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Modeling of Responsive Supply Chain by M. Jenamani, S. P. Sarmah, B. Mahanty, M.K. Tiwari

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139
5
Technologies for Supply Chain
Integration and Interoperability
5.1 Introduction
Most supply chain management strategies call for robust coordination
and collaboration of supply chain partners. Such coordination is possible
through effective information sharing through information and commu-
nication technologies (ICTs) in general and the Internet in particular. ICTs
have enabled companies to disseminate information and coordinate with
upstream as well as downstream partners in real time on various issues such
as product design and development, procurement, production, inventory,
distribution, after-sales service support, and marketing. The companies are
now able to explore new supplier bases and directly communicate with the
customers in faster and secure ways through the Internet. The other benets
of information sharing include better asset utilization, faster time to market,
reduction in total order fulllment times, enhanced customer service and
responsiveness, penetration of new markets, higher return on assets, use of
market intelligence for better demand management, and ultimately, higher
shareholder value. Therefore, a thorough understanding of the ICTs can help
companies to derive maximum benets out of these technologies.
Supply chain integration is dened as the extent to which the rm can
strategically collaborate with its supply chain partners and collaboratively
manage the intra- and interorganization processes to achieve the effective
and efcient ows of products and services, information, money, and deci-
sions with the objective of providing the maximum value to the customer at
low cost and high speed (Yi-nan, Zhao-fang, 2009). According to Lee (2000),
supply chain integration has three aspects: (1) information integration, (2)
coordination and resource sharing, and (3) organizational relationship link-
ages. While the rst aspect deals with technical issues involved in integrat-
ing heterogeneous information systems, the last two issues are strategic in
nature. Information integration is not effective if these strategic issues are
not adequately addressed.
140 Modeling of Responsive Supply Chain
The major concerns for integration are efcient business process integra-
tion, increased exibility throughout the company to accept the process
integration, and interoperability of ICT solutions, systems, and people to
face the resulting variability in the business environment (Vernadat, 2002).
Interoperability is the ability of two or more systems or components to
exchange and to use the information that has been exchanged (IEEE, 1990).
Two integrated systems are inevitably interoperable, but two interoperable
systems are not necessarily integrated (Chen et al., 2008). Interoperable sys-
tems require both technical- and semantics-level interoperability. Technical
interoperability deals with hardware and software compatibility of the inter-
connected systems, and semantic interoperability ensures that both systems
have the same understanding of different concepts. Supply chain interoper-
ability for business-to-business (B2B) integration is a particularly challeng-
ing task because of factors such as diverse information formats, large and
dynamic information space, lack of standards for semantic integration of
data, and issues related to fast, secure, and reliable data transmission.
This chapter is organized as follows: we start with a motivating example
to understand the complicacies involved in information system integration.
Next, we discuss the primary and supporting technologies for supply chain
integration. The primary technologies we discuss are electronic data inter-
change (EDI) and Web services. Many companies started using EDI in the late
1960s. During this period, adoption of EDI used to be a costly affair with the
use of enormous computer systems and proprietary networks. Recently, with
the Internet and data exchange standards such as XML, EDI implementation
has become cost effective. Web service is the latest technology for enterprise
integration. EDI integrates business processes at the data layers, and Web
services allow integration of workows at the process level. The support-
ing technologies that we discuss include security and payment systems, and
automatic product data capture technologies like radio frequency identica-
tion (RFID). In each case we have four sections: overview of the underlying
technology, existing standards, management issues, and research directions.
Finally, we discuss the technology impact on two business functions that
bind an organization with its immediate upstream and downstream supply
chain partners: procurement and customer relationship management.
5.2 Dimensions of Supply Chain Integration
According to Lee and Whang (2001), supply chain integration has four dimen-
sions: information integration, planning synchronization, workow coordina-
tion, and new business models and monitoring. Zeng and Pathak (2003) on
the other hand suggest the dimensions to be customer/market integration,
information integration, logistics and distribution integration, and supplier

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