Technology and Information in SCM

In today’s world, where the market is ever more competitive and aggressive, and customers are more and more demanding in terms of product quality, corporations cannot do without information technology in their supply chain. Generally, technology has affected supply chain management at least in two ways: by increasing the quality of service offered to customers, and by decreasing inventory costs, and consequently the entire supply chain costs [1].

Customers these days are used to performing orders online in a matter of minutes: they can choose the product they want, pay for it electronically, they can see when their orders are being processed, when the items are being shipped, they can see the expected delivery date and they can track shipments. None of this would be possible without proper investments in information technology, and if companies want to retain their customers, they have to be able to offer such service, or buyers, who rightly love this service and expect it from sellers, will simply flee to the next online vendor. Companies like FedEx and UPS have not only embraced these technologies, but they actually contributed to developing them, and they are in fact leaders in the shipping industry [2].

Moving on to see how IT has helped in cost reduction, consider inventory costs. Inventory management has taken advantage of the utilization of technologies such as barcode and RFID. RFID allows for a surprising cut in time needed for inventory cycles: what used to take days of work, and was only doable 2 or 3 times a year, can be done today on a daily basis. This technology also permits to perform an accurate re-ordering strategy, that cut inventory costs [3]. The barcode is another helpful technological support for managing customers’ checkout process in stores. A new type of barcode, the stretched barcode, has enhanced the checkout process even more, increasing customers’ satisfaction (Trader Joe’s) [4].

Cost reduction is also brought about by an efficient communication across different sectors of the supply chain. If a problem arises at one particular stage, the adjacent stages will be directly affected too. Similarly to Just-In-Time (JIT) strategies for inventory management, efficient and timely notification strategies, such as automated alerts via email or text message, will circulate information in real time and allow for interventions when and where needed [2].

Is information technology the real asset to rely on though, when it comes to efficient supply chain management? Is it really technology that we have to acknowledge for the progress made in these 30 years or so of the recognition of supply chain management as a field of its own? And is it really technology that we have to count on in order to move forward? Isn’t the greatness of human minds that first envisioned and then developed such technologies that we should be thanking for the wonders they created and will be able to create in the future [5]? The man before and beyond the machine, so to speak.

References

[1] http://www.csi-india.org/c/document_library/get_file?uuid=434f261e-5a9e-46df-a5b6-d6e8936f28cd&groupId=12177

[2] http://www.supplychainbrain.com/content/general-scm/business-strategy-alignment/single-article-page/article/how-technology-can-ease-supply-chain-management-and-mitigate-risk/

[3] http://www.tagsysrfid.com/Markets/Applications/Inventory

[4] http://designnotes.info/?p=1740

[5] http://blog.kinaxis.com/2012/05/scm30-how-has-technology-changed-supply-chain-management-today/