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Questions :

1. Briefly describe the business processes supported by a Supply Chain Management (SCM) information system. In a global business like Emerson what are the advantages and disadvantages of using a SCM information system? With Emerson’s many divisions using different suppliers, what would be the benefits of using a single SCM information system for all of its divisions?
2. Global companies like Emerson have suppliers, manufacturing, distribution, and retail operations. List and briefly describe the technologies and devices (used for input, output, and communication) that are used with SCM information systems. Choose two different input devices and discuss the advantages and disadvantages of each. Discuss the benefits that they provide to the business.
3. Consider that you have to implement a new SCM information system for Emerson. Describe each of the different implementation options. Discuss the advantages and disadvantages of the different implementation options. Make a recommendation and justify.
4. Modern SCM information systems and with the use of other technologies have supported businesses in improving environmental sustainability by reducing carbon emissions. Research and find an example. Briefly describe the system and how it works and how carbon emissions where reduced. Discuss what decision making is performed and how does the SCM information system contribute to the decision making. Discuss the advantages and disadvantages to the business.

 

 

Answer :

(1) Supply chain for an organisation can be defined as a channel through which organisations deliver their products and services to their end customers (Tarokh & Soroor, 2006, pp.425-531). Structure of a supply chain is mainly linear in nature and consists of following entities such as: 
  • Suppliers
  • Manufacturer
  • Distributors
  • Retail outlets
  • Consumers

In way it can be said that supply chain facilitates the entire operation of the business organisations like Emerson. A view of supply chain is displayed in below diagram.

                                                                        Figure 1: Various elements of supply chain management.

Based on case study of Emerson, it can be clearly understood that there are multiple business processes which are supported by supply chain management. These business processes are:

  • Purchase and acquisition of materials
  • Manufacturing process
  • Logistics aspects such as transportation etc.
  • Warehouse and retailing
  • Storage of manufactured items

 

 

In example of Emerson, it is clearly mentioned that how complex is its overall SCM environment. Irrespective of the fact that every organisation wants to have a sorted out supply chain structure, it is however extremely difficult to achieve this in case like Emerson, where its operations is spread across various countries. In such scenarios, the over view of SCM is somewhat like what has been displayed in below diagram

                                                                                            Figure 2: Perception of supply chain 

Above displayed diagram represents the fact that every organisation wants to have a well sorted out linear SCM, however in reality, majority of the organisations have to deal with a highly complex environment of supply chain (Kovács & Paganelli, 2003, pp.165-183).  With emergence of SCM information system there has been rapid advancement in the way supply chain is being managed. Entities present in supply chain are managed properly, and there is better visibility related to flow of information. In context to Emerson case, following are the potential advantages and disadvantages of SCM information system:

Advantages 

  • SCM Information system can help an organisation like Emerson to consolidate its overall supply chain by giving it a tight control over all the entities present in the supply chain.
  • Real time information related to inventory, procurement, shipping etc. is generated through the SCM information system, which can further help in quick decision making on various critical supply chain related issues.
  • SCM information system has given an opportunity to business like Emerson to bring all the members or entities of the supply chain such as suppliers and shipping company on same platform, it will further improve the overall efficiency and productivity.
  • Capital required for manual management of supply chain is much higher than what is expected for SCM information system. Hence, Emerson can save its operational cost by use of SCM information system. 

Disadvantages

  • Initial cost of investment required for SCM information system is high, especially when the size of organisation is as big as that of Emerson.
  • Implementation of SCM information system without proper feasibility study, and understanding of current business processes can lead to complete chaos and can make the existing SCM environment more complex (Bose et al, 2008, pp. 233-241).

Implementation of SCM information system for Emerson will be huge, especially in a situation where there are different divisions coordinating with different suppliers. SCM information system will provide a single platform on which data between divisions and suppliers can be exchanged through a common protocol such as EDI (Electronic data interchange). A common platform like SCM information system will help suppliers as well Emerson to consolidate all the supply chain processes through a common gateway, which will reduce inefficiency in the supply chain, and will help both supplier as well as Emerson management to save capital on various activities related to SCM (Williamson et al, 2004, pp.375-385).

 

(2) SCM information system has been playing a major role in improving the existing methods of supply chain management. Today there are several technologies and devices which are used with SCM information systems to facilitate the management of supply chain. Some of the technologies in this regard are as follows:

  • Electronic data interchange (EDI): EDI as a technology was introduced in 1970s, and gained popularity in 1980s. EDI is a technology which enables transactions and information exchanges between two parties/partners/entities in a supply chain (EDI, 2005, pp.1641-1656). EDI is mainly exchange of structured data for the automated processing, which takes place between two computers. Hence in SCM, EDI is used between trade partners to exchange essential information which is required for smooth functioning of the business. These links are established between organisations which are having long term trading relationship.
  • Enterprise Resource Planning (ERP) Systems: ERP systems can be defined as enterprise wide information systems that are used for automation of all the activities and functions of a business. ERP systems are mainly transaction based information system that is integrated across all the business processes of the organisation.
  • Warehouse management systems: WMS are information systems that control all the activities which takes place in warehouse operations. It covers processes such as receipt of goods, allocation or de-allocation of storage space, order picking, stock rotation etc.
  • Bar code and scanners: Bar codes and scanners are two critical technologies which has enabled successful automation of the data entry into a supply chain. Bar code can be defined as a representation of numbers, which conceal information related to product such as product manufacture date, name of manufacturer etc. This information can be retrieved through device named bar code scanners. Bar code scanners, are devices which read the barcode and translate the information in a format which can be understood by human beings (Lee et al, 2003, pp. 243-254).
  • Advantages of Barcode and scanner:
    • Helps in error reduction during data entry
    • Helps in better control of inventory
    • Helps in saving time which is consumed during inventory checks.
    • Disadvantages of Barcode and scanner:
      • It is cost intensive
      • Relatively old technology when compared to new technologies such as RFID
      • Needs manual intervention.
    • RFID (Radio frequency identification): There are certain limitations to bar code technologies, such as amount of information it can store in each bar code. This limitation was resolved by RFID technology which are more or less similar in various aspects, for example both technologies are auto-id technologies which are intended to provide item identification. However, major difference lies in the way information is decoded. In case of bar code, special bar code scanner has to be used by a person. In RFID; the reading device scans a tag by using radio frequency signals (Hsu, 2005, pp. 857-875).
    • Advantages of RFID
      • Unlike input technology like bar code, RFID does not have any line of sight issue, which means an item with radio tag can be scanned and its information entered in the system till its tag is in the frequency range of the RFID device.
      • Its capabilities are multiple times more than barcode, and can read multiple items simultaneously.
      • Disadvantages of RFID
        • Initial cost of acquisition is very high
        • RFID might have security concerns, as unauthorized devices might also read data.
        • Scanning might be a problem in mediums such as metal and water.

 

 

(3) SCM information systems are cost intensive, and high level of planning is required before the actual implementation of the system takes place. The implementation approach at times decides the success or failure of the system (Li & Lin, 2006, pp. 1641-1656). There are three different approaches which can be used:

Enterprise-wide full installation: Under this approach, the SCM information system is implemented across the enterprise in one go. Which means there are no phases of roll-out. This approach can be beneficial for an organisation which is small in size and has very restricted presence geographically.

Advantages of this approach are:

 

  • Helps in covering all the business processes of the organisation in single implementation cycle, which reduces process level ambiguities.
  • Due to single implantation cycle, mapping of business processes with the information system is proper.
  • It is cost effective for the organisation, as no multiple phases of implementation are required.

 

Disadvantages of this approach are:

  • Organisations have to coordinate with the employees who have to suddenly accept a new information system for their day-to-day use.
  • Learning curve for the employees is steep.
  • Issue in process mapping can create multiple levels of problems which can be detected only once the system is live. Hence, risk factor is high.

 

Key-process installation: As the name suggest, this implementation approach for the SCM information system focused on rolling out the system for key processes only. Hence, under this strategy, organisation first identifies the key processes of its supply chain which it wants to deal with first. Once the processes are identified, they are then mapped with the system. Based on initial implementation, the overall outcome is analysed and based on the positive or negative outcome, future strategy for implementation is decided (Yu et al, 2010).

Advantages of this approach are:

 

  • Enables organisation to focus on key process areas of its supply chain first.
  • Complexity involved in this implementation approach is less as compared to enterprise wide implementation approach.
  • This approach is less resource intensive

Disadvantages of this approach are:

  • If a key process, which is part of implementation has a dependent process which is excluded, then it might result into complexity during implementation of the system.
  • This implementation is time consuming for the organisation.

Based on above two approaches, it can be said that for Emerson, Key process approach will be suitable. It should first identify the key processes such as purchasing, logistics etc. and should accordingly implement the SCM information system to manage these key processes. Based on the outcomes, Emerson can accordingly include new processes in future implementation.

 
(4) SCM information systems have played a major role in improving the environmental sustainability.

It is important to understand that there are multiple entities involved in a supply chain. For example, a supplier has to supply the material which is required by the buyer. Once the purchase order is generated, it has to be then fulfilled by the supplier. In order to fulfil the order, supplier has to ship his the material to the buyer’s premise. There can be multiple ways through which materials can be shipped, however whatever mode is used, and each mode of shipping runs on fossil fuel, which means its consumption will result into carbon emission (Holmqvist & Stefansson, 2006).  

For companies like Emerson or any other global organisation which has to handle with thousands of suppliers day in and day out, in such cases, at times it might happen that same supplier might have to fulfil the order for two different purchase orders for same company. In traditional scenario when there was no SCM information system, such orders has to be fulfilled individually, which meant, that even if the material being sourced was coming from same supplier, organisations didn’t have view to control and consolidate such supplies into a single one, which resulted into increase of shipping procedure, further increasing the carbon emission.

 

SCM Information system has played significant role in reduction of the carbon emission. This can be understood by example of Emerson itself.  Through its SCM information system it has been able to consolidate all its orders for a common supplier. Hence for whichever supplier the order is raised, it automatically get directed towards the supplier and accordingly supplier combines multiple orders received from the SCM information system into a single order and ships it backs to the organisation. Similarly, SCM information system has ensured that an optimum level of inventory is maintained, without increasing the inventory just because of anticipation. SCM information provides accurate level of information related to inventory due to which companies like Emerson raises orders only when it is required, further helping in the reduction of operational cost for the business as well as the suppliers.

 

Decision making is also an important aspect of the SCM information system. There are multiple situations where decision making is done. For example, decision related to replenishment of inventory can be taken only when there is clear view of current inventory. SCM information systems provide an accurate view of inventory based on which decision are made.

However, at times, solely depending decision making on the information system can backfire as well. For example, an SCM information system might be programmed to raise a purchase order if the level of inventor goes beyond a specific level. At times, supply and demand might impact the production, resulting into high or less consumption of inventory. In such case, organisation might have to make manual intervention to track the inventory and raise the purchase order as per the situation. 

 

References 

Bose, I., Pal, R., & Ye, A. 2008. ERP and SCM systems integration: The case of a valve manufacturer in China. Information & Management, 45(4), 233-241.

EDI, L. D. I. 2005. Integrating EDI with an E-SCM system using EAI technology.

Holmqvist, M., & Stefansson, G. 2006. Mobile RFID—a case from volvo on innovation in SCM. In System Sciences, 2006. HICSS'06. Proceedings of the 39th Annual Hawaii International Conference on (Vol. 6, pp. 141a-141a). IEEE.

Hsu, L. L. 2005. SCM system effects on performance for interaction between suppliers and buyers. Industrial Management & Data Systems, 105(7), 857-875.

Kovács, G. L., & Paganelli, P. 2003. A planning and management infrastructure for large, complex, distributed projects—beyond ERP and SCM. Computers in Industry, 51(2), 165-183.

Lee, T. W., Park, N. K., & Lee, D. W. 2003. A simulation study for the logistics planning of a container terminal in view of SCM. Maritime Policy & Management, 30(3), 243-254.

Li, S., & Lin, B. 2006. Accessing information sharing and information quality in supply chain management. Decision support systems, 42(3), 1641-1656.

Tarokh, M. J., & Soroor, J. 2006. Supply chain management information systems critical failure factors. In Service Operations and Logistics, and Informatics, 2006. SOLI'06. IEEE International Conference on (pp. 425-431). IEEE.

Williamson, E. A., Harrison, D. K., & Jordan, M. 2004. Information systems development within supply chain management. International Journal of Information Management, 24(5), 375-385.

Yu, M. M., Ting, S. C., & Chen, M. C. 2010. Evaluating the cross-efficiency of information sharing in supply chains. Expert Systems with Applications, 37(4), 2891-2897.

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