QUESTION ONE [40] Read the article below and answer the questions that follow: Role of information systems in supply chain management and its application at five-star hotels in Istanbul 1. Introduction Today, businesses are trying to develop cooperation with the value chain members (suppliers, manufacturers, distributors) to achieve their objectives. These efforts, also known as supply chain management (SCM), direct business processes among enterprises to ensure regular coordination and control, reducing costs and accelerating the process to increase profit. In the new concept of business, results such as profitability, productivity and efficiency are dependent on good management of the internal processes of the business. Close cooperation with vendors, suppliers, manufacturers, customers, who are part of the supply chain is necessary. The application of information systems (IS) in business administration provides savings on input costs such as time, labour, and energy, and thus enables realisation of profitability and customer satisfaction collectively. Hotels can create safer and more cost-efficient supply chains thanks to efficient usage of ISs in the supply of both fixtures and daily consumables. Especially, it becomes more important to make use of modern information technology in SCM in regard to controlling costs of short-life foods. 2. Conceptual background 2.1 Supply chain and management Definition of SCM by the global supply chain forum: Supply Chain Management is the integration of key business process from end-user through original suppliers that provides product, services, and information that add value for customers and other stakeholders (Croxton et al., 2001). SCM in hotels means information, material and money flow coordination and integration of the network of suppliers, customers, distributors and manufacturers (Lee, 2000). SCM refers more to doing business electronically. SCM mainly consists of five areas. These are: strategic planning, marketing and sales, logistics, information technology and finance (Genc, 2009). Here, the processing load of supply focuses on the logistics process. Logistics can be understood as the positioning of the resources in the supply chain within a time frame. A supply chain cannot be properly addressed by examining separately such factors as purchasing, inventory management, functions like logistics line or distribution channels. This kind of perception slows down the development of SCM (Lummus and Vokurka, 1999). The supply chain should not be considered as a single process, it should be regarded as a matrix of components that can be controlled by management. The purpose of each entity in the supply chain is to forward the new information to the chain members and thus provide the perfect balance of supply and demand (Karasu, 2006). Certainly, every business aims first to increase its profits. But the philosophy ofsupply chain objectives is to increase the value of all the chain members so that ultimately the customer will have benefit (Frazelle, 2002). 2.2 ISs and supply chain relationship A good decision is based on timely, accurate, relevant and full information. This simple formula, unfortunately, is not very easy to apply. To obtain the desired quality and quantity of information is one of the most complex problems facing the decision-maker. Beyond a good software and system set up, SCM needs personnel with the ability to communicate and establish good relations with suppliers. To be successful in different areas of knowledge it is necessary to utilize SCM (Ozturen, 2008). Information is the connection between all of the activities and operations in a supply chain (Hugos, 2006). Without information integration, few gains can be made in overall supply chain integration (Lee, 2000). Information technology developments that enable sharing of information on demand throughout the entire chain inventory can reduce costs by between 2.2 and 12.1 percent (Cachon and Fisher, 2000). In the hospitality sector, the elements of management ISs can be grouped as form, human, information technology and application procedures. When we think of ISs, information technology usually comes to mind. However, the use of ISs is for people who are the decision-makers. The human element is far more important for businesses such as hospitality, which gives priority to the quality of service. The human element is the most important factor to ensure the continuity and success of an IS. Besides accommodation management expertise, the human element must be able to work as a group and be willing to share information. Policies regulating the operation of supply chain processes, standards, resolutions, contracts, performance measures, organisational chart, job descriptions, business contacts and information flow charts and similar documents with an explanation of the data collection and reporting tools and forms of information, are the tools to be considered within the scope of the procedures. Thanks to such procedures the formation of a standard and reliable business model has been provided with different kinds of people. Thus, efficient and effective work environment and controlled processes are simulated. 2.3 Supply chain information technology The basis of the SCM approach lies in information and communication technologies. Information and communication technology is a good solution to problems arising from the complexity of buyer- supplier and supplier-supplier systems and SCM (Gunasekaran and Ngai, 2004). Information technology is a globally competitive tool for data collection, data processing through a process of conversion of knowledge, information storage and transmission to users, when required. Information technology includes computer based IS hardware, software, communications and all the interface elements. For healthy management of this process, information technology should be compatible among members of the supply chain; procedures should be determined with each other.In the supply chain processes, information technologies such as radio frequency identification (RFID), electronic data interchange (EDI), barcode are being used. RFID is the common name for technologies used to identify objects with radio waves. A large part of supply chain applications can be traced with RFID technology. The use of barcode and data matrix systems provides convenience in warehouse management systems. The results of a survey show that in supply chain and logistics processes, the use of RFID technology is still low despite the widespread use of EDI and enterprise resource planning (ERP) systems (Olorunniwo and Li, 2010). EDI is transfer of business data from a standard computer to the other partner's computer application. Most importantly, EDI imposes a one-to-many architecture for communications between supply chain members (Kahl and Berquist, 2000). For EDI it is necessary to have EDI standards, the conversion software and the ability to communicate (Genc , 2009). EDI permits the electronic exchange of inventory information, purchase orders, invoices, and funds transfers to settle accounts (Tesone, 2006). Most importantly, EDI imposes a one-to-many architecture for communications between supply chain members (Kahl and Berquist, 2000). The development of management ISs has created the opportunity for global networking via internet, intranets, and extranets. There are numerous opportunities to expand open systems aspect of hotels. The only limitation for current and future hospitality managers is their imaginations (Tesone, 2006). Hospitality organizations that use IT capabilities enhance their competitive edge. Customized solutions, business collaboration, and flexible organization structures all provide what the customer is looking for when doing business with a firm (Tesone, 2006). One thing to always remember is that in order for an information technology system to generate a positive return on investment (ROI), it must either reduce costs or increase revenue in some quantifiable way. While a hospitality professional may not remember everything about detailed ROI calculations or IS minutiae, he or she can always fall back on this most basic premise (Nyheim et al., 2005). Even though the characteristics of ISs and information technology used by businesses are different, nowadays, the internet makes it largely possible to share information among companies. Naturally, supply chain applications become web-based applications. 2.4 Enterprise information architecture Functional areas known as intensive knowledge production and knowledge-based decision-making are the middle management level of these sections. At the upper management level information within the business is used at the least amount and at the broadest terms of use, and senior management focuses on the interaction between business and the outside world. Functional ISs based on the basic business functions can be examined in the form of service production, marketing, human resources, finance and accounting. These are ERP, SCM, customer relationship management (CRM) and knowledge management systems (KMS). Each of these is configured with the logic of ISs operated by associating with each other.An Enterprise system, also known as ERP system is a software system, which is an integration of activities such as finance, accounting, human resources, customer demand, supply, production, marketing, sales, distribution and allows the flow of information. ERP systems support in general recurring and continuity of the business processes such as SCM, order management and payment transactions. ERP systems give companies the flexibility to respond rapidly to a customer request while producing and stocking inventory only with what is needed to fulfil existing orders. Their ability to increase accurate and on-time shipments, minimise costs, and increase customer satisfaction adds to the firm's profitability (Laudon and Laudon, 2009). SCM systems, as described previously, help businesses manage relationships with their suppliers. CRM systems, help firms manage their relationships with customers. CRM systems provide information to coordinate all of the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention (Laudon and Laudon, 2009). KMS enable organisations to better manage processes for capturing and applying knowledge and expertise. These systems collect all relevant knowledge and experience in the firm, and make it available wherever and whenever it is needed to improve business processes and management decisions (Laudon and Laudon, 2009). The members of the supply chain (supplier, manufacturer, distributor, customer) and those operating in the sub-units (department, section, individuals) must be in contact with each other. This information allows members of the supply chain network to act as a single enterprise. This increases the importance of building a full-time IS. Information on the supply network is common knowledge to all members of the supply chain and can be accessed at any time. Information sharing on the basis of SCM, supply chain and the chain of communication between departments within an enterprise with members of their own communications network is extremely important in terms of supply chain efficiency. 2.5 The role of financial information in SCM of hotels Accounting IS is a subsystem concerned with business assets and resources caused by activities and detecting changes that can be measured with money, monitoring, valuing and transmitting results. On many issues such as production and operating costs, pricing, profit planning, customer value, pricing, purchasing, leasing, financial performance and valuation, recovery of investment, support for decision-making is provided with information supplied from the accounting IS. An important part of this information is a base of supply chain planning. Information from front-end transaction processing is sent to the back office for distribution to the shareholders. At the same time, resources are procured by back-end functions for distribution to the frontline staff members. The majority of back-office functions fall under the jurisdiction of the accounting and finance department. Today all accounting functions are automated through accounting ISs, which consist of computer networks used to report business transactions and economic events that occur within a hotel (Tesone, 2006). For example, supply chain transactions occur as part of the procurement processes that are used to acquire material resources for use inthe hotels. The performance evaluation of SCM holds together the members of a supply chain, by identifying problems, directing strategic solutions and allowing monitoring of the implementations of the strategies (decisions). Supply chain structure competencies are evaluated with indicators by processes, technology and business structure. Evaluation based on the direct cost and profit performance goals (cost reduction, increasing sales, increasing profits, reducing investment in inventory, accelerate ROI) is used to determine the status of realisation of the information produced by the accounting IS. Adapted from: Ergn Kaya Murat Azaltun, (2012),"Role of information systems in supply chain management and its application on five-star hotels in Istanbul", Journal of Hospitality and Tourism Technology, Vol. 3 Iss 2 pp. 138 - 146 Questions: 1.1 Using relevant examples from the article, examine how SCM and Information Systems can be utilised to create greater SC efficiency for hotels. (15) 1.2 Using relevant examples from the article elaborate on each of the different types of information systems that impact the SCM process.