Integrated Supply Chain Management - Technological Barriers

In this last post of the series of six articles on the benefits and barriers to supply chain integration, I will focus on technology barriers. The whole process of collaboration and integration with commercial partners is intensive in the exchange and treatment of data, therefore, information technology has a prominent role in the viability of initiatives of Supply Chain Management (CACHON and FISHER, 2000; CHOPRA and MEINDL, 2000; DATTA and CHRISTOPHER, 2011; GUNASEKARAN and NGAI, 2004; LEE et al., 2000; LI, 2002; LI and ZHANG, 2008). Technological barriers can have four different origins: incompatibility of systems, complexity of information flows, problems in the technological infrastructure and misunderstanding on the part of managers of the benefits of sharing information (FAWCETT et al..

Inadequate or incompatible information systems are a fundamental barrier to collaboration as they make it difficult for chain partners to exchange information (FAWCETT et al., 2007). Incompatibility problems begin with the lack of standardization of information contained in bar codes (HERRMANN et al., 2013), still the most used technology for cargo tracking along the chain, which carry diverse and not always useful information to improve planning and operationally integrate partners (BOECKE and WAMBA, 2008; MURAKAMI and SARAIVA, 2005).

In addition, the use of proprietary systems, designed to handle the company's information internally and, therefore, autonomous, heterogeneous and not integrated, presents challenges for collaboration between partners in the supply chain, since the necessary information is dispersed in these systems (MURAKAMI and SARAIVA, 2005). Therefore, it is necessary to convert the data to interchangeable language standards, such as EDIFACT or XML (PRAMATARI, 2007).

The use of standards is very important to ensure the reliability, accessibility, usefulness and interoperability of information between companies in a supply chain (MURAKAMI and SARAIVA, 2005; PRAMATARI, 2007). Most of the time, this data conversion and exchange needs to be intermediated by specialized companies, known as VANs (Value Added Network), which makes this type of operation more expensive and unfeasible for small and medium-sized companies.

This causes, in FAWCETT's analysis et al. (2007), a secondary problem: different levels of connectivity along the chain, which prevent the full use of integration opportunities. The spread of internet use and the development of the XML standard represent a great opportunity as a communication and data exchange channel between companies of all sizes (CASTRO and LADEIRA, 2012), which would minimize this problem. However, the difficulty of integrating systems is still mentioned, in all surveys with executives on the subject, as one of the greatest obstacles to chain integration (FAWCETT et al..

FAWCETT et al. (2007) point out that, despite the difficulty in exchanging data between companies, these only become valuable when transformed into relevant information and made available to decision makers. A major challenge therefore arises: dealing with the complexity of information flows (MURAKAMI and SARAIVA, 2005), which requires the analysis and interpretation of an ever-increasing amount of information (volume), coming from different sources and formats ( variety) and the availability practically in real time for a countless number of involved (speed).

Companies, in an attempt to deal with this complexity, have invested more and more time and resources in the acquisition and use of integrated business management systems (Enterprise Resources Planning – ERP), which seek to standardize information and processes, ensuring the reliability and availability of the same information for everyone in the company. However, the investments required for its implementation, in time and money, are usually up to two times greater than the initial budget and the results are often not as expected (FAWCETT et al..

The increase in data volume is a result of the accumulation of information recorded over the years, the infinity of texts exchanged on social media and the increase in the number of mobile devices producing and sensors collecting information, having been made possible by the reduction of data storage costs. data (HILBERT and LÓPEZ, 2011). Having solved the cost of storage space problem, the new challenge of selecting the most relevant data and generating useful information from them arises (FAWCETT et al..

In addition to having to deal with the large volume of data, another difficulty is working and crossing data in the most different formats, such as texts, database, spreadsheets, audio, video, financial transactions, meter and sensor records, among others (HILBERT et al. LÓPEZ, 2011). Much of this data is not in numeric format, which requires new and sophisticated analysis tools, with few companies able to use them consistently (MANYIKA et al..

The result of these analyzes needs to reach the right people in a timely manner for decision making, which obliges companies to improve the systems for exchanging and analyzing information, reinforcing the previously discussed points (FAWCETT et al., 2008). Reacting quickly enough to appropriate the benefits of available data is increasingly a challenge for most organizations.

In addition to the incompatibility of systems and the complexity of information flows (FAWCETT et al., 2007), the unavailability of IT and telecommunications infrastructure is also cited as a possible barrier to the integration of supply chains (AGAN, 2011; MOAVENZADEH et al., 2013). Countries and regions with unavailability or low quality of telecommunications and internet services tend to offer more difficulty for the exchange of data between companies (MOAVENZADEH et al., 2013). These three barriers together are grouped by FAWCETT et al. (2007) in the connectivity category.

The last technological barrier was thus defined by FAWCETT et al. (2007): “Managers do not understand the importance of goodwill in information sharing!”. Thus, they do not invest time in human issues related to the exchange of information, believing that this will occur as a simple and direct consequence of investments in advanced systems, disregarding that information is seen as a source of power and its sharing depends on “goodwill”. of the people involved, much more than the availability of systems (LEE et al..

Table 1 - Connectivity X Willingness to share information

Source: FAWCETT et al. (2007)

Table 1 (FAWCETT et al., 2007) crosses the dimensions of connectivity and “willingness to share information”, showing that unless there is high connectivity and high willingness to share, which depends on the existence of trust relationships, companies will have to overcome some challenges to facilitate their integration.

According to POWER (2005), information is the only element in the supply chain that is getting cheaper over time, enabling the evolution of collaborative practices between members of the supply chain. However, many managers fear that sharing information could potentially result in a loss of control over information and a decrease in the level of security within participating organizations. Privacy and security are, therefore, matters of great importance, since companies will deal with confidential data from their partners.

Table 2 - Summary table of technological barriers

Despite being a constant in the literature on SCM, the technological issue is often approached in a general way, which makes measuring its impact as a barrier to integration more difficult. In Figure 1, the main problems for integration are related to possible causes described in the literature, illustrating Table 2.

Figure 1 – Network Design of technological barriers to supply chain integration
Source: AUTHOR using Atlas.TI tool.

References:

1 AGAN, Y. Impact of Operations, Marketing, and Information Technology Capabilities on Supply Chain. Integration. Journal of Economics and Social Research, v. 13, no. 1, p. 27-56, 2011.

2 BOECK, H.; WAMBA, SF RFID and buyer-seller relationships in the retail Supply Chain. International Journal of Retail and Distribution Management, v. 36, no. 6, p. 433–460, 2008.

3 CACHON, GP; FISHER, M. Supply Chain inventory management and value of shared information. management science, v. 46, no. 8, pages 1032-1048, 2000.

4 CASTRO, MR DE; LADEIRA, MB Collaborative Practices in the Supply Chain and the Role of New Information Technologies. E-Tech: Technologies for Industrial Competitiveness, v. 5, no. 1, p. 32–55, 2012.

5 CHOPRA, S.; MEINDL, P. Supply Chain Management: Strategy, Planning and Operation, Prentice Hall, USA, 2000.

6 DATTA, PP; CHRISTOPHER, MG Information sharing and coordination mechanisms for managing uncertainty in Supply Chains: a simulation study. International Journal of Production Research, v. 49, no. 3, p. 765-803, Feb 2011.

7 FAWCETT, SE; OSTERHAUS, P.; MAGNAN, GM; BRAU, JC; MCCARTER, MW Information sharing and Supply Chain performance : the role of connectivity and willingness. Supply Chain Management: An International Journal, v. 12, no. 5, p. 358–368, 2007.

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9 GUNASEKARAN, A; NGAI, EWT Information systems in Supply Chain integration and management. European Journal of Operational Research, v. 159, p. 269–295, 2004.

10 HERRMANN, FF; PEREIRA, GM; BORCHARDT, M.; SILVA, RIDA. Benefits and impediments to the integration of the footwear supply chain through information technology. Management and Production, v. 20, no. 4, p. 939–952, 2013.

11 HILBERT, M.; LÓPEZ, P. The World's Technological Capacity to Store, Communicate, and Compute Information. Science magazine, v. 332, no. 6025, p. 60–65, 2011.

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13 LI, L. Information sharing in a Supply Chain with horizontal competition. management science, v. 48, n.9, pages 1196-1212, 2002.

14 LI, L.; ZHANG, H. Confidentiality and Information Sharing in Supply Chain coordination. management science, v. 54, no. 8, p. 1467–1481, 2008.

15 MANYIKA, J.; CHUI, M.; BROWN, B.; et al. Big data: The next frontier for innovation, competition and productivity. McKinsey Global Institute, pages 1–137, 2011.

16 MOAVENZADEH, J.; DOHERTY, S.; PHILIP, R.; et al. Enabling Trade Valuing Growth Opportunities. Davos: World Economic Forum. Available in: , 3.

17 MURAKAMI, E.; SARAIVA, AM Traceability of information in production chains: data exchange patterns. Brazilian Journal of Agroinformatics, v. 7, no. 1, p. 58–66, 2005.

18POWER, D. Supply Chain Management integration and implementation: a literature review. Supply Chain Management: An International Journal, v. 10, no. 4, p. 252–263, 2005.

19 PRAMATARI, K. Collaborative Supply Chain practices and evolving technological approaches. Supply Chain Management: An International Journal, v. 12, no. 3, p. 210–220, 2007.