Monday, May 26, 2014

Using the Internet to Create Efficient Supply Chains

San Diego Bay Dock -M.Abel

Products move across the globe at a speed unseen at any time in history. Much of this movement is directly derived from improved manufacturing methods mixed with telecommunications technologies that coordinate supply chain mechanisms to create more efficient processes. Fatorachian, et. al. (2013) studied 67 companies to determine what impact the integration of Internet technology and its computational power has on the supply chain. The study helps companies push for greater technological development using the data processing methods of the Internet.


The supply chain is a necessary component of moving products and equipment to various locations where they are put to use keeping the economic engine running. Sometimes this may be within a city, a country, or across the globe but many of the processes have similarities. According to Gereffi (1999), the supply chain integration can be a main source of providing competitive advantages based upon networked relationships. 


The supply chain ensures that each of the components are connected together to reduce waste, improve speed, and meet timeframes. The supply chain can be quit complex and take into consideration large and small shipments. It is therefore important to have the right kind of information that integrates all of these components into a more integrated network. Generally, the more integrated the network the more cost effective it can be and this impacts the profits of a company in a big way. 


Enhancing the supply chain requires better collaboration, cooperation and understanding of different partners within the network (Kandemir, et. al, 2006). This integration often requires higher levels of software, information, and connecting systems that encourage the components to work well together. When a product is tracked and the systematic efficiencies are improved across multiple companies there is a natural reduction in cost and an increase in service. 


Most of us are familiar with tracking at UPS and Amazon. We experience supply chain technology when products are scanned in as they move from one point to the next. Each time the product is scanned the system can tell at what leg and juncture of the trip it is at. Customers may find this a benefit but companies also get the benefit of monitoring many shipments to reduce costs and lower the level of resources expended on logistical management. 


Those companies that can integrate their supply chain have much higher payoffs than those who don’t (Cagliano, et. al., 2005).  This is not an easy process and often requires a systematic redesigning of the process to integrate high technology information with ground based systems. The development of high data and fast information transference systems that can manipulate the functioning of physical systems takes time. 


According to the authors when a company can do this well they are able to generate significant benefits.  The authors found through their analysis that the use of Internet technology improved upon supply chain integration, logistics and returns processes, order processes, procurement, planning synchronization, inventory control, overall production, and customer relationship management. This means that the implementation of technology systems furthered significant strategic goals within companies. Business leaders should consider the improvement of their systems and updating of technology when possible. 


Cagliano, R., (2005) Ebusiness strategy: how companies are shaping their supply chain through the internet. International Journal of Operations & Production Management, 25 (12), pp 130927.


Fatorachian, H., et. al. (2013). Role of Internet in supply chain integration: empirical evidence from manufacturing SME’s within the UK. Proceedings of the European Conference on Management, Leadership & Governance 

Gereffi, G. (1999) International trade and industrial upgrading in the apparel commodity chain. Journal of International Economics, 48 (1). 


Kandemir, D., Yaprak, A. and Cavusgil, S.T. (2006) Alliance orientation: conceptualization, measurement, and impact on market performance. Journal of the Academy of Marketing Science, 34 (3).

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