Md. Kabir Sheikh - (SCM)
Md. Kabir Sheikh - (SCM)
on
The Role of Information Technology (IT) in Supply Chain
Management
PREPARED FOR:
Md Rubel
Assistant Professor
Dept. of management studies,
Jahangirnagar University.
PREPARED By:
Batch: 6th
Jahangirnagar University
Savar, Dhaka-1342.
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.
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CHAPTER 2
SUPPLY CHAIN MANAGEMENT
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.
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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:
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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.
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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.
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.
• Reduction of costs
• Volume of transactions
• Speeding up information transfer
• Elimination of human errors
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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.
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.
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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.
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.
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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.
• 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.
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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.
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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.
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