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Time delays, distorted demand
signals, and poor visibility of exceptional conditions result in
Information and Communication Technology (ICT), and in particular the
Internet, playing a fundamental role in helping companies reach the goals
of supply chain integration.
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The Internet can change
the role and type of relationships between various players,
creating new value networks and developing new business models.
Buyers and sellers need to choose a coordination mechanism in
order to fill critical information gaps and serious challenges
for supply chain managers, including misinformation and
ultimately, mistrust.
In this view, the ICT is a key factor that enables for
competitive advantage, by cementing relationships with
customers,
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enabling integration forward or
backwards in the industry value chain, or establishing a technological
lead.
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The key business benefits
that ICT can bring are : |
- improvements to customer service through
simpler processes
- reduced lead times
- lower supply chain costs through simpler
integrated processes
- lower administrative costs
- reduced incidence of failure
- more efficient processes
- improved management information
- improved supplier relationships
- quicker response to end customer demands
- lower inventories along the supply chain
and
- lower costs associated with expediting
shipment and/or production.
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The Internet provides the
opportunity for demand data and supply capacity data to be visible to
all companies within a manufacturing supply chain. Consequently,
companies can be in a position to anticipate demand fluctuations and
to respond accordingly.
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The Internet has given
companies even greater tools for tightly orchestrating
relationships across the entire supply chain and creating
strategic partnerships and operational linkages with a
dynamic web of large and small firms spanning all
continents.
Internet-enabled shared information helps break down
organizational policies and functional fences, helping
supply chain alliance members develop a common understanding
of the competitive environment. In short, the availability
of the Internet and the associated technologies provides the
opportunity to make further significant, even radical,
improvements to break down functional barriers and enhance
the flow of information.
Many researchers agree that ICT reduces cost of
coordination. Lack of coordination will result in the supply
chain holding inefficiencies in the form of inventory
buffers, under-utilised capacity, and obsolescence of
products or lost sales.
In the previous case (the example of M/s Marico Limited) the
company has successfully introduced the Information
Technology and reaped the desired benefit. Marico Limited
further widened electronic markets by introducing Web based
system, opening email accounts for farmers, traders,
investing in their training and incentivising those farmers
who used email.
This has reduced turnaround time (from nine days to one),
availability of summary of transactions, placements of bids
online etc.
The buying team was provided with PDAs, seamless integration
developed between the web based system and PDA.
SMS based service introduced for placing sale offers,
information of arrival/departure of trucks etc.
In Marico Limited, there was a company wide initiative to
"re-engineer the supply chain" prior to introduction of the
electronic market, development of the web based electronic
"market" place, investment in education and IT literacy,
design of support to complement the newly designed processes
(for example, being able to switch to mobile based bids on
the portal) are examples of support processes that were
critical to the success of the innovation.
Since many of the farmers and other stakeholders were not
technology or process savvy, bringing about changes in their
business process was really difficult. Visible benefits to
them facilitated the transition. Thus, the organizational
mind set not only allowed exploitation of technology to
derive business benefits for itself, it also balanced it
with sharing those benefits with farmers. This required
Marico Limited to reengineer the physical supply chain,
managing the vested position of incumbent entities (for
example brokers and traders), an important basis on which
the entire electronic disintermediation initiative could be
built, need for evangelization of technology efforts,
keeping track of constant improvements in the technology
interface.
Visible benefits to them facilitated the transition. Thus
Marico Limited needed to design its own organizational
processes, structures, incentive mechanisms to ensure
desired outcomes of strengthening its linkages with the
farmers, traders etc. The organizational mind set not only
allowed exploitation of technology to derive business
benefits for itself, it also balanced it with sharing those
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benefits with farmers,
traders etc. This required Marico
Limited to work in partnership mode with all the
stakeholders.
Leveraging technology for farmers, traders etc., required
tremendous effort in designing appropriate interfaces, first
with a phone based system and later with Internet and mobile
based systems. It required considerable evangelization
efforts as well as willingness to make a slower transition
so that farmers, traders etc felt comfortable with such
technology. Mobile technology has given rise to
opportunities for innovative business models to emerge.
Inclusive growth models can lead to profitable initiatives,
to be effective, these require further support through
redesign/review of existing complementary processes.
Effective service delivery for underserved populations
requires contextualization of existing mobile/IT based
system. Business model innovations may be modeled as
innovations in core processes working within the context of
a supportive “innovation ecosystem” consisting of the
supporting, complementary processes. The core and supporting
processes need to be integrated and IT interventions need to
be embedded to increase the efficiency and scope of the
underlying business models.
ITC’s e-Choupal network, that leverages Information
Technology to empower farmers, is globally acknowledged for
its contribution to the development of rural communities in
India. As of now, ITC’s e-Choupals serve 40,000 villages and
4 million farmers, making it the world’s largest rural
digital infrastructure. This extensive network also provides
a unique source of competitiveness to the Company’s Packaged
Foods Business, through its efficient supply chain and
identity preserved procurement. It also strengthens the
company’s competitiveness in servicing the requirements of
international buyers who demand agri-products based on
sustainable agricultural practices with associated stringent
traceability assurance. This is helping the company to
support inclusive growth as well as reaping the benefits.
Thus, it is a win-win situation for both the parties.
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