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Role of IT in supply chain management

May 31, 2023


Supply chain management is an obscure process involving various stakeholders, and conventional approaches that can often result in delays, inaccuracies, and higher costs. For example, businesses may struggle to keep track of their inventory levels or customer demand, leading to stockouts or excess inventory without real-time data analytics. Consequently, this can impact customer satisfaction and lead to major business losses.

However, IT solutions help optimize supply chain management by offering improved visibility and control over operations. With real-time data analytics, businesses can swiftly identify trends, demand fluctuations, and supply chain disruptions, enabling them to react promptly and avoid stockouts or excess inventory. Moreover, automation streamlines supply chain processes, eliminating errors and saving time. Thus, automated order management, inventory tracking, or shipment notifications can help businesses save costs and free up resources to focus on critical activities like innovation and customer satisfaction.

By incorporating IT in supply chain management, organizations can effortlessly optimize business operations, diminish costs, and elevate customer satisfaction. This will give them a competitive advantage in the market and enable them to achieve their strategic goals. In addition, automating supply chain management with IT solutions can enhance profitability, enable businesses to reinvest in growth initiative projects and stay ahead of the business competition. Validating this, a study by Statista says that the global supply chain management market reached around 15.85 billion U.S. dollars in 2020 and is projected to exceed nearly 31 billion U.S. dollars by 2026, reflecting significant growth.

IT applications in supply chain management

Organizations must be agile and responsive to remain competitive in today’s fast-paced business environment. Also, supply chain management plays a crucial role in achieving this, and IT applications have become increasingly significant in streamlining supply chain operations. Two key IT applications used in supply chain management are Supply Chain Management (SCM) software and Transportation Management Systems (TMS).

SCM software assists businesses manage their supply chain activities more efficiently by offering a centralized platform for planning, executing, and monitoring supply chain operations. This solution generates real-time visibility into inventory levels, production schedules, and logistics operations. It also enables firms to team up more effectively with suppliers, distributors, and customers, allowing for better communication and coordination across the supply chain.

TMS, on the other hand, focuses specifically on transportation-related activities in the supply chain. This software helps businesses manage and optimize their transportation networks by providing real-time visibility into shipment status, route planning, and carrier management. TMS also provides businesses with tools to optimize transportation costs by identifying the most cost-effective routes and carriers. In fact, a report by Allied Market Research suggests that the global market for transportation management systems has already attained a value of $5,467 million by 2019 and is poised to reach $11,367 million by 2027, reflecting a robust CAGR of 9.6% from 2020 to 2027.

Together, these IT applications help automate and streamline supply chain operations in numerous ways. Firstly, they bring down the manual work by automating key processes like order processing, inventory tracking, and shipment notifications. Subsequently, this saves time, diminishes the error risks, and ensures greater accuracy.

Secondly, they offer real-time visibility into supply chain operations, thus allowing businesses to identify inefficiencies and take corrective action promptly.

Thirdly, they enable better joint-effort across the supply chain by providing a platform for sharing information and insights. This helps businesses make better-informed decisions and respond more quickly to changes in the market.

Therefore, IT applications such as SCM software and TMS are critical in today’s supply chain management landscape. They help businesses automate and streamline supply chain operations, reduce costs, improve efficiency, and enhance customer satisfaction. By leveraging these applications, companies can gain a competitive advantage, optimize their supply chain, and achieve their strategic goals.

Benefits of IT in supply chain management

Here are some prominent favors of using IT in supply chain management.

Improved efficiency: IT solutions can automate various supply chain processes, including order processing, inventory management, and shipping, which reduces manual work and streamlines operations. This automation leads to improved efficiency and faster turnaround times, which can help businesses stay ahead of the competition.

Increased visibility: Real-time data analytics and tracking can give businesses greater visibility over their supply chain operations, including inventory levels, order status, and transportation progress. This increased visibility enables enterprises to identify and respond to supply chain disruptions quickly, avoid stockouts, and reduce excess inventory.

Better decision-making: Data-driven decision-making is crucial in today’s business environment, and IT solutions provide businesses with accurate and up-to-date data to make informed decisions. Real-time data analytics can help companies to identify trends, changes in demand, and supply chain disruptions, allowing them to make timely decisions that positively impact the business.

Reduced costs: By automating supply chain processes and streamlining operations, businesses can consequently reduce costs associated with manual work, errors, and inefficiencies. For example, automating order processing can minimize errors, thereby saving companies’ money. Moreover, enhanced visibility and control over inventory levels lowers the costs of excess inventory or stockouts, leading to more significant cost savings.

Using IT in supply chain management provides businesses with multiple benefits, including increased visibility, improved efficiency, better decision-making, and reduced costs. Thus, by leveraging these benefits, companies can simplify their operations, stay ahead of the competition, and deliver better value to customers.

Implementation challenges of IT in supply chain management

Implementing IT in supply chain management can be challenging for companies, and some of the common challenges they may face include:

Addressing these challenges requires careful planning, effective communication, and collaboration between different departments within the organization. Companies should also invest in training and development programs to help employees adapt to new systems and processes and prioritize data security to protect their supply chain operations.

Suggestions for overcoming these challenges

To overcome the challenges that companies may face when implementing IT in their supply chain management, the following suggestions could be helpful:

By applying these suggestions, enterprises easily overcome IT challenges in their supply chain management and realize the benefits of increased visibility, better decision-making, improved efficiency, and reduced costs.

Automation with TradeEdge

The TradeEdge platform, by EdgeVerve, enabled a global retailer to enhance its supply chain operations by furnishing real-time visibility, efficient inventory management, and automation of major processes. Subsequently, the retailer achieved a 95% reduction in the time taken for order processing, a 90% reduction in stockouts, and a 25% increase in inventory turnover.

The TradeEdge platform also enabled the retailer to integrate with over 400 suppliers, facilitating smoother communication and collaboration throughout the supply chain. The result was improved efficiency, reduced costs, and greater customer satisfaction.

Download the case study for more information https://www.edgeverve.com/tradeedge/global-technology-retailer-engagement-programs/

The future of IT in supply chain management

Emerging IT trends such as the Internet of Things (IoT), Artificial Intelligence (AI), and other technologies are expected to impact supply chain management significantly. These technologies can help businesses improve their supply chain operations in several ways. Endorsing this, a majority exceeding 75% of vendors specializing in commercial supply chain management applications will incorporate integrated advanced analytics, AI, and data science capabilities within their offerings by 2026.

For example, IoT can enable real-time tracking of goods, providing businesses with visibility into the movement and condition of their products. In addition, AI can help enterprises to make data-driven decisions by analyzing vast amounts of data, identifying patterns, and predicting future trends. This can help businesses optimize their supply chain operations, identify potential disruptions, and make proactive decisions.

Other technologies like robotic process automation (RPA) can automate repetitive tasks, reducing errors and saving time. By leveraging these technologies, businesses can optimize their supply chain operations, reduce costs, and enhance customer satisfaction.

Final words

Hence, it will be fair to acknowledge that by implementing the power of IT in their supply chain management, companies primarily gain a competitive advantage and achieve greater success. Over and above that, IT solutions such as SCM software and other automation solutions can help companies to optimize their operations, reduce costs, and enhance customer satisfaction.

Despite challenges like resistance to change and data security concerns, businesses can overcome them with adequate training and support for employees and robust security measures. Furthermore, emerging technologies such as IoT and AI can further enhance supply chain operations, providing real-time visibility, predictive analytics, and automation. As a result, businesses that embrace these technologies can stay ahead of the competition, improve profitability, and achieve their strategic goals.

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