Business Courses/Operations ManagementCourse
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InstructorYuanxin (Amy) Yang AlcocerShow bio
Amy has a master's degree in secondary education and has been teaching math for over 9 years. Amy has worked with students at all levels from those with special needs to those that are gifted.
In business, the supply chain refers to the processes involved in producing and distributing goods and services to consumers. Learn about the information technology used for supply chain management. Explore built-to-order (BTO), enterprise resource planning (ERP), radio frequency identification (RFID), barcodes, electronic data interchange (EDI), and e-business.Updated: 08/22/2022
Table of Contents
- BTO (Built to Order)
- ERP (Enterprise Resource Planning)
- RFID (Radio Frequency Identification)
- Barcodes
- EDI (Electronic Data Interchange)
- E-Businesses
- Lesson Summary
Walk into any department store and you will see aisles and aisles of products. These products have all been shipped to the store but how does the store make sure it gets the products it needs when it needs them? Managing how products move from where they are made to the store you are shopping at is called supply chain management. This management includes the storage of the materials used to make the product and any inprocess and finished goods. And of course, it includes how these goods and materials are transported from one place to another.
Many technologies exist today that will help you when managing your supplies and inventory. Let's take a look at a few of these. BTO stands for build-to-order. This is not a technology per-se, but a way to manage the supply chain. With build-to-order, companies only produce a product when it is purchased, instead of having a warehouse full of finished products. When companies use the build-to order supply chain management style, they do not need a warehouse to store finished products because a product is directly shipped to the customer who bought it once it is made.
However, the business does need storage for the raw materials used to make the product. The benefit of a BTO system is that customers get exactly what they want. Businesses that have very customizable products benefit from this type of supply chain management. For example, some computer companies wait for an order before building a computer to the specifications of the customer.
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Enterprise resource planning (or ERP), refers to software that helps businesses to manage and automate many back office tasks. When used in supply chain management, ERP software helps businesses to easily see how their materials and inventory are being used. It can also automate the purchasing materials when stock levels drop below a certain point so that the production of new products won't be stopped due to a lack of materials.
For the department store that you are in, ERP software can automatically place orders with the store's vendors when products drop to a certain level. For example, if the store's inventory of bar soap falls below ten, the ERP software will automatically place an order with the soap vendor. Since the department store has thousands upon thousands of items to keep track of, you can see how ERP software really helps the business to keep track of its items. The ERP software also ensures that the store shelves are never empty.
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RFID stands for radio-frequency identification. This technology uses electromagnetic fields to wirelessly identify and track tags. This type of technology is great for keeping track of your supplies and inventory because items can be scanned by the hundreds. You won't have to scan or manually count each product individually. This can save businesses a lot of time.
RFID tags can also store electronic data. In addition to keeping track of your items, you can also add information, such as ownership information. RFID tags can be scanned no matter where they are located in the product, so these chips that people put in their pets to help them locate lost pets, are an example of RFID tags in use.
The department store that you are visiting can use RFID tags in its clothes and perhaps its very expensive items. Because RFID tags can be scanned wirelessly, they can be scanned as people walk past a sensor. So when stores use RFID tags in their very expensive items, if someone decides to walk out of the store without paying, it can trigger an alarm to alert the store that someone hasn't paid for an item.
When used for inventory tracking, items with RFID tags in them can be scanned by the hundreds. So when a shipment of clothes comes into the department store, the department store can simply pass the box near an RFID sensor and it will be able to count all the items in the box without the store having to individually scan or count each piece of clothing.
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A technology that is not as complicated as RFID tags is the barcode. Barcodes are optical patterns that represent data. When you look at almost any packaged item in the department store, you will find a barcode on it in the form of vertical lines of varying widths with a product number underneath. When scanned, the barcode can be used at the cash register to provide information, such as cost and item description.
In addition, scanning it can be used to count products so businesses can keep track of their inventory.
At your department store, when you are finished shopping, you usually take your items to the cashier so she can scan the barcodes through the cash register, where the item and price is added to your receipt. As the barcode is scanned, what you don't see is that the product you purchased is also noted on the inventory side of the department store and the inventory totals are decreased by the amount that you just purchased.
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Another type of technology that businesses can use to help them with their supply chain management is EDI, or electronic data interchange. EDI is communication between computers using a standardized message format. Using EDI, one business can send another business a purchase order that can be automatically processed and then shipped out by employees.
Your department store can use EDI as part of its ERP software. The ERP software can send out EDI purchase orders to its vendors when inventory levels decrease below a certain number. When the vendor receives the EDI purchase order, its computers can automatically translate the information into its appropriate parts of items purchased, quantity, shipping address, and billing address.
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With the increasing popularity of e-businesses the supply chain management arena has had to change as well to make room for these Internet businesses. Because e-businesses operate solely online, the Internet becomes a very important part of keeping track of inventory and supplies. The Internet is also an ever changing tool so e-businesses can have Internet software designed to suit their supply management needs, like software that keeps track of the number of sales and then makes changes to the inventory information of the business or software that automatically lets them know when they need to restock their inventory.
In short, the Internet can have and create tools that will do whatever the e-business needs to manage its supplies.
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Let's review what you've learned. Managing how products move from where they are made to the store you are shopping at is called supply chain management. Many technologies exist today that will help you in managing your supplies and inventory. BTO stands for build-to-order. This is when companies only produce a product when it is purchased. Enterprise resource planning (or ERP) refers to software that helps businesses to manage and automate many back office tasks. RFID stands for radio-frequency identification. This technology uses electromagnetic fields to wirelessly identify and track tags. Barcodes are optical patterns that represent data. Electronic data interchange or EDI is communication between computers using a standardized message format. E-businesses are Internet businesses. The Internet is also an ever changing tool so e-businesses can have Internet software designed to suit their supply chain management needs.
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