INTERNATIONAL INSTITUTE FOR SPECIAL EDUCATION

FINAL PROJECT ON “Role of IT in supply chain management”

Submitted To: Submitted By:

Dr. Shekhar Srivastava Poonam Yadav

PGDM Ist Year

Address: Kalyanpur (West), Lucknow, Uttar Pradesh 226022

Phone: 0522 275 0620

 DECLARATION

I hereby declare that the project work entitled” Role of IT in SCM” Submitted to
the IISE, is a record of an original work done by me under the guidance of
Dr. Shekhar Srivastava Professor, IISE Luck now, and this project work have
not performed the basis for the award of any Degree or diploma/ associate
ship/fellowship and similar project if any.

Poonam Yadav
1540
 Acknowledgement
I have taken efforts in this project. However, it would not have been possible
without the kind support and help of many individuals. I would like to extend my
sincere thanks to all of them.

I am highly indebted to Dr. Shekhar Srivastava for his guidance and constant
supervision as well as for providing necessary information regarding the project &
also for his support in completing the project.
I would like to express my gratitude towards other faculty member as well for their
kind co-operation and encouragement which helped me in completion of this
project.
 Table of Contents

S.NO. TOPICS

1. ABSTRACT

2. Introduction Role of IT in SCM

3. Supply Chain Decisions

4. Supply Chain Technologies and Strategies

5. Research Methodology

6. IT on Operation

7. IT on Customer relationship

8. IT on Vendor Relationships

9. IT on Firm

10. TQM

11. Conclusion

12. Bibliography
 ABSTRACT

This paper focuses the role of Information technology (IT) in supply chain
management. It also highlights the contribution of IT in helping to restructure the
entire distribution set up to achieve higher service levels and lower inventory and
lower supply chain costs. The broad strategic directions which need to be
supported by the IT strategy are increasing of frequency of receipts/dispatch,
holding materials further up the supply chain and crashing the various lead times.
Critical IT contributions and implementations are discussed. Fundamental changes
have occurred in today's economy. These changes alter the relationship we have
with our customers, our suppliers, our business partners and our colleagues. It also
describes how IT developments have presented companies with unprecedented
opportunities to gain competitive advantage. So IT investment is the pre-requisite
thing for each firm in order to sustain in the market.

Supply chain management is nothing but integration of elements of logistics

system of the firm and its further integration with logistics systems of business
partners like vendors, customers, and 3PL service providers. In supply chain
integration, the firm integrates its own value chain with the value chains of its
business partners for systematic exploitation of the shared resources. By working
together as partners, the firm and its supply chain members can provide greatest
value to end users at lowest costs and remain active in the marketplace for longer
period. Information technology allows firms to coordinate production with
demand, slash inventory and cycle times, better manage logistics, improve
customer satisfaction, and reduce overall costs. In the present day’s competitive
environment, the success of supply chain integration is largely conditioned by the
extent of use of information technology. By using information technology, vendors
are able to drastically cut response times. It allows firms real-time access to point
of sale information. It is essential for the retailers and manufacturers to know,
where exactly a firm’s products are and how long it takes to get them from point A
to point B, because they strive to find profit by cutting inefficiencies out of the
supply chain. Improvement in information technology reduces transaction costs
and promotes better communications between firms. One of the components of the
implementation of supply chain management is information sharing through two-
way communication between partners within a supply chain. As a result, most of
the corporate enterprises are, considerably, investing in the development of an
appropriate IT infrastructure foe supply chain integration in terms of computer
hardware, software, and connectivity means of Electronic Data Interchange (EDI),
Bar Code System (BCS), Enterprise Resource Planning (ERP), and Intranet,
Extranet and Internet.

INTRODUCTION:

A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished products
to customers. Supply chains exist in both service and manufacturing organizations,
although the complexity of the chain may vary greatly from industry to industry
and firm to firm. An example of a very simple supply chain for a single product,
where raw material is procured from vendors, transformed into finished goods in a
single step, and then transported to distribution centers, and ultimately, customers.
Realistic supply chains have multiple end products with shared components,
facilities and capacities. The flow of materials is not always along an arbores cent
network, various modes of transportation may be considered, and the bill of
materials for the end items may be both deep and large. The concept of Supply
Chain Management is based on two core ideas. The first is that practically every
product that reaches an end user represents the cumulative effort of multiple
organizations. These organizations are referred to collectively as the supply chain.
The second idea is that while supply chains have existed for a long time, most
organizations have only paid attention to what was happening within their “four
walls.” Few businesses understood, much less managed, the entire chain of
activities that ultimately delivered products to the final customer.

Supply chain management (SCM) is concerned with the flow of products and
information between supply chain members' organizations. Recent development in
technologies enables the organization to avail information easily in their premises.
These technologies are helpful to coordinates the activities to manage the supply
chain. The cost of information is decreased due to the increasing rate of
technologies. In the integrated supply chain model (Fig.1) bi-directional arrow
reflect the accommodation of reverse materials and information feedback flows.
Manager needs to understand that information technology is more than just
computers. Except computer data recognition equipment, communication
technologies, factory automation and other hardware and services are included.

Integrated supply chain model

Bi-directional arrow reflects the accommodation of reverse materials and

information feedback flows.

Managers need to understand that information technology is more than just

computers. Except computer, data recognition equipment, communication
technologies, factory automation and other hardware and services are included.

The importance of information in an integrated supply chain management

environment:

Prior to 1980s the information flow between functional areas with in an

organization and between supply chain member organizations were paper based.
The paper based transaction and communication is slow. During this period,
information was often over looked as a critical competitive resource because its
value to supply chain members was not clearly understood. IT infrastructure
capabilities provides a competitive positioning of business initiatives like cycle
time reduction, implementation, implementing redesigned cross-functional
processes. Several well know firms involved in supply chain relationship through
information technology. Three factors have strongly impacted this change in the
importance of information. First, satisfying in fact pleasing customer has become
something of a corporate obsession. Serving the customer in the best, most
efficient and effective manner has become critical. Second information is a crucial
factor in the managers' abilities to reduce inventory and human resource
requirement to a competitive level. Information flows plays a crucial role in
strategic planning.

Supply chain organizational dynamics:

All enterprises participating in supply chain management initiatives accept a

specific role to perform. They also share the joint belief that they and all other
supply chain participants will be better off because of this collaborative effort.
Power with in the supply chain is a central issue. There has been a general shift of
power from manufacturers to retailers over the last two decade. Retailers sit in a
very important position in term of information access for the supply chain.
Retailers have risen to the position of prominence through technologies.

The Wal-Mart & P&G experiences demonstrate how information sharing can be
utilized for mutual advantage. Through sound information technologies Wal-Mart
shares point of sale information from its many retail outlet directly with P&G and
other major suppliers.

The development of Inter organizational information system for the supply chain
has three distinct advantages like cost reduction, productivity, improvement and
product/market strategies.

Barrett and Konsynsik have identified five basic levels of participation individual
firms with in the inter organizational system.

1. Remote Input/Output mode: In this case the member participates from a

remote location with in the application system supported by one or more higher-
level participants.

2. Application processing node: In this case a member develops and shares a

single application such as an inventory query or order processing system.

3. Multi participant exchange node : In this case the member develops and
shares a network interlinking itself and any number of lower level participants with
whom it has an established business relationship.

4. Network control node: In this case the member develops and shares a network
with diverse application that may be used by many different types of lower level
participants.

5. Integrating network node: In this case the member literally becomes a data
communications/data processing utility that integrates any number of lower level
participants and applications in real times.

Four fundamental mistakes made when determining information requirements are

as follows:

1. Viewing system as functional instead of cross-functional.

2. Interviewing managers individually instead of jointly.
3. Not allowing for trial and error in detail design process.
4. Asking the wrong question during the interview

Supply Chain Decisions

We classify the decisions for supply chain management into two broad categories
-- strategic and operational. As the term implies, strategic decisions are made
typically over a longer time horizon. These are closely linked to the corporate
strategy (they sometimes {\it are} the corporate strategy), and guide supply chain
policies from a design perspective. On the other hand, operational decisions are
short term, and focus on activities over a day-to-day basis. The effort in these type
of decisions is to effectively and efficiently manage the product flow in the
"strategically" planned supply chain. There are four major decision areas in supply
chain management: Location Production Inventory Transportation
(distribution)

Location Decision: The geographic placement of production facilities, stocking

points, and sourcing points is the Natural first step in creating a supply chain. The
location of facilities involves a commitment of resources to a long-term plan. Once
the size, number, and location of these are determined, so are the possible paths by
which the product flows through to the final customer.

Production Decision: The strategic decisions include what products to produce,

and which plants to produce them in, allocation of suppliers to plants, plants to
DC's, and DC's to customer markets. As before, these decisions have a big impact
on the revenues, costs and customer service levels of the firm.

Inventory Decisions: These refer to means by which inventories are managed.

Inventories exist at every stage of the supply chain as either raw material, semi-
finished or finished goods. They can also be in-process between locations. Their
primary purpose is to buffer against any uncertainty that might exist in the supply
chain. Since holding of inventories can cost anywhere between 20 to 40 percent of
their value, their efficient management is critical in supply chain operations.

Transportation Decisions: The mode choice aspect of these decisions is the more
strategic ones. These are closely linked to the inventory decisions, since the best
choice of mode is often found by trading-off the cost of using the particular mode
of transport with the indirect cost of inventory associated with that mode. Since
transportation is more than 30 percent of the logistics costs, operating efficiently
makes good economic sense.

Shipment sizes (consolidated bulk shipments versus Lot-forLot), routing and

scheduling of equipment are key in effective management of the firm's transport
strategy Supply Chain Technologies and Strategies

1.E-Auctions: Use of technology tools to drive on-line contract bidding for a

growing array of both indirect and indirect materials. Pain: one band-aid. Gain:
five dollar signs (both out of five - see the full report). As we write in the report,
why wouldn't this work? It sure does for companies like Rubbermaid and
Hallmark.

2. Labor Management Systems in Distribution: A combination of software,

engineering and mindset change to improve logistics productivity. Labor
management systems are typically built on discrete, engineered standards for
specific tasks in a distribution center, plus detailed reporting at the individual
operator level against the resulting dynamic goal time calculations for the day’s
work. Pain: two band-aids. Gain: four dollar signs. One of the first things we'd do
in any decent size DC operation.

3. Spend Management Visibility: Software that provides greatly improved

visibility to what a company actually spends, where, and with what vendors. Pain:
three band-aids. Gain: five dollar signs. It works at home, why not in companies?
4. Demand Management/S&OP: A process, generally supported by some level of
technology tools, of aligning the sell side and the supply side of the company
around a unified financial and operations plan. While many companies have
nominal sales and operations planning processes in place, the consistent feedback
is that most are far from optimally effective. In parallel with the growth of S&OP
is the concept of demand management, in which sales, marketing, finance and the
supply chain work together to drive demand and sales that maximize profitability,
rather than simply reacting to forecast demand. Pain: four band-aids. Gain: five
dollar signs. Faster reaction to opportunities and organizational alignment are
essential today.

5. Supplier Portals: The technology has existed for some time now to relatively
easily integrate suppliers through increasingly functional web portals. The scope of
activities is very broad, from purchase order management, to providing demand
visibility, to advance ship notice and bar code label generation, to generating
dynamic inbound shipment requirements. Pain: two band-aids. Gain: three dollar
signs. We see know reason for companies not to be doing this.

6. Network Optimization: Use of network optimization software to find the

optimal balance between costs and service in the configuration of a company’s
supply chain network. Increasingly, these tools are being used more tactically than
in the past, supporting global sourcing strategies, more short term inventory
planning decisions, new product introductions, and even sales and operations
planning. Pain: four band-aids. Gain: five dollar signs. A variety of factors is
making this a hot category right now, and the use cases are changing.

7. Transportation Management Systems (TMS): Software systems that enable

shippers to automate planning and execution, connect electronically with carriers,
and reduce freight costs though optimal mode selection, optimal carrier
assignment, shipment consolidation, and use of continuous moves. Pain: two band-
aids. Gain: three dollar signs, but can be larger for companies with big freight
spend.

8.Strategic/Global Sourcing: Use of a more integrated, consolidated approach to

supplier selection and procurement, including evaluating total supply chain costs,
and consolidating purchasing power. Rapidly, strategic sourcing is also tightly tied
to off shoring and global sourcing strategies. We probably could have moved this
up on the list, but the opportunities vary dramatically company to company. Pain:
three band-aids. Gain: four dollar signs. Obviously a hot strategy now, though
many having early trouble getting the results they expect.
9. Wireless in the Warehouse: While use of radio frequency/wireless terminals in
distribution centers is at one level a highly penetrated and mature market, we
continue to be amazed at the number of even fairly large companies that are still
using paper-based systems in their DCs. Pain: one band-aid. Gain: two dollar signs.
This is becoming very easy to implement.

10. Yard Management Systems (YMS) and Dock Door Scheduling: Software
tools, implemented either stand-alone or in conjunction with a WMS or TMS, that
provide visibility into yard inventory and optimize appointment scheduling and
execution on inbound and outbound dock doors. The category has enjoyed
substantial growth in the past two years. Pain: one band-aid. Gain: two dollar
signs. Environmental changes making these systems increasingly easy to justify.
Literature Review It is well acknowledged that the use of IT is an integral part of
modern SCM. For example; Simchi-Levi etal. (2003, p. 267) list the objectives of
IT in SCM: Providing information availability and visibility Enabling single
point of contact of data Allowing decisions based on total supply chain
information Enabling collaboration with supply chain partners Examining
extant literature, we can grossly classify the functional roles of IT in SCM in three
categories IT supports frictionless transaction execution. IT is a means for
enhancing collaboration and coordination in supply chains. IT based decision
support systems (such as APS – advanced planning and scheduling and SCEM –
supply chain event management) can be used to aid better decisions. In our
discussion we will limit ourselves to the first two functional roles, as the decision
support role is somewhat separate area entailing less interaction with different
supply chain parties. Functional roles of IT in SCM Transaction execution
Collaboration and coordination Decision support There is an abundance of
studies from recent past examining how companies have adopted technologies in
transaction execution in supply chains. Lancioni et al. (2003) compare the use of
IT in 1999 and 2001among CLM companies. Their study shows a clear increase in
the use of web-technologies especially in purchasing and transportation. Same
kinds of results are reported by Rahman (2003) having the 1000 largest Indian
companies as the study population. On the other hand, another recent study by
Supply Chain Council (2002) on the use IT in supply chain management in large
US companies, mainly manufacturers, revealed that although the use of IT has
progressed, companies have still much to go. For example, 60-70 % of transactions
were still done by manual methods (phone, fax, and mail). This might demonstrate
how companies having to interact with multiple partners cannot use IT with all. As
for the information sharing in supply chains, besides well known success stories
such as Cisco and Dell, there are less clear empirical evidence how companies
actually use IT in their supply chains for coordination. The main view seems to be
that the use of IT in this sense is limited. For example, van Hoek (2001) holds that
“e-supply chains” coupling integrated supply chain scope and strategic approach
for the use of IT are very rare cases. Skjoett-Larsen and Bagchi (2002) observe in
their recent case study among 14 European companies in 5 networks that in many
cases supply chain integration is based on more traditional methods. Also evidence
suggest that the scope of collaboration is limited: based in their extensive research
with over 50 indepth interviews and a survey with nearly 600 responses within
APICS, NAPMand CLM members, Fawcett and Magnan (2002) report that true
collaboration beyond first-tier is rare. In summary, companies have adopted new
technologies especially for conducting transactions. However, there is less
discussion on how companies actually use new IT in managing their supply chains
and on the links of using IT in transactions and information sharing

Research Methodology

Research in common parlance refers to a search for knowledge. It can also define
research as a scientific and systematic search for pertinent information on a
specific topic. In fact, research is an art of scientific investigation. According to
Clifford Woody research comprises defining and redefining problems, formulating
hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the
conclusions to determine whether they fit the formulating hypothesis. Research is a
process of collecting, analyzing and interpreting information to answer questions.
But to qualify as research, the process must have certain characteristics: it must, as
far as possible, be controlled, rigorous, systematic, valid and verifiable, empirical
and critical.

The main objectives of research are: 1. To gain familiarity with a phenomenon or

to achieve new insights into it (studies with this 2. object in view are termed as
exploratory or formulative research studies); 3. To portray accurately the
characteristics of a particular individual, situation or a group 4. (studies with this
object in view are known as descriptive research studies); 5. To determine the
frequency with which something occurs or with which it is associated 6. with
something else (studies with this object in view are known as diagnostic research
7. studies); 8. To test a hypothesis of a causal relationship between variables (such
studies are known as hypothesis-testing research studies). The Framework for
Impact of IT on SCM IT on Purchasing IT on Logistic IT on Firm IT on
Vendor Relationship Management IT on Customer Relationship Management IT
on Purchasing: The use of the IT in managing purchasing in the supply chains has
developed rapidly over the last 10 years. The research demonstrates that the IT is
utilized in a variety of procurement applications including the communication with
vendors, checking vendor price quotes and making purchases from vendor
catalogs. Vendor negotiation has also been streamlined through the use of the IT.
Face-to-face negotiations are through the use of the IT. Face-to-face negotiations
are conducted through the IT. This includes the bargaining, renegotiation, price and
term agreements . The receipt of queries from vendors, providing vendors with
information and the processing of returns and damaged goods were all handled by
the IT. The other more popular use of the IT in supply chains is in order processing
applications. The most frequent use of the IT here is in order placement and order
status. Over half of the firms use the IT for this purpose This has dramatically
reduced the costs of order processing. The use of the IT in order processing has
reduced the error rate involved in order processing. Errors now can be detected
more easily and corrected more quickly

IT on Operation: One of the most costly aspects of supply chains is the

management of inventory. The research has shown that the most popular use of the
IT in this area is the communication of stock outs by customers to vendors, or the
notification of stock outs by companies to their customers. The IT has enabled
companies to more quickly institute EDI information programs with their
customers. The IT has affected inventory management most dramatically in the
ability of firms to be proactive in the management of inventory systems. This is
demonstrated in the ability of firms to notify customers of order shipping delays
and inventory emergencies, in order to decrease the delivery lead time and
inventory Production scheduling has traditionally been the most difficult aspect of
SCM. The IT has enabled firms to minimize the difficulty in their production
scheduling by improving the communication between vendors, firms and
customers. The research showed that some of the firms in the study use the IT to
coordinate their JIT programs with vendors. In addition, some of the firms are
beginning to use the IT to coordinate their production schedules with their vendors.
IT on Logistic: The most popular use of the IT in supply chains is in the
management of transport. Transportation typically is the highest cost component in
a supply chain, according to literature review.

The research showed that the monitoring of pickups at regional distribution centers
by carriers is the most popular application of the IT in this area. This is particularly
important for a company, since tracking shipments to regional depots provides the
firm with data on the reliability performance of the carriers it is using. This enables
transportation managers to make sure that the motor carriers they use are meeting
their promised arrival times. It also provides managers with the information they
need to inform carriers of shipment delays as they occur and to not have to wait for
days before the information becomes available for corrective measures to be taken.
Claims reporting, processing and settlement are more easily handled through the
use of IT tracking system applications. In production and logistics, many parties
are involved in coordinating all the processes that are involved in fulfilling a
customer's order: manufacturer, suppliers of parts and subassemblies, material
managers, logistics managers, transportation carriers, customer service
representatives, quality assurance staffs and others. The goals are to reduce the
cycle time to fill a customer's order, reduce the inventory of parts, work in process
and finished goods in the pipeline, increase the accuracy and completeness of
filling a customer's order and of billing him for it and accelerate the payment for
the delivered items to put cash in the bank as soon as possible. To achieve this
degree of Order Cycle Integration, manufacturers, merchandisers and their trading
partners are using IT.

IT on Customer Relationships: Many management experts argue that, by

focusing on total customer satisfaction, a company can improve its processes to
deliver better service at a lower cost. Customer- satisfaction driven is often
described as the next step beyond TQM,

Total quality management: the objective is not simply to deliver some abstract
definition of quality but to deliver total satisfaction to the customer, of which the
delivery of quality is only a part. Meanwhile, in the past, customer information
could not be fully utilized in setting processes of firms’ conditions. With recent
increase in the speed of the IT, it has provided firms with the ability to offer their
customers another way to contact the firm regarding service issues and integrate
customer information and firm information to bring great benefits to both customer
and firm. The research shows that some of the companies use the IT to receive
customer complaints, while the others utilize it for emergency notifications.

IT on Vendor Relationships: IT deployment in supply chains leads to closer

buyer-supplier relationships. Stump and Sriram provide empirical evidence that the
use of IT is associated with the overall closeness of buyer-supplier relationships.

Relationship between an IT-based supply chain and organizational benefits. Grover

et al.

Suggest that the decision to use IT within the dyad could encourage the
commitment to establishing relational behavior. Their results show that IT
decreases transaction costs between buyers and suppliers and creates a more
relational/cooperative governance structure. Trust plays a key role in any
organizational relationship that IT facilitates it. Trust exists when a party believes
that its partner is reliable and benevolent.

There has been a noticeable increase in the importance of trust in different forms of
inter-organizational relationships in management literature. The need for trust
between partners has been identified as an essential element of buyer-supplier
relationships.

IT on Firm: To keep costs down, an organization must have a high level of

discipline: each person knows what needs to be done, knows how to do it and does
it quickly and efficiently. This argues for the organization to have a high degree of
standardized procedures and for everyone to be trained in these procedures and to
execute them without question. Yet, in anever-changing market place, it is
important to also be able to innovate, to offer new service packages and new
organizational linkages with the customer. To do this requires a discipline of
change which encourages innovation and yet retains the stability of existing
procedures until innovations are ready for wide- spread adoption. IT could
overcome this problem. IT usage was also explored in the context of the size of the
firm with two measures-the number of employees and sales volume. As measured
by the number of employees, larger firms were more likely to use the IT to
communicate with customers on order status and to manage the outsourcing of
customer service functions.

Why SCM Strategy is Important for an Organization Supply Chain Strategies are
the critical backbone to Business Organizations today. Effective Market coverage,
Availability of Products at locations which hold the key to revenue recognition
depends upon the effectiveness of Supply Chain Strategy rolled out. Very simply
stated, when a product is introduced in the market and advertised, the entire market
in the country and all the sales counters need to have the product where the
customer is able to buy and take delivery. Any glitch in product not being available
at the right time can result in drop in customer interest and demand which can be
disastrous.

Transportation network design and management assume importance to support

sales and marketing strategy. Inventory control and inventory visibility are two
very critical elements in any operations for these are the cost drivers and directly
impact the bottom lines in the balance sheet. Inventory means value and is an asset
of the company. Every business has a standard for inventory turnaround that is
optimum for the business. Inventory turnaround refers to the number of times the
inventory is sold and replaced in a period of twelve months. The health of the
inventory turn relates to the health of business.

In a global scenario, the finished goods inventory is held at many locations and
distribution centers, managed by third parties. A lot of inventory would also be in
the pipeline in transportation, besides the inventory with distributors and retail
stocking points. Since any loss of inventory anywhere in the supply chain would
result in loss of value, effective control of inventory and visibility of inventory
gains importance as a key factor of Supply Chain Management function.

IT and SCM Recently with development of IT, the concepts of supply chain design
and management have become a popular operations paradigm. The complexity of
SCM has also forced companies to go for online communication systems. For
example, the Internet increases the richness of communications through greater
interactivity between the firm and the customer.

This illustrates an evolution in supply chain towards online business communities.

Supply chain management emphasizes the long-term benefit of all parties on the
chain through cooperation and information sharing. This confirms the importance
of IT in SCM which is largely caused by variability of ordering.

The use of IT is commonplace within our progressive companies. Two thirds of the
companies use some IT in purchase ordering or sales order intake. Typical
solutions used are traditional EDIFACT and sales transactions. On the other hand,
there is still a wide use of manual methods (phone, fax, and email). In fact, only in
a few special instances the transactions were conducted completely with IT. In
these cases the amount of supply chain parties was limited or the focal company
had power over the other parties to implement a solution it has desired to use.

In total, the majority (72 %) of companies have implemented some IT in purchase

or sales transaction in recent years. It seems that the main technologies allowing
the increase of IT use have been the extranet and 3rd party provided services, since
these technologies have highest rates of new implementations under last five years.
Conclusion The results of this study indicate that the operational use of IT has
developed in the last five years. In particular Internet technology and third party
transaction integration services have provided companies with increased
possibilities to network with supply chain partners. Furthermore, only
implementing IT, as such, for example in invoicing automation, is not likely to lead
to higher-level business impacts. Stating this, it is interesting to observe that in the
SCM context the main body of companies views IT primarily from operational
perspective. A reason for this may be the relative novelty of IT, meaning that larger
scale and strategic solutions are still yet to come, and after companies have
installed a basic IT infrastructure. There is no single way of using IT and,
moreover, the broader the business area where IT impacts, the more solutions have
to be customized. As applications are more tailormade, it is also more difficult to
copy a solution from one company to another. It was further observed that to
achieve real competitive advantage it is important to focus on improving those
processes that are most critical for customer service.

Benefits of IT in SCM are multitude and vary in the context of their

implementation. Moreover, as the use of IT is closely related to process changes,
most of the benefits are overlapping and interlinked.

Information and Technology: Application of SCM:

In the development and maintenance of Supply chain's information systems both

software and hardware must be addressed. Hardware includes computer's
input/output devices and storage media. Software includes the entire system and
application programme used for processing transactions management control,
decision-making and strategic planning. Recent development in Supply chain
management software is:

1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution
Sciences Inc. which is useful for computing freight costs, compares transportation
mode rates, analyze cost and service effectiveness of carrier.

2. A new software programme developed by Ross systems Inc. called Supply

Chain planning which is used for demand forecasting, replenishment &
manufacturing tools for accurate planning and scheduling of activities.

3. P&G distributing company and Saber decision Technologies resulted in a

software system called Transportation Network optimization for streamlining the
bidding and award process.

4. Logitility planning solution was recently introduced to provide a programme

capable managing the entire supply chain.
Electronic Commerce:

It is the term used to describe the wide range of tools and techniques utilized to
conduct business in a paperless environment. Electronic commerce therefore
includes electronic data interchange, e-mail, electronic fund transfers, electronic
publishing, image processing, electronic bulletin boards, shared databases and
magnetic/optical data capture. Companies are able to automate the process of
moving documents electronically between suppliers and customers.

Electronic Data Interchange:

Electronic Data Interchange (EDI) refers to computer-to-computer exchange of

business documents in a standard format. EDI describe both the capability and
practice of communicating information between two organizations electronically
instead of traditional form of mail, courier, & fax. The benefits of EDI are:

1. Quick process to information.

2. Better customer service.
3. Reduced paper work.
4. Increased productivity.
5. Improved tracing and expediting.
6. Cost efficiency.
7. Competitive advantage.
8. Improved billing.

Though the use of EDI supply chain partners can overcome the distortions and
exaggeration in supply and demand information by improving technologies to
facilitate real time sharing of actual demand and supply information.

Bar coding and Scanner:

Bar code scanners are most visible in the checkout counter of super market. This
code specifies name of product and its manufacturer. Other applications are
tracking the moving items such as components in PC assembly operations,
automobiles in assembly plants.

Data warehouse:
Data warehouse is a consolidated database maintained separately from an
organization's production system database. Many organizations have multiple
databases. A data warehouse is organized around informational subjects rather than
specific business processes. Data held in data warehouses are time dependent,
historical data may also be aggregated.

Enterprise Resource planning (ERP) tools:

Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the
core of their IT infrastructure. ERP system have become enterprise wide
transaction processing tools which capture the data and reduce the manual
activities and task associated with processing financial, inventory and customer
order information. ERP system achieve a high level of integration by utilizing a
single data model, developing a common understanding of what the shared data
represents and establishing a set of rules for accessing data.
 Conclusion

World is shrinking day by day with advancement of technology. Customers'

expectations are also increasing and companies are prone to more and more
uncertain environment. Companies will find that their conventional supply chain
integration will have to be expanded beyond their peripheries. The strategic and
technological innovations in supply chain will impact on how organizations buy
and sell in the future. However clear vision, strong planning and technical insight
into the Internet's capabilities would be necessary to ensure that companies
maximize the Internet's potential for better supply chain management and
ultimately improved competitiveness. Internet technology, World Wide Web,
electronic commerce etc. will change the way a company is required to do
business. These companies must realize that they must harness the power of
technology to collaborate with their business partners. That means using a new
breed of SCM application, the Internet and other networking links to observe past
performance and historical trends to determine how much product should be made
as well as the best and cost effective method for warehousing it or shipping it to
retailer.
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