Wednesday, October 2, 2013

Data Integration in SCM

Is it effective to integrate IT at each stage of the supply chain?


The word 'chain' is the key in supply chain management: It is an ensemble of steps that allow an organization to highly satisfy its customers at a low cost (while generating as much profits as possible).
Some of those steps are demand forecasting, supply planning, inventory management and logistics (warehousing and transportation).

At each of those stages, every organization could benefit from using:
 -demand forecasting can be effective with historical data collection coupled with forecasting softwares.
 -supply can also be planned by using forecasted demand and other parameters in a decision management tool.
 -and data mining, RFID, GPS, and several other IT or technology solutions are used in logistics.

It is indisputable that the use of IT at any of these stages lead to consistent improvement and costs savings.  However, we are talking about a chain, thus there should be an integration between all those stages and that might be difficult with the proliferation of different Information Systems.

Let's take the example of a company that uses Salesforce as their CRM system. So they have their customers' activities stored in Salesforce and can use this information to forecast the demand, make prediction and analyze trends. Now imagine that this company is using another system for their core business and SAP for their finance and accounting. So when it comes to managing their supply chain, that company will have to rely on disparate reports from different sources.

The hustle created by the use of IT may easily overcome its benefits.
So what is the solution? Should the companies return to traditional tools such as manual registers, invoices and simple and intuitive codes? When we see the simplicity and the effectiveness of the system used by the Dabawallas in India for centuries, we may tend to agree that there is no value added on using IT in SCM. Or we could argue that the key is to have a robust SCM and then add IT on top
of it.  In 2007, Cynthia Rettig discussed extensively about the challenges posed by the proliferation of IT systems and argued that the SOA (service oriented architecture) was not the magical solution[2]. Either way a modern company cannot escape the technology despite Carr's argument ten years ago that IT does not offer a competitive advantage[3].

However, IT is evolving continuously and every challenge is an opportunity to come up with innovative solutions. Some of the actual trends are Big Data, Analytics and Business Intelligence, but I am more interested in Data Integration. Data Integration softwares offer capabilities to seamlessly integrate data from different sources. For instance, it can integrate vendor data, customer data, credit info and sales volumes. Data integration constitutes a powerful tool in leveraging data from different sources and an innovation that can revolutionaries the use of IT in SCM. Will the companies return to their old habits of using several systems or will they continue using ERP, or SOA systems that cover all the areas of their supply chain? Is data integration the solution to all problems related to the overuse or misuse of IT in SCM?

1- The Trouble With Enterprise Software (Rettig, MIT Sloan Management Review, Fall 2007);; accessed on October 2, 2013
2-Nick Carr's 'IT Doesn't Matter' still matters (, Network World, May 14, 2013);; accessed on October 2, 2013

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.