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Understanding the supply chain

Involves integrated purchasing strategy, integrated logistics,


supplier integration, buyersupplier partnerships, strategic
supplier alliances, supply chain synchronization and lots more
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Lecture Presentation | Dr. A. K. Kar

primary
secondary
tertiary
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Lecture Presentation | Dr. A. K. Kar

Nature of IT Adoption & Impact in E-SCM

Subramani, M. (2004). How do suppliers benefit from information technology use in supply chain relationships?. MISQ, 45-73.

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Lecture Presentation | Dr. A. K. Kar

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Lecture Presentation | Dr. A. K. Kar

Croom, S. R. (2005). The impact of e-business on supply chain management: an empirical study of key developments. IJOPM, 25(1), 55-73.

Stage No:

1
Stakeholder
acquisition

Stakeholder
management
Utilisation of e-business
to support operations
Integrating supplyside activities

Increasing level of digitization


22-07-2015

Lecture Presentation | Dr. A. K. Kar

Integrated E-SCM
and Value Web
6

Main Benefits of E-SCM


Improved cost performance (from lower input prices)
Improved customer service (service quality)
Improved process capability (quality consistency)
Improved productivity (from increased control of material flow)
Improved dependability (from increased control of information flow)
Tan, K.C. (2001), A framework of supply chain management literature, EJOPSM, Vol. 7 No. 1, pp. 39-48.

22-07-2015

Lecture Presentation | Dr. A. K. Kar

Supply Chain Collaboration enabled using IT

Fawcett, S.E., Magnan, G.M., & McCarter, M.W. (2008). Benefits, barriers, and bridges to effective supply chain management. SCM-AIJ, 13(1), 35-48.

22-07-2015

Lecture Presentation | Dr. A. K. Kar

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

IT in SCM
To
Truly E-SCM

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Lecture Presentation | Dr. A. K. Kar

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Lecture Presentation | Dr. A. K. Kar

10

Traditional Procurement Management


Procurement management: The planning, organizing, and coordination of all the
activities relating to purchasing goods/services needed to accomplish a firms mission
Maverick buying: Unplanned purchases of items needed quickly, often at non prenegotiated higher prices than that is expected from a market

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Lecture Presentation | Dr. A. K. Kar

11

E-Procurement

E-procurement is the B2B or


B2C or B2G purchase and sale
of supplies, work, and
services through the Internet
as well as other information
and networking systems, such
as EDI and ERP.

Reduces maverick buying..

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Lecture Presentation | Dr. A. K. Kar

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Snapshot of different vendor evaluation criteria used across industries


Product quality
Exporting status
Product pricing
Management capability
Labor relations
Reciprocal arrangements
Inventory position
Geographical distance
Acceptable parts per million
Trade restrictions
Documentation
Rejection rate during inspection
Lead time
Innovation
Domain experience
Customs duties
Quality management
Electrical capacity
Total cost of acquisition
Research and development
Sub-component pricing
Rejection from customers
Billing accuracy
Data administration
Service quality credence

Delivery reliability
Packaging capability
Production capability
Vendor reputation
Service quality experience
Cultural fitment
Electronic data interchange
Foreign exchange rates
Service design
Buyers commitment
Design capability
Dollar value of performance
Indirect costs
Facility planning
Exporting status
Product line diversity
IT standards
Judgment
Risk perception
Organizational culture
Regulatory compliance
Education level of personnel
Cost reduction performance
Improvement commitment
Vendors commitment

Warranties
Intellectual Property Rights
Technical capability
Financial position
Past business records
Communication barriers
Value-added productivity
Trade tariffs
Order acknowledgements
E-Transaction capability
Supply variety
Purchase order stability
Response flexibility
Safety adherence
Conflict resolution systems
Intimacy of relationships
Cost reduction capability
Response time
Certification and standards
Availability of parts
Self-audits
Receiving inspection
Indirect costs
Procedural compliance
Skill level of staff

Kar, A.K.,
& Pani, A.K. (2014). Exploring the importance
of different
supplier
Management Research Review, 37(1), 89-105.
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Lecture
Presentation
| selection
Dr. A. K. criteria.
Kar

e-Tendering

E-Tendering is the process of making an offer, bid or proposal, or expressing


interest in response to an invitation or request for tender online.
Organisations will seek other businesses to respond to a particular need, such
as the supply of goods and services, and will select an offer or tender that
meets the needs the best way.
Tender request documents; also referred to as invitations to tender, Requests
for Tender (RFT), Requests for Proposal (RFP) etc outline what is required. The
document also outline the requirements, criteria, and instructions that are to
be followed.
Interested suppliers will then prepare a tender/bids; the documents that
outline the offer that they are making, and will include pricing, schedules as
well as their eligibility for the project or procurement.
The submitted tenders are then evaluated with regard to defined criteria. The
offer that best meets all of the requirements outlined in the request, and
provides value for money should win the contract.
E.G. TradeInterchange provides an online solution available on pay-per-use

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Lecture Presentation | Dr. A. K. Kar

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e-Sourcing

E-Sourcing is the process of obtaining bids from different suppliers via a


single online portal. The benefits of e-Sourcing include streamlining the
sourcing process, reducing prices by maximizing supplier competition,
and creating a repository for sourcing information.
Typically followed for regular Business-as-Usual operations and not for
exceptional purchasing requirements or maverick buying
It is an institutional procurement process that continuously improves and
re-evaluates the purchasing activities of a company.
Strategic sourcing techniques are also applied to non-traditional areas
such as services or capital.
E.G. Ariba, Delta-eSourcing, TradeInterchange

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Lecture Presentation | Dr. A. K. Kar

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e-Reverse auction

A e-Reverse Auction is a type of auction in which the roles of buyer and


seller are reversed.
In an ordinary auction (also known as a forward auction), buyers compete to obtain a
good or service by offering increasingly higher prices.
In a reverse auction, the sellers compete to obtain business from the buyer and prices
will typically decrease as the sellers undercut each other.

It is typically part of the financial bid, in the e-Tendering process. Lowest


bidder wins the bid, from among the parties who have cleared the
technical prequalification
One of the major strategies used by purchasing and supply management
organizations to reduce spending as part of strategic sourcing

E.g.: Epic Technologies, ARIBA, Kennisportal E-Procurement Portal


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Lecture Presentation | Dr. A. K. Kar

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e-Informing

e-Informing is receiving , editing and dissemination of procurement information


for internal and external customers and suppliers using web based technologies.
Purchasing information is used in the procurement process and the handling thereof, such as
contracts, invoices, need plans, performance indicators, goods receipt information and so on.
Gathering purchasing information: for example, to find information about products and
services , consult the financial status of a supplier or comparing data between similar
suppliers via the web.
Dissemination of procurement information: for example, contracted suppliers & managers
gain insight into performance metrics such as delivery time, delivery reliability and the
proportion of correct invoices.

The main types of e-Informing are :


Purchasing Intelligence: The processing of operational data to structure purchasing. Linked to this
is are performance indicators , to measure /achieve improvements
E - Contract Management: Finding ( framework) contracts within the organization that meet an
operational need, but also manage compliance and expiring contracts .

E.g. Kennisportal E-Procurement (e-procurement.nu)


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Lecture Presentation | Dr. A. K. Kar

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e-MRO (Maintenance, Repair and Operations)

MRO involves fixing any sort of mechanical, plumbing or electrical device


should it become out of order or broken.
Manage the entire business process of defining, planning and executing the
maintenance of complex configurable and regulated equipment systems.

e-MRO ensures the scheduling, initiation, monitoring such activities using


internet based technologies
It also includes performing routine actions which keep the device in working order
or prevent trouble from arising (preventive maintenance).
The actions include the combination of all technical and corresponding
administrative, managerial, and supervision actions.
Often, this requires partnering with third party MRO service providers through
automated portals and trigger gateways

E.g. Oracle Complex MRO Release 2.1


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Lecture Presentation | Dr. A. K. Kar

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E-Fulfilment

E-Fulfilment is in the most general sense the complete process from point of
sales inquiry to delivery of a product to the customer.
Order fulfilment is used to describe the more narrow act of distribution or the
logistics function, however, in the broader sense it refers to the way firms respond
to customer orders.
Fulfilment of services involves a series of supply chain activities responsible for
assembling and making services available to consumers.

Involves activities like


Network design including determining where to locate facilities, justifying economics of
supplementing the network with fast moving, bulk and/or seasonal operations
Process modelling and optimization including determining the ideal level of mechanization for the
operations
Facility design and layout including working with racking, material handling equipment and
automation vendors during implementation
Systems setup and integration including installation support, configuration and modifications
Peak season planning including ramp-up, outside storage operations and leveraging warehouse sites

DHLs E-Fulfilment Service


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Lecture Presentation | Dr. A. K. Kar

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Transaction
Costs

Manufacturing
Costs

Different Sources of Costs

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Direct materials cost


Direct labour cost
Manufacturing overhead / Indirect costs
Coordination costs / Search costs
Cost of fit
Agency costs / Risk of opportunism
Costs of incomplete contracts
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RFID implementation at Walmart

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E-SCM
Infrastructure

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