Free Essay Example:The Use of Technology in Supply Chain Management

Introduction

Complexities in today’s business environment adversely impact the effectiveness of Supply Chain Management (SCM). Modern supply chains qualify to be complex systems because they involve multiple companies and require large information to control them (Serdarasan & Tanyas, 2012). Also, they involve a variety of relations, interactions, and processes within and between companies. The use of technology can help address critical challenges that arise from SCM complexity. According to Serdarasan and Tanyas (2012), SCM research emphasizes the essence of information sharing, integration, sharing risk and awards, coordination, visibility, and long-term relationships to resolve SCM problems.

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In essence, SCM technology can address critical problems through standardization, enhanced coordination, and better integration of supply chains (Serdarasan & Tanyas, 2012). Other activities associated with SCM technology include process automation, information visibility, elimination of non-value-adding processes, and supply chain synchronization (Serdarasan & Tanyas, 2012). This research paper reviews academic literature to examine the use of technology in supply chain management, including its benefits and challenges.

Information Technology in SCM, Its Benefits and Challenges

Information technology (IT) plays a critical role in supply chain management. Research has shown that IT can address problems that arise from the disintegration of supply chain networks (Varma & Khan, 2014). Here, technology allows supply chain partners to share information through the integration of their systems. More importantly, the use of SCM information technology improves decision-making as it provides an opportunity for managers to acquire timely information in the format they need (Varma & Khan, 2014).

Companies now use technology to integrate stakeholders involved in their supply chains. According to Varma and Khan (2014), information technology plays a key role in integrating manufacturers, suppliers, distributors, and customers among other stakeholders to satisfy the quality and quantity of products. Coronado et al. (2006) corroborated that the integration aspect of technology allows organizations to gather information along their supply chains and utilize it to solve emerging problems or react to predictable changes in the market. In doing so, companies would be using supply chain management to gain a competitive advantage.

Research has demonstrated that using technology to integrate different supply chain stakeholders is beneficial in several ways (Varma & Khan, 2014). First, it enables collaboration between a company and its supply chain partners. Secondly, it creates a single point of contact for information and data. This feature supports decision-making based on total supply chain information. Thirdly, the integration aspect enhances information availability and visibility.

Auramo et al. (2005) categorized the functional roles of information technology on SCM as decision support, collaboration, and transaction execution functions. Varma and Khan (2014) added that IT features like business process standardization, real-time availability, data integrity, and visibility could facilitate the better matching of demand and supply between the partners.

Nonetheless, the rigorous use of IT in supply chain management poses serious challenges that decision-makers should address. Some of these problems are phishing, hacking, and internet/telemarketing fraud crimes (Varma & Khan, 2014). Still, companies can address these problems because modern SCM technologies provide an opportunity to curb e-risks.

The Adoption of Web-Based and Internet-Based Technologies

Internet and web technology have revolutionized supply chain management. According to Chou et al. (2004), the latter can support all supply chain functions and operations. There is evidence that internet-based SCM is beneficial to organizations as it is fast and inexpensive (Chou et al., 2004). Besides, web and internet-based technologies allow corporate executives to conduct real-time access to the organization’s inventory level. With the integration feature of SCM technology, distributors and suppliers can also have real-time access to the firm's inventory. Chou et al. (2004) said that web technology is paving the way for the development of e-commerce applications that support online transactions and communication. Notably, online procurement is an example of an SCM function supported by web technology.

Electronic data interchange (EDI) is one of the technologies that have improved supply chain management. Today’s organizations and their trading partners use this technology, mainly for information exchange. Some of the information exchange aspects are receiving purchasing orders and sending requisitions (Chou et al., 2004). However, many supply chain companies have not implemented EDI because it is costly to sustain (Chou et al., 2004).

Web-based supply chain management can improve efficiency and cut costs, but it can generate technical and ethical concerns. Here, partners in the supply chain can reveal business secrets if their collaboration is not based on cooperative norms, trust, and commitment. To overcome this cultural issue, business partners need to have a shared vision of the chain management strategy. Technical concerns about web-based SCM emanate from the insecure nature of the internet. In this sense, Chou et al. (2004) argued that organizations that intend to implement web-based supply chain management should prioritize data security.

Bhandari (2014) said that the latest technologies in SCM could be divided into three categories. These elements are information technology, communication technology, and Automatic Identification Technology (Auto-ID). Examples of Auto-ID technologies are Radio Frequency Identification (RFID), voice recognition, and barcoding. In this perspective, Bhandari (2014) defined Auto-ID as technologies that facilitate direct data entry to a computer system.

The benefits of Auto-ID in SCM include speedy data processing, convenience in storage, cost-saving, and accuracy (Bhandari, 2014). Barcoding supports inventory management as it conveys critical information such as product details, manufacturer name, material content, and manufacture date. Accordingly, barcoding helps reduce human error and increase the logistics system by enhancing reliability, speed, and accuracy (Coronado et al., 2006). In addition to easy identification, this Auto ID technology can reduce lead processing time and SCM paperwork.

RFID technology is an alternative to barcoding, and it uses radio waves to communicate inventory data. Bhandari (2014) found that RFID has had positive impacts on supply chain management. In this case, the author cited Walmart as an example of a global retailer that has leveraged RFID to enhance its SCM. Bhandari (2014) further said that this technology has linked Indian exporters to Walmart and has allowed them to have better visibility into the flow of their goods along the supply chain. Examples of other companies that extensively use RFID in their SCM processes are Proctor & Gamble Company and Ford Motor Company (Bhandari, 2014).

Automatic data capture (ADC) is the most advanced supply chain management technology in communication (Singh, 2003). This technological tool supports key supply chain and transactional information processes. ADC consists of Radio Frequency Data Capture (RFDC), voice recognition, and bar code scanning (Singh, 2003). These data capture and transmission tools allow supply chain managers to track the status of goods moving through the system. According to Singh (2003), RFID technology has great potential to eliminate information lag as it can collect 40 times the data that one can gather using conventional bar codes. In this regard, information lag refers to the difference between the time when an item is shipped or sold and documentation, showing it needs replenishment (Singh, 2003).

Research has demonstrated that optimization tools and technologies are the backbones of SCM (Singh, 2003). Heuristics in artificial intelligence and advances in algorithmic techniques have contributed to the emergence of sophisticated SCM optimization software versions and supply chain infrastructure (Singh, 2003). Research by Reddy et al. (2015) indicated that many companies use optimization technologies in their SCM for transaction processing. Importantly, organizations can use transaction processing technology for verification of delivery. According to Reddy et al. (2015), technology implementation in this area has reduced manual work and costs. Other benefits of transaction processing technology in SCM include efficient information transfer and improved quality of information (Reddy et al., 2015).

Good SCM technology in today’s business environment should facilitate the flow of goods and services in a way that an organization's operations can improve in terms of speed, agility, and real-time control (Soltany et al., 2018). However, the authors argued that SCM technology does not guarantee a competitive advantage to organizations (Soltany et al., 2018). The rationale is based on the idea that companies tend to duplicate particular adaptive technologies to leverage their supply chain activities and operations.

Conclusion

Many organizations have integrated technology into their supply chain networks to enhance SCM. Technologies used in supply chain management fall into three groups: transaction execution technology, order tracking, and order delivery technology, and supply chain technology or collaboration IT. Extensive use of information technology in SCM has resulted in increased cooperation among supply chain partners, better inventory management, and more efficient order tracking and delivery. Besides, digital transformation in SCM has improved transparency, thus reducing the need for higher lead time and excessive inventories. However, partners in the supply chain can leak sensitive information if their collaboration is not based on mutual trust and cooperative norms. SCM information technology also raises technical concerns as unauthorized parties can access sensitive information through hacking and phishing. In the future, more companies will likely embrace technology in SCM because of the growing need for accountability and improved visibility in the business world.

References

Auramo, J., Kauremaa, J., & Tanskanen, K. (2005). Benefits of IT in supply chain management: An explorative study of progressive companies. International Journal of Physical Distribution & Logistics Management, 35(2), 82-100. https://doi.org/10.1108/09600030510590282

Bhandari, R. (2014). Impact of technology on logistics and supply chain management. IOSR Journal of Business and Management, 2(17), 19-24. http://www.iosrjournals.org/iosr-jbm/papers/7th-ibrc-volume-2/17.pdf

Chou, D. C., Tan, X., & Yen, D. C. (2004). Web technology and supply chain management. Information Management & Computer Security, 12(4), 338-349. https://doi.org/10.1108/09685220410553550

Coronado, A. E., Lyons, A. C., Michaelides, Z., & Kehoe, D. F. (2006). Automotive supply chain models and technologies: A review of some latest developments. Journal of Enterprise Information Management, 19(5), 551-562. https://doi.org/10.1108/17410390610703675

Reddy, P. R., Afsar, S., & Nadendla, G. (2015). Information technology in supply chain management. International Journal of Computer Science Engineering and Information Technology Research, 5(1), 111-116.