Chapter 10 > Extending the organization – supply chain management

·      A supply chain consists of all parties involved, directly or indirectly, in the procurement of a product or raw material.

·      Supply chain management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

·      The supply chain has three main links:

1.    Material flow from suppliers and their upstream suppliers at all levels.

2.    Transformation of materials into semi-finished and finished products, or the organization’s own production processes

3.    Distribution of products to customers and their downstream customers at all levels.

The five basic supply chain management activities

1.    Plans – prepare to manage all resources required to meet demand

2.    Sources – build relationships with suppliers to procure raw materials

3.    Make – manufacture products and create production schedules

4.    Deliver – plan for transportation of goods to customers

5.    Returns – support customers and product returns

Information technology’s role in the supply chain

·      Information technology’s primary role in SCM is creating the integrations or tight process and information linkages between functions within a firms and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers, and transportation providers. Information technology also integrates planning, decisions-making processes, business operating processes and information sharing for business performance management.

FACTOR DRIVING SUPPLY CHAIN MANAGEMENT

1.    VISIBILITY

                                               ·     ∫supply chain visibility is the ability to view all areas up and down the supply chain.

2.    CONSUMER BEHAVIOR

                                               ·     Demand planning software generates demand forecasts using statistical tools and forecasting technique.

3.    COMPETITION

                                               ·     Supply chain management software can be broken into supply chain planning software and supply chain execution software-both increase a company’s ability to compete. Supply chain planning software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. Supply chain execution software automates the different steps and stages of the supply chain. This could be as simple as electronically routing orders from a manufacturer to a supplier.

4.    SPEED

                                               ·     New forms of serves, telecommunications, wireless application, and software are enabling companies to perform activities that were once never thought possible. These systems raise accuracy, frequency, and speed of communication between suppliers and customers, as well as between internal users.

Factor fostering supply chain speed

A.   Pleasing customers has become something of corporate obsession. Serving the customer in the best, most efficient, and most effective manner has become critical, and information about issues such as order status, product availability, delivery schedules, and invoices has become a necessary part of the total customer service experience.

B.   Information is crucial to manager’s abilities to reduce inventory and human resource requirements to a competitive level.

C.    Information flows are essential to strategic planning for and deployment of resources.

Seven principles of supply chain management

1. Segment customers by service needs, regardless of industry, and then tailor services to those particular segments.

2. Customize the logistic network and focus intensively on the service requirements and on the profitability of the preidentified customer segments.

3. Listen to signals of market demand and play accordingly. Planning must span the entire chain to detect signals of changing demand.

4.Differentiate product closer to the customer, since companies can no longer afford to hold inventory to compensate for poor demand forecasting.

5.  Strategically manage sources of supply, by working with key suppliers to reduce overall costs of owning materials and services.

6. Develop a supply chain information technology strategy that supports different levels of decisions making and provides a clear view (visibility) of the flow of products, services, and information.

7.  Adopt performance evaluation measures that apply to every link in the supply chain and measure true profitability at every stage.  

Chapter 9: Enabling the organization – Decision making

Managerial decision making challenges

1.    Managers need to analyze large amount of information

·      Innovation in communication and globalization have resulted in a dramatic increase in the variables and dimensions people need to consider when making a decision, solving a problem, or appraising an opportunity.

2.    Manager must make decision quickly

·      Time is of the essence and people simply do not have time to sift through all the information manually.

3.    Managers must apply sophisticated analysis technique, such as Porter’s strategies or forecasting, to make strategic decisions.

·      Due to the intensely competitive global business environment, companies must offer far more than just a great product to succeed.

Operational

Employees develop, control and maintain core business activities required to run day to day operations. Operational decisions are considered structured decisions, which arise in situation where establish processes potential solutions. Structured decision are made frequently and are almost repetitive in nature.

Managerial

Employees are continuously evaluating company operations to hone the firm’s abilities to identify, adapt to, and leverage change. A company that has a competitive advantage needs to constantly adjust and revise its strategy to remain ahead of fast-following competitors. Managerial decisions cover short and medium-range plans, schedules and budgets along with policies, procedures, and business objectives for the firm. They also allocate resources and monitor the performance of organizational subunits, including departments, divisions, process teams, project teams, and other work groups. Types of decision are considered semi-structured decisions, they occurs in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision.

Strategic

Managers develop overall business strategies, goals, and objectives as part of the company’s strategic plan. They also monitor the strategic performance of the organization and its overall direction in the political, economic, and competitive business environment. Strategic decisions are highly unstructured decisions, occurring in situations in situations in which no procedures or rules exist to guide decisions makers toward the correct choices. They are infrequent, extremely important, and typically related to long-term business strategy.

Decision-making process

1.    Problem Identification: define the problem as clearly and precisely as possible.

2.    Data Collection: gather problem-related data, including who, what, where, when, why, and how. Be sure to gather facts, not rumors or opinions about the problem

3.    Solution generation: detail every solution possible, including ideas that seem farfetched.

4.    Solution test: evaluate solutions in terms of feasibility (can it be completed?), suitability (is it a permanent or a temporary fix?), and acceptability (can all participants form a consensus?).

5.    Solution Selection: select the solution that best solves the problem and meets the needs of the business.

6.    Solution Implementation: if the solution solves the problem, then the decisions made were correct. If not, then the decisions were incorrect and the process begins again.

 

Support: enhancing decision making with MIS

·      A model is a simplified representation or abstraction of reality. Model helps managers calculate risks, understand uncertainty, change variables, and manipulate time to make decision. MIS support systems rely on models for computational and analytical routine that mathematically express relationship among variable.

Operational support systems

·      Transactional information encompasses all the information contained within a single business process or unit of work, and its primary purpose is to support the performance of daily operational or structured decisions. Transactional information is created, for example, when a customer purchasing stocks, making an airline reservation, or withdrawing cash from ATM. Manager use transactional information when making structured decisions at the operational level, such as when analyzing daily sales reports to determine how much inventory to carry.

·      Online transaction processing (OLTP) is the capture of transaction and events information using technology to (1) process the information according to defined business rules, (2) stores the information, (3) update existing information to reflect the new information. During OLTP, the organization must capture every details of transactions and events. A transaction processing system (TPS), is the basic business system that serves the operational level and assists in making structured decisions.

Managerial support system

·      Analytical informations, encompasses all organizational information, and its primary purpose is to support the performance of managerial analysis or semi-structured decisions. Online analytical processing (OLAP) is the manipulation to create business intelligence in support of strategic decisions making. Decisions supports systems (DSSs) model information using OLAP, which provides assistance in evaluating and choosing among different course of action. DSSs enable high-level mangers to examine and manipulate large amounts of detailed data from different internal and eternal sources.

·      What-if analysis checks the impact of a change in a variable or assumption on the models.

·      Sensitivity analysis a special case of what-if analysis, is the study of the impact on other variables when one variable is changed repeatedly.

·      Goal-seeking analysis find the inputs necessary to achieve a goal such as a desired level of output.

·      Optimization analysis an extension of goal seeking analysis, finds the optimum value for target variable by repeatedly changing other variable, subject to specified constraints.

Strategic support systems

·      An executive information system (EIS) is a specialized DSS that supports senior-level executives and unstructured, long-term, non-routine decisions requiring judgment, evaluation, and insight.

·      Consolidation is the aggregation of data from simple roll-ups to complex groupings of interrelated information.

·      Drill-down enables users to view details, and details of details, of information. This is the reserve of consolidation; a user can view regional sales data and then drill down all the way to each sales representative’s data at each office. Drill-down capability lets managers view monthly, weekly, daily, or even hourly information.

·      Slice-and-dice is the ability to look at information from different perspectives. One slice of information could display all product sales during a given promotion. Another slice could display a single product’s sale for all promotions.

The future: artificial intelligence

·      Intelligent system are various commercial applications of artificial intelligence.

·      Expert system are computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems.

·      Neural network also called an artificial neural network, is a category of AI that attempts to emulate the way the human brain works

CHAPTER 8 - Accessing Organizational Information - Data Warehouse

History of Data Warehouse

• in the 1990s as organizations began to need more timely information about their business, they found that traditional operational information systems were too cumbersome to provide relevant data efficiently and quickly. 
• operational systems typically include accounting, order entry, customer service, and sales and are not appropriate for business analysis.

Data Warehouse Fundamentals

• data warehouse is a logical collection of information - gathered from many different operational database - that support business analysis activities and decisions making task
• the primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository in such way that employees can make decisions and undertake business analysis activities.
• extraction, transformation, and loading (ETL), which is a process that extract information from internal and external databases, transform the information using common sets of enterprise definitions, and loads the information into data marts
• data marts contains a subset of data warehouse information, it is to distinguish between data warehouse and data marts, think of data warehouse as having more organizational focus and data marts as having focused information subsets particular to the needs of a given business unit such as finance or production and operations.

                           

Multidimensional analysis and data mining

• A dimension is a particular attribute of information .
• a cube is the common term for the representation of the multidimensional informational.
• data mining is the process of analyzing data to extract information not offered by the raw data alone.
• data mining tool use a variety of techniques to find pattern and relationships in large volumes of information and infer rules from them that predict future behavior and guide decision making.

 Information Cleansing Or Scrubbing

• An organization must maintain high-quality data in the data warehouse
• Information cleansing or scrubbing – a process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information
• Contact information in an operational system

Standardizing Customer name from Operational Systems



Accurate and complete information


Information cleansing activities

Bu business intelligence

•Business intelligence – information that people use to support their decision-making efforts

•

•Principle BI enablers include:

–Technology

–People

–Culture

CHAPTER 7 : STORING ORGANIZATIONAL INFORMATION - DATABASES

Relational Database Fundamentals 

• database maintains information about various type of object (inventory), events (transactions), people (employees), and places (ware-house).
• In hierarchical database model, information is organized into a tree-like structure that allows repeating information using parent/child relationships in such a way that it cannot have too many relationships
• the network database model is a flexible way of representing objects and their relationships.
• the relational database model is a type of database that stores information in the form of logically related two-dimensional tables.

Entities and Attributes

• entity in the relational database model is a person,place,thing,transaction, or events about which information is stored.
• attributes also called fields or columns , are characteristics or properties of an entity class. 

Keys and Relationships

•  a primary key is a fields (or group of fields) that uniquely identifies a given entity in the table.
• a foreign key in the relational database model is a primary key of one table that appears as an attribute in another table and acts to provide a logical relationship between the two tables.

relational database advantages

• increased flexibility 
• increased scalability and performance
• reduced information redundancy
• increased information integrity (quality)
• increased information security

Increased Flexibility

• database tends to mirror business structures, and a good database can handle changes quickly and easily, just as any good business need to be able to handle changes quickly and easily
• the physical view of information deals with the physical storage of information on a storage device such as hard disk.
• logical view of information focuses on how users logically access information to meet their particular business needs.

Increased scalability and performance

• scalability refers to how well system can adapt to increased demands.
• performance measure how quickly system performs a certain process or transaction.

Reduced information redundancy

• redundancy is the duplication of information, or storing the same information in multiple places.
• redundant information occurs because organizations frequently capture and store the same information in multiple location.

Increased information integrity (quality)

• information integrity is a measure of the quality of information.
• integrity constraints are rules that help ensure the quality of information.
• relational integrity constraints are rules that enforces basic and fundamental information-based constraints.
• business-critical integrity constraints enforce business rules vital to an organization's success and often require more insight and knowledge than relational integrity constraints.

database management system (DBMS)

• DBMS is software through which users and application programs interact with a database.

data driven websites

• data driven websites is an interactive website kept constantly update and relevant to the needs of its customers through the use of a database.

integrating information among multiple databases

• integration allows separate system to communicate directly with each other.
• forward integration takes information entered into a given system and send it automatically to all downstream systems and processes.
• a backward integration takes information entered into a given system and send it automatically to upstream system and process. 

 

 

CHAPTER 6

VALUING ORGANIZATIONAL INFORMATION

ORGANIZATIONAL INFORMATION

• information is everywhere in an organisation

• employees must be able to obtain and analyse the many different levels, formats, and granularity of organisational information to make decisions

• successfully collecting, compiling, sorting, and analysis information can provide tremendous insight into how an organisation is performing

• levels. format, any granularity of organisational information





THE VALUE OF TRANSACTIONAL AND ANALYTICAL INFORMATION

• transactional information encompasses all of the information contained within as single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks

• analytical information encompasses all organizational information, and its primary purpose is to support performing of managerial analysis tasks


THE VALUE OF TIMELY INFORMATION

• timeliness is an aspect of information that depends on the situation

• Real-time-information means immediate, up-to-date information

• Real-time- system provides real-time information in response to query requests


THE VALUE OF QUALITY INFORMATION

• business decisions are only as good as the quality of the information used to make the decisions

• you never want to find yourself using technology to help you make a bad decision faster

• characteristics of high-quality information include:

• accuracy

• completeness

• consistency

• uniqueness

• timeliness

UNDERSTANDING THE COSTS OF POOR INFORMATION

• The four primary sources of low quality information include:

• online customers intentionally enter inaccurate information to protect their privacy
• information from different systems have different entry standards and formats 
• call center operators enter abbreviated or erroneous information by accident or to save time
• third party and external information contains inconsistencies, inaccuracies, and errors

• potential business effects resulting from low quality information include:

• inability to accurately track customers 

• difficulty identifying valuable customers 

• inability to identifying selling opportunities 

• marketing to nonexistent customers 

• difficulty tracking revenue due to inaccurate invoice 

• inability to build strong customer relationships

UNDERSTANDING THE BENEFITS OF GOOD INFORMATION

• high quality information can significantly improve the chances of making a good decision

• good decisions can directly impact an organisation's bottom line

CHAPTER 5

ORGANISATIONAL STRUCTURES THAT SUPPORT STRATEGIC INITIATIVES

ORGANISATIONAL STRUCTURES

• organisational employees must work closely together to develop strategic initiatives that create competitive advantages

• ethics and security are two fundamental building blocks that organisations must base their business upon

IT ROLES AND RESPONSIBILITIES

• information technology is a relatively new functional area, having only been around formally for around 40 years

• recent IT-related strategic positions:

> Chief Information Officer (CIO) is oversees all uses of IT and ensures the strategic alignment of IT business goals and objectives

> Chief Technology Officer (CTO) is responsible for ensuring the throughput, speed, accuracy, availability, and reliability of an organization's information technology

> Chief Security Officer (CSO) is responsible for ensuring the ethical and legal use of information within an organization

> Chief Knowledge Office (CKO) is responsible for collecting, maintaining, and distributing the organisation's knowledge

THE GAP BETWEEN BUSINESS PERSONNEL AND IT PERSONNEL

• business personnel possess expertise in functional areas such as marketing, accounting and sales

• IT personnel have the technological expertise

• this typically causes a communications gap between the business personnel and IT personnel

IMPROVING COMMUNICATIONS

• business personnel must seek to increase their understanding of IT

• IT personnel must seek to increase their understanding of the business

• it is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel

ORGANIZATIONAL FUNDAMENTALS - ETHICS AND SECURITY

• ethics and security are two fundamental building blocks that organisations must base their businesses on to be successful

• in recent years, such events as the Enron and Martha Stewart, along with 9/11 have shed new light n the meaning of ethics and security

Ethics

• the principles and standards that guide our behavior toward other people

• privacy is a major ethical issue. the right to be left alone when you want to be, to have control over your      own personal possessions, and not to be observed without your consent

• issues affected by technology advances

• intellectual property - intangible creative work that is embodied in physical form

• copyright - the legal protection afforded an expression of an idea, such as a song, video game, and some types of proprietary documents

• fair use doctrine - in certain situations,it is legal to use copyright material

• pirated softwarebcounterfeit software - software that is manufactured to look like the real thing and sold as such

• one of the main ingredients in trust is privacy

• primary reasons privacy issues lost trust for e-business

• loss personal privacy is atop concern for american in the 21st century

• among Internet user, 37 percent would be "a lot" more inclined to purchase a product on a Web site that had a privacy policy

• privacy/security is the number one factor that would convert internet researchers into Internet buyers

Security

• organization information is intellectual capital - it must be protected

• information security - the protection of information from accidental or intentional misuse by person inside or outside an organization

• E-business automatically creates tremendous information security risks for organizations 

CHAPTER 4 > Measuring the Success of Strategic Initiatives

Efficiency and Effectiveness

• Efficiency IT metrics measure the performances of the IT system itself including throughput ,speed and availability.

• Effectiveness IT metrics measure the impacts IT has on business processes and activities including customer satisfaction, conversion rates, and sell-trough increase.

> doing thing right addresses efficiency - getting the most from the most resources.

> doing the right things addresses effectiveness - setting the right goals and objectives and ensuring they are      accomplish.

Benchmarking - Baseline Metrics

• benchmarking is a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance.

The Interrelationships of efficiency and effectiveness IT metrics.

• Throughput - The amount of information that can travel through a system at any point.
• Transaction speed - The amount of time a system takes to performs transaction.
• System Availability - The number of hours a system is available for users.
• Information Accuracy - The extent to which a system generates the correct results when executing the same transaction numerous times.
• Web Traffic - Includes a host of benchmarks such as the number of page views, the number of unique visitors, and the average time spent viewing a web page.
• Response Time - The time takes to respond to user interactions such as a mouse click.
• Usability - The ease with which people perform transaction or find information. A popular usability metric on the internet is degrees of freedom, which measure the number of clicks required to find desired information.
•  Customer Satisfaction - Measured by such benchmarks as satisfaction surveys, percentages of existing customer retained, increases in revenue dollars per customer.
• Conversion Rates - the number of customers an organization "touches" for the first time and persuade to purchase its products or services. this is a popular metric for evaluating the effectiveness of banner, pop-up, and pop-under ads on the Internet
• Financial -  Such as return on investment (the earning power of an organization's assets), cost- benefits analysis (the comparison of projected revenue and costs including development, maintenance, constant revenues equal ongoing costs).  

METRICS FOR STRATEGIC INITIATIVES

· metrics for measuring and managing strategic initiatives include:

·web site metrics

· supply chain management (SCM) metrics

· customer relationship management (CRM) metrics

·business process re engineering (BPR)

· enterprise resource planning (ERP) metrics

WEBSITE METRICS

·abandoned registrations

*   number of visitors who start the process of completing a registration page and then abandon the activity.

·abandoned shopping cards

*  number of visitors who create a shopping card and start shopping and then abandon the activity before paying for the merchandise.

·  click - through

* count of the number of people who visit a site, click on an ad, and are taken to the site of the advertiser.

·conversation rate

*   percentage of potential customers who visit a site and actually buy something.

·cost-per-thousand (CPM)

* sales dollars generated per dollar of advertising. this is commonly used to make the case for spending money to appear on a search engine.

· page exposures

*  average number of page exposures to an individual visitor.

·   total hits

*  number of visits to a web site, many of which may be by the same visitor.

·  unique visitors

*  number of unique visitors to a site in a given time. this is commonly used by Nielsen/Net ratings to rank the most popular Web sites.

SUPPLY CHAIN MANAGEMENT METRICS

· back order

* an unfilled customer order. A back order is demand (immediate or past due) against an item whose current stock level is insufficient to satisfy demand.

· customer order promised cycle time

*  the anticipated or agreed upon cycle time of a purchase order. it is a gap between the purchase order creation date and the requested delivery date.

·   customer order actual cycle time

*  the average time it takes toi actually fill a customer's purchase order. This measure can be viewed on an order or an order line level.

·    inventory replenishment cycle time

*   measure of the manufacturing cycle time plus the time included to deploy the product to the appropriate distribution center.

·     inventory turns (inventory turnover)

*   the number of times that a company's inventory cycles or turns over per year. it is one of the most commonly used supply chain metrics.

CUSTOMER RELATIONSHIP MANAGEMENT METRICS

· customer relationships management metrics measure user satisfaction and interaction        

BUSINESS PROCESS RE ENGINEERING AND ENTERPRISE RESOURCE PLANNING METRICS

·   the balanced scorecard enables organizations to measure and manage strategic initiatives