Monday, September 29, 2014

Technology in Supply Chain Management

Supply Chain Management involves the management of several interconnected business entities like the manufacturer and distributor in order to ensure that the end product reaches the customer in time without the quality of the product being compromised. Throughout the process, the exchange of information between every step is important for effective decision making. Many years back, supply chain management was something that was not given due importance. Even the customers were less demanding and more patient. Therefore, customer satisfaction was not a huge challenge. But now, with the increasing use of technology and changing times, using technology in supply chain management has become inevitable.

Now, technology in supply chain management is much more than the use of computers. Companies use speech recognition, digital imaging, radio frequency identification (RFID), real-time location systems (RTLS), bar coding, GPS communication etc. to improve their processes. Even factories use technology in the form of automated processes, data recognition equipment etc. These updated processes help in increasing the efficiency and reduce time such as reduction in cycle time due to automated factory process (1).This also ensures that the customers receive their goods on time, building on the reputation of the company and thereby maintaining customer loyalty.

Companies use technology in broadly three areas: transaction processing, supply chain management and order tracking and delivery (1). In transaction processing, technology helps in order processing, billing, tracking delivery status etc. For supply chain management, it helps in planning and collaboration thereby increasing efficiency. It helps in processes like analyzing customer feedback, maintaining inventory levels, demand forecasting, determining production capacity etc. This kind of data also helps in the implementation of lean management techniques. For order tracking and delivery, it helps in tracking shipments and ensuring that the order reaches the customer in a fixed stipulated time. Organizations are also using a technology called Electronic Commerce, where transactions are completed using electronic media like electronic data interchange (EDI), electronic funds transfer (EFT), CD-ROM catalogs etc. All required information is recorded electronically with minimal human intervention (2).

It’s very natural for companies to implement technology and upgrade their processes to stay in the market and to be competitive. However, there are some concerns regarding the use of IT and technology such as implementation costs and user-friendliness for their optimum use. A lot of companies going through mergers and acquisitions have to collaborate their internal processes. How do they deal with the change? And more importantly, how do they manage and train their employees to use technology?

2.    2.   Importance of information technology for effective supply chain management -

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