Supply Chain Information Systems

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Introduction

Many companies are currently streamlining their operations to be more efficient and in line with new business expectations of the 21^st century. However, it is important to note that the current business environment is very unpredictable, digitalized and dynamic than ever before. This calls for a change to a more unconventional way of doing business in order to sustain operations and increase the competitive advantage altogether.

Most companies are therefore trying to keep up with these new changes through digitized means. In light of these developments, outsourcing is quickly becoming a 21^st century business norm and virtual organizations are quickly coming up (Madjid 2005, p. 1). These developments are characteristic of the huge adoption of information technology in integrating the functions of suppliers and firms at various levels of operation.

Such is the approach taken by General motors because its supply chain activities have been characterized by sophisticated supply chain information systems. Most of the company’s business operations with suppliers are done through the supply chain portal and they include purchase orders, requests for quotes, management of inventory, delivery of vehicles and the likes (Quinstreeet 2010, p. 7).

These aspects are what constitute supply chain management systems. Business processes have therefore been undeniably integrated and the value of products to consumers increased in the same manner.

Supply chain management is currently being adopted by many organizations to achieve a higher competitive advantage and Gunasekaran (2004) identifies a past survey of 300 executives which noted that 92% of the respondents were intending to adopt supply chain management information systems in coming years.

This study exposes the fact that more and more managers are intending to adopt supply chain information systems in their operations. However, as this system is quickly being adopted, it should be noted that supply chain information systems have their advantages and disadvantages. This study will explore this fact through a case study of General Motors (GM).

Successes

In 2002, General Motors gained a number of key competencies from the company’s adoption of Supply chain information systems. Firstly, the company was able to reduce its inventory levels to competitive levels in most of its key plants and in turn, it was able to increase its savings and improve efficiency. Consequently, the company has been able to reduce its logistic costs to a bare operational minimum.

This was done in collaboration with an external company which largely used IT related programs to ensure the initiative was a success (Quinstreeet 2010, p. 7). Nonetheless, the reliability of the company’s products to its dealers was enhanced as a result. In other fronts, GM has been able to achieve a higher percentage of on time delivery which had never been experienced before.

In specific operational areas, the company was able to correctly estimate the time they would deliver their products to the dealers and also monitor the developments they made in their ordering systems. This was done to ensure that they would easily track the progress they made in comparison to the company’s commitments.

E- Commerce

General Motors has been able to improve its e-commerce business through supply chain management systems because of improved communications with its suppliers and other stakeholders in general.

This has been achieved through the constant sharing of resources within the organization and also within the network structure, such that the level of coordination within various departments is enhanced. The role of the supply chain information system has therefore been to enable coordination and communication between the business and suppliers (Wei 2010, p. 1).

Considering e commerce seeks to enable the businesses search and retrieve information which would be beneficial to the final decision making of the company, the intranet supply chain system has been able to assist the company avail information regarding what products are available, the kind of products existent in the company’s warehouse and which products are still being manufactured (Gunasekaran 2004, p. 275).

The company has also been in a better position to determine which products are entering the company’s physical facilities and which ones are currently exiting the facility. Also, the company has been able to determine the most sought after products through consumer sites.

This has enabled the company to know the specific well performing markets, where specific company brands sell most and which markets are poorly performing. This has also enabled the company streamline its distribution systems and undertake precise market segmentation at the same time.

Purchasing

The noted successes of e commerce have been largely associated with purchasing practices. A basic advantage which the supply chain management system has brought to GM is the reduced cost of paper purchases needed in purchasing transactions.

However, other derived benefits include reduced time within the purchase cycle and the reduction of inventory, brought about by a fast form of relaying purchase information due to a speedy transmission of business information (from business to business networks) (Mentzer 2004, p. 192).

Integrating Supply Chain Environment

Before the 90s period, GM has been previously using paper based information in its supply chain management process and it was seen that this paper based transactions were annoyingly slow. During this period, the supply chain information was perceived as a way in which GM could obtain its competitive advantage because the value of such pieces of information was largely misunderstood.

However, with the advent of supply chain information systems in the organization, GM was able to competitively position the business through the implementation of redesigned functional processes among its various departments (Schemm 2008, p. 1).

The competitive advantage was achieved through an increase in customer product value. Satisfying and pleasing customers through fantastic products was therefore an easy thing for GM to do.

Also, GM customers were able to be served using some of the most efficient methods of customer service in the automobile industry. In addition, the supply chain information system enabled GM’s management to reduce its inventory to competitive levels and also streamline its human resource into competitive alignments. This improved the overall strategic plan for the organization.

Decision Support

Implementation of the supply chain information system has tremendously improved decision making in GM. This primarily comes out of the fact that supply chain information system’s core role is easy transmission of information and facilitation of communication. GM has therefore had a lot of information on various business processes at its disposal and it can now make informed decisions better than it did in the past.

Decision making has therefore been very efficient because apart from the process being done in a timely manner, it is done in a comprehensive form because supply chain information systems provide cross functional information (Martins 2007, p. 8).

Enterprise Agility

Supply chain information systems have been able to break down the conventional walls associated with departmental functions. In this manner, company agility has been improved because GM has been more flexible in its functions and therefore its organizational structures have been able to increase operational efficiency.

This has in turn spilled over to product quality where the business has been able to overcome functional defects and provide efficient cars to its customers. This has improved the competitive advantage of the company.

Moreover, the company has been able to meet its customer expectations through the delivery of tailor made vehicles to its customers because of increased adaptation to customers’ needs. Most automobile companies have not been able to reach this level of competitiveness and therefore GM has been able to attract more customers in this manner.

Low Costs of Implementation

Considering GM is already an established company, the cost of implementing the supply chain information system was relatively cheaper when compared to its overall returns (Fosso 2009, p. 1). The Hardware and software costs were also relatively cheap in comparison to the overall scale of operation.

This was especially true because a bulk of the total cost of implementation rested on the total cost of the company reengineering process. This involved costs associated with training and preparing employees to use the new system.

Also converting the data from the paper information systems to an electronic nature also consumed a greater part of the budget. However, the total cost associated with the whole installation and implementation project was reasonably low for GM in comparison to its benefits.

Failures

Business Process Change

There has been a big problem in adoption of new supply chain information systems because of the business process change which is needed to make this process a success. Getting a common global application which can be applied by all agencies in the company has also proved a challenging task because not all of the company’s operations are similar.

For instance, in marketing, the company has had to develop 40 different web sites to suit the markets of 40 different countries (Quinstreeet 2010, p. 8). The company has consequently strived to come up with one common infrastructure to be used in all its markets, although the content developed ought to be different.

Central and Regional Control

It has become challenging for GM motors to determine the degree of control the central company should withhold from regional branches and at the same time, the level of flexibility of control which it needs to give regional branches. In this regard, the most pressing issues have been the type of repairs and supplies needed by the regional branches which the central company can provide.

Giving the regional branches a lot of control in the system has posed an eminent danger of poor management and excessive diversity of the company’s processes and products which may eventually affect the quality of the company’s products altogether.

At the same time, trying to find a midpoint where regional companies can effectively carry out their operations independently has constantly been a challenging task because the central company needs to have control of regional operations for quality and benchmarking purposes. To achieve a more balanced system of control it warrants the company to develop a very efficient infrastructure that will ensure this midpoint is reached.

Underestimation of the Planning Process

The management of GM motors to a significant degree underestimated the complexity of implementing the supply chain information system. The effort needed in overseeing the development process of the system was also underestimated not only by the managers but also by the IT staff it employed.

The level of training therefore needed to be comprehensive and thorough in equipping the staff to operate the new system. The level of preparedness in implementing the system also ought to have been thoroughly researched because the new system was radical and set to entirely change the operational processes of the company (Sachenko, 2010, p. 5).

Overreliance on the System

Since the supply chain information system revolutionized the operating processes of GM, there was a tendency by the company to over rely on the IT department to solve even the most basic of software or hardware problems.

This kind of trend is set to cost the organization more money in operating the system because it poorly equipped its employees to deal with even the most basic of system problems which could have been resolved at an organizational level.

Inadequate Data Conversion and Testing

GM faced minor setbacks through a lack of adequate information in the supply chain system especially regarding the conversion of old information into the new system. This made the new supply system lack significant amounts of information especially for past operations.

It is therefore very important that organizations back date their information into the supply chain information systems as far back as possible, otherwise the new system may malfunction and its reliability questioned.

Conclusion

This case study on the implementation of the supply chain information system can be relied on by many organizations or companies who would want to implement the same. Overall, the supply chain information system improves the company’s process to very competitive levels because the final products or services a business produces are bound to increase in value.

Consequently, an increase in value is bound to create competitive advantage. Key areas noted to gain from the adoption of the supply chain information system are in logistic management, inventory management, e-commerce, purchasing, product delivery, functional area integration, enterprise agility, decision making and costing.

The supply chain information system is bound to increase the efficiency of these functional areas which then increase the value of an organizational products or services. This creates the competitive advantage.

Nonetheless, supply chain information systems have their setbacks which can be exposed through the implementation of the GM’s supply chain information system. The need for planning and thorough research of organizational needs in implementing the system cannot therefore be overemphasized.

The need to prepare the employees and train them adequately can also never be underestimated because this will go a long way in ensuring the system is a success.

However, there are other common problems which should be avoided by any organization and they include: over reliance on the system, inadequate conversion of data, poor business process change and poor balancing of central and regional control (for global organizations).

Organizations and companies intending to adopt the supply chain information system therefore need to be wary of such causes of failure. Nonetheless, it is worth noting that the success of the supplier chain information system largely depends on its acceptability in the organization.

References

Fosso, S. (2009) A Contingency Model For Creating Value From RFID Supply Chain Network Projects in Logistics and Manufacturing Environments, European Journal of Information Systems, 18, 615–636.

Gunasekaran, A. (2004) Information Systems in Supply Chain Integration And Management. European Journal of Operational Research, 159, 269–295.

Madjid, T. (2005) Enterprise Information Systems. International Journal of Enterprise Information Systems, 8(7), 1548-1123.

Martins, B. (2007) ECKM 2007: 8th European Conference on Knowledge Management 2007: Consorci Escola Industrial de Barcelona, Barcelona, Spain, 6-7 September 2007. Barcelona: Academic Conferences Limited.

Mentzer, J. (2004) Fundamentals of Supply Chain Management: Twelve Drivers of Competitive Advantage. London: SAGE.

Quinstreeet. (2010) Driving Supply Chain Performance at GM. Web.

Sachenko, A. (2010) Enterprise Resource Planning: The Business Backbone. Web.

Schemm, J. (2008) Toward the Inter-organizational Product Information Supply Chain – Evidence from the Retail and Consumer Goods Industries. Journal of the Association forInformation Systems, 9(4), 10.

Wei, H. (2010) The Strategic Value Of Supply Chain Visibility: Increasing The Ability To Reconfigure. European Journal of Information Systems, 19, 238–249.

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