ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research

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1 Online Open Access publishing platform for Management Research Copyright by the authors - Licensee IPA- Under Creative Commons license 3.0 Research Article ISSN Survey on the use of supply chain related information technologies in Moroccan context Abdelkhak Nakabi, Zitouni Beidouri and Bouksour Othmane Department of Engineering Sciences, University Hassan2, ENSEM. Casablanca, Morocco na.abdelkhalek@gmail.com ABSTRACT The use of information technology (IT) is commonly acknowledged as a key prerequisite for the effective control of today s complex supply chains. Despite the acknowledged importance of the use of IT in supply chain management (SCM), the number of empirical studies assessing the use of IT in the supply chain context is limited. Based on empirical data from 30 industrial and service companies, this paper presents an overview of the amplitude of the use of IT by these companies to enhance their SC performance. This field based study assesses technologies used to support supply chain processes in Moroccan context. The reviewed processes are related to demand forecasting, order management, planning and operations and transactions control. The technologies reviewed are, ERP, GPS, TMS, WMS, RFID, and bare codes. The survey cover a small part of the processes and technologies related to SC Management but it provide a clear view of the maturity of the sample companies.the results of this survey help to highlight correlation between the amplitude of use of new technologies and level of companies supply chain integration confirming the assumption that the more a company is integrated and its supply chain processes are mature the much it is willing to use and leverage related information technologies. Keywords: Supply chain management, Morocco, IT in companies. 1. Introduction Today companies are more considered as parts of multi-company, multi-echelon networks, i.e. supply chains, delivering goods and services to the final customer, than independent entities (Christopher, 1992; Lambert and Cooper, 2000). Supply chain management (SCM) literature suggests that integrated control of these multi-company networks can provide significant benefits (e.g. Cooper et al., 1997; Burgess, 1998; de Leeuw et al., 1999; MasonJones and Towill, 1999; Norek and Pohlen, 2001). The utilization of information technology (IT), in turn, is considered as an imperative requirement for managing these networks, and has been associated with significant supply chain efficiency improvements (e.g. Lee and Billington, 1992; White and Pearson, 2001). Although the positive impact of IT on SCM efficiency is commonly acknowledged, empirical research assessing how IT is in practice used for the purposes of SCM is narrow, especially those interested to local and emerging context. More specifically, majority of the prior research has focused either on modeling the benefits of interorganizational information technologies and information sharing, on assessing the impact of specific technologies on supply chain efficiency or studying global businesses evolving in mature contexts. 379

2 Due to these identified limitations in the previous literature we address the following research problem: What is the real amplitude of the use of Information Technologies to control Supply Chains in Moroccan context and how this is reflecting SC integration and maturity? This paper is structured as follows. 1. First, the previous literature discussing the use of IT in SCM is reviewed. 2. Second, the research design is presented, followed by the presentation of the findings of the study. 3. Finally, in the last sections, the main findings are summarized and discussed and the concluding remarks are drawn. 2. Literature review There is such an abundance of papers discussing the role of IT in SCM and showing its benefits. In fact, Gunasekaran and Ngai 2003 and Johnson and Whang 2002, provide two, literature reviews on the subject. Simchi-Levi et al., (2003), Dawson (2002), Chopra and Meindl (2001), and Levary (2000) discussed the role of new information technology for SCM. According to Simchi-Levi et al., (2003, p. 267) objectives of IT in SCM are: 1. Providing information availability and visibility 2. Enabling single point of contact of data 3. Allowing decisions based on total supply chain information 4. Enabling collaboration with supply chain partners The most typical role of IT in SCM is reducing the friction in transactions between supply chain partners through cost-effective information flow (for example, Cross, 2000). Lee et al., 1997 describe IT as a solution for bullwhip effect in supply chains. Impact and benefits of IT in supply chain management, is recognized to enable huge opportunities: ranging from direct operational benefits to the creation of strategic advantage. This assumption was supported by McFarlan (1984), Benjamin et al., (1985), and Porter and Millar (1985). Porter and Millar (ibid), in particular, argued that IT changes industry structures and rules of competition, creates competitive advantage, and creates new business opportunities. In the logistics/supply chain context, Bowersox and Daugherty (1995) outlined that IT is critical in supporting companies creating strategic advantage by enabling centralized strategic planning with day-to-day centralized operations. A common view held is that IT has a profound impact on managing supply chains. Kemppainen and Vepsäläinen (2003) used case studies in six Finnish industrial supply chains as data, to conclude that IT is, alongside specialization and outsourcing, a key prerequisite for networking of organizations. Williams et al., argued that electronic SCM combines the structural benefits of SCM with the efficiency benefits of a simple approach, enabling, for example, lower cost through possibilities of selecting from a larger supplier base. The landmark work of Malone et al., (1987) proposes that the value offerings through IT are electronic communication (electronic brokerage, and electronic integration). Many theoretical papers have addressed the value of IT in SCM (van Hoek, 2001; Lee and Whang, 2001; Levary 2000; Cross 2000; Bowersox and Daugherty, 1995). In fact, Levary (ibid) suggest that IT in SCM provides reduction of cycle time, reduction of inventories, minimization of bullwhip effect, and improvement of effectiveness of distribution channels. 380

3 3. Questionnaire description This research is based on data related to the use of electronic technologies for SCM, from 30 companies evolving in Moroccan context. In this section we present the processes and technologies in scope, a description of the company sample participating in the survey and the research findings. The survey, in addition to assessing the amplitude of the use of the said technology, aims to draw the relationship that may exist between the use of these technologies and the maturity and integration level of SC. 3.1 Targeted processes Before assessing the level of penetration of advanced Electronic and Information Technologies in Moroccan SC context, we choose to assed first the maturity of the following processes. 3.2 Demand forecasting Demand forecasting is a key input for any planning process. Any maturity weakness in this process directly impacts planning efforts. The questions we have chosen helps to get an idea about the maturity of this process. The questionnaire offers to the participant many response choices, so we can get a clear idea about the effectiveness of this process. The question is then: which input your company uses to forecast your demand? The answer options suggested are: 1. Previous, years, months, weeks sales data, 2. Market Research, 3. Sales forces experience, 4. Current sales data, 5. Weather information, 6. Competitors data, 7. Sales objectives set by top management, 8. No sales forecast are performed. 3.3 Order management It is obvious that if a company still get orders in a decentralized manner by telephone through its sales forces who note it on paper sheets and communicate it verbally to the production or logistics department, it will be difficult to imagine implementing a performing TMS (Transport Management System) or APS (Advanced Planning System) tools for example to plan and control operations. To assess the efficiency of this process the questionnaire invited participants to answer the following questions: Are orders received by 1. Telephone 2. Directly by the sales force 3. By fax, 4. Use a Call Center 5. By mail 6. On a website 7. By using a regular or systematic Ordering tool, 381

4 8. Order triggered automatically based on specific routine (Using VMI (Vendor Managed Inventory), QR (Quick Response Approach) or any other collaboration approach)? The questionnaire invited also the participant to precise if orders are registered on: 1. Database, 2. Paper sheet, 3. On a dedicated tool? 3.4 Planning process This question aims to get a clear idea about the level of importance given by the company to planning processes, such as, MRP, MRP II (Manufacturing Resources Planning) or SandOP (Sales and Operations Planning) process. Thus, according to the participation or not of top management and multidisciplinary team in the planning effort and on its time horizon we can conclude if the company sets up or not an effective SandOP process. To assess the existence and maturity of the planning process, the following questions were asked: Your production plans are made on a: 1. Daily, 2. Weekly, 3. Monthly Basis People attending the SandOP (Sales and Operation planning) meetings belong to 1. Production, 2. Technical, 3. Marketing, 4. Sales, 5. Logistics and Supply Chain, 6. Finance, 7. General Management 3.5 Operations control To get an idea of how effectively logistics operations are controlled we measured the level of use of technologies such as GPS tracking, RFID, bar codes, TMS (Transport Management System) and WMS (Warehouse Management System). The more a company uses these technologies the easily we can conclude that operations are controlled. Although the targeted processes do not cover all processes under the dome of the SC, they give a holistic picture of maturity and integration level of the entire SC. 3.6 Targeted technologies In the matter of technologies we questioned the use of number of Information Technology tools to handstand to which end the sample companies profit from new tendencies to enhance their SC performances. 3.7 Use of GPS tracking In this section we measure if GPS is a common use for transportation business, if companies try to leverage potential benefits of it, if their expectations from such a tool are clear and if companies get preconditions to maximize usage of this tool. 382

5 We then asked the questions in below: Are your vehicles equipped with GPS. If so, what is the portion of fleet equipped? If your trucks are equipped with GPS what are its main uses? 1. Check respect of safety rules (speed limits, time of work, respect for trips...) 2. Monitor drivers behaviors and disciplinary 3. Truck fuel consumption level 4. Tours planning 5. Improve customer service Are you satisfied with the GPS technology implemented? 3.8 Use of RFID and barcode technology A company that has come to realize the importance of having visibility into the movement of products throughout the chain and to share this information with all chain partners should certainly reach an advanced level of integration. The use of RFID (Radio Frequency Identification) and barcode technologies is probed through the following question: Throughout your supply chain or part of it, your company, its main suppliers, retailers or distributors use product identification systems? 1. RFID 2. Bare Code 3.9 Use of ERP A company that does not have an ERP or use small parts of it would normally be entitled to a basic level of integration of its SC. The questions we asked to probe how the Moroccan companies plan their resources are: 1. Your company uses an ERP? 2. If so, which ERP solution do you use? 3. If so what are the modules used 3.10 Use of websites To assess the Moroccan companies amplitude of use of Web technologies to deal with partners, we asked participants to respond to questions about the use of web sites. A website can be a simple commercial portal, an order management tool, a customer relationship management application or exchange platform with suppliers and distributors. In this topic we proposed a wide range of response choices for the potential uses of Web sites to measure the company's effort to integrate its partners Use of advanced planning tools (APS) The Advanced Planning tools make use of advanced information technologies and planning methodologies, so that the enterprise has the capability to synchronize planning, consider the best planning under enterprise resource limitation, prompt planning and support policy decision. In the survey we tried to check up to which end Advanced Planning modules such as TMS (Transport Management system), WMS (Wahrehouse Management System) are used and leveraged to support planning processes Companies sample 383

6 Companies participating in the survey are classified according to the following criteria: 3.13 Local Vs multinational 60% of companies (Figure1) that responded to the questionnaire are affiliates to multinational groups. We checked the suggestion that multinationals affiliates got higher maturity levels of their SC than local companies and uses more frequently and efficiently Information Technologies to control their SC. As they act in global scope these affiliates should be more willing to standardize their processes and use advanced IT tools to enhance visibility on their operations. Local businesses should feel less pressure to standardize their operations as they remain local and generally specific Companies size Figure 1: Sample companies classification (Local vs Multinational) Large companies should be more willing to integrate SC to facilitate operation control and to plan more efficiently their business. They also got financial capacities and resources to procure advanced technologies that are not necessarily affordable for small size businesses. In this research we try to check these suggestions. The size of the sample companies was schematically represented by its Turnover. The figure below show the distribution of these companies according to their Turnover. Figure 2: Sample companies classification by company s size 384

7 3.15 Whether if operation are outsourced or internally performed? During this survey it was found that the majority of companies opt to outsource their transport fleet to focus on their core businesses. Transport is known to be a very capital intensive activity which led companies with a high level of maturity to choose to outsource this function to optimize their capital employed and thus improve their financial results. Other considerations generally push companies to outsource this function such as the hope to get rid of drivers and fleet management issues. Figure 3: Sample companies classification (Transport outsourced vs internally handled) 3.16 Storage facilities platforms Around 50% of companies surveyed got less than 1 warehouse or logistics platforms. To implement logistics platforms generally aims to the consumer markets and to reduce lead time. The low number of logistics platforms largely explains the low utilization rate of WMS (Warehouse Management System) Business sector Figure 4: Sample companies classification by number of warehouses The survey show that the sample companies belong to different business sector: 1. Construction materials 2. Car industry 3. Foods industry 4. Pharmaceutical industry 5. Logistics and transport 385

8 6. Energy 7. Electronic Industry Some sectors should be reaching advanced supply chain maturity levels rather then others depending on the awareness these companies have of the role of SCM and the willing to implement high technologies to control it. 4. Results and discussions In this section we present a sum up of acquired response to the questionnaire. The responses are. The first section relates to the measure of the maturity of processes targeted by the questionnaire. The second focuses on a number of technologies that offer considerable potential for improving the visibility and improving process integration. 4.1 Delivery operations Figure 5: Sample companies Business Sector A first element which allows having an idea about the scope of the operations is whether deliveries operations are handled by the company or it belongs to the customer to pick its goods and manage transportation. 70% of companies said they support this process, which is a positive point to be noted and should help to implement delivery and transportation optimization projects. For companies that let their customers to handle delivery operations it will be difficult to assess delivery planning or optimization process since it remains out of operational control. It is only when a company supports the delivery process it will become aware of the challenges of this process and strive to implement optimization and improvement projects. 386

9 4.2 Order management Figure 6: Sample companies deliveries handling The results of the survey showed that only, 19% of the questioned companies got this function automated or implement partnership protocols with their customers such as VMI (Vendor Managed Inventory). This suggests that this process is still at a primary level of maturity for more than 80% of companies. In the other hand, it should be noted that in only 31% of the cases, sales force continues to handle this function. The more a company SC is mature the more its sales forces focus on business development and customers support and dedicates separate resources and tools for order taking jobs. In 69% of the cases orders companies get order by fax, , on a dedicated platform or through a VMI channel. Figure 7: Orders generation Another aspect that helps to draw a picture about the maturity of this process is the list of order recording tools used. Using a dedicated tool that allows interfacing with scheduling systems would smooth implementation of process improvement and optimization projects. Otherwise, if a company continues to record orders on paper sheet or on Excel database, the introduction of deliveries automatic planning tools for example will be hampered by the absence of accurate input data. Companies wishing to develop planning tools start by implementing robust order registration database tools for effective controls. 13 Of the companies surveyed use paper sheet and 87% use either platforms or dedicated database which gives a very encouraging sign for the development of planning tools. 387

10 4.3 Demand forecasting Figure 8: Orders Registration For the order taking process it is essential to set up a daily schedule of operations, the presence or absence of demand forecasting system is necessary for the implementation of SandOP Process (Sales and Operations Planning) and to define the Business plan. The question we posed related to this topic helps shed light on the process that allows the company to raise its demand forecast, the more a company integrates elements in its sales forecast more gains in the process robustness and production plans and transportation approaches reality. Companies that are limited to sales history or sales objectives set by top management are often obliged to adjust their plans during operations execution, which generates a lot of losses and asynchrony. In the case of our pool, 60% say they integrate more than one input to establish their forecasts. 4.4 Sales and operations planning Figure 9: Demand planning input Companies where each department works separately to develop its own plans often remain at a basic level of maturity. The much key departments are represented around the same table to discuss and validate sales plans, financial plans, production plans and the logistical plans with the presence of the top management the much the processes is robust, effective and mature. As a result of the survey, it is important to note that for 69% of the questioned companies at 388

11 least two departments attend these meetings, which is a strong sign of maturity of the companies sampled. Figure 10: Multidepartment participation in the SandOP process To evaluate this process from another view, we asked about the frequency of these meeting. Indeed, when talking about business plans, this type of exercise is performed at least once every 3 years considering investing new opportunities, major distribution network shaping, withdrawals from certain markets or activities, plants closure or divestment. The SandOP where resources planning, annual sales plans, production and logistics are considered cover a time horizon between 3 months and 1 year. The results of the survey showed that only 8% of the companies make got plans for more than one week. This is to be compared to the results of the question related to the implementation of APS tool. 4.5 Survey of the technologies used Figure 11: Orders Registration In this paragraph we have collected the answers on the use of new information technologies by the Moroccan company in favor of SC process and especially for the benefit of improving visibility to improve the planning process. 40% of companies do not use trucks equipped with GPS. 50% of companies use fleet equipped at a portion lower than 20% in GPS. This lack of enthusiasm for this technology comes from the fact that over 80% of companies outsource their transport and therefore the use of this technology depends on the willingness of carriers and their maturity levels. 389

12 Figure 12: Use of GPS The lack of enthusiasm is a kind of introduction to the lack of enthusiasm for Transport Management Systems. GPS is usually a prerequisite for TMS. Thus, only 13% of business that have been features a TMS. Figure 13: Use of TMS (Transport Management System) The same portion use WMS systems. Figure 14: Use of WMS (Warehouse Management Sytem) These two types of system as part of a new generation of logistics management tools preceding the implementation of ERP still have a room for expansion and maturity during the next few years. For Moroccan market companies still not aware of the value these tools can add to improve chain process in one hand and specialized tools vendors still not very numerous. In the register of Enterprise Resources Planning, 85% of companies use ERP, the most common solutions as SAP and JDE. This is a positive sign of maturity. In the other side of this picture, we realized that ERPs are not necessarily used to support SC management and are mainly a master part of accounting and finance management system. We checked the 390

13 modules used in the ERP. More than 70% of companies use at least one component related to the management of stock, or to the transport management, or order management. Figure15: Use of ERP (Enterprise Resources Planning) To improve the visibility of product movement, 57% of companies or a portion of their chains use at least bar code system or RFID system to truck product flow. (Cf Fig) To measure the quality of use of these sites we asked about the features offered by these sites. 70% of companies use these sites as a façade or they publish information on their production sites, the sampling or respect their product. Only the remaining 30% add transactional capabilities of online sales, order intake or interaction with suppliers. 5. Conclusions To sum up we note that for a big number of sample companies many processes such as order management, sales forecasting in one hand are mature. In the other hand, planning processes such as SandOP and operations control still suffer from a lack of maturity. This situation is confirmed by the fact that some the kind of Information Technologies are used to support these processes where other tools are not. Figure 16: Use of ERP (Enterprise Resources Planning) 391

14 Figure 17: Companies use of Web Site In fact many companies use robust tools to manage customers orders and use ERP to register transactions. Tools like TMS, WMS, RFID and GPS still very narrowly used even if more than 56% belong to multinational companies. These results suggest that the more companies get their SC process mature and integrated the more it is willing to implement advanced technologies to enhance planning and control performances. Nomenclature SC : Supply Chain SCM : Supply Chain Management ERP: Enterprise Resources Planning RFID: Radio Frequency Identification TMS: Transport Management System WMS: Warehouse Management System GPS: Global Positioning System 6. References 1. Benjamin R.I., Rockart, J.F., Scott Morton M.S. and Wyman J. (1984), Information Technology, A Strategic Opportunity, Sloan Management Review, 25(3), pp Bowersox D.J. and Daugherty P.J. (1995), Logistics paradigms: the impact of information technology, Journal of Business Logistics, 16(1), pp Burgess R. (1998), Avoiding supply chain management failure: lessons from business process re-engineering, International Journal of Logistics Management, Vol. 9, No. 1, pp Chopra S. and Meindl P. (2001), Supply Chain Management: Strategy, Planning, and Operation. Prentice Hall, Upper Saddle River, New Jersey, p Christopher M. (1992), Logistics and supply chain management, Pitman publishing, London 6. Cooper, M.C., Lambert, D.M. and Pagh J.D. (1997), Supply chain management: more than a new name for logistics, The International Journal of Logistics Management, Vol. 8, No 1, pp

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