The broader impact of ICT on procurement and supply chain management

Technological developments have a range of impacts on business and purchasing activity;
1. Automation and computerization raises productivity by allowing faster, more accurate, more consistent work than human beings can achieve alone. A supplier with access to advanced design, manufacturing, goods handling and transport technology should be able
to fulfill orders faster, more cheaply and with more consistent (though not necessarily higher) quality.
2. Technology opens up new product markets through the potential for product innovation; think of the relatively new markets for digital cameras, MP3 players, music and book downloads plasma TVs and so on. These new markets impact on purchasing
by creating new sourcing requirements.
3. Technology opens up new supply markets, e.g. by giving purchasers access to information on international suppliers via the internet, and facilitating communication and transaction processing. Technology may also be a differentiating or cost saving factor, lowering barriers to entry and allowing small new producers access to established markets.
4. Technology changes business processes. It may be used to perform operational functions more safely (e.g. automated production and materials handling) or easily (e.g. recording and tracking stock movements using barcoding or RFID). In recent decades, it
has changed both production processes and supply and distribution processes.

Production processes-with an emphasis on labor-saving equipment and machinery impacting purchasing through the need for investment appraisal and capital purchases. Examples include the increasing use of automated (or robotic) production, computer aided design and manufacture, computerized monitoring of quality and process and so on. Supply and distribution processes-Examples include: access to new global supply and product markets through e-commerce and faster transport; electronic sourcing and
procurement systems; and new methods of service delivery (such as ATM machines, online entertainment ticketing and online banking).

5. Technology changes the amount of labor and types of skills required by businesses (e.g. through the use of labor saving automation) and how they can be organized and managed (e.g. the use of ICT to facilitate off-site and mobile working, and virtual team working). This may in turn support the use of out- sourcing and sub-contracting, which may be driven and managed by the procurement function. It may also create a changing skill profile for procurement staff (e.g. the use of e-procurement tools).
6. ICT can also be used to develop supply chain relationships for example by:
• Providing real-time information for transaction processing, delivering tracking and other value-adding services
• Streamlining procurement and delivery processes for higher levels of customer services
• Supporting the customization of products and services and the personalization of contacts for supplier or customer relationship management.
• Creating knowledge communities- e.g. sharing information via extranets
• Facilitating coordination of collaborative activities.

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