April 10, 2016

Information Technology and the Supply Chain

Chopra and Meindl's book, Supply Chain Management: Strategy, Planning, and Operation, is a comprehensive introduction on supply chain management.


The supply chain management (SCM) is concerned with the flow of products and information between the supply chain members that encompasses all of those organizations such as suppliers, producers, service providers and customers. In the supply chain, these organizations linked together to acquire, purchase, convert/manufacture, assemble, and distribute goods and services, from suppliers to the ultimate and users.

The cost and availability of information resources allow easy linkages and eliminate information-related time delays in any supply chain network. Organizations are adopting Electronic Commerce, where transactions are completed via a variety of electronic media, including electronic data
interchange (EDI), electronic funds transfer (EFT), bar codes, fax, automated voice mail, CD-ROM
catalogs, and a variety of others. The old “paper” type transactions are becoming increasingly becoming obsolete. Leading-edge organizations no longer require paper purchase requisitions; purchase orders, invoices, receiving forms, and manual accounts payable “matching” process. All required information is recorded electronically right at the origin, and associated transactions are performed with the minimum amount of human intervention.  With the application of the appropriate information systems, monitoring inventory levels, placing orders, and expediting orders will soon become totally automated.


The information systems and the technologies utilized in the supply chain represent one of the fundamental elements that link the organizations into a unified and coordinated system. In the current technology and process environment, little doubt remains about the importance of information and
information technology to the ultimate success, and perhaps even the survival, of any supply chain
management initiative. Cycle time reduction, implementing redesigned cross-functional processes, utilizing cross-selling opportunities require information. Timely and accurate information is more critical now than at any time.

Three factors have strongly impacted this change in the importance of information.

1) Satisfying customers have become something of a corporate obsession.
Serving the customer in the best, most efficient and effective manner has become
critical, and information about issues such as order status, product availability, delivery schedules, and invoices has become a necessary part of the total customer service experience.

2) Information is a crucial factor in the managers’ abilities to reduce inventory and human resources
requirements to a competitive level.

3) Information flows play an essential role in the strategic planning for and deployment of resources.

The need for virtually seamless bonds within and between organizations is a key notion in the essential nature of information systems in the development and maintenance of successful supply
chain. That is, creating intra-organizational processes and link to facilitate delivery of seamless
information between marketing, sales, purchasing, finance, manufacturing, distribution and
transportation internally, as well as inter organizationally, to customers, suppliers, carriers
across the supply chain will improve fill rates of the customers service, increase forecast accuracy,
reduction in the total inventory and savings in the company’s’ transportation costs - goals which need
to be achieved.

In fact, inaccurate or distorted information from one end of a supply chain to the other can lead
to tremendous inefficiencies such as excessive inventory investment, poor customer service, lost
revenues, misguided capacity plans, ineffective transportation, and missed production schedules.
Bullwhip effect, which is big variability in orders at factory level  is commonly experienced by the consumer goods industries due to lack of uniform information in the entire supply chain. Suitable technologies such as bar codes and scanners have been developed and applied in the supply chain to remove inaccuracy, time delays and gaps in communcations.

e-business and the Supply Chain. - Review Notes

Global Complexity is driving Supply Chain Information  Systems into Cloud Wharton Knowledge Article January 2011

Updated  10 Apr 2016
9 Dec 2011

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