The Role of Technology in Supply Chain Management

The Role of Technology in Supply Chain Management
The Role of Technology in Supply Chain Management

The Role of Technology in Supply Chain Management

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The supply chain is concerned with fusing several elements of the industrial processes. This includes not just the fabrication and delivery of products to clients, but also ensures the quality standards are not compromised.  It also encompasses taking minimal timespan to manufacture and deliver goods without comprising market demands for quality. At the core of the market economy lays spirited competition, which demands the cost reduction in a bid to streamline expenditure. With this in mind, almost every company is looking to enhance their operations with more efficient supply chains (SC).

Thus, the supply chain in tandem with the global logistics works proficiently with the enterprise resource planning (ERP) system (Blanchard, 2007). While the supply chain is mainly associated with the movement of raw materials, fabrication, production and delivery, the ERP system happens to structure information supply chains employ for efficient operations and companies can only risk running into a problem in the absence of this technology. In short, the success of supply chain management is dependent on technology.

Although the supply chain outlives the internet technology, it only through the use of web-based application and communication that the supply chain can reach its fullest. Ultimately, technology helps SCM in global logistical companies to enhance safety delivery of products, boost profits and control wastes based on three fundamental principles; time, cost and quality.  This paper discusses the role of technology in the successful supply chain in connection with global logistics or supply chain management.

The Role of Technology in Supply Chain Management

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In logistics, technology is used to predict varying conditions as well as requirements to respond to unexpected costs. Technology is helping companies ensure that their operations are successful. In this case, they can meet the needs of their clients. This has provided the organization with the opportunity to work collaboratively with their customers. While it is complex to establish these partnerships, modern technology helps organizations to create practical and frequently updates plans, predict, and assess demand details, deliveries, and orders.

This technology is essential for incorporating planning process that subsequently assists planners to use up-to-date information on inventory, sales, and production. In fact, this helps them in meeting the requirements and increases the capacity to satisfy demand while ensuring the effectiveness of supply chain (Blanchard, 2007).

The well-organized automation network provides the flow of SKU pallets efficiently while connecting all pieces seamlessly. Moreover, the solution is unique in a way that it synchronizes and dictates that number of products required to be loaded in the mini-load and the sequences the distribution of cartons to the palletizer.

This helps organizations to measure precisely and minimize product damages, meaning that is meeting its clients’ needs. Moreover, it has presented the organization with the opportunity for considerable logistic effectiveness leading to proper usage of trailer cubes and make stores well-organized (Krajewski & Ritzman, 2005).

The Role of Technology in Supply Chain Management

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Technology is helping firms to leverage demand and supply by developing practical business processes. Proper supply chain schedules entail creating recurrent business systems to deal with exceptions.  Proper planning is also elementary for the firm’s production regarding streamlining the supply chain’s activities. The S&OP technology plays a fundamental role in the running and management of the supply chain (Krajewski & Ritzman, 2005). With technology, supply chains are better placed to handle the unexpected issues that may result from inadequate supply, unpredictable demand, and production disruptions.                                                                                   

Nonetheless, the firm can produce various sizes and variety of products in a consistent matrix. This way, organizations can be in a position to save time and financial resources. Moreover, technology has helped firms to combine effectively volume of sales and operations roles.   Therefore, to reach a collective agreement, technology is important in making sure that all the organizations departments work in a synch.

The manufacturing, sales or purchasing departments could not perform with an edition of ambiguity as such; technology offers firms with an edition of certainty (Quayle, 2006). Below are some of the technologies used by logistical companies along the supply chain: 

TechnologicaL innovation used in SCM


Several companies consider radio frequency identification (RFID) technology as a useful tool in securing supply chain because it can be incorporated in the supply chain to help increase the efficiency of the entire process. Regarding locating, tracking logistics enhancing movement of a product or controlling inventory, RFID is important. Improves supply chain processes by increasing productivity as well as considerably increases traceability. Because RFID technology can monitor objects, provide it with the opportunity to help companies with a real-time visibility of distinct products (Closs et al. 2008).    

    The Role of Technology in Supply Chain Management   

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RFID can be integrated with global positioning systems that assist companies to collect all the required product information such as manufacturing and expiry dates; product descriptions; delivery time and location of producers. In this case, RFID presents an extraordinary level of visibility in the supply chain that can be attained with bar codes. For example, in retail industries where inaccuracy is the primary problem, RFID allows for increasing and guaranteeing sufficient visibility.

Because RFID has advanced automation procedure, closed loop monitoring and tracking capacity, it presents supply chain process with clarity. This is necessary to assist companies in the identification of mixed pallets without having to unpack. This technology can support a high degree of checking and managing automated goods. This capability is important for companies’ warehouses since it reduces the time required for the management of products and errors throughout operations such as counting products, cross docking, and clearance.                                                                                                                               

Moreover, RFID provides a unique identification characterized by greater information capacity. This presents organizations with the capability to ensure excellence record keeping as well as recovery ability. For example in medical industry, the technology is utilized to keep track of medical appliances, in casinos, it is employed to game chips and in flower companies to bloom seeds (Closs et al. 2008)

The Role of Technology in Supply Chain Management

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Transportation Management System (TMS) technology

TMS is a reliable way of enhancing efficiency in route, mode, and carrier of a shipment. This is true, considering the definition of a TMS as software whose purpose is to manage an organization’s transportation operations (Alan, 2006).

One of the most noticeable methods of determining an efficient choice of transporting goods is weight. Nevertheless, this is not widely used technique considering that there are many factors involved in transportation. Customer needs are always an important priority, and there are internal company policies to consider as well. With the entrance of a TMS, it becomes so easy to meet a conglomeration of demands regarding business requirements; customer needs strategies, and so on.

Strategic planning, as this role is called, is one of the categories of new types of TMSs (Alan, 2006). These systems simply use their optimizing and planning tools to analyze all the options and choose the most efficient option for transport. In case rates have already been negotiated, this transportation system comes in handy in the automatic selection of carriers. As Alan M. notes, transportation management tools improve the efficiency of getting answers to supply chain configuration in the top level of management (2006). 

The Role of Technology in Supply Chain Management

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When it comes to visibility of logistics, the TMS is miles ahead of the conventional methods of fax and email. The old methods are not only labor-intensive and inefficient but also very prone to errors that can cost the company dearly. This can be addressed through a reliable TMS.  With this approach, it is possible to connect an unlimited number of shipment businesses and customers.

This is a collaborative tactical planning method, whereby companies cut costs by enjoining their transportation commitments and processes (Alan, 2006). Freight payment is probably one of the riskiest activities of a shipment process. It is usually tough to ascertain the correctness of a charge on an invoice without wasting time. In most cases, the business may end up paying more for the process.

All this changes when a company adopts the strategic sourcing tools of a TMS. As such, advanced instruments in this category, which are quite helpful transportation spending analysis (Alan M., 2006). Unlike the conventional method where invoices are a headache, the TMS may be designed to notify the shipper every time the bill exceeds a specified amount. Through this tool, TMS introduces a lot of efficiency in costing and reporting.

The Role of Technology in Supply Chain Management

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When a company management hears about a TMS package for the first time, they may deem it too expensive to implement. However, a company does not have to go the sophisticated way to benefit from new TMS tools. A small-sized shipper may use the services of a simple hosted offering from a vendor and do just fine (Alan, 2006).  The days of fax, emails and spreadsheets for logistics are on the blink of an end. The efficiency introduced by TMSs is too good to ignore.

How TMS increases efficiency in logistics

Increasing operational expenditure and capacity limits encourage organizations to use transportation management systems. This is because transportation management systems concentrate on tools that fulfill regular tactical demands. Unlike other applications that focus on a particular set of issues, TMS tools gather, integrate information regarding current transport activities, sourcing, predicting and scheduling the supply chain process (Krajewski & Ritzman, 2005).

In logistics, technology is used to predict varying conditions as well as requirements to respond to unexpected costs. To effectively work, this technique needs a tight connection between transport scheduling and implementation.                                                                                

TMS tools are important in increasing the efficiency of logistics. To ensure logistics efficiency is enhanced these tools can be used in different areas including;

  • Strategic planning;  in this case the TMS tools respond to issues such as methods of matching warehouses with the requirements of the clients as well as the location of suppliers. Also, the tools allow organizations to model procedures, facilities, shipping, inventory, vendor, and client needs to top-level strategic issues regarding the arrangement of the supply chain.

The Role of Technology in Supply Chain Management

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  • In strategic sourcing, TMS tools play a crucial role in minimizing freight and administration expenses, reduce the number of carriers and enhance the performance of shippers and compliance by making sure that the organizations employ the appropriate mix of transporters. Because these tools are advanced they allow organizations to assess transport costs, predict changes, choose shipper to bid procedure, mechanize multi-round consultations, assess bids and load data on transport management systems.
  • In tactical planning, TMS uses simulations to provide responses to issues such as if at a new client will require extra shipment capacity on a particular route. As, such the tools have the ability to collect information about historical orders, delivery and apply any adjustments to develop a real shipment activity in a given time frame. With regards to two-way tactical planning, TMS help organizations find suitable techniques of reducing expenses by connecting transport procedure and dedications across many firms.
  • Moreover, in operational transportation scheduling, TMS utilizes inbound, outbound and transfer orders to produce transport schedules which comprise of modes, selection of carriers and pickup periods. These tools have the ability to model a variety of operational restrictions (including client lead times), asset restrictions (requirements for refrigerated carriers) or door-to-door limitations. These are vital in systematically assessing more combinations for shipping schedule alternatives compared to an organization conducting it manually. Subsequently, they help organizations to schedule accurately, minimize the number of consignments and distance covered, and reduce the use of premium shipment channels.

The Role of Technology in Supply Chain Management

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TMS can reduce costs, increase delivery and inventory reductions.  This way, transport management system provides organizations with a chance to fully use technology since most of them are located in regions where shippers, systems, and prices change always. On the other hand, TMS is like a vehicle that ensures that prices are accurate, constraints are practical, and other dynamic features are sustained and regularly restructured. This helps to guarantee continuous enhancements (Field, 2006).

Since TMS leads to increased productivity, it assists organizations to manage order delivery and sizes. TMS is designed in a way that it provides stand-alone solutions that help in maintaining fleet and parcel shipping. In this manner, it helps organizations to manage shipping activities effectively (Upton & Harpal, 2007). Furthermore, TMS can assist in controlling transport processes and reduce transport related spending in different ways including;

The Role of Technology in Supply Chain Management

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  • Improve processing through the use advanced TMS, which helps in controlling operation expenses whereby carrier selection, shipment scheduling are automated. This leads to increased productivity and centralizing all transportation functions at the system level.
  • TMS provides the ability to process automatically orders as well as an optimally select cost-effective transport mode. Orders can be optimized at reasonable rates, reinforce plans that help in reducing transportation costs. This involves consolidating LTL delivery into multi-truck via inbound and outbound carriers. By continuously linking processes transport costs are reduced unlike managing each shipment.
  • TMS provides the capacity to reduce rates and increase quality through main shipper program. In this manner, guidelines for carriers can easily be transmitted assisting transporters to classify quality issues with ease and take necessary measures.

Not all shippers require TMS; rather organizations should begin understanding the importance of sophistication. A company with moderate shipment needs may simply go for a simplified hosted provision or provision from suppliers instead of using a complex transport system (Field, 2006).

The Role of Technology in Supply Chain Management

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VAS and Cross-Docking in supply chain

The advents of Value added Systems (VAS) have necessitated many companies to put in place distribution channels.  In most warehouses, VAS plays an integral role in not just picking goods but also in processing items. Thus, VAS makes it possible for various distribution hubs to underpin store needs. Approximately 40 percent of received goods can be cross-docked to minimize stock levels in the delivery centers (Forger, 2005).

Warehouse control system entails the harmonization processes. For instance, it ensures proper management of incoming goods, storage, and distribution. Warehouse control systems enhance the usage of stored catalog by way of synchronized data. With the help of Wide Local Area Network (WLAN) or RFID, logistical companies can ensure on-time delivery of goods. 

Technological advancement is responsible for shared obligations in modern firms (Lysons and Farrington, 2006). This shows firms dedication to supplying chain. Since the clients have varying needs, and the market is competitive, it is important for companies to use technology to reduce costs while enhancing productivity.

Wal-Mart Case Study

In its unrelenting quest for low customer prices, Wal-Mart incorporated technology that made it pioneer the way stores track inventory and replenish their shelves, hence enabling the company to lower costs. The technology works by Wal-Mart’s supply chain (Closs et al. 2008). The company runs the largest information and technical system of any private establishment globally. 

The highly sophisticated technology enables Wal-Mart to project demand, track and predict inventory levels, develops highly efficient transportation routes and manages client support and service response logistics. For instance, Wal-Mart uses Universal Product Code, where information at the store level is stored and immediately collected and evaluated.

The company runs a satellite communication system known as Retail Link, which is connected to a vast Bentonville repository.  By way of a global cable system, Retail Link is associated to reviewers who predict purveyor demands to the supplier network that display real mode sales from cash inventories and Wal-Mart’s distribution hubs.

The Role of Technology in Supply Chain Management

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With technology, purveyors and manufacturers along the chain have the ability to harmonize their demand estimates under a joint planning, forecasting and replenishment pattern (Closs et al. 2008). Again, every link in the chain is integrated through technology that entails a central database, store point of sale applications and a satellite system. Wal-Mart’s strategy is implicit of the regular, informal collaboration among stores, distribution hubs and suppliers with less centralized control. 

Moreover, technology allows the firm’s supply chain to track clientele sales and demand. This enables customers to pull products to stores as opposed to having the company push goods on shelves. Wal-Mart uses RFID to track pallets of goods on transit along the chain from any location. This is done not just by Wal-Mart but suppliers as well.  With smart tags, employees can determine which products ought to be replaced to ensure consistent stocking of shelves. This also allows the inventory to be carefully monitored.

Some expected innovations in the area of technology used in SCM

Collectively, the SCM processes bring about novelty in businesses by way of coordination and integration of tasks along the chain to enhance the design, improvement, and distribution of solutions. Innovation in this context can be comprehended as notable improvements in goods and procedures and services in the market. SCM processes involve the cooperation and IT integration of global logistical companies with clients.

Shared processes include strategies formulated between suppliers and clients, regarding tailor making goods or determining and assessing market patterns, for mass-production products, and considering innovative in production lines, using new raw materials and integration of software (Kaminski, Oliveira, and Lopes, 2008). The internet infrastructure has been a major revolution in the modern business world. Most SCM roles executed within and from without the firm by people in the chain take advantage of this platform.

The Role of Technology in Supply Chain Management

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Technological adoption in SCM creates value that allows for the evolution of pertinent competitive benefits by enhancing the association of suppliers and clients. Technology enhances not just the collaboration of activities, but also the sharing of new ideas and information for the development and delivery of solutions.  The main challenge of the SCM activities is the assimilation of the company with customers and the purveyors.

Collaboration with suppliers is a cost-benefit; moreover, service delivery to the customer is an essential attribute for the success of the SC. Customers also contribute to the success of this process when they work together with the company in creating goods and services that meet their needs. IT in SCM is employed to ensure collaboration between firms and their suppliers and clients. The major argument is that a synchronized development of processes along the supply chain is essential to guarantee the flow of data within and across various domains underpinned by technology (Kaminski, Oliveira, and Lopes, 2008).


Technology is the engine that drives supply chain, particularly global logistical firms. The demands of the market economy warrant every firm to have the best technology in a bid to enhance the quality of products, cut down costs and reduce the amount of time taken to manufacture goods.  TMS, for instance, is used to increase efficiency; on the other hand, VAS and Cross-Docking in the supply chain are used to improve the management of product movement and delivery. The paper demonstrated that technology is a game changer. This has been evident with how Wal-Mart improves productivity and efficiency across the supply chain by the use of smart tags and RFID technology.

The Role of Technology in Supply Chain Management

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Field, A. M., (2006). One platform, many uses. Journal of Commerce, New York August 21. 

Forger, Gary (2005). “Kirkland’s New Home,” Modern Materials Handling (Warehousing Management Edition), Boston Vol 60, Iss. 4: pg 22. 

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