Everyone admits that operative supply-chainmanagement can supply a major source of competitive advantage. The aim of a supply chain manager must therefore be to link the end client, the channels of distribution, the production processes and the procurement activity in such a way that clients′ service expectations are surpassed and yet at a lower total cost than the competition. One of the enabling elements for the achievement of this point is the efficient use of information technology.
Logistics information technology takes an important place in firm success. Specifically, supply chain research shows that form success is hardly dependent on efficient information sharing (Knill, 2008). For example, one study found that 87% of companies trusted logistics information technology (LIT) (as a tool for information exchange) plays a virtual role in a company’s supply chain management strategy (Dranove and Hogan, 2008). Given that supply chain management strategies and operations span suppliers and clients, information technology must conjoin the supply chain. One acknowledged LIT benefit is improved interaction between supply chain partners, thereby improving supply chain effectiveness (Bowersox and Closs, 2001). Investigation of LIT roles and advantages related of supply chain dynamics is necessary to define the appropriate trade-offbetween LIT applications and supply chain performance. LIT influences the relationship with downstream firms as well. Bensau and Earl, for example, states that without high technology, a company may lose clients (Bensaou and Earl, 2003). However, this opinion is no longer satisfactory justification for senior management given the substantial level of prior investment. While the dormant benefits are apparent, these have always been realized. Therefore, there are increasing calls for more empirical justification ofLIT-specificinvestment (Torkzadeh and Doll, 2002). Examining information technology in more detail, such as dividing information technology into its critical dimensions, may be a method to define further justification.
Several recent studies have indicated internal and external supply chain elements as critical to achieving performance connected competitive advantage (Liedtka, 2006; Stank, Daugherty and Ellinger, 2009). Other researchers have analyzed the impact internal/external integration has on technology/information exchange (Daugherty, 2004). These authors pointed that enhanced profitability and high competitiveness can be succeeded when integration is facilitated by information exchange. A synthesis of prior literature supports the segmentation of LIT into internal and external dimensions or constructs. However, previous research has granted limited evidence regarding the breadth and validity of these dimensions (Keller, Savitskie, Stank, Lynch and Ellinger, 2002). Keller et al. summarized a number of logistics related information technology scales. They suggested limited insight as they are: focused on individual technologies, very multifunctional focused such as with warehousing or transportation used only the general “information technology” notion. Previous research has proved limited evidence regarding the validity of these dimensions. Examining LIT as two separate elements, internal and external provides a unique method for estimating the relationship between LIT and client integration and client service performance. Items (i.e., survey questions) were assigned to internal or external LIT based on whether the technology supported applications within the firm or information exchange across companies. The next sections describe elements of the internal and external logistics information technology.
Inner Logistics information technology covers technologies that relieve information exchange, communication between departments, and functional and effective process. Inner information technology involves a company’s databanks and transaction applications which are often defined by the extent of integration, data accuracy, timeliness, and quality.
An enterprises resource planning (ERP) system is an instance of an internal logistics information technology. ERP systems facilitate accounting, financial, fulfillment, manufacturing and fulfillment integration. One author states that ERP packages are most significant LIT-relateddevelopment in the 2000 (Davenport, 2003). This is based on the demands for raised accuracy and improved responsibility of division and enterprise data. The tremendous absorption in ERP systems during the late 1990s is also due to concerns regarding the year 2000 question. While such concern was suitable, the rationale for widespread implementation of ERP systems was much broader. Typical ERP system advantages include inventory reduction, decreased data processing time, and increased customer responsiveness (Minahan, 2001). Other instance of internal LIT involves warehouse management system (WMS) and transportation management systems (TMS). While other internal LIT instances could have been involved, the Broad ERP perspective effectively describes most inner LIT elements addressed in this survey.
External LIT describes those technologies that relieve communication and information transactions between supply chain partners. These technologies are external interfaces or applications that relieve efficient information exchange, analysis, and reporting between supply chain partners. Today many firms are extending their information sharing capacities to reach integrated supply chain management which demands more extensive information exchange. Electronic data interchange (EDI) and the Internet is examples of information technology that relieves information exchange (Walton, 1999). However, other important criteria of external LIT as reflected by these items involve strategic and tactical information exchange and coordination with customers and suppliers.
Supply chain success is closely reliant on information exchange effectiveness and efficiency (Fox, 2006). The advantages of information exchange are enhanced responsiveness, cost reduction, and decreased uncertainty. Additionally, those companies effectively employing information shaping initiatives often develop a great supplier-manufacturerrelationship.
It is referred that internal LIT integration and customer integration are strong accelerators of customer service performance. Internal LIT integration does have a straight, although not particularly great impact. While external LIT integration has a very great indicative impact on customer integration and presumably indirect impact on customer service performance, its direct impact is negative and is counter to the anticipated relationship (Stein, 2000). Overall, customer integration has an essential influence since the relationship is very strong. In assessing the influence internal and external LIT integration have on customer integration the results are very various. In this evaluation, external LIT integration has a significantly larger impact on customer integration, than internal LIT integration, which was not significant and therefore not useful for predictive purposes.