DEPARTMENT OF ECONOMICS

ECN4205 - PRINCIPLES OF PROCUREMENT AND

SUPPLY MANAGEMENT

Information Systems in SCM

Presented by:

Sheralyn Vangenderen –
1027920
Joel Walcott - 1021096
OBJECTIVES
 What is Supply Chain Management & Brief History
 The Role of Digitalisation in Supply Chain Management
 Supply Chain Management Information Systems
 Emerging IT technologies
 WHAT IS
Supply chain management (SCM) is the SUPPLY
management of the flow of goods and services
and includes all processes that transform raw CHAIN
materials into final products. It involves the active
streamlining of a business's supply-side activities
MANAGEMEN
to maximize customer value and gain a T?
competitive advantage in the marketplace.
 By managing the supply chain, companies can
cut excess costs and deliver products to the
consumer faster and more efficiently.
 Good supply chain management keeps
companies out of the headlines and away from
expensive recalls and lawsuits.
 The five most critical elements of SCM are
developing a strategy, sourcing raw materials,
production, distribution, and returns.
BRIEF HISTORY OF SUPPLY
CHAIN MANAGEMENT
 Pre-1900s: Local supply chains

Prior to the first industrial revolution, supply chains were typically local and restricted to
regions. As the use of railroads increased, so did the distance that goods could be
distributed.
 1900-1950s: Supply chains continue to grow

Between the 1900s and 1950s, global supply chains started to take shape, many
organizations opened their doors. Industry leaders began to look at improving manual
processes, researching the use of mechanization, and demonstrating the benefits of
analytics in military logistics following World War II. Leading up to the 1950s the concept
‘unit load’ became popular, later to be extended to transportation management.
 1960s-70s: Physical distribution

By the 1960s, DHL joined the growing number of logistics providers, along with FedEx in
the 1970s. In this time, time-dependent freight transportation transitioned to trucks,
which led to organizations coining the concept ‘physical distribution’
 1982: Supply chain management coined

Keith Oliver coined the term ‘supply chain management, using the term in an
interview with Arnold Kransdorff of the Financial Times, on 4 June 1982. Oliver
defined it thus: “Supply chain management is the process of planning,
implementing, and controlling the operations of the supply chain with the
purpose to satisfy customer requirements as efficiently as possible. It spans all
movement and storage of raw materials, work-in-process inventory, and
finished goods from point-of-origin to point-of-consumption.”
 1990s-2000s: tech revolution and globalisation

This period saw the supply chain industry grow further, with solutions such as
enterprise resource planning and advanced planning and scheduling, as well
as the increase in global imports and exports.
 1996: First cobot is invented

A cobot, or collaborative robot, is a robot intended for human interaction. They

were invented in 1996 by J Edward Colgate and Michael Peshkin, professors at
Northwestern University. Their invention sprang from a 1994 General Motors
initiative to find a way to make robots or robot-like equipment safe enough to
team with people.
 2010-2020: Industry 4.0

While the likes of AI, data, and the Internet of Things (IoT) have been around
prior to 2010, the past decade has seen an exponential increase in their
adoption, and supply chains have not been left out. Organizations around
the world have been using Industry 4.0 tech to drive their digital
transformation strategies.
 2020: Covid-19
 The pandemic spread around the world, and supply chains grinded to a
halt, leaving no one in any doubt as to the importance of these vital
functions of business. The outbreak of Covid-19 spurred investment in
localisation, and further investment in digitalisation, to mitigate the
pandemic's impact.
Too often, manufacturing operates independently
from marketing, from customers, and from suppliers
THE ROLE OF
and other partners. Lack of transparency means that
none of the links in the supply chain really
DIGITALIZATI
understand what any other link is doing or needs. ON IN SCM
Inevitably, it seems the orderly flow from marketing
to customer is disrupted somewhere.
Supply chain digitalization is when a business
embraces digital technology to improve its processes
and how it works both internally and with customers
and suppliers. It takes human-driven events and uses
digital technology to make them software-driven.
They use digital technologies to improve a business
model and provide new revenue and value-producing
opportunities.
Technology has had a major impact on supply chains
as a facilitator of change as companies have
transformed their processes.
BENEFITS OF
DIGITALIZATION
 Improved flexibility and responsiveness to change
By embracing technologies such as predictive analytics, or automating stock
management processes, businesses are more likely to identify upcoming challenges
earlier and have the capability to dynamically react to them. As a consequence, they
are better positioned to deal with rapid change that comes with supply and demand
fluctuations.
 Ability to handle big data and at a granular level
Technology provides the data insights that businesses need to make informed
decisions and identify areas of improvement and opportunity.
It also allows teams to dig into data at a granular level – whether this is tracking
individual SKUs along a supply chain or forecasting stock levels item by item.
 Better accuracy
Moving from human-led to software-led processes removes the element of human-
error. With advancements such as real-time tracking, comes the benefit of total
transparency of business operations at each stage of the supply chain.
 Greater efficiency
 If businesses can integrate and speed-up processes, this leads to greater
operational productivity. Examples of this include introducing picking software or
conveyor automation to make warehouse processes more efficient.
 Improved competitiveness
 There’s a growing volume of empirical evidence that suggests digitalisation can
help businesses during times of economic uncertainty, e.g recessions and
economic slowdowns.
 A study published in Harvard Business Review (HBR) in 2010 looked at 4700 public
companies in the USA before, during and after the recessions of 1980, 1990 and
2000 and closely reviewed the performance of each one. It found that 9% of
companies flourished after the slowdowns, with them all having a similar strategic
approach:
 They cut costs through improvements in operational efficiency
 They invested in assets such as technology, plant and machinery
 They invested in R&D and marketing

This allowed them to outperform their competitors by at least 10% in terms of sales
and profits growth.
DIGITALIZATION AND SUPPLY
CHAIN MANAGEMENT
DIGITALIZATION AND SUPPLY
CHAIN MANAGEMENT
ROLE OF DIGITIZATION
 SCM
INFORMATION
SYSTEMS
Planning and Execution Systems
Data Capture systems
Customer Relationship Management systems
Unit identification system
SUPPLY CHAIN
MANAGEMENT FLOWS
PLANNING AND EXECUTION
SYSTEM
The planning system provide information that helps businesses in the
planning of their supply chain. Every business must create a plan which will
be used to provide a variety of benefits.
The execution system provide information that helps businesses in the
execution of their supply chain steps.
 Forecasting demand for specific products and
preparing sourcing and manufacturing plan for
BENEFITS OF
those products. PLANNING
 Estimating the quantity of the product to be SYSTEM
manufactured in a given time period.
 Deciding the location where the finished goods
are to be stored
 Identifying the transportation mode to be used
for delivering the products
 Setting the inventory levels for raw materials,
intermediate products, and finished goods
 Determining the product quantity a business
should make in order to meet all its customers’
demands
  Managing the flow of products from the
BENEFITS OF manufacturers to distributors to retailers and
finally to customers in order to ensure the
EXECUTION accurate delivery of products.
SYSTEM  Providing information about the status of orders
being processed so that the vendors could
provide the exact delivery dates to customers.
 Tracking the shipment and accounting for the
products that have been returned or are to be
repaired and serviced.
CUSTOMER RELATIONSHIP
MANAGEMENT SYSTEM
 Customer relationship management is the process of managing customer
interactions with a business. It allows businesses to improve customer
satisfaction, retention, and loyalty. It also includes the analysis of data to
identify customer needs, providing information to customers about various
products, and making sure customers are happy with their experience.
 CRM systems can help businesses reach people BENEFITS OF
who are right for their products and services. CUSTOMER
 They also allow businesses to target their RELATIONSHIP
marketing efforts and make them more efficient. MANAGEMENT
 They help businesses develop better SYSTEM
relationships with their suppliers.
 It helps to track customer interactions, so it is
easy for businesses to understand what
customers want and need.
DATA CAPTURE SYSTEM
Supply chain are useless without data. Constant data must be inputted into
the software for it to be useful. The data capturing system is therefore the
heart of the supply chain management system as it is indeed critical to the
success of the entire system.
UNIT IDENTIFICATION
SYSTEM
Identification (Auto ID) applications can provide corporate information
systems with the identity of each physical item in the supply chain in an
automated and timely manner. The real time availability of item identity
allows other information, related to the item, to be drawn on in order to
assess both the current state of the product and future actions required.
BENEFITS OF DATA
CAPTURING SYSTEM AND
UNIT IDENTIFICATION
SYSTEM
Precise forecasting- Firms with large data are more likely to have precise
forecasting and prediction results.
Increased profitability- The data gathered allows the firm to make informed
decisions which is not beneficial to the customers but to the profitability of
the firm as well.
Efficiency- The ability to produce more goods by utilizing less time and
resources. This is because computer software have led to an improved
system and reduced timing.
Emerging IT
Technologies
Internet of Things ( IoT )
Moblie Connectivity
Functional Automation
AI and Machine Learning
Digital Supply Chain Twin
 We live in a highly connected world of
smartphones and mobile computers. However,
there is another level of connectivity that most INTERNET
people don’t notice. Connected devices— with
sensors, on/off switches, and Internet linkages—
OF THINGS
already outnumber the world’s population and (IOT)
the gap is accelerating. This Internet of Things
(IoT) includes Apple watches, Fitbit trackers, and
other wearables, home automation systems,
electronic toll passes, and other devices used
daily by people.
 A broad range of IoT business equipment,
devices, and mechanisms are already in use.
Gartner (a major research and advisory
company) indicates that the IoT trend will
influence how supply chains operate. Hence, it is
an innovative or “disruptive” technology that
warrants attention.
 The technology will allow supply chain managers to intelligently connect
people, processes, data, and things using IoT devices and sensors. This
deeper intelligence will be used to align, synchronize, and automate supply
chain activities.

Examples of how IoT can enhance supply chain performance include:

 Right-sizing inventory levels – Use sensors to monitor inventory levels in fuel
tanks. Trigger a replenishment request when inventory is nearly depleted.
 Modifying storage conditions – Monitor container and facility climate. Adjust
temperature and humidity levels to avoid spoilage of food and
pharmaceuticals.
 Enhancing in-transit visibility – Track status of shipments as they move
across the network. Send new routes to drivers to avoid congested
roadways.
 Calibrating factory machinery – Capture equipment performance data.
Remotely adjust machine settings or dispatch a maintenance worker for
repairs.
  Mobile technology is not a new topic in SCM. In fact, it has
been used for nearly four decades since Qualcomm’s
MOBLIE OmniTracs ushered in mobile two-way satellite-based
information services for fleet management. Subsequent
introductions and advancements in GPS technology, auto-
CONNECTIV ID, wireless connectivity, tablets, and smartphones have
altered supply chain processes for the better. Improved
visibility, asset control, and agility are three benefits of a
ITY connected supply chain.
 Although mobile connectivity is growing, it has not
reached the saturation point in the marketplace.
Opportunities for wider adoption are vast as mobile
technology problems have faded away. Price points for
hardware and communications have fallen, the reliability
of mobile technologies has greatly improved, and logical
solutions with real ROI are being developed. Mobile
connectivity is critical in the transportation area as freight
companies must grapple with the competing objectives of
maximizing service and minimizing costs. They need a
continuous link with their geographically dispersed
drivers, equipment, and cargo. Enhanced geographic
information systems data along with real-time and
predictive traffic data are needed to effectively plan
routes, determine dispatch times, and re-route in-transit
 These capabilities will help the freight companies to accurately predict arrival
times, reduce delivery costs, and decrease energy consumption. Warehouse
operations have long relied on RFID-enabled terminals on forklifts and hand
held devices to direct employee activities. Yet, traditional labor management
systems are PC-based and tie managers to the office. They need to spend
more time on the warehouse floor to gain operational oversight and coach
employees, Mobile tools and solutions will provide managers with access to
critical productivity, workload management, and exceptional data regardless
of their location. Such capabilities will allow managers to break away from
the office and spend much needed time directly engaging with their
employees and improving throughput. Mobility is also a technology priority
for manufacturing operations. Forward thinking manufacturers are
integrating mobile capabilities into their quality systems. This allows real-
time monitoring of supplier traceability, quality, and non-conformance and
corrective actions. Mobile integration of configure, price and quote systems
to pricing and inventory systems makes it possible for salespeople to rapidly
give customer pricing and delivery dates. And, accessible dashboards on
mobile devices will allow managers to monitor production workflow
performance. The goals of these initiatives are to make manufacturers more
responsive to customers and make manufacturing intelligence the new
normal in production operations.
 Automation has long been a part of the
manufacturing plant with conveyors moving FUNCTIONAL
products between workstations and robots
handling welding, painting, and other precision AUTOMATIO
tasks. Warehouse automation has also gained
tremendous traction as companies are opening
N
large scale datacentres that deploy automated
storage, handling, and distribution technologies
rather than manual labor. Fulfillment speed and
accuracy—two essential elements of
omnichannel retailing—are greatly enhanced and
there is never an absenteeism issue. In contrast,
the transportation function continues to be a
labor-intensive activity, particularly the trucking
industry. Connective technologies needed to
support driverless vehicles are under rapid
development.
 Companies like Daimler AG, Google, and Komatsu are spending significant
resources to develop autonomous vehicles. Daimler’s Future Truck 2025
navigates using its Highway Pilot system, enabled by a collection of cameras
and radar sensors, while continuously transmitting its position to other
drivers and traffic control centers. The pilot program puts a driver in the
vehicle to handle driving on city streets. However, it relies heavily on the
operational system for highway driving much like an auto-pilot system for an
airplane during normal flight operations. The promises of driverless vehicles
are many. First, the prospect of safer truck operation is strong due to the
multitude of sensors being used and the elimination of driver fatigue as a
crash factor. Second, the driving system is designed to operate at maximum
fuel efficiency and reduce emissions. Finally, the technology may be able to
address the chronic shortage of truck drivers that hampers industry capacity.
This is a long-range prospect as much more testing and proof of concept will
be needed to gain regulatory and public acceptance of truly driverless
vehicles.
Some ways in which robots and automation are revolutionizing the
manufacturing industry include:
 Delivery robots: These robots can help companies save on labor costs and
eliminate the need to place humans in a hazardous role, thereby also
reducing health and safety costs and costs due to missed work.
 Automated trucking: Self-driving vehicles are likely in the future, with
humans and machines working together to ensure the safe transport of
products and materials.
 Sorters: Utilizing vision technology, these robots can learn as they go (AI) to
recognize various materials and categorize them accordingly, eradicating a
menial and time-consuming task for humans.
 Automated storage and retrieval: These are computer- and robot-aided
systems that can move inventoried products as needed for storage or use
per consumer demand.
 The harrowing year of 2020 forced businesses to rethink
their operations to remain relevant and competitive amid
a pandemic that rocked the globe, making innovation AI AND
imperative to avoid disrupting demand and revenues and
keep "doors open" in new ways. As a result, digitization MACHINE
and automation became necessary to keep the wheels of
commerce turning. An Oxford Economics Survey found
LEARNING
that 70% of businesses surveyed have implemented or
tested artificial intelligence (AI) solutions in the wake of
one of the most memorable years in manufacturing and
consumer sales.
 AI can make better decisions and has already been used to
help reduce empty freight trips or plan labor resources.
Companies implementing AI perform stronger with better
results than companies lagging in technological
advancements. The unconventional software uses
algorithms modeled on human thoughts and behaviors
and can modify its processes over time based on intel from
past operations. In other words, it learns and evolves to
improve methods established by previous failures and
successes.
 In the manufacturing world, this means smart manufacturing or using
machines to analyze, compute, and make decisions in real-time, often in
ways far superior to human capabilities. Machine learning leads to increased
productivity and accuracy to keep costs low and operations running
efficiently. The programming of machines to sense problems and send data
make it easier to maintain tools and avoid lapses in production.
 Manufacturers can use predictive analytics for more than just real-time
product intelligence. Supply chain analytics can help improve customer
experiences, reduce costs, and optimize inventory visibility and strategic
sourcing per Deloitte's 2019 Supply Chain Digital and Analytics Survey.
Supply chain management relies on details and data quality to deliver big-
picture values. Analytics is the way to drive the technological elements that
lead to insightful tactics and beneficial results.
  A digital twin of your supply chain system can help you
optimize and make business decisions by manipulating
DIGITAL and finding how changes would affect your supply chain
management. In other words, it's a simulation model
SUPPLY replicating current performance to help forecast and
analyze various supply chain behaviors and potential
CHAIN TWIN problems to devise a plan. In addition, these digital
supply chain twins are detailed and integral, providing
live data feeds, so information and predictions are
continually updated.
 Analysts create digital twins using specialized supply
chain software integrated within company systems to
represent and connect hundreds of assets and positions
across a business chain. This software is flexible,
scalable, and interoperable to identify risks in advance
and make changes accordingly. Users need transparency
along the supply chain for accurate and informed
decision-making based on anticipated events.
Essentially, digital supply chain twins provide you with
data-driven insights to help improve or test processes
before mistakes happen or as they're happening to
prevent significant company losses.
Manufacturers can use digital supply chain twins for the following purposes:
 Understanding the way your supply chain operates
 Bottleneck discoveries (i.e., anything presenting a "kink" or break in the
chain, such as limited resources, poor planning or execution, inefficient time
management, lack of innovative processes, etc.)
 Testing changes or new developments to the supply chain
 Risk management and monitoring with the assessment of possible
contingencies
 Transportation planning
 Inventory optimization
 Forecasting and testing of various operational methods
 Predictive and determinative analytics
Without question, the innovations described earlier have the potential to drive
SCM to new levels of performance. The same is true for future solutions that
are in the concept phase today. The only way to keep up with the ever-
changing technology landscape is to continuously monitor industry
developments.
CASE STUDY
In 1996, when McDonald's entered India, it was looking for a distribution
agent who would act as a hub for all its vendors. Mumbai-based
Radhakrishna Foodland Private Limited (RFPL) was chosen for the job as it
was already a distributor for its sister concern, Radhakrishna Hospitality
Services, a catering unit supplying to offshore institutions. The iceberg
lettuce from Ooty, mutton patties from Hyderabad and sesame seed buns
from Punjab were all delivered to RFPL's distribution centre (cold storage) in
its refrigerated vans. RFPL stored the products in controlled conditions in
Mumbai and New Delhi and supplied them to McDonald's outlets on a daily
basis.
CASE STUDY
By transporting the semi-finished products at a particular temperature, the
cold chain ensured freshness and adequate moisture content of the food.
The specially designed trucks maintained the temperature in the storage
chamber throughout the journey. Drivers were instructed specifically not to
switch off the chilling system to save electricity, even in the event of traffic
jam...
CASE STUDY
McDonald's sourced ingredients from all parts of India. (Refer Table I). The
iceberg lettuce was specially developed for India using a new culture
farming technique. This variety of lettuce was similar to the lettuce
McDonald's used elsewhere in the world. To meet the demand consistently,
McDonald's helped Trikaya Agriculture grow the lettuce throughout the year
and even in rain-shadow areas. The crop was harvested between 45 days,
depending on the climate. The crop was harvested early in the morning and
immediately stored in vacuum pre-coolers installed at the farm. The pre-
cooler brought down the temperature of the lettuce from 26º to 3º...
REFERENCES

 Ashaolu, B. (2021). 7 supply chain technologies for better supply chain management. 7
Supply Chain Technologies for Better Supply Chain Management.
https://converged.propelsoftware.com/blogs/supply-chain-technologies-better-supply-chain-m
anagement

 Ashcroft, S. (2021). The history of supply management. The history of supply chain
management | Supply Chain Magazine.
https://supplychaindigital.com/supply-chain-risk-management/history-supply-chain-managem
ent

 Baker, T. (2022). What's driving supply chain digitalisation and what are the benefits?Supply
chain digitalisation- drivers and benefits.
https://www.eazystock.com/uk/blog-uk/supply-chain-digitalisation/
REFERENCES
 Customer Relationship Management. (2022). Customer relationship management and
supply chain management.
https://crm.walkme.com/customer-relationship-management-and-supply-chain-manag
ement/

 Fernando, J. (2022). Supply chain management (SCM): How it works and why it is
important. Supply Chain Management (SCM): How It Works and Why It Is Important

 John J Coyle, C. John Langley Junior, Robert A Novack, and Brian J. Gibson Thomson,
Supply Chain Management – A logistics Perspective (9th Edition), Mason, OH: South-
Western.
REFERENCES

 Keefer, M.(2021). 6 strategies for using data in supply chain management.

https://www.bluemargin.com/ttd/6-strategies-for-using-data-in-supply-
chain-management
 Management Study HQ. (n.d.). What is supply chain management? Types
and benefits of supply chain management (SCM).
https://www.managementstudyhq.com/types-and-benefits-of-scm.html
 Mcfarlane, D. & Sheffi, Y. (2003). The impact of automatic identification on
supply chain operations.https
://www.researchgate.net/publication/235278265_The_Impact_of_Automatic_
Identification_on_Supply_Chain_Operations
REFERENCES
 Sharma, K. (2013). A CASE STUDY ON MCDONALD’S SUPPLY-CHAIN IN
INDIA.
https://www.researchgate.net/publication/276881546_A_CASE_STUDY_ON_
MCDONALD'S_SUPPLY-CHAIN_IN_INDIA
 Wisner, J. D., Tan, K.-C., & Leong, G. L. Principles of Supply Chain
Management: A Balanced Approach (3rd Edition). Mason, OH: South-
Western.