Running head: TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 1
Technological Advances in Supply Chain Management
Janet Millard
Liberty University
Strategic Supply Chain Management
Business 740
Dr. Thomas Spotts
December 9, 2019
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 2
Technological Advances in Supply Chain Management
Introduction
Supply chain management (SCM) has undergone a profound transformation over the past
50 years due primarily to the adoption of digital technology. The supply chain began as a
contractual, short-term relationship between a buyer and a supplier typically located within the
same geographical area. Many small business suppliers were associated with local manufacturers
and small towns were able to sustain each other.
As the information age blossomed and the world-wide web became a common tool for
businesses, these buyer-supplier relationships were able to extend to other geographic areas to
include the global market. This forced manufacturers to assess the profitability of their suppliers.
The new global community offered many options and companies were able to negotiate the best
arrangement for their firm. The new global marketplace also offered expansion opportunities for
businesses including the ability to build relationships with manufacturers and suppliers in regions
closest to their target market.
The term SCM was first introduced in 1982 when it was concluded that collaborative
supplier-buyer relationships could provide a long-term competitive advantage (Fawcett, Jin,
Fawcett, & Bernardes, 2018). SCM is the management of an integrated network that includes all
processes from procurement of raw materials through delivery to the consumer (Varma & Khan,
2014). Before the proliferation of digital technology, SCM was an entirely manual process that
was laborious, prone to errors, and a limiting factor for growth and global expansion. Digital
technologies such as cellular phones, personal computers, the internet, and the cloud have
enabled companies to form integrated networks of suppliers, buyers and manufacturers that can
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 3
share information and collaborate on projects with the goal of reducing risk in the supply chain
(Varma & Khan, 2014).
Evolution of Technology in Supply Chain Design
Harold Sirkin of Boston Consulting group stated, “As the economy changes, as
competition becomes more global, it’s no longer company vs. company but supply chain vs.
supply chain.” (Fawcett et al., 2018, p. 1). The supply chain is the heart of the company. Any
disruptions within the supply chain can cause the entire production to come to a halt. The 20th
century supply chain design and management was based on the firm’s efficiency goals and
transaction-cost economics. Firms would negotiate contracts with suppliers, leveraging the
suppliers one against another which resulted in non-collaborative, short-term relationships. The
lack of collaboration in these relationships forced each part of the supply chain into a silo.
Vertical integration does not allow for open communication, rather it isolates and at times can
alienate.
In the 1980s the SCM saw a dramatic shift as Toyota implemented a process that
included long term, solid relationships with suppliers in order to implement Just-in-Time
sourcing (JITS) (Fawcett et al., 2018). The JIT system had given Toyota a competitive edge in
the auto production industry.This development made the case that solid, long-term relationships
in the supply chain gave a company a competitive edge.
Just-in-Time
JITS is modeled after Just-in-Time manufacturing (JITM) with the goal of producing and
delivering products just in time to be sold, sub-assemblies just in time to be assembled and raw
materials just in time to be made into parts (Fawcett & Birou, 1993). JITS was found to be an
effective option to increase the firm’s efficiency and allowed for lower inventory levels and
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 4
increased competitiveness. JITS was innovative, but there was still a need to ensure that the parts
of the supply chain had effective, reliable communication. A reliable upstream and downstream
integration required effective communication capabilities. Information Technology (IT) and the
internet provides that line of communication that is capable of integrating the Supply Chain
network. This improved communication allows for reductions in inventory, lead time and can
minimize the Bullwhip effect (Fawcett & Birou, 1993).
Natural disasters and other supply chain disruptions can have a significant impact on a
JIT supply chain. Inventory is kept to a minimum and any disruption can cause difficulties in
providing product. There has to be an accurate forecast with accurate safety stock numbers to
avoid issues during these times of disruption.
Information Technology
Information Technology (IT) has allowed to unlimited growth and information sharing
across the globe. IT consists of hardware and software applications that play an important role in
creating a complex, integrated network within the supply chain that is be comprised of multiple
components (Varma & Khan, 2014). An important component of the IT system in SCM is
Electronic Records Management (ERM), which consists of an Enterprise Resource Planning
(ERP) system, automatic identification (auto ID), and Electronic Data Interchange (EDI) (Varma
& Khan, 2014). The primary goal of ERM is accountability of process flow to reduce cyber
incursions. Furthermore, IT has introduced the SCM to modalities such as Bar Code Scanning
(BCS), Radio Frequency Identification (RFID) technology, and Electronic Data Interchange
(EDI).
Companies have been leveraging IT to help them increase the productivity of the
company and to achieve a competitive advantage (Liu, Ke, Wei, & Hua, 2012). The use of IT to
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 5
make innovations in products and supply chains is necessary for a company that wishes to
succeed and be competitive (Kim & Chai, 2017). Suppliers are also taking a more active role in
driving innovation and the development of new products. Suppliers driving innovation can
increase manufacturers ability to control costs, quality, delivery and flexibility (Kim & Chai,
2017). This process can unfortunately create a rift between the suppliers and buyers by causing
confusion and decreased control (Kim & Chai, 2017). In a successful, solid long-term
relationship however the suppliers may be able to take over more aspects of the supply chain.
One of the primary functions of IT in the supply chain is optimization. IT processes
provides businesses with the ability to gather and aggregate data, analyze the data and share data
with others in the supply chain for use.
Bar Code and Scanning
BCS is a process whereby a barcode is placed on each product or part. The barcode
contains data that is either magnetic or optical and when scanned will upload the information
into the inventory system to allow the product to be tracked and inventory systems to be updated
(MacCarthy, Blome, Olhanger, Srai, & Zhao, 2016). This process also allows retailers to scan a
product during check-out and simultaneously send the information to the warehouse for
replacement (Varma & Khan, 2014). As the information is scanned into the system, an order for
a replacement is triggered and the replacement will be sent out to the retailer. This process helps
the retailer to avoid stockouts and replaces the manual process of inventory, ordering and receipt
of product.
During the past decade, barcode scanning has become routine in hospitals and other
health care settings. Nurses now use barcode scanning to ensure that they are giving the correct
medication, correct dosage and that they are giving the medication to the correct patient. This has
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 6
proved to be effectively used to ensure patient safety. The nurse first scans the patient which
brings up the medication orders, the nurse then scans the medication and is notified if it is not the
correct medication or dosage. After the medication is administered, the pharmacy is notified and
a replacement is sent to the unit.
Radio Frequency Identification (RFID)
RFID technology enables product to be automatically identified and allow for data
capture. RFID in SCM is defined as “a wireless communication technology that can identify
specific targets using radio signals and read and write relevant data without mechanical or optical
contact between the system and the target” (Rejeb, Keogh, & Treiblmaier, 2019). The system
consists of three parts: tag with chip connected with an antenna, a reader that emits and receives
signals and a middleware that bridges the device to the enterprise system (Sarac, Absi, &
Dauzere-Peres, 2010). This provides a real-time communication which can improve product
traceability among the supply chains, increase accuracy, efficiency and speed of process (Sarac
et al., 2010). The use of RFID can also decrease loss due to fraud by manipulating order entry
and authorization from supplier to customer. It should be noted that RFID technology is not new.
It was first used in World War II on airplanes to allow for easy identification of enemy planes
(Sarac et al., 2010).
A real-world use of RFID in a hospital is for equipment. Many pieces of equipment are
very expensive, but also very small. These pieces of equipment are prone to loss due to theft or
accidentally being thrown away. Telemetry devices are notorious for being wrapped up in the
bed linens and sent to the laundry. The use of RFID on this equipment allows for tracking of the
items prior to loss.
Electronic Data Interchange (EDI)
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 7
EDI is computer to computer of information and business documents in a standard,
machine retrievable data format between trading partners (Varma & Khan, 2014). This is used
for paperless communication to share transactions, order processing, inventory, financials, etc.
This replaced forms that were traditionally sent by mail or fax. EDI is beneficial in controlling
the Bullwhip effect, improved invoicing and customer satisfaction.
Enterprise Resource Planning (ERP)
ERP is the framework for an organizational planning system which works with all core
activities of business and has interfaces to facilitate the seamless flow of information throughout
the entire supply chain (Varma & Khan, 2014). The ERP provides a common infrastructure that
allows for role-based access to the data. This is achieved with a Web-based portal that allows a
common entry point for both internal and external access (Simchi-Levi, Kaminsky, Simchi-Levi,
& Shankar, 2018).
One ERP is SAP R/3. Philips Healthcare utilizes this system to finalize quotes, send
orders to the production facility and track the orders through receipt. All members of the team
that have the authority to access this information are able to enter the system through the portal
and determine the status of the order, read information regarding issues or delays and can
accurately plan for the delivery and installation of all equipment. This allows for accurate
communication with the customers and is crucial for customer satisfaction.
Internet of Things and Blockchain Technology
Supply chains are increasingly complex and required a strong connection for internal and
external communications. The Internet of Things (IoT) and Blockchain technology, as well as,
cloud computing, business analytics, artificial intelligence and machine learning are being
adapted by companies (Rejeb, Keogh, & Treiblmaier, 2019). These innovations in technology
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 8
can be used alone or in conjunction with others. These techniques are touted as a process by
which the supply chain will achieve advanced data collection, information sharing, and analysis
between collaborating stakeholders of the supply chain. These technologies are key to mass
digitization of the supply chain. When combined Blockchain technology and IoT can be used to
streamline supply chains and value-creating networks.
Blockchain technology
Blockchain technology is a secure money transaction system that has been historically
utilized in the banking and insurance industries (Gurtu & Johny, 2019). The blockchain is a
digital ledger that records transaction in chronological order to create a permanent secure record
(Rejeb et al., 2019) is evolving into an ecosystem of technologies that includes Internet of Things
(IoT), artificial intelligence (AI), robotics and crowdsourcing (Gurtu & Johny, 2019). Blockchain
technology’s technical functions ensures data integrity, allows for instant sharing of information
and can program and automatically control processes. Blockchain platform supports multiple
party exchange relationships in a global design with user authentication and transaction
enhancements (Rejeb et al., 2019) These functions can potentially eliminate many manual
processes within the current supply chain (Gurtu & Johny, 2019).
Internet of Things
Internet of Things is defined as a “group of infrastructures interconnecting connected
objects and allowing their management, data mining and the access to data they generate” (Rejeb
et al., 2019). IoT, also known as Big Data, includes many of the technologies already in use
including RFID and other electronics that are connected over the internet. These technologies
used together can perform many functions such as activity sensing, movement, temperature;
actuating and collecting; processing, warehousing and data sharing (Rejeb et al., 2019).
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 9
Temperature sensitive products can be continuously monitored through the supply chain through
use of RFID and an electronic thermometer that sends the temperature to the IoT via mobile 4G
or GPRS (General Packet Radio Service) (MacCarthy et al., 2016). Temperatures that are in
violation of the preset parameters will trigger an alert in real-time. This assures that the product
remains viable throughout the supply chain. This will protect a variety of products including
food products and temperature sensitive medications.
RFID is the key to the enabling the IoT by utilizing wireless technology to read data from
the products without requiring line of sight verification. RFID is only a portion of the IoT.
Industrial wireless networks (IWN) include machines and equipment along with the cloud
technology, blue tooth and ZigBee (Calatayud & Mangan, 2019). There has been 4 layers of
technology identified in the IoT network.
1. The sensing layer which includes the RFID technology along with reading tools and
sensors to receive and interpret the data. There is also a requirement for a short-area
network such as Wi-Fi or ZigBee to close the loop on the network. This layer allows
for the collection and analysis of data from products and equipment that are
connected to the short-area network.
2. The gateway and network layer connects objects or things and facilitates the
exchange of information. This layer consists of a gateway that in turn connects with
the sensing layer and an external network that allows communication with other
networks. This allows all persons that need access can enter through a single portal
that will grant access to the data.
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 10
3. A third layer, the management service layer, also relies on the middleware to store
data and interact with multiple devices and processes. The management layer allows
for management of the system, data analytics, security, and process modeling.
4. The application layer is all information that has been collected and transmitted are
saved and processed. This layer also manages and controls the objects or things that
are connected in the IoT. Information is displayed for the user to utilize and
interaction with the system is allowed (Calatayud & Mangan, 2019)
Information sharing promotes collaboration throughout the supply chain, which helps to
build stronger partnerships and provides the integration needed to have a successful SCM (Kim
& Chai, 2017).
Wireless Sensor Networks
A Wireless Sensor Network (WSN) allows more effective monitoring of the supply
chain. The WSN allows for real-time monitoring of the logistics activities within the supply
chain by sending up to the minute information regarding the location of an item (Rejeb et al.,
2019). The ability to know exactly when and where an item is allows for more accurate ordering
and fulfillment of orders.
Artificial Intelligence
Artificial Intelligence (AI) is one of the more recent technological advances that is being
integrated into the supply chain. AI is not a new technology but, has been inexistence since 1950
with the Turing test. Since that time AI has been used in a variety of settings without much
interest. Since the early 2000s, the high usage of Big Data and Machine Learning has renewed
interest in AI (Baryannis, Validi, Dani, & Antoniou, 2018).
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“AI is a set of computational technologies developed to sense, learn, reason, and act
appropriately (Dash, McMurtrey, Rebman, & Kar, 2019, p. 43). In other words, AI is the ability
of a computer to learn and solve problems that it was not specifically programmed to perform.
AI has been proved to create value in several different areas: forecast demand and optimization,
production, promotion and pricing, delivery, smart retailing, and smart manufacturing (Dash et
al., 2019).
A current trend in SCM is the development of a Smart SCM solution. Oh (2019)
describes the current SCM as a vertically integrated system which is difficult to manage and
difficult to manipulate data that is produced from the system. The proposed system is an
intelligent smart SCM solution comprised of three programs: Automated Ordering System
(AOS) a web-based system that shares product data with vendors on a real-time basis;
Automated Inventory management utilizes IoT technology such as RFID; Adequate inventory
Calculation System Patterns of defective products are analyzed utilizing AI to identify the
appropriate level of safety stock (Oh, 2019). The goal of this system is provision of efficient
inventory management, ensure adequate product supply and maximize profits (Oh, 2019). There
is little research available on the subject of a Smart SCM System at this time to make
comparisons or evaluate efficacy.
AI is also being utilized to within the area of Supply Chain Risk Management (SCRM).
As industries become more and more efficient through the use of JIT and Lean, there is very
little room for error in SCM. Natural disasters, political or financial instability can have severe
impact on the supply chain. There is a current interest to explore the ability of Big Data along
with AI to assist the field of Supply Chain Risk Management (SCRM). However, Baryannis
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 12
(2018) found that while AI has been successful in many areas, it has not been proved to be useful
in the field of SCRM at this time. (Baryannis et al., 2018)
Additive Manufacturing
Supply chain is not a static entity. The supply chain evolves and changes with advances
in technologies. 3D printing is an example of additive manufacturing. This relatively new
process allows for parts or items can be printed on a 3D printer and immediately available for
use. Additive manufacturing is being used in new product development where the turn around
time for a new product prototype to be manufactured has been reduced from 3 months to a little
as a week (Fawcett et al., 2018). 3D printing can also be crucial for the spare parts industry.
There will no longer be the requirement to manufacture a minimum number when the printer can
easily do one part at a time.
Supply Chain Management within a Christian worldview
SCM is a core competency for any manufacturer, retailer or supplier as the lines of
communication with their partners must be open, free-flowing and solid in order to maintain
good relationships. The creation of all products begins with the supply chain and the
procurement of raw materials to create the parts to use in the final product. In the beginning,
God created the world. He gave to us the raw materials needed to create and build products and
goods. He entrusted man to care for the materials that he gave to use. He expected man to work
just as he worked to create the world for us.
God started with his imagination when he formed the earth. He separated the earth into
firmament and water. He then filled the earth with vegetation, animals on land, fish in the water
and birds in the sky. This was God’s supply chain. He provided all things required to sustain life
on earth. His final act was to place man on earth to work and care for his creation. God then
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 13
noticed that all other creatures on earth had mates and so God made woman from the rib of man.
The man and woman lived in the Garden of Eden with just one rule: Do not eat the fruit of one
tree in the garden. The man and woman did not follow this rule and damaged their relationship
with God.
A vital part of SCM is the formation of solid, long-term relationships between buyers and
sellers. These relationships are dependent on each other just as God’s creations were dependent
on each other for sustainability. A breach of the relationship between the members of the supply
chain will affect all aspects of the supply chain and cause inefficiencies and lower profitability.
In the supply chain, raw materials, parts, assemblies, and manufacturers are working in tandem
to produce the desired products. On earth, God provided the raw materials such as earth, water
and seed to grow food. There was water and vegetation to sustain the animals and the animals
could be used for food in order to sustain the humans.
Nothing and no one is perfect including the creations of God. Eve partook of the apple in
direct defiance of the instructions from God. She convinced Adam to take a bite of the apple as
well. It was then that they became cognizant of their nakedness and hid in the trees, eventually
covering themselves with fig leaves. This action began the fall from grace for Adam and Eve.
Eve was told that she was going to labor painfully during childbirth. Adam was told that the
earth would grow thorns and thistles and he would have to labor long hours to grow edible food.
Adam and Eve did not show respect to their relationship with God. In turn, God turn them away
from the garden of Eden to labor on the earth to survive.
In the supply chain, relationships at one time were considered temporary and mutual
respect and collaboration were not engrained in the relationship. This type of relationship did not
prove beneficial for either party. As with Adam and Eve, there was no respect for the
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 14
relationship for the parties in the supply chain. As relationships would terminate within the
supply chain, decreased revenues and profits would occur. There must be trust, collaboration and
dedication to the relationship in order for it to flourish.
As man and woman reproduced on earth, the God was alarmed to see the wickedness of
man. This was evident when Cain rose up and took the life of his brother Abel. God repented that
he had created man and placed him on earth. God made the decision to destroy all of mankind,
animals and all his creations with the exception of Noah and his family and two of all creatures.
He chose Noah because Noah walked with God and was free of evil. The two had a solid, long-
term relationship that included respect and trust.
SCM has evolved to where long-term relationships are formed to ensure the future
success of the company. The buyers and suppliers look to each other for input and collaboration.
This new solid relationship has allowed some shifts in the input each member possesses. The
suppliers are now collaborating on new products or new designs. There is a mutual respect
between the parties that allows for a solid relationship that can sustain in the long-term.
There may be times where buyer-supplier relationships may not be able to continue.
Reasons could include inferior quality, failure to meet quotas or timeframes, or theft of product
or intellectual property. In these cases, the long-term relationship could be dissolved. There
could also be ethical reasons for ending a long-term relationship. In many third-world countries,
human rights are violated on a continuous basis. This will present an ethical dilemma within a
Christian world-view. The denigration and abuse of human beings including children have no
place in a Christian world-view. The buyer-supplier relationship formation must include each
party to do their due diligence prior to signing an agreement.
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 15
When God chose Noah to be the one that would be responsible for assisting God in the
repopulation of the earth. In this instance, God had realized that he was not able to remain in the
original long-term relationship. He found Noah who was compatible with his ethics and beliefs.
He passed on his views to Noah and his family and stated that they shall never take the blood of
their own kind or eat of the flesh of their own kind. He set the standard that he desired and
ensured that his new partners knew their limits.
The process of developing a supply chain fits perfectly within the Book of Genesis. The
creation of the supply chain in its original form did not include a relationship that could sustain
in the long-term. Technology opened the gates to expand the supply chain to other regions or
countries. The expansion to these locations proved to be profitable while also posing some
ethical issues. As technology continues to grow in the business world, additional issues may
surface. Issues can be evaluated using a Christian worldview to ensure that all we do in business
is in God’s name.
Summary
Technology has assumed a prominent place in Supply Chain Management. The invention
of the world-wide web allowed the world to be opened for business. Industries that had at one
time relied on local suppliers and workers are now able to purchase, manufacture or sell
anywhere in the world. While the business is able to increase efficiency and profitability of the
company through the use of technology, there is a local impact for those small businesses that
lose contracts with the company. Globalization is not without issues. While profitability may
increase by utilizing a company in a third world country, there is the trade off in quality and a
concern for human rights offences in some of these countries.
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 16
SCM was a completely manual business in the past. Every order, form and letter had to
be completed manually. Inventory was laborious, time consuming and prone to errors. Sellers
and buyers were not able to communicate readily. The internet and ERP systems have given the
buyers-sellers one system with a single- entry portal where information can be accessed by
authorized users. This allows members of the SCM to find requested information without
contacting another member of the supply chain.
The IoT has given the SCM the ability to inventory, track, and evaluate temperature. IoT
utilizes the use of Big Data, Bar Code and Scanning, RFID technology and AI to gather, analyze
and send data to the ERP. The data can then be accessed by the members of the SCM. Bar Code
and Scanning allows for all members of the supply chain including the retailer to access data
from the bar code on a product. RFID allows for tracking of a product as it progresses throughout
the entire supply chain. AI is being introduced into the SCM to assist in analysis and processing
of data. The use of AI can increase the efficiency and profitability of the supply chain. AI is
being introduced but has not been fully integrated at this time.
SCM is a core competency of a business. Each of the technological advances discussed
has built on prior technology to continue advancing SCM. The use of the world wide web
opened the world to trade and the IoT has allowed for the supply chain to track an item from the
purchase of raw materials until a product is sold at the local Wal-Mart to the end consumer.
The SCM is a business that can very easily translated into the Bible’s Book of Genesis.
God created heaven and earth and then filled the earth with plants, animals, fish and birds. The
book of Genesis shows the creation, the fall, redemption-consummation. Each of these stages can
be seen in the history of the SCM. First there was the creation of a product and the supply chain
that supports it. The creation of the internet also precipitated the fall of the local supplier’s
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 17
relationships. Then the continued proliferation of internet technology allowed for globalization
and allowed for new relationships to be forged. Just as in all areas of our lives, God is seen and
what we do in our professions can be related to the Word of the Lord.
TECHNOLOGICAL ADVANCES IN SUPPLY CHAIN MANAGEMENT 18
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