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Introduction to Management Information Systems Chapter 8 E-Commerce and Supply Chain Management

Introduction to Management Information Systems Chapter 8 E-Commerce and Supply Chain Management. HTM 304 Fall 07. Supply Chain Management. Supply chain – network of organizations and facilities that transforms raw materials into products delivered to customers Chain is a mis-cocnept

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Introduction to Management Information Systems Chapter 8 E-Commerce and Supply Chain Management

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  1. Introduction to Management Information SystemsChapter 8 E-Commerce and Supply Chain Management HTM 304 Fall 07

  2. Supply Chain Management • Supply chain – network of organizations and facilities that transforms raw materials into products delivered to customers • Chain is a mis-cocnept • implies each organization connected to just one company up (toward the supplier) and down (toward the customer) the chain • At each level, an organization can work with many organizations both up and down the supply chain A supply chain is actually a network!

  3. Supply Chain Network Customer is the only source of revenue! • All the upstream firms are competing to get a good share of the pie. • All the upstream firms are interrelated since each decision will affect the total size of the pie! Supply Chain Management is challenging!

  4. IS to improve the SC performance • Four major factors that affect supply chain performance: • Facilities • Inventory • Transportation • Information • The challenge is to design the system that maximizes supply chain profitability which in the long run improves each partner's profitability • Maximizing the chain profit does not always maximize each organization’s profit in isolation • Successful SCM requires coordination  strategic alliances  inter-organizational IS

  5. Integration of SRM and CRM • CRM: customer relationship management • SRM: Supplier relationship management

  6. Supplier Relationship Management • SRM – business process for managing al contracts between an organization and its suppliers. • Three basic processes: • Source • Purchase • Settle

  7. SRM processes – (1) • Source • Find vendors of needed supplies, materials, or services • Assess the vendors • Negotiate terms • Procurement contracts • Some SRM applications search for product sources and find evaluations of vendors and products

  8. SRM processes – (2) • Purchase • Request • information • quotation • proposals • Approve purchases • Issue orders

  9. SRM processes – (3) • Settle • Connect to the cash management subsystem in financial management application to make payment • Some SRM packages include features to support procurement auctions. Secure cash flow (schedule payments, manage cash flows) Financial System bids bids bids SRM Settlement module

  10. Technology for Data Exchange • From EDI to XML • Why not HTML? – lack of structure • EDI (Electronic Data Interchange) • A standard of formats for common business documents. • Facilitate organizations to exchange documents (e.g. purchase order, invoice). • XML (eXtensible Markup Language) • Electronic exchange via world wide web.

  11. EDI • Require agreement on the data format (standard) to be sent • Popular Standards: • EDI X12 Standard • American National Standards Institute (ANSI) X12 committee manages the EDI standard in the U.S. • includes hundreds of documents with standard names, e.g. EDI 850 – purchase order, EDI 856 – advance ship notices, EDI 810 – electronic invoice, etc. • EDIFACT standard – used internationally • HIPAA standard – used for medical records • Standards do not stand still.  • Various versions of each of X12, EDIFACT, and HIPAA…

  12. An Example of Data Exchange with EDI X12 FoodSeller, Co. Buy Snack, Inc. Internet Receive Order, Translate EDI 850 Orders Items: Generate EDI 850 EDI X12 850 Purchase Order Generate EDI 997 Acknowledgement EDI X12 997 Functional Acknowledgement View EDI 997 Checks supply to fulfill order, EDI 855 EDI X12 855 Purchase Order Acknowledgement View EDI 855 to Check the Changes Generate EDI 997 Acknowledge View EDI 997 EDI X12 997 Functional Acknowledgement Process Order, EDI 856 Ship Notice View EDI 856 Awaits Arrival EDI X12 856 Shipment Notice Bills for Order EDI 819 Invoice View EDI 855 to Check the Changes EDI X12 855 Purchase Order Acknowledgement

  13. Example Scenario of System Integration

  14. XML – a W3C standard • eXtensible Markup Language • A markup just like HTML • Designed to describe Data, not to display webpage (as HTML) • Has become a significant standard for computer processing

  15. Example: • Using XML Web Service to share sales data with business partners

  16. Problem Solving Guide (P.235a-b) • Interorganizational Information Exchange • What should you do in scenario 1-5?

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