Efficient exchange of information
can provide a company with higher service levels, lower inventory and a lower
supply chain cost. Unlike the start of the last decade where the demand for a
particular product was defined by the wholesale distributers, the manufacturers
have direct access to assess the demand for a particular product in the market.
SCM is concerned with the downward flow of product in the supply chain and an
upward flow of information. Efficient exchange of information is very necessary
for a company’s operations. IT
infrastructure capabilities provide a competitive positioning of business
initiatives like cycle time reduction, implementation, implementing redesigned
cross-functional processes. Several well know firms are involved in supply chain
relationship through information technology. There are several factors that have
strongly impacted this change in the importance of information. First, serving
the customer in the best, most efficient and effective manner has become
critical. Second information is a crucial factor in the managers' abilities to
reduce inventory and human resource requirement to a competitive level.
Wal-Mart & P&G
experiences demonstrate how information sharing can be utilized for mutual
advantage. Through sound information technologies Wal-Mart shares point of sale
information from its many retail outlet directly with P&G and other major
suppliers.
Recognizing the critical
importance of information in an integrated supply chain environment, many
organizations are implementing some form of an inter-organizational information
system (IOIS). With the ERP solutions most of the automobile industries are
able to produce JIT productions which have led to a considerable decrease in
the cost of the vehicles. In order to perfectly implement the IT solutions
within a firm, a firm needs to integrate the three tier system. That is the
suppliers, the customers and the internal SCM network need to communicate over
a single platform. With a proper flow of information between these three
segments the firms can achieve high levels of profitability. Many leading
companies like Oracle, SAP, Microsoft and NetSuite work towards building the
right solution by integrating these three components for their clients. All
enterprises participating in supply chain management initiatives accept a
specific role to perform. They also share the joint belief that they and all
other supply chain participants will be better off because of this
collaborative effort. In the past two decades the power in a supply chain has
shifted from the manufacturer to the retailers. Retailers sit in a very
important position in term of information access for the supply chain.
Retailers have risen to the position of prominence through technologies. The
use of technology enables the manufacturers to know how much to produce according
to the demand in the market.
Typically, the following types of
information are of relevance,
· Inventory
level: This comprises of the material that is used in the production of certain
goods and the finished products which are ready to transit.
· Sales
data: The sales data integrated with the orders that are placed to the
suppliers forms an important component of the process ensuring lower inventory
and higher number of inventory turnovers.
· Order
status for tracking and tracing: For many firms that outsource their shipments
to other service providers it’s needed for them to track the shipment of their
goods. This information can be further shared with the customer which provides
them with a better service feature.
·
Production and delivery schedules: The different
tiers in a supply chain can align their operations to
support the whole process
if production and delivery schedules are shared.
The
efficient flow of this information has led to companies working with their
suppliers and ultimately eliminating the cost from the supply chain, rather
than pushing it down the chain. This leads to a better business for all the members
of the supply chain network.
A
successful implementation of these solutions is very important. Hershey Food
Corporation tried to implement the ERP systems and failed in doing so. They
went through various problems later down the lane. Their usual delivery period
was 5 days but with the failed system in place there delivery time increased to
15 days. They suffered through an increase in inventory levels as they rose by
25%. In hindsight they realized that the problem was the missing inventory database
in the SAP R/3 ERP software that had been set up. The technical team did not coordinate
well with the operations team and thus the inventory data was not updated. There
were several reasons for this failure:
1. They
implanted the system during the peak season and couldn’t rectify the
implementation.
2. The
implementation should have been incremental but they went with the ‘Big Bang’
with the scope not layed out.
3. Software
interference from different vendors.
4. The
board members had no-one with the competency to understand the IT complexity.
5.
Overloaded employees.
These
problems were avoidable as they were a consequence of their own shortcomings.
It was the internal factors that mattered and not the external ones!
References
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.