SUPPLY CHAIN MANAGEMENT IN SYSTEM INFORMATION CONTEXT

DELLA ANDINI

Value Chain

Value chain is a concept for considering key activities that organization can perform or manage with intention of adding value for the customer as product and services move from conception to delivery to the customer.

Value chain is activities to add a value and reduce cost in order to create effectiveness from organization’s supply chain activities.

The Impact e-business to value chain

In my opinion, an existence e-business can create competitive advantages for organization.

E-business growth has created direct marketing such online purchasing and selling activities. The growth of e-business exposes an opportunity to expand or to reach another customer’s segment. It shows that existence of e-business can create value chain in marketing activity.

In procurement activity, a progression of electronic communication can make value chain by reducing cost and create integrating data. In the primary value chain, benefits can be even greater, for example, if a retailer shares information electronically with a supplier about demand for its products, this can enhance the value chain of both parties since the cycle time for ordering can be reduced, resulting in lower inventory holding and hence lower costs.

In distribution activity, the existence of e-business can create value chain and increase a responsiveness organization to fulfill customer’s needs.

1.      Supply chain management: all coordination and managed activities of an organization from supplier and partner that work together to produce and distribute product for customers. Supply chain exist to two part upstream supply activities (procurement and inbound logistics) are equivalent to buy-side e-commerce and downstream supply chain activities (sales, outbound logistics and fulfilment) correspond to sell-side e-commerce.

a.       Relation between supply chain and logistics:

Logistic is time-related positioning of resource or strategic management of total supply chain. Logistic activities include procurement, manufacture, distribution, waste disposal and it associated with transportation, storage, and information technology. Logistic is used to refer not to all supply chain activities, but specifically to the management of logistic,  inbound logistic (management of entering resource to organization from supplier) and outbound logistic (management of supplying resource from organization to intermediaries (retailers and distributors and customers)

b.      Relation between supply chain and value chain concept:

Value chain is a model that considers how supply chain activities can perform and manage supply chain with intention of adding value for the customer as product and service move from conception to delivery to customer. The elements of value chain such as procurement, manufacture, sales and distribution. To analyze a value from supply chain activities, manager can identify supply chain become internal and external value to improve efficiency and effectiveness.

c.       Relation between supply chain and value networks:

Relation between supply chain and value networks is how to reduce time to market and increasing customer responsiveness in order to increase efficiency.

2.      Difference between push and pull orientation

a.       Push model is illustrate by manufacturer who perhaps develop an innovative product and then identifying suitable target market and a distribution channel is then created to push the product to the market. The typical motivation for a push approach is to optimize the production process for cost and efficiency. Push strategy worked by using promotion, sales promotion, and other facility that given by company for intermediary to promote and sell their product to customers. Its strategy used by organization that has product with low loyalty, impulse product, and when the customer prefer to shop in store near from their house.

Actually, push strategy need more intermediaries to distribute this product for all segment target. Its need more difficulty for company to handle and control their intermediaries.

b.      Pull model is an emphasis on using the supply chain to deliver value by reducing cost and increasing service quality to customers who are actively involved in product and service specification. Pull model focuses on customer’s need and starts with analyze of their requirement through market research and close corporation with customers and suppliers in new product development. The typical motivation for a pull approach is to optimize the production process for customer response, cost and efficiency. It will be apparent that such an approach is also consistent with management thinking about the similar concept of the value chain.

Actually its strategy used when the company has product with brand high loyalty, when customer can accept differential brand and mark, and when the customer can choose its brand.

3.      How information system can support supply chain

Information systems need to deliver supply chain visibility to different parties who need to access the supply chain information of an organization, whether they be employees within the organization, suppliers, logistics service providers or customers. Information  systems have a key role in providing this visibility.Users of this information need to be able to personalize their view of the information according to their needs – customers want to see the status of their order, suppliers want to access the organization’s database to know when their customer is next likely to place a major order. Security is also important – if a company has differential pricing, it will not want customers to see price differences.

These requirements for delivering supply chain information imply the need for an integrated supply chain database with different personalized views for different parties.A key feature of a modern supply chain infrastructure is the use of a central operational database that enables information to be shared between supply chain processes and applications. This operational database is usually part of an enterprise resource planning system such as SAP, Baan or Prism and is usually purchased with the applications for supply chain planning and execution. Some of the planning applications such as network simulation and optimization are more likely to be supplied by separate software suppliers. The use of Internet technologies to deliver information over a TCP/IP protocol is becoming standard to reduce the costs of proprietary leased-line networks. Information needed by managers to intervene in the supply chain process when problems occur is delivered as alerts or through continuous monitoring across secure private intranets or extranets used to link to partners.

4.      The key strategic options in supply chain management

A strategic approach for supply chain management can also defined using SOSTAC approach. The elements of strategy imply a linear approach to strategic thinking and an iterative approach in which there is a joint development between the organization, the suppliers and other third parties. Strategies for supply chain improvement have been categorized according to the scope of change and the speed of change. These dimensions of change are similar to those that are associated with business process re-engineering and business process improvement. And this is table

strategy element	supply chain management approach
situation analyze	gather the data :
	internal assessment of current approaches to the supply chain
	external analysis of marketpalce trends and customer opprotunities
objective setting	set the approach :
	definition of required terget return and release of shareholder value
strategy	frame the strategies :
	development of supply chain strategies to achieve these goals (Action)
Tactics	prioritization of operational improvement strategies and quick wins
Actions	implement the change and challenge the thinking:
	formation of supply chain strategy forum to assess the needs
	analysis of value-added, cost and cycle time of supply chain activities
	cascade of executive-led project groups to scrutinize key processes
	allocation of business development strategies to sponsor executives
control	measure the outcome:
	integation of supply chain measurement incorporate-wide reviews
	baselining to maintan pressure for performance delivery