How to Use Information Technology in Supply Chain Management
Before the Internet was a vital tool in business, the supply chain was a much different place than today. It was slow-moving, achieving the result (product or service) took a much longer time, and dealing with suppliers was a much different story. However, the use of information technology in supply chain management has streamlined the world of procurement and purchasing through supply chain management, cloud software, and other types of IT that help boost supply chain efficiency.
Read on to learn about the importance of quality in supply chain management, how IT helps to achieve that quality, and more details about the supply chain.
The Use of Information Technology in Supply Chain Management: What Is Supply Chain Management and Why Is It Important?
The terms “procurement” and “supply chain” can often be tossed around interchangeably when they refer to two different things. As such, when management is being discussed, supply chain management and procurement management are slightly different.
The supply chain refers to the whole entity / process involved in making a product—from its inception to its actual finalization. Procurement is but only one part of the supply chain, as you are procuring goods and services needed to make the final product. The supply chain consists of procurement, production, packaging, warehousing, shipping, risk management, delivery, among others. Supply chain management is, of course, important because it brings everything together and ultimately delivers the product to its destination.
The Use of Information Technology in Supply Chain Management: What Role Does IT Play?
IT in the supply chain can wear several different hats. In modern times, you’ll see many cases of global sourcing in supply chain management, which has been made possible through the use of information technology in supply chain management. However, IT can be used in other ways as well, including:
- Integrated supply chain. IT can bring different parts of the supply chain together (such as procurement and production), making data collection more efficient and, therefore, easier to run analytics.
- Cost reduction. Automation of the supply chain has resulted in resources (i.e., your team) being used more resourcefully and efficiently, instead of spending time doing long, drawn-out, and mundane tasks.
- Increase in productivity. The use of information technology in supply chain management certainly increases productivity because everything is being run more efficiently due to automation
- Transparency and visibility. Allowing information to be visible to managers and everyone involved at all levels of the supply chain allows for fewer questions, better collaboration, and an easier workflow. It also makes for fewer bottlenecks and wait times since managers don’t have to wait for information to be sent to them to keep the process going.
How to Use Information Technology in Supply Chain Management: Supply Chain Software Features
If you want to know how to use information technology in supply chain management efficiently, having the right software is key. Of course, every software suite comes with its own set of features, but you should consider some key features when shopping around. These include:
- Forecasting. Your software should be able to reasonably predict both procurement and production demand for both raw materials and finished goods.
- Inventory management. You want the ability to be able to manage your inventory, which includes your stocked parts, raw materials, and spare parts, along with your asset management.
- Return management. When it does happen, you need to process insurance claims or process returns for damaged goods.
- Logistics and shipping management. Good supply chain software will have a robust section on warehousing and shipping management.
- Order and supplier management. This is the procurement piece of your supply chain software, where you want to keep an eye on what’s coming and going, what’s on time, and what’s late.
Depending on the nature of your business, your use of information technology in supply chain management may lean more toward procurement or more toward the production or even a different part of the supply chain, so you’ll want software that will reflect the true needs of your business.
To hear more about using information technology in supply chain management or to receive a software demo, contact EC Sourcing Group at 973-936-9672 today. We want you to reimagine the way you think about procurement.