Supply Chain Information Technology in Supply Chain Essay

Excerpt from Essay :

Supply Chain

Information technology in supply chain management

The supply chain capabilities within a resource-based framework

The supply chain capabilities

Exchange of information

Coordination

Integration of activities

Supply chain responsiveness

In this paper, we evaluate the role played by information technology in the improvement of supply chain operations. The main aim is to evaluate how information technology can be used in the achievement of a competitive advantage in regard to the supply chain operations. This is conducted in light of factors such as exchange of information, coordination, and integration of interfirm activities as well as supply chain responsiveness.

Supply chain management (SCM) a term which refers to the management of a network of businesses that are highly interconnected but are involved in the intricate process of providing products and services that are required by the end users (customers) (Harland,1996) has been heavily influenced by the advents of the internet. The application of information technology (IT) in the management of the global and regional supply chain processes has increasingly gained attention in the global corporate sector (Wu et al.,2005).In this paper we evaluate the influence and applications of information technology as a source competitive advantage in supply chain management.

The concept of supply chain

The concept of supply chain refers to a network that consists of suppliers, product manufacturers, distributors, product retailers as well as customers as illustrated below. The supply chain network is made up three forms of flows that all require the best form of planning as well as co-ordination (Yucesan & Wassenhove,1999).

Information technology in supply chain management

The application of information technology in the management of various aspects of supply chain processes has over the last few years drawn a lot of attention from various industries. Radjou (2003) mentioned that the use of IT in supply chain help by improving the agility of supply chain, reducing the cycle time, helping in the achievement of a higher efficiency, delivery of various products as well as services to the clients in a timely fashion. The in vestment in However, in the view of resource-based theory, the concept of IT as a resource can help in the creation of a sustainable competitive advantage to a given firm. The issue is however largely unresolved (Barney, Wright, & Ketchen, 2001).

The value of information technology can be effectively embedded in the entire process of supply chain as noted by Powell & Dent-Micallef (1997).The implementation of the information technology approaches t the supply chain can effectively enable a given organization to develop as well as accumulate enough knowledge about its operational variables and conditions.

The supply chain capabilities within a resource-based framework

The resource-based view maintains that the sources of competitive advantage within a framework that is dominated by the organizational resources may be immobile and heterogeneous (Barney,1991). The various differences that exists within the market performance are basically as a consequence of the distinctive resources as well as capabilities that are non-substitutable, rare, valuable as well as inimitable (Wernerfelt, 1984). Additionally, an organization's competitive advantage can be effectively sustained by the implementation of a strategy that is not easily duplicated by its main rivals (Barney,1991). The methods of leveraging resources in the creation as well as sustenance of a competitive advantage have recently become a major focus for research by various marketing experts (Srivastava, Shervani, & Fahey, 1999).

Information technology when regarded as a portion of an organization's resource portfolio may never be sufficient to satisfy the requirement of the resource-based view. This is attributed to the relatively low barriers to acquisition and imitation by competing firms. The competitive advantage which is IT-based is noted by Clemons & Row (1991) to somehow diminish very quickly.

The work of Powell and Dent-Micallef (1997) indicated that information technology can effectively be augmented only if embedded into a given organization via the concepts resource complementarity as well as co-specialization. In this paper, we investigate how information technology can be implemented within the supply chain communication system in order to bring about a competitive advantage via the facilitation of higher order firm capabilities (supply chain capabilities. Bharadwaj (2000) mentioned that competitive advantage can be achieved by the adoption of various sophisticated technologies as well as by the consideration of the synergetic benefits that are realized via an integrated system.

The supply chain capabilities

Information technology has been indicated to perform a mediating role in the enhancement of an organization's performance. Supply chain capabilities are the ability of a firm to accurately identify, use as well as assimilate internal as well as external resources in the facilitation of all the existing supply chain operations (Amit & Schoemaker, 1993). In this regard, we conceptualize the various supply chain capabilities as second-order constructs that is made up of a total of four factors. These factors are; exchange of information, coordination, integration of interfirm activities as well as supply chain responsiveness. These four factors are chosen since they are representative of all the important activities that are involved in the various supply chain processes.

Each of the four factors are a reflection of the ability of affirm to perform cross-functional and interorganizational operations. Additionally, they indicate the dynamic nature of the concept of supply chain capabilities that can enable a given firm to effectively respond to various changes to the environment (Teece, Pisano, & Shuen, 1997).

Exchange of information

Information exchange denotes the ability of a given organization to effectively share knowledge with its numerous supply chain partners in effective and yet efficient fashion. The information which is shared in the supply chain communication system contains details that are shared between the direct channel partners and those from the entire supply chain network as noted by Clemons & Row (1993).For the channeling of information to take place efficiently as well as effectively, the information should be exchanged on an as-needed basis. The information must also be sourced from credible sources in a format which is adequate as noted by Mohr & Sohi (

1995). Shore & Venkatachalam (2003) noted that an effective exchange of information is one of the most important abilities in any supply chain process. Information technology plays an integral role in the process of information exchange between the various supply chain processes that takes place within an organization or between supply chain partners.

Coordination

The interorganizational coordination is the ability of a given firm to effectively coordinate the various activities that are a related to the transactions happening between the supply chain partners (Shin, 1999). The coordination with the various supply chain partners involves the coordination of various materials, manpower, money as well as capital equipment from the process of taking orders up to the process of order follow-up as noted by Sahin & Robinson (2002).

The improvement of the level of coordination between supply chain partners has been indicate to lead to a reduction in the level of transactional costs as well as the improvement of the operational efficiency that exists between the various supply chain partners. An improvement in the level of coordination between supply chain partners has been indicated by Sahin & Robinson, (2002) to lead to a reduction in the overall transactional costs as well as an improvement in the operational efficiency between the various supply chain partners. IT has been shown to play an integral role in the coordination of operation between supply chain partners.

Integration of activities

Organizations have been indicated to integrate their various activities across the channels partners as well as internally (Clark & Stoddard, 1996).Information technology has been indicated to lead to an integration of activities across channel partners. Technological integration is shown by the level of technological alignment that exists within the existing channel partners. The level of integration is however conceptualized as the degree to which an organization coordinates its various strategic channel activities like planning as well as forecasting with its existing supply chain partners as noted by Bowersox et al. (1999). In order for firms to achieve a perfect activity integration with its partners, they must fundamentally shift the way in which they do their business from being discrete transaction-based one to a continuous and yet consistent one (Clark & Stoddard, 1996). An organization's supply chain capability is therefore indicated by the level of activity integration as opposed to the level of technology integration. Information Technology however plays an integral role in the integration of the activities between the supply chain partners.

Supply chain responsiveness

Supply chin responsiveness refers to the extent to which the various channel members produce response in a cooperative manner to the environmental changes. It shows the dynamic nature of an organization's supply chain capabilities. These capabilities have been indicated to allow an organization to develop as well as renew its organization-specific competencies as well as to better respond to the various shifts in the operating environment as noted by Teece et al. (

1997).The work of Rogers, Daugherty, & Stank (1993) indicated that the contemporary marketplace is highly competitive and dynamic and therefore requires reliable and yet…

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