Chapter 12: Information Sharing Flashcards
(25 cards)
4 Reasons why information is important?
- Improved customer satisfaction
- Increased flexibility
- Redefines SC relationships (information sharing)
- Substituting information for inventory or other resources reduce costs
What does information technology strategy comprise of?
2 components
1. Connectivity
• Technology allows/makes it possible for various people, teams, functions and organisations to work together
2. Willingness
• Information is power, thus sharing information means relinquishing some power
What is Enterprise Resource Planning (ERP)
• A single database surrounded by application programs that take data from the database and either conduct analysis or collect additional data for the firm.
ERP vs. Legacy Systems: 3 Differences?
ERP
• Single integrated database
• Data entered once
• Integrated, cross-functional
Legacy systems
• Multiple databases
• Data entered several times
• Standalone
ERP Implementation Process: Step 1
- Define the current process “as is”
• Cross-functional implementation team of subject-matter experts document the current processes
ERP Implementation Process: Step 2
- Define what the best-in-class business process should be
•State the final objective of the process
•Identify what the ERP system will replace
•Identify how the benefits are likely to occur
ERP Implementation Process: Step 3
- Develop the system
• Consultants work together with those who are most familiar with the business processes in question
ERP Implementation Process: Step 4
- Work through all the final “bugs” and then “flip the switch”
• Company may not be ready for change
System may not be configured to handle specific activities
ERP Implementation Issues: Excessive Costs
•Without proper planning, the timeline and cost can quickly exceed the budget
ERP Implementation Issues: Resistance to change
•Managers and employees often prefer the legacy systems and are resistant to change
ERP Implementation Issues: Errors during implementation
- Errors in new systems may become evident only after implementation
- Solutions include:
- Slowly phasing the new system in and the old system out
- Running the two systems concurrently until al “bugs” are fixed
- Pilot projects at certain locations for beta testing
ERP Implementation Issues: Rapid technological change
- Can render new systems obsolete, complicating cost-benefit analysis
- Early adopters may have the benefit of being ahead of competitors
- Early adopters run the risk of acquiring untested technology that could disrupt the firm’s entire operation
ERP Implementation Issues: Never-ending implementation
- Many firms adopt an ERP system module by module, extending the implementation period
- Simple implementations take a year or more
- Complex implementations have taken close to a decade
ERP Implementation Issues: Use of consultant
- There is a learning curve in any new technology
- Knowledgeable consultants can help companies along the learning curve
- Relying solely on outside consultants can lead to expensive implementation that doesn’t meet company needs
Internet
Allows unlimited access
Intranet
- Allows systems access to limited number of parties
- Avoids custom interface
- Avoids incompatible types of hardware
- Avoids special connection procedures
Extranet
•Allows limited access to certain applications and data to external users
What is Electronic-commerce?
- The automation of commercial transactions using computers and networked communication technologies.
- Includes Internet, email, EDI, EFT
How can E-commerce reduce costs?
- Centralisation of inventory
- Centralisation shipping locations
- Reduced safety stock
- Consolidation of inbound transportation/reduce costs
How can E-commerce enhance revenue?
- Removes time and location constraints
- Allows direct sales to customers (no intermediary)
- Allows instantaneous and flexible introduction of products and product mixes
- Allows customers to instantly pay, reducing cash-to-cash cycle time
- Allows real-time access to demand in inventory data to facilitate better decision-making.
What is an Electronic Marketplace?
- Neutral Internet-enabled entities through which companies buy or sell goods or services.
- Neutrality – e-marketplace does not represent a single buyer or seller
What are the limitations of E-marketplace?
- Do not yield significant, repeatable price cuts
- Not a viable substitute for a company’s SC department
- Not the solution for all of a business’s purchasing needs
Why should information be shared?
Benefits of sharing information?
- Improved customer service
- Reduced costs
- Increased sales
- Reduced lead times
- Improved quality
- Increased profitability
- Enhanced diffusion of technology and innovation
What information should be shared?
Companies should share:
• Sales data and sales forecast
o To reduce Bullwhip effect, companies should share actual sales data as well as orders with their suppliers.
o Suppliers need to know why their customers ordered more this month than last month.
o This leads to best inventory management decisions
• Inventory levels
o Providing visibility into inventory levels can reduce the total level of inventory by reducing the amount of safety stock required.
• Order status for tracking
o Customers want to know the real-time status of their orders.
o This information can be used to trans-ship to other customers, DC or production facilities to meet unexpected need.
• Performance metrics
o Companies should share their performance metrics with their suppliers and customers.
o This could point out strengths and weaknesses of SC members.
o This information can be used to improve the performance of individual players or provide insight needed to shift tasks to other members in the SC.
• Capacity and capability information
o SC partners need to know the capacity levels, potential disruptions and when new capacity is going to come on-line
o Similar information should be shared for new capabilities
o Helps prepare for shortages
