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Use of Information & Technology

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.

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,

enabling integration forward or backwards in the industry value chain, or establishing a technological lead.

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.

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.

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


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.


Click these links to read in details:

Inclusivity Measurement
Present Scenario
Supply Chain

Realigning Supply Chain through :

Direct Procurement from Producers/Primary Suppliers
Use of Information & Technology
Vendor Development
Open Tendering
Ancillary Development
Targeted Procurement
Unbundling of Contract




Digvijay Singh, Dy. Manager (Materials Management)
Research & Development Center for Iron & Steel (RDCIS)
Steel Authority of India Ltd. (Ranchi)


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Dynamic Business environment
Supply Chain Strategies

Benefits of preparedness in Negotiation

Seven Principles of Supply Chain Management
10 necessary Strategies for Supply Chain Management
Inclusive growth by realigning Supply Chain

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