What is supply chain? Earlier, supply chain was
defied as the movement of material from point of origin to point of
consumption. But with the advent of information technology and its incorporation
in the supply chain, the entire process of supply chain along with its
definition has undergone a transformation. With the inclusion of information
technology in the supply chain, it is now defined as the movement of information
and material in the value chain. As a result, information is now extracted,
processed and stored in the most efficient manner.
Figure1:
Entities in a supply chain
Figure1 shows the different entities involved in the
supply chain. Due to the involvement of many separate entities, there is a
great need for collaboration and coordination between these different entities,
which is supported by information technology.
Let us look at how some of the leading companies are
using technology to aid them in their supply chain.
Use
of technology in the supply chain of Dell
Major PC makers are suffering losses as products are
becoming obsolete in the electronic industry. How is Dell dealing with this
problem? Dell uses information technology to manage their inventory. Dell has a
strong supplier base and maintains thin inventory. They have majority of online
orders. Whenever a customer places an order online, Dell shares these order
details with its suppliers located in the areas closer to the area of the
customer, who provide the components. These suppliers transport the components
to the nearest Dell warehouse where they are assembled and shipped to the
customer. This saves Dell the inventory storage costs and also saves the
company from incurring losses due to the product becoming obsolete. This is
made possible by the IT infrastructure of Dell, which allows real time data
sharing between the company and the suppliers.
Emergence and inclusion
of information technology in the supply chain, not only benefited the manufacturing
firms, but also the service industries.
Use
of technology in the supply chain of Banks
Millions of transactions are done in the banks every
day. Thanks to technology, customers can now transfer money instantaneously
using IT enables systems. This reduces the exchange of currency notes to a
great extent. Technology not only makes it easier for the banks, but also for
the customers. The customers can transfer money on the go using their mobiles
or computers. Today IT has become an inseparable part of bank’s supply chain.
Use
of Technology in Logistics
Logistics is the most important part of any company’s
supply chain and many companies prefer to outsource it to a third party in
order to optimize their operations.
Figure2: Use of technology in the Logistics system
of FedEx
The Figure2 above shows the use of information
technology by FedEx, who is the logistics provider for Acer. Whenever a
customer logs a complaint for any of the Acer products, it gets logged in the
FedEx database. This helps FedEx to pick up the package and ship it to the nearest
Acer repair center. A barcode is put on the package which helps in real time
tracking of the package. This helps Acer and the customer to track the package
at any point in time.
As we saw above, Information Technology is now
affecting almost every entity of the supply chain process. This gives rise to
the following questions:
How long does it take for the company to cover up
the initial costs required to set up the IT infrastructure?
Does incorporating IT in the supply chain prove to
be beneficial for small firms as well?
References:
http://www.academia.edu/3165949/Gaining_Competitive_AdvantagesThrough_Supply_Chain_Management_Success_Stories
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