370 Int. J. Business Information Systems, Vol. 1, No.

4, 2006

Information systems in supply chain management:

a comparative case study of three organisations

Girish H. Subramanian*
and Abdullah C. Iyigungor
School of Business, E355 Olmsted Building
Penn State Harrisburg, 777 W. Harrisburg Pike
Middletown, PA, 17057, USA
E-mail: ghs2@psu.edu
Fax: (717) 948–6456
*Corresponding author

Abstract: Supply Chain Management (SCM) is recognised as a core

competitive strategy for businesses in almost every industry. A strong supply
chain provides products and services to consumers faster, cheaper, and better.
The paper discusses SCM and information systems in the supply chain. Case
studies of Wal-Mart, Amazon.Com and United Parcel Services (UPS) and their
use of information systems in the supply chain are presented. Wal-Mart and
Amazon have established critical and timely strategies in their supply chains
through huge investments in Information Technology (IT). While Wal-Mart
and Amazon are offering their products to consumers, UPS offers logistics
solutions to clients. These companies use a variety of information technologies
which include satellite systems, barcodes, web-based Electronic Data
Interchange (EDI), Radio Frequency Identification (RFID), data warehousing,
and e-commerce in their supply chain. The supply chain and use of these
technologies in SCM are reviewed and compared for these three organisations.

Keywords: information technology; Supply Chain Management (SCM);

information systems applications; e-commerce; web-based electronic
data interchange.

Reference to this paper should be made as follows: Subramanian, G.H. and

Iyigungor, A.C. (2006) ‘Information systems in supply chain management:
a comparative case study of three organisations’, Int. J. Business Information
Systems, Vol. 1, No. 4, pp.370–386.

Biographical notes: Girish H. Subramanian is Associate Professor of

Information Systems at the School of Business Administration at Penn State
Harrisburg. His research interests are in software engineering, global software
development, and enterprise information systems. His research publications
have appeared in Communications of the ACM, Decision Sciences, Journal
of Management Information Systems, IEEE Transactions on Software
Engineering, Journal of Computer Information Systems and other journals.

Abdullah C. Iyigungor earned his Master of Science in Information Systems

from the School of Business, Penn State Harrisburg.

Copyright © 2006 Inderscience Enterprises Ltd.

 Information systems in supply chain management 371

1 Introduction

The term ‘Supply Chain Management (SCM)’ arose in the late 1980s and came into
widespread use in the 1990s. Prior to that time, businesses used terms such as ‘logistics’
and ‘operations management’ instead of SCM (Hugos, 2003). Lambert et al. (1998)
simply define supply chain as the alignment of firms that bring products or services to
market. According to Swaminathan and Tayur (2003), a supply chain “is a set of entities
involved in the design of new products and services, procuring raw materials,
transforming them into semi-finished and finished products, and delivering them to the
end customer”.
IT can provide the following functions to improve SCM (Russell and Taylor, III,
2003; Handfield and Nichols, 1999): centralised coordination of information flows,
integration of transportation, the ability to locate and track the movement of every item in
the supply chain, consolidation of purchasing from all suppliers, intercompany and
intracompany information access and information sharing, data interchange, data
acquisition at the point of origin and point of sale, instantaneous updating of inventory
levels in real time, and improvements in supplier-customer relationships.
In this paper, we use three case studies (Wal-Mart, Amazon.com and UPS) to see the
use of IT in SCM. Wal-Mart continuously seeks for a way to reduce its inventory by
improving the cycle times and increasing the flow of information within its supply chains
in order to further reduce its prices. On the other hand, Amazon strives to improve its
SCM so that it can pass along the related savings to its customers in the form of lower
prices. Supply chain technologies provide Amazon the ability to minimise human
intervention, communication with its supply chain members in real time, and proper
shipment of products to consumers on time. In the third case, UPS utilises its innovative
supply chain technologies to provide third-party logistics (3PL) solutions in the most
efficient way for its customer companies.
We review the SCM and use of IT in SCM. We present the research methodology
and our case study approach. Then, we discuss SCM and use of IT in SCM at
Wal-Mart, Amazon, and UPS. We analyse the cases and compare them. Finally, we
conclude the paper.

2 Review of Supply Chain Management (SCM) and use of IT in SCM

A supply chain encompasses all activities associated with the flow and transformation of
goods and services from the raw materials stage to the end user, as well as the associated
information flows. Fundamentally, it consists of all the assets, information, and processes
that provide ‘supply’ (Russell and Taylor, III, 2003). Ellram et al. (2004) define SCM as
the management of information, processes, goods and funds from the earliest supplier to
the ultimate customer, including disposal. Tracey et al. (2004) describe SCM as a
philosophy that views a business as an interrelated entity with many parts that seeks to
integrate all aspects of the chain’s resources to provide superior value to customers.
Bagchi and Larsen (2003) specify that by realising the synergy that exist among
functions such as transportation, procurement, inventory control, distribution, and
customer service, many companies have extended the concept further upstream and
downstream to include entities outside the company including vendors and their vendors
and customers and their customers. As stated in McLaughlin et al. (2003) companies are
372 G.H. Subramanian and A.C. Iyigungor

aggressively pursuing initiatives to better manage their supply chains. Hadley (2004)
clarifies that the goal of supply chain planning is to create plans that minimise total
supply chain costs while maintaining desired customer service levels. Yu et al. (2001)
state that uncertainties are caused by delayed deliveries, machine breakdowns, order
fluctuations, etc. and therefore, can propagate through the supply chain in the form of
amplification of ordering variability.
Giannakis and Croom (2004) expands SCM with a conceptual framework. Their
analysis clarifies that the supply chain field uses a summary of three strategic dimensions
relating to the physical structure of supply chains which they name ‘synthesis’
dimension, human interaction and relations within the supply chain which is ‘synergy’
dimension, and the coordination and control of operations processes across the supply
chain which is ‘synchronisation’ dimension.
Today, much of the current interest in SCM is focused on the capabilities of
information technology to link and coordinate the chain members in the entire supply
chain. Several technologies are used in the supply chain. Croson and Donohue (2003)
suggest that Point-of-Sale (POS) data leads to a reduction in the bullwhip effect when
suppliers have no prior knowledge of the demand distribution.
The basic relationship among supply chain members is the Business-to-Business
(B2B) type relationship. According to Gibson and Edwards (2004), the most significant
enabler of improved SCM is B2B e-commerce. They also state that e-businesses can offer
significant improvements by removing gaps in communication and maintaining a focused
view of the service received by the final customer. E-procurement is a part of B2B
commerce which is conducted on the internet. In e-procurement, buyers make purchases
directly from suppliers through their websites using software packages or through
e-marketplaces (Russell and Taylor, III, 2003). E-commerce provides firms with a new
platform of business network which is referred as e-marketplaces. This network is
composed of business networks that interact with each other via the internet. Russell and
Taylor III (2003) define e-marketplaces as websites where companies and suppliers
conduct B2B activities. Kandampully (2003) sees e-marketplaces as an organisational
information system that allows the participating buyers and sellers to exchange
information about prices and product offerings. Delfmann et al. (2002) state that
e-commerce for suppliers become visible through e-marketplaces, where a fraction of
their products are procured from their customers.
Angulo et al. (2004) studied the impacts of information delay and accuracy among
supply chain members. Enterprise Resource Planning (ERP) has the ability to interface
with all processes including the manufacturing of system requirements within the
firm (Nah, 2004). EDI is a computer-to-computer exchange of business documents
in a standard format that has been established by the American National Standards
Institute (ANSI) and the International Standards Organization (ISO) (Russell and
Taylor, III, 2003). The essence of EDI is the ability to transfer data among computers
from different companies.

3 Research methodology

Due to the fact that the area of supply chain management and use of information
technologies is applied in nature, a case study approach is employed to conduct the
research. An analysis of three case studies of companies which have significant
 Information systems in supply chain management 373

contributions to the use of information systems in supply chain is presented. The three
companies are Wal-Mart, Amazon.com, and UPS. Wal-Mart is a retailer, Amazon is an
e-retailer, and UPS is a logistics and transportation service provider.
Case study techniques, such as obtaining historical data, examining documentation,
and archival sources provide insight into the use of information systems by these
three organisations. A systematic method of scanning websites, annual reports,
publications, texts, and journal articles is used to obtain information about these three
organisations. The information is sorted into similar and different SCMs and the use of
information technologies in SCM. We suggest that integrated information systems using
telecommunications, data warehouses, e-commerce, and automated input devices are the
basis for the effective use of IT in supply chain management. Through these case studies,
we would like to study the use of these information technologies such as satellite
systems, barcodes, web-based EDI, RFID, data warehousing, and e-commerce in these
organisations and to arrive at a comparison of the use of these technologies.

4 Case study of Wal-Mart

4.1 Wal-Mart’s supply chain
Wal-Mart competes in an industry which has a low level of entry barriers. Getting
higher market shares in such industries is difficult. Wal-Mart gained its competitive
advantage through its ability to influence and access the supply and distribution channels.
Wal-Mart is also competing on speed. Competing on speed depends on flexibility. Fast
inventory replenishment is another way of competing on speed. Wal-Mart replenishes its
stock twice a week instead of the industry average of every two weeks (Russell and
Taylor, III, 2003).
Efficient supply chains are the optimum ways of reducing the amount of
the inventory. Through the utilisation of supply chain concepts and cutting-edge
IT adopted by Wal-Mart, the company became not only the world’s largest retailer
but also the world’s largest company. According to Fishman (2003), Wal-Mart no longer
has any rivals.
Providing everyday low prices to customers can only be managed by reducing
purchase costs for Wal-Mart. The company procures goods directly from manufacturers,
bypassing all intermediaries.1 Wal-Mart expects from its suppliers to operate at optimum
efficiency with ability to move and track merchandise (Fishman, 2003).
As the materials arrive, distribution centres may warehouse inventory for future
shipment or it may be used for cross-docking (Hugos, 2003). Wal-Mart’s strategy
is expanding around distribution centres. Wal-Mart first builds a new distribution centre.
It supports the opening of more new stores in the area at a very low additional cost
(Hugos, 2003).
Cross-docking is a unique feature of Wal-Mart’s supply chain design. In this system,
products are delivered in the form of truckload shipments to Wal-Mart’s distribution
centres on a continual basis, where they are unloaded, sorted, repacked, and distributed to
stores with smaller lots combined with smaller lots of other products (Russell and
Taylor, III, 2003). Cross-docking also is a demanding technique where coordination
among inbound and outbound logistics is essential (Hugos, 2003).
374 G.H. Subramanian and A.C. Iyigungor

4.2 Information systems at Wal-Mart

Wal-Mart’s IT strategies are critical success factors of the company’s success. IT usage
facilitated Wal-Mart to obtain optimum utilisation of supply chain logistics, operational
cost efficiencies and customer satisfaction. In order to make its supply chain strategies
work, Wal-Mart has invested heavily in an integrated Information System (IS) that
provides continuous collaboration and real-time information between all of its suppliers,
distribution centres, and every store through its satellite communication system.
Wal-Mart was one of the first organisations that utilised barcode technology to
automate its inventory management. After that, the business spent huge investments on a
private satellite system to keep track of sales data, deliveries, and transmit audio and
video signals in a cost effective way. This satellite network is considered the largest
private communication system in the USA. The implementation of this satellite network
system allowed information to be shared between the company’s wide network of stores,
distribution centres, and suppliers. Information systems at Wal-Mart stores identified
product which was low in stock and sent a signal to its suppliers. The system then sent a
re-supply order to the nearest supplier factory through a satellite communication system.
Suppliers then delivered the product either to the Wal-Mart distribution centre or directly
to the concerned stores.1
Wal-Mart probably implemented its satellite network right with their innovative
use of a star VSAT network sourced from their headquarters in Bentonville,
Arkansas. Wal-Mart pushed its supply chain members to incorporate VSATs into their
telecommunications and business management strategies (Elbert, n.d.).
A development of a partnership between Procter and Gamble (P&G) and Wal-Mart
led to sharing of data across their supply chains. The partnership started with a single
desire to improve supply chain efficiencies by sharing information and knowledge
about their respective markets (Grean and Shaw, n.d.). Before the partnership, Wal-Mart
used to hold large inventories of P&G products in its warehouses before shipping them to
stores. Wal-Mart realised that keeping these products took up so much space and they
had a very low profit margin. For instance, the company was losing about 20 cents a
diaper just handling the inventory. Working together, Wal-mart and P&G realised that it
was less costly and more profitable to have diapers shipped directly from the suppliers to
the store more frequently even though labour and transportation costs would be higher
(Russell and Taylor, III, 2003).
A ‘data highway’ was developed by linking P&G data to Wal-Mart data. The data
link helped to reduce costs and increase information-sharing efficiency. This ‘data
highway’ allowed P&G to change the replenishment process by linking Wal-Mart’s
inventory data at the P&G distribution centre (Grean and Shaw, n.d.).
Through state-of-the-art information systems, Wal-Mart started to share POS data
from its many retail outlets directly with P&G, and other major suppliers. This
willingness to share data provided Wal-Mart a great competitive advantage by freeing it
from management of the supplier’s products. Wal-Mart’s suppliers became responsible
for the sales and inventory replenishment processes (Handfield and Nichols, 1999).
The order management and store replenishment of goods were entirely executed
with the help of computers through the Point-of-Sales (POS) system. Employees in the
Wal-Mart stores use a hand-held device which was linked to store terminals through a
radio frequency network. Employees, by using these handheld devices, kept track of the
inventory in the store.
 Information systems in supply chain management 375

Barcoding devices enable efficient picking, receiving and proper inventory control of
the appropriate goods, easy order packing and physical counting of the inventories. The
handheld devices guide an employee with regard to the location of a particular product
from a particular bin or shelf in the centre. The hand-held device also enables the
packaging department to get reliable information about the products to be packed. It
displays all information about the storage, packaging and shipping of a particular product
therefore saving time on unnecessary paperwork.1
Gilligan (2004) claims that RFID will probably supplant barcodes for much of the
work of gathering logistics information. Wal-Mart is going to replace barcodes with
RFID tags for major suppliers. Wal-Mart considers this technology as a key to reducing
inventory and distribution expenses further. According to Woollacott (2004), Wal-Mart
has been working on RFID since the 1990s. Wal-Mart has been trying to collaborate with
its suppliers through RFID by making the technology easier for suppliers to adopt.
Sullivan (2004) states that collaboration is critical for speed, efficiency, and innovation.
Additional supply chain visibility through RFID will help reduce out-of-stock items and
to lower inventory levels. RFID can provide better solutions to align product distribution
with actual shelf-specific demand, reduce safety stock inventory, inventory obsolescence,
material handling costs, and stock-outs (Kinsella, 2003).
According to Foote and Krishnamurthi (2001), Wal-Mart’s initial database systems
were capable of reporting only averages and summaries of their operations before it
realised that relying on averages does not always represent specific store, time and
market information.
Today, NCR’s Teradata software, a data handling system, which is a core component
used in Wal-Mart’s data warehouse is believed to be one of the biggest data warehouse
systems in the retailing industry. This system provides substantial parallel computing and
data storage infrastructure (Foote and Krishnamurthi, 2001).
Wal-Mart initially started with a 700 GB of data to manage its point-of-sale.
However, that 700 GB of data is ridiculously low compared to the 460 terabytes of
data that is used today for storing data from buyers and 10 000 suppliers in terms of
inventory, forecasts, markdowns, demographics, returns, and market baskets. This
tremendous amount of data stored on the company mainframes allows Wal-Mart to study
shopping patterns of consumers that includes a diverse collection of goods (Foote and
Krishnamurthi, 2001). This data warehousing is also the foundation of ‘Retail Link’
extranet system that Wal-Mart’s suppliers use to study inventory and sales information.
Wal-Mart’s strategy to share data with its vendor partners has been implemented
through a tool named ‘Retail Link’. This tool links all Wal-Mart’s important data with
vendor partners and carriers. It integrates the company’s EDI networks with an extranet
that is built and operated by Wal-Mart. This system lets buyers and over 10 000 suppliers
to utilise data on sales and inventory levels in every store (Janoff, 2000).
The use of extranet, as in Retail Link, can substantially decrease EDI costs and it
better allows for data synchronisation and collaboration. However, companies are looking
to move some or all of their EDI transactions to the internet. Bednarz (2004a) states that,
Wal-Mart requires the use of internet EDI software that adheres to Applicability
Statement 2 (AS2).
376 G.H. Subramanian and A.C. Iyigungor

Wal-Mart is expanding via its website, Walmart.com. The site is in the top ten
dotcom retailers in terms of number of visitors. Wal-Mart’s e-commerce site was
launched in 1996 and has a password-protected service from Verified by Visa
(Sullivan, 2004).

5 Case study of Amazon.com

5.1 Amazon.com’s supply chain
From its launch in July 1995, Amazon has been a customer-centric company. According
to a study in the journal Logistic Today (Anonymous, 2004b), logistics, shipping and
overall supply chain management have combined to make Amazon a leading online
retailer of almost every consumer product. Amazon’s supply chain efficiency is based on
its operations philosophy, where it utilises Six Sigma approach to its distribution
operations, and applies just-in-time manufacturing and total quality management
methodologies to its processes (Anonymous, 2004a).
Amazon was one of the early entrants of e-commerce and is also one of the surviving
dotcoms. From 1996 to 2000, hundreds of dotcom firms were founded. Unfortunately,
most of them ended up with failure. One important reason Amazon survived was its
intensive effort to fix the company’s sloppy supply chain.
Taylor (n.d.) reveals that Amazon’s problem had been so bad that 12% of incoming
inventory was routed to the wrong stage location, resulting in increased costs and wasted
time. In 2002, after installing better inventory control management systems, the company
had that figure down to 4%. Amazon also started to combine shipments to gain
economies of scale by sending shipments out in full truckloads. As a consequence of this
improved supply chain, Amazon had 18% reduction in inventory, 17% reduction in
fulfilment expenses, and a saving of $22 million.
Competition is very strong in e-retailing industry, and survival depends on both
offering lower prices and fast shipping. Distribution centres should be utilised in order
to complete orders as quick as possible and ship these orders on the same day.
According to Maloney (2000), significant part of Amazon’s success depends on choice
of materials handling systems in its distribution centres, particularly conveyors and
sorters that can handle the mix of products and quantities at a speed that is efficient for
the e-commerce.
A typical distribution centre has ten miles of conveyor belts and ships most in-stock
items within 24 hours of the order click. Each of these distribution centres has roughly
700 000 square feet of warehouse space to provide packing, shipping, and dispatching
thousands of items every hour. Amazon’s distribution strategy in the USA is to locate its
distribution centres equidistant from major population centres. On the other hand, its
international distribution centres are located close to its suppliers. Amazon’s staff is
assigned to group the products as they arrive from hundreds of Amazon’s suppliers. The
distribution centres are highly automated, using barcodes and scanners to track and sort
inventory that moves through the facilities.
 Information systems in supply chain management 377

5.2 Information systems at Amazon.com

Amazon has one of the most sophisticated SCM in the world. Amazon has worked to
minimise the human intervention in its supply chain. Amazon’s supply chain applications
communicate with each other in real-time (Bacheldor, 2004).
Amazon’s supply chain systems are tightly integrated so that when a customer makes
an online order, the order management system communicates with inventory
management systems to find the optimal distribution centre, locate the product in stock
and fulfil the order. Also, customers can learn instantly an estimated delivery time
through the order and inventory management systems.
Amazon primarily uses its own proprietary technologies, as well as technology
licensed from third parties. Amazon has implemented numerous features and
functionality that simplify the supply chain and improves the online shopping experience.
These numerous features also enable third parties to sell on Amazon’s platform, and to
utilise Amazon’s fulfilment and customer service operations (Amazon.com, Inc., 2004).
Amazon uses a set of applications for accepting and validating customer orders,
placing and tracking orders with suppliers, managing and assigning inventory to
customer orders, and ensuring proper shipment of products to consumers. Amazon’s
transaction-processing systems handle millions of items, a number of different status
inquiries, multiple shipping addresses, gift-wrapping requests, and multiple shipment
methods. These systems allow the customer to choose whether to receive single or
several shipments based on availability and to track the progress of each order. These
applications also manage the process of accepting, authorising, and charging customer
credit cards (Amazon.com, Inc., 2004).
Amazon fully utilises barcode technology. In its highly automated distribution
centres, Amazon uses barcodes and scanners to track and sort inventory that moves
through facilities (Wheatley, 2000). In order to provide order tracking for its customers,
barcodes are used on customer shipments. RFID technology is not used at Amazon yet.
However, Bacheldor (2004) notes that, certain Amazon applications can use RFID
technology. He also notes that, RFID is not a priority since the company does not have
poor inventory accuracy, high shrink rate, and any real-time information problem.
From the time a customer clicks on Amazon’s website until the product is shipped,
Amazon’s data warehouse is the key to provide the highest level of customer satisfaction.
In 1999, the company realised it was quickly outgrowing its existing data warehouse,
which was not well suited to the volume and frequency of Amazon’s data updates.
Amazon sought a more flexible and reliable data warehouse solution that could support
an annual growth rate of 100% or more, plus protect its investment in data and
infrastructure.2–5
Having adopted Linux in 2001, Amazon first migrated its web servers to the
operating system, and then moved the servers running its custom-built applications for
handling systems such as order fulfilment and customer management. This Linux-based
system provided the company a data warehouse about 14 terrabytes in size with a data
speed of several gigabytes per second.6
Amazon.com is trying to hit all three corners of the ‘fast, reliable, cheap’ technology
triangle by using Oracle’s Real Application Clusters on Hewlett-Packard ProLiant servers
and HP Modular Smart Array storage systems.6 The Oracle data warehouse is Amazon’s
most important source for business IT systems such as supply-chain optimisation, and
378 G.H. Subramanian and A.C. Iyigungor

website personalisation. Consumers benefit from the data warehouse through the
Amazon.com shopping experience, with features such as product recommendations and
personalised storefronts. About 800 Amazon.com employees from every department in
the company tap into the Oracle data warehouse. Employees submit over 4000 queries
daily, and growth rates are substantial.4–5
Amazon’s database system is updated six times per day. Also, the flexibility of the
Oracle database has made Amazon’s business growth and changes much less painful than
before. Oracle database’s ability to support rapid growth, change and handle increasingly
complex query requirements is helpful for Amazon.4–5
Amazon’s SCM strategy seeks to optimise cycle times and costs. In order to do this
Amazon chose to outsource its supply chain logistics software to Manugistics Group Inc.
Amazon.com uses two products from the Manugistics NetWorks e-business suite:
NetWorks Strategy and NetWorks Transport. The former system was used to plan the
flow of goods through Amazon’s transportation and facility network in the USA and
Europe. This e-business suite is used to design an optimal global network by identifying
desirable locations worldwide for new distribution centres. The software is also used to
determine what quantity of each item should be kept on hand.2–5
Wheatley (2000) states that the Manugistics’ NetWorks provides Amazon the ability
to set optimal inventory levels and decide appropriate product mix and storage capacity
across the network. The solution will even suggest season pre-builds and optimal lane
volumes to maximise customer service during the holiday season and other peak periods.
By providing greater inventory visibility, NetWorks additionally will enable Amazon to
consolidate individual shipments across all shipping operations.
Database and e-business software vendor Excelon Corp. was selected to rebuild
Amazon’s B2B supply chain. Amazon utilises a private exchange that links the company
to its suppliers for toys, CDs, electronics, and all other products other than books.
Excelon’s B2B Integration Server links up supplier’s systems and a B2B Portal Server to
build a product catalogue for use with wireless devices. The system will let Amazon.com
and its suppliers communicate in real-time on orders and shipments. In addition,
Amazon’s largest suppliers will be able to manage their own inventories via connections
to Amazon’s back-office applications.4–5
Amazon opened its virtual doors in 1995 with a mission to use internet and transform
book buying into the fastest, easiest, and most enjoyable shopping experience possible.
Amazon is one of the largest online retailers, offering almost every product in
many categories.
Amazon’s website is the essential supply chain link between consumers and the
company. According to Post and Anderson (2003), Amazon uses the Secure Netscape
Commerce Server to handle online sales. Customers can conveniently enter their credit
card information online using any computer network that supports the Secure Sockets
Layer specification. Amazon’s inventory system is run on separate computers and is not
directly connected to its website. Consumers can easily access a range of information
including special discounts, online tracking, product availability, estimated delivery
time, setup help, troubleshooting, recommendations, warranty and rebate information,
comparisons to other products, chat areas, etc.
Amazon also creates websites and shares its e-commerce technology in exchange for
percentage of sales. Amazon offers this web services for consumers and other businesses
in the form of online auctions and third party vendors. Amazon has several types of
partners that need access to its systems for various reasons. Greenfield (2004) classifies
 Information systems in supply chain management 379

these types of partners as: large partners that need efficiency, outside developers that
want to create new solutions and applications, third party vendors that want to list their
products, and website operators that want to merchandise Amazon products through
separate marketing programmes. Therefore, Amazon provides web services to these
parties through a set of Application Program Interfaces (APIs). Web services also support
a wide range of XML-based protocols for data transfer, and Simple Object Access
Protocol to access the site’s functionality.

6 Case study of UPS

6.1 UPS’s supply chain solutions
UPS SCM solution creates efficiencies and adds value to businesses. The diverse services
offered by the supply chain management solutions serve different value chain activities
ranging from pre-manufacturing to post-sales support. These supply chain management
services include logistics and distribution, transportation and freight (air, ocean, rail, and
road), customs brokerage, and international management. UPS Supply Chain Solutions
(UPS-SCS) deliver on-time delivery, distribution, inventory management, and in-facility
and in-transit visibility. Their proven experience and expertise covers a broad range of
products and services within the high-tech industry, including aerospace, computers and
peripheral devices, electronics, semiconductors, and telecommunications.
UPS has thousands of customers who lack distribution networks overseas. These
customer companies simply rely on the strength of UPS network to transport their goods.
UPS provides solutions to these companies to manage their inventory in warehouses near
their foreign customers and helps to manage their network of suppliers. In other words,
customers of UPS gain instant supply chain and global presence (Eskew, 2004).
UPS-SCS has resources to manage global and domestic supply chains, including
transportation management, logistics and distribution, custom brokerage and international
trade services. UPS has helped many companies streamline their supply chains by
creating customised IT solutions. Many multinational companies turn to UPS to get
this valuable service. Customers from specific industries such as automotive,
consumer goods, healthcare, high-tech and retail, can synchronise their supply chains
with UPS-SCS.
UPS can facilitate their customers’ business processes from site analysis and
selection, to supply chain modelling and network optimisation, and to parts planning
through their design and planning services.7 Distribution is the most essential part of
supply chains. UPS’s network of worldwide distribution facilities and transportation
services, enable same-day order fulfilment (pick, pack, and kitting), reverse logistics and
returns management, and services parts logistics.8 UPS combines a shared IT platform
with a network of multi-client distribution centres across the USA. The advantages of this
network are: minimising the capital investment of customers, positioning products closer
to customer’s customers, leveraging the multi-carrier capabilities, accessing advanced IT
systems to manage inventory and shipments.8
Managing suppliers is always an issue that needs to be focused on while
designing and creating supply chains. UPS customers obtain information earlier in the
fulfilment process which helps them to gain more control and to reduce their costs. The
380 G.H. Subramanian and A.C. Iyigungor

state-of-the-art operating system and IT that UPS has been utilising are critical for their
customers to monitor data and events. Customers of UPS-SCS can access data whenever
they need it and the information is available to them 24/7.9

6.2 Information systems at UPS

IT systems allow companies like UPS to offer fourth party logistics (4PL) services. These
IT systems link suppliers in China and clients in Bangalore with customers in Zimbabwe.
These IT systems must compensate for conflicting time zones, languages, cultures, and
business processes. UPS offers an unmatched array of solutions, including supply chain
management, Enterprise Resource Planning (ERP) through ERP solution providers,
systems integration, and the use of web-based services. UPS has a substantial impact on
shaping the way businesses operate with its strong technology infrastructure. UPS
pioneered many technologies and won numerous awards for its website and information
technology infrastructure.
The backbone of all of UPS’s information-based services consists of two data
facilities placed in Georgia and New Jersey. They house the largest DB2 database in the
world. The database has more than 7000 GB of tracking data containing all UPS
packages shipped in an 18-month period (Post and Anderson, 2003). The data consists of
information regarding senders, receivers, billing, bar codes, time sent, destinations, and
other related information for more than four billion packages. Inputs of data are collected
through handhelds. Data transfer is made via a network of dedicated cables, switching
nodes and a UPS satellite.
Database systems connect with third parties to speed up international trade and
customs brokerage, and to streamline import and export documentation processing.
The multilingual website was developed by a global software team. UPS website
provides real-time information to its customers in more than 22 different languages
through more than hundred country-specific websites. The customers can use information
to get immediate proof of delivery, substantially shorten their supply chain, and collect
payment faster.
‘Flex Global View’ is the UPS-SCS’ event management and visibility tool. It
allows clients to focus on vital shipment details within the supply chain. Therefore,
it helps its clients to make critical decisions about their inventory management and
supply chains.10
‘Online Service Parts Logistics’ provides UPS-SCS clients with direct, interactive
access to the same information, which is available to dispatchers, customer service
representatives and managers via the use of internet. Clients are able to review
shipment status, make inventory inquiries, and write orders.11 An ensured e-mail
service allows UPS-SCS customers to securely communicate by sending and receiving
encrypted e-mails.
UPS-SCS IT systems track and forecast the movement of goods so customers can
monitor every step of the movement of goods. UPS offers several convenient ways to
track packages; UPS Signature Tracking, Track by E-mail, Track by Reference Number,
and Quantum View. Also ‘SonicAir’ customers can track packages from SonicAir’s
website on the same day.15 Quantum View service provided by UPS helps businesses
send and receive critical package updates from UPS, manages up-to-date shipping status
without installing any special IT hardware, and gets information about customers’ and
 Information systems in supply chain management 381

suppliers’ shipments by providing critical updates. Enhanced version of Quantum View is

a web-based management tool that helps international clients to manage customs
clearance process for package shipments.
UPS defines its e-commerce solutions to businesses in several categories such as
UPS Online Tools, Shipping Solutions, Expense Management, UPS Returns Services,
e-Commerce Service and Product Providers. UPS Online Tools provide a variety of
options to customise e-commerce and enterprise solutions. The UPS Online Tools are a
set of APIs that reside at UPS and are used via your existing internet connection. UPS
states that applying online tools improves customer service, adds website functionality,
reduces costs, and empowers buyers.12 Businesses can get benefits from offering flexible
shipping options and customised tracking numbers.
UPS Shipping Solutions gives businesses access to technically advanced shipping
systems from UPS, and other third-party UPS online compatible vendors.12 UPS Expense
Management helps businesses gain control and visibility into all of their company’s
shipping activities. UPS Return Services allows the returns process to be completed
online by the consumer, including the delivery of a UPS return label via a browser. UPS
Service and Product providers help to integrate UPS technology into customers’ systems.
UPS offers Provider Programme training to use as a starting point in search for
integration resources. UPS Product Providers have three main functions:12 namely:
providing Customer Relationship Management, ERP/Accounting, Supply Chain
Integration, Retail Enterprise or Procurement; providing customisable e-commerce
solutions that will help businesses build or enhance their websites; and providing
enterprise solutions such as SAP, ORACLE, and SPS Commerce that can help to
streamline client’s business processes with UPS technology that provides easy access to
UPS information.
‘UPS Logistics Technologies’ (UPS-LT) is another business unit of UPS directly
related with UPS-SCS. These solutions save significant amount of time and increase the
accuracy of service and delivery through a fully integrated software, which uniquely
provides seamless transfer of information.13 UPS-LT is offering several IT products:
Roadnet Transportation Suite, Roadnet, Roadnet ee, Roadnet Info Center, Territory
Planner, MobileCast, and FleetLoader.
‘Roadnet Transportation Suite’ includes a group of strategic and tactical
transportation optimisation tools. It is used to optimise and balance delivery profitability
and customer service through territory and route efficiencies. Roadnet, Roadnet ee, and
Roadnet info Center are all other supporting tools. Roadnet is a tactical daily routing tool.
Roadnet ee, on the other hand, provides companies to use Roadnet remotely by sharing a
central database. Finally, ‘Roadnet Info Center’ exposes real-time execution of data to the
entire organisation using an intranet.14
‘Territory Planner’ is a planning tool which examines historical transportation
information to balance both territories and routes. This tool reduces time and increases
company resource efficiency by allowing clients to design routes. ‘MobileCast’ enables
its users to access real-time route visibility and execution. It enables delivery tracking and
proof of delivery.13 UPS-LT’s final product offering, which is named ‘FleetLoader’ is a
tactical loading tool for the beverage industry that analyses and optimises beverage SKUs
for loading.13
According to Bednarz (2004b), UPS has started testing RFID applications in specific
supply chains. However, UPS is encountering some issues with the use of RFID
382 G.H. Subramanian and A.C. Iyigungor

technology such as package sequencing and data overflow. UPS is putting RFID tags to
its trucks to monitor the arrival and departure of its trucks to eliminate the need for
drivers to sign in and out. Moreover, RFID labels replace barcoding in select distribution
centres (Bednarz, 2004b).

7 Analysis of cases

Wal-Mart and Amazon have established critical and timely strategies in their supply
chains through huge investments in IT. While Wal-Mart and Amazon are offering
their products to consumers, UPS-SCS offers logistics solutions for both B2B and
B2C transactions. Table 1 provides a comparison of the SCM strategies used by these
three organisations.

Table 1 Comparison of Supply chain management strategies

Supply chain
criteria Wal-Mart Amazon UPS
Distribution Critical; expands Large distribution centres Multi-client distribution centres and a
centres around these centres that are highly automated. sophisticated IT system to deliver
Centres equidistant among SCM solutions to customers.
major population centres Customers can use UPS’s distribution
network and get instant presence in
domestic and global markets.
Inventory Fast; competes on Critical; major investment in Optimal inventory management for
management speed IT for optimally managing clients focusing mostly on
inventory; communicating transportation and in-process
information to suppliers inventory
for JIT.
Management Suppliers have to Due to being a e-retailer, Service provider to suppliers and
of suppliers be very efficient Amazon provides quick e-retailers like Amazon
and optimal; high information to suppliers and
pressure on suppliers e-merchants to fulfil orders.
to conform Amazon also can ship from
its warehouses.
SCM service No Helps other e-merchants Yes; major SCM service provider.
provider have a presence on Provides IT, distribution and logistics
amazon.com systems and services for clients.

Wal-Mart shares real-time information from its many retail stores directly with its
major suppliers through state-of-the-art supply chain technologies. Wal-Mart’s ability to
manage its inventory and reduce transportation costs is the reason why the company is
successful in the retail industry. Wal-Mart competes on speed and price. It has pioneered
some supply chain applications such as ‘cross docking’, and barcode scanning and
point-of-sale applications. Wal-Mart utilises its own private satellite network, the world’s
largest retailer database system, barcode scanning technology, RFID, web-based EDI,
and e-commerce to make its supply chain efficient.
Amazon also competes on speed and price. Cost reduction is the primary reason for
Amazon to initiate supply chain improvements. Amazon’s supply chain efficiency is
based on its operations philosophy, which are JIT and TQM. Competition is fierce in the
 Information systems in supply chain management 383

e-retailing industry thus Amazon is utilising one of the largest data warehouses, a supply
chain technology from Manugistic Group Inc., and a B2B integration software from
Excelon. Amazon’s website is its critical link with its customers.
UPS provides solutions to companies so they can better manage their supply chains.
UPS has the largest DB2 database in the world. UPS also has its own satellite to increase
data transfer speeds and provide package visibility. UPS also provides package tracking,
expense management, reverse logistics, and several transportation tools through its
website. It also utilises RFID technology in some of its distribution centres.

Table 2 Utilisation of information technologies in SCM

IT use Wal-Mart Amazon.com UPS-SCS
Satellite Helps in establishing N/A Transmission of 30 gigabytes of
systems collaboration among numeric information per day
chain members, over an optic cable network
monitoring stores, supported by UPS satellite
monitoring sales, full
duplex voice and
video communication,
data transfer
Data Allows to study Provides high level of customer Keeps track of the data which
warehouse shopping patterns satisfaction, supply chain consists of information regarding
of consumers, optimisation, web personalisation, senders, receivers, billing,
foundation of and flexibility barcodes, time sent, destinations,
‘Retail Link’ and other related information for
more than four billion packages.
Barcode Shares data across Tracks and sorts inventory in Sorts parcels, loads packages,
technology supply chains, distribution centres, and provides information capability
inventory provides the tracking of shipped to customers
management, JIT, products for customers
cross docking,
increases inventory
turnover rate, keeps
track of inventory
RFID Provides Wal-Mart N/A Monitors the arrival and
buyers additional departure of its trucks to
visibility, reduce safety eliminate the need for drivers to
stock inventory, sign in and out, replaces
inventory barcoding in select distribution
obsolescence, material centres, increases accuracy,
handling costs, and speed, and efficiency of sorting
stock-outs and routing parcels
Web-based Provides its suppliers Supplies sales data to almost 10 Helps its clients to make critical
EDI to utilise sales data, 000 suppliers, allows third parties decisions about their inventory
‘Retail Link’, Vendor to manage their own product management and supply chains,
managed inventory catalogues and communication in real-time route visibility and
real-time execution
E-commerce Increases customer Provides information on special Provides immediate proof of
reach, market share, discounts, online tracking, product delivery, order tracking, provides
and product availability, estimated delivery real-time information based on
categories time, setup help, troubleshooting, customers’ supply chains, and
recommendations, warranty and allows customers access to
rebate information, comparisons company’s internal IT system
to other products, and chat areas
384 G.H. Subramanian and A.C. Iyigungor

8 Conclusion

Fierce competition, globalisation, and advances in technology have forced companies

to automate their SCM and innovate using IT in order to increase efficiency and
effectiveness in designing, making, and delivering the product and satisfying customers.
The use of IT in supply chain is to increase the ability of information sharing among
members through IT integration provided by web-based EDI, data warehousing, private
communication networks, e-commerce, barcode and RFID, warehouse management
systems, and enterprise-wide systems. One of the key advantages of IT integration is the
speed and efficiency of exchanging data with supply chain members.
Using the case study approach, we present the SCM in Wal-Mart, Amazon, and UPS.
We also compare their SCM. Then, we review the use of selected information
technologies in SCM. We also compare the use of these information technologies in
SCM. It is clear that all these organisations are quite successful in their management
of SCM and the use of information technologies. It is also interesting to see differences
in their supply chain strategies and the use of IT. While Wal-Mart puts a lot of pressure
on its suppliers, UPS provides logistics and SCM services to suppliers. Again, while
Wal-Mart is actively implementing RFID technology, Amazon is more active in
implementing e-commerce technology.
A limitation of our study is that we did not conduct interviews or survey employees
of these organisations. As a lot of information about these organisations is publicly
available, we did not see the need to conduct interviews or administer questionnaires.
Moreover, we need to narrow down and identify specific issues or IT for such a study.
Future research can look at such specific technology or issue for a field study in the use
of IT in SCM.

Acknowledgement

The authors thank the reviewers for their valuable comments.

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Notes
1 Managing the Supply Chain (n.d.) Retrieved 21 March 2005, from Center for Management
Research Website: http://icmr.icfai.org/casestudies/Managing%20supply%20chain.html.
2 Amazon.com Company Overview (n.d.) Retrieved 28 March 2005, from Value Line
Investment Survey Website: http://www.valueline.com.
3 Amazon.com, Inc. Company Overview (n.d.) Retrieved 28 March 2005, from
http://www.hoovers.com.
4 Amazon.com’s Rapidly Growing 10TB Data Warehouse Pays for Itself in Six Months
(n.d.) Retrieved 29 March 2005, http://www.oracle.com/pls/cis/Profiles.print_html?p_profile
_id=3165.
5 Amazon’s IT Agenda (n.d.) Retrieved 30 March 2005, from Information Week Website:
http://www.informationweek.com/811/pramazon.htm.
6 Linux Infrastructure (n.d.) Retrieved 28 March 2005, from the Computer Weekly Website:
http://www.computerweekly.com/Article127751.htm.
7 Design and Planning (n.d.) Retrieved 7 March 2005, from UPS Supply Chain Solutions
Website: http://www.ups-scs.com/logistics/designconsulting.html.
8 Distribution (n.d.) Retrieved 7 March 2005, from UPS Supply Chain Solutions Website:
http://www.ups-scs.com/logistics/distribution.html.
9 Supplier management (n.d.) Retrieved 7 March 2005, from UPS Supply Chain Solutions
Website: http://www.ups-scs.com/logistics/supplier.html.
10 Flex Global View (n.d.) Retrieved 8 March 2005, from UPS Supply Chain Solutions Website:
http://www.ups-scs.com/tools/fgv/index.html.
11 Online! Service Parts (n.d.) Retrieved 7 March 2005, from UPS Supply Chain Solutions
Website: https://online.spl.ups-scs.com/splus3site/index.html.
12 UPS E-Commerce Solutions (n.d.) Retrieved 11 March 2005, from UPS E-Commerce
Website: http://www.ec.ups.com/ecommerce/solutions/c1.html.
13 UPS Logistics Technologies (n.d.) Retrieved 14 March 2005, from UPS Logistics
Technologies Website: http://www.upslogisticstech.com/.
14 Roadnet Transportation Suite (n.d.) Retrieved 14 March 2005, from UPS Logistics
Technologies Website: http://www.upslogisticstech.com/pages/products/rts/.
15 UPS Sonic Air Same Day Service (n.d.) Retrieved 6 March 2005, from UPS Supply Chain
Solutions Website: http://www.sonicair.ups.com/ups/.