Fading Challenges in Implementation of Supply Chain Management Information System in the Indian Automobile Industry

Fading Challenges in Implementation of Supply Chain Management Information System in the Indian Automobile Industry

Manisha Seth (Noida Institute of Engineering and Technology, India), Ravi Kiran (Thapar Institute of Engineering and Technology, India) and D. P. Goyal (Indian Institute of Management, Shillong, India)
DOI: 10.4018/978-1-7998-1786-4.ch009

Abstract

With the advent of globalization and fast changing environment, companies are using information and communication systems in the supply chain. Supply chain management information system (SCMIS) has gained a lot of importance because of its ability to reduce costs and increase responsiveness in the supply chain. Review of literature has revealed that the success in implementation of SCMIS and successfully attaining the return expected from the system implemented is a challenge. With such high failure rates scenario, it becomes imperative to identify the risk and the failure factors that may arise during implementation and the ways to tackle these risks. In this chapter, an attempt has been made to establish the challenges, their severity, and improvisation for the successful implementation of SCMIS in the Indian automobile industry. The findings can help the practitioners and managers better understand the challenges, focus the resources, their attention, set up the priorities, and thus improve the chances of successful implementation of SCMIS.
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Introduction

In the contemporary world competitive advantage of an organization depends on the information sharing and flow of information across the supply chain with the help of information technology. Information sharing in SCM is receiving attention for achieving global competitive advantage (Khurana et al., 2011). Through the use of information based upon the use of information technologies, the efficiency and effectiveness of supply chains can be significantly enhanced. Thus IT plays an important role in integrating supply chain. Besides information flow it also helps in various decision making processes. At present focus is on integration of upstream and downstream partners through Supply Chain Management Information System (SCMIS). It is cross-functional, inter-enterprise system that uses information technology to support and manage the linkages between company’s processes involved in buying, making and moving a product. It integrates supplier, manufacturer, distributor and customer logistics processes to improve manufacturing efficiency and distribution effectiveness.

Supply chain management information system (SCMIS) extension of Enterprise resource planning (ERP) as shown in Fig 1 (Moller, 2005) integrates companies beyond the boundaries of an organization and with the advent of globalization it has further gained more importance (Marwah, et al., 2012).

Figure 1.

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978-1-7998-1786-4.ch009.f01

It has been recognized by many organizations as a strategy to attain business goals (Chan and Lee 2005). SCMIS involves managing and coordinating all activities associated with goods and information flows from raw material sourcing to product delivery and finally to the end customers (Wei and Chen, 2008). It provides high quality, relevant and timely information flow that effectively supports decision-making for inventory replenishment, capacity activation and for synchronizing material flows at all tiers within the supply chain. Thereby it plays an increasingly critical role in the ability of firms to reduce costs, increase responsiveness (Chopra and Miendl 2005), gain competitive advantage (Dezdar, 2011) and achieve better coordination.

Manufacturing companies including automobile companies have already realised the importance of these systems as it needs to keep control over costs at every stage to remain competitive. The emergence of e-business has thus led to different way in which enterprise communicate, transmit and receive information with the suppliers upstream and customers downstream. Major OEMs have realized the benefits arising out of these systems; however, the achievement of these above mentioned benefits depend upon the effective implementation of the SCMIS. Implementing these systems is a complex, lengthy and expensive process. These systems require huge commitment of funds, time and expertise (Motwani et al. 2008). There is a strong evidence in the literature that implementation of SCMIS projects were either not completed on time or did not bring about the planned effects and even exceeded their estimated costs (Davenport 1998).

This is substantiated by the research done by Panorama consulting solutions in 2018 which summarizes the experiences of 237 ERP customers with regards to enterprise software, vendors, consultants and overall implementation as shown in Table 1 and Fig 2

Table 1.
Experience of ERP users with regard to enterprise software
YearAverage Project Cost Percentage% of cost
Overruns
Duration% of
Duration Overruns
%
Receiving 50% or
Less Benefits
20173.6%64%17.4 months79%44%
20166.5%74%16.9 months59%37%
20155.9%57%21.1 months57%46%
20144.6%55%14.3 months75%41%
20135.5%54%16.3 months72%66%

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