INFORMATION TECHNOLOGY AND SUPPLY CHAIN MANAGEMENT

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Global supply chain management concerns the sourcing and coordination of materials, information and funds from the initial raw material supplier to the final customer. The key to making a global information system work effectively is a good information system. MNEs now rely more and more on information technology (IT) for an effective management of their supply chain. IT helps supply chain management in several ways:

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1. Electronic Data Interchange (EDI). It refers to the electronic movement of money and information via computers and telecommunications equipment in a way that effectively links suppliers, customers & third-party intermediaries, & ultimately enhances customer value.

2. Enterprise Resource Planning/Materials Resource Planning: It refers to the use of software to link information flows from different parts of a business and from different parts of the world. An extension of ERP is material requirements planning (MRP), a computerized information system that addresses complex inventory situations and calculates the demand for parts from the production schedules of the companies that use the parts.

3. Radio Frequency ID (RFID): It is a system that labels products with an electronic tag that stores and transmits information regarding the product’s origin, destination, and quantity.

4. E-Commerce: It refers to the use of the Internet to link suppliers with firms and firms with customers. Linkages are done through intranets and extranets. An intranet can be used to help automate and speed up internal processes in a company. The term extranet refers to using the Internet to link a company with external constituencies. Private Technology Exchange (PTX) refers to an online collaboration model that brings manufacturers, distributors, resellers, and customers together to execute trade transactions and to share information regarding demand, production, availability, etc.

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