An Assignment

on
The Role of Information Technology (IT) in Supply Chain
Management

Course Name: Supply Chain Management

Course Code: MGT-410

PREPARED FOR:

Md Rubel
Assistant Professor
Dept. of management studies,

Jahangirnagar University.

PREPARED By:

Md. Kabir Sheikh

Exam Roll: 162365

Class Roll: 1805

Batch: 6th

Dept. of Management Studies,

Jahangirnagar University

Savar, Dhaka-1342.

Date of Submission: 31.12.2020

Table of Contents
CHAPTER 1 ........................................................................................................................................ 1
INTRODUCTION ................................................................................................................................. 1
CHAPTER 2 ........................................................................................................................................ 2
SUPPLY CHAIN MANAGEMENT .......................................................................................................... 2
2.1 Defining Supply Chain .............................................................................................................. 2
2.2 Stages of Supply Chain ............................................................................................................. 3
CHAPTER 3 ........................................................................................................................................ 4
INFORMATION TECHNOLOGY AND SUPPLY CHAIN ............................................................................. 4
3.1 Introduction ............................................................................................................................. 4
3.2 Importance of Information....................................................................................................... 4
3.3 Inter Organizational Information System.................................................................................. 5
3.4 Drivers for IT Use in SCM.......................................................................................................... 5
CHAPTER 4 ........................................................................................................................................ 6
THE ROLE OF IT IN SUPPLY CHAIN MANAGEMENT ............................................................................. 6
4.1 Introduction ............................................................................................................................. 6
4.2 Value of Information Technology in Supply Chain Management ............................................... 6
4.2.1 Increased Control Over Production ................................................................................... 6
4.2.2 Better Inventory Management .......................................................................................... 7
4.2.3 Increased Collaboration Between Supply Chain Partners ................................................... 7
4.2.4 More Effective Order Tracking & Delivery.......................................................................... 7
4.3 Digital Transformation in Supply Chain Management ............................................................... 8
4.4 The Supply Chain IT Framework ............................................................................................... 8
4.4.1 The Supply Chain Macro Processes .................................................................................... 8
4.5 The Future of It in The Supply Chain ......................................................................................... 9
CHAPTER 5 ...................................................................................................................................... 10
CONCLUSION ................................................................................................................................... 10
CHAPTER 1
INTRODUCTION
In the present circumstances, companies are not considered as independent ones rather they are
considered as Multi Company, multi organizational networks such as supply chains, deliver
goods and services to the customers. Supply chain management (SCM) describes that
appropriate control of these multi company needs can give rise to significant benefits.

The use of information technology (IT) is very important for managing multi network
Company. The use of information technology is very much important for efficient SCM
Mostly, the research has concentrated on either on improving the benefits of inter-
organizational information technologies or on describing the effect of certain technologies on
supply chain efficiency. The use of Information Technology in the supply chain activities of
the firms that are involved in procurement, logistics and international trade activities like
imports and exports. Information Technology (IT) is where an organization uses technology
to acquire, store, process and organize data states, IT involves software, hardware, firmware
and middleware as well as network infrastructures, platforms, operating systems and the
worldwide web.
supply chain management as the management of flow of products, services, information and
finances from supplier’s suppliers through intermediate organizations out to the customer’s
customers. Supply chain management encompasses the management of all logistics process of
a business. These logistics processes include activities such as procurement, warehousing,
inventory control, manufacturing, distribution and sales order of a business.

1|P ag e
CHAPTER 2
SUPPLY CHAIN MANAGEMENT

2.1 Defining Supply Chain

A supply chain consists of all parties involved, directly or indirectly, in fulfilling customer
demand. The supply chain includes not only the manufacturer and the supplier, but also
transporters, warehouses, retailers, and even customers themselves. A supply chain is a system
of organizations, people, technology, activities, information and resources involved in moving
a product or service from supplier to customer. Supply chain activities transform natural
resources, raw materials and components into a finished product that is delivered to the end
customer.

At last it can be said that supply chain management is the set of actions or activities from
collecting raw materials to delivering finished goods or services to the final customers by
minimizing overall cost and adding value of goods and services.

The concept of supply chain management is based on two core ideas:

➢ The first is that practically every product that reaches an end user represents the
combined effort of multiple organizations. These organizations are referred to
collectively as the supply chain.
➢ The second idea is few businesses understood, much less managed, the entire chain of
activities that ultimately delivered products to the final customer. The result was
disjointed and often ineffective supply chain.

2|P ag e
2.2 Stages of Supply Chain
Supply chain management is a continuous process from collecting raw materials to deliver the
goods or services to its ultimate customers. Every stage of this chain should focus on cost
reduction by gaining efficiency.

Here the various stages of supply chain are shown sequentially be:

3|P ag e
CHAPTER 3
INFORMATION TECHNOLOGY AND SUPPLY CHAIN

3.1 Introduction
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. These organizations linked together to
acquire, purchase, convert/manufacture, assemble, and distribute goods and services, from
suppliers to the ultimate and users.
Today, information and technology must be conceived of broadly to encompass the information
that businesses create and use as well as a wide spectrum of increasingly convergent and linked
technologies that process the information with the emergence of the personal computer, optical
fiber networks, the explosion of the Internet and the World Wide Web. The cost and availability
of information resources allow easy linkages and eliminate information-related time delays in
any supply chain network. This means that organizations are moving toward a concept known
as 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.

3.2 Importance of Information

Information is the key to the decision making in Business. Prior to the 1980s, a significant
portion of the information used to flow between functional areas within an organization, and
between supply chain member organizations, were paper-based. In many instances, these
paper-based transactions and communications were slow, unreliable, and error prone.
Conducting business in this manner was costly because it decreased firms’ effectiveness in
being able to design, develop, procure, manufacture, and distribute their products. During this
period, information was often overlooked as a critical competitive resource because its value
to supply chain members was not clearly understood. However, firms that are embarking upon
supply chain management initiatives now recognize the vital importance of information and
the technologies that make this information available. In a sense, the information systems and
the technologies utilized in the supply chain represent one of the fundamental elements that

4|P ag e
link the organizations into a unified and coordinated system. In the current competitive climate,
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 and capturing the channel to the customer.

3.3 Inter Organizational Information System

In supply chain-management, the suppliers, producers, customers are the members and are
linked through the ultimate level of integration. These members are continuously supplied with
information in real time. The foundation of the ability to share information is the effective use
of Information Technology within the supply chain. Appropriate application of these
technologies provides decision makers with timely access to all required information from any
location within the supply chain. Recognizing the critical importance of information in an
integrated supply chain environment, many organizations are implementing some form of an
inter-organizational information system.

3.4 Drivers for IT Use in SCM

The second construct, drivers for using IT in SCM refers here to the reasons why IT is used in
a certain manner in SCM. Ba, I expect that following drivers for the use IT in transaction
processing can be found in the case companies: reduction of the costs of operational processes
(manual work), improvement of information quality by eliminating human errors, and
speeding up the transfer of information between organizations. It was also assumed that supply
chain coordination information is shared especially in volatile, unpredictable, and logistically
demanding business environments. Finally, we expected that tracking and coordination
activities are performed in project- oriented businesses and in cases with in-transit delivery
consolidation. The most likely benefits are as follows:

• Reduction of costs
• Volume of transactions
• Speeding up information transfer
• Elimination of human errors

5|P ag e
CHAPTER 4
THE ROLE OF IT IN SUPPLY CHAIN MANAGEMENT

4.1 Introduction
A new generation of shopping options through eCommerce and M-Commerce has made supply
chain management a vital area of concern for many businesses. Manufacturers, suppliers,
retailers, shippers and distributors are the major stakeholders in the supply chain of
manufacturing companies, which ends with product delivery to the customer. With an
increasing emphasis on technological advancements, as well as the changes in customer
expectations, the need for an integrated supply management has become increasingly
important. For manufacturing companies to build substantial customer bases, digitization of
business processes has become more of a necessity than a value-add proposition. This has
increased the requirement for creating a digital environment that seamlessly integrates the
operations carried out by various entities in the supply chain. Technological advancements now
enable businesses to build end-to-end supply chain solutions that speed up processes and avoid
bottlenecks in the supply chain. Interestingly enough, real time or near real time information is
the key factor in supply chain management. Supply chain management software is designed to
manage and enhance the exchange of information of across various key supply chain partners
to attain such outcomes as just-in-time procurement, reduction of inventory, increase of
manufacturing efficiency and to meet customer needs in a timely fashion.

4.2 Value of Information Technology in Supply Chain Management

4.2.1 Increased Control Over Production

Use of information technology in supply chain management provides improved visibility and
accountability. In order to bring efficiency to the total production process, it is important that
a manufacturing company have clear sight into the current stage of in-production products,
foresee any potential problems or delays they might face and be able to align production
schedules accordingly. Use of technology can bring the necessary transparency into the whole
process. It allows the manufacturing companies to have better control over product flow and
information flow across the supply chain.

6|P ag e
4.2.2 Better Inventory Management

Maintaining optimal levels of inventory is a challenge faced by all manufacturers. While excess
inventory leads to risk of waste and for an increased need for working capital funds, too low
of inventory may lead to stoppages in the production cycle and of losing business through
stockouts. With the use of technology, manufacturers can create adaptable business processes
that provide flexibility to handle varied demand situations. The analytics will help you achieve
financial goals with predictable success by managing your inventory and sales orders
effectively.

4.2.3 Increased Collaboration Between Supply Chain Partners

With the IT enabled, real time information sharing, manufacturers can increase the
collaboration with their key partners. Manufacturers can also track activities through the whole
supply chain, with visibility into supplier end and distributor processes. Such information can
help the manufacturers in making more informed decisions and better forecast future demand.
This helps control the manufacturing process and leads to lower costs through more effective
decisions in procurement and contract management.

4.2.4 More Effective Order Tracking & Delivery

Timely delivery of product is an important factor in ensuring customer satisfaction. Higher

customer satisfaction levels lead to higher customer retention and repeat business. Technology
solutions can play a vital role in increasing speed of delivery and in keeping the customer
informed about the product delivery schedule. Processes can be designed to keep customers
informed throughout the process, from order confirmation to order fulfilment. It can also
provide a platform for the customer to track their order, increasing a customer’s sense of self-
sufficiency and control, while at the same time transferring customer service tasks to the
customer, which saves manufacturers time and money. Manufacturers can also develop
mechanisms to interact with their logistic providers and get real time updates on shipments of
both their inventory and product delivery. Product manufacturing is a complicated process and
any hindrances faced in the production generally result in increased costs and increased product
cycle time. By embracing technology to gain better visibility across all areas of the business
and make data driven decisions based on real time information, technology brings efficiency
across the whole manufacturing process.

7|P ag e
4.3 Digital Transformation in Supply Chain Management
Digital Transformation in the Supply Chain – especially for manufacturers – can enable
transparency and insight in the “upstream” (raw materials, sourcing) and “downstream”
(distribution, logistics, delivery, service) of your company’s supply chain, all the way to – and
through – customer receipt, acceptance, and use, in many cases.

The reason for which it is so much important:

• Increased transparency (and knowledge) reduces the need for excessive inventories,
lead times, and the working capital associated with them.

• Increased collaboration (where, when, and how it makes strategic sense for your
business) drives increased value, revenues, and customer satisfaction by allowing
supply chain partners to contribute their unique value to customers’ needs.

• Effective tracking – from order through delivery – frees your customer service and
sales people to focus on value-adding insights and services beyond what customers can
do for themselves.

4.4 The Supply Chain IT Framework

Developing a framework that managers can use to understand the role of IT within the supply
chain. At its core, IT provides access and reporting of supply chain transaction data. More
advanced IT systems then layer on a level of analytics that uses transaction data to proactively
improve supply chain performance. For example, as a baseline, good IT systems will record
and report demand, inventory, and fulfillment information for Amazon. IT systems that provide
analytics then allow Amazon to decide whether to open new distribution centers and how
to stock them. Given that both reporting and analysis require the availability of accurate
transaction data, enterprise software forms the foundation of a supply chain IT system.

4.4.1 The Supply Chain Macro Processes

The emergence of supply chain management has broadened the scope across which companies
make decisions. This scope has expanded from trying to optimize performance across the
division, to the enterprise, and now to the entire supply chain. This broadening of scope
emphasizes the importance of including processes all along the supply chain when making

8|P ag e
decisions. From an enterprise’s perspective, all processes within its supply chain can be
categorized into three main areas:
• Customer relationship management (CRM). Processes that focus on downstream
interactions between the enterprise and its customers.
• Internal supply chain management (ISCM). Processes that focus on internal operations
within the enterprise. Note that the software industry commonly calls this “supply chain
management” (without the word “internal”), even though the focus is entirely within the
enterprise. In our definition, supply chain management includes all three macro processes,
CRM, ISCM, and SRM.
• Supplier relationship management (SRM). Processes that focus on upstream interactions
between the enterprise and its suppliers.

4.5 The Future of It in The Supply Chain

At the highest level, the three SCM macro processes will continue to drive the evolution of
supply chain IT. While there is still plenty of room to improve the visibility and reporting of
supply chain information, the relative focus on improved analysis to support decision making
will continue to grow. The following three important trends will impact IT in the supply chain:
➢ The growth in software as a service (SaaS)
➢ Increased availability of real-time data
➢ Increased use of mobile technology
The increased use of mobile technology coupled with real-time information offers some
supply chains an opportunity to better match demand to supply using differential pricing. An
example is an initiative by Groupon titled Groupon Now, which offers mobile users deals that
are time and location specific. Businesses can improve profitability by offering deals when
business is slow at specific locations. Consumers benefit from getting a deal when and where
they want it.

9|P ag e
CHAPTER 5
CONCLUSION
In general, companies should embrace the use of IT in the supply chain to minimize cost and
maximize revenue. More focus should be put on the planning and sales function to regulate
the buying since customer demands are high and can cost can be increased. In order to meet
the current level of demand, the systems in place should facilitate the determination of the
current level of demand and also predict future demands to curb stockouts or stock overruns.
Most SMEs do not consider supply chain as an essential function in the organization and
procurement is seen as a finance activity. SMEs should consider implementing supply chain
and use Information Technology to improve their operations as this will save the companies a
lot. The companies should also use IT in planning their procurement activities and engage their
stakeholders as well. The results have also shown how communication is important in an
organization that uses procurement. Most of the supply chain in SMEs is not transparent as the
managers are known to have a conflict of interest. These results in poor revenues, bad customer
service due to delay of product information to customers and also longer lead time. Through
the user of IT, all these can be curbed and companies can enjoy longer benefits such as
improved sales revenue and reduced inventory costs.

10 | P a g e