Information Technology (IT) in Supply Chain Management Research Paper

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Supply Chain Management

Of the many processes, systems and platforms in any company, its supply chain is the most critical for continually meeting customer expectations and delivering high quality products and services. Managing supply chains so they are demand-driven and meet and exceed customer expectations is essential if a business is going succeed over the long-term and earn trust through continual, predictable execution to customer requirements (Ellinger, Shin, Northington, et.al. 2012). The challenge however is that supply chains are often very complex, multiple layers deep, requiring an intensive amount of effort to keep coordinated and synchronized while also staying aligned with rapidly changing product requirements over time. Adding in the need to launch new products quickly to attain revenue growth, and the full complexity of supply chain management becomes clear. The intent of this analysis is to evaluate the pros and cons of integrating a supply chain and specifically evaluate how companies are managing the inevitable conflicts between time, cost and scope to ensure a consistently high level of supply chain performance and quality products being produced. The highest performing supply chains are able to transform information and insight into intelligence that is immediately used to accelerate and streamline supply chain performance (Kogut, 2000). The Toyota Production System is a case in point, which relies on an advanced series of processes for interpreting supply chain performance and create plans and programs that compensate for variations in customer demands and the ability of suppliers to react accordingly (Shook, 2009). The second section of this analysis concentrates on the top ten supply chain innovations of all time as mentioned in the Supply Chain Digest video. The unifying threads of these ten innovations are analyzed with emphasis of what they mean to the future of supply chain management.

Pros and Cons of Integrating a Supply Chain

The following table compares the pros and cons of integrating a supply chain. Reducing costs, complexity, managing the constraints of project- and make-to-stock manufacturing more effectively, in addition to increasing the speed of the new product development and launch process are just a few of the pros or advantages of integrating a supply chain. What unifies the many advantages of integrating a supply chain is the ability to be more customer-centric and driven not by internal forecasts ore a myopic view of cost reduction but more of how to attain greater customer responsiveness, meeting and exceeding their expectations in the process (Ellinger, Shin, Northington, et.al. 2012). Research firm AMR Researched defined the many factors that contribute to a more customer-centric and demand driven supply network as the formation of a Demand Driven Supply Network (DDSN) (Friscia, 2005). Central to the DDSN concept is the unification of all aspects of a supply chain to the common goal of meeting cus9otmers' demands in a timely, completely and most importantly, accurate and cost-effective manner. The DDSN has since been used as a framework for quantifying just how much an integrated supply chain can deliver in terms of economic value to an enterprise. The Hierarchy of Supply Chain Metrics, an entire taxonomy of supply chain metrics defined by AMR Research (Hofman, 2004), is discussed in the second half of this analysis. One of the most significant findings from the AMR Research studies of the DDSN concept was how an integrated supply chain creates knowledge over time, and this knowledge becomes the fuel for even greater levels of competitive differentiation and value over time. The well-known study of the Toyota Production System by Dyer and Nobeoka (2000) illustrates how Toyota shows how the auto maker continues to succeed in transforming information and intelligence into a competitive advantage by increasing speed and accuracy of production expense (Shook, 2009). Dyer and Nobeoka noted that information and intelligence became more valuable that cash as a means for suppliers to coordinate with each other in the TPS framework (Dyer, Nobeoka, 2000). With so many advantages to integrating a supply chain, it's understandable that enterprises continue to seek out expertise in this area to increase process, product and project performance across their enterprises.

Table: Pros and Cons of Integrating a Supply Chain

Pros

Cons

Greater responsiveness to customers including the ability to better predict when a customized order will be shipped (Ellinger, Shin, Northington, et.al. 2012).

Costs of an integrated supply chain can become excessive if the underlying assumptions regarding its structure and approach are not well-defined to begin with. A faulty or badly designed framework will actually make a supply chain even more ineffective and inefficient than it had been prior to be automated (Abu-Suleiman, Boardman, Priest, 2004).

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Greater supplier collaboration and reduction in new product introduction timelines, leading to greater revenue generation over time (Dyer, Nobeoka, 2000).

Supply chains that are integrated often only deliver a specific subset of the financial results necessary to define the hierarchy of supply chain metrics in total. This can lead to an incomplete picture of overall of an enterprises' operation and greater confusion than when it had been manually-based (Hofman, 2004).

Closer coordination between the distribution and selling networks, manufacturers and suppliers resulting in more accurate forecasts and greater sales (Harrington, 1999).

An integrated supply chain that lacks the overall change management programs to get suppliers onboard and using it effect8ively can actually lead to even more costs that the manually-based one it was designed to replace (Dyer, Nobeoka, 2000).

Reduced costs through the use of advanced supply chain coordination and costing, including the ability to better manage bill of materials in a production environment (Abu-Suleiman, Boardman, Priest, 2004).

The continual shift in suppliers in high inventory velocity industries can also lead to significant shifts in the overall design of the supply network and inconsistencies over time that need to be compensated with an integrated supply chain.

Broader distribution of risk across the entire supply chain by ensuring every level of the supply chain has greater visibility into customer demands, seasonality and customization requirements over time.

Inconsistent performance on specific items critical to customer needs can lead to even greater levels of customer dissatisfaction as an integrated supply chain will often slow down execution of specific tasks if not planned and implemented well.

More effective definition of inventory management, supplier quality, purchasing costs and cost details including plant utilization and cycle times using an integrated supply chain

(Hofman, 2004).

The annual maintenance costs for enterprise software to manage the supply chain network, in addition to the headcount needed to manage the overall network effectively are often variable and unpredictable. These costs can escalate quickly if a supply chain integration strategy is not well planned and executed.

Better management and prediction of how to get the right product to the right customer at the right time -- in order words, the ability to attain the perfect order for customers across all distribution channels

(Hofman, 2004).

The lack of participation on the part of key suppliers, or as is often the case, only a specific subset of specific transactions are included in the formalized system, lead to confusion over actual supply chain performance over time (Abu-Suleiman, Boardman, Priest, 2004).

Integrated supply chains can provide a greater level of financial visibility into a company's performance including being more effective at reducing Days Sales Outstanding (DSO) and reworked orders due to lack of integration across a supply chain (Hofman, 2004).

Often requires companies whose business models have rapid product lifecycles to disclose confidential data to suppliers under non-disclosure agreements which are at times violated. Apple's continued efforts to keep their iPad development under control in their supply chain (they did not succeed) is a case in point.

More efficient at adopting new technologies to streamline the supply chain management process once the manually-based processes are in place.

Continual churn of suppliers in a commodity industry will often lead to integrated supply chains operating at a sub-optimal level of performance and ironically work better when they had been manually-based.

Able to attain grater supply chain optimization through the use of advanced technologies once a supply chain has been integrated together and is functioning to deliver products on time.

Advanced supply chain strategies including Vendor Managed Inventory (VMI), Collaborative Planning Forecasting and Replenishment (CPFR) require a highly integrated supply chain at an electronic level many suppliers do not have the ability to support with their current IT staffs.

Creating supply chain quality audits and using the data to better manage inbound shipments is possible in an integrated supply chain; as technologies are added to streamline quality management, quality audits can be used to accelerate acceptance, rejection and guide suppliers to higher quality levels in real-time (Abu-Suleiman, Boardman, Priest, 2004).

Future technology developments in material handling and inventory management including Radio Frequency Identification (RFID) are more easily accomplished with a smaller set of suppliers as opposed to an entire networked, highly integrated supply chain. The greater the complexity of a given network the more challenging it is to keep the entire system platform base across suppliers current.

The greater the level of integration within….....

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