Towards Improving Supply Chain Coordination through Business Process Reengineering

Abstract

Global marketplaces, higher levels of product variety, shorter product life cycles, and demand for premium customer services are all things which cause pressure for one supply chain to be more efficient, more time compressed and more cost effective. This has become even more critical in recent years because the advancement in information technology has enabled companies to improve their supply chain strategies and explore new models for management of supply chain activity. Among others, important research area in the supply chain management literature is the coordination of the supply chain. Actually, the understanding and practicing of supply chain coordination has become an essential prerequisite for staying competitive in the global race and for enhancing profitability. Hence, supply chain management needs to be defined to explicitly recognise the strategic nature of coordination and information sharing between trading partners and to explain the dual purpose of supply chain management: to improve the performance of an individual organisation an to improve the performance of the whole supply chain. In this context, we present the business process reengineering as a tool for achievinging effective supply chain management, and illustrate through a case study how business process modelling can help in achieving successful improvements in sharing information and the coordination of supply chain processes. It is well recognised that advances in information technologies have driven much change through supply chain and logistics management services. Traditionally, the management of information has been somewhat neglected. The method of information transferring carried out by memebers of the supply chain has consisted of placing orders with the member directly above them. This caused many problems in the supply chain including: excessive inventory holding, longer lead times and reduced service levels in addition to increased demand variability or the ‘Bullwhip Effect’. Thus, as supply chain management progresses, supply chain managers are realising the need to utilise improved information sharing throughout the supply chain in order to have coordinated supply chain and to remain competitive. However, coordination is not just a mere information sharing. Information can be shared but there may not be any alignment in terms of incentives, objectives and decisions (Lee et al., 1997b). Coordination involves alignments of decisions, objectives and incentives and this can be done only through new reengineered business process models, which need to follow the information sharing. Appropriate business processes are a prerequisite for the strategic