Wednesday, October 2, 2013

Supply Chains will become smarter – THE IT EFFECT

The current supply chains are more complex and global. They wouldn’t have been global or interconnected without incorporating information technology in the supply chain process. The IBM supply chain executives believe that IT has made supply chain interconnected, instrumental and intelligent. They have incorporated the IT EFFECT in their business strategy to make the supply chains “smarter”.

 The IT EFFECT includes :-
1) Research analysis
2) Purchasing
3) Networking

4) Relationship management

There are around 10 % companies that have involved IT in their supply chain to improve their value creation process. Their major focus in on the technology that makes supply chain more visible. Some examples of companies incorporating IT in their supply chain are IBM, Dell, Proctor and Gamble and Walmart.
 Some issues solved by using IT are :-

  • Network and inventory optimization
  • Product life cycle management
  • Sales and operations planning
  • Manufacturing optimisation
  • Logistics optimisation
  • RFID (Radio frequency identity devices)
  • Procurement
  • Business intelligence

Walmart is an excellent example of using RFID chips on jeans and other garments in its supply chain process for controlling inventory and preventing threat. These chips will be installed in the hangtags of the clothes, which facilitates tracking and identification. Theses RFID tags not only help in inventory management but also store more data, provide real time information and can be scanned clearly from a long distance.

The RFID are still debated since there are many issues associated with it too . Firstly there is the cost, especially in products which have a low profit margin followed by implementation issues like pushbacks from suppliers and retailers.

The future of this technology is uncertain. With the U.S. economy slowly recovering and retailers beginning to step back into the market, will RFID fully emerge from Gartner’s trough and find fortune in the next stages, the “slope of enlightenment” and “plateau of productivity?”

Will the IT be implemented and fully successful in the Supply Chain process?

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