Real-Time Collaborative Technology Capabilities

The development of information technology (IT) software and platforms that support an end-to-end supply chain have grown rapidly in the twenty-first century, as have identification technologies such as radio frequency identification (RFID) and voice recognition systems. These technologies allow enhanced collaboration between the parties in the supply chain. One example of this is highlighted by the mission of e-supply chain company ULTRIVA which states on its website “Support your replenishment system of choice on a collaborative platform that seamlessly connects plants and suppliers.”15 Software packages that are gaining the attention of purchasers include e-purchasing suites (see Chapter 18), which have become popular with firms. Two primary supply chain applications involved in supply chain collaboration that involve purchasing are supply chain planning and supply chain execution. Planning software seeks to improve forecast accuracy, optimize production scheduling, reduce working capital costs, shorten cycle times, cut transportation costs, and improve customer service. Execution software helps obtain materials and manage physical flows from suppliers through downstream distribution to ensure that customers receive the right products at the right location, time, and cost. It can be summed up as “lean logistics,” “lean operations,” and “lean supply.”

Regardless of the type of information technology platform or software used, supply chain systems should capture and share information across functional groups and organizational boundaries on a real-time or near-real-time basis. This may involve transmitting the location of transportation vehicles using global positioning systems (GPSs), using Internet-based systems to transmit material requirements to suppliers, or using bar code technology to monitor the timeliness of receipts from suppliers. RFID tags are being used in more applications to capture real-time data about material and product movement across the supply chain.

Examples regarding the relationship between information technology and supply chain excellence are not hard to find. TaylorMade-adidas has led the golf industry’s technological revolution since its founding in 1979. TaylorMade uses supply chain planning and execution software from i2 to optimize its end-to-end supply chain activities. It all starts with demand planning, which is needed to manage TaylorMade’s strong yet unpredictable product sales. For example, when a competitor dropped its prices on a new line of titanium drivers, demand spiked much higher than the company anticipated. This resulted in multiple suppliers being required to meet the extra demand at a premium cost. The new system enables improved visibility into demand, which can then be immediately seen by the purchasing function, permitting a more integrated approach to sourcing and reduced inventory. Demand from retail customers is now collected on wireless devices by sales representatives, who then transmit it to the warehouse. If stock is not available at the warehouse, then another wireless transmission is made to the TaylorMade facility. This may require purchasing action to obtain the desired components to complete the order. By sharing demand forecasts with suppliers, every member of the chain now has demand visibility, allowing better planning on all fronts. Suppliers now can look ahead and improve their schedules, and TaylorMade gets shipments of items that are needed to satisfy customer requirements with less inventory. One of TaylorMade’s executives sums it up: “In the past we never really knew how much we were going to sell in one period; as a result we built up inventory to guard against placing customers on backorder

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