Question:
Write a short essay that discusses the following statement, using examples and references to support your answer:
“Identify and discuss ONE impactful trend in supply chain management over the last quarter century? Justify your choice.”
When the internet first started being used, the new technology provided an alternative way of finding information. However, today the internet has become a valuable resource and part of the individual life of people today. The internet has thus made the greatest impact in the life of people and business and thus changed the way people and businesses operate. The internet has been described as the merging of the digital and physical worlds to share information over a network (Castel 1996, p11). The internet has changed the business operations and is one of the trends in supply chain that cannot be ignored.
The business environment has changed with increased competition and the need to minimise costs. Businesses have been forced to adopt technology trends that are coming up in order to remain competitive. The biggest paradigm shift in the business environment was the rise of the internet as a mode of communication in business. Burke and Vakkaria (2002, p16) suggest that total performance of a supply chain is boosted by optimising all the links in the supply chain. Recent modern technological developments in information systems and technology have facilitated the coordination in the supply chain field leading to the integrating of the entire supply chain into one unit that is easily managed. Businesses that are doing well have integrated their supply chain environment with internet based technologies to increase customer experience and increase competitive advantage. According to Gartner report of 2014, the use of the internet in the business environment was highlighted as one of the emerging trends in supply chain management.
Supply chain management is concerned with planning and managing of company activities of coordinating all the logistics within the company. This ensures that supply and demand is merged across the company to keep the company processes running. The business function and processes have to be linked across the firm. Croom (2000, p 5) argues that the need to change the supply chain field led to the use of internet in supply chain processes. To change the supply chain process from the traditional way of doing business needed a change from individual management function to integration of the individual business activities into one supply chain process. Nagume et al (2005, 125) add that the has led to a supply chain system where business operations are done in a more fluid way enabling customers to benefit through increased communication between them and the supplier. This benefit extends beyond speed of communication to improved service delivery and reduced costs.
Cagliano, Caniato and Spina (2003, p 1156) suggest that merging of the internet and supply chain management has been described as Electronic Supply Chain Management (e-SCM). This was driven by the fact that the internet can enhance supply chain decision making through providing real time data. Before the rise of the internet, supply chain management was base on materials management through inbound outbound logistics and shipping of finished goods to the customer. The use of eSCM broke the traditional way of physical product and information floe to allow an interface where the customer and the supplier can interact on one platform.
The internet is one of the trends that have changed the area of supply chain management. Over the last decade the internet has changed business operations and the mode of communication. The invention of the World Wide Web led to connection of people from different parts of the globe to one platform. This has thus speeded up communication between the customer and the supplier.
Supply chain function is an important element in any firm that is doing business. Many companies develop individual supply chain areas that contain a breakdown of different aspects of the companies intended activities like transportation, inventory and material handling. This means that supply chain is multidimensional with the main function of ensuring that the company minimises costs and maximises profits. The rise of quality management and the need for firms to satisfy customer needs lead to the use of the internet in supply chains. This therefore ensured that the supply chain moved from the manual way of doing work to internet enabled automated systems that ensured that efficiency is increased (Bowersox and Closs 1996, p11-13). The internet is used in procurement function to reduce costs in purchasing through providing quick access to purchase information and any relevant detail that is needed in purchasing. Supply chain makes the information available n the internet for easy access of any interested party. This means that making orders and determining what is available in the store is just a click away. Procurement is thus made easy by quick access to information that is required.
The organization benefits from this simplified process since the actual price paid for the purchases remains the same where as procurement costs have reduced. This has been termed as e-purchasing where the internet is widely used in checking price quotations, negotiating with vendors, managing product issues and improving inter-organizational coordination. Internet or online procurement has advantages to a business organization. The firm is able to save transactions costs and thus enabling the business to easily react to the changing market. For example it costs an average of $150 to generate a purchase by IBM but the same processes costs $30 when e-procurement is used (Dyer & Jeffrey 2000, p 11; Stern & El-Ansary 1995, p27). This is because the system allows the business to manage multiple tiers of suppliers within one platform.
The internet provided an easily accessible market for marketing goods that a company has produced. Use of the internet to market products improves transparency in pricing and reduces transaction costs which benefit the supplier. This also enables the customer to avoid intermediaries who increase the cost of products. The internet allows direct end to end transactions where the business changing does not involve intermediaries. The internet is thus used in developed countries like the US to streamline purchasing. This is due to its ability to reduce paper work and the order cycle. This is because the internet provides a single platform through the electronic data interface that allows the parties involved to easily meet their terms of trade. The biggest milestone that the internet has assisted
According to Cassivi et al (2004, 98) the internet has reinvented supply chain management through a network of technologies like e-procurement, collaborative commerce, e-logistics, inventory management, demand scheduling, customer interface and web based tracking. This leads businesses to save costs through real time communication in the supply chain. Therefore what adds value to an organization is not technology or internet but coordination between different business lines and technology.
On the other hand, Agi, Ballot and Molet (2005, p110) argue that research has also shown that companies that have invested heavily in electronic supply chain management have performed ore worse than those that did not invest in technology. It is also worthy noting that the internet has posed business risks that can also be a threat to business. New technologies lead to new crimes like cyber crimes that can harm a business in one way or the other. This is an indicator that businesses should not blindly adopt every technology that is available. The need to weigh the available resources that are available and the challenges that the business is to face in the future and the market trends of the day in determining the type of technological investment to be adopted. Despite the above the internet remains the biggest trend and force that has changed the business environment.
References
Agi, M., Ballot, E. and Molet, H., 2005, “100% EDI -connected suppliers projects: An empirical investigation of success factors”, Journal of Purchasing and Supply Chain Management, Vol. 11 No. 2-3, pp. 107-115.
Bowersox, D. J., and Closs, D. J., 1996, Logistical Management—The Integrated Supply Chain Process. McGraw-Hill Companies, New York.
Burke, G. J. and Vakkaria, A. J., 2002, Supply Chain Management. Internet encyclopaedia. John Wiley, New York.
Cagliano, R., Caniato, F. and Spina, G., 2003, E-business strategy: How companies are shaping their supply chain through the Internet, International Journal of Operations & Production Management, Vol. 23 No. 10, pp. 1142-1162.
Castells, M., 1996, The rise of the network society. Oxford: Blackwell Publishers.
Cassivi, L., Lefebvre, E., Lefebvre, L. A. and Leger, P. M., 2004, The Impact of E-collaboration Tools on Firms’ Performance, The International Journal of Logistics Management, Vol. 15 No.1, pp. 91-110.
Croom, S. R., 2000, The impact of web-based procurement on the management of operating resources supply, The Journal of Supply Chain Management, Vol. 36 No. 1, pp. 4-13.
Dyer J.H., Jeffrey H., 2000, Collaborative Advantage. Oxford University Press, New York.
Nagurney, A., Cruz, J., Dong, J. and Zhang, D, 2005, Supply chain networks, Electronic commerce, and supply side and demand side risk, European Journal of Operational Research, Vol. 164 No. 1, pp. 120-142.
Stern, L. W., and El-Ansary, A., Marketing Channels, 5thedition, Prentice Hall, Englewood Cliffs, New Jersey, 1995.
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