Influence Internet and Digital Technologies on Supply Chain - Essay Example

Influence Internet and Digital Technologies on Supply Chain Information technology has observable impacts onthe supply chain of various businesses across the globe. Research conducted by the Forrester firm indicated that many firms have increased their dependent on IT services because of the benefits they derive from these services (Fasanghari, et.al. 2008:8). Specifically, organisations demonstrate concern on the agility of supply chain, reduction of product time cycle, efficiency, and product delivery. The essence of the above contention is to achieve high performance through introduction of effective and efficient services. The move from the traditional system to the electronic system was because of the influence created by the electronic system to the organisation performance. The IT introduction increases organisation’s ability to understand it consumer behaviour, its store, the market that has an effect on the organisation performance. The paper will address the influence created by internet and other digital technology on supply chain management (SCM). The understanding of internet or information technology with respect to SCM would refer to a system where the organisation has no boundaries of sharing its information. Supply chain management is a process where an organisation coordinates, plans, and controls materials (goods) from supply to consumer (Wang, C. et.al.2011:6). The chain consists of geographical facilities of distribution and links created through the transport system that connect the chain to the facilities. The chain would begin from the manufacturing organisation and would end with the consumer. The length of the chain determines the efficiency of the organisation. Supply synergy Supplier to buyer relationship shows some degree of interdependence. Factors, which influence the interdependence, are bargaining power and supply power among others. The development of organisation’s strategy largely depends on its supply power. The effectiveness of the chain would depend on the trust demonstrated by the concerned parties. Analysts contends that application of electronic system in product marketing i.e. IT reduces costs associated with coordination because it drastically cut cost of communication and the assets which offer create chain relationship (Salo and Karjaluoto, 2006:56). The competitiveness of a product in the market depends on the consumer information about the product. The essence of digital technology is to influence the traditional supply chain by creating effective operations. Study on traditional chain show that information availability is limited thus leading to in adequate performance (Simchi-Levi, et.al. 2004:132). Communication is a vital element in the supply chain because it dictates terms of service between the suppliers and the buyers. The effectiveness of the system leads to strategic approaches, which influence the performance of the organisation. Researchers have observed that many organisations have embraced internet and other digital systems in their supply chain process. The shortcoming of the traditional chain includes limited functionality of the enterprise, inflexibility to adapt to environmental changes, limited support functionality in decision-making and limited modularity (Gordon, et.al. 2008:58). Supply Chain in the Book Industry Research on internet influence on SCM in book industry indicates that the application has an influence in the following areas procurement, supply relationship management, customer relationship management, and logistics (Wang, et.al.2011:13). The processes involved in supply chain of books include publishing, creation, consumption and distribution. The trend is similar to other trends employed by other organisations. A bid to understand the impact of internet application to SCM leads to the following approach of explanations. Internet and other digital technologies on purchasing Availability of information through internet has influenced processes involved in purchasing products. Initially, purchasing of books involved sending letters of inquiry, followed by catalogues, purchase order among other lengthy processes. In the recent past, trends in the book publishing have rapidly changed embracing the fully use or hybrid technology application. The lengthy communication process involved in the supply chain influenced the efficiency in purchasing. The technology has streamlined the negotiations observed between the vendors and the buyers as well as suppliers and the publishing houses (Bourlakis, et.al. 2011:136). The process enables the involved parties to negotiate through internet service thereby eliminating delays in the traditional system. The use of internet enables vendors to process their needs efficiently and timely. The influence created by the technology use is enormous because it eliminates costs associated with application processing. Previously, firms had to incur costs for initiating processes involved in purchasing. Errors, which occur during processing influences the ability of the supply, chain to meet the needs of the consumers. For instance, response to demands in the traditional system did not reflect instant consumer demands because of information silos, which led to sub optimal performance (Wang, et.al.2011:9). Researchers have been able to demonstrate reduction of errors of processing which in turn influence performance of the industry. The effectiveness of SCM depends on error limit. Relationship of the vendors and the firm should reflect on the consumer behaviour. Internet and other digital technologies on Operation Inventory cost consumes much of the costs involved in the supply chain management. The concern of many organisations is how to develop efficient and effective framework, which can reduce these costs. Research shows that book publishers have developed effective channels through using internet to supply and market their products. The channel enables the firm to adjust its inventory management in response to the conditions in the market. Book publishers demonstrate the above process through notifications, which they address to their clients about delays expected, delivery information, or any emergencies, which could influence the supply chain (Simchi-Levi, et.al. 2004:130). Production scheduling is an aspect of SCM, which influences viability of the organisation with respect to market operations. The use of the internet system has enabled the industry to schedule its production in response to vendors’ requests or consumer behaviour. For instance, book publishing relies on the vendors’ information to schedule publication exercise. The idea is to link the market with the production lines. The use of the internet technology has increased communication between supplies and production department. The result of the process is efficiency in service delivery in production sector. The process eliminates wastage associated with over production, which firms register because of ineffective communication, or information relay (Lynch, 2009:169). The direct contact between the SCM and the consumers offers an opportunity for monitoring trends in the supply chain. Some trends require instant response while others do not. For instance, response given to products with short span must demonstrate immediate response to needs of the consumers. Open information links offers the parties involve in the chain with the opportunity to act swiftly. The figure below demonstrates supply chain management in book industry. Available from http://www.aicit.org/aiss/ppl/19_10.4156aiss.vol3.issue6.19.pdf Internet and other digital technology on Logistics The use of internet system on transport management is gaining popularity among many firms. Transport is an element in the supply chain, which dictates product availability in various markets. Research in the book industry indicates that distributers use internet services to track shipment while updating their consumers of the development made (Simchi-Levi). Time spent between product production and consumption depends on the system applied in product delivery. The above condition dictates the relationship between the suppliers and the consumers. The application of technology enables transport department to schedule its activities within the time specified by the consumers. Detection of delays in the transport line is quite effective because internet offers information about the situation of events. Parties involved in logistics and production base their schedules on outcomes of communication got from respective departments. Consumers usually feel the effects of long chains, which delay product provision in the market (Gattorna, 2003:121). Internet services ensure that consumer demands reach the vendors and the producers efficiently. The approach taken in information relay eliminates barriers created through communication breakdown. For instance, arrangement for production can occur between the consumers and the producer. It thus reduces cycle time, which influences consumer behaviour in the market. Consumption of books differs from other products because of the consumer trends. Some productions occur on request because of nature of complexity involved. Internet has created mode of negotiation, which reduces hindrances, which the consumer might experience. Internet on consumer relationship Internet use promotes close relationship between the supplier and the consumer. The interest of management is to satisfy customers by offering products, which meet the demand projected in the market by consumers (Gules, et.al. 2011:18). Delivering total quality demanded by the consumer dictates that the firm must make timely effort alongside the quality needed. For instance, late delivery of the quality demanded does not satisfy the needs of the customers because cycle time has influenced the product consumption. Internet allows firms to integrate their services in response to consumer demands. The benefits of the approach do not only apply to the economic viability it creates to the firm but also the sustainability of the firm in the market. Internet use in book industry Publishers using internet system enjoy limitless publishing. The flexibility of the system allows publishers to respond swiftly to needs of consumers. In some cases, consumers can have direct links to publishers and the authors. The above technology use sidelines other sectors of supply chain such as logistics because the consumer is able to link directly to the publishers. Studies show that internet use creates value of time, in that it allows the publisher to reach many consumers at the same time. For example once the publisher has posted an article to the internet, consumers can access the book instantly without any delay (Lynch, 2009:156). Shipment, which created delay in time cycle, does not appear. Internet application adds quality to books because the consumers can access sounds, pictures, words and flash. The above provisions change the mode of consumption because it does not restrict the consumer to the traditional product. Observation Creation of digital copyright is challenge to the supply chain in the book industry. Many firms experience the challenge because of laws that guide copyright. Firms lose millions to individuals who use the internet opportunity to access the work of books they have not bought. I suggest creation of legislation that can protect digital copyright. Publishers’ choice of suppliers may influence delivery of services in case of misconception. For instance, termination of contracts between the internet suppliers and the publishers offer opportunity for the supply to utilize the services of the publishers even after the termination of control. Publishers should therefore develop relationships that are long term. This would protect the interest of consumers as well as benefiting the publishers. Publishers should think of a protection technology, which can help reduce instances of exploitation. Another barrier to the digital technology is that it can be prone to hackers (Simchi-Levi, et.al. 2004:136). The effects of hacker’s activities would directly influence information delivery. Firms must initiate methods of updating information posted in the internet. Distortion of internet information is quite easy given the medium of transmission. A focus into the future of the technology application seems to suggest that industrial activities would fully depend on internet services. Conclusion Many firms have embraced the use of internet and other digital technology in the supply chain management because it eliminates the shortcoming of the traditional chain includes limited functionality of the enterprise, inflexibility to adapt to environmental changes, limited support functionality in decision-making and limited modularity. Internet and other digital technology usage by organisations eliminate long time cycles, which dictate product consumptions. Production scheduling processes can directly respond to the market demand because of the direct links. The technology promotes open communication among the concerned parties. The situation created by the condition enables firms to monitor logistics and other trends that influence SCM. Internet technology makes operations in the supply chain effective because it eliminate barriers observed in the traditional chains. However, the technology does not eliminate all costs of the supply chain. Book publisher’s chain has drastically changed following the digital or electronic services. It is important to note that measures must apply to internet technology in order to protect the concerned parties. Bibliography Bourlakis, M. et.al. 2011. Intelligent Agrifood Chains and Networks. New Jersey: John Wiley & Sons. Fasanghari, M. et.al. 2008. Assessing the Impact of Information Technology on Supply Chain Management. Available from http://idosi.org/wasj/wasj4%281%29/13.pdf [Accessed on 25 April 2012] Gattorna, J. 2003. Gower Handbook of Supply Chain Management. London: Gower Publishing, Ltd. Gordon, C. L. et.al. 2008. Strategic use of E-Commerce in the Transformation of the Publishing Industry. Communications of the IIMA, 2008 Volume 8 Issue 4. Gules, K. H. et.al. 2011. The Strategic Impact of Information Technologies on Supply Chain and Business Performance. Available from http://www.isarder.org/tr/2012cilt4no1/Vol.4_Issue.1-11_full_text.pdf [Accessed on 25 April 2012] Lynch, S. G. 2009. Single Point of Failure: The Ten Essential Laws of Supply Chain Risk Management. New Jersey: John Wiley & Sons. Madu, N. H. and Kuei, C. 2005. Erp And Supply Chain Management. Fairfield: Chi Publishers Inc. Salo, J. and Karjaluoto, H. 2006. IT—Enabled Supply Chain Management. Contemporary Management Research. Pages 17-30, Vol. 2, No. 1, March 2006. Simchi-Levi, D. et.al. 2004. Managing the Supply Chain: The Definitive Guide for the Business Professional. New York; McGraw-Hill. Simchi-Levi, D. The impact of Internet on Supply chain management. Available from http://ebusiness.mit.edu/sponsors/common/2001-Nov-wksp-B2B/B2B%20Davids.pdf [Accessed on 25 April 2012] Wang, C. et.al.2011. The Comparative Study of Supply Chain between Traditional and Electronic Publishing Industry. Available from http://www.aicit.org/aiss/ppl/19_10.4156aiss.vol3.issue6.19.pdf [Accessed on 25 April 2012] Read More