Abstract:

Organisations form links in supply chains that stretch from the initial producer of raw materials, through a series of transformative stages, to the final consumer of finished products. An organisation’s supply chain consists of its upstream supply, its internal supply chain, and its downstream supply chain. The internal supply chain can be represented by Porter’s value chain model. A supply chain can therefore be represented as a series of linked value chains. A company can be involved in a number of supply chains, as can its suppliers and its customers. These suppliers and customers cover a broad spectrum from very large to very small organisations.  Large companies have progressed from the use of stand-alone systems to the use of large-scale enterprise information systems. The use of these large-scale integrated information systems provides many benefits and has allowed large companies to develop cross-functional systems that eliminate islands of automation, remove many unnecessary activities, provide information visibility, help reduce costs, and can improve the performance of the value chain. The performance and responsiveness of supply chains can also be enhanced through the sharing of information. The availability of timely, accurate, and relevant information can help overcome problems associated with the operation and management of supply chains. Large companies are increasingly using information systems to link with their trading partners in order to assist in the execution and management of supply chain activities. The use of inter-organisational information systems provides benefits that are associated with information integration. While large companies have many trading partners, in monetary terms most business will be transacted with a small number of trading partners, most of whom will also be large companies. The remaining business will be transacted with a large number of trading partners, most of whom will be small or medium sized enterprises (SMEs).  Despite falling capital costs, barriers to the adoption of IT by SMEs combined with a lack of strategic focus, results in them lagging behind larger organisation in the use of integrated internal information systems and inter-organisational systems.  Many SMEs therefore lose out on the potential benefits of IT. However, this also negatively impacts on the larger organisations. Having a large number of trading partners outside of the inter-organisational information system means that potential benefits do not materialize as they are dependent upon integration of systems. The operation of  a 2-tier system with parallel manual and automated systems results in expected benefits not being realized and the incurring of additional unexpected costs. The anticipated return on investment is therefore not achieved. The links in the supply chain can represent large organisations or small organisations. These large and small links in the supply chain must work in harmony if the supply chain is to be responsive to the needs of the consumer. This paper considers the issues faced regarding the use of information systems to link large organisations and their smaller counterparts in the supply chain. The paper reports on the empirical data that has been collected in a study of these issues.