USE OF INFORMATION TECHNOLOGY IN THE SUPPLY CHAIN

Difficulties in the use of Information Technology (IT) in supply chain activities have bothered most Brazilian logistics executives.

The problems begin when financial resources are made available for the implementation of technological tools. This is one of the points of greatest dissatisfaction among executives: the necessary investments are greater than expected.

According to a survey carried out by Coppead/UFRJ, each large Brazilian company invests just under US$ 800 per year in technology applied to supply chain activities (including expenses with hardware, infrastructure, licenses, maintenance and services). This value is much smaller than the investment made by companies in the United States and Europe, which on average spend more than US$ 4 million annually, having technology implemented in a much larger percentage of activities (Source: AMR Research).

In Brazil, the sector that, in proportion to revenue, invests the most in IT applied to the supply chain is Hygiene, Cleaning and Pharmaceuticals. In companies in this segment, the average budget applied to IT is equivalent to 0,21% of the companies' annual revenue, a percentage well above the Brazilian average, which is 0,13%. This is also a sector that, in the future, still plans to invest heavily in technological applications for the supply chain, as 80% of companies in this segment state that they will increase spending on IT.

This forecast of expansion of financial resources dedicated to information technology is also observed in other economic segments in the country. Thus, although they have pointed out that there are difficulties with the implementation of IT, Brazilian executives are determined to increase investments in technologies that help supply chain management. Compared to Europe and the United States, Brazilian companies have recently been the ones that proportionally increased the financial resources allocated to IT. Between 2007 and 2008, the expenses of Brazilian companies with technologies applied to supply chain activities increased by 23%, against a 14% increase in the same period registered in Europe and a 12% increase in the United States (see Figure 1) .

The main goals and objectives of IT executives in Brazil are to improve service levels in activities and promote innovation. This means that Brazilian companies have the perception that they need to innovate and improve their performance, and one of the alternatives is to implement IT. This scenario is a little different in more mature markets, where technology is sought as a way to reduce the company's costs, and not as a necessary expense to keep up with the degree of innovation of other organizations. Thus, the maturation in relation to the use of IT shows that it can be an important cost reduction tool, advantages that have not yet been clearly perceived by Brazilian companies.

The activities that stand out the most in terms of technology use in Brazil are those essential for carrying out a business, which are buying and selling activities. The graph in Figure 2 shows that the Purchasing/Supply, Order Management and Sales Management processes already have IT implemented in 79%, 73% and 66% of the country's large companies, respectively.

In turn, the demand that should grow the most in percentage terms in Brazil is related to IT systems that help with data analysis and bring greater visibility to the supply chain of organizations. Thus, companies that offer technological solutions must be concerned with the analytical capacity of their systems.

A point that strongly influences the choice of IT tool concerns the integration capacity between the technology to be implemented and the other existing systems in the company. Brazilian executives consider this compatibility an extremely important item, which leads them to prefer to hire their own ERP system suppliers to implement new modules with other functionalities. Altogether, 61% of executives in Brazil prefer to hire their own ERP vendors rather than choosing a vendor with slightly better technology or a vendor that would develop a custom application (see Figure 3). It is noteworthy that this type of preference is also common in European countries and the United States.

But in the case of Brazil, as this is still an incipient market and not very mature in relation to the use of IT in supply chain management activities, companies still do not have what can be called a “key supplier” of technology. Only half of the country's large companies claim to have this main supplier. In more mature markets, in turn, this rate is much higher: in the United States, for example, 76% of executives already have a key IT supplier applied to the company's supply chain (Source: Coppead and AMR Research).

These results indicate that Brazil is still a market to be explored with regard to IT solutions. However, technology suppliers that wish to enter or expand their operations in the country need to know and adapt to the local reality and its specific demands. In the past, during the first "boom" of implementation of ERP systems in Brazilian organizations, many companies went through bad experiences and suffered with the implementation process and, in several cases, took a long time to complete the implementation of the technology or gave up.

The country's current situation shows that IT suppliers that have adapted to the Brazilian market have gained some space and have more competitive advantages in relation to the others. Executives in the country rate these suppliers with an average score of 7,4 (on a scale of 1 to 10), which is not a bad score, but one that still needs improvement. Among the key software suppliers/brands in large companies in Brazil are SAP, Datasul (now Totvs), Oracle and Baan, indicated as strategic by around 80% of companies in the country.

In turn, an analysis of the performance of key IT providers in industries of different segments shows that there are large differences in evaluation, depending on the type of industry served. These differences are the result of both the maturity of each sector in the use of IT and the complexity and ability of technology providers to meet the expectations of their customers in each segment of the economy.

It can be seen in Figure 4 that, once again, the Hygiene, Cleaning and Pharmaceuticals sector stands out, since, in addition to being the one that, in terms of revenue, invests the most in technology in the supply chain, it is also the one that most evaluates its IT vendors. In this sector, the average score given to providers of applications aimed at supply chain management activities was 8,5 (on a scale of 1 to 10). But the size of the investment in IT does not necessarily mean that companies will be more satisfied with the implemented solutions. The Food and Beverage industries, which proportionally also invest more in IT than other segments, assigned an average score of just 6,7 on the same scale. This is one of the lowest ratings for key technology suppliers operating in Brazil, second only to the 6,0 grade awarded by companies in the Textiles and Footwear sector.

When each supply chain activity is specifically evaluated, it can be seen that, in Brazil, the technologies that best meet the expectations of executives are those applied to the storage operation: 93% of the professionals interviewed state that “yes, the applications currently used for storage management meet my expectations” (see Figure 5). It is worth noting that, in Brazil, 57% of large companies have technological applications for warehouse management and another 24% do not, but plan to invest by the end of 2009. The average score attributed to the applications used in the storage activity is 7,6 ,XNUMX, an evaluation that used as criteria the ability to integrate with other company systems, data analysis capacity, return on investment, speed of access to information, ease of operation of the application, implementation time and the total amount of the investment.

At the opposite extreme of satisfaction with the applications used, it should be noted that carrying out sales and operations planning, especially the so-called S&OP (Sales and Operational Planning) process, is the activity in which IT least meets the expectations of executives. Only 65% ​​of professionals who use applications for this purpose are satisfied with the technologies implemented. It can be seen that this is an activity with processes that are still poorly structured in organizations and one of the activities that most use applications developed exclusively and customized for the company.

Carrying out collaborative forecasting with the aid of technological resources was also one of the activities in which executives in the country were least satisfied with the solutions they adopted (only 67% of professionals who have IT in this activity approve of the systems they use). It is known, however, that collaborative forecasting is an unusual activity in Brazil and, when it exists, it is one of the least implemented IT. The country has little culture of exchanging information between companies and this is one of the items in which it most differs from the US and Europe, with regard to the use of technology. While in Brazil only 42% of companies already have or intend to implement some initiative to use IT to carry out collaborative forecasting by the end of 2009, in the United States and Europe this percentage is over 70%.

Finally, it is worth highlighting that many of the problems faced in the implementation of IT in organizations can be motivated by poor management or lack of definition of the processes of each activity. Well-structured processes are required so that IT systems can be deployed and used successfully.

BIBLIOGRAPHIC REFERENCES

Coppead Logistics Overview – Information Technology in the Supply Chain 2009
The Supply Chain Management Spending Report – AMR Research