Supply Chain Management Information System: Business Processes, Technologies, Implementation Options, And Environmental Sustainability

Business Processes Supported by a Supply Chain Management Information System

Questions:

1. Briefly describe the business processes supported by a Supply Chain Management (SCM) information system. In a global business like Emerson what are the advantages and disadvantages of using a SCM information system? With Emerson’s many divisions using different suppliers, what would be the benefits of using a single SCM information system for all of its divisions?

2. Global companies like Emerson have suppliers, manufacturing, distribution, and retail operations. List and briefly describe the technologies and devices (used for input, output, and communication) that are used with SCM information systems. Choose two different input devices and discuss the advantages and disadvantages of each. Discuss the benefits that they provide to the business?

3. Consider that you have to implement a new SCM information system for Emerson. Describe each of the different implementation options. Discuss the advantages and disadvantages of the different implementation options. Make a recommendation and justify?

4. Modern SCM information systems and with the use of other technologies have supported businesses in improving environmental sustainability by reducing carbon emissions. Research and find an example. Briefly describe the system and how it works and how carbon emissions where reduced. Discuss what decision making is performed and how does the SCM information system contribute to the decision making. Discuss the advantages and disadvantages to the business?

1. Before understanding the various business processes supported by a supply chain management, it is important to understand the concept of SCM. Supply chain can be defined as interlinked set of business procedures and business providers, through which flow of goods and information related to it is managed, initiating from point of design till the delivery of the product or service to the end consumer. A simplistic view of supply chain management is displayed below:

 

Figure 1: Overview of SCM

In this context, there are several business processes which are supported by a SCM (Handfield & Nichols, 2009). This can be understood by example of Emerson case study as well. It can be clearly understood from the case study, that following business processes are supported:

• Sales
• Production
• Logistics
• Purchasing

Above mentioned are the core processes which supports the SCM. A hierarchy of the business processes in a company like Emerson has been displayed below:

Figure 2: Business process hierarchy

Hence, from above diagram it can be understood, that how several business processes and their sub-processes supports the SCM (Bowersox et al, 2002).

In a global business like Emerson, use of supply chain information system has its own share of advantages as well as disadvantages as follows:

• Use of SCM information system can help company like Emerson to generate and analyse information related to demand, supply, inventory and shipment and other aspects in real time.
• SCM information system helps in increasing the manufacturing throughput or in other words, productions at all levels of organisation.
• Through use of SCM information system, organisations can generate better return on assets.
• Internet based SCM, take the advantage a step further, as it helps in connecting all the suppliers and other related entities through a common link over information network.
• SCM information helps in improving the responsiveness and efficiency of the business.

• Inability to implement the SCM information system can rapidly increase the cost of implementation, further increasing the operational cost of the business.
• There can be issues such as increase in the lead time in the procurement processes, as in many cases real time update of inventory can trigger this situation, between supplier and the buyer.
• Implementation of SCM information system can be capital intensive for the business, as it might require assigning human, financial, and material resources to fulfil the requirements of SCM in the business.

Considering the case, where different divisions in Emerson, are coordinating with different suppliers to fulfil their requirement, in such case, single SCM information system can be of tremendous benefit (Gunasekaran & Ngai, 2004, pp.269-295). Firstly, it will enable to provide a consolidate view of entire supply chain management within organisation. Hence, instead of segregated view through the supply chain, Emerson can have better control over its supply chain, and will enable it manage its relationship with suppliers in a better way. SCM information system will also enable Emerson to save operational cost which it used to spend due to breakup of supply chain at multiple levels, leading to operational inefficiency, redundancies and delay in supplies and procurement of materials required for manufacturing.

Advantages and Disadvantages of Using a SCM Information System

2. Technology has played major role in improving the efficiency and productivity of existing organisations. In this regard SCM information systems has played major role, especially for organisations in manufacturing segment. An integrated supply chain model is displayed below:

Figure 3: Integrated supply chain model

In a supply chain model there are various input as well as output channels from where there is in-flow and out-flow of information which takes place continuously. This information can be related to scenarios such as, punching in of a purchase order, generation of PO, PO being extracted by supplier, and then supplying the requested material to the supplier, resulting into update of the inventory (Lee et al, 2004, pp.1875-1886).  In order to facilitate such processes in a SCM information system, there are various technologies and devices which are used such as:

• EDI (electronic data interchange): This has been mentioned in the case study of Emerson as well. EDI as a technology enables transactions and information exchanges in a supply chain information system. EDI is defined as computer to computer exchange of structured data which enables automatic processing of information (Thomas & Griffin, 1996, pp.1-15).

• Bar Coding and scanner: Bar codes can be defined as representation of a number or code in a format which can be read by a machine like bar code scanner. Every bar code helps in encapsulating various information about the item. Bar codes are generally used across the supply chain to identify and track goods (Stock & Lambert, 2001).

• Inventory management systems: These information systems, enable end-to-end management of the information related to inventory. Such systems basically work in a circular process, which includes stages such as purchase tracking, inventory monitoring, and re-ordering (Cooper & Ellram, 1993, pp.13-24).

• Transportation management systems: This information system mainly helps in providing visibility to the supplier and the buyer about the shipments and the orders. Such systems also helps in scheduling related issues (Cooper et al, 1997, pp. 1-14).

• Bar coding and scanner: Bar codes as discussed in above section specifies name of the product along with other information such as manufacturer etc. its advantages are:

• It eliminates human error which might happen due to incorrect information input in database.
• Reduces training time for the employee, as barcode scanner is a handheld or desktop devices which hardly requires any special training to be used.
• Inventory control improves, as barcodes helps in precise tracking of inventory.
• Promotes better decision making, as data is obtained rapidly and accurately.

• Speech recognition: Speech recognition is another popular and upcoming way of hands-free data entry in a supply chain operations. Unlike other devices which required keying in data, speech recognition provides the individual at any point in SCM to input the data based on voice, which has enabled in saving lot of efforts and time for organisations.

• Speech recognition based data entry eliminates any possible case of human error due entering due to typing issue.
• Such technology, helps in boosting the overall productivity of the employee as he can perform other tasks in parallel as well.
• Can be beneficial for disabled person who are present in the supply chain operations.

Input devices provide numerous benefits to the business like Emerson. Firstly, it helps in automation of the input process in the supply chain operations, hence reducing the margin of error which might come up due to incorrect information. Secondly, such devices helps in better monitoring and tracking of the inventory, as all the information related to inventory is updated within seconds and real time, which might not be possible in case of manual process (Lambert & Cooper, 2000, pp.65-83).

3. In order to implement a SCM information system, there can be various approaches which can selected for Emerson. However before selection of an approach it is important to focus on following aspects associated with the organisation:

• Size of the organisation
• Geographical spread of the organisation
• Number of people who are expected to use the system
• Timeline by which the system is expected to be live for use

• Big bang approach: under which complete organisation will be covered for the rollout of the SCM information system. Hence each and every location where Emerson has its operations will be covered, and there will be a global rollout of the entire SCM information system.

• Phased approach: Under this approach of implementation. Instead of going for a global rollout of SCM information system, focus will be on rollout in a phased approach. Which means, that either few specific locations can be selected where SCM information system will be rolled out, followed by other locations.

After analysis of the two possible implementation approach for SCM information system, it can be said that Emerson as an organisation is spread across globe with complex business process in the organisation facilitating day-to-day transactions (Holland, 2005, pp. 117-133). Also there are thousands of users spread across globe who will be potential users of the proposed SCM information system. In such circumstances, it is logical to opt for phased implementation of the SCM information system. Reason behind opting for phased approach is, that this approach will enable implementation of SCM information system in a controlled manner. Secondly, this approach will allow management to observe and analyse the benefits of first phase of implementation. If some further improvement is required then it can be done, before moving towards the next phase of implementation. This approach will also enable the business to evaluate the overall performance of the SCM information system, and map the existing business process with the proposed SCM information system in a seamless manner.

Phased approach will allow Emerson management to identify the core business areas where they first want to implement the system, before moving on to other business areas. This pre-planning, understanding of current business processes, identification of gaps and designing of to be processes can be achieved in an efficient manner only through a phased approach, as phased approach will give enough bandwidth to analyse each business process and understand the required outcome expected from the proposed SCM information system.

Overall, it can be said that as an organisation Emerson is not suited well for big-bang approach, especially due to scale of operations it has, and number of geographical regions it exists. In such situation, Emerson should opt for a phased implementation of the SCM information system.

4. Modern supply chain management information systems have created far reaching impact on the environment sustainability mainly by reducing the carbon emission drastically at various levels of supply chain. Supply chain are critical links that connects an organisation’s input to its output. Traditionally, supply chain management has focused on aspects such as just in time delivery, cost reduction, inventory control etc. However over a period of time, role of SCM has become important in environment sustainability, especially its role in increase of carbon emission.

The supply chain can be characterised as the production of raw materials, their transfer to and through various processing steps, and finally the final product shipping and receiving. Each step requires a review of combustion/energy emissions, waste disposal emissions, transportation energy costs and emissions, and packaging related emissions. With use of SCM information system this entire lifecycle of procuring material for production and shipping it back has reduced to a large level. This can be understood by example of Emerson as well, which combined the shipments from various suppliers through one container. In such situation it becomes obvious that fuel combustion and carbon emission in a case where two different ships would have carried supply from suppliers would have been much higher as compared to a situation, where a consolidated shipment is being sent, resulting into reduction of carbon emission and improving overall environment sustainability. This has been possible due to SCM information system, because it has allowed business organisations like Emerson to consolidate its supply chain business processes in a single view, where the organisation has tight control over its inventory, and material being procured from different suppliers. In a way it can be said that SCM information system has helped the organisation by improving the view of overall supply chain, resulting in much better coordination with suppliers, which could not have been possible with traditional way of handling the supply chain.

References

Handfield, R. B., & Nichols, E. L. 2009. Introduction to supply chain management (Vol. 183). Upper Saddle River, NJ: prentice Hall.

Bowersox, D. J., Closs, D. J., & Cooper, M. B. 2002. Supply chain logistics management (Vol. 2). New York: McGraw-Hill.

Gunasekaran, A., & Ngai, E. W. 2004. Information systems in supply chain integration and management. European Journal of Operational Research, 159(2), 269-295.

Lee, H. L., Padmanabhan, V., & Whang, S. 2004. Information distortion in a supply chain: the bullwhip effect. Management science, 50(12_supplement), 1875-1886.

Thomas, D. J., & Griffin, P. M. 1996. Coordinated supply chain management. European journal of operational research, 94(1), 1-15.

Stock, J. R., & Lambert, D. M. 2001. Strategic logistics management.

Cooper, M. C., & Ellram, L. M. 1993. Characteristics of supply chain management and the implications for purchasing and logistics strategy. International Journal of Logistics Management, The, 4(2), 13-24.

Cooper, M. C., Lambert, D. M., & Pagh, J. D. 1997. Supply chain management: more than a new name for logistics. International Journal of Logistics Management, The, 8(1), 1-14.

Lambert, D. M., & Cooper, M. C. 2000. Issues in supply chain management. Industrial marketing management, 29(1), 65-83.

Holland, C. P. 2005. Cooperative supply chain management: the impact of interorganizational information systems. The Journal of Strategic Information Systems, 4(2), 117-133