Information Management Chapter 6: Supply Chain Management

Supply Chain Management

• Downstream supply chain refers to the organizations and processes responsible for delivering products to customers
• Upstream supply chain refers to a firm's suppliers, suppliers' suppliers, and the processes for managing relationships with them

Push-Based and Pull-Based Model

• Push-based model (build-to-stock) is an earlier SCM system that schedules production based on best guesses of demand
• Pull-based model (demand-driven) is a web-based system where customer orders trigger events in the supply chain

Supply Chain Management

• Supply chain is a network of organizations and business processes for procuring raw materials, transforming them into intermediate and finished products, and distributing the finished products to customers
• Inefficiencies in supply chain management can waste up to 25% of operating expenses
• Just-in-time strategy involves receiving components as they are needed and shipping finished goods immediately after leaving the assembly line
• Safety stock is a buffer for lack of flexibility in the supply chain
• Bullwhip effect occurs when information about product demand gets distorted as it passes from one entity to the next across the supply chain

Supply Chain Management Software

• Supply chain planning systems model existing supply chains, enable demand planning, optimize sourcing and manufacturing plans, establish inventory levels, and identify transportation modes
• Supply chain execution systems manage the flow of products through distribution centers and warehouses

Internal Supply Chain

• Internal supply chain is used for transforming materials, components, and services into finished products or intermediate products for customers and managing materials and inventory

Digital Goods

• Digital goods are goods that can be delivered over a digital network
• The cost of producing the first unit is almost the entire cost of the product
• Costs of delivery over the Internet are very low, but marketing costs remain the same
• Pricing is highly variable in digital goods industries
• Industries with digital goods are undergoing revolutionary changes (e.g., publishers, record labels)

Internet-Enabled Technologies Used in B2B

• Electronic data interchange (EDI) enables computer-to-computer exchange of standard transactions such as invoices and purchase orders
• Private industrial networks (private exchanges) are secure websites used by large firms to link to suppliers and partners
• Net marketplaces (e-hubs) are single digital marketplaces for many buyers and sellers
• Exchanges are independently owned third-party Net marketplaces for spot purchasing

E-Commerce Presence Map

• The e-commerce presence map consists of four areas: websites, e-mail, social media, and offline media

Type of E-Commerce Revenue Model

• Advertising generates revenue by attracting a large audience of visitors who can be exposed to advertisements
• Sales involve companies deriving revenue by selling goods, information, or services to customers
• Subscription involves offering content or services and charging a subscription fee for access to some or all of the offerings
• Free/Freemium involves offering basic services or content for free and charging a premium for advanced or special features
• Transaction fee involves receiving a fee for enabling or executing a transaction
• Affiliate involves websites sending visitors to other websites in return for a referral fee or percentage of the revenue from any resulting sales