In order to find out the relationships between the business intelligence application and the supply management system improvement, it is important to outline the general terms of the research work.
First, it is essential to consider the informational system (IS). It is a widely used term that may be applied in the interactions between people, technology processing, data treatment etc. It is very important to put an emphasis on the fact that IS is applied not only in the communication technologies or information treatment, it is also used in the business and management processes outlining (Kroenke, 2008).It is possible to consider the IS as the combination of human activities and informational technologies available for the data processing and for the decision making processes improvement (O’Brien, 2003).
The IS notion is deeply interrelated with computer systems and business processes. In the first case, the IS includes the information technology component; thus, a computer system may be considered as an additional tool of the IS. While talking about a certain business process, the IS is a part of its correct functioning: it improves all the processes and helps to control them (Alter, 2005).
Generally, the IS is a part of a work system – the system that integrates human work with the automatic devices’ work and machines’ work in order to produce and distribute some specific product. The main role of the IS in the whole work system is treatment of information, concerning supply chain, manufacturing process, distribution and maintenance of a certain product. The general requirements concerning the IS are the following: providing easy access to the relevant information, its security, as well as keeping it in the correct order (Beynon-Davies, 2009).
Internal Supply Chain of the Dell Inc.
The next issue to be discussed in the scopes of the research is consideration of the background information concerning the chosen company – Dell Inc. – and the core parts of the company’s supply chain and the core activities carried out by different parts of its entire supply chain. Dell Inc. is a multinational computer technology corporation. Its head office is based in the USA – 1 Dell Way, Round Rock, Texas. The core areas of its activity are the following: development, distribution and maintenance of computers and related products.
The internal supply chain of this organization consists of the following functional departments: sourcing, production, and distribution.
The sourcing department, which may also be referred to as the purchasing department, carries out the following responsibilities: selecting suppliers, carrying out contract negotiations, purchasing process formulating, and processing orders. The production department carries out the following responsibilities: transforming raw materials or other forms of product components into a final product. The core responsibilities of the distribution department are the following: managing the flow of material and goods to teens customers.
While taking into account the notion of the supplier network, it is important to pay additional attention to its main components. It includes those organizational structures that provide the manufacturer with proper materials or services both in direct and in indirect manners. In Dell Inc., the manufacturer supplier network includes all the business entities that provide the company with the all items required by the manufacturing process. These are the following: plastics, computer chips, hard drives, motherboards etc. In addition, it is possible for the supplier of motherboards to have its own set of suppliers responsible for the inputs providing. These suppliers, in turn, are called second-tier suppliers and they also constitute part of the Dell Inc. supply chain.
The distribution network’s responsibilities cover the movement of materials between specific locations. Managing the distribution network, in turn, implies coordinating the following processes: storing, packaging and handling of all the materials at the receiving docks, warehouses, and retail outlets.
The main part of the distribution management implies managing transportation processes; that means that the external carriers are selected, managed and controlled by the distribution network managers.
While taking in account the fact that Dell Inc. is mainly working via the World Wide Web, it is important to rely on such aspects of the supply chain as e-commerce, e-distribution and e-procurement. In e-commerce, advanced technologies are applied in assisting in business transactions. In the scopes of the web-based environment, this facilitates transactions and the flow of information and funds (Chopra, 2001).
There exist different types of business transactions provided by e-commerce. They are the following: Covisint applies business-to business transactions (B2B); Amazon.com uses business-to-customer transactions (B2C); priceline.com applies the tools of customer-to-business transactions (C2B) and finally; E-Bay auction utilizes the system of customer-to-customer transactions (C2C). Dell Inc. collaborates with all the above listed systems and they create the entire supply chain of the corporation.
In addition, the e-commerce performance is carried out via different types of electronic media. These are the following: electronic data interchange, transfer of electronic funds, fax, voice mail etc.
While taking into account the system of e-distribution, it is possible to define two core tasks of the system: instructing where to locate the supply sources and advising the way of access to these sources. In addition, this system implies the moving of materials to the retailers while applying the means of the Internet and the environment, which is based on the Web.
The last issue to be discussed in the scopes of this section is e-procurement as a valuable part of the Dell Inc. electronic commerce. It is possible to state that, in the light of the core manufacturing trends of the 21st century, the role of e-procurement is the complete revolution of the supply chain of a distribution firm and a manufacturing enterprise due to the fact that it assists in organization of the seamless flow of the informational order fulfillment in the chain from the manufacturer to the supplier (Butler, 2000).
In order to conclude this section, it is important to outline three core aspects of the supply chain management in Dell Inc.
First, the core task of the SCM in the company is manufacturing products that meet the current needs of end customers. The second aspect is the efficiency and cost-effectiveness of the objective of supply chain management, which is achieved by collaborative efforts across the entire system. The third important aspect of the Dell Inc. SCM is the fact that all the activities carried out in the organization are encompassed into the supply chain management. These activities imply the following: integration of suppliers, managing the manufacturers, collaboration with the wholesalers, retailers and end customers (Steermann, 2003).
The Role of Virtual Integration of the Supply Chain Management in Dell Inc.
First, it is important to pay additional attention to the fact that the principal aim of the practical application of virtual integration is blurring the traditional boundaries between the chain of suppliers, manufactures, and business entities, which are involved into the distribution process, as well as with the end users of Dell Inc.’s products and services.
The main competitive advantage of virtual cooperation between the different levels of the supply chain in Dell Inc. is creating the maximum value in the process of cooperation with its suppliers and customers.
Virtual integration provides the company with an option of creating a thoroughly coordinated supply chain. While taking into account the fact that such technological achievements of the 21st century as virtual organizations have made their contribution to the style of the managers’ and engineers’ working process, the contemporary managers and professional staff cannot be considered as the lone custodians of the corporate culture and information due to the fact that the rapid exchange of information takes place in the scopes of different cultures, time and space boundaries; as a result, virtual global enterprises are established. As an example, it is possible to consider Dell Inc., which has been initially established in the US, a global organization; although the lion share of its manufacturing facilities are located in China.
In order to reach virtual integration between various business entities in the scopes of the supply chain, real-time automation of business processes, which take place inside the organization, is required (Boalow, 2000).
During the last 10-15 years, the latest technological achievements such as e-mail, voice mail and fax have been widely applied by different organizations and by Dell Inc. in particular. According to such practice, this approach towards communication between diverse business entities or between the different departments of the entire company may cause delays in delivery, and that is why such practices are to be re-entered for several times in order to ensure the fact of cooperation, delivery, making orders etc. (Deans, 1994).
The supply chain integrated model of Dell Inc. mainly focuses on trust and respectful attitude towards all members of the supply chain. In addition, such factors as just-in-time manufacturing and avoiding collaboration with the third-party retailers constitute additional features of Dell Inc.’s integrated supply chain model (Magretta, 1998).
In addition, the inherent features of Dell Inc.’s integrated supply chain are the constant improvement of labor conditions for the staff while implementing training seminars, joint improvement projects, and workshops into the daily manufacturing routine of the corporation. The meetings between the organization’s top management are usually directed at improving the system, practical implementation of the innovative processes and, as a result, at reaching the competitive advantage of the company on the market of high technologies.
As a result of the increase in the communication degree between the customers and suppliers, the level of sharing information rises and additional clients and business partners are attracted and then involved into the supply chain of Dell Inc.
Finally, while taking in account the latest trend of mass-customization, many companies are forced to focus on their main competences. As a result, several other functions such as design, manufacturing and distribution of the products are outsourced. In Dell Inc., outsourcing has taken its place when the head office, located in the US, has made a decision of establishing the enterprise in China and placing the key manufacturing facilities in that country (Simchi-Levi, 2003).
In order to improve Dell Inc.’s supply chain, two following recommendations are developed: business intelligence practical implementation and supply chain management improvement.
Business Intelligence (BI) is a relatively new term; it was introduced by Hans Peter Luhn in 1958 for the first time. The author has characterized BI in the following way: “it is the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal” (Luhn, 1958). This notion has changed since that time due to the computer technologies progress. In the 1980s, it has involved the computer-aided models, which were to help in decision making processes by executing some calculations according to the criteria like “if…” and “than”. Such programs as DSS, OLAP, Data Warehouse and Executive Information Systems are the first developed programs in business intelligence area.
Later, the BI system was interpreted as all possible methods, concepts, tools and possibilities of the business process improving with the help of the fact-based support systems (Power, 340). Nowadays, BI is the computer based and operated system of problem definition, business information collecting, treatment and decision making assistance. As an example, with its help one can perform the sales revenue calculation, according to relevant information available on the web-sources, by concidering the previous and current state of affairs as well as business experts’ forecasts and general trends in the area. The main functions of the BI system are the following: online analytical processing – collecting the data needed for decision making; carrying out the economic analysis of this information; benchmarking – borrowing other organizations’ experiences, especially from those operating in the same field (competitors); business performance management – selecting several possible variants for the business to expand; and, finally, making the predictive analysis of these decisions (Power, 2007).
Supply Chain Management
Supply chain management (SCM) is a circulatory business system. It includes such processes as delivery, movement and storage of raw materials, which are required for product manufacturing, making inventories, and, finally, the promotion of finished goods from the manufacturer to the end consumer (Harland, 1996).
The area of SCM’s responsibility includes planning, designing and monitoring all the supply chain activities in order to organize and support the infrastructure, the logistic system, balance the supply and demand for the product and, finally, make objective measurement of the products’ global performance.
The Relationship between Information Systems, Business Intelligence and Supply Chain Management Improvement
In order to provide objective evaluation of IS’ and BI’s influence on the SCM we would like to investigate it on all three levels of the SCM system.
On the strategic level, all the processes of information investigation, its treatment and correct decision making, according to the current situation on the market, is possible in case of having good business intelligence software and skillfully organized informational system. In this information age, competition is won by that participant of the market who operates with up-to-date information and makes correct business decisions before others do that. Thus, it is very important to be responsible for all actions that take place in the decision making process. The wide spectrum of information should be treated and taken in consideration as well as the rates of previous periods, current indexes and experts’ economic forecasts. It is possible to obtain this information from online sources for the shortest period of time with the help of proper BI software.
On the tactical level, it is very important to pay attention to the legislative basis changing, to take all aspects of paper work into consideration and to organize the control over the execution of agreements. Benchmarking may be organized with the BI system, thus helping in getting the needed information from open online sources.
On the operational level, a well-organized informational system will assist the manager in all key aspects of the company’s work. It will provide the manager with an opportunity of monitoring the main processes from the personal computer or get personal access to the online system from every NAP.
To conclude, it is important to stress on the importance of introducing the newest achievements of the technologies in IS and BI areas into business practice. There are several reasons for that issue: first, saving time and money for the informational search; second, automation of a routine decision making process: “if…. then…” automatic system; third, possibility of all processes coordination and improvement – top-management is provided with an access to information concerning each department (current information about current processes).
Finally, computer-assisted software simplifies the majority of processes that take place in a particular company. It allows easy control over all actions of employees, all needed additional sources; it, in turn, provides a particular company with an opportunity to reduce time, costs and efforts directed to the main management processes: planning, organization, motivation and control.