Information Systems and Supply Chain

Management

Supply chain management and information systems have

become important tools for achieving a sustainable
competitive advantage. Developing more efficient methods
of distributing merchandise creates an opportunity to reduce
costs and prices and ensure that the right merchandise is
available when and where customers want it.

The systems used to control the flow of information to

buyers and then on to vendors have become quite
sophisticated. Retailers have developed data warehouses
that provide them with intimate knowledge of who their
customers are and what they like to buy. The data
warehouses are being used to strengthen the relationships
with their customers and improve the productivity of their
marketing and inventory management efforts.

Most large retailers own and operate their own distribution

centers. Some of the activities performed by the center are
managing inbound and outbound transportation, receiving
and checking merchandise shipments, storing and cross-
docking, and getting merchandise floor-ready.

In designing their supply chain management systems,

retailers make decisions about what activities to outsource,
when to use a push and pull system for replenishing stores,
what merchandise to cross-dock, and whether to ship
merchandise to stores through a distribution center, use
direct store delivery, or have products drop shipped to
customers.
Retailers and vendors are collaborating to improve supply
chain efficiency. Electronic data interchange enables retailers
to communicate electronically with their vendors. The
Internet has accelerated the adoption of EDI. Other, more
involving and effective collaborative approaches include
information sharing, VMI, and CPFR. These approaches
represent the nexus of information systems and logistics
management. They reduce lead time, increase product
availability, lower inventory investments, and reduce overall
logistics expenses.

Finally, RFID has the potential of further streamlining the

supply chain. The small RFID devices are affixed to pallets,
cartons, and individual items and can be used to track
merchandise through the supply chain and store
information, such as when an item was shipped to a
distribution center. Although still relatively expensive to be
placed on all items, RFID technology can reduce labor, theft,
and inventory costs.