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The Role of IT in Supply Chain Management

The Role of IT in Supply Chain Management

Businesses are digitalizing their processes in the past couple of decades. And it is becoming a necessity rather than an option. Why not? IT is integrating various operations carried out by different companies in the supply chain. The role of IT in supply chain management is speeding up business processes and preventing bottlenecks. Companies are closer to accomplishing on-time procurement, shorter inventory, and better efficiency, particularly in manufacturing. IT is allowing companies in the supply chain for meeting the needs of consumers.

What is a supply chain?

A supply chain refers to the entire process of manufacturing and selling goods. Ranging from the supply of raw materials and using them to manufacture products to the distribution and sale to consumers. It is a network of companies, counting suppliers, manufacturers,  shippers, distributors, and retailers. Moreover, these all are working together to make stuff like logistics, inventory management, transportation, and so forth go as smoothly as possible.

Also read: How Modern Technology is Improving Food Supply Chain

The role that IT plays in supply chain management is so important. IT is providing the tools which can pick up relevant information, and break it down for proper analysis. As well as helps in executing it for optimum performance of the supply chain. Data is pivotal to the operation of the supply chain. Primarily because it offers the base on which the supply chain managers are taking decisions.

Subsequently, real-time information is the key to proper supply chain management. With information about the various stages of the supply chain, decision-makers can strategize, manage, and adjust processes to accomplish goals in procurement, inventory, manufacturing, etc.

The Role of IT in Supply Chain Management

It is leaving a mark everywhere. No wonder each aspect of a business is now under its command! The role of IT in Supply Chain Management is emphasized in the following.

1. Integrated and Coordinated Supply Chain

A supply chain can work efficiently when it is properly integrated and well-coordinated. IT is performing this important task by bringing in multiple technologies and combining them to optimize the supply chain. These technologies are making data collection possible and much easier and more accurate. Ultimately, this is allowing precise and detailed data analysis leading to sound business decisions.

2. Increased Productivity

A smooth flow of information, new technologies, and effective communication increase the productivity of all entities in the supply chain. It is like an initiation for product movement. Additionally, IT is building the link that passes the needed information continuously.

3. Cost Reduction

IT permits the optimum utilization of assets and resources. Previous data is used to study the trends. And technology is used to analyze it for refining performance. When resources are being used optimally, they result in cost reduction.

In a supply chain, the role of IT becomes more prominent as it motivates all parties to use their respective resources in the most cost-efficient approach. When IT is used as it should be, there is a dramatic decrease in overall expenses.

4. Product Improvement

Furthermore, IT is consisting of tools and applications which can be used to attain early awareness. In a market where customers always want something new, the product will either have to evolve or else it will go out of demand. Therefore, to remain in business, you must present product improvement and innovation sooner rather than later.

5. Supply Chain Visibility

Consequently, information builds the whole supply chain visible to supply chain managers. How the information flows from one collaborator to the other and the effect it has on others is used by the managers in creating strategic decisions.

Also read: How to Implement RFID in the Automotive Supply Chain

Following are the functional roles of IT in supply chain management

Apart from the above-mentioned fundamental roles, there are three functional roles of IT in supply chain management. These are:

1. Transaction execution

When information is flowing efficiently between the participants of the supply chain, the number of transactions between them is decreased. Therefore, IT increases the efficiency of repetitive and frequent data exchanges. This data is generally suitable for delivery verification, order processing, billing, and dispatch advice.

2. Collaboration and coordination

IT renders the flow of information. This makes for easier coordination, planning, and improved collaboration between all participants. Demand forecasting will be making it possible for planning for the future. As well as order tracking makes knowing the physical location of each order a reality. Neither of these activities is probable without IT.

3. Decision support

They are and should be based on data and information. Since, IT is a mega benefit in decision support. It can help in collecting even the most complicated set of data. And it can convert them into easy-to-understand charts and reports. In this context, IT is extending decision support to all managers.

Conclusion

Nonetheless, the secret behind successful supply chain management remains in IT. From the very beginning of the supply chain to its end, data plays a crucial role in bringing the entire set together. IT equipment offers the necessary communication path between all entities. It is allowing them to work independently and yet in a coordinated manner. Therefore, the role of IT in supply chain management is unquestionable.

Make sure to get in touch with us. We’ll analyze the operations in your facility to find the best approach to increase your supply chain productivity.

FAQs

What are the applications of IT in the supply chain?

Organizations are moving towards the virtual supply chain with aid of quick changes in technology and IT applications. Such as Electronic Data Exchange (EDI), Bar Code, Radio Frequency Identification (RFID), Electronic Commerce, Decision Support system, Enterprises Resource Planning (ERP) packages, etc

What is the supply chain in the IT industry?

Since, a supply chain is a network of all the individuals, organizations, resources, activities, and technology concerned with the creation and selling of a product. A supply chain encompasses everything from the delivery of raw materials from the supplier to the manufacturer through to its final delivery to the end user.