Using Information Technology in the Supply Chain

New generations of shopping options have come to the forefront of supply chain management through e-commerce and m-commerce, making supply chain management a concern for many organisations. A brief definition of these two areas of supply chain management is:

• Electronic commerce, or E-commerce, refers to online marketing, advertising, purchasing and selling products or services. It includes the exchange of money and information to enable these transactions.

• Mobile commerce, or M-commerce, involves selling and purchasing products and services using wireless handheld devices like smartphones and tablets.

However, effectively managing data and extracting insights requires specialised skill sets. Without the right expertise, technologically driven inventory management can be counterproductive for organisations. It is only beneficial when utilised expertly and appropriately.

The Evolution of Technology

The rise of e-commerce is heavily reliant on technological advancements in inventory management. This shift has blurred the lines between traditional retail and online order fulfilment, highlighting the importance of integrated inventory systems across various sales channels.

The evolution of e-commerce has led to a hybrid model where physical stores incorporate e-commerce platforms. This integration is only feasible with a comprehensive inventory management system that seamlessly tracks inventory across different retail channels.

Due to the rapid rate of change, keeping up with technological advances has historically been a challenge for organisations. However, advancements are now more accessible to all, leading to a complete transformation in organisations' operations. Organisations now have a wide array of technology options, allowing them to tailor their inventory management systems to suit their needs without incurring excessive costs.

The scalability of technology enables organisations to adapt as they grow, potentially giving rise to new business models. Despite the variety of technologies available, the primary goal remains consistent: organising, controlling, and providing inventory information.

Automated inventory management systems utilise tracking technologies like barcodes and RFID to streamline information collection and goods flow. These systems can be active or passive, with active systems offering automatic detection, tracking, and analysis capabilities.
 
Innovative technologies and applications are crucial in advancing inventory management practices, although manual data entry can introduce errors. Nevertheless, these systems can be a flexible and valuable option for smaller organisations.

Each process, whether conducted physically or electronically, has its unique nuances. This is especially evident when comparing competitors offering the same products but having different operational approaches. Furthermore, the peculiarities within various industries contribute to the diversity of processes, even extending to third-party logistics organisations.

Supply chain management software has been designed and evolved to manage and enhance the exchange of information and data across various vital supply chain partners to attain such outcomes as:

• Just-in-time procurement.

• Reduction of inventory.

• Increase in manufacturing efficiency.

• To meet customer needs in a time-sensitive fashion.

Organisations can now leverage technological advancements to create comprehensive supply chain solutions that optimise operations, improve productivity, and address potential bottlenecks in the supply chain process. The availability of real-time information plays a crucial role in increasing the supply chain's efficiency and effectiveness. 

Manufacturing

The evolving technological landscape and shifting customer expectations have underscored the significance of integrated supply management, particularly for manufacturing organisations aiming to expand their customer base. Digitalising business operations is no longer just an added benefit but a fundamental requirement in today's competitive market environment. 

Manufacturing organisations rely heavily on their supply chain partners to deliver products, with stakeholders such as manufacturers, suppliers, retailers, shippers, and distributors playing crucial roles. The supply chain culminates in the delivery of products to the end customer, highlighting the importance of collaboration and efficiency among all involved parties. 

To streamline the overall production process, a manufacturing organisation must clearly understand the status of products in production, anticipate any potential issues or delays, and adjust production schedules accordingly. Technology integration can enhance transparency throughout the process, giving manufacturing organisations greater control over product data and information flow across the supply chain.

Managing inventory levels optimally poses a significant challenge for all manufacturers. Excess inventory can result in financial risks due to waste and increased working capital requirements. In contrast, insufficient inventory may lead to production disruptions and business losses from stockouts. Manufacturers can establish flexible business processes that adapt to varying demand scenarios by leveraging technology. Analytics can help manufacturing organisations achieve their financial objectives by effectively managing inventory and sales orders.

Through IT-enabled real-time information sharing, manufacturers can enhance collaboration and partnership efforts with critical suppliers. Improved visibility into supplier and distribution processes allows manufacturers to monitor activities across the supply chain more effectively. This valuable information enables manufacturers to make informed decisions, anticipate future material demand patterns, and reduce costs through strategic decision-making in procurement and supplier contract management.

Ensuring timely material delivery is crucial for maintaining high customer satisfaction levels, increasing customer retention, and generating repeat business. Technology solutions play a pivotal and vital role in enhancing the delivery speed and keeping customers informed about the status of their product deliveries.

Implementing processes involving customers throughout the manufacturing journey, from order confirmation to fulfilment, can empower them to track and trace their orders and control their experience. This enhances their satisfaction and reduces the workload on the manufacturer's customer service team.

Establishing effective communication channels with logistics service providers can provide real-time updates on inventory shipments and product deliveries, helping to streamline the manufacturing process and minimise delays and costs associated with production obstacles.

Leveraging technology to gain comprehensive visibility across all organisational functions and utilising real-time decision-making data can significantly improve manufacturing efficiency. Incorporating technology into supply chain management can result in lower product costs, reduced working capital requirements, and, ultimately, higher customer satisfaction.
 
Business Intelligence

Business intelligence (BI) comprises organisations' strategies and technologies to analyse business data. BI technologies provide historical, current and predictive views of business operations. The standard business functions of intelligence technologies include:

• Reporting.

• Online analytical processing.

• Analytics.

• Process Data Mining.

• Business performance management.

• Benchmarking.

BI technologies can handle large volumes of structured and sometimes unstructured data, enabling organisations to identify, develop, and create new strategic business opportunities. By providing a straightforward interpretation of these extensive datasets, BI technologies can help organisations uncover insights that can give organisations a competitive advantage in the market and ensure long-term stability.

From operational to strategic decisions, BI can support various aspects of an organisation's business, including product positioning, pricing, and other essential operations. To be most effective, BI should combine external market data with internal organisational financial and operational data sets to provide a comprehensive view that enhances decision-making capabilities.

Additionally, business intelligence tools can empower organisations to gain insights into new markets, assess product or service suitability for different market segments, and evaluate the impact of marketing efforts. 

Inventory Management 

Inventory management is a challenging and crucial task that involves constantly checking and verifying stock levels. It is never complete, as the inventory position continually changes. However, it is essential for the successful operation of any retail or manufacturing organisation. When issues arise with inventory, they can significantly impact the organisation in terms of cost and inefficiency.

Fortunately, technology has evolved to help address these inventory management problems. The goal is to eliminate the manual aspects of inventory management that are slow and prone to errors. In the past, the traditional manual approach to inventory management meant that accuracy was never achieved, and the actual state of the organisation's inventory needed to be accurately represented. Staff had to manually compare incoming and outgoing orders and physically count the inventory to identify and correct errors.

Due to the nature of manual inventory counting, it could not be done continuously and in real time. It was typically done during pre-determined periods set by the organisation. This manual process made it difficult to verify the accuracy of the inventory, and mistakes were inevitable, especially when the task was repetitive and laborious.

However, technological advancements have introduced RFID technology, which can revolutionise inventory management. RFID tags and scanners automate inventory management and continuously track all items entering and leaving a warehouse. Each time a product is moved, its movement is logged, allowing for precise tracking of its location.

For organisations that offer services in addition to goods, RFID technology can also be invaluable for asset inventory management. It eliminates errors, ensures accuracy, enhances customer service, and enables better decision-making.

Organisations rely heavily on inventory management decisions enhanced through insightful data analysis. This approach saves time and equips managers with the necessary tools to improve overall business decision-making processes.

Technologically driven inventory management enables organisations to collect and analyse data, providing valuable insights into product trends and demand patterns. This data-driven approach is crucial for making efficient sales decisions and leveraging big data in the future.

Warehouse Management

While different organisations provide blueprints for key processes using barcoding and radio frequency controls, these standardised methods only apply to reading and recording data. The actual handling of physical materials and the specific procedures followed in each warehouse are distinct and tailored to the individual business. This is driven by factors including:

• The magnitude of the warehouse operation.

• Storage capacity.

• Temperature.

• Order profiles.

• Legislative requirements.

• Organisational culture.

• Volume of goods moving through the facility.

The different processes that occur within a Warehouse Management System are fundamentally the same across many warehouse operations and typically consist of:

• Receiving.

• Put-Away.

• Picking.

• Packing.

• Dispatching.

• Returns.

• Value-adding. 

The complexity around handling value-adding processes and the changing nature of component products in and out-of-shelf locations can be daunting. Over the years, systems have evolved to assist. Yet, many companies find that recording value-adding components may be incompatible with how their logistics system or WMS is set up.

Business Process Management

Business Process Management (BPM) is how an organisation creates, edits, and analyses the predictable processes comprising its core. Each team is responsible for taking some form of raw material or data and transforming it into a usable product or information. Each team may handle a dozen or more core processes, in part or as a whole.

The flow of goods within an organisation involves various procedures, during which a Warehouse Management System (WMS) or an Enterprise Resource Planning (ERP) is utilised to document the corresponding transactions:

• Inbound.

• Goods In.

• Main Storage.

• Picking.

• Packing.

• Dispatch.

With Business Process Management, an organisation takes a step back. It looks at all of its processes in total and individually, typically encapsulated within an ERP or WMS system, before analysing its current state and identifying areas of improvement to create a more efficient and effective organisation.

Business Process Management is not associated with task Management, which focuses on individual tasks, or with project Management, which handles one-time or unpredictable task flows. It is an ongoing organisational improvement process that aims to make the organisation operate more effectively and efficiently.

Staff will only see one part of a process at the individual level. Very few can see the full effects of an entire process and where potential bottlenecks and inefficiencies lie. Uncoordinated and chaotic organisational processes lead to ineffectiveness and inefficiency in one or more of these scenarios:

• Time wasted in non-value-adding activities.

• Increased errors decrease the value of an organisation's data and information.

• A “blame” culture develops instead of corrective actions being taken.

• Lack of accurate data being accrued or created.

• Demoralised staff whose focus is on the error rather than a solution.

Applying business process management principles within an organisation can improve its processes and keep all aspects of its supply chain and logistics running optimally. The following are some of the primary benefits of using BPM within an organisation:

• Gain control of chaotic and unwieldy processes.

• Create, map, analyse and improve business processes.

• The ability to run everyday operations more efficiently.

• Potentially realise bigger organisational goals.

• Move towards digital transformation utilising internet-based technologies.

• Improve and optimise chaotic supply chain and logistical processes.

• Closely track individual products or materials as they move through a workflow.

Business Process Management centres on repetitive and ongoing processes that follow predictable patterns or process management routines. When organised and systemised, business processes can lead to increased organisational performance.

Enterprise Resource Planning

Enterprise resource planning (ERP) is a crucial process that organisations utilise to manage and integrate essential components of their operations. ERP software applications play a critical role in resource planning by consolidating all necessary processes into one system. This integrated system encompasses planning, purchasing, inventory management, sales, and marketing, streamlining organisational operations.

An ERP system is a cohesive force that combines the various computer systems within a large organisation. Without an ERP application, each team within the organisation would have its IT system tailored to its specific tasks. However, with ERP software implementation, each team retains its system while gaining access to all systems through a single application and interface. This integration facilitates a comprehensive planning and operating system.

ERP applications are crucial in enhancing communication and information sharing among different teams within an organisation. By collecting data on the organisation's activities and the status of various teams, the ERP system makes this information readily available to other teams, enabling them to utilise it effectively.

Implementing ERP applications can significantly contribute to an organisation's self-awareness by connecting information related to production, finance, distribution, and human resources. This integration bridges the technological gaps between different parts of the organisation, eliminating duplication and incompatible technologies. It often integrates systems such as accounts payable, stock control, order monitoring, and customer databases into a unified system.

Over the years, ERP offerings have evolved from traditional software models reliant on physical client servers to cloud-based software that offers remote web-based access. While an ERP system does not entirely eradicate inefficiencies, it prompts the organisation to reconsider its structure and operations to maximise the benefits of ERP technology.
 
Despite the potential advantages, ERP systems often fail to achieve their intended objectives due to organisations' reluctance to abandon outdated processes incompatible with the software. Additionally, some organisations are hesitant to let go of old software that has proven effective in the past. To ensure the success of ERP projects, it is crucial to keep them distinct from numerous smaller projects, which can lead to product and service cost overruns.

E-Commerce

Electronic commerce, or E-commerce, is the natural evolution of MRP systems. It refers to any commercial activity or financial transaction that involves exchanging products, services, financial resources, and information over the Internet.

The activities are focused on conducting internal and external business processes as a continuous stream of product and data flows upstream and downstream of the supply chain, utilising cloud-based internet technologies across many different IT networks and platforms.

E-commerce encompasses the capability to exchange products or services by leveraging computer networks like the internet or mobile technology, such as "Apps" on mobile phones. The realm of electronic commerce relies on various technologies to facilitate its operations, which draw on technologies such as:

• Mobile commerce.

• Electronic funds transfer.

• Supply Chain Management.

• Internet marketing.

• Online transaction processing.

• Electronic data interchange (EDI).

• Inventory management systems.

• Automated data collection.

Organisations have faced challenges due to the disparity between the advantages of supply chain technology and the means to actualise those advantages. Nevertheless, the growing adoption of e-commerce technologies has offered a streamlined and productive method of realising the benefits of modern supply chain technologies.

This can unify all internal and external organisational operations encompassing the tangible, monetary, and informational movements of products, services, and data across the supply chain. Furthermore, the influence of e-commerce on supply chains is considerably more advanced.

By utilising electronic solutions, organisations can now pinpoint discrepancies between various levels of supply chains, thereby eliminating the performance gap. The advent of e-commerce has also facilitated the implementation of ERP and WMS systems, enabling organisations to enhance the efficiency and effectiveness of their supply operations with customers and suppliers.

These new capabilities still need to be fully exploited as technology organisations invest in new e-commerce software solutions and expect greater investment returns. E-commerce helps solve many issues that organisations may need help coping with, such as political barriers or cross-country changes, and it provides organisations with a more efficient and effective way to collaborate within the supply chain.

The emergence of e-commerce has created job opportunities in information-related services, software apps, and digital products. However, e-commerce has also resulted in job losses, especially within the retail, postal, and travel sectors, which are expected to experience the most significant job losses due to the increasing reliance on e-commerce and customers' self-sufficiency in using online services provided by organisations.

One of the main advantages of e-commerce is its convenience to customers. They can now shop from home and easily browse through an organisation's online shopping portal. This is especially beneficial when purchasing products or services that are not available locally. 

By shopping online, customers can access a broader range of products, saving them time, money, and effort. Additionally, online shopping gives customers purchasing power as people can research products and compare prices among multiple retailers.

E-commerce technologies have also helped reduce transaction costs by eliminating the need for intermediaries. Organisations and end users can now directly engage in online product or service searches, which has contributed to the success of e-commerce at both urban and regional levels. However, the success of e-commerce relies on how effectively local organisations utilise it and how well local end users adapt to its use.

Despite e-commerce's advantages, human interaction is still needed, especially for customers who prefer face-to-face contact. Many customers are concerned about online transactions' security and integrity, and remain loyal to well-known retailers. 

To address these concerns, some clothing retailers, like Tommy Hilfiger, have introduced "Virtual Fit" platforms on their e-commerce sites to minimise the risk of customers purchasing ill-fitting clothes. However, the effectiveness of these platforms varies significantly.

While e-commerce has created new job opportunities and increased customer convenience, it has also led to job losses in specific sectors. The success of e-commerce depends on the proper use of local organisations and the adaptation of local end users. Additionally, human interaction is still needed to address customer concerns regarding online transactions.

The rise of e-commerce has been identified as a principal and significant factor contributing to the decline of brick-and-mortar retailers, a phenomenon often dubbed the "retail apocalypse". The proliferation of online shopping platforms like Amazon has posed challenges for traditional retailers in retaining and attracting customers, prompting them to revamp their sales tactics.

Many businesses have resorted to implementing sales promotions and intensifying their digital presence to entice consumers, leading to the closure of physical store locations. This shift in consumer behaviour has compelled some traditional retailers to prioritise their online operations over their traditional storefronts, ultimately reshaping the retail industry's landscape.

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