Technological Development and its Integration in the Global Supply Chain
Literature Review
The main goal of this review is to present literature on the study of technological development and how its integration in the global supply chain has strengthened many supply chain industries. The review will reflect on what other scholars have studied aimed at providing accurate information on the influences of IT on the performance of the supply chain network that has been created by various companies across the globe. Since the topic of technology and its integration in the SCM function has emerged as a field of interest for many scholars, this review is supported by investigations that have been carried out in the form of journal articles, available case studies, as well as textbooks focusing on the similar subject.
Technological Development in Businesses
According to Berisha-Shaqiri (2014), today, many organizations cannot plan business initiatives without the use of technology. Ahmad (2014) agrees with this argument and says that in the recent years, technological development has brought excessive opportunities to all fields of businesses. In this context, most of the modern enterprises are using technology for the benefit of the firm, and this has brought critical impact on the design, nature, work, and structure of many organizations (Ahmad, 2014). In research that was done to define technology and its evolvement in the businesses, Wahab et al. (2012) point out that new technological advancement has forced companies to view the expansion of technology as a new demand that will give them a competitive advantage and new possibilities that will lead to improvement. For example, currently, the employment of information communication technology (ICT) has been viewed by most of the businesses operating in the domestic and international market, as a new need that should be incorporated in every department involved in the organization performance.
Bhagat, McDevitt, and Baliga (2017) allude that for many international organizations, the development of technology is forecastable, and most of the well-organized businesses have incorporated technology with their decision-making forums. Similarly, Information Resources Management Association (2002) posits that the development of technology such as global software sourcing has made global organizations more effective and the system has enhanced success where necessary. Moreover, McArthur and Werker (2009) reveal that as technology has become more accessible in the global business sphere, this has imperatively brought a business breakthrough in which organization can trade efficiently and with ease. In addition, Mai and Phuong (2016) support this point by writing that the change and expansion of technological systems have made many global enterprises more innovative, which has assisted many firms to meet the demand of their customers and create a strong client base where trade is carried out more responsively. In essence, from the available literature, it is noted that technology development has positive influences on the global organizations and when integrated with the functions of the international firms, it gives businesses the concept of effectiveness and competitiveness.
Global Supply Chain
Marinagi, Trivellas, and Sakas (2014) define supply chain as a network that is made up suppliers, warehousing, retailers, distributors, manufacturers, and coordinators, whereby the objective of each personnel is to plan on the delivery of materials and finished goods from one point to another. For many years, the global supply chain has changed, as the function has become tremendously important due to the expansion of competitiveness in the global business environment. Rodrigue (2012) stresses that in the present world; the need for supply chain strategy has increased on the global market, as the practice is viewed by many organizations as a sources competitive performance and success. Many businesses use the function of supply chain management (SCM) to move goods and services in the global market, which is making these enterprises to gain high profitability and enhance that there is customer satisfaction (Rodrigue, 2012). Kampstra, Ashayeri, and Gattorna (2006) argue that global supply chain succeeds when organizations apply three core loops. In this case, supply chain for international companies cannot be efficient if there is no transformational change, or if the objective of the supply chain is not clear or well presented by the global firms.
In essence, Kampstra et al. (2006) quote that for the present enterprises to put into account the factors influencing the effectiveness of the supply chain, it is relevant to consider the context of strategy loop, change loop, as well as the control loop. As such, global organizations recognize particular supply chain metric that enhances decision making within the networks set to provide goods and services in the market. Larson and Rogers (1998) declared that for many businesses operating in the global markets to reap efficiency through supply chain management, the system is organized into three categories that are relational, technological, and analytical. The three categories are important, as they are taken by supply chain managers as tools to measure and strengthen the operation of supply chain practice as well as factors to underpin the performance of a firm in the international markets. From this context, it is evident that several factors have been influential in the development and growth of global supply chain, with most of them being regarded as interventions to improve the management of global supply chain management.
On an assessment scrutinizing the model of global supply chain, Janvier-James (2012) asserts that general system theory of supply chain makes the SCM functions in a way that many organization uses the system to connect and improve the provision of goods and services in the available market. Through the theories of SCM, supply chain activities are carried out distinctively, but under the concept of connectivity that has brought for improvement within the SCM organizations. Janvier-James (2012) indicates that according to the general theory of supply chain, the larger the SCM system, the more the organization will spend in terms of resources and money as required to support the SCM process. Further, Vaart and Pieter (2006) suggest that it is significant for global SCM companies to understand the aspect of supply chain theories because the models make the SCM dynamic, which is essential in the course of delivering orders to the multinational market and the context of replenishment organizational performance whenever it is required.
Gunasekaran and Ngai (2004) also show that when global supply chain networks are integrated with the SCM models, this makes the theory to influence the behaviors of the customers in the market directly. Therefore, if organizations allow SCM to work with business models such as lean supply chain model, organizations will change the intention of the customers in the market, as it will make buyers become closer to the business and purchase more than what has been planned to be provided in the market (Janvier-James, 2012). From this review, it can be argued that SCM model has enhanced the global supply chain system by making sure that concessions that are connected through the SCM practice use the available mechanism to reach to as many customers in the international sphere as possible.
History and Evaluation of Supply Chain
According to Bujak (2014), since the beginning of the early 1970s and 20th century, the world has witnessed the creation and development of different concepts that are used by an organization to function appropriately, as well as achieve the projected goals. As the world economy has continuously become more and more dynamic, supply chain management has evolved as a concept that is connected with the past and its future. Habib (2011) proposes that the term supply chain has been imminence for more than fifteen years. Based on the available literature, Habib (2011) reveals that today, approximately 13.55% of the concurrent titles contain the words supply chain, which in an indication of the evolution and growth of supply chain management. This means that supply chain has become one of the most popular concepts within the management of organizational performance. Habib (2014) states that the study of distribution and logistics was instituted in the 1960s and 1970s, but the introduction of SCM became prominent in 1980s. In addition, Habib (2014) argues that the growth of supply chain continued to rise due to the aspect of intense global competition. With survey findings showing that supply chain management has been a progressive function, it is believed that as the world continues to change by the usage of the technological component, SCM will take a new initiative in the coming years, where organizations will perform SCM activities with the help of technological devices.
Moreover, Ballou (2006) affirms that in early 1950, supply chain was viewed as a military function that was associated with tasks such as procurement, maintenance, transportation of army materials, and distribution of personnel who were meant to participate in the battlefield. Through the various forms of exploratory research, it is evident that the evolvement of the SCM networks in the current world has become prevalent due to the incorporation of the SCM in the education sector. Throughout the integration of SCM in the educational course, many people both students and scholars have created a balance in the development of supply chain practice. Bujak (2015) notes that throughout the world of business, modern supply chain function has become comprehensive and integrated approaches to promote the distribution of materials in the market. Indeed, from the history of supply chain and its evolvement, it is apparent that the global SCM of the 21st century is great, as businesses have become more innovative by the use of components such as technology and human intervention.
Integration of Technological Development in the Supply Chain
As reported by Marinagi, Trivellas, and Sakas (2014), in the past, supply chain was primarily considered as a process of transporting products and services from one area to another. However, recently many organizations have changed their perspective toward supply chain, as they view the SCM as a strategic function that they use to influence the position of the business in the market. The integration of IT to supply chain has positively changed the SCM function, as through the information technology forum, many organizations can correlate supply chain with both internal and external operations (Marinagi et al., 2014). Based on this presentation, the use technology in the global supply chain context has become a useful concept, as through IT many SCM practices in the international market have become more productive and prevailing.
Awad (2010) notes that technology has become an enabler to global supply chain, which has led to the emergence of substantial technological models used to facilitate the functioning of the SCM. Consequently, as the integration of technology in the global SCM means the transformation of the system, its automatic factor has made SCM continue fulfilling customers request without any difficulties. For instance, Ehm, Ponsignon, and Kaufmann (2011) review the integration of IT in the supply chain practices to find out that different technological models that are used in the supply chain have transformed the SCM system by making it become a new paradigm for the companies within the global market. On the other hand, Gunasekaran and Ngaiopines (2004) opine that the incorporation of IT programs in the SCM system assist organizations and supply chain managers to perform their duties clearly and control complex supply chain activities, which has made supply chain to become a network for manufacturers and transportation of materials in the market. This implies that as every company and each department within an organization need technology; different supply chain technologies are assisting global SCM to become strategic and responsive around the different part of the world.
Current Technologies Used In the Global Supply Chain
Enterprise Resource Planning (ERP)
The use of IT techniques such as Enterprise Resource Planning (ERP) system has become a broader issue in the global supply chain networks, with most of the international organizations using ERP software to facilitate procurement and distribution activities. Marinagi et al. (2014) argue that global supply chain employs ERP systems to integrated different business management activities, managing distribution of material tasks, codifying, and standardizing supply chain processes as well the data that is used within the SCM function. As much as it is clear that ERPs are relevant to the supply chain networks, the literature demonstrates that the system is also essential to the employees working for specific organizations. For instance, Norris et al., (2002) display that when global supply chains incorporates ERP models with their functioning, this gives the workforce of an organization with an established SCM an opportunity to access the company’s database, administer SCM data in a uniform manner, and ensure that the SCM does not cost the company a lot of money. Importantly, surveys tend to show that it is entirely substantial for supply chains to use ERP, as the model make sure that firms do not encounter any data redundancy and repetition, as the two components can influence the performance of supply chain organizations in the global market.
Correspondingly, Ince et al., (2013) outline that ERP is an enabler, as the system incorporate a wide range of information regarding the SCM resources. As a result, the technological model builds synergies between the stakeholders involved in the SCM networks, ensures that the SCM meets the needs of the customers in the market, and improves the performance of a supply chain organization. Ince et al., (2013) present that in the global supply chain system, ERP is a form of technology that diversified multinational organization applies to manage the production processes, stores, sales, customer services, and accounting, where the system allows the SCM to perform these tasks simultaneously. At the same time, Chorafas (2001) poses that many global supply chains use the ERP technology because the system provides supply chain organizations with complete visibility, which is highly impossible when SCM data is managed manually. As such, from the argument of different authors, it is clear that ERP has become a relevant technology that global supply chain organizations are using to monitor and control logistic activities as well as the independent suppliers established in the different location across the globe.
However, although research shows that ERP is a useful model for global SCM, some scholars have asserted that in some cases, it is hard to predict the appropriateness of ERP system. Iles (2007) highlights that in some situations ERP can bring confusion, especially in the cases where managers and procurement offices do not have the necessary ability and experience to monitor data through the use the system as it applies to the supply networks. Moreover, Akkermans et al., (2003) note that ERP has can endanger the global supply chain, as the system can limit the progress of the SCM in the global markets, especially in the cases where competition is high. On the similar argument, Govil and Proth (2002) pointed out that ERP could influence international supply chain networks negatively because the system may become inflexible to cater for the requirements of the ever-changing supply chain practices. Besides, ERP lacks the characteristics of functionality beyond the managing section, hence making the system to pose adverse implication to the SCM function (Govil & Proth, 2002). Here, research has found out that the shortfall of ERP can affect the level of supply chain responsiveness, which will influence the overall performance of global supply chains and their capacity to satisfy the consumers in the market.
Electronic Data Interchange (EDI)
The development of EDI in the supply chain system is no exception, as it continues to be implemented with the aim of promoting supply chain systems within the global market. In most cases, EDI applies when supply chain firms want to eliminate buffer stocks and accelerate the flow of production from one location to another. Through EDI, global supply chain networks exchange information about consignments efficiently and in an accurate manner (McKinnon, 1990). Larson and Rogers (1998) explain that in the global supply chain management, electronic data interchange (EDI) is the aspect of computerized exchange of business elements such as bills of landing, acquisition of orders, invoices, and any other documents used to facilitate supply chain processes within the international market. According to Larson and Rogers (1998), in countries such as Canada, more than 146 logistic organizations use EDI to perform supply chain activities, which is enhancing improvement of global SCM serving both domestic and worldwide markets. In survey whereby 47 employees were interviewed, Macharia and Ismail (2015) express that through EDI supply chain networks that operate at the different location can lead to cost reduction, which results in the saving of imperative amount of operational cost within an organization. In essence, when suppliers use EDI to run the SCM practice, this is important to organizations, as the system allows companies to manage their inventory effectively, which is one way of ensuring that the SCM is not expensive and it does not influence the status of the supply chain system.
In a presentation about supply chain management, Mentzer (2001) attempts to show that EDI can help an organization with a well-versed supply chain system process transactions and data entry faster, as the system does not rely mostly on the human element that may cause errors within the SCM system. In this context, global supply chains use EDI to improve communication, reduce lead-times, the level of absolute inventory, as well as the speed and accuracy of the supply chain activities. Furthermore, EDI has a direct purpose to the modern global supply chain organizations, as the system is viewed as an enabler of information accuracy in both internal and external context of the organizations. Equally, EDI as a technological system that is mostly applied by many global SCM is said to be an essential factor that initiates several benefits to the global companies with significant supply chain function (Information Resources Management Association, 2002). Typically, since most of the global supply chain organizations heed on implementing computerized systems to run the welfare of the SCM, EDI has significantly assisted many organizations to distribute and manage products and service in the best ways possible.
Despite the importance of EDI, scholars also present the system as a technological model that can influence global supply chain in an adverse manner. Wang, Heng, and Chau (2007) confirm that in countries such as the United States, EDI has not been very prevalent with reports showing that the number of global companies that has implemented EDI is low due to the difficulties that relate to EDI. For example, Wang et al. (2007) opine that for the global supply chain to reach the full benefit of EDI, they are forced to ensure that they have partners and consumers who are willing to adopt EDI. In the supply chain processes, the partnership is essential because, through the aspect of the partnership, organizations within the SCM networks translate EDI messages clearly aimed at outlining what is needed for the system to execute decisions.
Additionally, Mackie (2006) posits that EDI becomes unsuitable for global supply chain networks because the system demands highly trained workforces. As such, when supply chain in the international markets implements EDI, the companies increase their human resources due to the increase of automatic processing task that involves the generation of purchasing orders, invoices, and supply chain documents. From this context, it can be argued that EDI is an expensive model that may require an organization to spend more than what it has initially planned. Buxmann et al. (2004) assert that for success in the global supply chain activities, SCM organizations using EDI are required to create and enter data in more than one time, regardless of the fact that the data is presented electronically. Here, Buxmann et al. (2004) argue that this may be problematic, because EDI does not allow supply chain managers to duplicate input or data, and if the data is lost, the individual monitoring the information may fail to recover the data. This means that despite the benefits that EDI has on the global supply chain systems, the technology can become problematic if its management is not immense or done in a prominent manner.
Bar Coding and Radio Frequency Identification (RFID)
In the global supply chain, barcodes are used as optical machine or presentations that are readable in nature. Wang (2012) proclaims that barcodes are printed horizontal strips made of vertical bars that suppliers and organization use to identify specific items or products distributed in the market. At the same time, Kärkkäinen (2003) argues that today, barcodes-based applications that global supply chain organizations use are important as they make the supply chain system efficient while ensuring that every task taking place in the SCM is meant for the success of the supply chain organizations. In cases where barcodes are used to execute supply chain practices, various types of scanning equipment are done, which is one way of making the supply chain network more efficient. The process of barcodes scanning is essential to the supply chain organizations, as the scanning helps supply chain organizations to reduce errors related to the aspect of data handling, as well as producing visibility that helps organizations to manage their supply chain activities within the global market.
Moreover, in an analysis of the effect of technology on logistics and supply chain, Bhandari (2014) pointed out that barcodes assist global supply chains in a way that through the implementation of the coding programs, organizations can identify and track the goods in transit. This is mostly applied to the finished products that are ready to be transported to the available market. Barcodes are mainly implemented in the warehouse, where global supply chains use the systems to manage and control individual inventories and items that are being distributed to independent suppliers (Bhandari, 2014). Although barcodes is a technological system that global supply chain applies to become prominent and competitive in the market, scholarly evidence shows that the system is becoming less popular, as most of the organizations in the global market are now focusing on the use of technologies such as the “Radio Frequency Identification (RFID)” system.
Bhandari (2014) suggests that RFID are used as the alternative for barcodes, especially when the supply chain organizations want to communicate the inventory data to the receiver of the inventory through radio waves. However, Wang (2012) states that RFID technology is more enhanced than barcodes system, as through RFID, information about inventory is well tracked and monitored accurately. In essence, RFID is less complex, and the system is more considerably because it aid global supply chain organizations incorporates inventory data throughout the entire process of the supply chain. Ray (2010) supports the use of RFID in the global supply chain system, as the scholar compare RFID and barcodes to find out that RFID can hold enough data from 100 characters and above, while barcodes technology can only store 12-15 digits.
When supply chain uses RFID to manage data, the organizations can add information continuously, which is contrary to the cases where barcodes are used for the management of inventory and data. Kärkkäinen (2003) have outlined that when supply chains use RFID in the management of supply chain practices, the most notable benefit that the system can give suppliers is that it reduces the out-of-stock products, which gives the global vendors an opportunity to deliver invariable of products as preferred by the consumers in the market. Additionally, Milne (2013) reveals that RFID is a useful technology used by suppliers in the global sphere to read the number of products delivered on a single pallet and data matrix, which is more importantly than what a barcode can do when being used for more than one task. Therefore, from the points that have been raised by different investigators, it is clear that RFID has the ability to help global supply chain networks manage inventory appropriately and improve complex distribution system that may affect the work of the supply chain system.
Although research has shown that the use of RFID is beneficial to both the suppliers and customers in the market, some scholars feel that RFID cannot be used as a sustainable technology in the administration supply chains activities executed in the global markets. Rangarai, Raghuram, and Srinivasan (2009) contend that despite RFID technology being seen as the system that will take the supply chain to the top level in the global markets, the technology is expensive and its cost makes barcodes preferably the best technology that organizations can use to administer data. For instance, the expenses of barcodes are negligible, as most of the system costs at around $0.002, while the cost of RFID tags is usually high, which makes the technology costly to purchase (Rangarai et al., 2009). In this context, research suggests that global supply chain organizations should, conduct a systematic cost analysis of the RFID technology before adopting the system.
Besanko et al. (2009) present that RFID technology has brought dramatic improvement for global supply chain, but since the application is too demanding, it is expensive to be implemented by organizations with many supply chain networks in different regions. For the reason of the cost of RFID, they system has become complex for adoption, which has made it difficult for suppliers to ensure that through the technology supply chain is operating efficiently (Besanko et al., 2009). Besides, Ray (2010) outlines that for efficiency in the supply chain where technology is used, RFID needs to be stabilized by reflecting on the values of the SCM practices. In this case, RFID is compared with barcodes to show that global suppliers have used the barcodes technologies for a while and the technology has reached the high level of maturity. Ray (2010) emphasizes that as the majority of the global supply chain organizations want to carry out distribution practice through cost-effective technologies, and for this to happen the utilization of RFID need to be stabilized, as this will make sure that most of the RFID tags are implemented appropriately and in the cheapest way possible. Thus, as the research on RFID and barcodes is extremely clear it is displayed that both technologies have benefits, and at the same time, the systems can influence the performance of the supply chain organizations located in different part around the world in a negative way.
Distribution Resources Planning (DRP)
Enns and Suwanruji (2000) explore that distribution resources planning (DRP) is another important technological tool that global supply chain organizations use to plan and manage the task of materials distribution. In a generalized manner, Greeff and Ghoshal (2004) suggest that DRP system or DRP II is an integrated approach used by the global supply chain organizations to connect the manufacturing companies and the customers within the market. When supply chain organizations use DRP, the organizations become positioned in a better way whereby they can react responsively to the changing needs of the customers through rush orders or orders cancellation (Erengüç, Simpson, & Vakharia, 1999).
According to Balasubramanian (2012), global supply chain becomes successful when they use the DRP technology, as through the model the organizations can review inventory status and come up with new shipments managed periodically. The concept is fundamental to supply chain networks, as it is mostly used according to the characteristic of Material Requirement Planning (MRP) technology (Balasubramanian, 2012). The study reveals that DRP helps global supply chain consolidate shipment to different locations, spread materials to various markets, which is critical to the supply chain companies, as they save transportation costs that may be incurred by moving goods from one point to another independently (Lei et al., 2001). In essence, it evident that researchers have agreed that DRP is used by supply chain networks because the technology assists the organizations to improve the visibility of their inventory, which result in the reduction of the level of the inventory and the warehouse space required for the storage of manufacturing raw materials and finished goods.
On the other hand, DRP can be problematic to the international SCM, especially when the organizations want to deliver high-quality products in the market that have a feature of the right quantity and at the right time. Enns and Suwanruji (2000) proclaim that DRP requires the supply chain networks to plan the lead-time properly and plan on the sizes that will be distributed to a particular market. In most cases, this requires the suppliers to control the performance of the system, which is well done when lead-time adjustments are made (Enns & Suwanruji, 2000). Consequently, this affects the supply chain process, as suppliers are forced to adjust the reorder point in order to ensure that the SCM does not fail to deliver goods in the market at the right time and in the right amount.
Conversely, Monczka (2011) asserts that DRP may cause a delay in the supply chain processes, as the technology work well when test and trails about its eligibility are done before being implemented. For example, in most of the modern global supply chain networks, DRP has been recognized to cause delays due to the aspect of customs clearance process, lack of distribution capacity, and unimproved distribution lanes (Monczka, 2011). In this situation, research indicates that majority of the global supply chain organizations have implemented DRP, but due to weak planning processes and undefined responsibilities within the supply chain system, DRP makes the distribution of goods and services to slow down.
Furthermore, poor planning delays the lead-time used to transport products from the central point to the locality of the independent suppliers. According to Samaranayake (2005), DRP works proficiently when supported by other supply chain technological tools such as Material Requirement Planning (MRP), which can be viewed as a major weakness of the DRP technology. As such, in the integration of DRP within the global supply chain network, organizations are supposed to conduct the structural level of SCM by linking of DRP records with the data that has been collected through MRP system (Samaranayake, 2005). This implies that DRP cannot operate independently, which makes the technology expensive and problematic to supply chain organizations when they intend to make DRP a standalone system.
Conclusion
From the review of different presentation that has been written by various scholars, it can be argued that currently, integration in the supply chain has become immense due to the growth of technology that is used as a strategy for success. Indeed, based on the available literature, the integration of technologies in the global supply chain has strengthened the work of different organizations focusing on serving the multinational markets. From the scholarly findings that have been outlined in this review, it is apparent that today, technology has become an imperative factor that is enhancing supply chain competitiveness and the overall performance of the global supply chains. Therefore, having identified different types of technologies that have been integrated into the global supply chain, it can be suggested that for the SCM to propel on the world market, it will be important to choose the right technology for different supply chains and logistics activities. Selecting the best technology is critical to the supply chain organizations because when the companies use the appropriate technology, they will become efficiency by enhancing customer satisfaction as well as gaining a competitive advantage. Finally, the supply chain would be more protruding the supply chain organizations operating the logistics processes in the global market by implements a software module that will support object-oriented technologies such as ERP, EDI, Barcodes, RFID, and DRP system.
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