Information Technology - A Key Driver of SCM

Supply Chain Management is a broad-based function that encompasses all business and operational processes involved in but not limited to Procurement, Manufacturing, and Finished Goods Transportation, warehousing & Distribution and Inventory Management.

In a globalized business scenario characterized by Geographically spread markets, raw material procurement sources across the world and cheaper manufacturing and labor markets being available in developing world, the business of meeting demand with supply is constantly changing and evolving.

Global business has been fuelled and enabled by the IT Technology which has redefined all aspects of business today. All businesses today are run on ERP - Enterprise Resource Planning which provides the organizations with tools to manage all the functions including procurement, production, sales, and finance management in seamless and integrated manner.

These software systems like SAP, Oracle, People soft, etc., have taken over and enhanced the business processes that were traditionally being managed manually.

Demand planning, Forecasting, Global procurement management are some of the enabling tools on which the Global procurement strategies are built and managed. The availability of these sophisticated systems has further enabled companies to implement good and cost effective manufacturing practices like JIT, Kanban, VMI, etc.

Finished goods distribution, transportation, and inventory management, besides sales process is again driven by the various ERP modules combined with additional specific applications as required.

ERP has enabled companies to manage their business processes in different markets and countries under one common business process thus providing standardization and control.

The complex network of various processes, software platforms and applications and different software tools used by various vendors and agents in the entire chain drive the supply chain of the companies.

E commerce has further redefined the way business is carried on. Online purchase has impacted the way supply chains are organized and markets are driven. Customer behavior and preferences are changing as online marketing is establishing a one to one contact with the customer and can offer a personalized experience. The instant delivery of the information through internet elicits immediate response and action from the customer. The sales lead time is rapidly decreasing. The demanding customer, therefore, needs to be serviced immediately at the same speed.

The internet technology has further opened up the geographical boundaries for the companies. Any person sitting in any corner of the globe can purchase a product online at the click of a button. The companies have to be well equipped with the logistics and supply chain network to be able to service the customer.

When in a global scenario, goods and services move through multiple chains involving very many agents including transporters, forwarders, customs, distribution centers, distributors and lastly the retail outlets, availability of data, documentation and information becomes the lifeline for the organization to be able to take decisions and ensure seamless processes and control the supply chain.

IT is one of the most important enabler of the Supply chain in complex modern world of Global Businesses.

Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.