Supply Chain Technology and Innovation

Technology is increasingly becoming an integral part of business operations in the contemporary business environment (Christensen, Raynor and McDonald 2015). The implementation of information systems in business has improved operational efficiency for most companies and enhanced decision-making especially for multinational corporations serving several markets (Seuring and Müller 2008). Technology has also reduced the cost of doing business through automation and the reduction of fixed costs. The supply chain is a key area of business operation that has seen an increase in technology adoption. Many business organisations have invested in supply chain technologies to achieve an improved overall business performance (Dubey et al. 2017). Strategic investment in supply chain technologies can, therefore, be used to drive an organisation towards the realisation of its business objectives (Stevens and Johnson 2016). This paper is a literature review of how supply chain technologies are implemented by business organisations and the benefits that such organisations derive from investing in supply chain technologies. It focuses on supply chain IT and its effects on management decision-making, supply chain sustainability and innovation.

Supply Chain Information Technology Systems and Decision-making

A strategic supply chain can effectively result in a competitive advantage for a business organisation in the marketplace (Zhang and Dhaliwal 2009). However, this success significantly depends on the ability of management to identify changes in the business environment and make decisions that meet the changing demands of the marketplace (Fawcett, Magnan & McCarter 2008). A responsive supply chain is a critical source of competitive advantage in a business environment that is increasingly defined by intense competition and the need to meet the needs and interests of various stakeholders. Information systems integrate suppliers and customers to develop an integrated value chain that can be used to improve management decision-making within the supply chain (Trkman 2010). For instance, GSI Australia teamed up with 1WorldSync to integrate supplier data and the company on a common platform (Informit 2018). Such systems enable managers to identify changes in market conditions in order to make decisions that improve business success (Li et al. 2009). Such decisions centre on the needs of suppliers and customers with the aims of positioning the company as the best to trade with and purchase from.

Supply chain IT systems also enhance operational efficiency by ensuring that organisations maintain an optimum level of inventory through improved management decision-making (Lozano 2012). Many firms have invested in supply chain IT systems to improve inventory management, for instance, by requesting for inventory from suppliers at the right time to avoid inconveniencing consumers or having excess merchandise in storage. Such requests can be made promptly through an integrated communication system that links the company and its suppliers. For instance, GraysOnline realised a 15-20 percent improvement in productivity and cut its order cycles times by 75 percent by using technology to improve its inventory management process. IT systems can be used to trace inventory along the supply chain and maintain records in order to minimise errors that could result in negative customer experiences. Operational efficiency is a key source of competitive advantage for many business organisations because it minimises the cost of doing business and enhances consumer satisfaction (Sarac, Absi and Dauzère-Pérès 2010). For instance, Orica Woodcare invested in IT to enhance operational efficiency and reduced its cost of doing business. In the end, the organisation will benefit from an improved bottom line and a loyal customer base.

Technology and Supply Chain Sustainability

Supply chain information systems improve business performance by enhancing collaboration between an organisation and its suppliers and improve sustainability (Darnall, Jolley and Handfield 2008). The rise of sustainability concerns along the supply chain has made it crucial for business organisations to pay attention to the activities of different actors within the supply chain to ensure that they are sustainable.  Multinational corporations with global supply networks must especially ensure that suppliers do not engage in unethical activities that could jeopardise the brand image of the company (Hutchins and Sutherland 2008). For instance, Fonterra invested in information technology to achieve end-to-end visibility along its supply chain and improve collaboration with suppliers. Enhanced collaboration through information systems, therefore, ensures that an organisation achieves supply chain sustainability objectives.

IT systems also ensure that the procurement procedures of an organisation are adhered to in order to ensure that supply chain sustainability is enhanced (Carter and Liane Easton 2011). Organisations looking to ensure that their procurement managers only deal with ethical suppliers develop procurement procedures that allow the procurement of goods and services from suppliers that meet sustainability criteria. IT systems help to keep the procurement process above board with the aim of achieving sustainability objectives. E-procurement is a strategy that most governments are increasingly adopting to improve transparency in procurement (Walker and Brammer 2009). It ensures that public officials are accountable for the decisions that they make. It also minimises the loss of public funds through corrupt practices.

The Virtual Enterprise and Innovation

Information systems in supply chain management enable the establishment of a virtual organisation. The virtual enterprise is regarded as a key driver of agility in the supply chain of an organisation. According to Gunasekaran, Lai and Cheng (2008), this system enables an organisation to form partnerships that are guided by core competencies in order to develop an agile supply chain. In the virtual enterprise, manufacturers do not develop complete products in facilities that are isolated. They function as nodes within a network made up of customers, suppliers, engineers, and various specialised service functions. The primary goal of a virtual enterprise is to facilitate several organisations to rapidly establish a work environment that enables them to collect resources and use these resources to achieve common goals (Pagell and Wu 2009). Since each participating partner brings a core competency to the common work environment, project success is significantly dependent on the ability of the organisations to function as a unitary entity (Melo, Nickel and Saldanha-Da-Gama 2009). Virtual enterprises enable organisations to become highly flexible and adaptable to changes in the business environment. The ability of organisations to respond rapidly to changes in the business environment enables them to meet the needs and preferences of consumers and attain a competitive advantage in the marketplace (Swafford, Ghosh and Murthy 2008). Information technology in virtual enterprises essentially eliminates physical and financial barriers that prevent organisations from pooling together resources and core competencies in order to gain a competitive advantage in the marketplace.

Discussion and Conclusion

This essay finds that supply chain technologies can result in several benefits for business organisations. Information systems in the supply chain integrate suppliers and customers to develop an integrated value chain that can be used to improve management decision-making within the supply chain. Supply chain IT systems also enhance operational efficiency by ensuring that organisations maintain an optimum level of inventory through improved management decision-making. The paper also finds that supply chain information systems improve business performance by enhancing collaboration between an organisation and its suppliers and improve sustainability. IT systems also ensure that the procurement procedures of an organisation are adhered to in order to ensure that supply chain sustainability is enhanced. The paper also determines that information systems in supply chain management enable the establishment of a virtual organisation. The virtual enterprise is regarded as a key driver of agility in the supply chain of an organisation. Future research should examine how supply chain technology can also hinder business success to determine how organisations can overcome such challenges.

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