Supply Chain Management

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What is the information value in the Supply Chain?

Nowadays companies focus on satisfying customer needs and capturing customer loyalty. Businesses depend on strategic relations with their customers and suppliers for creating value systems that will provide a competitive advantage in the market. Companies trade with suppliers and customers over the Internet in real time. This requires a real time automation of business processes between business partners using a variety of information systems inside the company and among supply chain member organizations. In order to inform customers about products, services, transactions twenty four hours a day, companies have to integrate their information systems with those of their suppliers and customers.

After studying the business environment, we have noticed that e-business integration increase company performance by supporting business success: faster design and market of new products and services; better service; sales growth; lower costs with production, inventory. E-business brings complexity to business applications regarding security, reliability, fault tolerance, government regulations, as well as technical aspects: B2B requirements, online customer and supplier connections, and networks, Web technologies (Roşca, 2004). A complex information system for supply chain management should execute the following operations: centralized coordination of information flows, cross-functional and cross organizational decision-making; logistic management; customer fulfillment systems; inventory management; global sourcing, inter-organizational information access; data transmission through wireless communication; data capture - tracking an order status to the end customer.

ERP applications are complex; they are expensive and difficult to implement such as Oracle, SAP, People soft, Edwards. J.D examining the existing information systems for supply chain in the software market and implemented in different Romanian companies, we concluded that entreprises may benefit from implementing even isolated modules or applications for supply chain. Many ERP systems include modules for supply chain management which use information from different sources: current inventory and order status, cost accounting, sales forecast and customer orders, manufacturing capacity, new product development, CAD drawings, product and quality specifications, supplier capabilities, transportation rates, benchmark analysis.

Organizations store data from different systems in data warehouses for enabling data mining for decision-making applications. Some systems use on-line analytical processing - OLAP for reports generations executed on-line from any remote location. Due to the complexity of SCM, software companies introduced decision support systems in their information systems which provide reports on relationships and performance across the supply chain (Ilieş, 2003).

These supply chain decision support systems use huge volumes of static information such as: production rates, capacities, bills of material, routings and dynamic information about forecasts, orders, and deliveries. Technologies used for building a decision support system include: SQL interface for direct links to common relational database; expert system rules; scheduling algorithms; linear programming capabilities; scheduling for production, inventories, demand centers; graphical user interface; user definable database using object oriented approach, demand management etc (Turban and Aronson, 2001). “There are different models in the scientific literature for the configuration of such a system like: statistical models, knowledge based models, optimization models, simulation models and hybrid models” (Chandra and Grabis, 2007).

More than ever before, today’s information technology is permeating the supply chain at every point, transforming the way exchange-related activities are performed and the nature of the linkages between them (Palmer and Griffith, 1998). A more recent perspective on linkages within the supply chain considers the role of inter-organizational systems, which are sophisticated information systems connecting separate organizations (Kumar and van Dissel, 1996). The strength of inter-organizational systems has been particularly crucial with respect to enabling the process transformation needed to create effective networks (Holland et al., 1994; Venkatraman, 1994; Holland, 1995; Teng et al., 1996; Kumar and van Dissel, 1996; Greis and Kasarda, 1997; Christiaanse and Kumar, 2000). Information technology also enhances supply chain efficiency by providing real-time information regarding product availability, inventory level, shipment status, and production requirements (Radstaak and Ketelaar, 1998). It has a vast potential to facilitate collaborative planning among supply chain partners by sharing information on demand forecasts and production schedules that dictate supply chain activities (Karoway, 1997). In particular, the goal of these systems is to replace inventory with perfect information. Thus, the indicators of this construct are conceptualized to denote the presence of electronic transactions and communication in various forms between the supply chain partners (Greis and Kasarda, 1997; Carr and Pearson, 1999). In this case, we can speak an information system for SCM.

The companies have to create higher value for clients, reduce cycle times for developing new products at lower prices. Costumers require new products based on the latest technologies and tailored to different market niches. The evolution of information technology is another factor that enabled the integration of supply chains into value systems. E-business technologies supported today's customer-centric environment where suppliers use the Internet to link their business information systems and to increase the efficiency of the decision-making process for their suppliers and customers. Intelligent supply chains information systems enable quality growth of products, and services, information services and e-business links, inventory reduction, customer service improvement.

Before implementing a complex information system for supply chain management, companies must redesign their supply chain; create an infrastructure to allow the usage of these modern technologies. In order to create an integrated value system, it is necessary to implement a series of activities:

• Rocess mapping;

• Internal integration of information systems between business functions ;

• Financial analysis to maximize value creation process;

• Collaboration and trust development