A research project by the Cambridge Information Network involving more than 270 corporate chief information officers found that 56 percent plan to install an Internet-enabled real-time link from their enterprise resource planning systems to their suppliers. The market for supply chain management hardware, software, and services is expected to increase by 50 percent in 1999 to $3.9 billion (Wreden, 1999). However, with all of the publicity about interconnectivity, it is easy to lose sight of the essentials of data collection and information management. First and foremost, SMEs must decide which data will be collected and how they will be used. The data management system should then be selected using technologies compatible with other supply chain participants. Competitive advantage is not gained simply through faster communication of data but from the skilled use of the knowledge gained from useful and timely data.
Decision making can be improved through real-time knowledge of sales rates, inventory levels, and production rates throughout the supply chain. These data can be used to reduce oscillations in the system (more closely matching production and inventories to demand) and reduce supply chain misalignment (Figure 9-1). Misalignment occurs when product shipments plus channel fill (the amount of product in the distribution system) are not equal to customer demand. Integration of demand planning, order fulfillment, and capacity planning can enable reduced supply chain inventory levels, improve on-time delivery, and enable more rapid resource deployment to problem areas. By minimizing multiple tiers of report writing and other non-value-added activities, overhead costs and delay times can be greatly reduced.
Collaborative demand planning based on shared customer (order and point of sale) and operational (inventory and availability) data can provide real-time forecasts of demand for all of the partners. If everyone in the supply chain has an immediate and accurate view of demand, the response of the chain, as a whole, can be rapid and synchronized. Distorted or delayed demand forecasts can cause inventory imbalances, delays, and higher costs. Accurate predictions require that SMEs have accurate and systematic methods of generating and sharing demand and supply information.
Several problems with information technology can hinder integration and planning. Information from various functions may be handled by multiple (and sometimes incompatible) electronic systems. Most organizations continually upgrade and migrate their software making it difficult to unite applications in the integration process. Information and