Title:
Big Links
and Small Links in the Supply Chain and their Use of Information Systems
Abstract: Organisations
form links in supply chains that stretch from the initial producer of
raw materials, through a series of transformative stages, to the final
consumer of finished products. An organisation’s supply chain consists
of its upstream supply, its internal supply chain, and its downstream
supply chain. The internal supply chain can be represented by Porter’s
value chain model. A supply chain can therefore be represented as a
series of linked value chains. A company can be involved in a number of
supply chains, as can its suppliers and its customers. These suppliers
and customers cover a broad spectrum from very large to very small
organisations. Large companies have progressed from the use of
stand-alone systems to the use of large-scale enterprise information
systems. The use of these large-scale integrated information systems
provides many benefits and has allowed large companies to develop
cross-functional systems that eliminate islands of automation, remove
many unnecessary activities, provide information visibility, help
reduce costs, and can improve the performance of the value chain. The
performance and responsiveness of supply chains can also be enhanced
through the sharing of information. The availability of timely,
accurate, and relevant information can help overcome problems
associated with the operation and management of supply chains. Large
companies are increasingly using information systems to link with their
trading partners in order to assist in the execution and management of
supply chain activities. The use of inter-organisational information
systems provides benefits that are associated with information
integration. While large companies have many trading partners, in
monetary terms most business will be transacted with a small number of
trading partners, most of whom will also be large companies. The
remaining business will be transacted with a large number of trading
partners, most of whom will be small or medium sized enterprises
(SMEs). Despite falling capital costs, barriers to the adoption
of IT by SMEs combined with a lack of strategic focus, results in them
lagging behind larger organisation in the use of integrated internal
information systems and inter-organisational systems. Many SMEs
therefore lose out on the potential benefits of IT. However, this also
negatively impacts on the larger organisations. Having a large number
of trading partners outside of the inter-organisational information
system means that potential benefits do not materialize as they are
dependent upon integration of systems. The operation of a 2-tier
system with parallel manual and automated systems results in expected
benefits not being realized and the incurring of additional unexpected
costs. The anticipated return on investment is therefore not achieved.
The links in the supply chain can represent large organisations or
small organisations. These large and small links in the supply chain
must work in harmony if the supply chain is to be responsive to the
needs of the consumer. This paper considers the issues faced regarding
the use of information systems to link large organisations and their
smaller counterparts in the supply chain. The paper reports on the
empirical data that has been collected in a study of these issues.
Author: Liam Doyle