BUILDING INFORMATION TECHNOLOGY MODEL IN SMEs SUPPLY CHAIN MANAGEMENT: REVIEW
Dina Mellita
Faculty of Economics
Bina Darma University
dinamellita@mail.binadarma.ac.id
ABSTRACT
To almost all economies in the world, Small and Medium Scale Enterprises (SMEs) is important due to it’s role in contributing to economic development of many countries around the world. With no exception, SMEs also have to be competitive and resilient to survive in today’s challenging environment In this area, competition not only between firm but between Supply Chain. Supply Chain Management (SCM) literature proposes that integrated control of these multi-firm network can provide significant benefit. The utilization of information technology (IT) in turn, is considered an imperative requirement for managing these network and has been associated with significant supply chain efficiency improvements. The flexibility, quick decision-making, and co-operation from employees of the SMEs characteristic should build a specific patern of IT for this kind of firm. This paper provide a framework that constructs the model of IT specifically for SME’s Supply Chain Management. It’s conclude that IT is powerful technology for communication at the buyer-supplier interface in SMEs. Electronicmail (E-mail), Application Software, Internet Network, website and even SMS can lead the supply chain in area of buyer supplier partnership and beteer co-ordination and ensure competitive advantage of SMEs
Field of Research: Supply Chain Management (SCM), Information technology, Small and Medium Scale Enterprises (SMEs)
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1. Introduction
Supply Chain Management (SCM) is defined as a series of interconnected activities which are concerned with planning, coordinating and controlling materials, parts and finished goods form supplier to customer (Stevens, 1989). SCM is one of the most powerful executive paradigms for competitive advantage of production companies and service providers (Gunasekaran, 2004). Today, organizations or individual firm are not important but rather the creation of added value occurs in the supply chain and its management. Just as competition has increased, customer expectations are also constantly changing. In other words, more emphasis needs to be put on faster distribution, higher customer orientation, and better service quality and by timely access to information different production and distribution sectors should be supported.
To the effectiveness control of today’s complex supply chains the use of Information Technology (IT) considered important. Recent study explored that there is so many benefit brought about by IT to the industries. Within the application of IT, industry can improve supply chain agility, reduce cycle time, achieve higher efficiency, and deliver products to customer in a timely manner (Radjou, 2003). Besides, the implementation of IT in the SCM can enable a firm to develop and accumulate knowledge stores about its customers, suppliers and market demands, which in turn influences firm performance (Tippins, and Sohi, 2003).
However, current status of literature indicates that the impact IT in terms of SCM in the large firm leaving out SMEs who anyways start with a disadvantage due to their inherent resource constraints. Given that majority of the firms in economies today are Small and Medium Enterprises (SMEs), they are the ones that are acquired effective and efficient in gaining global competition and play very fundamental function in the economies of many developing countries through the creation of employment and provision of support services to larger firms (UNCTAD, 1993). Some research found that SMEs face a number of challenges which are likely to explain the performance of their supply chains and their survival, one of them is information technology accessibility (Onugu , 2005). Due to these identified limitations in the previous literature, this paper tend to built a model for IT model specifically on SMEs’ SCM.
2. Supply Chain Management and IT
Today, SCM is a critical element in today’s highly complex and competitive business environment. It has direct influence on key issues like cost to market, time to market, responsiveness to changing customer demands and market dynamics and the overall business. SCM has received attention since early 1980’s (Moore, 2008).it can be described as a path of value creation frombasic producer through customer including all transportation and logistic sevices that connect them. In other words, SCM is a system which includes material suppliers, production facilities, distribution services and customer linked together by the feed forwars flow of materials and the feedback flow of formation (Stevens, 1989).
Supply chain management confines the notion of an organization to coordinate the activities from procurement to the final customer. Each component of the SCM activity supports another by focusing on each component operations across firms’ boundaries (McIvor and McHugh, 2000). Procurement in almost literature consider vital aspect of supply chains. According to Carr (1996), the constructs of procurement practices are strategic purchasing, purchasing risk taking and purchasing knowledge and skill. Strategic purchasing involves planning, evaluating, implementing and controlling the operational activities of the purchasing function an effort to meet the objectives of the firm. Purchasing risk taking is about the long term focus of the purchasing function to take on risk when appropriate opportunities present themselves and relentless pursuit of company objectives by purchasing professionals. Then, the construct of purchasing knowledge and skills looks at the extent to which persons handling the procurement function exhibit high purchasing knowledge and skills. This includes ensuring that persons handling the procurement function are qualified, have the skills to monitor and interpret supply market changes as well as handle aspects of relationship with suppliers.
SCM requires a serious integration from planning process to order and sales. Niu (2010) recognize the components of a linear supply chain as upstream supply chain, internal supply chain and downstream supply chain. Each component of the SCM activity supports another by focusing on each component operations across firms’ boundaries (McIvor and McHugh, 2000). In order to be successful in SCM, firms should share their stock, production and promotion estimations and plan with customers and suppliers which form the other rings of the chain. In this area, Information access and data transfer are highly recommended in SCM systems. Reservation of information and avoiding use use of technology by some firms reduce pace and effectiveness of supply chain.
Jaana Auramo et al (…..) investigates the role of IT in SCM, They develop three different types of IT in use in SCM as follows: transaction processing, supply chain planning and collaboration, order tracking and delivery coordination. Transaction processing stands for the use IT for increasing the efficiency of repetitive information exchanges between supply chain partners. In this type of IT use the exchange information is typically related to such task as order processing, billing, delivery verification, generating and sending dispatch advices and producing order quotes. The supply chain planning and collaboration type represents the use of IT for sharing planning-related information such as demand forecasts and other demand information, inventory information, and producing capacity information, with the intention of increasing the effectiveness of the supply chain. And the last is the third type of IT use in SCM, order tracking and delivery coordination which refers to the monitoring of individual orders or shipments, which include of component or final product, with the aim of coordinating their delivery or conveying timely information of their location.
SCM IN SME
Small and Medium enterprises are defined in several ways, but most commonly as firm that have up to 250 employees. In other literature, SMEs describe as an entity which deploys limited resources due to its small size, with less information and integration, and employs less trained workers with short-term goals 9Persona et al., 2004). As a group, these enterprises already provide wide-scale employment: jobs in small and medium enterprises account for more than half off all formal employment worldwide and 45% of formal employment in developing countries (Ayyagari et al, 2007). SMEs are seen by many national governments and international development organizations as important engines of innovation, economic growth, employment and poverty reduction.
SCM is perceived by SMEs differently. In several researches assumes that SMEs do not perceive their supplier to be their partners, rather, they perceive them to be a process which protects them against lack of production (Udomleartpresert et al., 2003). Udemleartpresert proposed Vertical Chain Management Model to increase SME’s bargaining power and relationship with customer. The of this model is to maximizing bilateral benefits with supplier in the chain and gaining bargaining power over supplier through establishment of a union by SMEs operating in the same sector.
Most studies on SCM did not take the size of firm as consideration. It means there is no sufficient research on to what extent SCM fits to SMEs and whether it is right to implement exactly the same SCM, which is implemented on big firms, on SMEs. Arend and Wisher (2005) found that SMEs do not implemented SCM rightly, they do not use SCM strategies fullyand they do not select SCM freely. In fact, there is week harmony between SCM and SMEs. Within their study, it was concluded that SMEs are willing to use supply chain after they begin using their supplier’s electronic data interchange (EDI) system.
In the research conducted by Hatice Cahpmar (2007) on SME Supply Chain Management Model, it was concluded that SMEs Supply Chain devided into 2 stage. The first stage of the model takes places place in supply and production centers and the scond stage takes place in product and customer center in consideration of their ffeatures and qualification. In supply-production stage of the model there are supply center, customer center and production center. SME union, which is among these institutions, provides integration among institutions at the first stage. The second stage, which is product-customer center, consist of bulk supplier, retail dealer and customer center, there is information flow in the opposite direction.
Figure 1. SME Supply Chain Management Model
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Information Technology in SME
As competition began to increase, and the supply-based market was replaced by the consumer-based market where there were plenty of suppliers to satisfy the consumer’s demand, corporations were compelled to improve their performance in order to survive in this everchanging market. Thus, rapid changes in information technology (IT) force enterprises to adapt new development. In other words, IT is critical to the success of most businesses especially small and medium sized enterprises (SMEs).
In the late nineties, web-based technologies were introduced and corporations started realizing the immense potential carried by these technologies.
Based on the objective of this study that is to examine the influence of student trainees’ bullying experiences and emotional dissonance on their subsequent career intentions, the above theoretical framework was developed (Figure 1). The instrument used was adopted from Rayner & Hoel (1997), Chu & Murrmann (2006) and Zahari (2004) earlier related studies.
6. Methodology
6.1 Sample and data collection method
Diploma students majoring in culinary arts and hotel management from two universities in Malaysia was the focus of this study based on their prior practicum training experiences in various hotels in Malaysia. A structured group-administered questionnaire using 7-point Likert scale was used in assessing the students’ self-reported experiences and feedbacks. The students were gathered and asked to respond to the questionnaire in a group administered setting in the faculty conference halls.
6.2 Instrumentation
The following Table 1 indicates the measures of the study variables used in the study. The instrument items were adopted from previous studies by Rayner, & Hoel, (1997), Dormann & Zapf (2004), Chu & Murrmann (2006), Maslach & Jackson (1986) and Zahari (2004).
7. Finding & Discussion
7.1 Reliability analysis
The Cronbach’s alpha coefficient value for all variables in the study revealed a range of coefficient value from .78 to .82 accordingly. The dependent variable of subsequent career intentions scale had a high reliability coefficient of .82 as compared to the independent variables. The independent variables of workplace bullying and emotional dissonance had coefficient values of .78 and .79 respectively.
7.2 Descriptive statistics & analysis
The findings showed that the distribution of gender was higher for females with a total of 157 female respondents (67.7%). On the other hand, there were 75 male respondents or 32.3 percent out of the total respondents. The age of the respondents showed that most of them were 21 years old, 13.4% were 20 years old and the rest (15.1%) were above 21 years old.
8. Conclusion and Future Recommendation
Although the findings showed significant influences of workplace bullying on student trainees’ subsequent career intentions and emotional dissonance experiences did not, more detail investigation is recommended to seek and better clarify other variables similar to this study. The findings provide human resource or training managers with information on how to deal with and eliminating bullying behavior or even tendencies to do so..
Acknowledgement
This paper is under scholarship of the university.
References
Abraham, R. (1999). Emotional dissonance in organizations: conceptualizing the roles of self-esteem and job-induced tension, Leadership & Organization Development Journal, 20(1), 18-25.
Bloisi, W., & Hoel, H. (2008). Abusive work practices and bullying among chefs: A review of the literature. International Journal of Hospitality Management, 27, 649-656.
Bubany, S. T., Krieshok, T. S., Black, M. D., & McKay, R. A. (2008). College students’ perspectives on their career decision making. Journal of Career Assessment, 16(2), 177-197.
Abraham, R. (1999). Emotional dissonance in organizations: conceptualizing the roles of self-esteem and job-induced tension, Leadership & Organization Development Journal, 20(1), 18-25.
Bloisi, W., & Hoel, H. (2008). Abusive work practices and bullying among chefs: A review of the literature. International Journal of Hospitality Management, 27, 649-656.
Bubany, S. T., Krieshok, T. S., Black, M. D., & McKay, R. A. (2008). College students’ perspectives on their career decision making. Journal of Career Assessment, 16(2), 177-197.
