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Current use of ICT on three levels

How are you using ICT in your supply chain?

For several reasons it’s useful to map how you use ICT to facilitate your supply chain. In earlier steps we used the Make, Plan, Produce, Distribute and Return processes of SCOR to look at ICT systems and how they can support supply chain processes. This is useful but there are also other ways to look at ICT support for supply chain. In this article we look at a classification that can also help to evaluate how you use ICT in a supply chain.

Use of ICT in supply chain

It is shown in the picture above. It uses two dimensions: strategic level and the transaction phase.

Strategic level can be:

Operational: repetitive operations that are vital to the supply chain but usually require no middle or top management attention

Tactical: less frequent processes that are usually more at a management level. Tactical decisions have an impact on the operational level and use data from the operational level to monitor and evaluate operations

Strategic: Higher level processes and decisions that require management involvement and direct tactical and operational activities. Strategic level activities ideally make use of internal data from tactical and operational levels and also benefit from external data

Transaction Phases can be:

Search: Searching actors or resources that can perform an activity. Evaluate their quality, price and capacity. Select the preferred parties to be part of the contract

Contract: Arriving at an agreement with an actor or resource. Document the agreement and conditions. The contract provides a binding framework for the execution and settlement phase

Execute: Carrying out the activities by the actors/resources selected

Settle: Evaluate the performance of the execution phase against the contract conditions and compensate the actors/resources for their activities (e.g. payment)

Using the three strategic levels (operational, tactical and strategic) and the four transaction phases (search, contract, execute, settle) we can position ICT support in 12 cells as shown in the figure. The 12 cell framework can be useful to position current ICT systems and serve as a source of inspiration to develop or acquire new systems.

You often see that ICT systems pop-up as results of projects in individual cells. For example a company buys a software system that automates the search for suitable warehouse storage facilities. This is a Tactical Search activity so it fits in column 1, row 2 of the framework as shown above. But what else can the company do? Can it link this system to solutions for automatic contracting (Column 2, Row 2)? Can it also monitor the contracting and use of the storage facilities (column 3 row 2 based on an operational system in column 3 row 3) and directly process the invoices based on contract conditions (column 4 row 2)? Next a strategic planning system can be established (column 3, row 1) that evaluates the performance, cost and quality of the warehouse storage providers and their sustainability ratio’s. Based on this system decisions can be made to change search strategies or contract conditions, warehouse locations etc.

You may find this framework useful as it can position current ICT systems for supply chain and what they can do, but more importantly how they can grow. ICT systems are seldom implemented in a big bang fashion offering all possible transaction support at all strategic levels. Rather, you can follow a route through the framework and grow your ICT systems capabilities along strategic levels and transaction phases to eventually offer full support.

So let’s see what you can think of regarding use of ICT for more than 1 cell in the framework shown above. Please join the discussion by answering this question from which cell it seems logical to you to enhance ICT to a different cell?

What typical routes do you see feasible?

Name the cells as we did above referring to row and colums.

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This article is from the free online course:

Supply Chain Innovation: How Technology Can Create a Sustainable Future

University of Twente

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