Information Transfer in Supply Chain Management

Introduction In the modern world the main focus of competition is not only between different companies but also between supply chains. As the satisfaction of the final customer is of utmost importance for the successfulness of the whole chain, effective management of those processes is crucial. Many new technological solutions and organizational concepts have developed in recent years, however, only a few companies are using them strategically in a supply chain to achieve full competitive advantage, while many others are developing and implementing inappropriate ebusiness solutions (Cox, Chicksand & Ireland, 2001). Practical experience has shown that the root cause for this is not technological problems, but is connected with organizational and process aspects (Jaklic, Groznik & Kovacic, 2003). Therefore the main idea of this paper is to show that full strategic advantages can be realized, especially if the two items below are considered, while e-business and IT solutions alone can bring certain improvements in the overall business performance,: 1. business process modelling is a prerequisite for business process management (BPM) and renovation (BPR), 2. successful operation of a supply chain is only possible with effective BPM. While different approaches to BPM and BPR are possible, none of them is feasible without prior detailed knowledge about an internal and external business process. Models of business processes play an important role in different phases of business process (re)design regardless of the methodology used (Desel & Erwin, 2000). Business process management should not only be applied locally but also at the supply-chain level. Many of the changes are directly or indirectly connected with the flow and utilization of information, where e-business and Internet play a vital role as an enabler of cheap, quick and efficient transfer of information. Successful utilization of information, however, is dependent on efficient business processes as shown in the remainder of this paper. The structure of this paper is as follows: the next chapter analyses the main concepts and challenges of SCM. Special attention is paid to the importance of information sharing and measurement of SC successfulness. Then the role of business process modelling in effective SCM is analyzed. Finally, the theoretical findings are shown with an example of possible business process renovation and integration in a two-tier supply chain. The benefits of those changes are shown with AS-IS (current version) and TO-BE models (improved version) of procurement process. Supply Chain Management (SCM) Supply chain is a linked set of resources and processes that begins with the sourcing of raw materials and extends through the delivery of end items to the final customer (Bridgefeld Group ERP/Supply Chain Glossary, 2004). While the separation of supply chain activities among different companies enables specialization and economies of scale, there are many important issues and problems that need to be resolved for successful SC operation--this is the main purpose of SCM. According to the definition of SCM by the Global Supply Chain Forum (GSCF), SCM is "the integration of key business processes from end user through original suppliers that provide products, services, and information that add value for customer and other stakeholders" (Chan & Qi, 2003). We can only talk about SCM, if there is a proactive relationship between a buyer and supplier and the integration is across the whole supply chain, not just first-tier suppliers (Cox, 2004). There are several important problems in SCM that need to be resolved for efficient operation. Most of those problems stem either from uncertainties or inability to coordinate several activities and partners (Turban, McLean, & Wetherbe, 2004). One of the most common problems in supply chains is the so-called bullwhip effect. …