Paper Example on Information Technology and Supply Chain Management

Introduction

According to Lambert, Garcia and Croxton (2005) in their article, Supply chain management is broad series of activities required to plan, control and execute the flow of goods and services from the acquisition of raw materials to production till the products get to the final consumer, in the most cost-effective and streamlined manner. In other words, it is the flow of goods and services that involves the whole process of the movement of products, storage of raw materials, and the process of inventory to the consumption of the products. Supply chain management aims to raise the output while reducing the cost of production. To lower the rate of delay in the process it is required that the level of cooperation is enhanced and the supply chain network increased. Currently, the global market is very competitive, and businesses have to invent ways to streamline their supply chain to be able to optimize production. According to Fredendall and Hill many organizations are adopting the use of information technology to create better visibility and effectiveness in the supply chain management department. The use of IT enables the firms to have more control over their business and thrive in the competitive market. The essay will provide a detailed discussion of the benefits of IT in supply chain management.

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Traditional and Current use of Information Technology

Previously, IT was applied with the aim of making automatic manual processes in the supply chain management like ordering and settling of accounts and to make easier repetitive processes.

According to a study conducted by De Barros, Ishikiryama, Perez and Gomez information technology in the supply chain has developed over time a range of new advanced features, such as coordination, sharing of communication and collaboration, which connects an organization with its supply chain partners. Notably, these features have enabled firms that have adopted IT in supply management to enjoy various benefits. Some of the benefits include:-

Improved Customer Services

Notably, according to Mishra, IT in supply chain results in customer satisfaction via the production of accurate, reliable and quality information.

Sustainability in Markets

Firms can sustain in competitive markets, increase their rate of production as IT enables the process to not only improve but also to be useful (Mishra, 2014). Often, this also results in the elimination of redundancies in functions, improvement in the management of assets, increased rate of flexibility and reduction in the time allocated for delivery.

Reduction of Cost

Integration of IT also results in the combination of all the players in the supply chain management from delivery of raw materials to the final consumer. According to research conducted by Subramani, a firm that invests in IT can collaborate and coordinate with suppliers. As a result, minimize cost, and in the end, the consumers benefit as they will be charged at a lower rate for a product.

Connectivity with Partners

Notably, when IT is seamlessly assimilated in the management of the supply chain, the firm can connect to its partners in real time. Hence, they can plan; execute applications and internal processes of the firm. However, the firms have to ensure that they use technology that is compatible with each other so that they can effectively flow of information, consistency, and minimizing errors avoiding misinterpretation of data.

According to Hugos 2018, the electronic transfer of data enables organizations to process the information quickly, reduce paperwork, and improves expediting and tracing billing. Due to the changes the supply chain department will be able to improve their production and save more cost and time compared to the previous means of sharing information which involved fax, traditional mailing, and courier which were slower, resulting to consumption of time. Also viewing of electronic data will enable the managers to quickly identify when and where money is spent in the organization.

Differentiation of Services

IT results in differentiation of services or products via development of new products and an increase of the value of the services of products. Notably, these benefits motivate the adaptation of IT in supply chain management. According to Baltzan, a firm that invests in IT can collaborate and coordinate with suppliers. As a result, minimize cost, and in the end, the consumers benefit as they will be charged at a lower rate for a product.

Manufacturing Warehousing Order Fulfillment Transportation

Notably, this is a simple process of the supply chain management. SCM can bring about immense changes in the firm scope and progress. According to Gattorna, the administration has to carefully plan before initiating any action to avoid incurring adverse results. The first process is strategic planning process which involves the designing, assessment and optimization of the SCM. The first process acts as the basis of all other operations like transportation, resources, and products; this helps the stuff to be able to respond accurately to new developments. Also, the process involves identifying suppliers to work with throughout the process.

The process can be more effective through the integration of IT, for instance, a firm can communicate effectively with suppliers, enabling them to save time and cost, making the process more efficient. In the past years communication was very slow, slowing down the production process which at times resulted in the loss of consumers to other fast firms.

The second process involves demand planning; the process tries to integrate information gathered from forecast, promotion and sales plans. The implementation of IT will enable the firm to obtain accurate and reliable information and reach to a large number of audiences at once. Often, this ensures that the firm is aware of the number of products to produce to avoid losses. The previous method involved the use of historical data which might be updated or depending on people to carry out the various duties which were slow, inaccurate and not resourceful.

Thirdly, the supply planning process involves planning on various issues like stocking, supply network, outsourcing, distribution and collaboration between customers and suppliers. Notably, IT makes these processes easy as stocking can be recorded electronically and the information protected, reducing errors.

Also the reliability and accuracy of information results to consumer satisfaction, hence it results to loyal consumers and the acquisition of more. Previously, the manual process of conducting different events was not only slow but with errors.

Forth process is procurement; it involves purchasing of orders, confirmation of receipt and verification of process. Notably, digitizing the data on purchase of orders and receipt makes it possible to easily acquire the data and promotes transparency in the firm. Often this information is readily available and can locate quickly in case it is needed. Also, the technology makes it easy to make calculations and avoid errors. Previously, use of only manual receipts was risky as in case the receipts were lost, data could be lost and hence no evidence of the transaction. Currently, the information can be backed up electronically and retrieved in case it gets lost due to some circumstances.

Fifth, the manufacturing process involves the planning of production and the execution of manufacturing. The integration of IT increases the rate of production as the technology enables the means to not only improve but also to be effective. Often, this also results in an increased rate of flexibility and reduction in the time allocated for delivery. Previously the manufacturing process had redundancies in functions and regularly, the time allotted for distribution was not meet.

The sixth process of SCM is warehousing; it includes various operations like cross-docking, storage, outbound and inbound and physical inventory. Some of the activities have been digitized due to the presence of information technology, resulting in better performance and effectiveness in the overall process (Mishra, 2014). In that, the supply chain manager knows the number of products quickly due to electronic records.

The seventh process, order fulfillment, involves entry of orders, pricing, scheduling, and issuing the invoice to payments made. A firm that uses IT encounters minimal or no errors when dealing with the mentioned activities, also, the firm does not encounter mix up of invoices that occur in a firm using paperwork (Gattorna, 2017).

The final process is transportation, which involves planning on costs and execution of the conveyance. Incorporation of IT results in improved customer satisfaction via enhanced customer services.

The process of SCM with IT can be improved through automating the purchasing process in that it becomes automatic. Arguably, this will free up employees to focus on other critical duties; this is often achieved through programming the enterprise resource planning software to automatically place orders with dealers when inventory drops below a specific level. According to Ptak & Schragenheim the installation of the right Enterprise Resource Planning system will eliminate mistakes and fraud. This will enable the supply chain management process to be more transparent and reduce the unexplained inventory that often occurs. The organizations should ensure that the systems that they are using are standardized to increase efficiency and save both time and money (Baltzan, 2012). Also, standardization increases accuracy and reduces miscommunication among employees. The firm using IT can adopt an ERP system that allows employees to access inventory, purchase and production information instantly; this will help in making decisions in a timely and accurate manner. This will provide valuable details into the supply chain enabling a productive business.

Conclusion

It is evident that incorporation of IT in supply chain management has numerous benefits to organizations. IT automates various processes, making the output valid, accurate and reliable. For example, a firm using information technology equipment's and software's to carry out their procedures cannot meet their deadline but also be more productive due to the advantages of the technology. Notably, IT also has disadvantages as the technology keeps on getting outdated and has to be renewed. Hence, the firm needs to know the type of equipment they purchase to avoid constant purchase. Notably, for the IT to be effective, the equipments purchased should be compatible with each other to obtain improved performance and undergo maintenance to avoid breakage and loss of data. Firms should adopt the use of IT in their supply chain management process and enjoy the results of the supply chain with information technology

References

Baltzan, P. (2012). Business driven technology. McGraw-Hill/Irwin.De Barros, A. P., Ishikiriyama, C. S., Pe...