ICT Integration to Supply Chain Management
Introduction
Change is the only thing in this world remained constant. Everything in this world evolves, even strategic performance measures. An organization must be open to the idea that some measures changes over time. Organizations must research on different approaches to be at par with the changes on the systems. Business organizations today particularly the manufacturing and retail organizations operate in a turbulent and dynamic business environment. The contemporary business environment is undergoing a metamorphosis as rapid technological innovations, competitive markets, diverse customer preferences, and extensive global operations prevail in it because of the value of time. For them time is equal to money. To ensure continuous operation and survival in today’s rigid business environment, a business firm has to be open to change and improvement. Business processes, services, products and operations should be consistently subject to evaluation and refinement. The norm is to deliver quality products and services while maintaining flexible and effective operations.
One of the most vital aspects of a business operation is the management of the supply chain. The supply chain comprises of the coordinated arrangement of manpower, technology, and production processes that transforms raw materials into tangible products or services. The supply chain is the overall process that determines how business firms secure materials, exploit people, utilize machines, and follow business processes to develop specific products and services for the satisfaction of consumers. This business operation is crucial as any defect in one area can render adverse impacts to the others. Thus, management of the supply chain entails strategies and constant monitoring to ensure its consistency to deliver outputs to customer at the most convenient time.
Time is valuable to any business organizations since it corresponds to satisfaction of clients and business progress. Satisfaction and progress reflects to the money earned by the organization. In manufacturing and retail organizations, time is very vital. The needs of the supply chain demand the efficient and speedy movement of goods to the end user with enhanced levels of service. Increasingly, this entails the customization of goods and services according to the requirements of individual clients. In order to maintain their competitiveness, all parties involved in the process, including manufacturers, vendors and logistics providers, must be able to offer and provide a swift and individually customized service to value time and money. In retail or even in electronic business, time is also important because of continues changes in the demand of the consumers. Businesses should learn how to cope up to the current trend and time in business to have more profit. Retail businesses should consider the changes in business arena. They should know the competition, position in the market value of money and time.
A certain business has to improve the flexibility of its supply chain network and coordination among the various entities involved in the process. Coordination and flexibility go hand in hand because a company that has well-aligned supply chain operations is guaranteed total flexibility. A business has to plan its supply chain operation in advance to minimize wasted transactions. Garber and Sarkar (2007) reports that the pursuit of supply chain flexibility is by designing a supply chain model. A supply chain model requires the company to determine the kinds of strategies and amount of time to suffice current customer needs. In this approach the business has to analyze and understand customer and stakeholder expectations in order to conceptualize the supply chain requirements and costs involved in each. Today, with these reasons, the integration of ICT to businesses’ supply chain management has increasing prominent to the success of any company.
The Integration
Information technology (IT), also commonly referred to as information and communication technology (ICT) has been applied in various forms not only in electronic businesses but also within different business industries. In the electronic business sector, IT has played a significant role in enhancing supply chain management (SCM) systems. A number of information technologies had been made available to owners of business organizations for this purpose, from less-sophisticated to more advanced systems. The supply chain operations of most businesses have been enhanced through information technology mainly when the concepts of business and consumers (B2C) and business partners (B2B) were introduced.
Internet technology also led to the development of SCM systems among electronic companies. Through this innovation, product customization, information searches and online deliveries are some common services that are now available to the customers. Manufacturers, suppliers and distributors on the other hand, benefit from internet utilization through well-coordinated information sharing. Online auctions are even made possible with this technological development (Emiliani 2000).
In addition to internet technology, specific programs and systems such as Enterprise Resource Planning (ERP) also became one of the most well-known strategies for applying IT within manufacturing enterprises, which helps in facilitating information exchange (Evans et al 1995). In addition to this, ERP also helps the business sector by improving various activities such as the monitoring of orders, materials, schedules and inventories as well as business process engineering. The Electronic Data Interchange (EDI) is yet another IT strategy that is applied by business organizations, particularly in improving their SCM operations. Private wide-area networks or value-added networks (VAN) were conventionally used to implement EDI. This however made EDI too costly for small and medium sized companies. With the introduction of the internet-based EDI, these enterprises are now able to acquire the benefits of EDI application (Johnston & Mark 2000).
The electronic retailing industry is also one of the business sectors that utilize various information technology strategies so as to enhance its operations. One of these strategies was the application of Electronic Point of Sale (EPOS), which was first introduced during the late 1980s. With this strategy, retail companies are able to acquire virtual online information about their respective customers, particularly their demands. These data are derived from the scanned purchases at the checkout counters of retail stores (McCall & Stone 2004).
As retailers operate for several years, especially the electronic retailers, they were able to acquire a large customer database that can more or less give a good representation of their total demand. Customer data basically include information such as consumer sales in terms of brand, product, outlet and region. Information about the customers such as names, frequency of their visit to a particular outlet and payment method can also be obtained and stored in the database. With these data, McCall & Stone (2004) pointed out that retail companies are able to develop and make successful television campaigns based on the product sales obtained from a specific region.
The introduction of information technology to business application even made the development of a customer database even easier and more effective. The incorporation of IT to customer data then led to the construction of the EPOS strategy. With this added feature, businesses now can make the most of the data derived from their customers. In addition, the development of results from analyzing these data is now easier and faster than before. Data storage and classification are no longer a problem either.
In organizations that observe regular office settings, IT application strategies had also been used. One of which is the use of information technologies in developing virtual teams. Business organizations have long been searching for mechanisms or systems that will make their operations work more efficiently. In the past, industries had recognized the efficacy of creating teams from their workforce in achieving this objective. Based on corporate experience, organizations have witnessed that team-based working environment is capable of drawing productivity and creativity out of their employees. Moreover, a dynamic business environment exemplified by work teams enables the member to overcome challenges better.
However, as teams are integrated into an organization's work operation, management had started to encounter several problems and dilemmas. For instance, some work assignments require frequent relocations. This then would call for expensive travel expenses to transfer a particular work team. Due to this, organizations are not able to maximize the use of team-based workforce as work teams tend to be constricted on small projects only. Furthermore, traveling causes much delay on work actions and decisions. Without the full and complete presence of the teams’ members in a common work site or location, no work progress is achieved. This has been the case until information technology was introduced.
With new software programs, faster communication systems and more efficient processors, business sectors now have access to a useful technology known as virtual connectivity. The access to these new technologies and innovations has allowed people all over the world to communicate even at great distances. This transition has given organizations the idea of creating virtual teams. Virtual teams are made up of organizational members whose main form of interaction is made via electronic communication means. Through the use of the telephone, fax machines, the internet or other computer-based media (Townsend, DeMarie & Hendrickson 1996), team members are able to communicate without actually seeing one another and even without being in one work location.
By means of these virtual communication systems, team members can easily decide or select information system is appropriate for particular work tasks. For instance, in a work assignment that needs the exchange of information, lean technologies, such as electronic mailing or instant messaging, are used. Complicated work duties on the other hand, like conflict resolution or brainstorming, require more advance technologies such as video conferencing. Leonard (1998) noted that as the members of the virtual team are aware of the resources available to them for specific tasks, they are able to develop a refined sense of efficiency in communicating and conducting business operations as a team.
The application of information technology has also been used as a strategy for improving the businesses’ marketing efforts. For instance, internet technology may be integrated to other marketing tools in order to develop a strategy known as Integrated Marketing Communications (IMC). IMC is the strategic coordination of multiple communication voices. Its aim is to optimize the impact of persuasive communication on both consumer and non-consumer such as trade and professional audiences by coordinating such elements of the marketing mix as advertising, public relations, promotions, direct marketing, and package design (Moore & Thorson 1996). From these examples, it is clear that various strategies in applying information technology have been developed to address the different needs of business companies.
Benefits and Limitations
Through the application of these IT strategies, organizations within the business industry were able to achieve a number of advantages and some drawbacks. For instance, the application of EDI in the company operations allowed the facilitation of electronic data exchanges in the absence of human intervention. As daily transactions are accomplished faster through this technology, transaction costs are considerably reduced as well. Expenses incurred in transactions are also considerably reduced. In addition to these advantages, business practices such as vendor managed inventory as well as just-in-time delivery were made possible through the EDI. Vendors were also able to develop recent ICT-based systems for SCM. With these systems, businesses are able to apply analytical applications that are useful for planning, scheduling and revenue management. This in turn is useful for the optimization of the manufacturing, supply, transportation and distribution processes (Chopra & Meindl 2001).
On the other hand, the use of the EPOS strategy also proved to be beneficial to the business industry. For example, as business companies gather and record individual customer transactions through virtual means, EPOS enables them to calculate stock levels as well as eliminate the need for regular stock computations. As EPOS operates through electronic means, business organizations have eliminated the requirement for data-gathering through physical means. This in turn according to Czerniawska & Potter (1998) helps in reducing costs incurred out of data collection, analysis and dissemination.
Higher work efficiency is yet another important benefit of EPOS systems as fewer errors are incurred with the application of this strategy. Timely delivery of output can also be standardized through this type of technology. A good example for this effect is the operations of a manufacturing company. Through EPOS, supply chain efficiency can be achieved. This is acquired through the provision of real-time information regarding product planning, product availability, purchase order generation, management of inventory and the delivery status. According to Walton & Gupta (1999), information systems based on this technology can automate both the internal or external procurements functions of the company. These functions could involve the issuance of request for pricing information, management tools, supplier interface, purchase orders and supply chain control.
Another important internal benefit of implementing EPOS systems is its ability to provide valuable sales information. Acquiring these sales data is beneficial to the company as it allows it to concentrate on its more profitable product or service lines, improve demand forecasting as well as reduce inventory. EPOS systems are highly flexible and easy to upgrade as readily available features and capabilities may be added to the system. Incorporating other functions can also increase the efficiency of the company. For instance, by adding the EFT or Electronic Funds Transfer capability to the EPOS system, credit or debit card transactions are automatically processed whenever a sales transaction is made. This in turn helps in lessening time allocated for every transaction.
Conclusion
The implementation of ICT to company’s supply chain has been beneficial as it helps in identifying the most useful and appropriate methods in communicating and establishing good customer relations, including good relationships with stakeholders like the employees, investors, suppliers interest groups and the public in general. The introduction of the ICT to company’s supply chain has been one of the most important developments in business process, which continued on up to the present. In accordance to this, the ICT integration to supply chain is being applied by large and small companies alike, and has been well-known among companies’ business procedures.
References:
Chopra, S & Meindl, P 2001, Supply Chain Management: Strategy, Planning, and Operations, Prentice Hall College.
Czerniawska, F & Potter, G 1998, Business in a Virtual World: Exploiting Information for Competitive Advantage, Macmillan, Houndmills, England.
Emiliani, ML 2000, ‘Business-To-Business Online Auctions: Key Issues For Purchasing Process Improvement’, Supply Chain Management, vol. 5, no. 4, pp. 176-186.
Evans, GN, Towill, DR, & Naim, MM 1995, Business Process Re-Engineering the Supply Chain, International Journal of Production Planning and Control, vol. 6, no. 3, pp. 227-237.
Garber, R & Sarkar, S 2009, “Want a More Flexible Supply Chain?” Supply Chain Management Review, Viewed 13 April 2009 Available from: <http://www.scmr.com/article/CA6406208.html>.
Johnston, RB & Mark, HC 2000, ‘An Emerging Vision of Internet-Enabled Supply-Chain Electronic Commerce’, International Journal of Electronic Commerce, vol. 4, no. 4, pp. 43-59.
Leonard, D et al 1998, ‘Virtual Teams: Using Communications Technology to Manage Geographically Dispersed Development Groups’, in S. Bradley & R. Nolan (Eds), Sense & Respond: Capturing Value in the Network Era (p. 292), Harvard Business School Press, Boston.
McCall, J & Stone, A 2004, International Strategic Marketing: A European Perspective, Routledge, New York.
Moore, J & Thorson, E 1996, Integrated Communication: Synergy of Persuasive, Lawrence Erlbaum Associates, Mahwah, NJ.
Townsend, AM, DeMarie, SM & Hendrickson, AR 1996, ‘Are you ready for virtual teams?’, HR Magazine, 1 September viewed 13 April 2009 Available from: <www.highbeam.com>
Walton, S & Gupta, J 1999, ‘Electronic data interchange for process change in an integrated supply chain’ International Journal of Operations & Production Management, vol. 19, pp. 4-21.
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