Supply Chain

Contents
.........................................................................................................................................................2
Chapter 1 INTRODUCTION..........................................................................................................3
1.1 Significance of the problem.......................................................................................................5
1.2 Research Question.....................................................................................................................6
1.3 Research criteria .......................................................................................................................6
1.4 Information Technology in SCM...............................................................................................6
E-Business.....................................................................................................7
.........................................................................................................................................................8
Types of e-business .....................................................................................8
(B2C)Business-to- Consumer.......................................................................8
(B2B)Business-to-Business............................................................................8
(C2C) consumer-to- Consumer......................................................................9
Supply Chain....................................................................................................................................9
...................................................................................................................10
Definition Of Supply Chain Management: ...................................................................................10
Supply Chain innovations: ...........................................................................................................12
Information Technology:...............................................................................................................14
Information Technology in SCM:..................................................................................................14
Types of IT use in SCM.................................................................................................................18
EDI (Electronic data Interchange): ..............................................................................................19
ERP in Supply chain Management: ..............................................................................................20
EDI (Electronic data Interchange): ..............................................................................................20
2.1 Supply chain support systems .................................................................................................21
2.2 IT Industry & IT systems in SCM ..........................................................................................21
2.3 Impact of IT on SCMS (Supply chain management system) .................................................21
IT impact on Firm:.......................................................................................22
IT impact on Logistic:..................................................................................23
IT impact on Customer relationship:...........................................................23
IT impact on operation:...............................................................................23
Research Method........................................................................................25
2
3.2 Document Study.......................................................................................................................25

The Case Study of the supply chain in Dell Computers..............................25
Bridge Case study:......................................................................................27
Whirlpool case study:..................................................................................27
3.2 Comparison of Case studies..................................................................29
3.3 Limitations of the methodology............................................................29
Chapter 4 Conclusion.....................................................................................................................31
References:.....................................................................................................................................33
Salman Ali 0468GGGG1109 Page 2

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Chapter 1 INTRODUCTION
The old ways of managing supply chain have become outdated and
have changed. Manual tracking and face to face information
exchange, wired communication systems and paper order
processing systems were the primary sources of information
exchange in businesses and organizations before but now
developments in the area of information technology have
significantly impacted management requirements as well.
The term supply chain management was first coined by a U.S.

industry consultant in the early 1980s. However, the concept of a
supply chain in management was of great importance long before,
in the early 20th century, especially with the creation of the
assembly line. The characteristics of this era of supply chain
management include the need for large-scale changes, re-
engineering, downsizing driven by cost reduction programs, and
widespread attention to the Japanese practice of management. The
next stage in the supply chain evaluation was when it was
implemented with the new technologies for large scale industries.
This was first highlighted with the development of Electronic Data
Interchange (EDI) in the 1980s and was subsequently furthered
through the introduction of ERP in the 1990s.
Supply chain management has been successfully implemented by

organizations and the private sectors. SCM has gained success and
importance in the field of marketing where it is considered one of
the main processes and a tool for exerting a positive influence on
shareholders’ values. These days, information is a key part for the
success of a business, because information helps to make rapid yet
right decisions. Things like estimating demand, judging raw supply
and forecasting sales are of vital importance. And it is there that
information systems prove to be of indispensable help for the
managers.

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Supply chain management is concerned with the flow of products,

information and materials as they move from supplier to
manufacturer and from manufacturer to consumer. A supply chain
deals both with manufacturing and services. To maintain supply
chain information regarding supply and manufacturing is crucial.
Developments in technology enable organizations to access and
reveal information easily and with high speed.
A supply chain can be made up of a set of three or more companies

directly linked by one or more of the upstream and downstream
flows of products, services, finances, and information from a source
to a customer. Supply chain management in turn is the
implementation of the supply chain orientation across supplier and
customers.
Here are four important decisions areas in supply chain

management:
1. Location, 2. Production 3. Inventory 4. Transportation
Before 1980s the information flow between functional areas within

an organization and between supply chain management
organizations were paper based. So this transaction was very slow
and cumbersome in its effects on supply in the market. Nowadays,
however, information technology carries out this same transaction
at high speed – resulting in a turnaround within the same day
sometimes. To give but one example, imagine that there is a large
demand for cars in the market. What would have previously caused
a deficit and unavailability of cars for a long time now would hardly
be allowed to happen: the manufacturing of cars would start at the
same time, because the IT systems would have alerted the car
companies about the speed of consumption. Furthermore, the cost
of that information transfer is decreased thanks to the availability
of the technologies. But of course, information technology is more
than just computers: computer data recognition equipment,
communication technologies, factory automation and other
hardware and services are included under this heading.

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The essential point is to identify and describe a domain of theory

and practice where there is potential for some additional gain that
would be achieved by reconceptualizing it in a particular way. The
important idea captured at least in part by supply strategy is that a
mode of thinking and action which encompasses, and seeks to
exploit, interlocking relationships could potentially be used as a
powerful lever for competitive advantage. (Ketchen and Giunipero,
2004)
Small and medium enterprises play a major role in the national

economy. A sometimes small enterprise lacks new technology like
ERP, MRP, CAD/CAM and E-Commerce, or they are not as able as
larger companies to acquire it and integrate it seamlessly. Yet
especially at the present time SMEs are trying to use the
information technology and are purposefully doing so to make SMEs
an integral part of the global business network supply chain.
In late 1970s and early 1980s, there was a big competition between
the US and Japan in the automobile industry. Japanese carmakers
utilized just-in time delivery to achieve efficient inventory
management. The solution at the time was to communicate through
batch order and via a standard called EDI. (Mount, I. and B.
Caulfield, 2001)
Since the 1990s, the adoption of the internet and the various web
technologies have promised a ubiquitous and less costly way to tie
companies and their business partners together in the supply chain.
The great collaboration made e-commerce buzzwords like “B2B”
and “B2C” popular in most business circles. Clearly, advancement in
the field of technology helped business partners to improve the
efficiency of their SCM.
1.1 Significance of the problem

Integrating supply chain and information technology results in the success of
the business and the organization. The research question is thus: up to what
extent does the IT industry support supply chain management? Are there

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limitations and what are they. In this thesis, the question posed will be
answered in the positive – namely that it is true that information technology
reduces costs for supply chain implementation and increases the efficiency
of the supply chain management systems.
As most organizations are now computerized and data is manipulated online,

manufacturers get information as soon as there is demand and start the
production of a particular item. The following areas will be examined in the
thesis.
1. The degree of cost reduction in the organization as a consequence of the

use of information technology in the supply chain management.
2. The extent to which the efficiency of the production cycle is increased.
3. The effect that supply chain management might have (be it negative or
positive) on the quality of the final product.
1.2 Research Question

The main research questions for dissertation are:
 What is the role of information technology in supply chain
management?
 How the evolution of these technologies impacting on supply

chain management?
1.3 Research criteria

1. Information will be collected from companies or individuals.
2. In IT some systems that help to support the supply chain management

will also be described.
1.4 Information Technology in SCM

 E-Business
 EDI(Electronic Data Interchange)

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 Bar Code
 RFID(Radio frequency Identification)
 Internet
E-Business
Russell. R at el, (2006), Definition of E-business is extensive; E-
business is simply way of replacing business process from physical
to electronic. E-business is same as e-mail or e-commerce that
conducts business online. Most companies now use online business
services for sale, transaction and shipping. Companies conducting
e-business mostly provides products online and all information
regarding product. Companies can place or receive orders online,
orders can be tracked, companies use online payment and receiving.
E-business shorten transaction time, reduces cost.
Impact of E-Business on SCM: Chopra. S and Jan A. Mieghem. A

(2000) E-Business allows firms to enlarge their revenues by sales of
product to consumer directly using internet, As in traditional supply
chain there was no direct contact of manufacturers with customers
but now they can switch to internet and sell online to customer
directly, for example Amazon and Dell computers sell computer on
internet directly to customers.
Selling computer on internet saves Dell computer to share money

with retailer. Providing on-line product and other information across
the supply chain allows flexibility on price, product portfolio and
promotions. Allowing customer to place an order and access at any
time helps E-business to enhance their business revenue, because it
attracts those customers who may not have time place an online
order during their business hours. Following are features of
conducting E-Business:
 Reduction or elimination of the role of intermediaries or
retailers as firms can sale their products online and can save
share that they need to give for retailers to sale their product.
 Shortening supply chain response and transaction times
 Gaining a wider presence and increased visibility for
companies
 Greater choices and more information for customers to match
products and check price.

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 E-business can coordinate and connect all of the business

process such as sales, marketing, finance, and accounting to
eliminate internal costs.
Types of e-business
There are different types of e-business such as
o (B2C) Business-to- Consumer
o (B2B)Business-to-Business
o (C2C)consumer-to- Consumer
(B2C)Business-to- Consumer
Business to consumer involves direct relationship between
consumer and business .online websites are the best example of
business to consumer model, where consumer can search and
placed order for products. The main reason why business creates
websites is to interact customers for direct purchase of products
online.
(B2B)Business-to-Business
To describe all kind of computer related trade like to use of
networking technologies and internet to exchange values across
business.

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Since mid 1970s companies have been using technologies such as

Automated Order Entry System .in beginning companies used
telephones to send or get orders to achieved their goals , With this
service both companies and customers have benefited companies
has improved their service and reduce cost and on other hand
consumer get s good service and cheaper prices for their products .
In late 70s the new technology EDI electronic data interchanged
entered B2B commerce
Through this technology business could share their database with
each other in the form of invoices purchasing orders and selling
items details.
With B2B commerce seller gets more information from their
suppliers which not only benefit the supplier but also benefit seller
by reducing customer serving cost.
And in mid 90s web application came in to B2B commerce.
(C2C) consumer-to- Consumer

C2C commerce where consumer can deal with each other they can
buy or sell item online. They can post their item on any online
auction website i.e. www.amazon.com
This website provides consumer to consumer interaction , seller can
post their items on webpage the website will charge him a
percentage for his transaction and buyer can buy this item directly
from that website.
The aim of the review is to evaluate the diversity of the fieldwork
and research conducted by different authors on the subject as well
as to throw light on the current discussions of the problem by
examining recent articles. The key search phrase is ‘Supply Chain
Management’. This chapter shows how the different authors have
expressed their views about supply chain in different companies
and different organizations at different points in time. ‘The most
effective supply chains are those that are built around the
company’s business strategies and purpose.’
Supply Chain
Blanchard. D (2007) Supply chain can be summarized in these words
plan, source, make, deliver, sale and return.

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We can use the example of Ford Company they plan to create a

model and then collect sources to make it. After completion it is
delivered and then sold to retailers and after usage machinery is
returned back to company for recycle or for garbage. Conventional
supply chain strategies have focused on individual firms as the
competitive units, and have enforced optimization techniques to
support the decision of individual functional operations, such as
demand forecasting, inventory management, transportation
scheduling, etc. In recent years, a combination of economics,
technology and market places has compelled companies to examine
and reinvent their supply chain strategies. To stay competitive,
enlightened companies strive to achieve greater coordination and
collaboration among supply chain partners in an approach called
supply chain integration (Gosain et al.,2005; Lee & Whang, 2001).
Information technology, particularly the Internet, play a key role in
furthering the goalsof supply chain integration. E-business has been
a powerful and compelling enabler of supply chain integration
across a wide range of industries (Kaplan & Sawhney, 2000).
Definition Of Supply Chain Management:

The supply chain is a set of firms that pass materials forward’. (La
Londe and
Masters, 1994). A supply chain is the network of organizations that
are involved, through upstream and downstream linkages, in the
different processes and activities that produce value in the form of
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products and services delivered to the ultimate consumer’.

(Christopher, 1992).There is no theoretical support for explaining
the existence and the boundaries of supply chain management. A
few authors such as Halldorsson, et al. (2004), Ketchen and Hult
(2006) and Lavassani, et al. (2008) have tried to provide theoretical
foundations for different areas related to supply chain by employing
organizational theories. These theories include:
• SResource-Based View (RBV)

• Transaction Cost Analysis (TCA)
• Knowledge-Based View (KBV)
• Strategic Choice Theory (SCT)
• Agency Theory (AT)
• Institutional theory (InT)
• Systems Theory (ST)
• Network Perspective (NP)
This supply chain representation is realistic and is a hybrid

encompassing a combination of dyadic, raw material to the final
customer and network types. It includes information from between
the site and regional/national headquarter and the interface with
suppliers manufacturers, merchants and contractors’. (Barker &
Naim, 2004, pp.57-58)
Various forms of SCM applications are arising among the enabling
technologies. Prominent vendors in SCM applications marketing
includes i2 Technologies, SAP, Oracle and Invensys, which produce a
range of hardware and software component that span
communication, optimization and modeling systems’ (William
Y.C.Wang et. al)
Supply chain management is the integration of key business
processes from end user through original suppliers that provides
products, services, and information that add value for customers
and stakeholders’. (Lambert, Cooper, and Pagh, 1998)
According to Schonsleben (2007) SCM is “the co-ordination of a
strategic and long-term co-operation among co-makers in the total
supply chain for the development and production of products, both
in production and procurement and in product and process
innovation.”
According to Simchi-Levi et al., (2003, p. 267) main objectives of IT
in SCM are providing information, helping to make decisions based
on information provided, enables collaboration with supply chain
partners.
Supply chain management has following features:
 Inventory management for stock optimisation saving cost of
storage.
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 Management of orders with automated entry.

 Planning of supply chain in order to improve the operations
and increase efficiency of the forecasting, and reducing price
over- runs.
 Provides support for making transport channels automated to
enhance the way managing warehouses and order tracking.
Supply chain Management Systems are technologies Cash and
Konsynski,(1985) that serve to Mediate customer-supplier
transactions (Subramani, 2003). IT provides a lot of opportunities
not only in business or SCM but in general as well. Bowersox and
Daugherty (1995)Highlights IT as a key for supporting companies
for centralized planning of strategy with day-to-day operations.
Closs (1994) stresses that IS application for supply chain
management must be extensively reviewed or reengineered to shift
from a functional to a process focus. In his view, newer applications
must focus on the reengineering of processes to create competitive
advantage. Existing applications should be a starting point for the
reengineering process.
The new integrated supply chain management systems, if utilized
properly, can lead to higher quality products, enhanced
productivity, efficient machine utilization, reduced space, and
ultimately increase logistics efficiency and flexibility (Gross 1984;
Kaltwasser 1990). According to study by Bowersox and Daugherty
(1995) IT Supports companies to create strategic advantage
because it enables them to plan day-to-day operations.
According to Williams et al. (1997) main purpose of introducing
Information technology in SCM was to just automate clerical work.
Supply Chain innovations:

This is combination of development in information and related
technologies. Purpose of supply chain innovation is to improve
logistic and operational efficiency these technologies include
ECR(effective consumer response), CR(customer replenishment),
auto ordering and usage of scanner data in order to automate
consumer orders. These all technologies are innovated to an
organization in order to enhance or increase profits and to reducing
costs. Deploying supply chain innovations within border provides
efficiency and effectiveness but implementing it in cross border
poses so many constraints, because it becomes very difficult.
Supply chain innovation includes following components.

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 Information Technology
 Logistic procedures
 Marketing procedures
In a study by Olhager. J and Selldin. E(2002) they investigated 128

Swedish companies to find the Supply chain management strategy.
In this study they led light on most important supply chain issues
like planning, integration, design, communication tools
management. In this study they conclude the following. First, the
main overall objectives for the design of supply chains are resource
utilization and cost minimization. Second, many aspects are
important when companies choose supply chain partners, but
quality is the single most important criteria. Third, forecasting is
the prime area for collaborative efforts. Fourth, companies are
prepared to expand the span of their supply chain operations that
can be planned and controlled in an integrated fashion. Fifth,
companies show relatively high awareness of modern supply chain
planning and control tools.
Performance of supply chain management affects customer
satisfaction. Main objective of SCM in a company is to reduce
operational and logistic cost without affecting the performance.
And basic functions of SCM are:
 Demand planning: In terms of demand planning role of SCM is
to make sure enough products are manufactured to satisfy
demand of product in market place.
 Supply planning: Supply planning is related to providing the
manufactured products to the consumer or vendors on time
and with accuracy, any hazards constraining the supply must
be checked for keeping efficiency of work.
 Scheduling of Manufacturing: Manufacturing scheduling is
referred to make sure all resources for production are
available and planning for the amount to be manufactured to
fulfil customer demand.
 Logistic or transport planning: Transport planning in any
company is very costly, this is the part to be planned with
proper ,management reducing transport expenses, to gain this
most cost effective method for manufacturing should be
applied.

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Information Technology:
Use of IT in Supply chain has become a prerequisite, for effective and
smooth operations of a company IT implementation is very important to
control complex supply chain. According to Ryssel, Ritter, and
Gemunden(2004), “ Information technology is a term that encompasses all
forms of technology utilized to create, capture, manipulate, communicate,
exchange, present, and use information in its various forms.” Information
technology has changed the face of business. Because now seller and buyer
don not need to meet each other they can interact through internet,
browsers and digital interaction. Some times IT investments in a company
does not provide any success or benefits.
Information Technology in SCM:

When using term IT in SCM it refers to those systems that are used
in an organization for information sharing or data exchange. For
example use of EDI, XML, ERP, SAP and RFID technologies in an
organization for smooth operations.
Auramo. J at el, conducted a research for impact of IT on SCM, This
research focuses on three main IT areas of SCM transaction
processing, Supply chain planning and delivery and order tracking
system. Data collection method in this study is survey on several
companies. They conducted survey in three fields of IT how they
affect SCM.
Implementation of IT in SCM develops and manages vendor,
supplier, customer records, which in terns affects the performance
of Firm.
In order to correctly forecast inventory levels, the supply chain management
system needs ERP’s database cooperation helps Supply Chain management
system to forecast inventories (Laudon & Laudon, 2002). In order to make
SCM powerful it includes systematization and optimization of operational and
strategic information and methods within and between enterprises. In Early
ERP it was not focused on Supply chain. It was integrated with internally
oriented application systems that support financial, management,
Manufacturing and data entry. But Internet brought an evaluation in Supply
chain for integration in ERP. In a study conducted by Akkermans H. A et al.,
(2003) they show impact of ERP on future supply chain management. In this
study they identified some future issues regarding SCM. Finding of this study
is that ERP is providing a modest role in SCM. But positive contribution of
ERP towards SCM can only be seen in top 4 supply chain issues out of 12
these are: ERP provides goods and services more customized, More
standardize and processes and information, fulfills all needs of world wide IT
systems and services. Another finding of this study is limitations of ERP in

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supply chain 1. They have inefficient control over crossing organizational

boundaries. 2. They have no efficiency to face changing supply chain needs.
3. They lacks functionality to manage transactions. 4. They provide a close
and non- modular architecture.
In a study by Ngai. E.W.T et al.(2007) they reviewed integration of RFID in

Mobile commerce. Method of study was case studies to find advantages of
this integration specially in M-Commerce.
Bagchi et al, (2002),conducted a study to examine impact of adopting

technology in European firms, they conducted a mail survey to get
information about the impact of information sharing and IT in firms.
In this study statistic method was used to analyze data, this study
attempted to find increasing level of the intensity of supply chain
integration with IT to increase operational performance. Findings of
this study are that cost and time is reduced in these companies with
adoption of these SCM technologies, but here is negative
relationship between length of relationship with supplier and
performance measures such as total logistics costs, on-time delivery
and rate of return.
Attaran. M (2007) conducted a study about RFID; purpose of study
was to find issues of RFID technology. In this study evolution of
RFID is discussed and all technologies and applications related to
RFID that are implemented in different industries are discussed.
This study covers all aspects related to RFID such as adoption,
challenges, identifiers, reviews and RFID success factors. Finding of
this research is that RFID provides a supply chain collaboration and
visibility. An RFID systems solution will increase corporate ROI while
at the same time improving retail supply chain communication. RFID
technology can result in an evolutionary change incorporating
legacy systems with the real-time supply chain management of
tomorrow. Its stumbling point seems only to be a variety of issues
outside the technology itself: marketing problems, false promises,
security and privacy considerations, and a lack of standards.
As with increasing implementation of IT in SCM everything is becoming
automatic from order placing to deliver of product. In a study conducted by
Themistocleous et al(2004) they describe the integration of different
applications in SCM but they don’t describe how this implementation affect
the SCM.
Companies have a different focus now their focus is shifted from
integrating their companies to integrating across companies as well
this is because coordination of supply chain is improved this way,
use of EDI and XML have changed the view of business by allowing
companies to exchange their information among organizations or
partners. As companies are developing day by day old technologies
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are replaced by new ones for example to make the system fast and
efficient companies implement XML (Extensible Markup Language)
to exchange data on transaction by transaction basis. XML files
provide all documentation and schema of transactions during
exchange, and can be transmitted through HTTP because XML is
text base. Another benefit of implementing XML in data transmit ion
is cost effective,
Chandra. C & Grabis. J(2008) the overall objective of this study is to

describe decision-making models for supply chain modeling. Model
integration is a precondition for efficient development and
utilization of these models. This study focuses on modern
information technology (IT) techniques and methods for integration
of supply chain decision-making models. Data and process modeling
technique is used to design the methodology. The presented
discussion serves as the basis for further developments in
developing integrated supply chain decision-making models.
Closs, D. and Savitskie, K. (2003) conducted a research for Logistic
Information technology in international perspective. Main objective
of study is to provide justification of expenditures of LIT for
managers. A literature review method was used for data analysis by
international sources. Finding of this study was that LID could be
separated in two different dimensions and each dimension affects
the impact of LID in different perspectives. This study was very
week and does not provide any evidence because search sample
was just 34 and it is not ideal.
Here are so many studies previously done on impact of IT in SCM
but a study conducted by Auramo. J et al. is most effective and
relevant study, purpose of study is to provide evidence of benefits
of IT in Supply chain management. Data was collected with inquiries
conducting interviews with 48 Companies to gain information about
what supply chain solutions they implement. Findings of this study
are E-business improves the supply network. E-business improves
customer service which is very important for business. Although it
was a good study but still here are some limitations very first is
sample of company is for a single company not for supply network.
In an other study by SCHNETZLER.M.J & SCHONSLEBEN.P (Sep 2007)
they shed light on impact of Information technology and Information
Management in Supply chain management. Objective of this study
was to find all attributes that helps for Information Management in
Supply chain management and their impact, In this study method of
study was Axiomatic design. Finding of study is that IM has an
impact on all target areas of SCM, i.e. quality, delivery reliability,
delivery lead times, flexibility, assets, and costs. Two case studies
were conducted to illustrate methodology of study.
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Supply chain Management Systems are technologies Cash and

Konsynski,(1985) that serve to
Mediate customer-supplier transactions (Subramani, 2003). IT
provides a lot of opportunities not only in business or SCM but in
general as well. Bowersox and Daugherty (1995)Highlights IT as a
key for supporting companies for centralized planning of strategy
with day-to-day operations.
Closs (1994) stresses that IS application for supply chain
management must be extensively reviewed or reengineered to shift
from a functional to a process focus. In his view, newer applications
must focus on the reengineering of processes to create competitive
advantage. Existing applications should be a starting point for the
reengineering process.
The new integrated supply chain management systems, if utilized
properly, can lead to higher quality products, enhanced
productivity, efficient machine utilization, reduced space, and
ultimately increase logistics efficiency and flexibility (Gross 1984;
Kaltwasser 1990). According to study by Bowersox and Daugherty
(1995) IT Supports companies to create strategic advantage
because it enables them to plan day-to-day operations.
According to Williams et al. (1997) main purpose of introducing
Information technology in SCM was to just automate clerical work.
Earl (1989) classified the scope of information technology into the
following categories according to whether information technology is
widely used in the value chain or selectively used for only
information processing and whether it is applied for value creation
or applied for the connection of value-adding activities: (1)
Information technology that automates or improves the physical
aspect of every activity; (2) Information technology used for
physically connecting each value activity or controlling those
activities at the connecting point; (3) Information systems that
facilitate the implementation, support, and management of value
activities; and (4) Information systems that optimize or adjust the
connection of each value activity. Earl's classification is not only
applicable to the internal value chain of a firm, but can also be
extended to the company's supply chain, linking suppliers and
customers.
(Wisner et al., 2001) ‘Supply chain management’ is defined as the
systematic, coordination of the traditional business functions and
the tactics across these business functions within a particular
company and across businesses within the supply chain, for the
purpose of improving the long term performance of the individual
companies and the supply chain as a whole’ (Mentzer et al, 2001,
p.22) It should be noted that most of the articles and books focus on
the definition of supply chain management rather than on research
18
methodologies. The implication for the supply chain is clear and

they therefore focus on the cost and consumer requirement targets.
The most typical role of IT in SCM is reducing the friction in
transactions between supply chain partners through cost-effective
information flow (for example, Cross, 2000).
Conversely, IT is more importantly viewed to have a role in
supporting the collaboration
and coordination of supply chains through information sharing (for
example Lee et al.,
1997 present IT as one of the key cures for bullwhip effect in supply
chains). Third, IT
can be used for decision support. In this instance the analytical
power of computers is
used to provide assistance to managerial decisions. (For a detailed
discussion of decision
support systems for supply chain management see Simchi-Levi et
al., 2003, pp. 293-318,
and Swaminathan & Tayur, 2003 on the review of analytical models
in the supply chain management literature).
Types of IT use in SCM

Auramo. J et al., When we talk about implementation of IT in Supply chain
that makes a question why IT is implemented in SCM and where? So answer
to this question is for implementation of IT in SCM is first in Transaction
processing, Supply chain planning, order tracking and delivery coordination.
1. Transaction processing
2. Supply chain planning and Collaboration
3. Order tracking and delivery coordination

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Implementation of IT in transaction processing increases efficiency and

improves information quality by reducing human errors. And saving to
transfer information among organizations. Supply chain planning helps for
predicting the demand. Order tracking and delivery coordination helps
company to keep record of orders and deliveries for better progress and
efficiency of work.
EDI (Electronic data Interchange):

Angeles. R (2000) EDI provides computer to computer data exchange or
document exchange that is in computer format between organization and
partners. EDI provides automation and synchronization of demand, supply
and production from all raw material suppliers to product consumer. IBM
established a website for procurement, communication, supplier relationship,
EDI and E-commerce. An EDI customer invoicing transaction is included in
this web site. EDI allows business process integration that is it could be
layered over existing applications that is most important advantage of EDI.
Implementation of EDI in business or organization enhances customer
service and productivity. Reason for successful EDI implementation is: a
talented and competent champion, top management support, early user
involvement, industry efforts and management information system capability
and support. In another study Benjamin.R.I, de Long.D.W, M.S. (1990)

20
identified the importance of EDI standards, managing change in the

organization and work design. EDI has following limitations:
 Implementation of EDI is very expensive
 Because of Batch processing transactions are delayed.
 Technical needs for implementation are very expensive
 Not suitable for small scale business because of higher cost and hard
implementation requirements.
ERP in Supply chain Management:

In order to correctly forecast inventory levels, the supply chain
management system needs ERP’s database cooperation helps
Supply Chain management system to forecast inventories (Laudon &
Laudon, 2002). In order to make SCM powerful it includes
systematization and optimization of operational and strategic
information and methods within and between enterprises. In Early
ERP it was not focused on Supply chain. It was integrated with
internally oriented application systems that support financial,
management, Manufacturing and data entry. But Internet brought
an evaluation in Supply chain for integration in ERP,
EDI (Electronic data Interchange):

Angeles. R (2000) EDI provides computer to computer data exchange or
document exchange that is in computer format between organization and
partners. EDI provides automation and synchronization of demand, supply
and production from all raw material suppliers to product consumer. IBM
established a website for procurement, communication, supplier relationship,
EDI and E-commerce. An EDI customer invoicing transaction is included in
this web site. EDI allows business process integration that is it could be
layered over existing applications that is most important advantage of EDI.
Implementation of EDI in business or organization enhances customer
service and productivity. In a study by Emmelhainz [9], Reason for successful
EDI implementation is: a talented and competent champion, top
management support, early user involvement, industry efforts and
management information system capability and support. In another study
Benjamin.R.I, de Long.D.W, M.S. (1990) identified the importance of EDI
standards, managing change in the organization and work design.

21
2.1 Supply chain support systems

Supply chain support systems are those systems that manipulate
the flow of information regarding product production. These
systems keeps track of product demand and inform the production
unit about how much and when products are required to keep flow
of supply chain smooth and quick.
2.2 IT Industry & IT systems in SCM

The IT industry is also called communication industry. Any industry
that uses computer hardware, software on communication services
is an IT industry. The scope of the IT industry is increasing every
day. A key purpose of information technology is to enable
organizations to increase their efficiency and effectiveness and
enable management to make better informed decisions.
If we are talking about IT systems used in SCM they are inter-
organizational systems that are used for sharing data among firms
to process information.
According to Patnayakuni, Rai and Seth(2006) lack of information
sharing among supply chain prohibits coordination and makes whole
system inefficient and reduces profits. According to a research by
Muller & Seuring, (2007) integration of communication, data and
application for consistent and real time communication among
function unites in supply chain for information integration. To
develop operations and workflow coordination companies are
required to integrate all resources and embed them. IS integration
can enhance supply chain agility. By improving operational
performance. Information System (IS) impacts in two propositions.
1. Changes in production and services and marketing new

products are affected with IS.
2. Degree of dependability among partners is increased with IS
3. Is improves production and volume flexibility in Supply chain.
2.3 Impact of IT on SCMS (Supply chain management

system)
SCMS is the term used for the software tools that are used for
supply chain management. The functions performed by these

22
software tools are: to monitor and process customer requirements,

to achieve inventory management, stock and warehouse
management, to processing purchase and sale orders and supply
management.
The most impact of IT on SCM is on Logistic, procurement, Firm,
Customer relationship.
The main requirement of the SCMS system is forecasting because
the balance between supply and demand is only maintained by
forecasting and demand analysis for better future needs.
The most important aspect of Supply chain and IT is inventory
management. The most popular use of IT is in communication area
where the companies communicate with their customers to tell
about stock outs, and the customers can communicate to the
vendors about the stock outs.
Some previous studies showed that IT helps the firms to coordinate
their JIT operations. The most important use of IT in supply chain
management is Transport management. Most popular application of
IT is monitoring of the regional distribution pickups at carriers. This
information is very helpful for companies to keep track of the
carriers they using to deliver products.
Grover et al. suggest that use of IT within dyad could establish
relational behavior; IT reduces transaction cost between buyer and
supplier and creates a very cooperative structure.
Figure 1 Impact of IT in Supply Chain Management
As in Figure 1 we can see IT in supply chain mostly impacts Firm,

Logistic, Vendor relationship management, Procurement, Operation
Customer relationship management.
IT impact on Firm:
In order to keep firms working in proper manner and to reduce
production costs everyone needs to know what to do? How to do,
and does quickly and correctly, In order to gain all this a firm must
have a high level of discipline. And the second main thing to keep
under control is changing products and services and marketing of
new products and services. To gain all these things IT can help to
solve all problems by making information sharing easy and making
all information available to personnel of company.

23
IT impact on Logistic:
IT impacts logistic with great extend, as transport is most cost
effective component of a firm. Most important IT application is
transport region tracking that helps firm to track the shipment in
order to keep record of shipment. These systems can help transport
manager to find the motor carriers are meeting their promised
arrival times. The basic goal of production and logistic is to reduce
time to fill customer order, reduce the inventory of part, and
finishing of customer order on pipeline and with accuracy. Because
customer satisfaction is biggest success of a firm. So for fulfilment
of all these processes manufacturers, retailers, and traders are
using IT.
IT impact on Customer relationship:

The success of a company depends upon the services they provide
to their customer. Customer satisfaction leads company towards
success. Customer satisfaction depends up on how soon they
response to customer order and how soon customer order is
delivered with great efficiency and accuracy. In order to keep record
and tracking of customer request IT can help firms to manage all
these things. The other way to bridge a solid relationship between
customer and company is to provide a digital conversation by
providing facility to customer to contact company. Some companies
use IT to collect customer complaints or for emergency notification.
IT impact on operation:
The most difficult thing to be managed in a company is inventory
management, that is very expensive for companies to keep record
of stock outs, information providing to customers regarding stock
outs was very difficult but use of IT among companies have solved
this problem. Production scheduling was one of the most difficult
task among the companies using traditional SCM, but with the
implementation of IT in Supply chain management it has become
very simple and easy. Using EDI systems and Communication
Sources, Company keeps in contact with vendors, suppliers and
customers. Implementation of IT in SCM can make management of
operations very easy and accurate.

24

25
Chapter 3
Research Method
3.2 Document Study

Given the availability already of numerous surveys on the topic,
rather than conducting direct interviews and inquiries (which can be
limited and incomplete by the formulaic nature), it is more
beneficial to coordinate and collate already available data and to
knowledgeably interpret a wide range of example. Thus, in
conducting this study my first method would be document reading.
It is preferred to read authorized articles and books on the topic.
Some historical studies for supply chain management will be
reviewed for a thorough coverage of the topic. The relationship
between ERP and supply chain must also be taken into account.
Different historical data for companies that use IT and the
companies that do not use IT must be discovered. Large and small
business organizations must be compared in order to arrive at a
satisfactory result and to be able to show whether or not IT in
business supports supply chain management. Research data must
be collected via targeted reviews of organizations that use supply
chain support systems as well as organizations using paperwork for
transaction management. Then a comparison must be done to
identify changes in supply chain managements resulting from the
introduction of information technology.
The Case Study of the supply chain in Dell Computers

Supply Chain of Dell Computers: the companies managing to maintain
their supply chain at the minimal cost are to be considered the
successful companies. Dell Computers is one of them with an impressive
style of supply chain management. Dell Company started first by Michael
Dell in 1984. This company was selling custom computers. Network servers,
notebooks and desktops were the commodity of choice in the computer
market of the 1990s. Dell’s speciality to provide on the one hand more
moderately priced alternatives for private customers and on the other robust
network systems for businesses was coming against very elaborate and
expensive competitor offerings from IBM, HP, Compaq and others. Althout
towards the end of the decade almost half of American households had a PC,
the majority of companies still relied on outdated server/desktops. How
cumbersome the purchasing process was is evident in the fact that all

26
purchasing orders needed to be vetted by management and this led to a

negligible 2.2% of sales for serves when compared to desktop PCs for the
year 1996. What Dell did was to avail themselves of the fact that an ever
bigger slice of the public were intensive Internet users and therefore it came
as no surprise that when Dell opened their online store at dell.com, it was an
immensely successful venture. The supply chain and the sales channel
brought together to great effects. A concomitant benefit is the reduction of
inventories as well as a general betterment of material management. Not
least the interface with suppliers is facilitated, which means that wherever
the manufacturing premises and the points of sale may be – North and South
America, Europe or Asia, all of Dell’s 34 400 employees are able to provide
tailored and up-close service to their customers. OptiPlex, for instance, is
capable of building no less then 20 000 bespoke machines every day
– all of which more reasonably priced that the standard not
customised machines of their competitors. This narrowly tailored
business approach has been a financial boon amounting in 2001 to
31.8 billion US dollars in sales, 50% of which carried out via
electronic means. The company itself currently not only sells online
but buys about 90% of its materials online too. Because
manufacturers of components are locally sourced, the company can
effectively build a computer from scratch within a matter of hours
within an inexpensive geographical space. In other words, this
electronically augmented brand of supply chain management has
put both the company’s suppliers and customers at the company’s
fingertips. Worder best by a Dell executive: "Because we work
directly with customers, we have the ability to connect and
understand what products will be required and when. We can start
the development cycle much more quickly with our partners.
Whether it's a new midnight grey flat panel LCD because customers
do not like the old beige or whatever colour scheme, we can start to
plan those components and share information with our suppliers
many months in advance of the product actually coming to market."
@@@@@@@@@ reference@@@@@ Another consequence of the system’s
introduction is a type of internal workplace restructuring which without
causing redundancies has lessened costs and improved productivity –
namely, employees that previously would have dealt with administrative and
purchasing tasks, become specialized in managing supplier relations making
sure that there is someone to fill in should technical glitches cause any
inconvenience (delays) or invoice inaccuracy for the customers. For example,
customers would be kept abreast of developments by being issued with
tracking number, while suppliers would be briefed continuously about the
current need for materials. Kumar. S and Craig.S (2007) Indeed, Dell has
managed to actually export the highly bothersome task of keeping
inventories to the suppliers themselves so that Dell instead can concentrate
on product assembly only. Overall, the sharing of information (databases,
27
methodologies etc) rather than withholding of information has lead to

business advantage. In a way Dell has been educating its partners about its
internal logistics in order to make the relays of information within the
systems becomes more reliable - all the dots are connected and every
employee, consumer, supplier is kept posted on the flow of information and
materials. The company consequently optimises performance, reduces waste
or overproduction because all deliveries of raw materials or finished products
are based on actual demand rather than on estimated and on approximation.
It is hardly surprising in the end that Dell was named the second leading
company of 2001. Its supply chain management is pioneering and remains
impressive to this day. To put it simply, Dell ensures a couple of basic steps:
it has sufficient suppliers from whom to order products, it produces and
dispatches its products directly or online, it reduces overheads. According to
Dell Corporation (2001) Dell using I2 types of supply chain software to
maintain its Supply chain. As we can see from the example above, Dell is
maintaining a highly optimised Supply Chain technology but still here is room
for improvement. Dell Supply Chain had shortened the cycle between the
Component, Manufacturer and the end customer (ITAC, 2001). As other
companies like HP and Intel or Microsoft Dell does not spend more attention
for advertisement that is
weakness.@@@@@@@@@@@@@@@@@@@@problem with last
sentence@@@@@
Bridge Case study:
www.bridge-project.eu BRIDGE (Building Radio frequency Identification for

the Global Environment) is a 13 million Euro RFID project running over 3
years and partly funded (€7.5 million) by the European Union. The objective
of the BRIDGE project is to research, develop and implement tools to enable
the deployment of EPC global applications in Europe. Thirty interdisciplinary
partners from 12 countries (Europe and Asia) are working together on :
Hardware development, Serial Look-up Service, Serial-Level Supply Chain
Control, Security; Anti-counterfeiting, Drug Pedigree, Supply Chain
Management, Manufacturing Process, Reusable Asset Management, Products
in Service, Item Level Tagging for non-food items as well as Dissemination
tools, Education material and Policy recommendations Look-up Service,
Serial-Level Supply Chain Control, Security; Anti-counterfeiting, Drug
Pedigree, Supply Chain Management, Manufacturing Process, Reusable Asset
Management, Products in Service, Item Level Tagging for non-food items as
well as Dissemination tools, Education material and Policy recommendations.
Whirlpool case study:
The Problem

28
In 2000 Whirlpool recognized a problem with its supply chain. It was in fact high time that this
recognition be made given how the companies dysfunctional processes has become the butt of
jokes even within Whirlpool. "We had too much inventory, too little inventory, wrong inventory,
right inventory/wrong place, any combination of those things," are the words of then supply
chain project director J.B. Hoyt. Whirlpool had effectively lost its status as a major manufacturer
as a result of this appalling performance – causing quips from the likes of ‘among the four major
appliance makers in the U.S., Whirlpool ranked fifth in delivery performance’. In fact, even an
abysmally low performance would have been better, if only it had been consistent rather than so
unreliable from day to day. For it is the variation that exasperates partners and makes progress
nearly impossible.
The Recognition
A year after the sober realization, Whirlpool decided to launch a global redesign covering its
entire supply chain management system. It was to be carried out via multiple different projects
and has in fact subsequently transformed in a type of ongoing meta project of improvement –
with some system still to be effected and some technical issues still to be resolved. Whirlpool’s
management however views the project as an indisputable success – with improvements in
particular in customer service and cost minimization. It is these improvements in effect that serve
to sustain the drive to implement the project till the end. Whirlpool CIO Esat Sezer notes the
utter inefficiency of the old systems of manual and paper intensive data collation that contributed
rather than alleviated the complexity of keeping apace with contemporary developments (let
alone expanding). In the CEO’s words "Our supply chain was becoming a competitive
disadvantage for us." Whirlpool had reached an all time low whereby availability or the chances
that a specific product will be at the right place at the right time was only 83% of the time. This
was despite the fact that the product was in the inventory elsewhere. The problem was in fact that
there was a general lack of integration between individual supply systems and the company's
SAP ERP system (set up in 1999), between the company and its suppliers, the company and its
customers. Scheduling was also outdated. A specific difficulty seemed to present the fact that the
existing supply chains were rather broad-brush and to geared towards niche agents and priorities.
Whirlpool’s North American supply chain in 2000 was a series of outdated systems that
included:
• An idiosyncratic scheduling system, the Whirlpool Manufacturing Control System

(WMCS), which had been in use from as far back as the mid-1980s
• SAP's R/3 ERP system, which had been put in place in 1999. Its focus was accounting
and order processing.
• i2 Technologies' Demand Planner (also known as Demand Manager). It had been
installed in 1997 to forecast demand.
• A distribution planning system again from the 1980s (with optimization software from
ILOG).
The Solution

29
In 2001, Whirlpool launched an advanced planning and scheduling (APS) system. Included
were also a suite of supply chain integration and optimization tools from i2 -- Supply Chain
Planner for Master Scheduling, Deployment Planning and Inventory Planning. All of these
systems were rolled out gradually in three phases over the following two years. In mid-2002,
Whirlpool brought to the table the i2 TradeMatrix Collaborative Planning, Forecasting and
Replenishment (CPFR) system. This was a collaborative online tool than was capable of
collating sale forecasts – of a Web-based collaboration tool for sharing and combining the
sales forecasts of Whirlpool just as well as of trade partners such as Sears, Roebuck and Co.,
Lowe's, Best Buy Co. On the side of suppliers, another initiative has been underway but has
yet to be fully realized, yet management is optimistic about the future developments. These
letter include not least a replacement of the old WMCS that Whirlpool uses for production
scheduling and which is planned for replacement with SAP’s Production Planning module.
3.2 Comparison of Case studies

The study proposed to deal with examples of appliances and car
manufacturing companies. These were chosen for the scale of their
operations, as it is postulated that the effects of IT in SCM can best be
glimpsed in large scale enterprises. Companies that provide online access to
their data were used for the research – chiefly to limit the scope of project.
Additional evidence was collected via which was analyzed and acknowledged
so that there is no doubt as to the authenticity of the research. Needless to
say, proper referencing and review of previous investigation of the topic
have been be the starting point.
3.3 Limitations of the methodology

There is some concern that a study showcasing only positive
examples or companies that have successfully integrated IT in their
supply chain management model and are flourishing may be biased.
This bias may be due to the sheer unavailability of data about other
companies that have failed to integrate IT or still other companies
that have failed because they have not integrated IT. Although
these concerns are legitimate, they are unproductive as proof or an
evaluation tool for the effectiveness of IT in supply chain
management. It is simply more beneficial to zero in on success
cases, which themselves are by no means simple. To an extent there
is a commonsensical preconception that certainly all new
technological implementations are aimed at improvement. However,
our study is less concerned with this undisputed aim of the
improvement and more concerned with the qualitative differences
of that improvement – with finding out what manner of IT
implementation (beyond mere automation) works most often and

30
most successfully for supply chain management. Thus, the aim here
has been explorative more than determinative. A further bias may
be identified in the fact that companies themselves may be all too
willing to disclose details about successful implementation than
about failed attempts, making scientific inquiry highly reliant on the
company’s own partisan wish to appear forward thinking and
modern and using IT as a buzz word. We acknowledge this type of
bias to have been possible in the early stages of IT implementation
but to have eventually become irrelevant as the costs of sustaining
the false pretence would outweigh the benefits of this superficial
advertising. Thus, in the long run, both biases are irrelevant.

31
Chapter 4 Conclusion
In analysing the example of the three case studies listed above,

several distinct commonalities can be identified. First of all, the
need for the introduction of IT in supply chain management only
becomes palpably clear once a company becomes a certain size, or
its operations begin to expand. It is then that the old systems
become visibly inadequate, cumbersome and outdated. There is
certainly similar dynamics at smaller companies with more limited
operations, yet there typically there exist more tailored and flexible
solutions already and manageability is less of an issue. Thus
although in principle any company ought to benefit from IT
improvements, certain trade-offs (financial or otherwise) need to be
taken into account when discussing IT implementation in SCM. In
certain companies the cost of implementation may outweigh the
benefits. This however is only likely to be in the short term. Because
of the state of the economy nowadays and because of the general
penetration of IT solutions in all spheres, it is becoming increasingly
easier and cheaper to effect IT implementation – indeed it is
becoming the norm and the only natural solution for even the tiniest
of businesses. As long as SCM is warranted, so is IT too.
All examples plentifully illustrate the ability of IT solutions to optimize

performance in terms of saving time, expenses for paper and postage and
other such. This is a very simple classical type of optimization that is little
different from automation. If this is the only use of IT in SCM, it would be
rather uninteresting and not too different from the implementation of any
new technology (as had been done at the beginning of the 20th century for
instance). What is however special about IT is the intensity of the
intervention – which is unprecedented. Thanks to this quantitative difference
in intensity, a qualitative transformation is achieved. That is to say, not only
does IT help SCM at targeting local individual points, but it works
strategically to transform the entire philosophy used by the company so far.
It creates new ideas and fosters unexpected business solutions. And as was
demonstrated in the examples above, often times the companies chose to
transfer the positive experience they had with one type of IT implementation

32
to a completely unrelated branch of the company. Thus IT is not only a novel

methodology but a driver of innovation as well.
Another characteristic that has emerged as vital aspect of the IT use in

Supply Chain Management ha been the facilitation of customer relations.
There may seem as only one part of a company’s operation but appear to be
increasingly important and a distinguishing marker. In a business climate
where many products and services are identical and unremarkable, customer
service becomes a vital individualising feature. It is paradoxical to an extend
that instead of stifling the ‘human touch’, IT solutions in fact make it possible
on a very large scale.
Finally, and again a paradoxical characteristic of IT solutions, is the increased

transparency and real time access to information that they provide all along
the supply chain. Although this present study has been necessarily limited
to simply identifying the many benefits of IT implementation in SCM, the
deeper conceptual questions that come in the wake of that implementation
could perhaps be taken up in further studies on the topic.

33
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Contents

3.2 Document Study.......................................................................................................................25

Salman Ali 0468GGGG1109 Page 2

The term supply chain management was first coined by a U.S.

Supply chain management has been successfully implemented by

Salman Ali 0468GGGG1109 Page 3

Supply chain management is concerned with the flow of products,

A supply chain can be made up of a set of three or more companies

Here are four important decisions areas in supply chain

1. Location, 2. Production 3. Inventory 4. Transportation

Before 1980s the information flow between functional areas within

Salman Ali 0468GGGG1109 Page 4

The essential point is to identify and describe a domain of theory

Small and medium enterprises play a major role in the national

1.1 Significance of the problem

Salman Ali 0468GGGG1109 Page 5

As most organizations are now computerized and data is manipulated online,

1. The degree of cost reduction in the organization as a consequence of the

2. The extent to which the efficiency of the production cycle is increased.

1.2 Research Question

 How the evolution of these technologies impacting on supply

1.3 Research criteria

2. In IT some systems that help to support the supply chain management

1.4 Information Technology in SCM

 EDI(Electronic Data Interchange)

Salman Ali 0468GGGG1109 Page 6

 RFID(Radio frequency Identification)

Impact of E-Business on SCM: Chopra. S and Jan A. Mieghem. A

Selling computer on internet saves Dell computer to share money

Salman Ali 0468GGGG1109 Page 7

 E-business can coordinate and connect all of the business

o (B2C) Business-to- Consumer

Salman Ali 0468GGGG1109 Page 8

Since mid 1970s companies have been using technologies such as

(C2C) consumer-to- Consumer

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We can use the example of Ford Company they plan to create a

Definition Of Supply Chain Management:

products and services delivered to the ultimate consumer’.

• SResource-Based View (RBV)

This supply chain representation is realistic and is a hybrid

 Management of orders with automated entry.

Supply Chain innovations:

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In a study by Olhager. J and Selldin. E(2002) they investigated 128

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Information Technology in SCM:

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supply chain 1. They have inefficient control over crossing organizational

In a study by Ngai. E.W.T et al.(2007) they reviewed integration of RFID in

Bagchi et al, (2002),conducted a study to examine impact of adopting

Chandra. C & Grabis. J(2008) the overall objective of this study is to

Supply chain Management Systems are technologies Cash and

methodologies. The implication for the supply chain is clear and

Types of IT use in SCM

2. Supply chain planning and Collaboration

3. Order tracking and delivery coordination

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Implementation of IT in transaction processing increases efficiency and

EDI (Electronic data Interchange):

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identified the importance of EDI standards, managing change in the

ERP in Supply chain Management:

EDI (Electronic data Interchange):