A REPORT

ON
SUPPLY CHAIN MANAGEMENT SYSTEM

By:

Rohan Byanjankar

Submitted to:
Baikuntha Sigdel
Department of IT
Sainik Awasiya Mahavidyalaya

In partial fulfillment of the requirements for the Course

Management Information System
Sallaghari, Bhaktapur
March 19, 2015

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 ACKNOWLEDGEMENT
We would like to express our gratitude to Sainik Awashiya Mahavidyalaya,
Sallaghari, Bhaktapur, for providing the golden opportunity to prepare a project work
on A Report on Supply Chain Management System. Our horizon of knowledge has
expanded and has made us aware about the requirement of Supply Chain Management
System and its importance in contemporary business world. Moreover, we experience
and enjoyed the difficulty in conducting research, however, we got opportunity to
hone our language, knowledge, and talent.

We have no words for Mr Baikuntha Sigdel for his immeasurable guidance,

inspiration, and resource materials, without which we would not have been able to
prepare this project work being in bound of complete formality. We express our
sincere thanks to Mr. Ram Singh Budal, BBA Coordinator; SAMB for his time and
advises in managing the content of the project work. We express our sincere thanks to
our friends for their time and advises to sharpen up this study.

Last but not the least; we would like to express our sincere thanks to employees at
Sainik Awashiya Mahavidyalaya for their direct or indirect contribution in shaping up
this study.

We would be obliged to any suggestions and comments from the readers that will
assist in further improvement of this project work.

Project team

Third semester

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 DECLARATION
We, the project team (Rohan Byanjankar, Aabita Basnet, Nirvik Naresh Neupane,
Niranjan Silwal, and Nirajan Thapa) declare that the work presented in the form of
report entitled SUPPLY CHAIN MANAGEMENT SYSTEM submitted to
department of IT, Sainik Awashiya Mahavidyalaya, is our original work done in the
form of partial fulfillment of the requirement of BBA program MIS course of Third
semester under the supervision of Baikuntha Sigdel, Sainik Awashiya Mahavidyalaya.

Date:

Project team

BBA program, Third Semester,

Sainik Awashiya Mahavidyalaya

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 RECOMMENDATION
This is to certify that the report submitted by Rohan Byanjankar, Aabita Basnet,
Nirvik Naresh Neupane, Niranjan Silwal, and Nirajan Thapa entitled SUPPLY
CHAIN MANAGEMENT SYSTEM has been prepared and submitted in the
prescribed format of department of IT, Sainik Awashiya . This report is forwarded for
evaluation.

(Baikuntha Sigdel)

Department of IT

Nepal Commerce Campus

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 EVALUATION SHEET

We have concluded the viva-voce examination of the report prepared and presented
by Rohan Byanjankar, Aabita Basnet, Nirvik Naresh Neupane, Niranjan Silwal, and
Nirajan Thapa entitled SUPPLY CHAIN MANAGEMENT SYSTEM and found the
report to be the original work and according to the prescribed format. We recommend
the report to be accepted as partial fulfilment of the requirements for Management
Information System subject of BBA program.

( Baikuntha Sigdel) ( )
Internal Evaluator External Expert

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 ABSTRACT
The project work is a short account on Supply Chain Management System. The
project, in an introductory phase, encompasses a short description of Supply Chain
Management System along with its objectives. The project work set light on system
prospective of SCMS, which contains background of SCMS that includes basic
criteria for implementation of SCMS and requirements for SCMS to be introduced in
an organization, a short history of supply chain management, Business Intelligence
and SCMS along with uses area of SCMS. Organizational prospective of the system,
which includes helpfulness of system to organization, benefit of SCMS, MIS
dimension of system, and role of system for business operation, has been briefly
described. All systems are vulnerable; Security issue of system includes Security and
control of SCMS, potential security concerns, what security policy organization can
adopt to reduce notorious activities of intruders. The ethical, social, and political
issues addressed by the system, moral dimensions of the system and reasons why
ethical issues are raised in the system are explained. We have included some figures,
and tables to visualize the content vividly.

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 LIST OF FIGURES
Figures Pages

Figure 1: Nikes Supply Chain 2

Figure 2: The Two-way relationship between organization and SCMS 6

Figure 3: The requirements of SCMS 8

Figure 4: Evolutionary timeline of SCM from 1950 to present. 12

Figure 5: Components of SCMS 14

Figure 6: Working Mechanism of JIT Production Plant 15

Figure 7: Supply Chain Management at Amazon.com 16
Figure 8: Cross Ducking Method in Walmart 17
Figure 9: Supply Chain Management System at Dominos. 18
Figure 10: Contemporary Security Challenges and Vulnerabilities 23
Figure 11: Wi-Fi Security Challenges 24
Figure 12: Access Rules for a Personal System 30

Figure 13: Sample Auditor's List of Control Weaknesses 31

Figure 14: The relationship between Ethical, Social, and Political Issues in an
Information society 32

LIST OF TABLE
Table Pages

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Table 1:- Mediating Factors 7

Table 2: Evolution of Supply Chain Management and its application areas 12

Table 3: Competitive advantage achieved through SCMS 21

Table 4: General Controls 27

Table 5: Online Order Processing Risk Assessment 29

Table 6: Key Technology Trend That Raise Ethical Issues 37

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 TABLE OF CONTENT
Chapter Pages
ACKNOWLEDGEMENT II
DECLARATION III
RECOMMENDATION IV
EVALUATION SHEET V
ABSTRACT VI
LIST OF FIGURES VII
LIST OF TABLE VIII
TABLE OF CONTENT XI
ACRONYMS X
CHAPTER 1: INTRODUCTION 1-4

1.1 Background of Study 1

1.2 Introduction of Group Members 1

1.3 Introduction of SCMS 1

1.3.1 Objectives of SCMS 2

1.4 Methodology of study 3

1.5 Limitation of Study 4

CHAPTER 2: SYSTEM PROSPECTIVE 5-18

2.1 Background of SCMS 5

2.1.1 Organization and SCMS 6

2.2.2 Requirements for SCMS 8

2.2 Evolution History of system 10

2.3 Business Intelligence and System 13

2.4 Uses area of system 15

CHAPTER 3: ORGANIZATIONAL PROSPECTIVE OF SYSTEM 19-22

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 3.1 How system is helpful to organization 19

3.2 Benefit of system for organization 20

3.3 MIS dimension of system

3.4 Role of system for business operation 22

CHAPTER 4: SECURITY ISSUE OF SYSTEM 23-31

4.1 What is security and control? 23

4.2 Potential Security Concerns 23

4.3 Controls required for system 26

4.4 Organizational control implementation role 28

CHAPTER 5: ETHICAL ISSUES OF SYSTEM 32-38

5.1 How ethical, social and political issues addressed by system 32

5.2 Moral dimension and information system 33

5.3 Key Technology Trend That Raise Ethical Issues 36

5.4 Why ethical questions is raised in this system 38

CHAPTER 6: CONCLUSION AND LEARNING 39-40

6.1 Conclusion 39

6.2 Learning 39

BIBLIOGRAPHY A

GLOSSARY B

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 ACRONYMS
1. BI = Business Intelligence
2. COGS = Cost Of Goods Sold
3. DDoS = Distributed Denial-of-Service
4. DoS = Denial-of-Service
5. DSS = Decision Support System
6. HP = Hewlett-Packard
7. IBM = International Business Machine
8. IS = Information System
9. IT = Information Technology
10. ITOR = Inventory Turnover Ratio
11. JIT = Just-In-Time
12. LIS = Local Information System
13. MIS = Management Information System
14. NORA = Non-obvious Relationship Awareness
15. OLAP = Online Analytical Processing
16. P&G = Procter & Gamble
17. SCM = Supply Chain Management
18. SCMS = Supply Chain Management System
19. TD = Toronto-Dominion Bank
20. TQM = Total Quality Management

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 CHAPTER 1: INTRODUCTION

Background of study
This report was prepared to review the following aspects of SCMS:

1. The history of SCMS along with its application, benefits and business value,
possible threats and security concern, and ethical issues raised by it.
2. The existing IT infrastructure ecosystem which encompasses computer
hardware platform, operating system platform, enterprise software
applications, networking/telecommunications, internet platform, consultants
and system integrators and data management and storage.
3. Use of information technology by organizations and their impact on the
business process.
4. The value add component of the information system to organization.
5. Types of business processes and activities to promote strategic interests of
organization.

1.2 Group members

The project work entitled SUPPLY CHAIN MANAGEMENT SYSTEM is the joint
effort of five group members. The group consists of following members:

i) Aabita Basnet
ii) Rohan Byanjankar
iii) Nirvik Naresh Neupane
iv) Nirajan Thapa
v) Niranjan Silwal

1.3 Introduction of Supply Chain Management System

Supply Chain Management System (SCMS) is an inter-organizational system that
helps organizations to seamlessly integrate manufacturing operations, purchasing,
transportation, and physical distribution into a unified program. The Supply Chain
Council (1997) defines "The supply chain a term increasingly used by logistics
professionals - encompasses every effort involved in producing and delivering a final
product, from the supplier's supplier to the customer's customer. Four basic processes
plan, source, make, deliver - broadly define these efforts, which include managing
supply and demand, sourcing raw materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and order management, distribution
across all channels, and delivery to the customer." Thus, SCMS is an information
system that promotes a network of organizations that are involved, through upstream

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and downstream linkages, in the different processes and activities that produce value
in the form of products and services in the hands of the ultimate customer. The
growing competition among firms have made SCMS, the system that serves an
organization for operational excellence, competitive advantage, customer-supplier
intimacy and survival.

1.3.1 Objective of SCMS

1. To reduce working capital

Figure 1: Nikes Supply Chain

Working capital is the capital of a business which is used in its day-to-day

trading operations, calculated as the current assets minus the current liabilities.
SCMS helps to reduce working capital as it virtually connects both supplier
and customer and reduces cost of ordering raw materials to suppliers and
receiving order from customer.
2. To increase inventory turnover
Inventory Turnover Ratio is defines as the ratio of Cost of Goods Sold
(COGS) to inventory. It defines how efficiently a firm can cut off its inventory
by offering it to market for sale. Higher Inventory Turnover Ratio (ITOR) is
considered to be better. SCMS helps to reduce inventory as it helps to make
tenacious link with customer ensuing higher ITOR.
3. To virtually link customer and supplier

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 The primary task of SCMS is to virtually link customer and supplier. The
growing networking advances and development of intranet and extranet have
narrowed down gap between supplier and firm, and firm and its customer.
4. To add value to customer
The core objective of SCMS is to add value to customer. The continence to
customer is the utmost requirement as customers are the king. For example:
Toyota is known for its service after sale. The superior link of Toyota with its
customer have made it possible for Toyota to provide service to customer after
the sale of product too.
5. To promote Total Quality Management (TQM)
TQM is a holistic approach to long term success that views continuous
improvement in all aspects of an organization as a process and not as a short
term goal. Just-In-Time (JIT) method, one of the approaches to supply
chaining, has close association with TQM. JIT promotes TQM, which has
been visualized through continuous improvement in Toyota and Dell.
6. To promote competitive advantage
If a firm can offer similar quality product at lower price or can offer higher
quality product at same price through differentiation than of competitors, then
it is said to be competitive advantage. The lower marginal cost of a firm, the
higher profitability of a firm. SCMS helps to reduce marginal cost through
elimination of wastage, reduction in inventory and superior distribution of
product that adds value to customer.

1.4 Methodology of study

Our report is based on research. So, we have made stringent effort to collect data from
various sources so that our report will encompasses a wide range of information, facts
and figures. We have collected data from both primary and secondary sources,
however, we have relied more on secondary sources. We interviewed a number of
faculty members of Information Technology Department, which falls under primary
source of data. Data from the primary source was not adequate to prepare entire
report, so we took reference of couple of books related to Information technology and
system, economics, and management. Not to mention, our primary reference book
was Management Information System- Managing the Digital Firm, 12th edition by
Louden and Louden. Our biggest source of data was the internet. We went through
numerous websites and put down several crucial points from several webpages. We
also went through several journals, magazines, newspaper, and e-post in search of

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reliable and precise data. We consulted some business websites such as forbes.com,
bloomberg.com, and economictimes.indiatimes.com to get hold of information
regarding contemporary business practices, leading companies, and their inclination
towards information technology.

1.5 Limitations of the study

This report is a partial requirement of practical exam of MIS of BBA third semester
conducted by Tribhuvan University. The report has been prepared and submitted
within a prescribed time. Although we did our best, therere still some limitations.
They are:

1. Since the report is based on secondary data, the findings are based on
information collected.
2. This report is conducted under the prescribed format by T.U. for the purpose
of practical exam report of Bachelor degree.
3. The study has been prepared under the constraint of the limited time. Thus,
detail analytical study could not be conducted.
4. It contains the general idea of supply chain management system only, so may
not be felicitous report to those who seek for in-depth analysis of SCMS.

CHAPTER 2: SYSTEM PROSPECTIVE

2.1 Background of System

Supply Chain Management System (SCMS) is one of the inter-organizational system
that automate the flow of information across the organizational boundaries, and helps

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firm to acquire right amount of product from their sources to the final destination with
the least possible cost, and least time. SCMS has been one of the integral parts of
every company. The best companies around the world are discovering new techniques
to gain competitive advantage, and has stumbled to Supply Chain Management
System. One of the most significant changes in paradigm of modern business
management is that individual businesses no longer compete as solely autonomous
entities but rather as supply chains. Supply Chain Management System does not call
for superior, complex, and weird resources, and prerequisites. SCMS can be applied
to all firms: manufacturing, retailer, service and public organization.

Some basic criteria for implementation of SCMS are as follows:

1. Minimum number of employee in a firm must be at most twenty

SCMS is not bounded to a particular type of firm, however, the rudimentary

requirement for its integration in firms business model requires at most
twenty employees. If the number of employees in a firm is less than twenty,
the integration of SCMS does not generate value to firm. So, its not prudent
enough to be quick to adopt sophisticated SCM software if it has employees
less than twenty.

2. Strong management commitment to adopt new ways of working and

innovation
The stereotype management, which has close adherence towards management
practices of past days, cannot derive adequate benefit from SCMS. The
application of SCM software is worthless unless firms adopt new ways of
working. The acute vision towards innovation, research and development are
some fundamental requirements of firm to be felicitous for the application of
SCMS.

2.1.1 Organization and SCMS

All information systems and organization influence each other. Information system
are built by managers to serve the interest of business firm. Not to mention,
organization must be aware and open to the influences of information systems to
benefit from new technologies. Similarly, organization and SCMS influence one other

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too. The mediating factors, which includes organizations culture, structure,
environment, business process, polities and management decision, acts as a bridge
between them. These factors are the primary intruders and are influencing factors.
These influencing factors determine whether the application of SCMS will be proven
fruitful or not. Organization extract out information regarding the impact of
introduction to SCMS in existing business process, surrounding environment, culture
and management decisions. Organization should have strict vigilance over these
mediating factors in order to successfully integrate information system to its existing
business process.

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 SCMS (Information system)

Figure 2: The Two-way relationship between organization a

Mediating Factor
Environment
Culture
Organization Structure
Business Processes
Politics
Management decis

This complex two way relationship is mediated by a number of factors. Environment,

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Table 1:- Mediating Factors

Factors Description Impact on system

Environment of the firm consist of
SCMS is needed in
competitors, supplies, customers,
highly Competitive and
Environment government, and technology.
technological
Organization and environment have
environment.
reciprocal relationship.
Organizational culture encompasses the Open culture is the
set of assumptions about what products fundamental
Culture the organization should produce, how it requirement to
should produce them, where, and for integrate any system in
whom. business process.
Organization structure defines
Tall structure with strict
hierarchy, and position in an
Structure chain of command does
organization. Flat structure is preferred
not support SCMS.
to tall structure.
Business processes are the set of
Business logically interrelated activities that
Processes must be performed together to achieve
desired goal.
The diversified viewpoint of people of The more diversified
different position that ensues political viewpoints, the more
Politics
struggle for resources, competition and difficult to introduce
conflict. new system.
Resilient management
has positive impact on
Decision made by management
Management system while rigidity
committee for/against the course of
decision creates obstacles in
action is called management decision.
introducing and
functioning of system.

2.1.2 Requirements for SCMS

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 The mediating factors are the determinant of firms techniques, and tactics to conduct
general business operations. The environment of firm drives and diverts the firm.
Firms extract out their strength, opportunities, threat, and weakness through
environmental scanning, and accordingly integrates information system to increase
efficiency of existing business process or to enable entirely new processes that are
capable of transforming the business. Nevertheless, culture, structure, business
processes and politics are highly capable of transforming the business. So, the
application of SCMS highly depends upon these factors. SCMS has high inclination
towards those firms, which have open culture, decentralized structure, innovative
ideology, organizational politics, flexible management, and wide-spread distribution

The requirements of SCMS can be categorized into organizational requirement consisting of open culture, d
network.

Organizational Requirements

1. Open culture
SCMS or any other information system cannot be integrated to business
process if the organization is not in favour of open culture. The organization
advocating in favour of close culture, discards frequent interactions with
external environment, and believes in self-sufficiency and independence
cannot generate value from SCMS. For instance: Dell, the third largest vendor
of PC, uses JIT strategy. The JIT, also Build-to-order, calls for close intimacy
with suppliers and customers. Thus, its unattainable for those organization
adhering to close culture to adopt JIT strategy or any other supply chaining
methods.
2. Decentralized Structure

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 Organization that follows strict chain of command and limits the decision
making authority to mere top level management is very slow to acknowledge
change in environment. The lengthy processes and complex business model
makes the entire operation tiresome, reducing the efficiency. Decentralized
structure is the rudimentary requirement for SCMS. Quick response to
suppliers and customers, defining accurate quantity of product to be acquired
and calculation of lead time with precision are the basis of supply chain
management, which cannot be easily maintained by organizations cohering to
centralized structure.
3. Innovative Ideology
Innovation of new product and introducing them to market has been a general
trend in todays competitive business environment. The application of
Information System fosters if and only if the organization has extensive focus
towards innovation. SCMS is also the consequence of continuous effort of
innumerous business firms to discover new method of achieving competitive
advantage. For instance: Walmart, the largest store in the Earth, has
persistently focused on innovation. The superior replenishment system has
made Walmart, The Largest Company in the World by Revenue, which is
the consequence of innovative ideology adopted by it.
4. Flexible Management
Management decision plays a vital role in introducing new system to an
organization. Management committee that focuses toward transformation and
feels the weeny change in mediating factors readily accepts new technology.
The diversified viewpoint of people of different position in an organization
ensues political struggle for resources, competition and conflict, and creates
hindrance in introducing new system.

Technological Requirement

1. Superior Hardware and Software

Low quality hardware and software is not preferable. The hardware that does
not support fast respond cannot make the supply chain system effective.

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 Similarly, best software should be used so that hackers and crackers cannot
easily intrude on the system.
2. Networking Advances
Networking and telecommunication advances is the utmost requirement for
SCMS. Networking and telecommunication virtually connects an organization
with suppliers, customers, and other stakeholders, which makes supply
chaining smooth, flexible, and quick.
3. Advance data analysis
Opulent supply chain management takes place if an organization has adopted
better technologies for advance data analysis. The supply chain leaders such as
Dell, Walmart, Procter & Gamble (P&G), and IBM have adopted superior
technologies for advance data analysis. Without rigorous data analysis, no any
firm can successfully generate value from SCMS.

2.2 Evolution History of System

The history of Supply Chain is dated from 1950s. During 1950s, logistics was thought
in military terms for procurement, maintenance, and transportation of military
facilities, materials, and personnel. The study and practice of physical distribution and
logistics emerged in the 1960s and 1970s. Prior to 1950, logistics was not considered
as strategic function. The importance of logistics increased considerably, when
physical distribution management in manufacturing firms was recognized as a
separate organizational function. The SCM concept was coined in the early 1980s by
consultants in logistics. Walmart, the largest retailer on the planet, was one of the
pioneering figures in supply chain management through the successful application of
cross docking during 1980s.

The evolution of SCM continued into the 1990s due to the intense global competition.
The worlds prominent firms acknowledged the utmost requirement of supply chain
and streamlining of business model due to amplifying global competition. The
multitudinous companies, who were performing their business activities being in
bound of political boundary, were free to set up their business anywhere in the globe.
The firms, who were dominating the domestic market, and were making effort to
fulfil the requirements of domestic consumers, made an envision to get over entire
business world, which was a harrowing ordeal indeed. Myriad firms, such as Dell, HP,
Sony, Apple, and so on, made their core focus towards adding value to customers. The
rush of preeminent business firms to get over one another and to capture larger market

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share, which called for acquisition of superfluous amount of raw materials, splendid
inventory management, and superior distribution policy, ensuing the concept of
supply chain and logistics management.

Enterprise Era

The commencement of enterprise era is dated from 1992. The growing power of
computer, networking advances, and evolution of global network, the Internet, made
an instigation of enterprise era, where firms use networking to make their business
model to expedite and business process to streamline. The enterprise era is deemed to
the golden era of Information Technology. The integration of suppliers, customers,
and other stakeholders to the mainstream of firms activities was the uttermost need,
which could be achieved through supply chain management. Not to mention, the use
of intranet, and extranet further flourish the concept of supply chain management. For
instance: Intel corporation, the largest manufacturer of microprocessor, and the
dominant figure in Information Technology, uses intranet to create link between its
employees. The intranet of Intel has been viewed for more than 50 million times.

Cloud Computing Era

Cloud Computing is the computing model in which individual or firm acquire

computing power over the internet. Cloud computing has predominated
technologically advance world since last five years, however, the concept of the cloud
computing came into existence in 2002. There has been radical changes in the normal
course of business. Firms have deemed to be more focused towards the
technologically advance model in order to get hold of lucrative opportunities. Supply
chain became one of the blazing topics in the realm of business. Companies became
more specialized and started seeking for suppliers who can provide low cost, quality
materials rather than own their source of supply. It became critical for companies to
manage the entire network of supply to optimize overall performance. These
organizations realized that whenever a company deals with another company that
performs the next phase of the supply chain, both stand to benefit from the other's
success.

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 F

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Table 2: Evolution of Supply Chain Management and its application areas.

Year Event Application of SCM

Initiated the concept of logistics first Procurement, maintenance, and
1950
time in the history. transportation of military facilities,
materials, and personnel. Wide
The concept of logistics developed and
spread practice of physical
1970 became one of the predominating
distribution of products and
concepts.
logistics during 1970s.
Initiated the concept of Supply Chain The initial phase of Supply Chain
1980
Management for the first time. management.
Manufacturing companies were
first to integrate SCM to their
Wide use of SCM in manufacturing
1985 business process. In 1985, Walmart
industry
began using cross ducking in retail
sector.
Many service industries, Amazon
Ubiquitous spread of SCM in service
1995 Inc., Google Inc., emerged. Dell
industry
began using JIT strategy.

2.3 Business Intelligence and SCMS

Business intelligence (BI) is a contemporary term for data and software tools for
organizing, analysing, and providing access to data to help managers and other
enterprise users to make more informed decision. The ever growing technology, cut
throat competition, and desire of every firm to be number one have made business
intelligence, one of the basic requirement of an organization. The introduction to
Business Intelligence in the realm of business has transformed the scenario of
business firms. Service oriented companies have toppled mighty manufacturing
companies. The shift of market power from manufacturing companies to IT
companies is the consequence of technological advances and business intelligence.
Data warehousing, data mining, Online Analytical Processing (OLAP), and Local
Information System (LIS) are some tools of BI.

SCMS is the active management of supply chain activities to maximize customer

value and achieve a sustainable competitive advantage. SCMS helps to make
tenacious link between supplier and customer, and helps them to approach nearer to

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firm. These system helps profitability by lowering costs of moving and making
products and by enabling managers to make better decision about sourcing,
production and distribution of a product. Supply Chain Management (SCM) is
composed of three main components. Procurement, Processing, and Distribution are
the three main pillars of SCM.

Figure 5: Components of SCMS

Procurement

2.3.1 Impact of Business Intelligence on SCMS

1. Impact on Procurement of materials

Identification of the best supplier and procurement of material is the first
activity of supply chain management. To opt the best supplier from a number

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 of suppliers is a daunting task. Manually, its quite unattainable, but with the
application of tools of BI, this tedious task can be made easier. The tools of BI
helps to organize and analyse complex data, and help in decision making.
2. Impact on Processing
Processing is the core of any information system. The conversion of raw
material procured from the supplier to finished product is called processing of
material. Firms need to identify production capacity, determine production
schedule, and method of production. BI plays vital role in evaluating
production capacity, preparing the most appropriate schedule for production,
and the least cost production method.
3. Impact on distribution
Distribution is the final activity of supply chain. Distribution is the process of
selling of finished goods and services through the appropriate distribution
channel. Firms need to identify demand, performance of product in market,
and reliable distribution network. BI helps firms to make demand prediction
through trend analysis, and helps to identify conducive distribution channel
through analysis of shipment data, fringe cost data, fuel consumption cost
data, and so on.

2.4 Uses area of SCMS

Globalization has ensued extensive competition among the worlds leading
companies. Competitive advantage, product differentiation, customer satisfaction, low
cost, and high quality are the contemporary business terms which have changed
business world. These factors determine who will be the ultimate winner or loser.
Organizations are discovering new method, tactics, and technology to achieve these
factors. Gigantic firms have been using SCM applications to surmount their
competitor through innovation, product differentiation, low cost and high quality.
Thus, SCMS has been deemed as one of the most essential component of an
organization.

1. Manufacturing Firms
SCM was first practiced by manufacturing firms during 1980s. Manufacturing
firms used SCMS to procure raw materials from suppliers in least possible
time with least cost. Moreover, these firms used SCMS to process the raw
materials, and also in distribution of finished products. One of the best
examples of SCM is JIT strategy adopted by Dell. Dell uses SCMS to make

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virtual link with its suppliers and customers through networking. However,
JIT has been pioneered by Toyota, the largest automotive company.

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 Figure 6: Working Mechanism of JIT Productio

Customer Order Lead tim

JIT Strategy

Finished Product Processing

Production in JIT system starts with order by customer followed by lead time calculation, contact supplier fo

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2. Service oriented firms

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 Figure 7: Supply Chain Management at Am

Amazon.com takes order from customer through internet, contacts its supplier online, and deliver the prod

Buy Sid
Inside

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 Service oriented firms proliferated during 1990s. SCMS was first practiced by
service oriented firms in 1995. Majority of these firms began using SCMS
since 2000. Introduction to cloud computing instigated multitudinous service
oriented firms to integrate SCMS to their existing business process.
Amazon.com, the largest e-commerce company, uses superior supply chain
management system to be in contact with its suppliers and customers. One
click technology was pioneered by Amazon.com which tremendously reduced
cost and increased efficiency.

3. Retailer

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 Figure 8: Cross

Cross ducking starts with placement of order, followed by lead time calculation, contact to supplier, route t

Walmart has been synonymous to superior supply chaining. It is the first retail
store to practice cross ducking method, one of the techniques of supply chain
management that is based on direct selling and complete avoidance of
inventory. Not to mention, other retail stores such as K-mart, 7-eleven,
FamilyMart and so on are also using superior supply chain management
system to exist in the market.

4. Restaurants
Restaurants also use supply chain management system to make their business
process to run smoothly. Tracker, and online ordering services are some of the
facilities that restaurants provide their customers. For instance: Dominos has
integrate Pizza Tracker on its website, so customer can easily track their order
from their home.

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 Figure 9: Supply Chain Management

Information
Supplier Automated orde
Material

Customer Online orderi

Dominos has maintained automated ordering system for raw materials, which reduces cost and time for pl

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 CHAPTER 3: ORGANIZATIONAL PERSPECTIVE OF SYSTEM

3.1 How system is helpful to organization?

From a business perceptive, an information system provides a solution to a
problem or challenge facing a firm and represents a combination of management,
organization and technological elements. Information system are a foundation for
concluding business today.in many industries, survival and ability to achieve
strategic business goals are difficult without extensive use of information
technology. business today uses system to achieve six major objectives;
operational excellence, new products services, and business models,
customer/supplier intimacy, improved decision making, competitive advantage
and survival.
1. Operation Excellence
Businesses continuously seek to improve the efficiency of their operations in
order to achieve higher profitability. Walmart, the largest retailer on earth,
exemplifies the power of information systems coupled with brilliant business
practices and supportive management to achieve world-class operational
efficiency. In fiscal year 2010, Walmart achieved $408 billion in salesnearly
one-tenth of retail sales in the United Statesin large part because of its Retail
Link system, which digitally links its suppliers to every one of Walmarts
stores.
2. New product, services and business model
Information systems and technologies are a major enabling tool for firms to
create new products and services, as well as entirely new business models.
A business model describes how a company produces, delivers, and sells a
product or service to create wealth.
3. Customer and suppler intimacy
When a business really knows its customers, and serves them well, the
customers generally respond by returning and purchasing more. This raises
revenues and profits. Likewise with suppliers: the more a business engages its
suppliers, the better the suppliers can provide vital inputs. The Mandarin
Oriental in Manhattan and other high-end hotels exemplify the use of
information systems and technologies to achieve customer intimacy. These

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 hotels use computers to keep track of guests preferences, such as their
preferred room temperature, check-in time, frequently dialed telephone
numbers, and television programs, and store these data in a large data
repository.
4. Improved decision making
Many business managers operate in an information fog bank, never really
having the right information at the right time to make an informed decision.
Instead, managers rely on forecasts, best guesses, and luck. The result is
overor underproduction of goods and services, misallocation of resources, and
poor
response times. These poor outcomes raise costs and lose customers. In the
past decade, information systems and technologies have made it possible for
managers to use real-time data from the marketplace when making decisions.
5. Competitive advantage
Doing things better than competitors, charging less for superior products, and
responding to customers and suppliers in real time all add up to higher sales
and higher profits that your competitors cannot match. Apple Inc., Walmart,
and UPS, are industry leaders because they know how to use information
systems for this purpose.
6. Survival
Business firms also invest in information systems and technologies because
they are necessities of doing business. Sometimes these necessities are
driven by industry-level changes.

3.2 Benefits of system for organization

Supply chain management systems help increase sales. If a product is not
available when a customer wants it, customers often try to purchase it from
someone else. More precise control of the supply chain enhances the firms ability
to have the right product available for customer purchases at the right time.

1. Add value to customer

The core objective of SCMS is to add value to customer. The continence to

customer is the utmost requirement as customers are the king. For example:
Toyota is known for its service after sale. The superior link of Toyota with its
customer have made it possible for Toyota to provide service to customer after
the sale of product too.

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 2. Close contact with suppliers
The primary task of SCMS is to virtually link customer and supplier. The
growing networking advances and development of intranet and extranet have
narrowed down gap between supplier and firm, and firm and its customer.
3. Smooth flow of resources
SCMS helps in smooth flow of materials over a delicate supply chain and also
make a flow of information. It links customer and supplier in a delicate chain
ensuing smooth flow of resources.
4. Helps to promote competitive advantage
If a firm can offer similar quality product at lower price or can offer higher
quality product at same price through differentiation than of competitors, then
it is said to be competitive advantage. The lower marginal cost of a firm, the
higher profitability of a firm. SCMS helps to reduce marginal cost through
elimination of wastage, reduction in inventory and superior distribution of
product that adds value to customer.
5. Helps to reduce working capital
Working capital is the capital of a business which is used in its day-to-day
trading operations, calculated as the current assets minus the current liabilities.
SCMS helps to reduce working capital as it virtually connects both supplier
and customer and reduces cost of ordering raw materials to suppliers and
receiving order from customer.

Table 3: Competitive advantage achieved through SCMS

Competitive Advantage Example Firms

Increase in brand Monitors and tracks each customer Amazon.com,
loyalty (High switching interaction with the company. Dell Inc.
cost)
Customer Satisfaction Delivery of product in accurate time United Portal
without any damage or lost. Service (UPS),
FedEx
Product Differentiation Slight change in the model of Apple Inc., Sony
product through interaction with
suppliers and other stakeholders.
Quality product at low Minimize wastage, reduction in Samsung
cost carrying and holding cost Electronics

27
3.4 Role of system for business operation
Supply chain management systems automate the flow of information among
members of the supply chain so they can use it to make better decisions about
when and how much to purchase, produce, or ship. More accurate information
from supply chain management systems reduces uncertainty and the impact of
the bullwhip effect. Supply chain management software includes software for
supply chain planning and for supply chain execution. Internet technology
facilitates the management of global supply chains by providing the connectivity
for organizations in different countries to share supply chain information.
Improved communication among supply chain members also facilitates efficient
customer response and movement toward a demand-driven model.

Supply Chain Management System helps firm to conduct its business operations
in following ways:

1. Decide when and what to produce, store, and move

2. Rapidly communicate orders
3. Track the status of orders
4. Check inventory availability and monitor inventory levels
5. Reduce inventory, transportation, and warehousing costs
6. Track shipments
7. Plan production based on actual customer demand
8. Rapidly communicate changes in product design

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 CHAPTER 4: SECURITY ISSUES OF SYSTEM

4.1 Security and Control

The quality or state of being secure to be free from danger is called security. Security
is recognized as essential to protect vital processes and the systems that provide those
processes. Security is not something you buy, it is something you do. It includes
policies, procedures and technical measures used to prevent unauthorized access,
alteration, theft, or physical damage to information systems.

Controls are such methods, policies, and procedures that ensure protection of
organizations assets, accuracy and reliability of records, and operational adherence to
management standards.

4.2 Potential Security Concerns

When large amounts of data are stored in electronic form, they are vulnerable to many
more kinds of threats than when they are existed in manual form. Through
communications networks, information systems in different locations are
interconnected. The potential for unauthorized access, abuse, or fraud is not limited to
a single location but can occur at any access point in the network. Figure 7 illustrates
the most common threats against contemporary information systems.

Figure 10: Contemporary Security Challenges and Vulnerabilities

Some of the potential security threats are as follows:

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Figure 11: Wi-Fi Security Challenges

Hackers

A hacker is an individual who intends to gain unauthorized access to a computer

system. Hackers get unauthorised access by finding weaknesses in the security
protections maintained by web sites and computer systems, often taking advantage of
various features of the Internet that make it an open system that is easy to use. Hacker
activities have broadened beyond mere system intrusion to include theft of goods and
information, as well as system damage and cyber vandalism, the intentional
disruption, defacement, or even destruction of a Web site or corporate information
system.

Denial of service attack

Hackers flood a network server or Web server with many thousands of false
communications or requests for services to crash the network in Denial-of-service
(DoS) Attacks. The network receives so many queries that it cannot keep up with
them and is thus unavailable to service legitimate requests. A distributed denial-of-
service (DDoS) attack uses numerous computers to inundate and overwhelm the
network from numerous launch points.

30
For example, during the 2009 Iranian election protests, foreign activists trying to help
the opposition engaged in DDoS attacks against Irans government. The official Web
site of the Iranian government (ahmadinejad.ir) was rendered inaccessible on several
occasions.

Malware

"Malware" is a term for any software that gets installed on your machine and
performs unwanted tasks, often for some third party's benefit. Malware programs can
range from being simple annoyances (pop-up advertising) to causing serious computer
invasion and damage (e.g., stealing passwords and data or infecting other machines on
the network). Additionally, some malware programs are designed to transmit
information about your Web-browsing habits to advertisers or other third party
interests, unbeknownst to you.

Types of malware

Some categories of malware are:

Virus - Software that can replicate itself and spread to other computers or are
programmed to damage a computer by deleting files, reformatting the hard disk, or
using up computer memory.

Adware - Software that is financially supported (or financially supports another

program) by displaying ads when you're connected to the Internet.

Spyware - Software that surreptitiously gathers information and transmits it to

interested parties. Types of information that are gathered include the Websites visited,
browser and system information, and your computer IP address.

Browser hijacking software - Advertising software that modifies your browser settings
(e.g., default home page, search bars, toolbars), creates desktop shortcuts, and
displays intermittent advertising pop-ups. Once a browser is hijacked, the software
may also redirect links to other sites that advertise, or sites that collect Web usage
information.

Spoofing

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Spoofing refers to redirecting a Web link to an address different from the intended
one, with the site masquerading as the intended destination. One very common
example of spoofing is when people receive e-mails in their inbox saying that a
message could not be delivered to a recipient, even though they do not remember
sending that message.

Sniffing

A sniffer is a type of eavesdropping program that monitors information travelling over

a network. For example, if one login to a website that uses no encryption, ones
username and password can be sniffed off the network by someone who can capture
the network traffic between the user and the web site. Sniffers enable hackers to steal
proprietary information from anywhere on a network, including e-mail messages,
company files, and confidential reports.

4.3 Controls required for system

TPS controls consist of General Controls and Application Controls and can be done
both automatically and manually:

General Controls

General controls govern the design, security, and use of computer programs and the
security of data files in general throughout the organizations information technology
infrastructure. On the whole, general controls apply to all computerized applications
and consist of a combination of hardware, software, and manual procedures that
create an overall control environment. General controls include software controls,
physical hardware controls, computer operations controls, data security controls,
controls over implementation of system processes, and administrative controls. Table
3 describes the functions of each of these controls.

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Table 4: General Controls

Types of General Control Description

Software controls Monitor the use of system software and prevent
unauthorized access of software programs, system
software, and computer programs.
Hardware controls Ensure that computer hardware is physically secure, and
check for equipment malfunction. Organizations that are
critically dependent on their computers also must make
provisions for backup or continued operation to maintain
constant service.
Computer operations Oversee the work of the computer department to ensure
controls that programmed procedures are consistently and
correctly applied to the storage and processing of data.
They include controls over the setup of computer
processing jobs and backup and recovery procedures for
processing that ends abnormally.
Data security controls Ensure that valuable business data files on either disk or
tape are not subject to unauthorized access, change, or
destruction while they are in use or in storage.

Implementation controls Audit the systems development process at various points

to ensure that the process is properly controlled and
managed.
Administrative controls Formalize standards, rules, procedures, and control
disciplines to ensure that the organizations general and
application controls are properly executed and enforced.

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Application controls

Application controls are specific controls unique to each computerized application,

such as payroll or order processing. They include both automated and manual
procedures that ensure that only authorized data are completely and accurately
processed by that application.

Application controls can be classified as (1) input controls, (2) processing controls,
and (3) output controls. Input controls check data for accuracy and completeness
when they enter the system. There are specific input controls for input authorization,
data conversion, data editing, and error handling. Processing controls establish that
data are complete and accurate during updating. Output controls ensure that the
results of computer processing are accurate, complete, and properly distributed.

Organizational control implementation role

Even with the best security tools, TPS wont be reliable and secure unless one knows
how and where to deploy them. One will need to know where the company is at risk
and what controls one must have in place to protect the information systems. One will
also need to develop a security policy and plans for keeping the business running if
the information systems arent operational.

The roles of an organization to implement security control are as follows:

Risk assessment

A risk assessment determines the level of risk to the firm if a specific activity or
process is not properly controlled. Not all risks can be anticipated and measured, but
most businesses will be able to acquire some understanding of the risks they face.
Business managers working with information systems specialists should try to
determine the value of information assets, points of vulnerability, the likely frequency
of a problem, and the potential for damage. For example, if an event is likely to occur
no more than once a year, with a maximum of a $1,000 loss to the organization, it is
not be wise to spend $20,000 on the design and maintenance of a control to protect
against that event. However, if that same event could occur at least once a day, with a
potential loss of more than $300,000 a year, $100,000 spent on a control might be
entirely appropriate.

Table 5: Online Order Processing Risk Assessment

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 Exposure Probability of Loss Range/ Expected Annual
occurrence (%) Average ($) Loss
Power failure 30% $5,000-$200,000 $30,750
($102,500)
Embezzlement 5% $1,000$50,000 $1,275
($25,500)
User error 98% $200$40,000 $19,698
($20,100)

Security Policy

Security policy is a definition of what it means to be secure for a system, organization

or other entity. Once youve identified the main risks to your systems, your company
will need to develop a security policy for protecting the companys assets. A security
policy consists of statements ranking information risks, identifying acceptable
security goals, and identifying the mechanisms for achieving these goals. What are the
firms most important information assets? Who generates and controls this
information in the firm? What existing security policies are in place to protect the
information? What level of risk is management willing to accept for each of these
assets? Is it willing, for instance, to lose customer credit data once every 10 years? Or
will it build a security system for credit card data that can withstand the once-in-a-
hundred-year disaster? Management must estimate how much it will cost to achieve
this level of acceptable risk. Security policy also includes provisions for identity
management. Identity management consists of business processes and software tools
for identifying the valid users of a system and controlling their access to system
resources. It includes policies for identifying and authorizing different categories of
system users, specifying what systems or portions of systems each user is allowed to
access, and the processes and technologies for authenticating users and protecting
their identities.

Figure 12: Access Rules for a Personal System

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Disaster Recovery Planning and Business Continuity Planning

Disaster recovery planning devises plans for the restoration of computing and
communications services after they have been disrupted. It focuses primarily on the
technical issues involved in keeping systems up and running, such as which files to
back up and the maintenance of backup computer systems or disaster recovery
services. Business continuity planning focuses on how the company can restore
business operations after a disaster strikes. The business continuity plan identifies
critical business processes and determines action plans for handling mission-critical
functions if systems go down. For example, Deutsche Bank, which provides
investment banking and asset management services in 74 different countries, has a
well-developed business continuity plan that it continually updates and refines. It
maintains full-time teams in Singapore, Hong Kong, Japan, India, and Australia to
coordinate plans addressing loss of facilities, personnel, or critical systems so that the
company can continue to operate when a catastrophic event occurs.

The Role of Auditing

36
An MIS audit examines the firms overall security environment as well as controls
governing individual information systems. The auditor should trace the flow of
sample transactions through the system and perform tests, using, if appropriate,
automated audit software. The MIS audit may also examine data quality. Security
audits review technologies, procedures, documentation, training, and personnel. A
thorough audit will even simulate an attack or disaster to test the response of the
technology, information systems staff, and business employees.

The audit lists and ranks all control weaknesses and estimates the probability of their
occurrence. It then assesses the financial and organizational impact of each threat.
Figure 8-4 is a sample auditors listing of control weaknesses for a loan system. It
includes a section for notifying management of such weaknesses and for
managements response. Management is expected to devise a plan for countering
significant weaknesses in controls.

Figure 13: Sample Auditor's List of Control Weaknesses

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 CHAPTER 5: ETHICAL ISSUES OF INFORMATION SYSTEM

Figure 14: The relationship between Ethical, Social, and Political Issues in an Informa

5.1 How ethical, social and political issues addressed by system

In a social scenario open to information technology changes in technology often affect
the society. This can change individuals jobs, education, government and social
interactions. As a component of a society, each group has rights and responsibilities to
one another such as right to privacy, and obligations regarding ethics. The effect of
technology on individual can be beneficial or detrimental. Typical problems include
loss of privacy, depersonalization and change in incentives. The benefits include
lower price, better products and services. However, in most cases an alteration in
technology may help a group of individual and harmful to another set of people.
Many of these issues do not only affect our society as a whole, but also raise lots of
questions for organizations and our work place at large. The evolution of information
systems in our society today has grossly affected the way we live our lives. This has
invariably led to the increase in ethical and social impacts that are rising in the society
for health related matters to social threats. We can observe many examples related to
failed ethical and judgment by the management.

38
Information system raise new ethical questions for both individuals and society
because they create opportunities for intense social change, and thus threaten existing
distributions of power, money, rights, and obligations. Information system can be used
to achieve social progress like from the technologies like telephone, radio, electricity,
engines etc., but it can be used to commit crimes and threaten established social
values. The development of information technology can be misuse for the benefit of
few at the cost of many. And with the dominance of internet and inclination towards
e-commerce, the urgency of ethical guidance in using information technologies has
ten-folded over years. Moreover issues related to accountability for the consequences
of information systems, quality conformance, rights of concern parties and peoples
quality of life have evolved along with the course of digital evolution.

5.2 Moral Dimensions and information system

1. Information Rights : Privacy And Freedom In Internet Age
Privacy is the claim of individual to be left alone, free from surveillance or
interference from other individuals or organization, including the state. IT
threatens individual claims to privacy by making the invasion of privacy
cheap, profitable, and effective. Apart from exposing a persons information
that s/he does not want to share, it also enable other criminal activities like
kidnaping and blackmailing.
A gang of criminal can collect the name and address of high profile
businessman through a simple social networking site, say Facebook. They can
identify his family members through the same medium and are able to
blackmail him for their lives. The dilemma is, you are supposed to enable
people finding other people in a social networking site, but there is someone
who can misuse the information.
Everyone has right to freedom, to conduct themselves as they seem fit. Over
the internet, freedom of speech and expression takes the stage. On the internet
you can post things that might be offensive to others, one that is happening so
much in social networking sites. Company can collect the mail addresses of
people over the internet, ask questions regarding their habits hobbies,
addressing so that they can figure out what they can sell you, then pour over
hundreds of schemes and deals at your inbox. Isnt it is an abuse of their
privacy as the definition of privacy dictates? The best route is to find a middle
way that fulfills both the information needs of yours and privacy of others.

39
 Informed consent is very popular nowadays for gathering information without
arising debatable privacy.
2. Property Rights: Intellectual Property
Intellectual property refers to the creations of the mind in the fields of
inventions, literary and artistic works, scientific works, symbols, names, and
images used in industry, commerce and communication areas. Now, because
of the Internet, such creation can be copied and distributed easily and some
other person may be counting money instead of the creator. Here are some
different formats of intellectual property.
a) Trade secrets:
Any intellectual work product- a formula, devices, pattern, or
compilation of data- used for a business purpose can be classified
as a trade secret provided it is not based on the information in the
public domain. Most of the companies keep their formula,
methodology and so on secret to make their product
distinguishable. For Example: Coca-Cola, the world most valuable
non-technological brand, has not disclosed the formula of
preparing coke even to their indubitable employees.
b) Copyright :
Copyright is the legal protection extended to the owners of the
rights in an original work, which they have created. The Copyright
Act 2002 provides economic and moral rights to the creator
through his/her lifetime and seventy years after his/her death.
Activities such as production, reproduction, communication to
public, duplicate, sell etc. of the owner or against the agreement are
done without authorization of the owner or against the agreement
with the owner are considered copyright violation.
c) Patents :
A patent is an exclusive monopoly rights given on the ideas behind
an innovation for 20 years to the rightful creator. The patent rights
can be renewed after 20 years. Patents are intended to secure full
financial and other rewards to the investors and yet make
widespread use of the inventor gets royalty when another party
uses his inventions for his benefit. For instance: The Door Cooling
System technology has been registered under the patent of LG
electronics.

40
3. Accountability , liability, and control
Accountability refers to condition of being answerable to higher authority or
concerned parties. Liability is the state of being legally responsible for
something, thus subject to paying compensation for any wrong done. Control
means the measure to be adopted the faults as far as practicable in the digital
platform, basically asking who is responsible for controlling the mishaps. For
example: During the last week of September 2009, Toronto-Dominion (TD)
banks 6.5 million customers were temporarily out of funds in their account
because of a computer glitch caused due to a failed attempt of integrating
systems of TD bank and commerce bank. The question is, who is liable for
any economic harm caused to individuals or business that could not access
their full account balances in that period.
Computer software is a bulk of instructions provided to the machine, so if any
harms occur in account of the software, the authors should have been held
liable, but actually law often regards the operator to be liable stating that
software acts like a book, storing and displaying information so users action
is the cause of harm.
4. System Quality: Data Quality and System Errors
The debate over liability and accountability for unintentional consequences of
system use raises a related but independent moral dimension: what is an
acceptable, technologically feasible level of system quality? At what point
should system managers say, Stop testing, weve done all we can to perfect
his software .ship it! Individuals and organizations may be held responsible
for avoidable and consequences, which they have a duty to perceive and
correct. And the area is that some system errors are foreseeable and
correctable only at very large expensive, literally unaffordable. Though no
any system is completely precise and error free, system must comply with
some basic requirement and must fulfil minimum criteria. For example: In
mobile telecommunication, 10% failure is normal and acceptable elsewhere,
but failure beyond 10% is rejected.

5. Quality of life : Equity, Access, and Boundaries

Quality of life covers a huge aspect; culture, economy, status, family, rights
etc. The information technology should promote and upgrade quality of life.
Those systems that degrades quality of life is contemptible and is not
acceptable. The Information Technologies and System that provides benefit to

41
 society is welcomed. For instance: iPhone and iPad became tremendously
successful and were deemed as the game changer or the industry changer
because of its charismatic performance and widespread business application.

5.3 Key Technology Trend That Raise Ethical Issues

Ethical issues long preceded information technology. Nevertheless, information
technology has heightened ethical concerns, taxed existing social arrangements, and
made some laws obsolete or severely crippled. There are four key technological trends
responsible for these ethical stresses:-
1. Computing power doubles every 18 months
2. Data storage costs rapidly declining
3. Networking advances
4. Advance data analysis

1. Computing power doubles every 18 months

The doubling of computing power every 18 months has made it possible for
most organizations to use information systems for their core production
processes. As a result, our dependence on systems and our vulnerability to
system errors and poor data quality have increased. Social rules and laws have
not yet adjusted to this dependence. Standards for ensuring the accuracy and
reliability of information systems are not universally accepted or enforced.

2. Data storage costs rapidly declining

The storage of data online is one of the factors that led to the decline in the
storage cost. Thus this has made several organizations to easily maintain and
increase detailed database of individuals.

3. Networking advances
Networking advances has enabled copying and movement of data from one
location to another and accessing large qualities of personal data from remote
location with ease.
4. Advance data analysis

42
 This technological inclination has given organizations greater ability to
analysis personal information of individuals from vast qualities of data
gathered; and also to develop detailed profiles of individual behaviors non-
obvious relationship awareness (NORA).
Table 6: Key Technology Trend That Raise Ethical Issues

Trends Impacts

Computing power doubles every 18 Most of the worlds leading organization

months
Data storage costs rapidly declining
Networking advances
Advance data analysis
depend upon computer for managing entire
business operation.
Organizations can easily maintain detailed
databases on individuals. The data storage
cost is falling exponentially over past eight
years.
Copying data from one location to another
and accessing personal data from remote
locations are much easier. Development of
cloud computing is a hallmark in the field of
networking.
There has been tremendous advancement in
data analysis. Organizations can analyze
huge amount of data in a fraction of second.

5.4 Why Ethical Question Is Raised In This System?

Ethics refers to the principles of right and wrong that individuals, acting as free moral
agents, used to make choices to guide their behaviors. Information systems raise new
ethical question for both individuals and societies because they create opportunities
for intense social change, and thus threaten existing distribution of power, money,
rights, and obligation. Like other technologies, such as steam engines, electricity, the
telephone and the radio, information technology can be used to achieve social
progress, but it can also be used to commit crimes and threaten cherished social
values. The development of information technology will produce benefits for many
and costs for others.

43
Ethical issues in information systems have given new urgency by the rise of the
Internet and electronic commerce. Internet and digital firm technologies make it easier
than ever to assemble, integrate, and distribute information unleashing new concerns
about the appropriate use of customer information, the protection of personal privacy
and the protection of intellectual property.

Other pressing ethical issues raised by information systems include establishing

accountability for the consequences of information systems, settings standards to
safeguard system quality that protests the safety of the individual and society, and
preserving values and institution considered essential to the quality of life in an
information society.

CHAPTER 6: CONCLUSION

6.1 Conclusion
Supply Chain is an activity of making a link among suppliers and customers to make
procurement of raw materials from supplier and distribution of finished product to
customer easy and fast. Supply Chain Management System is the information system
44
that govern and integrates the supply chain activity in a unified program. The
extension competition has made SCMS, one of the most desired systems by most of
the worlds prominent organizations. The business world halts without SCMS. The
world is running in quick pace, this quick pace is the consequence of superior supply
chaining. However, SCMS is not free of threats and security concerns. Many intruders
and hackers persistently get engage in disturbing and destroying the system. So,
organization should maintain strong security through impenetrable firewalls, ethical
hackers and so on. Information rights and obligations, property rights and obligations,
accountability and control, system quality, and quality of life are five moral dimension
of SCMS.

6.2 Learning
The project work was really fruitful. We went through many websites, put down
important points which widen our knowledge. We learned many things about SCMS,
which our course did not cover. We learned how the concept of Supply chain
management came into existence, who applied SCM for the first time, and
significance of SCMS in the contemporary competitive business world. We learned
that there is positive correlation between networking advances and SCMS. Also, we
acknowledge that SCMS has positive correlation with firms profitability i.e. the firms
adhering towards superior supply chain management applications were generating
higher revenue, good suppliers and customer responses and vice-versa. We got hold of
many information regarding security concerns of SCMS. SCMS is not free from
vulnerabilities. Many intruders and hackers uses formidable techniques to crash and
destroy system. Snoofing, sniffing, Denial-of-Service (DoS) attack and Disturbed
Denial-of-Service (DDoS) are the techniques used by notorious hackers to leak
privacy, and crash entire system.

We have also learned that Digital data are vulnerable to destruction, misuse, error,
fraud, and hardware or software failures. The Internet is designed to be an open
system and makes internal corporate systems more vulnerable to actions from
outsiders. Hackers can unleash denial-of-service (DoS) attacks or penetrate corporate
networks, causing serious system disruptions. Wi-Fi networks can easily be penetrated
by intruders using sniffer programs to obtain an address to access the resources of the
network. We learned that firewall is the utmost requirement. Firewalls prevent
unauthorized users from accessing a private network when it is linked to the Internet.

45
Intrusion detection systems monitor private networks from suspicious network traffic
and attempts to access corporate systems. Antivirus software checks computer
systems for infections by viruses and worms and often eliminates the malicious
software, while antispyware software combats intrusive and harmful spyware
programs. Use of software metrics and rigorous software testing help improve
software quality and reliability.

46
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6. Rhonda R. Lummus, Robert J. Vokurka. Defining supply chain management:
a historical perspective and practical guidelines.
7. Rasheda H. Keane, Herbohn, John. , and Slaughter, Geoff. , THEORETICAL
BACKGROUND OF SUPPLYCHAIN MANAGEMENT AND POTENTIAL
SUPPLY CHAIN OF NORTH QUEENSLAND TIMBER INDUSTRY
8. Misra, Vikas., et.al. Supply Chain Management Systems: Architecture, Design
and Vision.

GLOSSARY

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1. Application controls Specific controls unique to each computerized
application that ensure that only authorized data are completely and accurately
processed by that application.
2. Business Intelligence: A collection of software and application tools that help
manager and other enterprise users make more informed decision
3. Cross Docking: a logistics procedure where products from a supplier or
manufacturing plant are distributed directly to a customer or retail chain with
marginal to no handling or storage time
4. Decision Support System: a powerful information system used by middle
level manager to handle unstructured problem.
5. Denial of Service: Flooding of network server with thousands of false request
for service to crash the server.
6. Distributed Denial of Service: Flooding of network server with thousands of
false request of service to crash the server from different computer.
7. Extranet: Private intranet that is accessible to authorized outsiders.
8. General controls: Overall control environment governing the design, security,
and use of computer programs and the security of data files in general
throughout the organization's information technology infrastructure
9. Hacker: A person who gains unauthorized access to a computer network for
profit, criminal mischief, or personal pleasure.
10. Hewlett Packard: A renowned IT company that produces computer, and its
parts.
11. Information Technology (IT): All the hardware and software technologies a
firm needs to achieve its business objectives.
12. Information: Data that have been shaped into a form that is meaningful and
useful to human beings.
13. Internet: Global network of networks using universal standards to
connect millions of different networks.
14. Intranet: An internal network based on Internet and World Wide Web
technology and standards.
15. Inventory Turnover Ratio: The ratio of sales to inventory that shows how
efficiently a firm can sell its inventory.
16. Just In Time: The production process in which production of product will
start when a customer places an order.
17. Local Information System: a form of information system built with business
intelligence tools, designed primarily to support geographic reporting
18. Management Information System: an information system that serves middle
level managers and generates reports from data collected by TPS
19. Network: The linking of two or more computers to share data or
resources, such as a printer.
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20. NORA: A process of collecting multiple data from various sources to find
hidden obscure relationship on individual, which helps in identifying criminals
21. Online Analytical Processing: computer processing that enables a user to
easily and selectively extract and view data from different points of view.
22. Online processing: A method of collecting and processing data in
which transactions are entered directly into the computer system
and processed immediately
23. Operating system: Software that manages the resources and activities
of the computer.
24. Portal: Web interface for presenting integrated personalized content
from a variety of sources. Also refers to a Web site service that
provides an initial point of entry to the Web.
25. Procter & Gamble: The largest company of consumer goods and cosmetics.
26. Product differentiation: Competitive strategy for creating brand
loyalty by developing new and unique products and services that
are not easily duplicated by competitors.
27. Security: Policies, procedures, and technical measures used to prevent
unauthorized access, alteration, theft, or physical damage to information
systems.
28. Total Quality Management: a comprehensive and structured approach to
organizational management that seeks to improve the quality of products and
services through ongoing refinements in response to continuous feedback
29. Transaction Processing System: An information system used in every
organization at lower level to record day to day activity/transaction of business
30. Wi-Fi: Standards for Wireless Fidelity and refers to the 802.11 family of
wireless networking standards