Information Systems Strategic Planning – Week #7 Lecture 1

Building the Supply Chain

You have learned a lot about the Information Systems backbone of the company, this week you will learn about getting the product to the customer (supply chain), taking care of the customer (customer relationship management) and managing the entire enterprise (enterprise resource planning). As in your personal life, communication is critical in your business endeavors. From the information systems point of view, you need to be sure that as you change things in the software, hardware and processes that what used to happen can still happen. This is called backward compatibility. If you implement some fancy new system but the ordering and delivery system cannot talk to it (not backwards compatible) your company will have significant issues shipping orders to customers.   

Enterprise systems consist of three primary components.

• Supply Chain Management
• Customer Relationship Management
• Enterprise Resource Planning

The supply chain has five basic activities: plan, source, make, deliver and sometimes return. Please study the image below and make sure you understand the function and processes involved with each activity.

The supply chain has three main links:

1. Materials flow from suppliers and their “upstream” suppliers at all levels (receiving the raw materials that go into their product).
2. Transformation of materials into semi-finished and finished products through the organization’s own production process (called manufacturing in some cases).
3. Distribution of products to customers and their “downstream” customers at all levels (shipping)

The main purposes of supply chain management systems is to:

• Decrease the power of its buyers
• Increase its own supplier power
• Increase switching costs to reduce the threat of substitute products or services
• Create entry barriers thereby reducing the threat of new entrants
• Increase efficiencies while seeking a competitive advantage through cost leadership

You can see from these items that efficiencies in your organization will keep you in the market and try to keep competitors out. The next most important thing about staying in business is taking care of your customers, you will learn more about that in the next lecture.