Introduction to Supply Chain Management Information System

Wilson was talking with John, discussinghow to make decisions regarding supply chain management information system.

Wilson:Sincemanagement information systems play a significant role in every stage of thesupply chain by enabling companies to gather and analyze information, atpresent, our biggest problem is how to make a decision on supply chainmanagement information system.

John:I thinkthere are several general ideas we should take into account.

Wilson:What arethey?

John:Firstly,a management information system that addresses the company’s key successfactors should be selected.

Wilson:Howimportant about this, John?

John:Everyindustry and even companies within an industry can have very different keysuccess factors. With respect to the key success factors, the two orthree elements that really determine whether a company is going to besuccessful.

Wilson:I amsorry. I don’t quite understand what you said. Could you explain it by givingme some examples?

John:Ofcourse. For instance, the ability to set inventory levels optimally is crucialin the PC business, in which product life cycles are short and inventorybecomes obsolete very quickly. In contrast, inventory levels are not nearly ascrucial for an oil company, in which demand is fairly stable and the producthas a very long life cycle.

Wilson:Now Iunderstand. I think, secondly, we should align the level of sophistication withthe need for sophistication.

John:I agreewith you. Management must consider the depth to which a managementinformation system deals with the firm’s key success factors. There can bea trade-off between the ease of implementing a system and that system’s levelof complexity.

Wilson:That’sright!

John:Then,we should make it clear that we should use managementinformation systems to support decision making instead of making decisions.Management must keep its focus on the supply chain because as the competitiveand customer landscape changes, there needs to be a corresponding change in thesupply chain.

Wilson:That’sreally a big question we should keep in mind.

John:Inaddition, as we think about these, we should think about the future at the sametime. The key here is to ensure that the software not only fits a company’scurrent needs but also, and even more importantly, it will meet the company’sfuture needs.

Wilson:That’sgood! By the way, we’ll have a meeting next Wednesday to make the decision,please inform all the people concerned.

John:OK.

 

How Do We Operate the DistributionNetwork

Linda:Iunderstand distribution is a core component of logistics operation.

Fan:Right!Without distribution, the logistics link would not be complete.

Linda:Andthe product would not reach the end users.

Fan:Exactly.

Linda:Butwhat activities does the distribution process involve?

Fan:Ingeneral, it involves stock-up, storage, processing, pick/groupage, shipment, and deliveryservice.

Linda:Whatdo you mean by stock-up?

Fan:It meansgetting goods available for the next process.

Linda:Howabout groupage?

Fan:If theitems form a single customer cannot reach the full payload of the deliveryvehicle, we may group items from several customers.

Linda:Inorder to make full use of the vehicle capacity?

Fan:That’sright.

Linda:Wehave a great quantity of customers. And each store has its specificrequirements. They order different items; the location is different so that thetravel route is complex; and delivery time also varies.

Fan:In fact,there are far more problems than those.

Linda:Forexample…

Fan:Occasionallysome stores require us to deliver the goods at midnight. This means we musthave someone on duty even at night time. Let alone traffic jam, which may delaythe delivery service.

Linda:Thenhow do we coordinate such complex problems?

Fan:Well, wetackle such problems on a case-to-case basis. It is difficult to generalize.

Linda:But wemust have some rules to tackle these problems, right?

Fan:Most ofthese problems are anticipative, and we have established measures andtechniques to cope with them.

Linda:Giveme an example, please.

Fan:Takevehicle routing as instance, we have special personnel to designthe route for each delivery task.

Linda:I see.In this way, we can have the shortest reasonable distance and minimal traveltime.

Fan:Exactly.