Integration of Supply Chain Management with Internet and Enterprise Resource Planning (ERP) Systems: Case Study

Article excerpt

Introduction

With today's emphasize on cutting costs, reduced inventories, streamlining expenses, lowering operating cost and gaining strategic advantages many companies are looking to develop their bottom lines with more effective and successful supply chains. In order to achieve these goals, supply chain competency must be placed at the heart of a company's business model. Firms realize that the competition is driven by customer demand. Effective supply chain management can offer customers high quality products and services with low prices (David et al, 2004). Unfortunately, many people related with different organizations don't have a clear understanding of what a supply chain is or how it fits into the company's overall strategy. The term supply chain management (SCM), from its basis was an effort to improve the logistics and material managements. It was developed to classify the connection between the organization, it supplier and the customers. First it was just considered as a link between the organizations and the suppliers but now it is considered as an important part of value creation.

The supply chain is now seen as being an important part of the value creation process. Customers not only want the right product, they want it "when they want it". Supply chain management recognises this and focuses effort on achieving tight integration between the various links of the chain. These include procurement, operations and logistics from the identification and selection of appropriate materials and components right through to delivery to the end customer and the realisation of customer satisfaction. Supply chain managers attempt to increase quality, reduce costs and increase profits by addressing the performance of supplier relations, supplier selection, purchasing negotiations, operations, transportation, inventory and warehousing.

Put simply, customers want and increasingly expect:

* Shorter lead times

* Flexibility, configurability, customisation; and

* Things to work "out-of-the-box". At the same time, suppliers want:

* Less inventory; and

* Less risk/greater reliability (less damage, fewer returns) (Dawson, 2002).

The power of SCM is well exemplified by Dell Computers. Started in 1984 in Austin, Dell Computers was ranked the No.1 PC maker in the US market in 1999 (Shah, 2001). Dell's direct-sales model is well known to the business community. Dell's PCs are made by electronic order and are delivered directly to its customers. They have eliminated the middleman within their supply chain and have also exemplified an innovative business model through their effective SCM. Dell Computers continues to enhance and broaden its competitive advantage by integrating the internet into its entire business process, including online sales, procurement, customer support and relationship management (David et. al, 2004). This paper first discusses the history of SCM and its synergistic meanings. Next, the impact of internet and ERP technology on SCM and further discuss the case of Dell Computer's SCM

Research Methodology

This research uses case study methodology as well as a literature review of the articles published in the last 10 years was also done. The null hypothesis is "technology implementations have a greater impact on firms supply chain and information sharing". The alternate hypothesis is "conventional supply chain i.e. without using an effective technology, have slow or sluggish information sharing".

The use of case study methodology permits a detailed and in-depth examination that is not possible in a wide sectional study (Sridharan et al., 2005). Motwani et al. (2002) uses case methodology to examine the factors that impact the success of ERP implementation project. Wong (1999) uses cases to demonstrate the necessity of effective partnering relationship between supply chain members.

History of SCM

It was developed somewhat 20 years in the past. …