Supply Chain Management and Information Technology

Topics: Supply chain management, Supply chain, Inventory Pages: 7 (2216 words) Published: April 19, 2008
Supply Chain Management and Information Technology

This paper will discuss how to achieve the benefits of cost reduction and profits through the utilization of information technology and information systems by examining processes between buyers and sellers, along with the supply chain. As information systems technology advances, supply chain partners can now work together to optimize performance. A basic enabler for coordination is information sharing, which has been greatly facilitated by the advances in information technology. In traditional supply chain management, orders are the only information exchanged, but information technology now allows demand and inventory data to be quickly and inexpensively shared. This paper discusses the importance of sharing data by utilizing information systems.

What is supply chain management?
Supply chain management (SCM) is the control of materials, data, and funds as they move in a process through to the end user. Supply chain management involves coordination and transformation of flows both within a company and between companies. The ultimate goal of any successful supply chain management system is to reduce inventory. Companies are implementing sophisticated software systems to have a successful supply chain.

Supply chain management flows can be divided into three main flows: ·The product flow
·The information flow
·The finances flow
The product flow includes the transfer of goods from a supplier to a purchaser. The information flow involves placing orders and providing the status of delivery. The financial flow consists of payment terms, payment schedules, and ownership arrangements. What does supply chain management software do?

Supply chain management software is possibly the most broken collection of software applications around. Each of the major supply chain steps composes dozens of specific tasks, many of which have their own specific software. Some have assembled many of these different chunks of software together as one, but there is not a complete package that is right for every business. For example, most businesses need to follow demand, supply, scheduling, and distribution. Businesses also need to share data with supply chain partners. There are two main types of SCM software:

·planning applications
·execution applications
Planning applications use sophisticated mathematical formulas or computer programs to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties. Some SCM applications are based on open data models that support the sharing of data both inside and outside the company. This is known as the extended enterprise, which includes top suppliers, manufacturers, and end customers. This shared data may reside in diverse database systems, or data warehouses, at several different sites and companies. By sharing this data, SCM applications have the opportunity to improve the production schedules, reduce costs, and allow all parties in the supply chain to plan for future needs. What is the goal of installing supply chain management software? Prior to the Internet, the objective of supply chain software followers were restricted to improving their ability to forecast demand from customers and make their own supply chains operate more efficiently. But the presence of the Internet, along with its simple principles has opened up new opportunities. Now, businesses can connect to each other’s supply chains (Business to Business). This was the reason for the B2B sudden increase. Today, most businesses share at least some data with their supply chain partners. The goal of these projects is greater supply chain visibility. In many cases if a company wants to business with another company they must be open to share data. Web-based applications are not only creating greater visibility, but they also provide a convenient way...
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