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Industry 4.0 Research: Information and Communication Technology (ICT) Capability Index for Supply Chain Management (SCM)

By Prof. Prashant R. Nair

“Amateurs discuss tactics; professionals discuss logistics.”

Napoleon Bonaparte

ICT Advantage

Rapid technology advances and dynamic market forces have altered the business landscape as also fundamentally altered existing business models. Information and Communication Technology (ICT) usage and deployment has opened the doors for companies to compete in any marketplace. Even companies, which have been benefiting from protectionist policies by governments, are now exposed to the perils of increased competition due to liberalization, privatization, pricing pressures and globalization. This challenging and dynamic business environment is popularly referred to as VUCA short for Volatility, Uncertainty, ComplexityandAmbiguity. Information Superhighway has further muddled the competitive waters by providing round-the-clock access and dissemination of information. The following examples illustrate the power of ICT, Internet and world-wide web:

  • The largest car company in the world is Uber, but interestingly Uber does not own any cars
  • The largest media company in the world is Facebook, but interestingly Facebook does not create any content.

The largest retailer in the world is Alibaba, but interestingly, Alibaba does not own any stores or retail establishments

The deployment of ICT advances such as Internet of Things (IoT), big data analytics, cyber physical systems, cloud computing & virtualization, mobile apps and the like are revolutionizing automation in enterprises. This trend, dubbed as Industry 4.0, is fast emerging as an inflection point in manufacturing and is being touted as the fourth industrial revolution. As pointed out by several thought leaders, in today’s interconnected world, it is not the companies that are competing, but their supply chains and stakeholder networks.

ICT for SCM

“The line of demarcation between chaos and order lies in ‘Smart’ logistics”

ICT adoption and deployment across various processes and links in the supply chain has become a determinant of competitive advantage for enterprises. ICT tools are great enablers, enhancers, levelers and facilitators of enterprise operations. Accessing information in a timely and actionable manner as also negotiating and managing relationships within and between organizations also contributes towards this. Deployment of these tools in supply chain planning and execution processes have resulted in better transparency, visibility, resilience, adaptability, dialogue, adaptability and decision-making for enterprises. This is not only within the enterprise intranet but also within the extranet consisting of their partners and suppliers.Broadly speaking, ICT impact in Supply Chain Management (SCM) can be classified into 3 major areas viz transaction execution, collaboration & coordination and decision support. ICT impact can be expressed in terms of ICT advances and ICT alignment. ICT advancement measures the extent to which a firm applies the state-of-the-art tools to augment its supply chain capabilities while ICT alignment reflects a firm’s strategic emphasis in coordinating and integrating its own ICT resources with that of its supply chain partners. The tools include software, hardware or ICT product, which combines both hardware and software like an IoT device. Interestingly, many of the buzz words in SCM such as Vendor Managed Inventory (VMI), Point of Sale (POS), Collaborative Planning, Forecasting and Replenishment and Enterprise Resource Planning (ERP) stem from ICT usage.There is also hype about an exciting and impactful integration of disruptive and game-changing technologies in the form of the SMAC – Social, Mobile, Analytics and Cloud stack to be the next wave in enterprise computing.

Industry 4.0 Research: ICT Capability Index for SCM

“One cannot control what one cannot measure”

While most researchers and industry practioners are unanimous about the fact that ICT positively impacts supply chain performance and improves the supply chain capabilities, there is an identified gap in terms of a framework, rubrics, constructs, assessment and metrics of these ICT benefits and capabilities in SCM as also which are the processes or sectors or domains that they impact. ICT deployment is not listed as a metric even though it contributes to all of the indicators of supply chain performance in various process reference models of SCM like Supply Chain Operations Reference (SCOR), of American Production and Inventory Control Society (APICS), GSCF, balanced score card and benchmarking. An inter-disciplinary team of researchers from Amrita Vishwa Vidyapeetham, (Deemed-to-be-University), Coimbatore campus is developing an assessment framework to measure the impact and benefits of ICT in SCM with the framework dovetailing into an ICT Capability Index for SCM. This can be applied to any enterprise irrespective of the vertical or domain, manufacturing or services. The supply chain performance indicators and constructs from SCOR model areused in the development of thisindex. These are agility, reliability, operating cost, responsiveness and asset management efficiency.

ICT for SCM

“The line of demarcation between chaos and order lies in ‘Smart’ logistics”

ICT adoption and deployment across various processes and links in the supply chain has become a determinant of competitive advantage for enterprises. ICT tools are great enablers, enhancers, levelers and facilitators of enterprise operations. Accessing information in a timely and actionable manner as also negotiating and managing relationships within and between organizations also contributes towards this. Deployment of these tools in supply chain planning and execution processes have resulted in better transparency, visibility, resilience, adaptability, dialogue, adaptability, and decision-making for enterprises. This is not only within the enterprise intranet but also within the extranet consisting of their partners and suppliers. Broadly speaking, ICT impact in Supply Chain Management (SCM) can be classified into 3 major areas viz transaction execution, collaboration & coordination and decision support. ICT impact can be expressed in terms of ICT advances and ICT alignment. ICT advancement measures the extent to which a firm applies the state-of-the-art tools to augment its supply chain capabilities while ICT alignment reflects a firm’s strategic emphasis in coordinating and integrating its own ICT resources with that of its supply chain partners. The tools include software, hardware or ICT product, which combines both hardware and software like an IoT device. Interestingly, many of the buzz words in SCM such as Vendor Managed Inventory (VMI), Point of Sale (POS), Collaborative Planning, Forecasting and Replenishment and Enterprise Resource Planning (ERP) stem from ICT usage. There is also hype about an exciting and impactful integration of disruptive and game-changing technologies in the form of the SMAC – Social, Mobile, Analytics, and Cloud stack to be the next wave in enterprise computing.

Industry 4.0 Research: ICT Capability Index for SCM

“One cannot control what one cannot measure”

While most researchers and industry practioners are unanimous about the fact that ICT positively impacts supply chain performance and improves the supply chain capabilities, there is an identified gap in terms of a framework, rubrics, constructs, assessment and metrics of these ICT benefits and capabilities in SCM as also which are the processes or sectors or domains that they impact. ICT deployment is not listed as a metric even though it contributes to all of the indicators of supply chain performance in various process reference models of SCM like Supply Chain Operations Reference (SCOR), of American Production and Inventory Control Society (APICS), GSCF, balanced score card and benchmarking. An inter-disciplinary team of researchers from Amrita Vishwa Vidyapeetham, (Deemed-to-be-University), Coimbatore campus is developing an assessment framework to measure the impact and benefits of ICT in SCM with the framework dovetailing into an ICT Capability Index for SCM. This can be applied to any enterprise irrespective of the vertical or domain, manufacturing or services. The supply chain performance indicators and constructs from SCOR model are used in the development of this index. These are agility, reliability, operating cost, responsiveness and asset management efficiency.

This research is currently underway by Prof. Prashant R.Nair from department of Computer Science and Engineering along with Dr. S.P. Anbuudayasankar from department of mechanical engineering of Amrita University. Enterprises will be provided with a benchmark of their ICT deployment in SCM in the form of an ICT Capability Index for SCM. The ICT advantage for SCM holds immense potential and savings for Indian industry, be it large enterprises or Micro, Small and Medium Enterprises (MSME). This stems from the fact that measuring this ICT impact on SCM by providing a benchmark equips enterprises with strategic choices for their investment in ICT as also choice of ICT tool.

About the Author

Prof. Prashant R. Nair is working in Amrita School of Engineering, Amrita Vishwa Vidyapeetham (Deemed-to-be-University). His intellectual contributions include 6 books, 2 edited books, 1 book chapter, 50+ research publications and columns in leading journals and magazines published by Narosa, Alpha Science, Springer, IGI Global, Careers360, Association of Indian Universities and department of science & technology of government of India. He has been recognized as the top innovation mentor in India by Ministry of Human Resource Development (MHRD) and Atal Innovation Mission of NITI Aayog. He can be contacted at prashant@amrita.edu