Supply Chain Collaboration Between the Organization and Suppliers Essay Example

Supply Chain Collaboration Between the Organization and Suppliers Essay Example Supply Chain Collaboration Between the Organization and Suppliers Essay Supply Chain Collaboration Between the Organization and Suppliers Essay In most organizations, supply chain collaboration between the organization and suppliers can reduce inventory costs with the use of information technology (IT). Laudon and Laudon (2007) suggest that IT consists of all hardware and software that a firm needs to use in order to achieve its business objectives. Computers, printers, and handheld personal digital assistants are considered hardware components. Software includes operating systems such as Linux or Windows, the Microsoft Office desktop productivity suite, and other computer programs essential to an organization that is currently on the market. Information technology offers a competitive advantage, reduces and controls costs, improves customer and supplier intimacy, and access to the global economy. Information Technology Competitive Advantage According to Laudon and Laudon (2007), more than 23 million managers and 113 million workers in the United States’ labor force rely on information systems to conduct business. IT offers the supply chain organization a competitive advantage by achieving operational excellence, customer and supplier intimacy, and improved decision making. IT allows the supply chain to respond to customers in real time, thus all improvements add up to higher sales and higher profits to the organization (Laudon and Laudon 2007). Reducing and Controlling Costs Gendron (2006) states, â€Å"Studies by the Aberdeen Group have shown that non-production materials like office supplies, computer equipment and maintenance, repair and operating provisions (MRO) can account for 30% to 60% of a company’s total expenditures yet they remain poorly controlled and costly to process at most organizations† (p. 91). Information technology permits the supply chain organization to control and process purchasing requisition for supplies efficiently and at reduced costs. Amazon. com, though is an e-commerce company, is a company that uses IT to track orders, place orders from suppliers, and also tracks where items are stored within the facility. Supply chain departments have access to several tools that can help in reducing costs. Enterprise resource planning (ERP) systems are used by large corporations to use the Web efficiently when purchasing suppliers. Gendron (2006) states, â€Å"Studies have also noted that off-contract buying is more prevalent for services than for direct or indirect products, and service supplier networks are huge, averaging nearly 75 suppliers per purchasing employee more than double the number of suppliers per buyer of direct goods† (p. 91). The supply chain organization purchasing responsibilities is one of the fastest payback areas using the Web, because the online bidding process can be used (Gendron 2006). Global Economy Opportunities Information technology offers the supply chain organization several advantages in a global economy to help reduce inventory costs. Laudon and Laudon (2007) state, â€Å"The emergence of the Internet into a full-blown international communications system has drastically reduced the costs of operating on a global scale† (p. 7). The supply chain organization can shop a worldwide marketplace, obtaining quality and price information reliably 24 hours a day. The key advantage is that the supply chain organization can achieve extraordinary cost reductions by finding low-cost suppliers and managing production facilities in other countries. Summary Information technology offers the supply chain organization several advantages to reduce costs and improve customer relations. Information technology offers a competitive advantage by reducing and controlling costs, improving customer and supplier intimacy, and provides access to the global economy. To stay competitive, the supply chain organization must use information technology to grow the business and reduce inventory costs. References Gendron, M. P. (2006). Creating the new e-business company: Innovative strategies for real-world applications. Mason, OH: The Thomson Corporation. Laudon, K. C. Laudon, J. P. (2007). Management information systems: Managing the digital firm. Upper Saddle River, NJ: Pearson Prentice Hall.