and e-procurement

You should be able to assess the potential of information systems to support supply chain management and e-procurement

You should be able to analyse procurement methods to evaluate cost savings