How Information Technology Has Influenced Supply Chain Management - Essay Example

Introduction

Information technology has become of great value in the current practice of supply chain management. According to many researchers findings show that indeed the rewards of Information Technology into the current business world has significant benefits more importantly inside supply chain management; it has managed on time, a critical issue in supply chain, improved on efficiency and ensures customers satisfaction. In the current world companies are experienced to be connected to each other through networks in terms of Supply Chain Management (SCM) (Greeff, 2004).

IT has had bigger advantages inside SCM. However, there is no assurance that an company will attain better performance. The fact is implementing a specific technology can easily be replicated by different companies that may end up not showing sustainable competitive advantages for the replicating company. The adoption of IT into supply chain influences a company in terms of information about customers, agents and the market needs. This paper aims at exploring how Information Technology has influenced the operations of supply chain management and assesses the impact in a number of Chinese firms that deal with technology to outline the qualitative assessment.

The Literature review

The clarity of explaining the subject is quit complex and thus a particular method is used to assess how information technology has influenced the operation of supply chain management as the main topics.

In compiling the rest of the dissertation, the following format has been implemented to bring out the main objectives of the paper. Understanding what is information technology and supply chain management as a major topic in this discussion; thus a summary of the definition of SCM and information technology, the discussion of the method of ranking, illustration of the experimental results of the Chinese automobile company supply chain, and finally the conclusion.

Information Technology Systems

Under systems of information technology, in appreciating how information technology has brought change in supply chain management, concentration on the main parameters that cut across the boundaries of organizations to ensure that sharing of information and processing are done efficiently. Therefore, apart from information systems that work internally like the enterprise resource planning systems, we further examine identification technologies like radio-frequency identification (Victor & Cheng, 2007)

Supply Chain

The definition of chain supply entails a number of linked up operations that concentrate on ensuring that all managerial tasks ranging from planning, directing, and controlling inputs and outputs, and ensuring that goods and services are promptly supplied to the customer. The production and distribution of commodities usually entails regional supply of services and transport networks that connect these services. In areas where commodities are centralized under larger chains, the production and distribution of commodities reduces to a complex form, where the area of starting is the output that is to be delivered to a client at the right time. Provided that a clean operational services, such as a monetary service company or an accessing process, the supply chain is mainly the flow of information.

Supply Chain Management and IT

In today’s world, the growth of information technology, the conceptions of supply chain strategy and management have come to be current operations model. The difficulty of supply chain management has similarly required firms to seek automated communication systems like seeking communication through the internet offers a wide range of interactions amongst the firm and the client. This results to benefits in the production and distribution of commodities in business.

Supply chain management stresses on the long run advantage to chain management by means of organizing and sharing of information. This asserts the advantages of IT in the production and delivery of goods and services subjective to inconsistency in ordering.

More research has been done to ascertain the effect of information technology in supply chain management and relationships between organizations. In this dissertation, Information technology seems to be an advantageous influence for shared relationships. A prevalent trust is that information technology can improve the capability of processing information for suppliers, thus allowing larger relationship in adding to reducing doubt. Information technology reduces the cost of transacting among agents and buyers and generates an extra interactive structure of governance, resulting to closer relationship between the buyer and the agent, which may reduce trust between partnership organizations and eliminates the significance of an individual towards how a buyer relates to an agent since belief is built the foundation customers.

The basis of the impact

The findings of research carried out on Foton discovered that the major issue IT uses to influence the ability to ensure that all the processes of chain supply lies on logistics, procurement, company, dealer association and consumer management; their explanations is as follows:

Information Technology on purchasing supplies

The application of information technology in purchasing, considering a company like Forta, its SCM levels have continuously increased in the past years. Research reveals that information technology is used in various procurement applications comprising of vendor communication, confirming dealer price margins and purchasing from the list of vendors. Negotiations with dealers have moreover modernized by the application of information technology. Interpersonal negotiations are not commonly used because a lot of negotiations are done through the use of information technology. The process involves bargaining and negotiation again over price and agreement standings. Queries from dealers on receipts, informing dealers and dispensation of returns and goods that are damaged are all done by information technology.

In addition, the other prevalent application of IT in supply chain management is the processing of applications of order. IT is commonly used in order placement and status. The application of information technology in processing of orders has decreased the frequency of errors that are included in processing of orders. Through IT, error identification and correction can easily be fixed.

Information Technology on operation

Inventory is the most costly feature of supply chain management. Through research findings carried out on Fukang, an automobile company in China, the most prevalent application of information technology over this field is by ensuring that shares from consumers are communicated with information. Through the use of Information technology has made it possible for firms to rapidly introduced information to their consumers through the use of EDI (electronic data interchange) programs (Morris, 2007). The use of IT has improved the inventory field through the aptitude that companies have active managerial skills. Companies have been able to handle issues like notifying customers on the state of the goods on transit in order to minimize uncertainties.

Supply chain management has for a long time been faced by the difficulty of scheduling production, IT has enabled companies limit the difficulty in scheduling production by enhancing the connection between the vendor, company and the consumer. Research reveals that some companies examined the use of information technology to link up their vendors with the just in time programs. Additionally some companies are taking the lead to use IT in scheduling production with their vendors.

Under Logistics

Management of transport has been the most prevalent application of IT in managing supply chain logistics. The most demanding cost in supply chain management is transport according to literature assessment. Research explains that the tracking of vehicles that distributes to regional centers by transporters is the most prevalent application of IT in supply chain. This is advantageous to the company since monitoring delivery to regional warehouses delivers the company with information on the dependability performance of the transporters on board. This permits the management of transportation to ensure that transporters using motor vehicle deliver in time. It also offers the management to inform customers over the state of delivery in case of delay to avoid much wait by the customer (Victor & Cheng, 2007). IT tracking application systems has enabled an efficient handling of reporting claims, settlement and processing.

In logistics and production, a lot of firms are involved in the ensuring that all processes comprise satisfaction of consumer’s orders that is manufacturing, delivering of parts and sub-assemblies, logistic director, transportation haulers, representative of customer services, material directors, and not limited workers who ensure that quality is attained. Time management when it comes to deliveries to customers, economic acquisition of inventory, and progressing labor among others are the main aims that increase accurateness and comprehensiveness of delivering a customer’s order and offsetting the client and hasten the compensation for the delivered goods and services and to bank the cash timely. To realize such a level of order in sequence incorporation, companies ranging from manufacturing, merchandising and their tradeoff associates are implementing IT

Under Customer Relationships

Through the view of experts in management, many argue that by concentrating on entire consumer satisfaction, a firm can increase its power in processing to produce quality service at an economic cost. Consumer satisfaction can be considered as the most reliable issue in to productivity within the company. The main objective of the field is not only to focus on distribution, however, the main goal is to ensure delivery of consumer total satisfaction, by which quality delivery is only a portion. In the meantime, few years ago, information about the customer could not be exploited fully in conditioning the setting of a company’s processes. Currently, the high speeds in information technology has enabled company’s the capability to provide their customers with an alternative way to consult the firm on matters of service and incorporate client and firm information to obtain better advantages on the parties. Research reveals that some firms are using IT to collect complaints from clients, while the rest make use of emergency notice.

Under Vendor Relationships

According to some researchers, setting out information technology into supply chain management will influence healthy relationships between the buyer and the seller. A firm gave practical results that the application of IT is related with general familiarity between the relationship of the buyer and the supplier (Morris, 2007). Further, it indicates better relationship between an organization and a supply chain management that has implemented IT solutions as an advantage. Another firm proposes that the application of IT inside the two sectors will inspire the obligation to creating relational conduct. Their outcomes show that the use of technology reduces the transaction expenses amongst the buyers and the suppliers and builds a better interpersonal relationship.

Within any organizational relationship, trust has a major role in influencing information technology. When there is belief, reliability and compassionate between two parties, then trust is said to exist. In different organizational relationship in management literature, there is need for to embrace trust as an important part. In the relationship between the buyer and the seller, trust is an indispensable component (Morris, 2007).

Research shows that in the long run positioning obligation as a forecaster for success in alternate organizational relationships. This refers to the readiness of different parties to employ exertion in coming up with sustainable relationships. Obligating resources of an organization’s relationship commonly establish such readiness in the form time, finances, and facilities among others. In supply chain management, output gains are conceivable when companies are ready to do transaction, which is a beneficial indicator of obligation that is supported by information technology.

Other researchers say that for a buyer and seller to have successful relationship that has better levels of sharing information. The kind of information that is shared should be is of critical value in partnership of supply chain. Through IT, positive results of information will be shared.

Under the Firm

To ensure that costs are down, the levels of discipline in the organization should be maintained at high levels. Anyone who is aware of what is to be done understands how to do it fast and efficiently. The argument is that the need for procedures that are of high value and consistent for every individual to familiarize with the procedures and implement them without failure. In the current market place, trends keep on changing and the most important thing is the ability is innovative by providing the client with new packages of service and better organizational relationships. In order to achieve this, information technology will deliver.

The use of IT was also discovered in the framework of the size of the company with dual measures: the volume of the sales and the number of employees. As compared with employees, big firms have the likelihood of using information technology to communicate with clients on the status of order and to achieve a subcontracting of client service purposes.

Every client and every local state is having a difference. If a firm is delivering a key multinational client, then it is required to deliver, or organize the delivery of the service in different geographical regions in the globe. In every state there are exclusive local features, duties, and practical business, and means of making things done efficiently. Equal measures cannot be functional consistently in every local state. Information technology has ensured that the estimated consistency of global practices and native differences has been balanced.

Need for unending education in this field is of great importance and success for the field. Since better players emerge, entities must have the ability to study fast the needs that allow individuals pace with upcoming ideas. Since information is nurtured, other associates of the group must be informed and similarly individuals in different bigger organization, that the major impact to success is through information technology.

An organization can either be tight or loose. Through having a tight scenario means the requirement of having a slender, well-organized operation, whereby, there is a strong and continual responsiveness to the possession of expenses lower and offering quality service every time. Being loose means verifying and fulfilling customer friendly qualities friendly and can be approachable in diverse customer expectations. Information technology has greatly influenced this area.

Data Collection

Data collected was specifically to investigate the influence of IT in supply chain management. Data was collected in three phases namely, the technologies, the solutions and the benefit to a firms supply chain management (Kotzab, 2005).

Stage 1: Consultation interviews on supply chain

To begin with, developing and understanding the existing trend in information technology applications in SCM was relevant. In the subsequent assessment of the research, IT is used in SCM as a substitute to all other technologies that can be used in handling and controlling facts and links that constitute supply chain, the actions and evidence that have exchanged between organizations (Morris, 2007).

Since the judgment supporting systems represent a rather distinct area, with dissimilar tasks and paybacks. Interviews that have been contacted within several consulting firms carrying their operation across the subject of logistics, has enabled the availability information of what type and what kind of technology that firms leading in the market have been using in the current years. The following is the extent to which research reached: EPR, EDI, and third party transaction centers that provide services among others (Kotzab, 2005).

Stage 2 Phone Inquiry to companies

A number of interviews were contacted within Foton and other companies that deal with automobile goods and services that were observed as tolerant user’s approaches in information technology and SCM. Skilled sentiments from academic and industrial representatives have been used assessing the firms in this discussion.

The aim was to assess how the effects of information technology have influenced the processes of supply chain management. The questioner was addressed to the informers earlier, and then through the phone the interview was contacted. In part of the firms the informers were in the field of logistics or managers in supply chain management, information technology managers or development managers while in firms that were smaller, the managing directors were addressed.

Stage 3: Interview with in depth cases

This stage comprised of interviews that had a deeper analysis on the impact of IT in various fields in supply chain field. A team of two investigators conducted the semi-structured interviews. Surveys were delivered to informers earlier to assist them collect sufficient information concerning the questions to be discussed about the topic. Questions comprised of definite issues that related to specific IT impacts on supply chain management including the assessment of the benefits and the challenges encountered during the implementation.

Analysis of the Data

The data that was collected in the third stage was analyzed in two different levels; Analysis within the scope and analysis across the scope, in addition a skilled analysis was conducted and the results analyzed.

Analysis within the scope of every scope included thorough case study writing of specific cases. The compiled writings were explanations that were organized in accordance with the concepts used in collection data. They were essential in the generation of understanding in or particular cases, for reasons they had assisted accomplish the analysis method of huge bulk data.

The process permitted the distinctive patterns of every case to appear. Every case analysis confined a complete description of the specific application of IT application in supply chain administration, including the procedure of clarification and the type of technology implemented. The benefits that were described were acknowledged by use of qualitative and quantitative facts where applicable.

The analysis of cross concept was carried out in double mechanisms: by means of comprehensive profits of IT in supply chain administration and to foresee how the presentation of information technology was connected to distinct procedures inside a company, cooperation of two supply chain management associates or suppose another system that had clarity in influencing the operations. Welfares were complementary progressive into suggestions that were accessible in the forth stage. All applications of information technology were then reviewed and grouped rendering to which objectives they linked with (Kotzab, 2005).

A validity and reliability note

Apprehensions regarding the validity and reliability are predominantly essential for a concept-based research. External legitimacy replicates how precisely the outcomes signify the singularity studied, creating simplification of outcomes. The difficult with external legitimacy has been the main obstacle in contacting a case training, conversing critics of a constructed case technique. For instance the overview of a research that is from specific case to a broader idea and not from samples to a large group of people. (O'Brien, 2009)

The other subject in research is planning advantages and reliability; giving the experimental reproducibility, and whether the outcomes attained will have repetition or not. Interviews that were conducted experimentally were used to develop the topics of the study and method in advance to every data gathering point. Also, the people who give information on phone interviews, in addition to the in deepness of case consultations, they had established their guide to dialogue previous, and thus they were aware of the topics with the kind of format citations that may be prerequisites. To additionally authenticate the reliability, a research report was established, which consisted of a copy of a widespread guide of the interview for each case and thorough summary of individual cases.

Validity discourses notion, forms the suitable functioning measures for the ideas to be reflected. The only way to deal with the idea of validity is return the research reports to the people who inform for verification.

Personnel from the firms individually reviewed the theory in advance to the analysis of concept. In the research, numerous foundations to the study were confirmed and used during the study, which enhanced the concept of validity.

Conclusion

The paper pursues how information technology influences the management supply chain; the discussion was presented through definition of the terms in the analysis. In terms of the applications of information technology in different classes of supply chain, it can be seen that greater and valuable achievements have been rewarded to many firms that have embraced it. Through efficiency in communication, education and competency, higher levels of achievement have been attained.

In global markets, firms may have competitive advantages depending on their ability to keep up with changes that provide customer satisfaction through use of technology. Though the findings of the study; Application of IT in SCM has important influence to financial performance through ensuring that information flows efficiently and effectively between parties in supply chain organizations. In evaluating how information technology has reshaped SCM, several Chinese automobile including Foton, a multinational automobile company, fukang among others were tested using several experts of the industry in supply chain and the largest percentage embraced the findings. The proposed discussion support a large field of IT established on SCM and can be used as a regulator to assess the SCM development by utilizing information technology.