The Role of IT in Supply Chain!

Role of IT

Supply chain management is an important aspect of every business because it ensures your business gets the supplies, resources, and materials it needs to fulfill services or deliver products to customers. 

However, the modern supply chain has become increasingly complex and challenging to manage. Your organization has to be more vigilant than ever regarding security to avoid risks like data loss or theft, underscoring the role of IT. If you don’t, you might suffer from consequences like losing the trust of your customers and investors. 

That said, you have to strengthen your business’s IT infrastructure to avoid adverse effects on your company. With the role of IT and the help of managed IT support providers like https://kmtech.com.au/, these modern systems enable you to secure your supply chain by automating time-consuming processes and upgrading data security measures. 

The following are six ways in which the role of IT and IT departments can support supply chain management: 

1. Financial Information Monitoring 

Financial data helps managers keep track of their company’s financial performance and determine if any areas need improvement. Modern bookkeeping systems are a perfect tool for monitoring the financial information of your company that might help you improve supply chain cost control. 

These tools enable you to track payments to your vendors and customers by gaining real-time updates on each transaction’s status. This feature makes it easy to monitor your assets and expenses without manually calculating by yourself, helping you streamline supply chain operations. 

2. Real-Time Information Sharing 

Real-time information sharing is a critical element of supply chain management. This modern approach allows manufacturers and suppliers to share real-time data about product availability, production, and sales. This information can help companies manage inventory levels and improve customer service and engagement.

IT can help streamline information sharing by providing a platform for real-time communication between all parties involved in the process. For instance, electronic data interchange (EDI) enables seamless communication between your company and your partners using electronic forms.

This tool allows you to exchange electronic documents like orders, invoices, and shipping notices via an electronic data network (EDN). As a result, you can eliminate paper-based processes and reduce errors due to manual data entry.  

3. Procurement Management  

Procurement is one of the most important parts of supply chain management because it determines which suppliers you work with and how much they charge for their products or services. As a result, procurement managers spend a lot of time tracking down vendors, negotiating terms and prices, and working with accounting departments to ensure invoices get paid on time.  

Since procurement can be time-consuming, many companies hire IT experts to create apps or platforms that can make the process easier for the staff. Nowadays, IT professionals could even be responsible for ordering new software licenses to keep costs down while still providing employees with the tools they need to do their jobs. 

In turn, if an employee needs a new computer, the IT team might be liable for ordering it and ensuring delivery as quickly as possible to prevent downtime in the procurement process.  

4. Supplier Relationship Management 

Supplier Relationship Management (SRM) involves relationships between buyers and sellers or manufacturers and suppliers. This systematic approach helps organizations ensure that they’re receiving high-quality materials at a reasonable price from their vendors. Aside from that, they can also minimize delivery delays and avoid issues in compliance standards that might disrupt operations. 

As technology advances, companies are finding new ways to utilize it and the role of IT for SRM. Below are four ways to apply it:

  • Data Analytics: Insights can help you interpret data to make better decisions about your business operations. For example, if you want to improve customer satisfaction in the supply chain, you could use data analytics to track and measure key metrics like delivery time or order accuracy rates. Then, you can identify areas where there are problems and work on fixing them before they become severe issues that might affect supplier partnerships. 
  • Automation: Automating processes helps your business save money and time by eliminating human error, improving efficiency, and reducing labor costs. Regarding SRM, automation can help you communicate with suppliers more effectively by automating data collection and facilitating communication between parties. If there are any delivery delays, your suppliers will be able to update you so you can notify your customers about them. 
  • Performance Metrics: Using metrics in your SRM process can help you identify areas for improvement and opportunities for improvement. For instance, depending on their performance levels, you may develop scorecards for each supplier. Doing so clearly indicates how well each supplier meets their obligations, so you can negotiate contracts with those who need to improve.  
  • Supplier Dashboard: Another way to leverage IT in your SRM is by setting up a dashboard where all of your suppliers’ performance metrics are displayed together so you can easily compare them against one another. This tool helps you identify performance differences and how you can effectively work with them as they go forward. In turn, they might be able to meet your expectations so you can eliminate disruptions in the supply chain. 

5. Demand Planning  

Demand planning involves finding where you’ll get your items, how much you need to order, and when to call them. This process is vital in the supply chain because it prevents your company from running out of stock while ensuring you don’t have excess inventory. As a result, you can avoid product spoilage and not waste company resources.  

One of the things IT systems do is use enterprise resource planning (ERP) for demand planning. With these systems, you can generate reports that show how much inventory you have on hand, your sales progress, and your forecasts for future sales. These insights are vital because they enable you to decide whether you must increase or decrease production based on actual demand versus the projected one. 

6. Facilitating Return Of Goods 

Returns management is a process that ensures companies accept, receive, evaluate, and dispose of defective products that customers have returned. This process also involves strategies that prevent unnecessary or fraudulent returns and reduce costs associated with returns processing. 

Today, with the help of IT, companies now have access to automated reverse logistics that automates the process of returning items, making it faster and less costly. With this modernization, customers can return an item at any time and receive their refund instantly.

As a result, they won’t have to wait several days to process their product returns. Aside from that, businesses can now reduce the risk of lost revenues, damages, and returns fraud.

Key Takeaway 

Managing your supply chain is vital in the overall operations of your organization because it affects the quality and delivery of your products. Therefore, you must note the role of IT team throughout the process. In doing so, you’ll be able to meet the demands of your buyers while strengthening your relationships with vendors and distributors.

Role of IT article and permission to publish here provided by Claire Glassman. Originally written for Supply Chain Game Changer and published on November 3, 2022. 

One thought on “The Role of IT in Supply Chain!”

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