Chapter 11 Objectives
• How do enterprise systems provide value for
businesses?
• How do supply chain management systems provide
value for businesses?
– 11.1.Enterprise systems (p. 380-383)
– 11.2. Supply chain management systems (p. 384-393)
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
1
How Enterprise Systems Work
• ISs that integrate and coordinate key internal processes of the
firms, integrating data from different business functions
• Enables data to be used by multiple functions and business
processes for precise organizational coordination and control.
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
2
Enterprise system architecture
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
3
Benefits of Enterprise Systems
• Firm structure and organization: A more uniform
organization
• Management: More efficient operations and customerdriven business processes –Firm-wide knowledge-based
management processes
• Firm-wide information for improved decision making Technology: Unified IT platform
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
4
The Supply Chain vs. Supply Chain
Management (SCM)
Supply Chain
• A network of organizations and business processes of procuring
material, transforming raw materials into intermediate and
finished products, and distributing the finished product to
customers
• Materials, information, and payments flow through the supply
chain in both directions.
Supply Chain Management (SCM)
• Coordination of business processes to speed information, product,
and fund flows up and down a supply chain to reduce time,
redundant effort, and inventory costs
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
5
Supply Chain Management Systems
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
6
Supply Chain Processes
SCOR (Chain Operations Reference Model) identifies five major
supply chain processes:
• 1-Plan: Balancing demand and supply to meet sourcing,
production, and delivery requirements
• 2-Source: Procurement of goods and services needed to create a
product or service
• 3-Make: Processes that transform a product into a finished state
• Deliver: Processes to manage order transportation and
distribution
• 5- Return: Processes associated with product returns
and post delivery customer support
Logistics: Planning and control of all factors that have an
impact on the supply chain
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
7
Supply Chain Processes
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
8
Information and Supply Chain Management
Problem of supply chain
• Inaccurate or untimely information causes inefficiencies in supply
chain, such as shortages, excessive inventory
• Objective of supply chain management is to overcome bullwhip
effect (‫)أثر كرة الثلج‬
• There are several solution: Just-in-time
Just-in-time strategy
• Scheduling system for minimizing inventory by having:
• (A) components arrive exactly at the moment they are needed and
• (B) finished goods shipped as soon as they leave the assembly
line
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
9
Bullwhip effect
• Distortion of information about the demand for a product as it
passes from one entity to the next across the supply chain
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
10
Supply Chain Management Applications [need to find
useful examples-based on my background _OR]
Supply chain management systems
• Automate flow of information between company and supply
chain partners (suppliers, logistics partners)
Supply chain planning systems
• Generate demand forecasts for a product (demand planning) and
help develop sourcing and manufacturing plans for that product
Supply chain execution systems
• Manage the flow of products through distribution centers and
warehouses to ensure that products are delivered to the right
locations in the most efficient manner
• E.g. Agility when it delivers product to Jamayyats in Kuwait
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
11
Supply Chain Performance Measurement
Metrics for measuring supply chain performance
• Fill rate (the ability to fill orders by the due date)
• Average time from order to delivery
• The number of days of supply in inventory
• Forecast accuracy
• The cycle time for sourcing and making a product (total elapsed
time to complete a business process)
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
12
Supply Chain Management Systems / Intranets and
Extranets for Supply Chain Management
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
13
Supply Chain Management Systems (cont’)
Internet-based supply chain management applications:
• Provide standard set of tools
• Facilitate global supply chains
• Reduce costs
• Enable efficient customer response
• Allow concurrent supply chains
Two types of demand-driven supply chain management: Push &
Pull
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
14
Push- versus Pull-Based Supply Chain Models
Replenish =Refill
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
15
Supply Chain Management Systems (cont’)
Push-based model
• Production master schedules based on forecasts of
demand for products, and products are “pushed” from
manufacturer to customers
Pull-based model
• Supply chain driven by actual customer orders or
purchases
• It is also called demand-driven model or build-to-order
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
16
The Future Internet-Driven Supply Chain
The model is not any more sequential …Random
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
17
Business Value of Supply Chain Management
Systems
• Improved customer service and responsiveness
• Cost reduction
• Cash utilization
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
18
Business Value of Supply Chain Management
Systems (cont’)
Dr K. ROUIBAH
Chapter 11 (QM 240) / dept QM & IS
19