LG-99111-333905000-KM-02 Supply Chain Operations

SAQA 99111 Knowledge Module 2

5. Automate data collection, management, and processes. Less physical work for
employees and the system has the net effect of lowering operating costs and
improving productivity. Automated systems, such as radio-frequency identification,
Bluetooth-enabled devices, and robotics, can handle thousands more processes than
their human counterparts. Such technologies may also take an active role, like active
RFID tags, which self-report order status, location, and other data. Thus, supply chain
transparency increases. As automated technology increases in use, integration will
become a common thread in the supply chain.

6. Use integrated systems to connect with employees. Happy employees are productive
employees, and not considering the needs and suggestions of employees may lead to
hostility and a breakdown of collaboration between supply chain workers and
managers. The simplest way to understand employee concerns and perspective lies in
data, integrating labour management with performance measurement systems.
Employees may use systems to access performance records, provide feedback to
managers, submit incident reports, and more. This will provide a sense of
accountability among employees, and managers can use such information in making
decisions, altering the schedule, awarding recognition, building rapport between
workers and managers, and lowering staff turnover.

The next technology is around the corner, and it will rest on a strong foundation of
integrated systems.315

Information requirements linked to the different supply chain processes and used as a basis
to measure effectiveness of the supply chain.

Information is the key to an effective supply chain management process and in order to
leverage on the available information, there is a generic process to follow – collect, access,
and analyse. In short, in order to utilize information, we need to gather information, gain
access to information and use the available information for analysis to assist process
improvement. Hence, the supply chain management goals in these areas are:

 Collect information on each product from production to delivery or purchase point
and provide complete visibility for all parties involved.

 Access any data in the system from a single-point-of contact.
 Analyse, plan activities, and make trade-offs based on information from the entire

supply chain.

Overall, the fundamental goal is to use IT in the supply chain to link information from the
point of production seamlessly with the point of delivery or purchase. The main point here
is to have an information trail that follows the product’s physical movement. 316The Global
Supply Chain Forum identified eight key processes that make up the core of supply chain
management:

315 https://www.industryweek.com/supply-chain/how-supply-chain-systems-integration-game-changer

316 Cooper, Martha C., Douglas M. Lambert, and Janus D. Pagh, “Supply Chain Management: More than a New

Name for Logistics,” The International Journal of Logistics Management, Vol. 8, No. 1 (1997), pp. 1-14.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 150

Module 2: 333905000-KM-02 – Supply Chain Operations

Copyright © 2021

SAQA 99111 Knowledge Module 2

 Customer Relationship Management
 Customer Service Management
 Demand Management
 Order Fulfilment
 Manufacturing Flow Management
 Procurement
 Product Development and Commercialization
 Returns

317The eight key business processes run the length of the supply chain and cut across firms
and functional silos within each firm (see diagram below). Functional silos include Marketing,
Research and Development, Finance, Production, Purchasing and Logistics. Activities in
these processes reside inside a functional silo, but an entire process will not be contained
within one function.

If the proper coordination mechanisms are not in place across the various functions, the
supply chain processes will be neither effective nor efficient. By taking a process focus, all

317 The International Journal of Logistics Management, Volume 12, Number 2 2001 - The Supply Chain Management

Processes Keely L. Croxton, Sebastián J. García-Dastugue and Douglas M. Lambert The Ohio State University Dale S. Rogers

University of Nevada, Reno

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 151
Module 2: 333905000-KM-02 – Supply Chain Operations

Copyright © 2021

SAQA 99111 Knowledge Module 2

functions that touch the product or provide information must work together. For example,
purchasing depends on sales and marketing data fed through a production schedule to
assess specific order levels and timing of requirements. These orders drive production
requirements that, in turn, are transmitted upstream to suppliers. 318The increasing use of
outsourcing has accelerated the need to coordinate supply chain processes since the
organization becomes more dependent on suppliers.

Implementation of Supply Chain Management

318 Auguste, Byron G., Yvonne Hao, Marc Singer and Michael Wiegand, “The Other Side of Outsourcing,” The McKinsey

Quarterly, No. 1 (2002), pp. 52-63; and Charles H. Fine, “Clockspeed-based Strategies for Supply Chain Design,” Production

& Operations Management, Vol. 9, No. 3 (2000), pp. 213-221.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 152
Module 2: 333905000-KM-02 – Supply Chain Operations

Copyright © 2021

SAQA 99111 Knowledge Module 2

KT0402: Decision making processes regarding supply chain information systems.

Knowledge Theory (KT) and corresponding Internal Assessment Criteria (IAC) covered:

KT0402 Decision making processes regarding supply chain information systems
IAC0404 Describe the process of effective decision-making regarding supply chain
information systems
IAC0405
List the stakeholders involved in the decision-making process

Beyond the improving the efficiency of the standardized, structured tasks that comprise the
purchasing transaction, today’s information technologies are helping purchasing managers
make better decision in a more complex and dynamic supply environment. Technologies
known as decision-support systems and resource-planning systems are now employed in
almost all purchasing organization to support a variety of decisions from budgeting to
forecasting as well as from project management to product design.

However, in many organisations, information systems tend to be standalone and not
properly integrated. For example, the customer service department will work with one
system, the finance department will work with another, and the manufacturing and
distribution systems also on completely separate systems.

Occasionally, there may be a transfer of critical information that needs to be shared across a
few function areas within a company, but if the information transfer is not done on a timely
basis, then the systems will never have exactly the same data. For example, the customer
service representative receiving an order may not be able to provide shipping status
information to customer inquiring it; and the factory may not be able to find out how many
orders are still outstanding.
This contributes to a tremendous amount of ineffectiveness on the supply chain.

The process of effective decision-making regarding supply chain information systems

After accessing, collecting, and storing data across the supply chain, there is a need to
convert the data into information and then to analyse it so that it can be useful to the
organisation for subsequent strategy formulation and execution.

The information system must be utilised to find the most efficient ways to produce,
assemble, warehouse, and distribute products – in other words, the best way to operate the
supply chain. This means that there is a requirement for different levels of decision making
relating to how to fulfil customer orders, as well as tactical decisions relating to which
warehouse to stock with what product, or what production plan for the next three months,
and strategic decisions about where and how to facilitate this through the efficient
allocation of resources.
The information systems need to be agile or flexible enough to accommodate constant and
sometimes rapid changes in supply chain strategies.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 153
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

Decision-support systems

Spreadsheets are a basic decision-support tool that can help up to analyse and compare
alternatives scenarios. Make-versus-buy and supplier selection decisions can be enhanced
through the use of a well-designed spreadsheet.

Once the decision-making procedure has been modelled via the spreadsheet, the
purchasing manager can input data associated with a variety of alternative scenarios to see
how the decision would change under difference circumstances.

Through this type of sensitivity analysis, a more robust decision can be made.
More sophisticated decision-making tools are commercially available. For example, many
project management packages exist that can be used to assess the impact of diverse
resource allocations on the overall project completion time.

Expert systems are another decision-support tool that differs in basic approach from the
tools. Decision-support applications reply on the knowledge and expertise of the purchaser
to structure the analysis and to provide the basic data. The application processes the data
and facilitates sensitively analysis so that the decision maker is better informed. By contrast,
expert systems do not follow a fixed algorithm; rather, they capture the knowledge and
expertise of the ‘expert’.

Expert systems model the process which an expert would follow, incorporating alternative
paths and short cuts depending on the specific situation being considered. Expert systems
make the knowledge of the expert available to purchasers throughout the organization,
enabling less-experienced purchasers to gain know-how as they are ‘guided’ by the expert,
and create a reservoir of knowledge that can be used long after the expert is no longer with
the organization.

An example of an expert support system is the negotiation support system. This system is
useful because it permits participants to test different negotiations tactics before the ‘real
event.”

This practice can help the purchaser refine the overall negotiation strategy. Purchasing
professional must remember that decision-support systems are only tools that provide
structure and insight; they are not a replacement for rigorous analysis and good managerial
judgment.

Most recently, the rapid development of Artificial Intelligence for data analysis and decision-
support, has emerged as a game changing tool that will revolutionise business in the 21st
century.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 154
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

Stakeholders involved in the decision-making process.

Stakeholders in the supply chain

319In the broadest sense, a ‘stakeholder’ is any person, group or organisation that is
impacted in some way by the action or inaction of another.
The most commonly used definition of a stakeholder is: ‘groups and individuals who benefit
from or are harmed by, and whose rights are violated or respected by, corporate actions’
(Freeman, 2001, p. 42).

Stakeholders can generally be classified into two groups, being internal stakeholders and
external stakeholders. Some examples are as follows:

Internal Stakeholders

 Directors
 Managers
 Employees



External Stakeholders

 Suppliers of raw materials, components, and services
 Strategic partners
 Governments imposing international and national regulations.
 Customers and consumers
 Society in general

Hence, relevant, and reliable information on a timely basis needs to be shared across all key
stakeholders and they should be readily accessible using the same set of data through any
interface device. Related to this is the important goal of having a single-point-of-contact for
all of the available information, so that information provided to a customer or required
internally can be accessed in one stop and be the same, regardless of the mode of inquiry.

KT0403: Effectiveness of supply chain information systems

Knowledge Theory (KT) and corresponding Internal Assessment Criteria (IAC) covered:

KT0403 Effectiveness of supply chain information systems
IAC0406
List the criteria for effective information systems in accordance with needs
IAC0407 and stakeholder requirements

Explain how the effectiveness of the information system will be measured
against these criteria

319 https://www.open.edu/openlearn/money-business/leadership-management/supply-chain-sustainability/content-
section-5.1

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 155
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

IAC0408 List the tools used to effectively determine and introduce improvements

Supply chain management is concerned about the flow of products and information
between the supply chain member organizations. In order to achieve seamless information
sharing for achieving effective supply chain management process, the use of Information
Technology and related systems is important. As mentioned before, IT is viewed as an
enabler to SCM, and some companies are using IT as a competitive tool to help their
companies to improve SCM processes. Through a wider acceptance and understanding of IT
as an enabler and competitive tool in the SCM industry, over the years, many standard
business processes, and functions such as customer order processing, inventory
management, and purchasing were altered through the use of technology. Hence, it is not
difficult to realize that IT has indeed reshaped the traditional model of SCM and through IT;
organisations’ internal processes are better integrated than before.

Image Credit/Source: https://saylordotorg.github.io/text_small-business-management-in-the-21st-
century/s15-supply-chain-management-you-be.html

Criteria for effective information systems in accordance with needs and stakeholder
requirements

The value of supply chain information is really the ability to take proactive action against
some undesirable outcomes. The availability of information at the right time regarding the
status of products and material is the basis on which intelligent supply chain decisions can
be made. Here, we are not just interested in tracking products across the supply chain but
rather to take proactive action on exception management to avert or prevent delay in a
delivery that will affect production schedules, the appropriate system needs to be notified
so they can make the proper adjustments by either delaying the schedules or seeking
alternative sources.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 156
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

This goal requires the standardization of product identification e.g., bar coding across
companies and industries. For example, a courier company needs to have a tracking system
that provides on-going information on the whereabouts of any package handled by the
company and makes this information available internally as well as to customers.

The effectiveness of the information system measured against specific criteria.

About three decades years ago before the advent of information technology and internet at
scale, most of information flows between functional areas within an organisation and
between other organisations were primarily conducted in paper-based formats. What it
means here is that most organisations sharing information based on the exchange of paper
documents and equivalent means.

This method was slow, unreliable, and subject to errors due to manual efforts involved in
creating the paper documents. Businesses that were conducted in this manner were
considered costly and less effective. This method of business process impeded an
organisation’s effectiveness in being able to design, develop, procure, manufacture, and
distribute their products. Moreover, this paper-based process also discouraged inter-
organisational ventures due to the lack of effective information system to drive business
processes. Over the years, organisations have come to realise the importance of
information and the technologies that make this information available within an
organisation as well as with other organisations.

In a nutshell, the information systems and the technologies utilised in these systems
represent one of the fundamental elements that ‘link’ the organizations of a supply chain
into a unified and coordinated system. In the current competitive environment, the
appropriate usage of information and information technology can be a survival factor to any
company and key determinant to the success of any supply chain initiative.

Information must be accurate and timely otherwise it has no value or very little value to an
organisation. Distorted information in any supply chain can lead to tremendous
inefficiencies such as excessive inventory, poor customer service, lost sales, poor production
schedule, underutilized production capacity or over stretched in production capacity,
ineffective distribution plan and poor transportation management, among others. These
are potential results of poor information quality that passed from one end of supply chain to
the other.

Tools used to effectively determine and introduce improvements.

Strategic Adoption Processes for Information System

The development, improvement or complete replacement of an information business

system can be a complex task requiring significant resources and taking several months or

years to complete. As the system develops, it passes through several sages in a particular

sequence.

The basic processes for the development and or improvement of information systems is as

follows:

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 157
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

A. Planning
B. Analysis and Design
C. Implementation
D. Operationalisation

A. Planning
i. Establishing the needs
Managers should always be alert to weakness in their information system.
Some of the questions that management asks to evaluate the existing
information system are:

 Do problems arise without any warning?
 Are decisions based on erroneous or incomplete information?
 Does it take a long time to get information for decision-making?
 Is some information unavailable because the raw data has not been

gathered?
 Are there security breaches?
 Are employees embezzling funds?

A new system is triggered by an inadequate existing system that is not
producing the desired results for a number of reasons. Perhaps the system is
not capable of handling increased volumes of activity or has been obsolete by
a new hardware or software development. When the manager becomes
aware of the inadequacy, work to remedy the situation should begin.

ii. Recognise the Problem.

The manager can seek out problems to solve or wait for problems to appear.
The approach will depend on the personality characteristics of the manager,
the manager’s problem-solving abilities, the expectations of the firm, the
particular business situation of the firm, and so on. Symptoms of problems
usually appear first, for example, poor quality control in the production area,
excessive customer complaints, returned merchandise, or requests for
credits. Managers often must sort through symptoms, looking for the cause
of the trouble. The manager usually is the one to recognize problems. They
are on the scene where the problem exists, or information is directed at the
manager to provide problem signals.

iii. Define the Problem.

Once the problem has been recognized, an effort must be made to examine it
as thoroughly as possible. Here, the manager can enlist the aid of the systems
analyst. The analyst might have to interview employees and other managers,
observe work being done, examine company records, and conduct surveys.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 158
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

This is not a full-blown study, but only an exploration of the most accessible
information resources. At this point, the intent is not to solve the problem
but to understand it – what is it, what caused it, and what the consequences
were.

iv. Set System Objective

The analyst provides the manager with information defining the problem,
and the manager decides what the new or modified system should
accomplish. These potential objectives of the new system usually are
selected to overcome existing weakness. For example, if the present quality
control system detects only 60% of the defective production units, a new
system might be designed to detect 95%. These objectives, when stated
quantitatively, provide the standards by which performance of the new
system can be measured.

v. Establish System Constrains

At this point, the analyst will begin to evaluate the potential of a new system.
Before this happens, the manager must be sure that the analyst will stay
within certain boundaries in developing a solution. These boundaries are
constraints based on limited financial resources, which may cause shortages
in personnel, materials, and machines. There are two types of constraints –
system development and system performance. System development
constraints set limits on the number of resources that can be used to develop
the system. For example, perhaps only two analysts can be assigned to the
project full time. System performance constraints set limits on how the
system will function once it becomes operational. An example is a
requirement that the system be able to handle a certain volume of
transactions in a stated period of time. Both types of constraints affect the
work that is performed to develop the new system.

vi. Prepare Study Project Proposal

At this point, the analyst shifts from a role of supporting the manager to a
role of primary responsibility. The analyst must furnish justification for
proceeding with the system development. The analyst will assemble all the
costs, facts and personnel needed and prepare a management report that
considers the advantages and disadvantages of the new system.
The proposal will contain the problem definition and the objectives,
constraints that were developed jointly by the analyst and the manager. The
analyst also describes a plan by which the potential new system can be
implemented and the objectives of the next step – the study project.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 159
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

vii. Approve the Study Project

The analyst presents the report to the manager, and they discuss it. Other
managers, such as the manager for information systems, might participate as
well. When the discussion ends, the manager must make the decision
regarding whether to proceed or to remain content with the existing system?
Sometime the decision may have to be delayed – possibly until more
complete information is available (in the form of an updated proposal) – but
ultimately, the decision to proceed must be “yes” or “no”.

viii. Establish a Control Mechanism

Control is one of the basic functions that a manager performs. The manager
keeps the organization on course by comparing actual accomplishment with
the plan. Any strategy or process for achieving and maintaining this control is
called a control mechanism.

ix. MIS Committee

At some point in time the project will be too large, too costly, or too complex
to be controlled by a single individual. Some type of control group needs to
be established. One such group is the MIS Committee that directs the
development of complete information systems or subsystems. The MIS
committee usually consists of a chairperson, who is a top-ranking executive,
such as the executive vice president, and members who are managers of the
areas involved.
The manager of information systems is automatically a member. The
committee meets periodically to review progress and makes the major
decisions.

x. Project Plan / Work Breakdown Schedule (WBS) / Bar Chart

It is not enough to simply have a progress reporting system, such as the
periodic committee meetings. There must be a standard against which
performance can be compared. It is common practice to develop a bar chart
or a network chart diagram that contains the details of what is to be done,
who is to do it, and when it will be done. A bar chart or Gantt chart consists
of horizontal bars representing tasks to be accomplished. The length of each
bar represents the period of time assigned to each task.

xi. Network Chart

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 160
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

Network analysis involves the drawing of a diagram showing the inter-
relationship of the tasks to be performed.

The technique is commonly referred to as PERT (Program Evaluation and
Review Technique) or CMP (Critical Path Method). Network analysis requires
that each step or activity of the project be defined and linked to form a
network.

If control is to be achieved and maintained, the basis for that control must be
established during the planning phase. Both Gantt charts and network
diagrams serve as effective yardsticks with which to measure the life work as
it is accomplished. The charts and diagrams help the manager both to plan
and control.

B. Analysis and Design

When approval is given for a study project and the control mechanisms are
established, the system enters the second stage – analysis and design. This stage
consists of six steps:

i. announce system study.
ii. Organize for the study and conduct system study.
iii. Finalize system objectives.
iv. Design the system.
v. Prepare implementation project proposal.
vi. Approve implementation project.

i. Announce the System Study

One of the first lessons that managers learned about systems development
was the importance of employee cooperation. A downward flow of
information should precede the system analysis and design work.
Announcements have to be made by top management, perhaps the
president, and often appear as articles in company newsletter. The purpose
of these announcements is to make the employees aware of what is about to
happen – why the system is being changed and how it will affect the
company and the employees. These announcements are followed by various
communications from the employee’s supervisor – individual counselling
sessions as well as group discussion.

ii. Organise for the study and conduct system study.

The term system study is another name for systems analysis. This activity
requires the analysts to study the existing system so that its limitations,
weaknesses, and needs are completely understood. System analysis consists
of two basic activities – data gathering and data analysis. The analyst uses
several methods for gathering data describing the existing system –
personnel interview, observation, records research, and statistical sampling.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 161
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

The findings are studied and documented with flowcharts, narratives, tables,
and diagrams. The assembled documentation for a system or subsystem is
called a system specification.

iii. Finalise System Objectives

At the conclusion of the study, both the manager and the analyst have an
understanding of the unmet needs and weakness of the present system.
With this information, the manager can finalize the objectives that the new
system should achieve. These objectives are refinements of those set during
the planning stage.
Some earlier objectives may be dropped, and new ones added, or some
earlier ones may be restated in more specified or accurate terms. The
objectives should clearly spell out what the new system should accomplish.

iv. Design the System.

The analyst identifies the feasible alternative solutions to the problems.
These are actually alternate system designs. Each alternative is evaluated in
terms of its advantages and disadvantages, and the best alternative is
selected. The best alternative is usually the one offering the best
cost/performance ratio – the best achievement of the objectives within the
constraints. An approach to system design that is receiving much attention is
structured design. This is a technique whereby the design evolves step-by-
step, beginning with a general description. Each step makes the description
more specific.

Another name for structured design is top-down design. The manager can
follow this evolution, making suggestions along the way that keep the design
activity on course. Regardless of approach, the analyst accomplishes the
design almost entirely with little help from others. The manager serves as a
control mechanism, assuring that the final design will be satisfactory.

v. Prepare the Implementation Project Proposal

Since the design only exists on paper, management must consider the
consequences of implementation – the possible gains and costs. Whether to
proceed with the project, decision will be based on a verbal discussion
between the analyst (or analyst team) and the manager (or MIS committee).
More likely, however, the decision will be based on some written evidence.
The implementation project proposal provides such evidence. The best
alternatives are explained in detail, along with a description of how the
system will affect the organization structure and operations. Anticipated
costs are identified along with a detailed implementation plan. The plan can
take the form of a redrawn bar chart or network diagram, showing each step
of the implementation.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 162
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

vi. Approve the Implementation Project

If the implementation project describes a system that the manager feels
should be implemented, and the costs are acceptable, a go decision is made.
This approval sends the life cycle into its third phase and virtually assures that
the new system will be put into use. If the proposal is rejected, the new
system effort is terminated. In this manner, the best system evolves in stages
– the successful completion of one stage is necessary for movement to the
next. The process remains under the manager’s control because of the close
frequency of the checkpoints.

C. Implementation

The implementation stage will consist of the following activities.

i. Announce implementation project.
ii. Select computing equipment / electronic devices.
iii. Prepare program library.
iv. Prepare database.
v. Prepare physical facilities.
vi. Educate users.
vii. Cut over to the new system.

i. Announce the Implementation Project
Management communicates to the employees the decision to proceed with
the implementation. This announcement is handled in the same way as the
one made at the beginning of the previous phase. More attention is given to
the details now, with advantages explained and implementation steps spelled
out. This announcement activity is not intended to train the employees – that
will come later. The employees are alerted to what their roles in the
implementation will be, and how the new system will affect their jobs.

ii. Select the Computing Equipment

Supplier selection is a prerequisite to the remaining tasks of the
implementation phase. The programming cannot be done, the data cannot
be converted, the equipment facilities cannot be built, and the users cannot
be educated until the equipment is selected. The selection process varies,
depending on the amount of equipment needed. Selection of a half dozen
CRT’s is much simpler than if a new large-scale system is needed. In most
cases, the user prefers that several suppliers bid on the project. This
competition is not intended to produce lower prices (as most suppliers do
not vary from their list prices) but can bring about nonprice concessions such
as service, support, delivery and so on. The organisations invite suppliers to

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 163
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

submit their proposal for both hardware and software by providing each
supplier with the following information:

 Letter of invitation,
 System summary,
 system objectives,
 system constraints,
 system design

o performance criteria
o equipment configuration
o system specification
o estimated transaction volumes.
o estimated file size.
 installation schedule

When the RFQ has been given to the supplier, the manager or management
committee must make selection criteria. Many factors that relate either to
the equipment or the supplier must be considered.

Some other criteria for consideration are as follows:

Equipment related factors:

 Reliability – ability to function without failure.
 Maintainability – ability to be repaired quickly and economically on

failure.
 Compatibility – conformity to standards for input and output and for

programming language
 Modularity – ability to grow to larger configuration by adding units to

the basic system or by easily interchanging units.

Supplier related factors include:

 Reputation for keeping promises concerning equipment performance
and delivery dates.

 Quality and breath of the educational program available to customers
 Knowledge of problems unique to the firm’s particular industry, such

as banking, insurance, or aerospace
 Proven support of user groups
 Quality of software and its documentation
 Cost and availability of equipment maintenance
 Availability of equipment

Some of these factors are more important than others and should be given
more weights in the evaluation process. A weight average criteria-scoring
method should be used to evaluate the proposal from suppliers.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 164
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

iii. Programming

The programming team should be assembled by this time, and it can begin to
create the computer programs. These programs, along with those acquired
from the equipment supplier, software houses, user groups, and elsewhere,
make up the program library. The library contains all the programs that the
firm will use – application programs, language translators, utility programs,
and decision support models.

The programmer plays the dominant role in this step, assisted by the analyst
and the operator. The analyst provides the documentation in the form of the
system specification. This material includes all of the documentation
prepared during the analysis and design phase – flowcharts, record layout,
and the like.
The operator turns the batch programs on the computer so that the
programmer can correct any errors. Processing test data validates the
program.

iv. Prepare the Database.

A special effort is needed to build a centralized collection of computer data –
the database. During the early years of computer use, this effort was
concerned with detection and correction of errors that had been generated
by earlier manual and punched card system. Today, the emphasis is on
reformatting the data to fit a data base management system (DBMS) and on
gathering additional environmental data. The DBMS is a group of programs
that maintains that database. The interest in environment data is caused by
increasing use of the computer as a Management Information System (MIS) –
at the higher management levels. This database activity is a genuine team
effort, directed by the database administrator (DBA). The DBS has overall
responsibility for developing and maintaining the database. In building the
database, the DBA can receive support from the analysts, programmers,
software suppliers, operators, and computer service bureaus, as follows:

 Analysts determine what data will be contained within the database –
files, records, and elements.

 Programmers code programs to edit or reformat data so that it is
acceptable to the new system.

 Software supplies also can code the editing and reformatting programs
and provide comprehensive database handling programs.

 Operators use the computer to create the database from existing and
newly gathered data.

 Computer service bureaus also can perform the database creation job
when the firm’s computer cannot handle the workload for any reason.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 165
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

 The database cannot be created overnight. Large companies with
massive files devote several months to this step.

v. Prepare the Physical Facilities

The new system may require alteration of an existing computer room or
construction of a new facility. Computing equipment requires special
temperature and humidity controls, security precautions, raised floor (to
cover interconnecting cables), fire detection and extinguishing equipment,
and perhaps standby generators. The creation of these facilities is similar to
any construction project and can require the participation of architects,
equipment specialists, interior designers, and general contractors. The
manager of computer operations usually works directly with the contractor
and plays an important role in controlling and coordinating the overall effort.

vi. Educate the System Users

All the people who will be using the new system must be educated so that
they can participate effectively in the new system. The education must focus
on:
(1) the reasons that participation is necessary, and
(2) the exact procedure to follow.
For example, employees will have to be shown how to operate CRT terminals,
salespersons must learn how to fill out OCR (optical character recognition)
sales order forms, suppliers must learn the new item coding scheme,
managers must learn to interpret the new reports and so on.

vii. Cut over to the New System.

The fastest means of implementing the new system is immediate cutover.
The old system is used one day, and the new one the next. Any errors
remaining in the new system are corrected as they occur. This approach is
most feasible for smaller firms. For large firms, correction of system flaws can
take too much time to accomplish without seriously disrupting much of the
firm’s operations. In larger organization, the new system may have to be
implemented one subsystem at a time – a phase cut-over. Each subsystem is
debugged before proceeding to the next. This approach extends the cut-over
period. A third approach is a parallel cut over, where the old system is
maintained in its entirety until the new system is checked out using real data.
Both systems operate at the same time. While this approach provides the
most safeguards, it is expensive since it requires the maintenance of two
complete systems.

D. Operationalisation

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 166
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2

The operations phase is the simplest one in terms of different activities performed.
There are only three steps involved:

i. Post-Installation audit,
ii. Operate the system and
iii. Maintain and improve the system.
i. Post Installation Audit

Shortly after handover / cut-over, perhaps 90 days later, a formal review of
the system performance should be conducted. This review is called the post
installation audit. The review should be conducted by some unbiased third
party, such as EDP (electronic data processing) auditors and consultants or
the firm’s own internal auditor. An EDP auditor is one who specializes in
examining computer system to assure that proper controls are being used.
Accounting firms, such as PWC, usually employ these auditors. The firm’s
own computer staff or computer equipment suppliers should not conduct
this audit since they cannot be expected a through and unbiased audit as well
as external investigators who are trained in auditing procedures.

ii. Operate the Systems.

The operations staff performs daily operations. The manager of computer
operations is a type of production manager. Machine, personnel, and
material resources are used to generate the final product (information) that
is distributed to the various users. The operations manager receives periodic
reports and other feedback showing the different aspects of the system
operation – system reliability, time spend for repairs, overtime use and so on.
One of the most important functions of the operations manager is to direct
work of the people within the operations area – supervisors, computer
operators, data entry employees, and data control personnel. The activities
of these persons have increased in complexity with the expansion of
computer technology. Today more emphasis is being placed on education
and training to increase their motivating potential.

iii. Maintain and Improve the System

As the new system is used, the firm’s managers and employees become
sensitive to needed improvements. These improvements are made to
prolong the life cycle. The programmers make the changes to the program
library and keep the documentation current. The systems analysts become
involved when it is necessary to provide a communication link between the
information systems department and the users of the system output. At one
point, when the system appears to be beyond the stage where patches can
be made, a new life cycle is initiated.

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 167
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021

SAQA 99111 Knowledge Module 2
***END***

333905000 – Occupational Certificate: Supply Chain Practitioner | SAQA Qualification ID: 99111 168
Module 2: 333905000-KM-02 – Supply Chain Operations
Copyright © 2021