Role of Information Technology in Supply Chain Management

Role of Information Technology in Supply Chain Management

Role of Information Technology in Supply Chain Management

This is the third post in a series of “Supply Chain Basics Training to Your Employees-Is it Necessary?” In case you missed the previous post, here they are “Importance of Supply Chain Management” and “Globalization Impact on Supply Chain“.

It was a Sunday, a pleasant day and my friend’s birthday too. So, I decided to go for an outing and then purchase a gift for him. According to the weather forecast for that day, there was a probability of rain and so I took my rain coat along. Rain did start pouring down and I used my raincoat.

Now, what does this incident have to do with supply chain management? Let us see.

Since the information I had about the weather was prior to my outing, I was able to protect myself from the rain. Similarly, for a company to be prepared or to be able to respond to the changes in the global environment, information flow among the various departments of a supply chain is very crucial. Let us see the following case of Cisco:

In the network components business, Cisco became the market leader in 1990. When the demand slowed down Cisco was unable to track its inventory across the various supply chains spread globally. This resulted in a high inventory accumulation due to which the Company in 2001 announced that it was writing off 2.2 billion dollars worth of inventory. [Source: APICS]

In the above case we see that Cisco was slow in gaining awareness of the decreasing demand and also lacked visibility in the supply chain. Thus, it was unprepared.

Remaining responsive to market condition is essential. Activities carried out in globally dispersed facilities should be coordinated in a better way to remain responsive. Where the product is, how the product is moving and what’s the demand of the product are important factors that a company should be aware of in order to plan the supply chain activities accordingly. If this information is easily accessible then it can set the stage for an effective management of the supply chain. When technology comes to aid sharing, transferring and processing information, then the integration of your supply chain will be effective.

To facilitate the integration of supply chain, various ERP software packages are currently available in the market. ERP facilitates information flow between all departments of the supply chain. But choosing the suitable information systems to integrate your supply chain may be difficult.

Out of the many factors that contribute to the failure of ERP implementation, one prime factor is inadequate training. Reports say that poor training is the main reason for unsuccessful ERP implementations because many companies train their employees only on new software or train only their technical staff. However, when you implement ERP, it changes the way your business is done. Training every person who is connected to the system on how to do business differently with the use of software yields good results. Developing in-house training materials and choosing eLearning as the delivery platform can be a good option.

In my next blog let us see the “Effect of Culture on Supply Chain Management“.

Register for the Webinar on Supply Chain Basics Training to Your Employees-Is it Necessary?