Information Systems in Supply Chains

Supply chain management is one of the areas that utilize information systems. The globalization of supply chains and the spread of suppliers, manufacturers, and customers across large geographies make supply chain management difficult. Besides, ever-increasing competition conditions between businesses require an effective supply chain management. Therefore, the use of information systems technologies in supply chain management is inevitable. 

One of the possible answers is as follows:  The flow of material and money is one-way while the information flow is two-way. In other words, the information flow in the supply chain can be from suppliers to the end-users and from the end-users to the suppliers. The information flow in the supply chain is also continuous. This is an indication that information is indispensable in supply chain management. 

Supply chain information flow provides a bidirectional flow of information across the supply chain participants at a variety of strategic, tactical, and business levels. Some of this information may include forecasts, planning decisions, material lists, product data, pricing, stock levels, customer and order information, delivery plans, supplier and distributor information, delivery status, performance measurements, commercial documents, and financial information. Supply chain participants are in constant communication to transfer this information to each other and to receive information.

A successful information management process forms the basis of information sharing; and therefore, information integration, which enables efficient execution of supply chain processes and flows. Hsu et al. (2008) define information sharing within a supply chain as the integration of information systems, decision systems, and business processes used to conduct information searches, manage business operations, monitor business details, and perform other business activities. The need to share information among the various participants throughout the supply chain is crucial. Lotfi et al. (2013) summarize the benefits of information sharing in supply chains as given below:

• Inventory reduction and efficient inventory management
• Cost reduction
• Increasing visibility
• Significant reduction or complete
elimination of bullwhip effect
• Improved resource utilization
• Increased productivity, organizational
efficiency, and improved services
• Building and strengthening social bonds
• Early problem detection
• Quick response
• Reduced cycle time from order to delivery
• Better tracing and tracking
• Earlier time to market
• Expanded network
• Optimized capacity utilization

The information sharing and collaboration between supply chain participants provide information integration. Information integration aims to transmit and process the information to be used in the supply chain decision making in realtime. Information integration can be considered as a dimension of supply chain integration.

Barriers such as information privacy, lack of information, outdated information, and integration costs can be counted among these obstacles. 

Information systems are defined as systems designed to store, process, and analyze the organizational data. Information systems consist of hardware, software, database, network, and human components to perform the mentioned functions. Generally, information systems aim to provide appropriate and requested information to their users by processing the data they collect and store. Information systems store and analyze data and information, support decision-making and management of business processes. Information systems also provide time and cost savings in large quantities and prevent errors caused by manual works are minimized. Besides, information systems reduce paper consumption in organizations.

Information systems have a wide range of uses in daily life and business life. Supply chains are also organizations where information systems benefit extensively. Supply chain management provides integration and coordination through information systems. Information systems play an important role in ensuring information integration that has an active role in supply chain efficiency. Furthermore, it is not easy for the supply chain management to control all units, to ensure the flow of information, to organize the units to work in harmony.

• Collecting information through the whole supply chain.
• Providing access to data from a single point of contact.
• Analyzing, planning, and decision-making using the information of the whole supply chain.
• Collaborating with all supply chain participants and operations.

Electronic Data Interchange (EDI) is a standardized and automated method that enables electronic transmission of information and documents between companies or departments with different information management systems.

Some of the benefits provided by information systems and technologies can be listed as follows:
• Better monitoring of the supply chain
• Better forecasting
• Cost reduction by eliminating unnecessary processes in the supply chain and increasing the efficiency of the processes
• Shortening the lead time
• Better management of inventories and consequently reduction of inventory costs
• Decrease in transportation costs
• The development of the relations between the supply chain participants
• Effective monitoring of the supply chain performance with real-time reports
• Quickly resolving customer dissatisfaction
• Ensuring sustainability and reducing negative impacts on the environment
• Monitoring the purchasing behavior of customers and responding quickly to changes in customer expectations

There are many information systems and technologies mostly used for information integration in supply chain management. The information system and technologies used can generally change according to the structure, size, need, and management understanding of the supply chain, etc. Some of these information systems and technologies used extensively are Electronic Data Interchange, barcode, Radio Frequency Identification, Enterprise Resource Planning, transportation management systems, and inventory management systems. Besides, there are supply chain management applications of Internet of Things technology, which has developed in recent years. Apart from these, the supply chain management system, customer relationship management system, supplier relationship management system, e-supply chain, e-business, etc. information systems and technologies are also information systems and technologies used in supply chains.

A barcode is an image consisting of a series of parallel black and white lines of various thicknesses that brings information about a product when scanned. In the simplest form, barcodes are labels on many products purchased in everyday life.

EDI plays three important roles in supply chain management as given below (Min, 2000).
• Electronic integration;
• Information diffusion and sharing
• Electronic marketplaces.

Fundamentally, EDI provides working efficiently in the supply chain. The information transmitted through EDI throughout the supply chain can be stock levels, customs certificates, delivery documents, invoices, orders, etc. The usage of EDI annihilates the errors due to manual operations and increases efficiency. Operations performed quickly and accurately with EDI ensure that costs are reduced and time-saving is provided. Besides, EDI benefits the supply chain on issues such as effective use of human resources, shorter order delivery time, optimization of stock control, rapid decision making, speeding up cash flow, and reduced paper usage. Even though there is a high implementation cost of EDI at the beginning, the mentioned benefits of EDI compensate for this cost.

Radio Frequency Identification or RFID can be defined as a technology in which digital data encoded in RFID tags are met by a reader through radio waves. RFID technology can be used to identify and monitor all kinds of objects and living creatures from a distance without touching them.

Barcode technology is widely used in supply chains because it provides an efficient integration process. Barcodes can be used to label semi and finished products, stock items, and delivery, which must be tracked in the supply chain. Barcodes are provided to identify the products accurately by computer systems at the transition points as they move through the entire supply chain. Thus, the movement of the products along the supply chain has been accelerated and the errors resulting from data entry errors have been eliminated. Besides, storage processes can be given as examples of other usage areas of barcode technology in supply chain management. Packages to be created during storage such as pallets, boxes, and parcels are labeled with barcodes. In this way, easy, accurate, and fast identification is provided at the points passed within the scope of logistics processes.

The benefits of RFID throughout the supply chain are listed as follows:
• Reduced shrinkage
• Reduced material handling
• Increased data accuracy
• Faster exception management
• Improved information sharing

The benefits of RFID technologies in terms of manufacturer and supplier are stated as production monitoring, quality control, and supply and continuity of production. It is also emphasized that RFID technology has material handling, land use, and asset management benefits for distributors and logistic providers. Lastly, the benefits of RFID for retailers are specified as reduced stockouts, customer service, aftersales service, and lower inventory.

Some of the benefits that ERPs provide to businesses can be listed as follows:

• Efficient use of resources and consequent reduction in costs and time
• High traceability in the business/supply chain
• Efficient inventory management
• Decrease in business processes
• Automatic preparation of accurate and consistent reports
• Effective order tracking
• Annihilation of the limitations about language and time
• Reaching the fastest and up-to-date information in terms of market, customer,
and business
• Decrease in errors caused by manual works and paper usage

A transportation management system (TMS) can be defined as software for planning, executing, and optimizing transportation activities.TMSs can be a software application on their own or integrated into ERP systems.

The use of TMS provides many advantages to supply chains. Some of these advantages can be listed as below:
• With the transportation system followed by TMS, a reduction in transportation costs can be achieved.
• TMSs provide route and load optimization. It performs the optimization of the mentioned issues in terms of warehouse, order, customer, and supplier as integrated. This opportunity provided by TMS saves time and money.
• As with any information system, TMSs minimize paper usage and increase supply chain visibility.
• With a real-time TMS, planning and forecasting work is more successful because inventory levels are instantly correct.
• TMS provides a reliable transport system; thus, it ensures that the shipment is made accurately and almost without errors.
• TMS offers the opportunity to monitor drivers and intervene in accident situations.
• TMS responds to the requests of the customers quickly and enables to meet the
expectations of the customers.
• Supply chain success increases with successful customer experience based on TMS.

There are numerous definitions of IoT in the literature. As one of them, Gubbi et al. (2013) define IoT as the interconnection of sensing and actuating devices providing the ability to share information across platforms through a unified framework, developing a common operating picture to enable innovative applications. They also emphasized that this interconnection is provided by seamless ubiquitous sensing, data analytics, and information representation with Cloud computing as the unifying framework. IoT is aimed at enabling the interconnection and integration of the physical world and the cyberspace (Ma, 2011).