Information Systems in Organizations - Principles of Information Systems - page 46

Figure 2.2

Upstream management

The Value Chain of a
Manufacturing Company
Managing raw materials, inbound
logistics, and warehouse and
storage facilities is called upstream
management. Managing finished
product storage, outbound logistics,
marketing and sales, and customer
service is called downstream
management.

Raw
materials

Inbound
logistics

Warehouse
and
storage

Production

Inbound
tracking
systems

Raw material
inventory
control systems

Process control
systems

Customer service Marketing and sales Outbound

logistics

Finished product
storage

Customer service
tracking and
control systems

Promotion planning
systems

Distribution planning
systems

Automated storage and
retrieval systems

Downstream management

Wal-Mart's use of information
systems is an integral part of its
operation. The company gives
suppliers access to its inventory
system, so the suppliers can
monitor the database and
automatically send another
shipment when stocks are low,
eliminating the need for purchase
orders. This speeds delivery time,
lowers Wal-Mart's inventory
carrying costs, and reduces
stockout costs.
(Source: www.walmart.com.)

Managing the supply chain and customer relationships are two key elements of managing
the value chain. Supply chain management (SCM) helps determine what supplies are required
for the value chain, what quantities are needed to meet customer demand, how the supplies
should be processed (manufactured) into finished goods and services, and how the shipment
of supplies and products to customers should be scheduled, monitored, and controlled. 2 For
example, in an automotive company, SCM can identify key supplies and parts, negotiate
with vendors for the best prices and support, make sure that all supplies and parts are available