MGT 300 - Chapter 10

Extending the Organization - Supply Chain Management

SUPPLY CHAIN MANAGEMENT

✱ The average company spends nearly half of every dollar that it earns on production

✱ In the past, companies focused primarily on manufacturing and quality improvements to        influence their supply chains

BASICS OF SUPPLY CHAIN

✱ The supply chain has three main links :

1. Materials flow from suppliers and their ''upstream'' suppliers at all levels
2. Transformation of materials into semi finished and finished products through the organization's own production process
3. Distribution of products to customers and their ''downstream'' customers at all levels

BASICS of SUPPLY CHAIN

✱ Plan 

    - A company must have a plan for managing all the resources that go toward meeting              customer demand for products or services

✱ Source

    - Companies must carefully choose reliable suppliers that will deliver goods and services        required for making products

✱ Make

    - This is the step where companies manufacture their products or services. This can                include scheduling the activities necessary for production, testing, packaging and                  preparing for delivery

✱ Deliver (Logistic)

    - Companies must be able to receive orders from customers, fulfill orders via a network          of warehouse, pick transportation companies to deliver system to facilitate payments.

✱ Return

    - This is typically the most problematic step in the supply chain. Companies must create 

      a network for receiving defective and excess products and support customers who have        problems with delivered products.

VISIBILITY

✱ Visibility - more visible models of different ways to do things in the supply chain have            emerged. High visibility in the supply chain is charging industries, as Wal-Mart                        demonstrated

✱ Supply Chain Visibility - the ability to view all areas up and down the supply chain

✱ Bullwhip effect - occurs when distorted product demand information passes form one            entity to the next throughout the supply chain

✱ supply chain visibility allows organizations to eliminate the bullwhip effect

• retailers order diapers from distributors when their inventory level falls below a certain level, they might order a few extra just to be safe

✱ companies can respond faster and more effectively to consumer demands through                supply chain enhances

✱ Demand planning software - generates demand forecasts using statistical tools and              forecasting techniques

✱ Supply Chain Planning (SCP) Software - uses advanced mathematical algorithms to            improve the flow and efficiency of the supply chain

✱ Supply Chain Execution (SCE) Software - automates the different steps and stages of          the supply chain

Supply Chain Management Success Factors

✱ SCM industry best practices include :

1. Make the sale to suppliers
2. Wean employees off traditional business practices
3. Ensure the SCM system supports the organizational goals
4. Deploy in incremental phases and measure and communicate success
5. Be future oriented

SCM Success Stories

✱ Numerous decision support systems (DSSs) are being to assist decision makers in the          design and operation of integrated supply chains

✱ DSSs allow managers to examine performance and relationship over the supply chain          and among :

• Suppliers
• Manufacturers
• Distributors
• Other factors that optimize supply chain performance

THE END CHAPTER 10

MGT 300 - Chapter 9

ENABLING THE ORGANIZATION - DECISION MAKING

DECISION MAKING

- Reasons for the growth of decision making information systems

• people need to analyze large amounts of information
• people must make decision 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

TRANSACTION PROCESSING SYSTEMS

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

v 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

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

DECISION SUPPORT SYSTEMS

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

vThree 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.

EXECUTIVE INFORMATION SYSTEMS

- A specialized DSS that supports senior level executives within the organization

vMost 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.

Artificial Intelligence (AI)

v Intelligent system – various commercial applications of artificial intelligence

 

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

Advantages: can check info on competitor

v 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 retailer’s websites and provide a comparison of each retailers’s offering including prive and availability.

Data Mining

- common forms of data-mining analysis capabilities include :

• cluster analysis
• association detection
• statistical analysis

CLUSTER ANALYSIS

v 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

v 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 

v 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

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

•Eg: Consumer goods by content, brand loyalty or similarity 

STATISTICAL ANALYSIS

v 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

MGT 300 - Chapter 8

 ACCESSING ORGANIZATIONAL INFORMATION - Data Warehouse

What is DATA WAREHOUSE?

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

- 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 

     ➤ Issue of quality information

     ➤ Without information history, it is difficult to hell how and why things change over time

Data Warehouse Fundamentals

a) Data Warehouse - a logical collection of information - gathered form many different operational databases - that supports business analysis activities and decision-making tasks

b) 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

➤ Extraction, information 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

➤ Data warehouse - then send subsets of the information to data smart

➤ Data Mart - contains a subset of data warehouse information

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

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

MULTIDIMENSIONAL ANALYSIS AND DATA MINING

➤ 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 sitting through and analyzing vast data stores in order to find trends, patterns, and correlations that can guide decisions making and increase understanding

To perform data mining users need data-mining tools

~ Data Mining Tool - uses a variety of techniques to find patterns and relationships in large volumes of information.

INFORMATION CLEANSING OR SCRUBBING

a) An organization must maintain high-quality data in the data warehouse 

b) Information cleansing and scrubbing - a process that weeds out and fixed or discards inconsistent, incorrect, or incomplete information

c) Occur during ETL process and second on the information once if is in the data warehouse.

BUSINESS INTELLIGENCE

➤ Business Intelligence - refers to applications and technologies that are used to gather, provide access, analyze data, and information to support decision making effort.

➤ these systems will illustrate business intelligence in the 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

MGT 300 - Chapter 7

STORING ORGANIZATIONAL INFORMATION

What is Information ?


⧭ Information is everywhere is an organization
⧭ Information is stored in databases :

• DATABASES - maintains information about various of objects (inventory), events (transactions), people (employees), and places (warehouses)

⧭ Database models include :

• HIERARCHICAL DATABASE MODEL - information is organized into a tree-like structure using parents/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

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

KEYS AND RELATIONSHIPS

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

• PRIMARY KEYS - a field (or group of fields) that uniquely identifies a given entity in a table
• FOREIGN KEYS - a primary key of one table that appear an attribute in another table and acts to provide a logical relationship among the two tables

RELATIONAL DATABASE ADVANTAGES

💕 Database advantages from a business perspectives 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 views

• physical view - deals with the physical storage of information on a storage device

have mutiple logical views

• logical view - 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
• Performances - measures how quickly a system perform a certain process or transaction

REDUCE 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

 

INCREASE 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

Data-Driven Web Site Business Advantages

• Development
• Content Management
• Future Expandability
• Minimizing Human Error
• Cutting Production and Update Costs
• More efficient
• Improved Stability

Integration Information among Multiple Databases

➤Integration - allows separate systems to communicate directly with each other

• Forward Integration - takes information entered into a given system and sends it automatically to all downstream systems and processes
• Backward Integration -  takes information entered into a given system and sends it automatically to all upstream systems and processes