In most organizations, supply chain collaboration between the organization and suppliers can reduce inventory costs with the use of information technology (IT). Laudon and Laudon (2007) suggest that IT consists of all hardware and software that a firm needs to use in order to achieve its business objectives. Computers, printers, and handheld personal digital assistants are considered hardware components. Software includes operating systems such as Linux or Windows, the Microsoft Office desktop productivity suite, and other computer programs essential to an organization that is currently on the market. Information technology offers a competitive advantage, reduces and controls costs, improves customer and supplier intimacy, and access to the global economy.
Information Technology Competitive Advantage
According to Laudon and Laudon (2007), more than 23 million managers and 113 million workers in the United States’ labor force rely on information systems to conduct business. IT offers the supply chain organization a competitive advantage by achieving operational excellence, customer and supplier intimacy, and improved decision making. IT allows the supply chain to respond to customers in real time, thus all improvements add up to higher sales and higher profits to the organization (Laudon and Laudon 2007).
Reducing and Controlling Costs
Gendron (2006) states, “Studies by the Aberdeen Group have shown that non-production materials like office supplies, computer equipment and maintenance, repair and operating provisions (MRO) can account for 30% to 60% of a company’s total expenditures yet they remain poorly controlled and costly to process at most organizations” (p. 91). Information technology permits the supply chain organization to control and process purchasing requisition for supplies efficiently and at reduced costs. Amazon.com, though is an e-commerce company, is a company that uses IT to track orders, place orders from suppliers, and also tracks...
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