Book Summary

Introduction to Supply Chain

Management Technologies, 2nd Edition
Book by David Frederick Ross Published by Auerbach Publications | © 2011

Synopsis
The rise of the internet in recent decades has sparked the need to rethink supply chain management. In the 21st
century, new technologies and digital tools provide vast transformational potential. Their ability to inspire continuous
innovation and optimization has the power to restructure and reshape the foundations of today’s business networks
in ways that were previously unreachable.

Introduction to Supply Chain

The key concepts of Introduction to Supply Chain Management
Management Technologies (Auerbach
Technologies can be distilled into the following steps:
Publications, © 2011) details the steps and
tools needed to reconfigure manufacturing
Understand Supply Chain Management
Know the foundations of supply chain management technologies to
processes, logistics, and customer
explore the transformative connectivity it enables.
management. Through concepts inspired by
new digital technologies, David Frederick
Ross provides innovative insight into the
Manage Information
Control the information needed to effectively automate, inform, and
continuously changing field of supply chain
network the organization and its partners.
management. Ross discusses how:

1 digitally-connected, web-based supply

Integrate Technology
management chains optimize business Use technology to integrate and automate the supply chain and drive
processes and customer satisfaction the planning, execution, and evaluation of the organization’s functions.
2 application of new technologies and
demand-driven supply networks improve
Maintain Relationships

manufacturing management, supplier Cultivate network and customer relationships through consistency,
relationships, and logistical planning high quality, customization, and superior service.

3 effective business
strategies are built by
Develop Strategy
Create a business strategy that incorporates new models and
integrating physical
technologies, and gives organizations a competitive advantage that
resources, knowledge
consistently achieves complete customer satisfaction.
competencies, and
technology
connectivity into
supply chain networks

“SCM is important because companies have come to recognize that their capacity to continuously
reinvent competitive advantage depends less on internal capabilities and more on their ability to look
outward to their networks of business partners in search of the resources to assemble the right blend of
competencies that will resonate with their own organizations and core product and process strategies. ”
Based on the 2nd edition of Introduction to Supply Chain Management Technologies by David Frederick Ross, we discuss
the foundations of supply chain management technologies in cultivating new digital solutions, enhancing the customer
experience, and improving network relationships. We share our interpretations of these insights in the following pages.
 Book Summary: Introduction to Supply Chain...
2

The Basics of Supply Chain Management Technologies

The rise of information technologies has prompted revolutionary change in the concept and application of supply
chain management. In order to thrive, companies must take advantage of the digital landscape to deal with the
increasing challenges in global marketplaces. Customers and suppliers demand instantaneous responses;
product life cycles are shorter; and technologies now enable and demand that companies offer rapid transactions
and automation to gain competitive edge.

sTechnology as a Tools
Information technology uses computer-based tools to assist in the management of information gleaned from
business activities to aid organizational knowledge. It automates, informs, and networks. Automation reduces
labor, eliminates repetitious tasks, improves productivity, increases accuracy, and standardizes processes. Use
of technology in purchasing, scheduling, and tracking can produce information that is used in a continuous loop
of process improvement and automation. The impact of information technology also produces more
collaborative and interactive relationships between people and teams, arming organizations to become more
integrative and able to leverage data into value-producing opportunities. Technology integration eliminates
barriers between the organization and its business partners, combining capabilities, skills, and experience in
order to work more efficiently.

sBusiness Information Systemss

Successfully implementing information management is vital to business success. Managing information requires
companies to find solutions to questions that ask:

• What information is needed to automate, inform, and network the organization and its business partners?
• How should this information be meaningfully organized?
• What kind of technology will enable those within the network to meaningfully use this information?
• How will the network ensure the information is accurate and timely?

The answer to these questions and others is the ultimate objective of computer-based systems. Determining
these answers requires the application of technology tools that automate tasks, activate information sources,
and provide networking opportunities across the supply chain.

sFunctions of the Information Systems

The goal of a business system that automates, informs, and networks is to create a flexible system of information
and knowledge that enables the business to respond with value-based solutions and collaborate effectively across
the supply network. Five common functions form the foundation of information systems that enable this goal.
 Book Summary: Introduction to Supply Chain...
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1 Enterprise Database. The data necessary for operating the business is in the system database, which
encompasses both static and variable data. Static data is information that does not change during
transactions, such as product structures, process routings, and channel structures. Variable data does
change, such as open orders and transaction balances. Computing systems enable companies to have
a single database that can be used by all departments, connecting usable data such as forecasts, inven-
tories, and order status.
2 Transaction Management. Computerized transaction management allows for accurate and timely
data collection, automation of time-consuming record-keeping, and enforceable rules for data entry
and maintenance, all of which can be used in business analysis, management, and planning.
3 Management Control. Creating best practices and performance measurements ensures the develop-
ment of standardized applications, which enables consistency across the business channel. Manage-
ment control ensures rational business processes, feedback on operations, ongoing measurement of
business capabilities, and planning for continuous improvement.
4 Decision Analysis/Simulation. Using modeling tools to assist in managing business processes from
the simple to the complex is a critical function to decision making in information systems. The ability to
analyze and simulate business processes helps companies to identify and evaluate the best methods
for improvement and consistency.
5 Strategic Planning. Strategic planning enables companies to determine long-term business goals and
business partner alliances, marketing approaches, and production capabilities. These provide the foun-
dations of management control, decision analysis, and performance, and ultimately drive competitive
advantage.

Building a Supply Chain Network

Technology is the driving force of supply chain management. It enables automation that reduces redundancies
and costs, generates information that assists in planning, executing, and evaluating, and connects the skills and
experiences of individuals who can improve business functions and solve problems. There are three distinct
approaches to adopting technology-driven supply chain management.

sLean Supply Chainss

Lean supply chain management focuses on the constant reduction of waste, and the need for continuous process
improvement within the organization and with the organization’s customers and suppliers. A lean supply chain
constantly checks whether procedures, inventories, supply and delivery processes, and operations of the supply
channel provide continuous value at a sustainable cost, or if they produce too little value at too high of a cost.
Lean supply chains seek the elimination of all wastes and the complete optimization of resources in support of
customer satisfaction and value.
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The benefits of a lean supply chain include reduced lead times, better delivery performance, increased revenue,
decreased operating costs, increased profits, higher customer and supplier satisfaction, and increased employee
retention and morale. According to Ross, the six components of a lean supply chain are: lean improvement tools,
process standardization, lean supply chain management technologies, network collaboration, lean supply chain
management implementation, and demand management. By pursuing these six components, companies can
achieve waste reduction at all channel levels, consistent value for customers, and continuous improvement and
profitability.

sAdaptive Supply Chainss

Today’s marketplace requires a greater flexibility in responding to viable threats to supply chains, such as natural
disasters, global recession, and the supply and fluctuating cost of oil. To combat these potential risks, companies
need to pursue adaptive supply chains that are highly responsive and able to meet changes in customer needs,
and flexible and able to dynamically change operations and processes. Adaptive supply chains are also proactive
in responding to market changes, such as a disruptive product or service, regulatory policies, and market
restructuring, all without compromising operational efficiency.

In today’s business environment, the management of risk (business environment, customers, products and
services, and suppliers) requires a step beyond the rigidity of the lean supply chain and towards an adaptive one
that can be strategically and operationally agile in navigating the business towards efficiency and complete
process improvement. The adaptive supply chain has three main attributes of management: visibility, velocity,
and variability. These enable quality, timeliness, and depth of information. Adaptive supply chain management
requires collaborative relationships within the network, the use of connective technology, and a common goal
to provide the customer with exceptional service and experience.

sDemand-Driven Supply Chainss

While lean and adaptive supply chains focus on optimizing process value chains and value delivery networks,
they constitute relatively short-term strategies. Companies should center on customer demand optimization in
a customer-centered supply chain. The companies that survive and thrive in the coming decades are those that
understand that the customer determines the marketplace direction. The customer holds the power in directing
the design of products or services, and in the design of pricing, transaction structure, and information sharing.
Customers expect to be treated individually, and require that suppliers provide solutions-oriented products,
services, and information designed to meet their needs and wants.

Demand-driven networks are focused on identifying what influences customer purchasing and customer
requirements for product features, prices, delivery, and buying habits. Having the customer at the center of the
supply chain can occur only when businesses have lean, adaptive supply chains that enable them to receive and
act on demand signals from any point in the network. A demand-driven supply network creates greater value
for the customer, enables closer relationships with network partners, and reduces costs.
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Developing Technology-Driven Supply

Chain Management Strategies
Companies need to take advantage of technology to structure new business models and gain competitive
advantage with new products and services that customers truly want. According to Ross, companies can build
these business strategies through opportunities in the technology-driven supply chain. There are five critical
steps to developing effective and innovative supply chain management strategies.

sThe Business Value Propositions

The business value proposition is the core of the management strategy, centering on providing the customer
with superior customer service, desirable products or services, and customization. Companies need to align
these goals with their resource and operations capabilities. Companies exist in order to fulfill particular customer
needs and wants. In the digital, technology-driven age, companies must be vigilant in ensuring that they are
prepared to offer total value to their customers.

sThe Value Portfolios

In the modern marketplace, there are new requirements needed to cultivate sustainable relationships with
customers, suppliers, and distributors. The market has shifted from standardized to more customized offerings,
available at any time and frequently delivered instantly through electronic platforms. Companies need to closely
integrate strategy with their resources in order to continuously satisfy customer needs. In order to support the
business value proposition, companies should focus on product design, cost management, valued services,
quality, and individualization.

sThe Scope of Collaborations

After the business value proposition and the value portfolio have been determined, companies must decide on
the scope of their processes and operations, and the level of collaboration with trading partners needed to supply
resources and skills. When determining the scope of collaboration in the design of the company’s technology
strategy, it’s important to keep in mind the following points:

• collaborative dimension, or the network of partners in sourcing, creating, and delivering valued products
or services
• collaborative intensity, or the level of collaboration with trading partners
• technical level, or the technological capabilities needed within the company and the network of partners
• outsourcing, or the decision to outsource functions in order to focus internally on strategy and competition
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sResource Managements
The business value proposition determines the company’s approach to the market, but the effective application
of its assets, infrastructures, and resources are the drivers of growth and profits. In implementing an effective
business strategy, companies need to restructure business processes towards efficiency and eliminate
unnecessary activities and wasted resources. Reducing costs and optimizing processes are just the first steps in
resource management. Far more critical is the ability to continuously reorganize resources both in and outside
of the company in pursuit of business growth and competitive advantage. The ultimate goal is to build business
structures that offer customers what they want—convenience, solutions, speed, and ease of use.

sGrowth Managements
In the development of a business strategy, structuring performance measurements that allow business planners
to gauge effectiveness of implemented solutions over time is critically important. The ability to determine and
track the impact of a business strategy on company and profit growth is the core of competitive measurement.
One major problem in supply chain collaboration is that it requires a complete overhaul of traditional
measurements in a technology-driven environment. Dated methods are no longer adequate, and companies
need measurement tools to be flexible and aligned with the company’s value propositions and portfolios.
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Insights—Building a Successful Supply Chain Network

In order to survive in the marketplace, companies cannot

remain self-contained competitive entities. Instead, they
must collaborate in a network of interconnecting systems
and processes as a mutually supportive global web of cus-
tomers, products, competencies, resources, and informa-
Collaborate
tion. Those organizations that can continuously leverage
resources and capabilities to respond to marketplace chal-
lenges are the ones that thrive.

A highly integrated supply chain should be instrumented,

interconnected, and intelligent, requiring technologies and
tools that can meet any industry or business process need.
Facilitate The end goal is to facilitate highly capable, configurable, and
flexible information business systems that can provide solu-
tions and connectivity at all points along the supply chain.

With today’s technology, customers can easily interact with

companies and suppliers, view marketing materials, order
products, track deliveries, and pay for products and services
instantly. This dramatic shift has forced companies to focus
Interact on satisfying individual customer needs and respond to cus-
tomers who are more informed than ever before. Compa-
nies who interact with customers to gain insight for real
solutions will succeed.

The shift to a technology-driven world dramatically altered

manufacturing, changing product life cycles, competition,
technology, and popular culture. Responding to these
changes requires developing innovative solutions that ulti-
Respond mately provide unique value for the customer. In order to
respond effectively, organizations must willingly look to new
avenues of supply chain collaboration and focus perform-
ance on agility, flexibility, informative collaboration, and
customer service.

New supply chain management technologies require that

organizations rethink the development and implementation
of business strategies. Previously, business strategies
focused inward, but the realization that resources, compe-
Strategize tencies, and skills were critical to survival spurred a critical
re-examination of strategizing. With the transformative
power of the internet, successful business strategies must
understand the supply chain from new perspectives.
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Conclusion
Until technology enabled companies to connect functions and processes to their customers and suppliers, they
had only the phone, mail, fax, and word of mouth to communicate. With the advent of information technologies,
companies began to break away from isolated hierarchies and embrace digital connectivity, enabling them to
streamline internal processes, increase productivity, decrease costs, and automate systems. Companies and
their business partners could engage in dialogues, sharing data and ideas easily and instantly. This ability to
engage across company boundaries, geography, and time is the foundation of supply chain management. These
digitally connected networks could then cultivate the best skills and resources within their channels and unite
in the goal of delivering superior service and products.

“Technology-enabled networking enables companies to shed the inflexible

organizations of the past in favor of the creation of virtual teams composed
of the best resources from across the supply chain who can now link their skills, talents,
and technologies to work in an iterative and parallel manner to achieve common objectives. ”

If you’ve enjoyed our insights on David Frederick Ross’s Introduction to Supply Chain Management Technologies,
Second Edition, we encourage you to access the other Introduction to Supply Chain Management Technologies assets
in the Skillsoft library, or purchase the hardcopy.

About the Author

DAVID FREDERICK ROSS is an enterprise research planning and supply chain man-
agement professional, having spent over 35 years in manufacturing and distribution
as a practitioner, consultant, and educator. Dr. Ross holds a PhD from the University
of Chicago and is recognized as a CFPIM and CSCP by APICS. He is currently Senior
Manager, Professional Development at APICS in Chicago, Illinois. He has taught oper-
ations and supply chain management at Oakton Community College, Eastern Illinois
University, Elmhurst College, and the Kellogg School of Management at Northwestern
University. He is also an instructor for many of APIC’s education and certification pro-
grams. He has published multiple articles on supply chain management, some of
which are used by universities or adopted by programs.

Also by David Frederick Ross

1 Distribution Planning and Control: Managing in the Era of Supply Chain Management,
3rd Edition, Springer, © 2015, ISBN 978-1489975782.
2 The Intimate Supply Chain: Leveraging the Supply Chain to Manage the Customer
Experience, Auerbach Publications, © 2008, ISBN 978-1420064971.
3 Competing Through Supply Chain Management: Creating Market-Winning Strategies
Through Supply Chain Partnerships, Springer, © 2010, ISBN 978-1441947277.

Introduction to Supply Chain Management Technologies, 2nd Edition, by David Frederick Ross.
Copyright © 2011, Auerbach Publications, 424 pages, ISBN 978-1439837528.