Question

List and briefly describe the drivers of supply chain performance, and explain how IT or IS can support them ?

Answer 1

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Decisions in the areas of production, storage, equipment and knowledge decide the efficiency of a supply chain. Such four areas are therefore known as drivers of the output of the supply chain.

Four Drivers:

1. Inventory: This consists of all the raw material, manufacturing, and finished goods in a supply chain.
2. Transportation: It involves moving inventory from one point in the supply chain to another point.
3. Facilities: A warehouse is a place of stockpiling, storing or assembling products. As a result, facilities can be categorized into production and storage facilities.
4. Information: It consists of inventory, storage, equipment, customer orders, clients, and funds data and performance results.

Inventory:

Inventory is retained in the supply chain due to differences between supply and demand.

Types of inventory:

• Cycle inventory: It comes from the production or procurement of larger lots in order to minimize the acquisition costs associated with the processing of each purchase or production order.
• Security Inventory: It is intended to counter ambiguity or demand fluctuations.
• Seasonal Inventory: Inventory is retained to meet higher demands relative to production capacity over a period of time. This occurs as a result of the decision to meet expected fluctuations in demand during slack periods or low demand times by extra production.

Increasing inventory results in higher sensitivity but higher cost of transporting inventory.

Transportation:

Amount of decisions must be made in the creation of a transport supply chain.

Transport mode: There are six basic modes

• Air
• Truck (Road)
• Rail
• Ship
• Pipeline
• Electronic transportation (the newest mode for music, documents etc)

Route and Network Selection

Network is a series of facilities or destinations that can be used to transport goods. Road is a limited range of goods moving services or destinations.

Own Transport or Outsourced Transport

Facilities:

Inventory is either converted into or stored in another state within a plant.

Facilities Related Decisions

• Location
• Capacity
• Manufacturing Methodology or Technology
• Warehousing methodology

Information:

Issues related to Information:

• Move information about the process and pull information about the process.
• Coordination and sharing of information through various supply chain facilities.
• Predictions.
• Planning for aggregates.
• Engineering allowing.

In order to improve the supply chain process, companies increasingly rely on information technology (IT). Nevertheless, past evidence shows that investment in IT per se does not guarantee enhanced performance in the company. Based on the resource-based viewpoint, this study suggests that the skills of the IT supply chain are firm-specific and hard to replicate across organizations.

Such skills can serve as a catalyst for a company's transformation of IT-related capital into higher value. The present study sheds light on these issues on the basis of data collected from surveying supply chain and logistics managers in different industries. In assessing IT investment in the supply chain process, the results provide a new perspective.

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