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Supply chains have traditionally been fragmented, resulting in a slow and sequential downstream flow of materials and similar movement of data back upstream. The disconnected flow of inventory and information has led to a lack of real-time information and a build-up of excess inventory to buffer uncertainties in supply and demand. Increased inventory carrying costs, longer order lead times, and difficulty in responding proactively to real-time changes have decreased profits and weakened customer goodwill (Mason et al., 2003). Of late, companies have been implementing new operations strategies and technologies in response to the growing challenges and demands of the twenty-first century. They need to be more responsive to customers’ unique and rapidly changing needs and are now seriously exploring the potential of the concept of Supply Chain Management (SCM) to improve their revenue growth (Gunasekaran et al., 2008).
Simchi-Levi et al. (2000) define SCM as a set of approaches utilized to efficiently integrate suppliers, manufactures, warehouses, and stores, so that merchandise is produced and distributed at the right quantities to the right locations at the right time, in order to minimize system-wide costs while satisfying service level requirements. The Global Supply Chain Forum defines SCM as the integration of key business processes from end user through original suppliers that provide products, services and information that add value for customers and other stakeholders (Lambert & Cooper, 2000).
The growing interest in SCM is evident in the academic literature and many researchers assert that integration is essential to SCM and that information integration in supply chains is beneficial to operations performance (Harland et al., 2007). This supply chain integration is profoundly dependent upon advanced information technology (Gunasekaran & Ngai, 2004; Fiala, 2005; Jiménez & Muñoz, 2006; Seggie et al., 2006; Reyes et al., 2009; Aas & Wallace, 2010). Sherer (2010) offers a framework for understanding enterprise applications that support the supply chain, organizing these applications, defining acronyms, and describing the various types of systems that make up an information infrastructure for SCM. SCM Systems are relied on logistics activities to manage warehouses, transportation, trade logistics and various other issues concerning the coordinated movement of products and services from suppliers to customers along the supply chain (Wang et al., 2009). Examples of such systems are Enterprise Resource Planning (ERP) and Warehouse Management System (WMS) (Kahl, 1999; Verwijmeren, 2004; Taylor, 2004). ERP systems are multifunctional in scope, tracking a range of activities such as financial results, procurement, sales, manufacturing, and human resources; are integrated in nature, meaning that when data are entered into one of the functions, information in all related functions is also changed immediately; and are modular in structure and usable in any combination of modules (Mabert et al., 2001). The capacity of ERP systems to integrate organizational business processes and share information across functional areas through a common database has prompted commentators to declare that they are a prerequisite for success in the twenty-first century (Davenport, 2000).