1. IT : Innovations,
Impressions & Implications
Dr S G Deshmukh
Director
ABV-Indian Institute of Information
Technology & Management, Gwalior
deshmukh.sg@gmail.com
ICATE 2013
Mukesh Patel School of Technology Management &
Engineering
23 Jan 2013

2. About my Institute
Setup by Ministry of Human Resource and Development,
Government of India in 1997 for excellence in IT and
Management
First IIIT in the country which started an integrated post
graduate (IPG) program in IT and Management catering to
the industry needs
Growing collaboration with industry and research institutes
in emerging areas and Cutting edge research
Predominantly a Research-led post graduate institute
Maximum number of Ph Ds (31) produced in IIIT family till
date

3. Speaking points
1. Dimensions of Information Technology
2. Various impressions
3. Implications for real life applications
4. Soft computing
5. Application to Supply Chain Coordination
problem
6. Endthoughts

4. Motivation
 Lot of debate on use/utility of IT
 IT has become all pervading in almost every
walk of life
 Soft Computing : As a powerful tool
 IT aided by Soft Computing ?
 Relevance of IT in Management of Business ?
4

5. Part 1
 Information Technology :
Innovations, Impressions

6. Information Technology (IT)
 A term used to refer to a wide variety of items
and abilities used in the creation, storage, and
dispersal of data and information.
 Its three main components:
 Computers, communications networks, and know-
how.
6

7. Characteristics of IT
 Ubiquitous
 Mobility
 Lighter and Smaller
 High speed
 Smartness
 Multiple functions
 Mix with Non-IT applications

8. Dimensions of IT
 Smart
 Fast
 Small & slick
 Affordable
 Convenient
 Flexible
 Friendly
 Accessible
 Connectivity
Culturally acceptable,
economically feasible
and technologically
accessible !

9. All pervading IT
 Internet
 Mobile
 Multi-Media
 Notebook
 Ipod,MP3,PMP, and
other gadgets
 Railway reservation
system
 MyTrip, amazon.com,
ebay.com, shaadi.com,
naukari.com, YouTube
 Social /professional
networks:
MySpace,Facebook,
Hi5,Linkedlin
9

10. Why Innovation is critical !
 Demography:
 55 crore population below the age of 25
 Disparity
caste, class, gender, region etc.
 Development
urgent need to improve quality of life
Sam Pitroda
Adviser to the PM of India, Public Infrastructure and Innovations,10

11. Opportunities in IT
 IT has been a major success story for India
 India leads the world in the Out sourcing business
 IT-BPO industry revenue is around US $ 7o billion/Yr
 India has around 500 million phones now & is
projected to have over 750 million in 2012
 India has only 7 million broadband connections &
needs 100 million
 The next benefits will come from Broadband,
Government, applications & public delivery systems

12. Innovation
 Technological innovations are defined as new products
and processes and major technological modifications
to products and processes.
 An innovation is considered performed if it is
introduced to the market (product innovation) or
implemented in the production process (process
innovation).

13. Remarks..
 Technological innovations – based on specific
technology, invention, discovery,
 Social innovations – in critical historic periods
more important than technological ones (mail,
educational systém, social systém, health care, …)

14. Degree of novelty..
 Incremental innovations
 Radical innovations
 Systemic innovations

15. Government Initiatives
 National Innovation Council (India)
 www.innovationcouncil .gov.in
 Information Technology Innovation Foundation
(USA)
 www.Itif.org
 Information Technology Industry Innovation
Council (Australia)
 http://www.innovation.gov.au/industry/informationandcommunicationstechnologies/i
tiic/Pages/default.aspx

16. Remarks.
 IT has a major role in driving innovation and
competitiveness for SMEs and IT sector itself
 Innovation has become “mot du jour” !
 IT helps to reduce cost, streamline processes
and bring markets closer to products & services

17. IT is making world flatter !
(Thanks to Friedman !)
 Outsourcing dominated paradigm
 Team work and leadership assumes new meaning
 Geography has become history: Time and distance are no longer the
important variables
 Mobile dense and multimedia rich environment has accelerated
digital environment.
 Connectivity has made the global village possible
 Working on-line, flexi-time, tele/videoconferencing, spiral career
paths, continuous learning and global competition are changing the
traditional notions of how work gets done.
 Internet is changing the way we communicate with –suppliers,
customers, potential and current employees by way of 2-way
communications !
 SMS driven communication

18. Automate
Business
Transaction
Informate
Make a basis
for Decision
Making
Transformate
For
Inclusiveness
and
Sustainability
Maturity of IT application

19. Use of Information
Technology (IT)
 IT as an enabler and facilitator
 IT as a tool
 IT for streamlining processes
 IT for bringing in transparency and objectivity
 IT helps in automation !

20. Impression 1: Role of IT
 IT acting as strategic weapon to gain differentiation and
advantage.
 Assumption: IT’s potency and ubiquity have increased, so
too has its strategic value?
 Examples: Indian Railways, CBSE , State Transport
 Truly strategic resource : Its not ubiquity but scarcity of a
resource which brings sustained competitive advantage.

21. Impression 2.. Availability of IT
 Ubiquity of resources transform them from potentially
strategic resources into commodity factors of
production .
 They are becoming costs of doing business that must
be paid but provide distinction to none.
 Availability of IT increased (see even at Grocery shops)
and cost decreased.
 More ubiquitous they are, less strategic they become.

22. Commoditization of IT
 Makes it valuable when shared than in isolation.
 IT is also highly replicable- no perfect commodity than
a byte of data at virtually no cost.
 Scalability of IT combined with technical
standardization dooms applications to economic
obsolescence.
 Internet accelerated commoditization of IT by
providing perfect delivery channel of apps.
 IT diffuses very fast from inception to maturity.
 Last ten years number of WWW sites grew from 0 to 40 million.
 Since 1980, over 280 million miles of fiber optic cable is installed- circle
the earth 11,320 times.

23. Impression 3: IT capability
 Because of its ability to record every customer
interaction,
 Ability to offer insights into customer and
market behavior,
 Turn a business into a scientific laboratory for
pre and post-production and manufacturing
purposes
 Its potential to re-invent the business itself
 IT’s proximity to decision making
23

24. IT Capability..
 How IT is used rather that what of IT is used
 IT fundamentally offers two important
capabilities to businesses:
 Integration and
 Interactivity
 These capabilities have to be managed
effectively for business
24

25. Implication 1: Integration
 Enables powerful integration of various
business functions : Marketing, Operations,
Design , Finance (Example: ERP based
systems)
 Integrates both internal and external functions
 Empowers suppliers and customers to become
part of the extended enterprise
25

26. Web 2.0
 Web 2.0 covers a broad range of new online services,
user-generated content, communities and social
networking tools.
Examples :Blogger, Flickr, MySpace, YouTube ,
Wikipedia and the Godfather of web 2.0 - Google.
 It is creation of far greater levels of interactivity, not
just between users, or between users and the internet
but between complementary online services through
web services
26

27. Observation..
 “..Ordinary people now have access to
technology, where they can create
value and even collaborate and level
the playing field with the world’s
mightiest enterprises ..
 Anthony Williams, “ Wikinomics: How Mass
collaboration Changes Everything”, 2007
27

28. Insight..
 Web 2.0 takes some of its philosophical
underpinning from James Surowiecki's book
“The Wisdom of Crowds”, which asserts that
the aggregated insights of large groups of
diverse people can provide better
answers and innovations than individual
experts.
28

29. Comment..
 If infrastructure is for connectivity -- akin to railroad,
Integration is about integrating functionalities of
various systems and applications even people; in a
broad sense focused on integrating people, processes
and technology in an enterprise setting.
 Role of Management: Enables effective
integration, provide necessary eco-system for
integration
29

30. Implication 2:
Interactivity
 Interactivity (WAP, Web Services, XML) being
more recent in the IT evolution
 Enables to understand customer better
 Establishes long term relationships with both
customer and suppliers
 Helps in understanding product features and
add-ons by close interaction
30

31. Implication for Management:
Connectivity !
Communication is anytime, anywhere via any
device : Person-to-person, person-to-machine,
machine-to-machine
 Connecting to Information sources
 Connecting to Change
 Connecting to an ever-changing , far reaching
universe
 Connecting to new issues and trends
 Connecting to diverse resources
 Connecting to talent pipeline
 Connecting to different ways of thinking
 Connecting to unexpected allies

32. Implication..
 Ever since the Internet brought down the cost of
connectivity, the need for integration (be it application
integration, b2b integration or data integration) has
been growing
 So also interactivity needs of enterprises particularly
dealing with bringing in pervasive functionalities as in
enterprise mobility, personalisation and so on
32

33. Insight..
 IT may become ubiquitous, but the insight
required to harness its potential will not be so
evenly distributed Therein lies the opportunity
for significant strategic advantage
33

34. Part 2
 Evaluation of Coordination in supply
chain- A Soft Computing Approach

35. INTRANET
Internet and Intranet
Internet and Intranet
Buy Side Sell-side
IT Enabled view of SCM
Suppliers
Key
Suppliers’ suppliers
Organizational processes
and functional units
Intermediaries
Customers
Customers’ customers

36. Tangible Benefits
Increased sales from new sales leads giving rise to increased
revenue from
new customers, new markets
existing customers (repeat-selling), existing customers (cross-
selling)
Marketing cost reduction from
reduced time in customer service
online sales, reduced printing and distribution costs of marketing
communications
Supply chain cost reductions from
reduced levels of inventory
increased competition from suppliers, shorter cycle time in
ordering
Administration cost reductions from
more efficient routine business processes such as invoice payment,
inventory transactions, etc

37. Supply Chain Coordination
 Act of working together and managing dependencies
among activities (Malone and Crowston, 1994)
 Integration or linking together of different parts of an
organization to accomplish a collective set of tasks
(Van de Ven et al., 1976)
 Coordination is a process to bring into a common
action, movement or condition, or to act together in a
smooth concerted way (Mattessich et al., 2001)

38. Types of IT
Transactional IT
Concerned with acquiring, processing and communicating
raw data about the company’s past and current supply chain
operations
e.g., POS systems, general ledger systems, quarterly sales reports, ERP
and e-commerce systems
Analytical IT
Concerned with developing and applying systems for
evaluating and disseminating decisions based on models
constructed from supply chain decision databases
e.g., production scheduling systems, forecasting systems, supply chain
network optimization systems
 Source : Shapiro J F , The Role of Optimization in Supply Chain Management, Sep 23, 2002. Slim Tehnologies,IMA
Workshop,
38

39. Sn Aspect Transactional IT Analytical IT
1 Time frame addressed Past and Present Future
2 Purpose Reporting Forecasting & Decision
making
3 Business scope Myopic Hierarchical and
longitudinal
4 Nature of Databases Raw and lightly
transformed objective
data
Raw, moderately and
heavily transformed
data that is both
objective and
judgmental
5 Response time for queries Real-time Real-time and batch
processing
6 Implications to BPR Substitute for, or
eliminate, inefficient
human effort
Improve managerial
decision-making
Source : Shapiro J F , The Role of Optimization in Supply Chain
Management, Sep 23, 2002. Slim Technologies, IMA Workshop,

40. {
Production Scheduling
Optimization
Modeling Systems
{
Distribution Scheduling
Optimization
Modeling Systems
Transactional IT
Demand
Forecasting
and Order
Management
System
Strategic Optimization
Modeling System
Tactical Optimization
Modeling System
Production Planning
Optimization
Modeling
System
Logistics
Optimization
Modeling
System
Supply Chain
Modeling System
Hierarchy
Top-Down View
Scope
Strategic
Analysis
Long-Term
Tactical
Analysis
Short-term
Tactical
Analysis
Operational
Analysis

41. Observation..
 IT is inherently strategic because of its
indirect effects
 It creates possibilities and options for the
chain members that did not exist before
 Companies that see, and act on, these
possibilities before others do will continue to
differentiate themselves in the marketplace
and reap economic rewards
41

42. IT based Management
interventions..
 Datamining & Business
Intelligence
 K-sharing
 Customer Relationship
Management
 Supplier Relationship
Management
 Enterprise Resource
Planning
 Etc..
Implementation of these
require careful
considerations on the
following IT capabilities:
 Infrastructure
 Integration
 Interactivity
42

43. Implication : IIIM Framework
 Innovation
 Integration
 Interactivity
These capabilities are to be effectively
managed : Role of Innovative Management
43

44. Initiative-Capability Matrix
IT Initiative Capability
Innovation Integration Interactivity
Data-mining &
Business
Intelligence
K-sharing
SRM
CRM
ERP Low ? High Medium
44

45. 45
Soft Computing
 Soft computing is an umbrella term for a collection of
computing techniques
 It is tolerant of imprecision, uncertainty and partial
truth
 Models based on human reasoning.
 Models can be
- linguistic,
- simple (no number crunching),
- comprehensible (no black boxes),
- fast when computing,
- good in practice.

46. 46
Soft Computing Applications : Business
• supplier evaluation
customer targeting,
• sequencing,
• scheduling,
• optimizing R&D,
• projects,
• knowledge-based
prognosis,
• fuzzy data analysis
• hospital stay prediction,
• TV commercial slot
evaluation,
• address matching,
• multi-criteria optimization,
etc.
•Supply Chain Coordination

47. Need of Coordination
 The supply chain entities optimize their local
objectives without taking into account its effect on
whole supply chain performance
 These conflicting objectives result in
 more inventory held up,
 increased system wide costs,
 more uncertainty and
 more demand fluctuations
 To improve the performance of whole supply chain
these conflicting issues are required to be resolved by
coordinating the supply chain processes

48. How supply chain coordination can be achieved?
 Effective Implementation of coordination mechanisms is a
good indicator of coordination
 Extent of coordination may be represented as a function of i
coordination mechanisms (CM)
EC= f (CM1, CM2, CM3, .......... CMi)
 A soft computing based model is proposed to evaluate EC:
Fuzzy based Analytic Hierarch Process (FAHP)

49. Contracts
• Structured at beginning of relationship
• Decisions regarding risks and rewards
• Set foundation for the adoption of other
mechanisms
• Optimal decisions do not satisfy all
members of supply chain
• Sort out conflicts and confusions
• Reduces uncertainties and encourage long
term partnerships
• Comprised of quantity, price, cost and
demand
Information Sharing
• Type of information shared
• Willingness to share information
• Improve different performance
measures like reduce supply chain
costs, inventory levels, demand
variance, lead time and greater
customer satisfaction
• Reduces uncertainty in supply and
demand
Information Technology
• Type of information system
• Speed and accuracy of information
system
• SCM/ERP software
• Mode of communication
Joint Decision Making
• Joint planning
• Joint forecasting
•Joint replenishment
• Joint ordering
• Joint benefit sharing
SUPPLY CHAIN COORDINATION

50. Coordination mechanism-
Information Sharing
 Order information
 Inventory data
 End customer
demand
 Sales data
 Capacity
 Production schedule
 Lead time
 Price scheme
 Status of order
 Product quality
 Future plans
 New technologies
 Product
specifications

51. Coordination mechanism-
Information Technology
 Precise and accurate information flow
 Faster and cheaper order processing
 Reduces uncertainty
 Increase flexibility
 Improves customer service
 Reduces response time

52. Extent of coordination (EC)
EC = w1*CO + w2*IS + w3*IT + w4*CL
where w1, w2, w3, w4 are relative weights of four
coordination mechanisms
 CO, IS, IT and CL are the crisp scores of four
mechanisms i.e contracts, information sharing,
information technology and collaboration respectively
 The crisp scores are assessed by defuzzyfying the
linguistic terms representing these factors

53. EL VL L SL AV SH H VH EH
1
0
0 0.2 0.4 0.6 0.8
1.0
Degree
of
membe
rship
a b c
d
SH H
VH
a b c
d










112
1
ab
b
dc
d
C
Linguistic terms assigned to coordination mechanisms
Conversion of fuzzy to crisp number
Crisp scores
CSCO: Contracts, CSIT: Information
technology, CSIS: Information sharing
and CSJD: Joint decision making
Pair wise comparisons of
coordination mechanisms
Relative weights of coordination
mechanisms
Check for
consisten
cy
Relative weights for
Contracts, Information technology, Information
sharing and Joint decision-making respectively
JDISITco ωandω,ω,ω
Inconsistent
Consistent Extent of Coordination
JDJDISISITITCOco CSωCSωCSωCSωEC +++=
FAHP model
AHP

54. Outcomes of FAHP model
 Uniform linguistic terms to coordination mechanisms
 Easiness of assigning linguistic terms by managers
 Extent of coordination based on the implementation and
importance of coordination mechanisms
 Applied to a real life case study
7701570770287068051407700420 .*.+.*.+.*.+.*.=EC
= 0.724
Low
1
0
0 0.3 0.4 0.7
0.86
Medium High
Score for Extent of Coordination
Degree of
membership

55. Pairwise comparison score
Coordina-
tion by
Contracts Information
Sharing
Information
Technology
Collaboration
Contracts 1 a12 1/a31 a14
Information
Sharing
1/a12 1 a23 1/a42
Information
Technology
a31 1/a23 1 1/a43
Collaboratio
n
1/a14 a42 a43 1

56. Analytic Hierarchy Process (AHP)
 Set AHP subjective scale for pair wise
comparison of factors on the basis of their
relative importance
 Normalize the comparison scores
 Calculate the relative weights by taking average
of normalized scores and assign as w1, w2, w3
and w4 for contracts, information sharing,
information technology and collaboration
respectively

57.  The defuzzification process is done using the
conversion formula given by Chen and Hwang (1992).
Where C is the crisp number computed by using
trapezoidal membership fuzzy number M= (a,b,c,d)










112
1
ab
b
dc
d
C

58. Input data for DSTSCC for two level SC
(A) Data considered for numerical example
Cost (cs) : 12 Cost (cb) : 2
Salvage (ss) : 9 Salvage (sb) :10
Goodwill cost (gs ) : 8 Goodwill cost (gb) : 14
Wholesale price (w) : 20 Price of product (p) : 30
Demand ~ N (100, 302)
(B) Decision variables for numerical example
Optimal order quantity : 111.35 units : 139.35 units
Other variables:  : 15, w’ : 10.1  : 0.6 and  : 0.148
Input data for DSTSCC for three level SC
(A) Data considered for numerical example
Level 1 Level 3
Marginal cost(cL1) : 20 Marginal cost (cL3) : 5
Goodwill cost (gL1) : 6 Goodwill cost (gL3) : 8
Salvage (sL1) : 16 Salvage (sL3) : 28
Wholesale price (w12) : 36 Price of product (p) : 60
Level 2
Marginal cost (cL2) :7
Goodwill cost (gL2) :7 Demand distribution N(100, 202)
Salvage (sL2) : 17
Wholesale price (w23) : 50 The cost and price are in monetary units
(B) Decision variables as Output data for DSTSCC
23 = 46 12 = 26
23 = 0.532 12 = 0.519
w’23 = 23.8 w’12 = 18.03
δ = 0.2936 Q*sc = 128.72 units
*
bQ *
sc
Q

59. Snapshot of the Model

60. Supply chain
member
Expected Performance
Measures
Case I
Scenario 0 (No
Coordination)
Case II “Coordination”
Scenario 1
(Coordin-ation
with optimal)
Scenario 2
(Scenario1+
Buyback contracts)
Scenario 3
(Scenario1+
Revenue sharing
contracts)
Scenario 4
(Scenario1+
Quantity
flexibility
contracts)
•Level 3
Actual Sale 86.760 99.20 99.195 99.195 102.171
Revenue realized 5205.596 5951.72 5951.722 3166.812 6130.253
Leftover inventory 4.165 29.53 29.529 29.53 2.539
Salvage realized 116.615 826.81 1353.762 826.81 71.081
Units short 13.048 0.61 0.612 0.61 0.480
Goodwill realized 104.381 4.90 4.897 4.90 3.836
Marginal value realized 454.624 643.62 643.621 643.62 586.922
Wholesale value incurred 4546.238 6436.21 6436.207 3076.507 5869.217
Buyback quantity realized 0 99.20 1353.762 0 633.741
Expected Profits 216.969 -306.198 220.759 268.593 375.101
•Level 2
Leftover inventory 0 0 29.565 29.529 2.539
Salvage realized 0 0 568.694 0 215.472
Units short 13.052 0.924 0.924 0.612 0.480
Goodwill realized 104.415 7.391 7.391 4.897 3.836
Marginal value realized 636.473 901.068 901.068 901.068 586.922
Wholesale value realized 4546.237 6436.205 6436.206 4522.280 5869.217
Wholesale value incurred 3273.29 4634.068 4634.068 2385.040 4225.836
Buyback quantity realized 0 0 568.694 0 456.294
Buyback quantity incurred 0 0 1359.99708 0 633.741
Expected Profits 545.110 894.602 1008.675 1231.886 856.358
Performance measures for different scenarios for three level
supply chain

61. Level 1
Leftover inventory 0 0 29.565 29.565 2.539
(Salvage realized –
buyback quantity) 0 0 417.477 0 202.797
Units short 13.052 0.924 0.924 0.612 0.480
Goodwill realized 626.491 5.543 5.543 3.673 2.877
Marginal value realized 1818.494 2574.482 2574.482 2574.483 2347.687
Wholesale value
incurred 3273.290 4634.068 4634.068 4415.645 4225.836
Expected Profits 828.305 2054.043 1936.279 1081.659 1621.776
Total Expected Profits of SC 1599.022 2638.789 2638.789 3175.516 2853.235
Supply chain
member
Expected
Performance
Measures
Case I
Scenario 0 (No
Coordination)
Case II “Coordination”
Scenario 1
(Coordin-
ation with
optimal)
Scenario 2
(Scenario1+
Buyback
contracts)
Scenario 3
(Scenario1+
Revenue sharing
contracts)
Scenario 4
(Scenario1+
Quantity
flexibility
contracts)
Performance measures for different scenarios for three level
supply chain (Contd.....)

62. Significance of coordination
mechanisms
Absence of contracts
Reduces profits of buyer
Absence of Information technology
Increases units short and goodwill cost
Absence of information sharing
Increase in marginal cost of supplier and overstock
Absence of join decision making
Reduces the profits of both supplier and buyer

63. Different Scenarios
Performance Measures* Scenario 2
(Buyback
contract)
Cont. to the profits
(%)*
Scenario 3
(Revenue
sharing
contract)
Cont. to the
profits (%)
Scenario 4
(Quantity
flexibility
contract)
Cont. to the
profits (%)
Buyer
Revenues realized 171.03 13.8 -995.06 -45.8 171.03 34.0
Salvage realized/ (Returns
realized in Scenario 2) 375.47 30.2 223.44 10.3 39.49 7.9
Goodwill incurred 79.82 6.4 79.82 3.7 79.82 15.9
Marginal cost incurred -56.00 -4.5 -56.00 -2.6 -19.28 -3.8
Wholesale value realized -560.02 -45.1 819.08 37.7 -192.84 -38.4
Total Gain (Loss) 626.32
(-616.02)
50.4
(-49.6)
1122.34
(-1051.06) 51.6 (-48.4)
290.34
(-212.12)
57.8
(-42.2)
Supplier
Salvage realized 379.61 19.4 0 0 26.90 6.1
Goodwill incurred 45.63 2.3 45.63 6.3 45.63 10.4
Marginal cost incurred -336.01 -17.2 -336.01 -46.1 -115.70 -26.2
Wholesale value realized 560.02 28.7 347.01 47.6 192.84 43.7
Returns cost incurred -631.62 -32.3 0 0 -59.77 -13.6
Total Gain (Loss) 985.26
(-967.63)
50.5
(-49.5)
392.64
(-336.01)
53.9
(-42.1)
265.36
(-175.47)
60.2
(-39.8)
Relative contribution of different performance
measures in the profit function

64. End Thoughts
 IT is a dominant technology
 Smart use of technology
 IT does matter by offering capabilities
 Integration
 Interactivity
 IT as a back end tool in Soft computing
 Part of decision making
 Supply chain as an application domain
 Evaluation of various scenarios
 Evaluation of alternative scenarios

65. Useful references
 Arshinder Kaur, Kanda, A. and Deshmukh, S. G. (2006), “A graph
theoretic approach to evaluate supply chain coordination”, International
Journal of Logistics and Systems Management”, Vol. 2, No.4, pp. 329-341
 Arshinder, Kanda, A. and Deshmukh, S. G. (2007), “Coordination in
Supply Chains: An Evaluation using Fuzzy Logic” ,Production Planning
and Control, Vol. 18, No. 5, pp. 420-435
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66. Thank you for your
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