We have witnessed a tremendous growth over the last several years in the development of information technology software and platforms that support two primary applications: supply chain planning and supply chain execution. Planning software seeks to improve forecast accuracy, optimize production scheduling, reduce working capital costs, cycle times, and transportation costs, and improve customer service. Applications or execution software helps obtain materials and manage physical flows from suppliers through downstream distribution to ensure customers receive the right products at the right location, time, and cost.

Regardless of the type of information technology platform or software used, supply chain systems should capture and share information across functional groups and organizational boundaries in a real-time or near real-time basis. This may involve transmitting the location of transportation vehicles using global positioning systems, using Web-based EDI systems to transmit material requirements to suppliers, or using bar code technology to monitor the timeliness of receipts form suppliers. In the near future radio frequency identification (RFID) tags will capture real-time data about material and product movement across the supply chain.

Examples regarding the relationship between information technology and supply chain excellence are not hard to find. Dell, consistently one of the most profitable computer companies, uses planning and execution software from i2 to obtain inventory from supplies over the Web in real time and to pull materials into factories every two hours based on customer orders. Dell’s IT system allows the company to better manage working capital, which reduces exposure to financial risk, while balancing the supply of components with the demand for components. If Dell experiences a temporary shortage of 15-inch color monitors, for example, the company can quickly offer a promotion on 17-inch monitors to balance supply and demand.