Jatinder (Jeet) N. D. Gupta
University of Alabama in Huntsville
A box of cereal spends ? days in the
• A box of cereal spends 104 days in the
Total inventory in the pharmaceutical
supply chain exceeds ? days and ? $ in
savings to be realized.
• Total inventory in the pharmaceutical
supply chain exceeds 100 days with at
least $ 11 billion in savings realized.
Poor coordination in the food industry supply chain
wasted ? dollars.
• Poor coordination wasted $ 30 billion
annually in the food industry.
Boeing wrote-off ? dollars in 1997 due to supply
• Boeing wrote-off $ 2.6 billion in 1997 due to
supply chain inefficiencies.
It costs, on average, ? dollars to process each
• It costs, on average, $80 to process each
Principal Component Analysis
The doughnut never changes shape even
though the projections are quite different.
Impact on Business Decisions
• Decisions are based on partial information,
from a specific perspective only.
• A decision good for one business function is
not best for overall business.
• Information needed to make business
decisions are not available.
• Coordination and collaboration becomes
rather difficult, if not impossible.
Nobel Prize in Economics 2001
Information Asymmetry between Customer Demand and Manufacturing
Source: Tom McGuffry, Electronic Commerce and Value Chain Management Time
What is Information Technology?
• Information Technology (IT) refers to a
wide variety of items and abilities used in
the collection, storage, dispersal, processing
and conversion of data into information to
• Knowledge is an understanding of a set of
information and how that information can
be put to the best use.
Three Dimensions of IS/T
• Processing dimension: Here IS is treated
primarily as a data processing system.
• Functional area dimension: Here IS is considered
as meeting the functional needs of the firm.
• Management hierarchy dimension: Here IS is
considered as supporting the decision making
processes at various levels of management.
Fourth Dimension of IS
• Knowledge management is one of the
fundamental requirements in an
• Hence, the fourth dimension of IS
considers the IS function as one of
knowledge generation and management.
• This is a much broader role for the IS
function and will gain importance.
An Information Age
• Person-to-person IT links between
individuals and businesses are an important
feature of an Information Age.
• Now, more people work at handling
information than in agriculture and
manufacturing sectors combined.
• Effective use of IT enables an organization
accomplish more than a few years ago.
Embedded Information Technology
• In an Information Age, IT is embedded and
integrated with other components of
products and services.
• Products and services with embedded IT are
also called knowledge-based because
knowledge about their function and
performance are embedded within them.
• A technology that transforms the way we
usually do work is called transformational
• It is also called a ‘disruptive technology’ as
it causes a disruption in organizations.
• The full benefits of these technologies are
only realized after majority of the
participants start using these technologies.
Electronic Commerce Solutions
EC Productivity Focus
Source Integrate CUSTOMERS
Supply Chain Solutions
The Business Value of Electronic Commerce
• Order processing cycle times reduced by 30% to
• Customer service levels improved by 5% to 25%
• Inventory was reduced by 10% to 15 days
• Inventory turns increased by up to six fold
• Distribution personal productivity increased by
25% to 30%
• Demand forecast errors reduced by 50% to 60%
• Profit improved 150% to 250%
Global Manufacturers’ Challenge
….. Move Productivity Beyond the Shop Floor
Traditional Productivity Focus
Plan / Forecast
Supply Chain Integration is the Competitive Differentiator
The Six Forces Model for the NE Era
SCM and EC Issues
• Multiple partners in an extended supply chain
• Global nature of the business operations
• Increased need for coordination
• Increased need for collaboration
• Increased need for cost reduction
• Increased need for speed
• Coordination and Integration is key to success
Financial Strategic Management
Supply Chain Decisions Evaluating opportunity costs
Supply Chain cost & pricing targets Checking if targets are met
Budget allocations for purchasing new Revising targets according to business
Holding cost and other variables
Financial Management System
Storage and processing of data
Supply Chain Management System
Conversion of data into timely, accurate, useful
Tracking and storing inventory
Recording procurement and sales Data
Transportation, warehousing and other
Assets on hand and their classifications
Amount sold / purchased
Multi-enterprise Design Collaboration
Value-added Suppliers Develoment Parnters
and Manufacturers and/or Customers
High-speed CAD/CAE Models;
CAD/CAM Models; Design
E-mails Data High-speed
Technical Data; Environment Technical Data;
Distributors & Customers Piece Part Suppliers
Dramatically Decrease NPI Cycle Time While Improving Quality
Generic Competitive Strategies
• Low Cost Leadership: Outperform firms in the
industry by providing products or services at a
lower cost than competitors.
• Product Differentiation: Provide a product or
service that is generally recognized as distinct
• Focus on a Market Niche: Identify and compete
in a market segment in which competitive
advantage may be gained by concentrating on a
specific buyer group, product line, or geographical
Realizing IT’s Competitive
• Changing the basis of competition: Dell’s
Computer Order Entry and Manufacturing System
• Build barriers to a new entrant: Microsoft
Windows on PCs
• Build in switching costs to customers: Merril
Lynch’s CMA integrates variety of product and
services to offer valuable service
• Strengthen a firm’s power in dealing with
• Provide new products and services: UPS
• Information Technology can provide
significant competitive advantages to a firm
by making the firms more efficient and
• Information Technology also decreases the
competitive disadvantage for a firm by
focusing on customer service and desires.
• Looking only to IT to solve organizational
problems is inviting disaster.
Personal Research Emphasis
• Walk a rather thin line between theory and
• Attempt to understand the way to collaborate
while playing the competitive game.
• Learn the process of intra-organizational and inter-
• Develop strategies and tools for supply chain
• Use technology as a tool that we must learn to
manage this tool to gain advantage.
The Computer Industry: Dell on-
Customer Order and
Customer Order and Procurement cycle Manufacturing Cycle
Procurement Cycle PUSH PROCESSES PULL PROCESSES
Dell Supply Chain Cycles
Amazon Retail Store
Distributor Warehouse (?)
Amazon Supply Chain Bookstore Supply Chain
On-Line Supply Chain Supermarket Supply Chain
Courses and Programs at UAH
• Developing and teaching a graduate course in Supply
Chain Management and E-Business.
• Developing a track in Supply Chain/Logistics
Management at the graduate and undergraduate levels.
• Reviewing the MS in MOT program to determine its
effectiveness in current times.
• Learning the process of learning to develop effective
strategies for the “learning to learn” paradigm.
• Researching in the integration of technology with other
business functions to gain competitive advantage.