Why is information so important in supply chains? What are the inherent challenges to the successful development and implementation of effective information?
Information is crucial to the performance of a supply chain because it provides the basis on which supply chain managers make decisions. Information technology consists of the tools used to gain awareness of information, analyze this information, and execute on it to improve the performance of the supply chain. Information is essential to making good supply chain decisions because it provides the broad view needed to make optimal decisions. IT provides the tools to gather this information and analyze it to make the best supply chain decisions.
Information is a key supply chain driver because it serves as the glue that allows the other supply chain drivers to work together to create an integrated, coordinated supply chain. Information is crucial to supply chain performance because it provides the foundation on which supply chain processes execute transactions and managers make decisions. Without information, a manager cannot know what customers want, how much inventory is in stock, and when more products should be produced or shipped. In short, information provides supply chain visibility, allowing managers to make decisions to improve the supply chain’s performance.
Using IT systems to capture and analyze information can have a significant impact on a firm’s performance. Availability and analysis of information to drive decision-making is key to the success of a supply chain. To support effective supply chain decisions, information must have the following characteristics: Information must be accurate, must be accessible promptly, must be of the right kind, and must be shared.
In summary, information is crucial to making good supply chain decisions at all three levels of decision making (strategy, planning, and operations) and in each of the other supply chain drivers (facilities, inventory, transportation, sourcing, and pricing). Information Technology enables not only the gathering of these data to create supply chain visibility but also the analysis of these data so that the supply chain decisions made will maximize profitability.
The inherent challenges to the successful development and implementation of effective information are the sharing of information along supply chains and the discipline to ensure the integrity of the data collected, (Coyle, Langley, Novack & Gibson, 2013). The information and communication systems that are available to organizations today lead to the collection and storage of vast amounts of data, but some organizations may not be taking advantage of the abundance of data to develop information systems to improve decision-making. The accumulation and storage of data are almost useless unless the data are shared horizontally and vertically in the supply chain and used to make better decisions about inventory, customer services, transportation, and so forth. Information can be a powerful tool if it is timely, accurate, managed, and shared.