Processing and Information Systems Role in Supply Chain | Free Essay Example

Processing and Information Systems Role in Supply Chain

Words: 1132
Topic: Business & Economics
Updated:

Introduction

With complexity in the nature of the environment in which business activities operate, it has become a necessity to integrate various aspects of technology in the operations with the main aim of attaining efficiency, effectiveness and economy as well as being at per with the competitive business world. Information has become an essential tool in all fields of the economy as it enhances competitiveness, the more information an organization has, the better the position it is in the competitive world.

An information system which is an integrated set of elements applied in the collection, storage, processing, and dissemination of information therefore become crucial in any organization that aims at succeeding. Information systems are useful in managing operations, order processing and supply, enhancing competitiveness and other general and personal activities (Information System, 2011). This paper will discuss the application of information systems in order processing, its effects on the running of the supply chain and also the technological inventions that may be useful in the industry.

Order Processing and Information Systems

Order processing entails the activities involved in facilitating the execution of an order for products or services placed by a consumer. The process of order processing starts with the acceptance of the order placed by a client and ends when the customer receives the goods or services and confirm that the delivery is as stipulated or expected. The establishment of a favorable working environment between organizations and the clients is essential and this can only be achieved through a strategic and efficient order processing strategy that allows maximum satisfaction of the customers.

Order processing may be either manual or automated depending on the types of goods and services and the nature of the order. Online order processing is usually less time consuming and efficient as compared to physical order processing since it only involves the buyer making payment for the products or services, the supplier taking note of the sale and accepting the payment and finally the delivery of goods or service. Where physical products are involved, the client places the order which is then taken to the distribution center where the specific items are put in order for shipping after which the client counterchecks the order for quality and quantity.

As opposed to traditional modes of order processing, which are time consuming and expensive, application of information systems in order processing enhances efficiency and effectiveness in terms of time and other resources hence promoting faster revenue generation, customer satisfaction and retention. This is done through the integration of enterprise systems and the automated processes of the organization in a single information system. The information system makes it easier to deal with both basic and complex orders and at the same time keep the customers up-to-date with information about their orders, for example, when the orders are received, when they are being processed or dispatched for fulfillment among others.

This is possible because the system is able to accurately capture all incoming orders and integrate the information with that available in the system making the whole process of order processing easy. The notable advantages of the use of information systems in order processing are; reduced manual labor, better order management and processing, reduced cost per sales order, automatic and regular review of the customers, accountable sales process and most important the satisfaction of customers. Customer satisfaction is the key issue in any business as it ensures customer retention and loyalty as customers are not likely to shift to other business when satisfied as oppose to when they would be disappointed (Stock and Lambert, 2000).

Effect of Application of Information Systems in Order Processing On the Supply Chain

A supply chain can be defined as a set of connections among various parties that are involved in the production, sale and delivery of products and services to customers. They include retailers and wholesalers, distributors, transporters and also those who offer storage facilities of the goods in the entire business process. The supply chain consist of three major components; the supply, manufacturing, and the distribution.

The supply entails aspects of the raw materials meant for manufacture or processing, for instance, their source, time of acquisition, and the means through which they are acquired. Manufacturing involves the conversion of the raw materials into finished goods while distribution constitutes processes that ensure that the processed goods are accurately and safely delivered to the customers through the various parties in the supply chain. Order processing falls in distribution part of the supply chain; this is a very critical part of the supply chain as it determines the success or failure of the whole process.

This is because in a way, although it’s the last stage, it determines the satisfaction of the customers, which is measured by how the goods and services are delivered in terms of quality, package, and time of delivery. When information systems are applied in order processing, it makes the process easy, efficient and effective and also saves on costs that could otherwise be used on middle men. It therefore has the ultimate effect of improving the quality of the supply chain by enhancing the delivery of products and services to the customers through utilization of data and information regarding the products and services in the systems (Stock and Lambert, 2000).

Other Technological Inventions in the Industry

Apart from the application of information systems in order processing, various technologies can be employed in the entire supply chain processes. They include; labor management system that enhance distribution, E- auctions that utilizes technology to get online business contracts, spend management visibility technology that governs the overall organization’s spending, and supplier portals which is the technology that brings together a variety of suppliers through the web in regard to activities involved in the production, sale, and distribution of products.

Other useful technologies are; the use of radio frequency or wireless terminals in the warehouse to facilitate communication, strategic sourcing that entails use of technology in selection of suppliers and purchases, transport management system that enables automation of the planning and execution processes hence reducing the transportation cost by making the best choice of mode of transport, and demand management technology that ascertain the level of demand and that of supply to help a business strike a balance among other technologies (Gilmore, 2007).

Conclusion

Information systems have gained a lot of importance in today’s world due to the benefits accrued to them especially in enhancing efficiency, effectiveness, and economy in operations both personal and organizational. An accurate and efficient order processing system is particularly important to the growth, development, and success of any business organization as its gives the customer’s needs a priority by ensuring that they verify the orders thereby promoting maximum satisfaction and retention of the customers. It also ensures secure and timely delivery of goods.

Reference List

Gilmore, D. (2007). The Top 10 Supply Chain Technologies and Strategies for 2007. Web.

Information System. (2011). In Encyclopedia Britannica. Web.

Stock, R.J., and Lambert, M.D. (2000). Strategic Logistics Management, 4th Ed. New York: McGraw-Hill Irwin Publishers.