Some people state that supply chain management (SCM) couldn’t exist if it wasn’t for IT, and that supply chain management has been made possible thanks to the IT boom. This is probably correct. During the 1990s, SCM became a recognize profession, which is also when the real IT boom started. Today, digital supply chain integration continues to be high on the agenda, further demonstrating the link between the two.
How Digital Supply Chain Integration Has Reduced SCM Costs
Digital supply chain integration has reduced SCM costs in a number of different ways, including:
- Digital workflow, which has reduced the amount of data entry that needs to be completed. Instead, information is sent immediately to the person who requires it, and to them only. EDI (electronic data exchange) is perhaps the greatest example of this. Different firms use the same IT standards to enable them to share inventory and order data. The EDI interconnectedness means that one order only has to be entered once. Internet ordering systems use the same technology, enabling customers to place their orders directly, thereby reducing the chance of data entry mistakes.
- Customer demand and inventory have both become a lot more visible because information streams have been properly integrated. This means that all partners within the supply chain can share information in a seamless manner. In so doing, under- and over-ordering has been dramatically reduced, keeping the supply chain right as well.
- ERP systems have enabled the supply chain to truly go global, dealing with different currencies and different languages at the same time. Complexities such as exchange rates and language translations are all managed by the system and this has further reduced overall cost.
- ECommerce in general has helped to reduce costs of identifying new sources for supplies. Online marketplaces complete all the administrative work, leaving supply chain managers to find new sources and create new products in a quicker way.
- Internet auctions have significantly increased competition, ensuring people can find the best deal for their money with ease. Plus, the cost of organizing these auctions is so low that anyone is able to take advantage of it.
Put together, this increase in technology has enabled the different elements within a supply chain to properly work together. Inventory is more accurate and fit for purposes, and communication and collaboration has been improved. All of this is thanks to advances in modern IT technology.
IT Has Helped to Grow Sales
Not only has the rise in IT technology helped to reduce costs, it has also helped to increase sales. ECommerce has connected the world, with suppliers and consumers now being linked together with ease. Any surplus stock can easily be sold using online technologies as well. Furthermore, it has improved competition, stopping businesses from overcharging and thereby creating a more level playing field. That is beneficial not just for businesses, but also for consumers, who have an increased trust in suppliers and hence want to spend more.
