Academic journal article Communications of the IIMA

Real-Time Value Chain Management

Academic journal article Communications of the IIMA

Real-Time Value Chain Management

Article excerpt

ABSTRACT

Value creation in the digital economy of the 21st century is characterized by the instantaneous processing and coordination of value chain activities across extended enterprises. Value chain management has evolved from automation and integration to the optimization of the entire value chain in real-time. Real-time value chain management enables organizations to be agile and responsive in a complex and rapidly changing global environment. This paper examines the real-time characteristics for each of the activities in the demand and supply value chains. A model is presented for real-time value chain management enabled by technologies in e-business, knowledge management and business intelligence.

INTRODUCTION

As described by Porter (2001) the evolution of technologies in business has gone through the overlapping stages of automation of discrete transactions, functional enhancement of activities, cross-activity integration, integration of the entire value chain, and the optimization of various activities in the value chain in real-time. The digital economy of the 21st century fueled by globalization and the Internet is characterized by instantaneous processing, access and dissemination of information around the globe. The ability for organizations to be agile and responsive in an increasingly complex, rapidly changing and interconnected global environment requires real-time management and coordination of value chain activities across the extended enterprise. Real-time management of the value chain requires the capability of conducting transactions through computer networks, the capability of responding to situations with expertise and knowledge, and the capability to leverage business intelligence. This paper examines the characteristics of real-time value chain management and presents a model utilizing technologies in e-business, knowledge management and business intelligence.

CHARACTERISTICS OF REAL-TIME VALUE CHAIN

Real-time processing refers to the capability of a system that can respond immediately at the time a transaction occurs (Ralston et al. 1983). The value chain as described by Porter (1985) can be grouped into activities in the demand value chain, supply value chain, and the support activities for demand and supply (Figure 1). The demand value chain deals with demand generation in marketing and sales, and demand fulfillment in outbound logistics and services. The supply value chain deals with procurement, inbound logistics and operations. In the following, the real-time characteristics for each of the activities in the demand and supply value chains will be examined.

[FIGURE 1 OMITTED]

Inbound and Outbound Logistics

The Council of Logistics Management defines logistics as "the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements". Efficient and effective logistics management plays a critical role in just-in-time supply chain management. Inbound and outbound logistics are among the five primary activities in the value chain model. Porter (1985) described inbound logistics activities as those associated with the functions of receiving, storing and dissemination of inputs, such as material handling, inventory control, vehicle scheduling, and returns to suppliers. It further described outbound logistics activities as those associated with functions in the final storage of goods from the last production process to the distribution of the goods to the customers, such as collecting, storing, and physically distributing the product to buyers, warehousing, material handling, delivery vehicle operations, order processing and scheduling.

Transportation and warehousing are two key components of logistics operations. In transportation, real-time tracking utilizing a combination of technologies in GPS and mobile computing provides visibility of the carrier, the freight and the driver. …

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