Chapter 10 – Extending the Organization – Supply Chain Management

BASICS OF SUPPLY CHAIN

SCM – the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

The supply chain has three main links.

1.       Materials flows from suppliers and their upstream suppliers at all levels

2.       Transformation of materials into semi-finished products, or the organization’s own production processes

3.       Distribution of products to customers and their downstream customers at all levels

INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN

 Information technology’s primary role in SCM is creating the integrations or tight process and information linkages between functions within a firm such as marketing, sales, finance, manufacturing, and distribution – and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers and transportation providers across the supply chain

VISIBILITY

·         Supply Chain Visibility is the ability to view all areas up and down the supply chain. Changing supply chains requires a comprehensive strategy buoyed by information technology. Organizations can use technology tools that help them integrate upstream and downstream, with both customers and suppliers.

·         The bullwhip effect occurs when distorted product demand information passes from one entity to the next throughout the supply chain.

CUSTOMER BEHAVIOR

·   The behavior of customers has changed the way businesses complete. Customers will leave if a company does not continually meet their expectations. They are more demanding because they have information readily available, they know exactly what they want, and they know when and how they want it.

·        Demand planning software generates demand forecasts using statistical tools and forecasting techniques. Companies can respond faster and more effectively to consumer demands through supply chain enhancements such as demand planning software.

·      Once an organization understands customer demand and its effect on the supply chain it can begin to estimate the impact that its supply chain will have on its customers and ultimately the organization’s performance.

COMPETITION

·        Supply chain planning (SCP) software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.

·     Supply chain execution (SCE) software automates the different steps and stages of the supply chain. This could be as simple as electronically routing orders from a manufacturer to a supplier.

SPEED

·         These systems raise the accuracy, frequency and speed of communication between suppliers and customers, as well as between internal users.

·        Another aspect of speed is the company’s ability to satisfy continually changing customer requirements efficiently, accurately and quickly.

SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS

·         To succeed in today’s competitive markets, companies must align their supply chain with the demands of the markets they serve.

·     Supply chain performance is now a distinct competitive advantage for companies proficient in the SCM area.

MAKE THE SALE TO SUPPLIERS

The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company’s walls. Not only will the people in the organization need to change the way they work, but also the people from each supplier that is added to the network must change. Be sure suppliers are on board with the benefits that the SCM system will provide.

WEAN EMPLOYEES OFF TRADITIONAL BUSINESS PRACTICES

Operations people typically deal with phone calls, faxes and orders scrawled on paper and will most likely want to keep it that way. Unfortunately, an organization cannot disconnect the telephones and fax machines just because it is implementing a supply chain management system. If the organization cannot convince people that using the software will be worth their time, they will easily find ways to work around it, which will quickly decrease the changes of success for the SCM system.

ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATION GOALS

It is important to select SCM software that gives organizations an advantage in the areas most crucial to their business success. If the organizational goals support highly efficient strategies, be sure the supply chain design has the same goals.

DEPLOY IN INCREMENTAL PHASE AND MEASURE AND COMMUNICATE SUCCESS

Design the development of the SCM system in incremental phases. For instance, instead of installing a complete supply chain management system across the company and all suppliers at once, start by getting it working with a few key suppliers, and then move on to the other suppliers. Along the way, make sure each step is adding value through improvements in the supply chain’s performance. While a big-picture perspective is vital to SCM success, the incremental approach means the SCM system should be implemented in digestible bites and also measured for success one step at a time.

BE FUTURE ORIENTED

The supply chain design must anticipate the future state of the business. Because the SCM system likely will last for many more years than originally planned, managers need to explore how flexible the systems will be when (not if) changes are required in the future. The key is to be certain that the software will meet future needs, not only current needs.

Chapter 9- Enabling the Organization – Decision Making

Ø  Reasons for the growth of decision-making information systems

§   People need to analyze large amounts of information

§   People must make decisions quickly

§ People must apply sophisticated analysis techniques, such as modeling and forecasting, to make good decisions

§   People must protect the corporate asset of organizational information

Ø   Model – a simplified representation or abstraction of reality

Ø   IT systems in an enterprise'

Transaction Processing Systems(TPS)

Ø  Moving up through the organizational pyramid users move from requiring transactional information to analytical information

Ø  Transaction processing system - the basic business system that serves the operational level (analysts) in an organization

Ø  Online transaction processing (OLTP) – the capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information

Ø  Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

Ø  Decision Support Systems(DSS)

Models information to support managers and business professionals during the decision-making process.

Ø  Three quantitative models used by DSSs include:

1.       Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model.

Eg: What will happen to the supply chain if a tsunami in Sabah reduces holding inventory from 30% to 10%?

2.       What-if analysis – checks the impact of a change in an assumption on the proposed solution.

Eg: Repeatedly changing revenue in small increments to determine it effects on other variables.

3.       Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output.

Eg: Determine how many customers must purchase a new product to increase gross profits to $5 million

What-if analysis

Goal-seeking analysis

Interaction between a TPS and a DSS

Ø  Executive Information Systems

A specialized DSS that supports senior level executives within the organization

Ø  Most EISs offering the following capabilities:

§        Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information.

 Eg: Data for different sales representatives can be rolled up to an office level. Then state level, then a regional sales level.

§        Drill-down – enables users to get details, and details of details, of information.

Eg: From regional sales data then drill down to each sales representatives at each office.

§        Slice-and-dice – looks at information from different perspectives.

Eg: One slice of information could display all product sales during a given promotion, another slice could display a single product’s sales for all promotions.

Interaction between a TPS and an EIS

Ø  Digital dashboard – integrates information from multiple components and presents it in a unified display

Ø  Intelligent system – various commercial applications of artificial intelligence

Ø  Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn

§        Advantages: can check info on competitor

The ultimate goal of AI is the ability to build a system that can mimic human intelligence

Ø  Four most common categories of AI include:

Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems.

Eg: Playing Chess.

Neural Network – attempts to emulate the way the human brain works. Eg: Finance industry uses neural network to review loan applications and create patterns or profiles of applications that fall into two categories – approved or denied.

Fuzzy logic – a mathematical method of handling imprecise or subjective information.

Eg: Washing machines that determine by themselves how much water to use or how long to wash

Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.

 Eg: Business executives use genetic algorithm to help them decide which combination of projects a firm should invest.

             

Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

•          Multi-agent systems

•          Agent-based modeling

             Eg:  Shopping bot: Software that will search several retailers’ websites and provide a comparison of each retailers’ offering including prive and availability

#Common forms of data-mining analysis capabilities include:

• Cluster analysis
• Association detection
• Statistical analysis

Cluster analysis – a technique used to divide an information set into mutually exclusive groups such that the members of each group are as close together as possible to one another and the different groups are as far apart as possible

CRM systems depend on cluster analysis to segment customer information and identify behavioral traits

Eg: Consumer goods by content, brand loyalty or similarity

Association detection – reveals the degree to which variables are related and the nature and frequency of these relationships in the information

Market basket analysis – analyzes such items as Web sites and checkout scanner information to detect customers’ buying behavior and predict future behavior by identifying affinities among customers’ choices of products and services

Eg: Maytag uses association detection to ensure that each generation of appliances is better than the previous generation.

Statistical analysis – performs such functions as information correlations, distributions, calculations, and variance analysis

• Forecast – predictions made on the basis of time-series information

• Time-series information – time-stamped information collected at a particular frequency

Eg: Kraft uses statistical analysis to assure consistent flavor, color, aroma, texture, and appearance for all of its lines of foods

Chapter 8 – Accessing Organizational Information – Data Warehouse

 What is Data Warehouse?

Ø  Defined in many different ways, but not rigorously

-          A decision support database that is maintained separately from the organization’s operational database.

-          A consistent database source that bring together information from multiple sources for decision support queries.

-          Support information processing by providing a solid platform of consolidated, historical data for analysis.

History of Data Warehousing

Ø  In the 1990’s executives became less concerned with the day-to-day business operations and more concerned with overall business functions

Ø  The data warehouse provided the ability to support decision making without disrupting the day-to-day operations, because;

-         Operational information is mainly current – does not include the history for better decision making

-         Issues of quality information

-         Without information history, it is difficult to tell how and why things change over time

Data warehouse fundamentals

Ø  Data warehouse – A logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making takes

Ø  The primary purpose of a data warehouse is to combined information throughout an organization into a single repository for decision-making purposes – data warehouse support only analytical processing

Data warehouse model

Ø  Extraction, transformation and loading (ETL) – A process that extracts information from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse.

Ø  Data warehouse then send subsets of the information to data mart.

Ø  Data mart – contains a subset of data warehouse information.

Multidimensional Analysis and Data Mining

Ø  Relational Database contains information in a series of two-dimensional tables.

Ø  In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows

-          Dimension – A particular attribute of information

Ø  Cube – common term for the representation of multidimensional information

Ø  Once a cube of information is created, users can begin to slice and dice the cube to drill down into the information.

Ø  Users can analyze information in a number of different ways and with number of different dimensions.

Ø  Data Mining – the process of analyzing data to extract information not offered by the raw data alone. Also known as “knowledge discovery” – computer-assisted tools and techniques for sifting through and analyzing vast data stores in order to finds trends, patterns and correlations that can guide decision making and increase understanding

Ø  To perform data mining users need data-mining tools

-          Data-mining tool – uses a variety of techniques to finds patterns and relationships in large volumes of information. Eg: retailers and use knowledge of these patterns to improve the placement of items in the layout of a mail-order catalog page or Web page.

Information Cleansing or Scrubbing

Ø  An organization must maintain high-quality data in the data warehouse

Ø  Information cleansing or scrubbing – A process that weeds out and fixes or discards inconsistent, incorrect or incomplete information

Ø  Occurs during ETL process and second on the information once if is in the data warehouse

Ø  Contract information in an operational system

Ø  Standardizing Customer  name from Operational Systems

Ø  Information cleansing activities

-          Missing Records or Attributes

-          Redundant Records

-          Missing Keys or Other Required Data

-          Erroneous Relationships or References

-          Inaccurate Data

Ø  Accurate and complete information

Business Intelligence

Ø  Business Intelligence – refers to applications and technologies that are used to gather, provides access, analyze data and information to support decision making efforts

Ø  These systems will illustrate business intelligence in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis to name a few

Ø  Eg; Excel, Access

CHAPTER 7 : STORING ORGANIZATIONAL INFORMATION - DATABASES

What is INFORMATION?

RELATIONAL DATABASE FUNDAMENTALS

Information is everywhere in an organization

Information is stored in databases

Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)

RELATIONAL DATABASE FUNDAMENTALS

Database models include:

·   Hierarchical database model – information is organized into a tree-like
    structure (using parent/child relationships) in such a way that it cannot have
    too many relationships

·   Network database model – a flexible way of representing objects and their
    relationships

·   Relational database model – stores information in the form of logically related
    two-dimensional tables

Entities and Attributes

·         Entity – a person, place, thing, transaction, or event about which information is stored

The rows in each table contain the entities

·         Attributes (fields, columns) – characteristics or properties of an entity class

The columns in each table contain the attributes

Keys and Relationships

Primary keys and foreign keys identify the various entity classes (tables) in the database

·         Primary key – a field (or group of fields) that uniquely identifies a given entity in a table

·         Foreign key – a primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables

RELATIONAL DATABASE ADVANTAGES

Database advantages from a business perspective include

· Increased flexibility

· Increased scalability and performance

· Reduced information redundancy

· Increased information integrity (quality)

· Increased information security

· Increased Flexibility

A well-designed database should:

· Handle changes quickly and easily

· Provide users with different views

· Have only one physical view – deals with the physical storage of
  information on a storage device

· Have multiple logical views - focuses on how users logically access information

Increased Scalability and Performance

A database must scale to meet increased demand,  while maintaining acceptable performance levels

· Scalability – refers to how well a system can adapt to increased demands

· Performance – measures how quickly a system performs a certain process or
  transaction

Reduced Information Redundancy

Databases reduce information redundancy

· Redundancy – the duplication of information or storing the same information in
  multiple places

Inconsistency is one of the primary problems with redundant information

Increase Information Integrity (Quality)

Information integrity – measures the quality of information

Integrity constraint – rules that help ensure the quality of information

· Relational integrity constraint

· Business-critical integrity constraint

Increased Information Security

Information is an organizational asset and must be protected

Databases offer several security features including:

· Password – provides authentication of the user

· Access level – determines who has access to the different types of information

· Access control – determines types of user access, such as read-only access

Database management systems (DBMS) – software through which users and application programs interact with a database

DATA-DRIVEN WEBSITES

Data-driven websites – an interactive website kept constantly updated and relevant to the needs of its customers through the use of a database.

DATA-DRIVEN BUSINESS INTELLIGENCE

CHAPTER 6 – VALUING ORGANIZATIONAL INFORMATION

ORGANIZATIONAL INFORMATION

·         Information is everywhere in an organization

·          Employees must be able to obtain and analyze the many different levels, formats and granularity of organizational information to make decisions

·          Successfully collecting, compiling, sorting and analyzing information can provide tremendous insight into how an organization is performing

·         Levels, formats and granularity of organizational information

The Value of Transnational And Analytically Information

·       Transaction information verses analytically information

     

THE VALUE OF QUALITY INFORMATION

-    Business decisions are only as good as the quality of the information used to make the decisions

-   You never want to find yourself using technology to help you make a bad decision faster

-   Characteristics of high-quality information include;

-   Low quality information example;

UNDERSTANDING THE COSTS OF POOR INFORMATION

-   The four primary sources of low quality information include;

- Online customers intentionally enter inaccurate information to protect their privacy

- Information from different systems have different entry standards and formats

- Call center operators enter abbreviated or erroneous information by accident or to save time

- Third party and external information contains inconsistencies, inaccuracies and errors

-   Potential business effects resulting from low quality information include;

- Inability to accurately track customers

- Difficulty identifying valuable customers

- Inability to identify selling opportunities

- Marketing to nonexistent customers

- Difficulty tracking revenue due to inaccurate invoices

- Inability to build strong customer relationships

UNDERSTANDING THE BENEFITS OF GOOD INFORMATION

-   High quality information can significantly improve the chances of making a good decision

-   Good decisions can directly impact an organization’s bottom line

CHAPTER 5 : ORGANIZATIONAL STRUCTURES THAT SUPPORT STRATEGIC INITIATIVE

Organizational Structure

ü  Organizational employees must work closely together to develop strategic initiatives that create competitive advantages.

ü  Ethics and security are two fundamental building blocks that organizations must base their businesses upon.

IT Roles And Responsibilities

Information technology is a relatively new function area, having only been around formally for around 40 years.

Recent IT-related strategic positions :

·         Chief Information Officer (CIO)

·         Chief Technology Officer (CTO)

·         Chief Security Officer (CSO)

·         Chief Privacy Officer (CPO)

·         Chief Knowledge (CKO)

1.   Chief Information Officer (CIO)

Oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

Broad CIO functions include:

Ø  Manager

ensuring the delivery of all IT projects, on time and within budget.

Ø  Leader

ensuring the strategic vision of IT is in line with the strategic vision of the organization.

Ø  Communicator

Building and maintaining strong executive relationships.

If they have any problem involve IT personal, CIO that will solve it. (more effectiveness)

1.   Chief Technology Officer (CTO)

Ø  responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT.

Ø  effectiveness because make sure the system is efficient

1.   Chief Security Officer (CSO)

Ø  responsible for ensuring the security of IT systems.

Ø  to make sure the system we do, no person can hack

1.   Chief Privacy Officer (CPO)

Ø  responsible for ensuring the ethical and legal use of information

1.   Chief Knowledge Office (CKO)

Ø  Responsible for collecting, maintaining, and distributing the organization's knowledge.

ORGANIZATIONAL FUNDAMENTALS

Ø  Ethics and security are two fundamental building blocks that organizations must base their businesses on to be successful.

Ø  In recent years, such events as the Enron and Martha Stewart, along with 9/11 have shed new light on the meaning of ethics and security.

• Ethics
• the principles and standards that guide our behavior toward other people

• Privacy is major ethical issue
• privacy
• the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.
• sometimes, we fell want to alone. don't want anyone bother
• we don't want someone to corrupt our business.

• Issues affected by technology advances
• intellectual property.
• intangible creative work that is embodied in physical form. for example, from idea to something we can hold. 
• create new things. so, there is intellectual property, can touch.
• things that comes from a creative idea.
• such as architects, building that we can touch.
• copyright
• the legal protection afforded an expression of an idea, such as a song, video, game, and some types of proprietary documents.

• fair use doctrine
• in certain situations, it is legal to use copyrighted materials. for example song from oversea to Malaysia.

• pirated software
• the unauthorized use, duplication, distribution, or sale of copyrighted software. more cheap and free.
• counterfeit software
• software that is manufactured to look like the real thing and sold as such. for example, buy antivirus, notify original but not original.

• One of the main ingredients in trust is privacy. the system is effective because customer will be satisfied but efficiency because the system can be slow.
• 
  

• Security
• organizational information is intellectual capital - it must be protected.

• Information security
• the protection of information from accidental or intentional misuse by persons inside or outside an organization.
• the CSO who save the information.

• E-business automatically creates tremendous information security risks for organizations.