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Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of consumption (supply chain). Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.
Information technology is revolutionizing the way, in which we live and work. It is changing all aspects of our life style. The digital revolution has given mankind the ability to treat information with mathematical precision, to transmit it with high accuracy and to manipulate it. These capabilities are bringing into being, a whole world within and around the physical world.
The Supply Chain Management (SCM) is concerned with the flow of products and information between the supply chain members that encompasses all of those organizations such as suppliers, producers, service providers and customers. These organizations linked together to acquire, purchase, convert/manufacture, assemble, and distribute goods and services, from suppliers to the ultimate and users.
Today, information and technology must be conceived of broadly to encompass the information that businesses create and use as well as a wide spectrum of increasingly convergent and linked technologies that process the information with the emergence of the personal computer, optical fiber networks, the explosion of the Internet and the World Wide Web. The cost and availability of information resources allow easy linkages and eliminate information-related time delays in any supply chain network. This means that organizations are moving toward a concept known as Electronic Commerce, where transactions are completed via a variety of electronic media, including electronic data interchange (EDI), electronic funds transfer (EFT), bar codes, fax, automated voice mail, CD-ROM catalogs, and a variety of others. The old “paper” type transactions are becoming increasingly obsolete.
The role of Information Technology in Supply Chain Management that integrates capabilities is outlined by Auramo et al (2005) in to three essential functions as shown in Figure 1.
Figure 1. Functional Role of IT in SCM