CH-14 Supply Chain Technology – Supply Chain Management: A Logistics Perspective : Book Guide

CHAPTER 14 SUPPLY CHAIN TECHNOLOGY LEARNING OBJECTIVES After reading this chapter, you should be able to do the following: • Appreciate the importance of information to supply chain management. • Explain information requirements in the supply chain. • Understand the capabilities of an integrated supply chain information system. • Describe and differentiate between the primary types of supply chain solutions. • Discuss the critical issues in technology selection and implementation. • Recognize the technological innovations that are influencing supply chain management. CHAPTER OVERVIEW Introduction Knowledge is essential for supply chain success. Information, along with materials and money, must readily flow across the supply chain to enable the planning, execution, and evaluation of key functions. Each participant in the supply chain needs relevant information to make effective forecasts and operational decisions as highlighted by the Supply Chain Profile. Existing supply chain information technologies support timely, cost efficient sharing of information between suppliers, manufacturers, intermediaries, logistics services providers, and customers. The changing nature of supply chains underlies the need for information and the investment in technology. Information Requirements It has been said that information is the lifeblood of business, driving appropriate decisions and actions. Across the supply chain, store inventory replenishment decisions are based on point-of-sale data, carrier selection is driven by delivery service goals, and production schedules are derived from forecasts. There are three principle supply chain information requirements that support effective decision-making. First, the information in a system must meet quality standards to support fact-based decision making. Second, the information must readily flow within and between organizations. Third, the information must support multiple types of supply chain decisions. Meeting Quality Standards Information quality is a critical characteristic of the knowledge flowing across the supply chain. The seven R’s definition of logistics applies to information as much as products with some slight alterations—getting the right information to the right partners, in the right quantity, in the right format, at the right place, at the right time, and at the right cost. Change any “right” to “wrong” and the capabilities of the decision maker will decline. • Accuracy: The information must be correct and depict reality; otherwise, it will be difficult to make appropriate decisions. Information inaccuracies can lead to inventory shortages, transportation delays, governmental penalties, and dissatisfied customers. • Accessibility: Information must be available to supply chain managers who have a legitimate need for it, regardless of their location or employer. • Relevancy: Supply chain managers must have pertinent information to make decisions. They must know what information is needed and be able to quickly acquire only that which is applicable to their current situation. • Timeliness: The information must be up to date and available in a reasonable timeframe. • Transferability: The final characteristic of information has multiple meanings. Supply chain managers need the ability to transfer supply chain data from one format to another to make it understandable and useful. • Usability: Information is useful only if it can drive effective decision making. • Reliability: The information contained in reports and transaction data sets must come from reliable and authoritative sources within the organization and from trusted supply chain partners. • Value: Supply chain executives must ensure that proposed information technology investments truly enhance knowledge and produce tangible performance benefits. Support Multidirectional Flows The engagement of multiple stakeholders in supply chain planning and decision making drives a need for multidirectional information flows in a supply chain. Internal information sharing supports cross-functional collaboration and organization-wide performance optimization. A failure to do so will prolong the problems of functional silos, myopic planning, and sub-optimal performance. Information must also flow seamlessly between a company and its supply chain partners. A free flow of information will promote integrated decision making and process synchronization. Shared insights regarding supplier capacity, production schedules, and inventory availability will facilitate alignment and efficient execution of downstream processes. Logistics service providers must also be kept in the information loop regarding upstream and downstream customer requirements. Additional support agencies must also receive and distribute critical information. Financial institutions participate in the movement of relevant information regarding payments and transactions. Government agencies require ongoing communication regarding trade data and regulatory compliance. Financial consequences can result from a failure to properly establish information flows with these organizations. Provide Decision Support With SCM taking on a more important and visible role in most organizations, the need for information greatly expands. Managers at every level of the supply chain require different types of information to excel in their roles. This intelligence is needed for strategic decision making, tactical planning, routing decision making, and execution and transaction processing.4 Strategic decision making focuses on the creation of long-range supply chain plans that are aligned with the organization’s mission and strategies. The required information is often unstructured and may differ from one project to the next. Tactical planning focuses on cross-organization linkages and supply chain activity coordination. The information must be readily available, support planning processes, and be in a flexible format that can be modified by the supply chain participants for use in their systems. Routine decision making leverages operational level information for rules-based decision making. The input data needs to be standardized so that the information system can generate appropriate solutions. Execution and transaction processing uses fundamental information from supply chain databases, customer profiles, inventory records, and related sources to complete fulfillment activities. System Capabilities The importance of supply chain information technology is well recognized by leading organizations. Apple, Amazon, Procter & Gamble, and other members of the Gartner Supply Chain Top 25 for 2015 are pursuing greater visibility of end-user demand patterns, digital synchronization of manufacturing with upstream suppliers, and the use of logistics control towers with sensors to reduce risk To compete at this level, a company must succeed on three fronts. First, the system must facilitate excellent performance across the plan, buy, make, move, and return processes of a supply chain. Next, a cohesive network of integrated technologies, skilled people, and robust processes must be established. Finally, common risks must be identified and mitigated to maximize the return on technology investments. Enable Process Excellence As supply chains grow increasingly complex, organizations need technology to help them thrive. Managing global relationships, collaborating with logistics service providers, and serving omnichannel consumers requires advanced information systems functionality. That is, information systems must support cross-chain visibility, agility, velocity, synchronization, adaptability, segmentation, and optimization. • Cross-chain Visibility: Managers need to control key supply chain activities. Having the most current data about the supply chain is a prerequisite for effective decision making and rapid problem response by managers. • Agility: Agile supply chains have the capability, capacity, and flexibility to deliver consistent or comparable cost, quality, and customer service under changing conditions. • Velocity: The speed of product flows across the supply chain must be aligned with customer expectations. • Synchronization: The goal of a multi-organization supply chain is to function as a single entity that produces and distributes the inventory needed to meet customer requirements. • Adaptability: Organizations must strategically adapt the design and capabilities of a supply chain to evolving conditions. This requires a flexible, geographically dispersed network supported by strong technology to analyze options and properly allocate network capacity. • Segmentation: Organizations must dynamically align their demand and supply response capabilities to optimize net profitability across each customer segment. Offering differentiated service levels to each segment, the organization can increase sales and reduce costs. • Optimization: To achieve peak supply chain performance, an organization must consider numerous trade-offs, effectively deploy its resources, and make the best possible decision. Supply chain optimization technologies use mathematical modeling tools to quickly run through the options to find the solution that facilitates success for all supply chain stakeholders. Link Network Elements A company cannot purchase software for a single process and expect to fundamentally improve its supply chain. Instead, an investment is required in a supply chain information system (SCIS) that provides critical knowledge links and automated information flows between internal processes and with external partners. SCIS enable firms to streamline their supply chain processes and provide management with more accurate information about what to produce, store, and move. A SCIS initiative will go much smoother and add greater value when time is taken to properly link the technology to people and processes in an intentional and integrated fashion. The technology must be connected across the supply chain. People need to adapt to the full capabilities of the SCIS. And, processes need to be updated to make use of the information that is generated through the SCIS Properly connected technology generates access to data for informed supply chain decision making. Linking the SCIS across facilities and companies using an Internet or electronic data interchange (EDI) platform allows information to be quickly shared among collaborating companies at low cost. After the technology foundation has been established and users understand the SCIS capabilities, the existing supply chain processes must be reviewed. The linkage of strong technology, properly trained users, and improved processes, creates a robust operating environment. Using the right SCIS, managers will be properly positioned to effectively plan and execute supply chain processes, make informed decisions, and respond quickly to potential problems. A comprehensive SCIS will also generate scorecards and dashboards that managers can use to continuously monitor, analyze, and improve performance. Mitigate Known Risks Technology alone cannot make ill-conceived processes highly productive or make effective use of poor quality data. Managers must avoid buying into the “solution” hype, resolve their process challenges prior to technology adoption, and remember the true role of technology – process enablement. Weak technology-process alignment is another barrier to success. Software may be chosen by executives and technology specialists that do not understand supply chain processes or requirements. This can lead to ill-fitting solutions that fail to achieve their promise. To mitigate this risk, supply chain managers must be engaged in the technology selection process. Technology gaps can be a significant problem for organizations. Often, “point solutions” fix an individual supply chain problem but don’t address related issues or processes. Also, software may be purchased and deployed in piecemeal fashion, leading to a patchwork quilt of technologies rather than a seamless information network. To reduce these gaps, organizations should create stable enterprise-wide platforms and adopt an integrated supply chain software suite. Cross-chain systems integration with suppliers, service providers, and customers is a stumbling block for some organizations. To overcome these integration woes, trading partners need to link their computer systems and transform the supply chain into a network of beneficial relationships.17 Poor planning and preparation for technology implementation is also problematic. The logical action is to mitigation methods follow a staged, logical approach to adopting new technologies and to establish adequate budgets for technology installation, integration, and training. As these mitigation strategies suggest, systems risks can be overcome. Many organizations successfully deploy SCIS to promote cost control, visibility, and service improvement. The key for supply chain leaders is to view technology implementation as a business improvement project. SCM Software An essential element of a capable SCIS is the software applications that help managers arrange, analyze, and act upon relevant data. The supply chain software market includes technologies that address virtually every activity that occurs in the supply chain. Whether a company needs to develop a sales and operations plan, analyze facility relocation options, or maintain visibility of inventory, relevant software is available. Supply chain software applications harness the computational power and communication abilities of an SCIS to help managers make timely, appropriate decisions. The primary SCM software categories include planning, execution, event management, and business intelligence. Planning Supply chain planning applications help organizations evaluate requirements for materials, capacity, and services so that effective fulfillment plans and schedules can be developed. The tools help managers gain accurate, detailed insight into issues that affect the development of supply chain processes. The solutions use complex algorithms, optimization techniques, and heuristics to solve supply chain objectives within the stated planning horizon. Today, supply chain managers need to understand omnichannel demand, forecast at a granular level, and manage resources across multiple supply chains. These needs would be well-served by a robust supply chain planning suite. This integrated collection of software sits on top of a transactional system to provide planning and what-if scenario analysis capabilities. Execution Use of execution tools is extensive due to their rapid ROI and positive impact on supply chain performance. Companies deploy a variety of execution software to implement their strategies and manage supply chain flows of product, information, and money. Effective integration of these tools supports data sharing and cross-chain visibility. The most widely used execution software include the warehouse management systems and transportation management systems discussed in previous chapters. However, the category has greatly expanded as companies seek integrated fulfillment capabilities. Event Management Supply chain event management tools collect data in real time from multiple sources across the supply chain and track the inventory as it flows through the supply chain, providing graphical displays of expected and actual inventory levels and other key data at each location. As the geographic scope and number of companies involved in a supply chain grow, the ability to monitor activities exceeds manual capabilities. Business Intelligence BI software supports self-service reporting, performance scorecarding versus goals, development of graphical dashboards, and activity monitoring in support of event management. These BI tools also provide access to data residing on multiple SCIS without the need for technology department involvement. Hence, cross-chain collaboration is supported. Emerging BI go well beyond descriptive information on past performance. These “big data” capabilities are more dynamic, allowing managers to deploy diagnostic, predictive, and prescriptive analytics for greater value. Facilitating Tools Briefly discussed here are systems and applications that provide critical links between supply chain processes, the organization, and external stakeholders. Collectively, they create a holistic view of the supply chain. • Enterprise Resource Planning (ERP): ERP systems incorporate internal and external systems into a single unified solution that spans the enterprise. ERP systems includes the software that supports business functions and processes, computing hardware for hosting and executing software applications, and back-end network architecture for data communication across and within information systems.30 A centralized and shared database system links the business processes, allowing information to be entered once and made available to all users. • Supplier Relationship Management (SRM): SRM is a controlled and systematic approach to managing an organization’s sourcing activities for goods and services. SRM seeks to improve communication with suppliers by establishing a common frame of reference for the organizations. SRM software supports the effort by facilitates design collaboration, sourcing decisions, negotiations, and buying processes.33 SRM software also helps organizations evaluate supplier risk, performance, and compliance throughout the lifecycle of a contract. The goal of SRM and related software is to consolidate processes, streamline transactions and improve information flows so that costs can be reduced and the end product for the consumer can be improved. • Customer Relationship Management: Customer relationship management (CRM) focuses on the practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the relationship lifecycle.35 CRM software consolidates customer information in a database so business users can more easily access and manage it. The system serves as a vital nerve center to manage the many connections between sellers and buyers in a supply chain. It facilitates information sharing and accessibility. • Automatic Identification: Supply chain managers can deploy a variety of automatic identification (auto-ID) and data capture technologies to assemble accurate data for analysis, planning, and execution of key processes. These technologies include: barcode labels, radio-frequency identification (RFID) tags, optical character recognition tags, and related hardware and software. They work together to recognize objects, collect relevant information, and feed the data directly into the SCIS. Auto-ID tools enhance the visibility and control of products as they move across a supply chain. Automated data collection also improves capture speed, accuracy, and cost efficiency. This facilitates shipment tracking and product traceability, supply chain event management, and inventory replenishment. Auto-ID also provides valuable support for omnichannel fulfillment as highlighted in the On the Line feature. Supply Chain Technology Implementation As the preceding section indicates, a wide array of software tools support supply chain planning, execution, and control. Companies spend billions of dollars on these technologies with the goal of making their supply chains more productive and effective. The key to overcoming these issues and harnessing the capabilities of supply chain technology within a reasonable timeframe is informed decision making. Needs Assessment The most important step in software selection and implementation is to understand the supply chains that the technology is intended to support. Too often, supply chain managers undertake the software selection process in isolation and without knowledge of the processes to be automated. Organizations must start with a diagnosis of their situation. This needs assessment sequence highlights the link between effective business processes, appropriate technology, and supply chain performance. Software Selection Supply chain managers face a multifaceted decision when selecting supply chain software, the manager must determine which type of software—planning, execution, event management, or business intelligence—is appropriate for the given process or situation. • Development Alternatives. The first issue involved in software selection focuses on who will develop the solution as the choices are to develop the tools in house or to purchase software from an external vendor. • Solutions Packages. Should an organization choose to purchase software rather than develop it in house, it has to determine what types of applications are needed and how they should be purchased. Due to mergers and acquisitions in the software industry and ERP vendors moving into the supply chain applications market space, it is possible to purchase supply chain software suites that combine planning, execution, event management, and related capabilities. The polar options are to work with a single vendor’s software or to purchase individual applications from leading providers in each software category, commonly called “best-of-breed” solutions. • Purchase Options. Historically, supply chain software buyers had one option—purchase solutions from software vendors for their own information systems. The downside of this purchase option is the high capital investment and complex deployment associated with conventional licensed applications. The Internet and cloud computing have changed the purchase landscape. Buyers can now use applications that are not permanently installed on the company’s network. In the software as a service (SaaS) distribution model, applications are hosted by a vendor or service provider and made available to customers over a network. Implementation Issues Supply chain managers tend to focus on functionality when considering software, but they also must consider the implementation and operational issue. Potentially useful software will become “shelfware” if it is difficult to install, poorly linked to other tools, or too cumbersome to use. • Data Standardization. Given the variety of software vendors, proprietary tools, and legacy systems, coordinating and sharing information across the supply chain can be a significant challenge. Rather than manually or electronically translating data, a better solution is to use a standardized format to enhance communication between partners. EDI provides interorganizational, computer-to-computer exchange of structured information in a standard, machine-processable format. Implementation can be complex and value-added network services that provide the company-to-company linkages charge transaction fees. XML is a robust, logically verifiable text format based on international standards that provides a flexible way to create structured, common information formats and share both the format and the data via the Internet, intranets, and other networks. • Application Integration. Another important issue is seamless integration of software applications. This can be readily accomplished within a self-contained supply chain software suite, but supply chain partners often rely on different vendors, applications, or software versions. The greater the variety of applications, the more challenging the connectivity and information-sharing issues become. Extensive efforts have been made to improve application integration and foster supply chain information synchronization. Application programming interfaces (APIs) are sets of requirements that govern how one application can talk to another. By sharing some of a program’s internal functions, it becomes possible to build compatible applications and readily share data. Service-oriented architecture (SOA) also promotes software integration. SOA defines how two computing entities interact in such a way as to enable one entity to perform a unit of work on behalf of another entity. Supply chain technology buyers need to understand the challenges of application integration while pursuing improved SCIS connectivity. They must assess and compare integration methods, and then choose those that best fit current needs while providing the flexibility to meet future functionality requirements. They would do well to follow these 10 golden rules for success: 1. Secure the commitment of senior management. 2. Remember that it is not just an information technology project. 3. Align the project with business goals. 4. Understand the software capabilities. 5. Select partners carefully. 6. Follow a proven implementation methodology. 7. Take a step-by-step approach for incremental value gains. 8. Be prepared to change business processes. 9. Keep end users informed and involved. 10. Measure success with key performance indicators (KPIs).40 Supply Chain Technology Innovations If there is one constant in SCM, then it has to be ongoing change. That may seem like an oxymoron, but the discipline is continuously evolving to support omnichannel innovation, global network realignment, and customer service enhancement. To achieve success, supply chain managers must effectively leverage current and emerging technologies. Internet of Things Connected devices – with sensors, on/off switches, and Internet linkages – already outnumber the world’s population and the gap is accelerating. A broad range of IoT business equipment, devices, and mechanisms are already in use. 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. A number of security issues must be resolved to bring IoT to its full potential. Increased digitization of information and transfer via the Internet creates data theft risks. Remote tampering with physical infrastructure is possible. And, consumer privacy must be protected against data breaches. To avoid such problems, IoT users must identify their risks and take meaningful steps to mitigate them. This includes: reducing the amount of data collected by IoT devices, deploying layered security systems including firewalls, intrusion detection systems, and anti-virus tools, segmenting networks, and allowing people to opt-out of IoT initiatives as desired.43 Mobile Connectivity 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 freight. These capabilities will help the freight companies to accurately predict arrival times, reduce delivery costs, and decrease energy consumption.45 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, according to a recent survey. Mobile tools and solutions will provide managers with access to critical productivity, workload management, and exception 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.46 Mobility is also a technology priority for manufacturing operations, according to a PwC global chief executive officer survey. 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 goal of these initiatives are to make manufacturers more responsive to customers and make manufacturing intelligence the new normal in production operations.47 Functional Automation Automation has long been a part of the manufacturing plant with conveyors moving products between workstations and robots handling welding, painting, and other precision tasks. Warehouse automation has also gained tremendous traction as companies are opening large scale distribution centers 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. 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.48 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.49 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. SUMMARY Information is critical to the success of a supply chain and must flow freely between partners. Without accurate, timely information, it is extremely difficult for managers to make effective decisions regarding the purchase, production, and distribution of materials. To facilitate the knowledge links and foster supply chain visibility, most organizations rely upon computer hardware, SCIS, and supportive Internet-based technologies. They realize that real-time information and the ability to dynamically respond to changing conditions in the supply chain are critical to organizational success. Industry leaders are using SCIS to create real-time knowledge, adaptive capabilities, and substantial competitive advantages in their respective markets. Harnessing information technology in support of supply chain excellence is an ongoing need as SCIS capabilities continue to evolve. Supply chain managers must recognize the critical role of information, understand the software options, choose solutions wisely, and overcome key implementation challenges to generate maximum benefit from information technology. Key concepts from the chapter include: • To produce actionable knowledge, supply chain information must be high quality, readily flow between organizations, and support a variety of decision types. • Leading organizations leverage supply chain technology for greater visibility, agility, velocity, synchronization, optimization, and related capabilities. • A well-designed SCIS links people, processes, and technology in a manner that provides actionable information and enhances decision making. • Savvy supply chain managers understand the risks involved in SCIS adoption and take an active role in the planning, purchase, and implementation of new tools. • Supply chain software falls into four general categories: (1) planning tools for forecasting and related activities, (2) execution systems for management of day-to-day processes, (3) event management tools to monitor supply chain flows, and (4) business intelligence applications used to analyze performance. • ERP, SRM, and CRM systems provide valuable data and platforms that link supply chain processes to the organization and external stakeholders. • To maximize SCIS investment success, managers must effectively assess the SCM requirements, understand software options, and address the technical issues. • The technology landscape is ever changing and managers must evaluate how innovations like IoT, mobility, and automation will drive supply chain improvement. ANSWERS TO STUDY QUESTIONS 1. Discuss the role of information in the supply chain and how it supports supply chain planning and execution. It has been said that information is the lifeline of business, driving effective decisions and actions. It is especially critical to supply chain managers because their direct line of sight to supply chain processes is very limited. Information provides them with insights and visibility into the supply chain activities taking place at distant supplier and customer locations. This visibility of demand, customer orders, delivery status, inventory stock levels, and production schedules provides managers with the knowledge needed to make effective situational assessments and develop appropriate responses. In contrast, limited awareness of external activity would leave the supply chain manager blind to the true situation and unable to make knowledge-driven decisions. Actions would be based on educated guesses with no guarantee of effective outcomes. A wide variety of information is needed for a supply chain to perform as anticipated. As you read through this book, it will become evident just how important information is for both long-range and day-to-day decision making. Supply chain professionals require information from across the channel for strategic planning issues such as network design, tactical planning and collaboration with supply chain partners, and execution of key processes. This information must effectively flow within the organization and between key participants to ensure the timely flow and control of materials and money in the supply chain. 2. Describe the attributes of information quality and how they impact supply chain decision making. Information quality is a critical characteristic of the knowledge flowing across the supply chain. Information must be available to supply chain managers who have a legitimate need for it, regardless of their location or employer. Supply chain managers must know what information is needed, and be able to quickly acquire only that which is applicable to their current situation. The information must be correct and depict reality; otherwise, it will be difficult to make appropriate decisions. Information inaccuracies can lead to inventory shortages, transportation delays, governmental penalties, and dissatisfied customers. The information must also be up to date, available in a reasonable timeframe, and transferable from one format to another to make it understandable and useful. Recent research found that information technology has a direct and positive impact on organizational performance, internal collaboration, and external collaboration. Information technology links geographically dispersed supply chain partners and facilities electronically, giving them the critical ability to monitor what is happening across the supply chain. By virtue of providing connectivity and visibility, technology facilitates real-time data sharing between supply chain participants. Supply chain technology promotes efficient execution and integration of key activities on an hourly and a daily basis to achieve operational excellence. 3. What are the primary capabilities created by supply chain technology? How can they drive supply chain excellence? An essential element of a capable SCIS is the software applications that help managers arrange, analyze, and act upon relevant data. The supply chain software market includes technologies that address virtually every activity that occurs in the supply chain. Whether a company needs to develop a sales and operations plan, analyze facility relocation options, or maintain visibility of inventory, relevant software is available. Supply chain software applications harness the computational power and communication abilities of an SCIS to help managers make timely, appropriate decisions. The primary SCM software categories include planning, execution, event management, and business intelligence. Supply chain planning applications help organizations evaluate requirements for materials, capacity, and services so that effective fulfillment plans and schedules can be developed. The tools help managers gain accurate, detailed insight into issues that affect the development of supply chain processes. The solutions use complex algorithms, optimization techniques, and heuristics to solve supply chain objectives within the stated planning horizon. Today, supply chain managers need to understand omnichannel demand, forecast at a granular level, and manage resources across multiple supply chains. These needs would be well-served by a robust supply chain planning suite. This integrated collection of software sits on top of a transactional system to provide planning and what-if scenario analysis capabilities.21 Supply chain execution tools and suites carry out key tasks from the time an order is placed until it is fulfilled. This order-driven category of software focuses on the day-today activities required to buy, make, and deliver the materials that flow through the supply chain. Supply chain execution doesn’t rely upon a single software program but consist of a group of tightly integrated tools that link well with supply chain partners’ systems to share relevant data and provide visibility. Successful implementation can provide users with improved inventory visibility, improved data accuracy, faster throughput and higher inventory turns, better control of transportation costs, and improved customer service. Supply chain event management tools collect data in real time from multiple sources across the supply chain and track the inventory as it flows through the supply chain, providing graphical displays of expected and actual inventory levels and other key data at each location. As the geographic scope and number of companies involved in a supply chain grow, the ability to monitor activities exceeds manual capabilities. Newer business intelligence tools have capabilities which are more dynamic, frequently delivering data from transactional systems across the supply chain to a data warehouse. In addition to the data collection and analysis capabilities, business intelligence software supports self-service reporting, performance score carding versus goals, development of dashboards and other graphical report displays, and activity monitoring in support of event management. Interest in business intelligence applications is rising, due primarily to a software vendor focus on increasing user-friendliness of the tools. It is becoming more difficult to completely segment SCIS from enterprise resource planning (ERP) systems. Many of the supply chain software applications discussed above are growing increasingly reliant upon the type of information that is stored inside ERP systems which are multi-module application software platforms that help organizations manage the important parts of their businesses. The ERP system provides a mechanism for supply chain members to efficiently share information so that visibility is improved, transactions are completed with more speed and accuracy, and decision making is enhanced. 4. Describe how a supply chain information system enables process excellence and links the essential elements. As supply chains grow increasingly complex, organizations need technology to help them thrive. Managing global relationships, collaborating with logistics service providers, and serving omnichannel consumers requires advanced information systems functionality. That is, information systems must support cross-chain visibility, agility, velocity, synchronization, adaptability, segmentation, and optimization. When properly deployed, these supply chain process enablers help organizations achieve significantly higher levels of performance on both revenue growth and earnings measures when compared to their industry peers.6 Cross-chain Visibility: Managers need to control key supply chain activities. Having the most current data about the supply chain is a prerequisite for effective decision making and rapid problem response by managers. Visibility tools provide quick access to global supply chain information, generate supply chain alerts, support management by exception, and facilitate trading partner collaboration. Ultimately, greater visibility supports process variability reduction, performance optimization, and supply chain cost control.7 Agility: In rapidly changing market conditions, supply chain managers must quickly recalibrate plans and respond to supply and demand volatility. Agile supply chains have the capability, capacity, and flexibility to deliver consistent or comparable cost, quality, and customer service under changing conditions. Appropriately designed systems have strong decision support analytics that model various scenarios. This helps supply chain managers to better understand volatility and respond appropriately.8 Velocity: The speed of product flows across the supply chain must be aligned with customer expectations. These velocity requirements are situation dependent–emergency replenishment and new product introductions require greater velocity than a normal replenishment of existing products. The ability to adjust speeds accordingly is essential. Capable systems capture order cycle time requirements, sequence orders, and identify the best delivery methods to ensure that fulfillment velocity meets customer deadlines. Synchronization: The goal of a multi-organization supply chain is to function as a single entity that produces and distributes the inventory needed to meet customer requirements. By synchronizing data, resources, and processes, the supply chain partners can coordinate supply and demand over time. Technology facilitates the real-time information sharing between partners that drives consistent insights and collaborative decisions. Inventory optimization software, workforce management applications, and advanced demand management tools have been shown to improve the alignment of supply and demand.9 Adaptability: Organizations must strategically adapt the design and capabilities of a supply chain to evolving conditions. They can capitalize on demographic trends, political shifts, emerging economies, and other new opportunities through alteration of their supply chain operating model. This requires a flexible, geographically dispersed network supported by strong technology to analyze options and properly allocate network capacity. By linking supply chain technologies to sales and marketing systems, companies can sense and respond to real-time market needs and shape demand when capacity is limited.10 Segmentation: Organizations must dynamically align their demand and supply response capabilities to optimize net profitability across each customer segment. Offering differentiated service levels to each segment, the organization can increase sales and reduce costs. They avoid the “one size fits all” strategy that under-serves important customers and creates unnecessary costs. Technology can help an organization define logical segments, understand the cost to serve them, and prioritize service execution so that key groups receive appropriate attention.11 Optimization: To achieve peak supply chain performance, an organization must consider numerous trade-offs, effectively deploy its resources, and make the best possible decision. Supply chain optimization technologies use mathematical modeling tools to quickly run through the options to find the solution that facilitates success for all supply chain stakeholders. These tools can be used to study network design options, determine appropriate inventory levels, develop routing decisions, and more. The goal is to maximize service for the minimal possible operating costs. These seven supply chain process enablers are by no means comprehensive or static. First, information systems must support initiatives related to supply chain innovation, performance analysis and improvement, risk management, and profitability. Second, these enabling technologies must evolve over time to meet new competitive challenges and changing customer requirements. Supply chain managers would be wise to regularly review these enablers and modify them as needed. Putting the seven process enablers into practice and generating their value is not a simple task. A company cannot purchase software for a single process and expect to fundamentally improve its supply chain. Instead, an investment is required in a supply chain information system (SCIS) that provides critical knowledge links and automated information flows between internal processes and with external partners. SCIS enable firms to streamline their supply chain processes and provide management with more accurate information about what to produce, store, and move.12 It is important to note that immediate success is not guaranteed. Many SCIS implementations have produced less than stellar initial results. A SCIS initiative will go much smoother and add greater value when time is taken to properly link the technology to people and processes in an intentional and integrated fashion. The technology must be connected across the supply chain. People need to adapt to the full capabilities of the SCIS. And, processes need to be updated to make use of the information that is generated through the SCIS. Properly connected technology generates access to data for informed supply chain decision making. Compared to a manual or partially integrated system, the data in a well-crafted and properly linked network supports data collection and synchronization through automated capture tools. Linking the SCIS across facilities and companies using an Internet or electronic data interchange (EDI) platform allows information to be quickly shared among collaborating companies at low cost. With a capable, connected SCIS and data that are accurate, standardized, and readily available, focus must turn to the people element of the network. The people tasked with implementing and integrating the technology need the requisite skills, as well as adequate staff and financial resources to complete the work. Also, the day-to-day SCIS users must be properly trained in the appropriate use of the tools. Acclimating users to the SCIS and helping them understand why the tools were adopted will facilitate acceptance and positively impact supply chain performance. After the technology foundation has been established and users understand the SCIS capabilities, the existing supply chain processes must be reviewed. The risk of not doing this is that inefficient, outdated, or unnecessary processes will be automated, providing little return on the SCIS investment. As needed, operating procedures must be updated and new goals for supply chain productivity, accuracy, timeliness, and cost should be established. Doing so will help supply chain managers fully leverage the process-enhancing capabilities of the SCIS. The linkage of strong technology, properly trained users, and improved processes, creates a robust operating environment. Using the right SCIS, managers will be properly positioned to effectively plan and execute supply chain processes, make informed decisions, and respond quickly to potential problems. A comprehensive SCIS will also generate scorecards and dashboards that managers can use to continuously monitor, analyze, and improve performance. 5. Review the methods used by supply chain managers to mitigate SCIS implementation risks. While information technology holds great promise for enhancing supply chain performance and organizational competitiveness, success is not guaranteed. Supply chain managers must carefully evaluate their technology options and steer clear of the pitfalls associated with systems adoption or upgrades. A fundamental risk is highlighted by the term “solution.” It is unrealistic to assume that supply chain technologies will readily solve or fix flawed supply chains. Technology alone cannot make ill-conceived processes highly productive or make effective use of poor quality data. Managers must avoid buying into the “solution” hype, resolve their process challenges prior to technology adoption, and remember the true role of technology – process enablement. Weak technology-process alignment is another barrier to success. Software may be chosen by executives and technology specialists that do not understand supply chain processes or requirements. This can lead to ill-fitting solutions that fail to achieve their promise. To mitigate this risk, supply chain managers must be engaged in the technology selection process. It is their responsibility to ensure that the tools fit the need, support collaboration, and provide visibility into all key aspects of the supply chain.14 Technology gaps can be a significant problem for organizations. Often, “point solutions” fix an individual supply chain problem but don’t address related issues or processes. Also, software may be purchased and deployed in piecemeal fashion, leading to a patchwork quilt of technologies rather than a seamless information network. To reduce these gaps, organizations should create stable enterprise-wide platforms and adopt an integrated supply chain software suite. This will improve data flows between supply chain processes and participants for accurate analysis and informed decision making. Cross-chain systems integration with suppliers, service providers, and customers is a stumbling block for some organizations. Chief information officers at logistics service providers view integration with customers’ information technologies as their single biggest challenge.15 On the customer side, supply chain network complexity and creating visibility across the supply chain are top challenges.16 To overcome these integration woes, trading partners need to link their computer systems and transform the supply chain into a network of beneficial relationships.17 Poor planning and preparation for technology implementation is also problematic. Some organizations do not create a change management plan. This increases the risk of implementation delays, lost connectivity, and supply chain disruptions. Others fail to address the all-important topics of cultural change, user acceptance, and training. These people issues were cited among the primary reasons why supply chain technology purchases fail to achieve the desired return on investment (ROI).18 The logical action is to mitigation methods follow a staged, logical approach to adopting new technologies and to establish adequate budgets for technology installation, integration, and training. As these mitigation strategies suggest, systems risks can be overcome. Many organizations successfully deploy SCIS to promote cost control, visibility, and service improvement. The key for supply chain leaders is to view technology implementation as a business improvement project. And, they must actively engage in the planning, purchase, and implementation of new tools. They cannot delegate responsibility and control to the IT team, consultants, or software suppliers.19 Realize that developing the systems capabilities of a Gartner Supply Chain Top 25 company is a long-term proposition. Fostering process excellence, linking multiple networks of people, processes, and technology, and mitigating technology risks are huge challenges, even with an established, best-in-class SCIS. Extensive time, financial resources, and top management commitment are required to select, implement, and maintain a quality system that supports supply chain excellence. 6. Identify the four primary categories of supply chain software and discuss their primary functions. Supply chain software applications harness the computational power and communication abilities of an SCIS to help managers make timely, appropriate decisions. The primary SCM software categories include planning, execution, event management, and business intelligence. Supply chain planning applications help organizations evaluate requirements for materials, capacity, and services so that effective fulfillment plans and schedules can be developed. The tools help managers gain accurate, detailed insight into issues that affect the development of supply chain processes. The solutions use complex algorithms, optimization techniques, and heuristics to solve supply chain objectives within the stated planning horizon.20 Use of execution tools is extensive due to their rapid ROI and positive impact on supply chain performance. Companies deploy a variety of execution software to implement their strategies and manage supply chain flows of product, information, and money. Effective integration of these tools supports data sharing and cross-chain visibility. Supply chain event management tools collect data in real time from multiple sources across the network and convert them into information that gives managers a clear picture of how their supply chain is performing. The software allows companies to automate the monitoring of supply chain events as they occur on a day-to-day basis. When a problem or exception occurs, managers receive real-time notifications so that corrective action can be taken. Problems such as parts shortages, truck breakdowns, and network disruptions can be avoided or mitigated, saving time and money. Business intelligence (BI) tools automate the analytical work and present the results in visual formats that are easier to understand.26 Relevant information becomes readily available to supply chain managers for informed planning and decision making. In addition to the data collection and analysis capabilities, BI software supports self-service reporting, performance score carding versus goals, development of graphical dashboards, and activity monitoring in support of event management. These BI tools also provide access to data residing on multiple SCIS without the need for technology department involvement. Hence, cross-chain collaboration is supported. 7. Using company Web sites, develop a profile (types of supply chain software offered, annual sales, and recent news) of the following organizations: a. SAP (http://www.sap.com) b. Manhattan Associates (http://www.manh.com) c. Logility (http://www.logility.com) Students’ answers will vary but should demonstrate and document sufficient research. 8. What is the role of enterprise resource planning systems in SCM? Enterprise resource planning (ERP) systems incorporate internal and external systems into a single unified solution that spans the enterprise. ERP systems includes the software that supports business functions and processes, computing hardware for hosting and executing software applications, and back-end network architecture for data communication across and within information systems.30 A centralized and shared database system links the business processes, allowing information to be entered once and made available to all users. Though they can be quite expensive and challenging to implement, ERP systems are widely used. A primary appeal lies in the ability of ERP systems to update and share accurate information across business processes. ERP-linked processes typically include accounting and finance, planning, engineering, human resources, purchasing, production, inventory/materials management, order processing, and more. Primary benefits include: process automation, technology cost savings, improved visibility of sales, inventory, and receivables, standardization of processes, and regulatory compliance.31 Over time, the traditional separation of supply chain technologies from ERP systems has faded. First, the boundaries are blurring as supply chain tools need to share the information stored in an ERP system. Second, the major ERP systems vendors offer supply chain software that can be readily linked to the ERP system. Though these ERP vendor versions of WMS, TMS, and other tools may not be quite as robust as best-of-breed supply chain software, they do have the advantage of being a one-stop solution and offer common structure that reduces the installation time and effort.32 9. Discuss the relative advantages of best-of-breed software versus supply chain suites. Should an organization choose to purchase software rather than develop it in house, it has to determine what types of applications are needed and how they should be purchased. Historically, software packages were purchased independently from different vendors and the organization’s information technology staff was tasked with making the various tools work together if possible. Today, buyers have another option. Due to mergers and acquisitions in the software industry and ERP vendors moving into the supply chain applications market space, it is possible to purchase supply chain software suites that combine planning, execution, event management, and related capabilities. The polar options are to work with a single vendor’s software or to purchase individual applications from leading providers in each software category, commonly called “best-of-breed” solutions. Each strategy has its merits. Single vendor supply chain suites should take less time to implement than a variety of tools from different vendors since there are fewer compatibility and connectivity issues to overcome. Also, there is only one vendor to work with rather than multiple companies which reduces administrative and coordination effort. Single vendor suites also require less training time and have lower implementation costs as there is only one set of integration requirements to master. Although the best-of-breed tools are more complex and typically take longer to integrate into the SCIS, they are working to streamline the process. Also, they offer more powerful applications for specific functions that provide greater flexibility and can be better tailored to an individual company’s supply chain issues. Some suites, especially those from ERP vendors, do not yet contain the advanced functionality or industry-specific capabilities found in specific best-of-breed applications, though they are working to close the gap. The challenge for the supply chain executives choosing between these options is to understand the implementation issues; their organization’s need for tailored, advanced capabilities; and the changing vendor landscape. 10. Why would companies choose to use on-demand software versus licensed software? Historically, supply chain software buyers had one option—license software from vendors and install it on the buyer’s client-server systems. This is a logical method for supply chain processes with intense computational activity requirements. The downside of licensing is the capital investment and complex deployment. Buyers have to pay for the software up front; address implementation issues; and manage software upgrades, fixes, and maintenance costs. The Internet and cloud computing have changed the purchase landscape. Buyers can now use applications that are not permanently installed on the company’s network. In the software as a service (SaaS) distribution model, applications are hosted by a vendor or service provider and made available to customers over a network. One SaaS option is hosted application management in which a technology provider hosts commercially available software for customers and delivers it over the Web. The other SaaS option is software on demand. In this model the provider gives customers network-based access to a single copy of an application created specifically for SaaS distribution.38 SaaS is gaining in popularity as more supply chain tools are offered via this method. Fast implementation, low capital requirements, scalability, easy Web-based access, and simplified software upgrades are reasons for deploying this model. However, potential adopters must also review the potential problems of SaaS. Security of sensitive company data must be evaluated. Service outages at the host site, regulatory compliance, and application performance management also warrant attention.39 11. When preparing to purchase and implement SCIS components, what issues and questions must managers address? Senior management plays a key role in facilitating the implementation of supply chain technology by providing vision, the required resources, and an unshakable commitment to SCIS initiatives. Some of these key questions include the following: •Who will lead our implementation effort? Senior management has neither the time nor direct knowledge of SCIS to supervise the selection and installation of new applications. •How will technology support our business needs and processes? There is a propensity to adopt software without considering the processes that it will support, leading to automation of inefficiencies. •What is the status of our existing data? It is critical to assess data quality, relevance, and completeness to ensure that the needed information is available to use with the technology being considered. •How well does our existing system integrate with suppliers and customers? SCIS fall woefully short on vital capabilities if they are unable to communicate with supply chain partners in an efficient manner. •What external issues must our systems address? Given the financial and product flow data contained within most SCIS, they have a major impact on an organization’s ability to address government mandates. 12. How will the Internet of Things, mobile connectivity, and automation drive change in a supply chain? We live in a highly connected world of smartphones and mobile computers. However, there is another level of connectivity that most people don’t notice. Connected devices – with sensors, on/off switches, and Internet linkages – already outnumber the world’s population and 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 conservatively estimates that by 2020 there will be more than 26 billion connected devices. Gartner indicates that the IoT trend will influence how supply chains operate.42 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. Future IoT innovations may radically alter the way supply chains serve end users. It is entirely possible that sensors connected to your refrigerator or your computer printer will be able to track your product usage and trigger automatic replenishment of milk, eggs, and ink cartridges. You will never experience a stockout and the retailer will operate in a true demand-responsive fashion. 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 freight. These capabilities will help the freight companies to accurately predict arrival times, reduce delivery costs, and decrease energy consumption.45 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, according to a recent survey. Mobile tools and solutions will provide managers with access to critical productivity, workload management, and exception 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.46 Mobility is also a technology priority for manufacturing operations, according to a PwC global chief executive officer survey. 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 goal of these initiatives are to make manufacturers more responsive to customers and make manufacturing intelligence the new normal in production operations.47 Automation has long been a part of the manufacturing plant with conveyors moving products between workstations and robots handling welding, painting, and other precision tasks. Warehouse automation has also gained tremendous traction as companies are opening large scale distribution centers 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.48 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.49 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. Without question, the innovations described above 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 Studies CHAPTER CASE 14.1 Inflate-a-Dome Innovations 1. As its customer base grows and becomes more diversified, how will the information requirements of the IDI supply chain change? IDI’s world is about to get much more complex. Moving from small build-to-order quantities to large shipments will require IDI to have a much better handle on inventories of production materials, procurement information, customer orders, and finished goods inventories. Thus, they need technologies to help them manage and coordinate the growing amount of information that accompanies company expansion. IDI will also need to establish more formal information connections with their suppliers and customers. Thus, they will need to ensure that their information meets quality standards to support fact-based decision making, is able to readily flow within and between organizations, and will support multiple types of supply chain decisions. 2. Given its anticipated volume growth and inventory variety expansion, what supply chain capabilities will IDI need? IDI will need to quickly scale up its ability to handle larger production runs, bigger shipments, and significantly greater and more complex inventories. In terms of inventory, IDI will need the ability to manage inventory much more closely. They will have a greater variety of production materials, a much larger number of stock keeping units, and higher finished goods levels. It will be important to synchronize order data from large customers with inventory levels to avoid stockouts, respond to orders rapidly to improve fulfillment velocity, and to optimize resource use. IDI will also need greater supply chain visibility due to the increasing scope of business with major retailers and Amazon. They will need to move beyond working with a small package carrier to a broader base of carriers. 3. In preparation for the strategic planning meeting, what technology risks must Vic think about? Vic must carefully evaluate the technology options and steer clear of the pitfalls associated with systems adoption. It is important to buy technology that works as promised, meets IDI’s needs now and in the future (it must be scalable), and not be overly expensive. If Vic doesn’t keep these issues in mind, then the investment in technology will not provide the needed capabilities or return on investment. Vic must also avoid buying into the “solution” hype, resolve IDI’s process challenges prior to technology adoption, and remember the true role of technology – process enablement. He cannot focus exclusively on the promise and the purchase. He must also get the leadership team to properly implement the technology, align it with people and processes, and ensure that resources are available to train people to use the software and maintain the system. 4. With limited funds available, what SCM software should Vic recommend? Why? Given that IDI is relying on Excel-based freeware, there is a need to obtain software specifically designed for managing supply chains. To save time and money, Vic should look at Software as a Service options to obtain on-demand access to supply chain planning and execution tools. IDI will get the most bang for the buck out of these software categories. SCM planning applications help organizations shift from autonomous planning activities to synchronized planning processes that use real-time data for collaboration across departments, suppliers, and customers. Supply and demand planning, inventory planning, and production planning tools should be considered early on. Supply chain execution applications are used carry out the recommendations of the planning tools. The software facilitates desired performance of day-to-day operating tasks required to support customer demand. IDI would be wise to select a basic system with order management, warehouse management, and transportation management capabilities. These tools will help IDI manage supply chain flows of product, information, and money. A well-integrated package will support data sharing and cross-chain visibility. CHAPTER CASE 14.2 Grand Reproductions Inc. 1. To obtain the necessary technological capabilities should GRI license software or purchase access via the Software as a Service model? Explain. Given its lack of experience with supply chain technology and reliance on Excel, it would be a long, costly initiative for GRI to develop internal IT capabilities and personnel. Hence, it would be far more efficient and effective for GRI to adopt cloud-based tools and rely upon the Software as a Service distribution model to access the necessary IT capabilities. That way, GRI would not have to make a major upfront investment in equipment and software. The cloud-based option will also be much faster to implement for GRI, allowing them to capture the Mega-Mart business. 2. What types of software does GRI need to support the Mega-Mart business? What features and capabilities are needed? GRI clearly needs to adopt supply chain execution tools based on the Mega-Mart comment about digital transfer of orders, point of sale data, and invoices. It is essential for GRI to adopt an order management system (OMS) to electronically control the inbound flow of these orders. Paper-based forms and Excel spreadsheets will not suffice in this situation. GRI would also be wise to consider linking a basic warehouse management system to the OMS. This will help them manage inventory, fulfill orders quickly and accurately, and provide order status information to Mega-Mart. These systems must be capable of helping GRI synchronize supply with demand, adapt to order changes, provide visibility of orders, and achieve faster fulfillment velocity. 3. What roles can the Internet play in GRI’s move from manual methods to technology-based information management? The Internet allows GRI to adopt the software-as-a-service offerings that could be accessed through the Internet. The Software-as-a-Service (SaaS) model is built on a cloud-computing model accessed via the Internet. SaaS is gaining in popularity as more supply chain tools are offered via this method. Fast implementation, low capital requirements, scalability, easy Web-based access, and simplified software upgrades are reasons for deploying this model. According to a SaaS software vendor, this is the suggested delivery model for customers who want to make a minimum of effort and reduce complexity to set up and run SCM solutions, and that want to get maximum value in shortest possible time. This is as close as a turnkey solution you ever will get. The Internet can also be used to support transportation with load tendering and in-transit tracking tools from major carriers. 4. What types of technology implementation challenges might GRI face? No software implementation, be it an on-site install or a SaaS access model, is without challenges. Potentially useful software will become “shelfware” if it is difficult to install, poorly linked to other tools, or too cumbersome to use. GRI would be wise to follow the 10 Golden Rules for IT Success that are discussed in the chapter. First, the data being transferred between GRI and Mega-Mart must be standardized so that the SCIS can work effectively. Agreements on the use of EDI or XML for data transfer must be established. Second, should GRI choose to use software tools from multiple vendors, it must ensure that the applications can achieve seamless integration. The applications must be synchronized and able to share information. Finally, there must be adequate budget and leadership support to make the technology usable. It is not enough to purchase the technology. It must be properly installed, vetted, and users must be properly trained. Solution Manual for Supply Chain Management: A Logistics Perspective John J. Coyle, John C. Langley, Robert A. Novack, Brian J. Gibson 9781305859975