advantages of information technology in supply chain management

Wal-Mart Stores, Inc. has used point-of-sale bar-code readers feeding data into an information system that links stores, distribution centers, and vendors. Supply Chain Management was impacted heavily by the introduction of information technology in it. Organizations have come to realize that they can achieve this by integrating their supply chains. This phenomenon results in the flow of distorted information from one entity to another along the supply chain. Getting insights from raw data helps managers make more informed decisions. MBA Skool is a Knowledge Resource for Management Students & Professionals. In order to bring efficiency to the total production process, it is important that a manufacturing company have clear sight into the current stage of in-production products, foresee any potential problems or delays they might face and be able to align production schedules accordingly. ��M��(x.�����tV�r��U Chopra, S. & Meindl, P. (2013). ( Log Out /  Later this data is made readily available by IT for aligning the flow of goods with the actual demand. The accumulation and storage of data are almost useless unless the data are shared horizontally and vertically in the supply chain and used to make better decisions about inventory, customer services, transportation, and so forth. United States of America: South-Western, Cengage Learning. Therefore, IT implementations deliver many benefits like standardized production, optimized supply chain process, and automated process. It helped in increasing visibility and control over the supply chain hence increasing production efficiency and customer satisfaction. It is not unique to P&G or the consumer packaged goods industry, but has also been experienced in a computer company and a pharmaceutical company. For instance when “Radio Frequency Identification” (RFID) is used with IT, the combination promises to enable an automatic collection of supply chain data for optimization purposes. Banks will now accept document substitutes, such as an “acknowledged purchase order” as part of an overall picture that also includes the bank’s relationship with the importer, delivery performance history and the general trade relationship between the seller and importer. Information is a key supply chain driver because it serves as the glue that allows the other supply chain drivers to work together to create an integrated, coordinated supply chain. Managers at every link in the supply chain tend to magnify even slight demand uncertainties and variabilities, and will tend to make ordering and inventory decisions in their own entity’s interest. Information is crucial to the performance of a supply chain because it provides the basis on which supply chain managers make decisions. 0000000556 00000 n The articles in this section have been submitted by our Authors. At the same time, these VMI partnerships have improved the suppliers’ on-time deliveries while increasing their inventory turnovers , and demonstrate how information sharing leads to mutual advantage for both parties in such partnerships. The need to share information across the various entities along the supply chain is definitely of paramount importance. The article deals with the logistics processes in supply chain management, information technology in management and prospects for the use of information technology in the transportation logistics segment, with particular attention paid to the key factors in information technology that affects the efficiency of transport logistics In all the information sharing that takes place in SCM, however, there is a need to ensure that the information flow is accurate and reliable. Sensor data such as abrasion, temperature, humidity, or brightness can be measured automatically for each transport unit and stored on the RFID chip. Advantages and Disadvantages of Information Technology in Supply Chain Management Supply Chain Management was impacted heavily by the introduction of information technology in it. 113 0 obj<>stream The definition of supply chain management (SCM) includes information flow as one of the two major flow components of the supply chain . The inherent challenges to the successful development and implementation of effective information are the sharing of information along supply chains and the discipline to ensure the integrity of the data collected, (Coyle, Langley, Novack & Gibson, 2013). supply chains, delivering goods and services to the final customer. In short, information provides supply chain visibility, allowing managers to make decisions to improve the supply chain’s performance (Chopra & Meindl, 2013). The phenomenon can give rise to excessive inventories, poor customer service, and lost revenues, among others. The wide use of electronic data interchange (EDI)—the direct computer-to-computer exchange between two business partners of standard business documents such as purchase orders and invoices—especially over the last ten years or so, has helped improve inter-organizational coordination in SCM. Managers at every link in the supply chain tend to magnify even slight demand uncertainties and variabilities, and will tend to make ordering and inventory decisions in their own entity’s interest. 0000001065 00000 n As a result, organizations need to adopt IT to support their supply chains and increase their efficiency by achieving tighter cooperation over the supply-chain. solutions for managing the supply chain effectively.Supply chain management is information driven function. The use of IT for optimizing SCM can be divided into (Ref. 0 H�|TMs�0��W�1�$K�D.P�Җa`��pФJj��@�G���� �`r�%Ko߾����qXv�I�W� �"�Z�~�g�4chT��2c��Pͳ<>���lr�_�}�.+�t�f�z�����څi�3��,c��t�1�8�& ��kz�.��߬����/]?�. Innovative companies have sprung up to harness the power of the IT, making it easier than ever for logistics managers to track and manage international shipments, and to serve their changing needs as they reach ever further across the globe to source goods. The term was there way before the 21st century, the reason why it gained popularity recently is the advancement of technology that took place in the past 15-20 years. xref 0000000016 00000 n (5th Edition). Supply chain planning and collaboration represents the use of IT for sharing planning-related information such as demand forecasts and other demand information, inventory information, and production capacity information, with the intention of increasing the effectiveness of the supply chain. I would love to hear your thoughts on the subject. It is worth noting that both the inter-functional and inter-organizational coordination dimensions of SCM have made significant strides forward as a result of developments in the field of information technology, particularly the growth of inter-organizational information systems. 'IT' AS AN ENABLER FOR A ‘GREEN SUPPLY CHAIN'. The need to share information across the various entities along the supply chain is definitely of paramount importance. Every business has suppliers, purchasing, production, distribution, and finally customers hence every business needs a reliable and robust supply chain that helps them in avoiding bottlenecks. Under a VMI system, a Wal-Mart supplier (subject to bounds previously agreed upon with Wal-Mart) decides on the appropriate levels of inventory to carry at the retail stores, as well as the corresponding inventory policies to maintain such levels. As globalization of trade gets a firmer foothold, the tendency to rely on ‘Letters Of Credit’ (LOC) is waning and other forms of cross-border payments and financing are starting to emerge in place of LOC, with open account payment terms becoming much more common. A survey of 48 progressive companies was conducted to identify what IT solutions they have implemented in SCM. <<7b45176dc4f7cb48a4ffe54e6f7b2e9d>]>> These are − Cost reduction − The advancement of technology has further led to ready availability of all the products with different offers and discounts. 0000003633 00000 n The pursued objectives are reducing storage space at the “Global Distribution Centres” (GDC) while curbing the risk of out-of-stock situations. Technology providers are innovating and developing energy efficient solutions that have a more favourable impact on the environment. – To provide empirical evidence of benefits from IT in supply chain management., – Data in this qualitative study were collected through multiple enquiries. %PDF-1.4 %���� The information and communication systems that are available to organizations today lead to the collection and storage of vast amounts of data, but some organizations may not be taking advantage of the abundance of data to develop information systems to improve decision-making. Overall, the results indicate that it has powerful business potential that goes well beyond incremental operational improvements. Order tracking and delivery coordination refers to the monitoring of individual orders or shipments, which may consist of components or final products, with the aim of coordinating their delivery or conveying timely information of their location.

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