Supply chain management normally involves purchasing the raw materials from the vendors, manufacturing the products, passing of finished products to the wholesaler, then to retailer and finally to the consumer. Information technology (IT) refers to the application of computer based programs to store and manipulate information. The IT applications have great impact on the supply chain management.
By applying IT techniques on the the supply chain management of a company, the following benefits are offered for a company:
- One of the greatest advantage, the companies can get by using IT applications in their supply chain by installing the web based programs or intranets is that, it helps the participants in the supply chain to share the information and this when used appropriately can translate into management efficiency and reduced risks.
- Technology has many financial effects on the supply chain, the management can apply the technology to make supply chain cost effective and it also saves time for the company. For example, manufacturers, suppliers, retailers can make the orders and payments electronically with the help of electronic data interchange.
- The technology helps the businesses to trouble shoot the problems like delays in the manufacturing or the shipment and allows the parties in the supply chain to identify these problems.
- With the use of IT applications in the supply chain the company can easily identify and they can adjust to the changing market conditions. If economic conditions change and inventory levels are growing, then adjustments can be made to decrease manufacturing.
While installing a IT program in the company the company has to consider initial development and implementation costs. Systems quickly become outdated, if some of the partners in the supply chain are not ready to provide the data.