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Importance Of Information Systems

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Supply chain management information system (SCM IS) plays an increasing critical role in the ability of firms to reduce costs and increase the responsiveness of their supply chain. This paper focuses on: supply chain management information systems, initial research model and theoretical foundations, internal integration ,external integration ,strategic information systems contribution to supply chain integration in line with: transaction execution, collaboration and coordination and decision support and finally E-commerce technology contribution to procurement functions.

ASP: Advanced Planning Scheduling
BACS: Bankers Automated Clearing Services
EDI: Electronic Data Interchange
EFT: Electronic Fund Transfer
E-POS: Electronic Point Of Sale
IT: Information Technology
SCM IS: Supply Chain Management Information Systems.
The present business environment is increasing competitive and both researchers and practitioners are constantly engaged in proposing ways to thrive in the environment. There are many different measures business have engaged in and many others being proposed to survive in the volatile business environment. For example, Doz and Kosonen (2008) suggested openness to new evidence, flexibility, readiness to access past choices and willingness to change course in relation to new developments as necessary factors I the current environment. In addition, collaboration with different partners, such as, suppliers, customers, competitors, universities, consultants and formulation of supply chains (SC) are such examples of measures to respond to the environment pressures. A supply chain is a group of companies which collaborate to achieve mutually agreed goals (Christopher, 2000).

Supply chain management information systems (SCM IS) play an increasing critical role in the ability of firms to reduce costs and increase the responsiveness of their supply chain (Chopra and Meindl,2001; Dagenais and Gautsch:2000: Lee 2000). SCM IS is information systems (IS) used to coordinate information between internal and external customers, suppliers, distributors and other partners in a supply chain. Individual studies have explored the benefits and capabilities of different SCM IS such as Electronic Data Interchange (EDI) (Lee et al, 1999: Mukhopadhyay et al, 1995), Electronic Marketplace (Dagenais and Gautschi 2002; Kaplan and Sawhney 2000), or Enterprise Resource Planning (ERP) (Green 2001) systems. However, there are few empirically derived models suitable for analysing the organizational capabilities supported by the range of SCM IS alternatives.

As a result, firms face complex and risky decisions analysing and selecting an appropriate SCM IS solution or ensuring that their implemented systems are aligned with their business strategies (Reddy and Reddy, 2001). An organisational capability is the ability of an organisation to achieve its goals by leveraging its various resources (Ulrich and Hake 1990). IS capabilities are organisational capabilities which are enabled by IS. Similarly, SCM IS capabilities are organisational capabilities enabled by SCM IS. Over the years, research on the evaluation of IS has increased in abstraction from matching IS capabilities with functional requirements (lucas, 1981), to desired architecture (Allen and Boynton, 1991), to competitive strategies (Henderson et al, 1996).

Although strategic alignment has received considerable attention in recent studies of overall IS strategy (Kearns and Lederer, 2001; Reich and Benbasat, 2000; Sabherwal and Chan, 2001), models have not yet been developed to a sufficiently detailed level to examine the organisational capabilities enabled by specific types of IS such as SCM IS. Determining how well SCM IS enables various organisational capabilities in a firm can reduce the complexity of evaluating different SCM IS. Previous studies have developed individual models of the organisational capabilities enabled by various types of IS (Bensaou 1997; Sabherual and Chan 2001; Venkatraman and Ramanu Jam 1987; Zviran 1990). However, no single model exists that is suitable for examining and evaluating the capabilities enabled by SCM IS specifically.

For example, this study found existing generic IS capabilities constructs such as “analysis” (Sabherwal and Chan 2001; Venkatraman 1989) did not sufficiently discriminate between internal and external analysis, which subsequently interviews showed to be an important distinction in SCM IS. 3.1 INITIAL RESERCH MODEL AND THEORETICAL FOUNDATIONS In organisational literature, the “resource-based view of the firm” maker an important distinction between resources and capabilities. Resources are the basic inputs to production, while capabilities are the ability to do something with the resources. Resources are the source of a firm’s competitive advantage (Grant 1991). Similarly, this paper makes the distinction between IS functional attributes and IS capabilities.

The functional attributes of an IS identify what functions the IS is intended to provide. In contrast, measuring the organisational capabilities enabled by an implemented IS involves a more perceptual measure of how well the IS supports the firm’s activities. Several studies have noted that the benefits achievable from an IS often depend as much on how they are implemented and utilized than on what functions they are designed to provide (Clucas 1981; Markus 1983; Pam et al 1999; Robey and Boudreau 1999) . The effectiveness of an IS should therefore be measured by how well it meets a firm’s goals rather than what functions it is designed to provide (Delone and Mclean 1992; Kaplan and Maxwell 1994).

Furthermore, measuring the perceived capabilities of IS (such as the level of support for internal analysis) incorporates additional factors such as; usability, reliability and management support of the IS, which are often of equal or higher importance to the functions that the IS provide (Holland and Light, 1999; Lucas 1981; Parr et al 1999; Wixom and Watson, 2001). Researchers have studied various IS capabilities such as operational efficiency (Sabherwal and Chan2001; Sethi and King 1994) or strategic planning (Venkatraman and Ramanujam 1987, Zvivan 1990), but integrated models were not found which would be suitable for analysing SCM IS specifically. SCM IS has ranging capabilities for supporting the coordination of supply and demand information throughout a supply chain.

Coordination of supply chain information reduces the “bullwhip effect” which is the increasing uncertainty in demand and lead times the further removed supply chain partner is from the end-customer (Lee et al 1997). SCM IS can enable more accurate and timely information coordination, which reduces inventory and administrative costs and increases responsiveness to market demands (Horvath 2001; Lee at al 197; Van Hoek 2001). Effective use of SCM IS can reduce buffer inventory stocks, reduce lead times, increase sales and improve customer service (Anderson and Lee 1999; Mentzer et al 2000). The benefits achievable using SCM IS are influenced by a number of factors such as how well the systems support the efficiency and flexibility requirements of the supply chain( Reddy 2001) or the level of trust between the trading partners (Karahanns and Jones 1999).

Support for operational flexibility or agility requires IS that enable the rapid detection and response of competitive market opportunities (Sambamurthy et al 2003). Operational efficiency and flexibility are often seen as either incompatible or unrealistic goals (Reddy 2001). IS are sometimes viewed as inhibitors rather than enablers of flexibility (Allen and Boyaton 1991). However, effective SCM IS can enhance operational flexibility by automating routine tasks (O’ Leavy 2000). Similarly, SCM IS can support flexibility by facilitating product and supplier searching (Bakos 1997; Kaplan and Sawhney 2000) and the management of multiple strategic sourcing and distribution relationships (Kalakota and Robinson 2001). Traditionally, SCM IS that focuses on efficiency has been relatively inflexible. EDI systems can reduce transaction processing costs to near negligible levels (Mukhopadhyay et al 1995; O’Leany 2000).

However, the systems and data integration efforts required to achieve this may result in a system that is flexible in adapting to hanging partners, processes, and data structures (Konsyaski; 1996). More flexible internet technology such as XML and web services promise to reduce the trade-offs in achieving efficiency and flexibility, although the evidence is mostly anecdotal. Planning and analysis capabilities are also widely cited in IS studies (Sabherwal and Chan; 2001 Seger; 1989 Venkatraman and Ramanujam 1987). However, the relative importance of each and distinctions between different types of planning and analysis vary. SCM IS increasingly incorporate support for collaborative planning, forecasting and replenishment (CPFR) capabilities to enable tighter supply chain coordination between partners (Peterson 1999).

Through their support of joint planning initiatives such as CPFR, SCM IS can greatly reduce the bullwhip effect and yield more accurate demand forecasts (Bamalt and Oliveira 2001). SCM IS in particular must not only support internal coordination , but must also support inter organisation collaboration through the exchange and coordination of operational and tactical information such as electronic orders and supply and demand forecasts (Kumar;2001) the focus of this coordination can be internal, external or both (Moncrieff and Stonich;2001, Poirier and Bauer 2001). SCM IS that provide a high level of support for external coordination have been successfully deployed at companies such as DELL computers and Wal-Mart, although for other companies the focus is still on internal coordination (Dagenais and Gautschi;2002, Holland and Light;1999, Roloff et al 2001)

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