Mobile supply chain management: Challenges for implementation

Technovation 26 (2006) 682 686 www.elsevier.com/locate/technovation Mobile supply chain management: Challenges for implementation Teck-Yong Eng* King s College London, University of London, School of Social Science & Public Policy, Management Department, 150 Stamford Street, London SE1 9NH, UK Abstract Mobile supply chain management (mscm) is fast gaining recognition as a major source of cost reduction and supply chain performance. However, there is little published academic literature on the application and implementation of mobile and/or wireless technology in SCM. This article attempts to explore the challenges of mobile technology for successful implementation of mscm. The implications of mobile or wireless technology for successful implementation of mscm are examined with reference to three critical areas of SCM: (1) competitive advantage based on the notion of value chain analysis in SCM; (2) relationship management for successful collaboration along the supply chain and strategic partnerships; and (3) coordination and integration of disparate functions and activities to enhance overall supply chain performance. The article identifies the implications of mobile technology for SCM and develops propositions that have important consequences on the likelihood of a successful implementation of mscm. q 2005 Elsevier Ltd. All rights reserved. Keywords: Mobile SCM; Wireless technology; Implementation; Coordination; Integration 1. Introduction A supply chain consists of networks of participants and channels of different functions from inside as well as outside an organization that affect the desired outcomes of the supply chain. Supply chain management (SCM) involves coordinating and integrating activities and processes among different business functions for the benefit of the entire supply chain. The integration of multiple functions and enterprises particularly in a global supply chain context is complex. Information technology (IT) systems have long been recognized to facilitate the process of SCM through integrated information sharing, process automation, and relationship management programs. The increasing use of the Internet in a business-to-business context has further improved SCM through real time collaboration, 24/7 availability, online procurement, and access to worldwide markets (e.g. Lancioni et al., 2003). Furthermore, improvements in IT, Internet security and bandwidth have spurred the growth of wireless technology or mobile applications for SCM in industries. A wireless computing environment is presenting both opportunities and challenges for creating mobile SCM. * Tel./fax: C44 207 848 4211. E-mail address: teck.eng@kcl.ac.uk. 0166-4972/$ - see front matter q 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.technovation.2005.07.003 Mobile SCM (mscm) refers to the use of mobile applications and devices to aid the conduct of supply chain activities, and ultimately help firms to gain cost reductions, supply chain responsiveness and competitive advantage. Mobile SCM is relatively new, and it complements, combines and/or replaces existing IT systems. It can be developed by integrating mobile technology to existing IT systems and/or replacing dependence on wired systems. This provides firms and users the flexibility to apply wireless technology to any IT-enabled supply chain functions, and extends existing SCM capabilities. The most obvious advantage of using wireless or mobile technology in SCM is that it enables firms to provide services to customers wherever they are located at the time they need them. This is known as location-based services (LBS), where wireless technology and infrastructure, namely Global Positioning System (GPS) and Geographical Information System (GIS) are combined to locate and target customers in specific locations. In addition, mobile SCM applications can be used to streamline business processes of different business functions to ensure efficient flow and exchange of supply chain activities from the inception of a product, design, production, sales, customer service to the end of its useful life. However, there is scant literature on mscm particularly about the challenges of the characteristics of wireless technology for implementation. Academic research on mscm is lagging behind industry practice and wireless

T.-Y. Eng / Technovation 26 (2006) 682 686 683 technology developments. Despite the potential of wireless technology combined with both existing IT systems and the Internet in changing the way firms conduct their business, no theoretical and empirical work has yet examined the application and implementation of mscm. An understanding of the challenges of application and implementation of mscm is crucial as mobile technology provides real time and on-demand response. For example, without knowledge of application and implementation of mscm, mistakes could be very costly as real time decision-making is irreversible and affect multiple functions through knock-on supply chain effects, and cause customer dissatisfaction. Thus, it is worth to develop an understanding of the characteristics of mobile technology for SCM, and to explore the challenges for successful mscm implementation. This article attempts to provide some insights into the nature of mscm and their implications for successful implementation. Consistent with SCM literature, the primary focus is on analyzing the implications of the characteristics of wireless technology for three critical aspects of SCM: competitive advantage, relationship management, and coordination and integration of supply chain functions. This article aims to lay some of the groundwork for understanding the contribution of wireless technology to these critical aspects of SCM rather than develop a fully specified framework for mscm implementation challenges. The objectives of the article are to: (1) examine the characteristics of wireless technology and their implications for SCM; (2) conceptualize research and practical challenges as regards successful implementation of mscm; and (3) develop propositions that have important consequences on the likelihoods of successful implementation of mscm. Specifically, the characteristics of wireless technology related to real time events, ubiquity and personalization are examined in terms of the implementation challenges for developing competitive advantage through value chain analysis, managing collaboration in supply chain relationships and partnerships, and for enhancing SCM performance through coordination and integration. The likelihoods for successful implementation of mscm are discussed by developing propositions framed in key concepts related to the characteristics of wireless technology. 2. Mobile supply chain application Mobile SCM integrates software applications with mobile devices (e.g. cell phones, personal digital assistants, pocket personal computers) to give users the flexibility to operate in a wireless computing environment at any location. Mobile devices are connected to a company s computer server via wireless technology infrastructure such as via GPS, GIS and wireless fidelity (Wi-Fi) which enables users to share data across functions and along the supply chain without the need for fixed wires and/or connections for exchange of information. For example, radio frequency identification (RFID) and short message service (SMS) software applications combined with tags and cell phones respectively provide wireless or mobile access to a company s database. This enables users to take advantage of information systems linking business processes among different functions within the company and between companies at remote locations. As such, mobile supply chain software application extends both intrabusiness and interfirm business systems by enabling supply chain participants to carry out business activities such as perform online transactions, share and exchange up-to-date information, provide customer service on demand, manage logistics, transportation and inventory levels. However, mobile supply chain applications introduce new challenges particularly for implementation. Mobile technology extends SCM capabilities through new virtual and remote ways of conducting supply chain activities. While software companies claim that mscm delivers an increased in return-on-investment, productivity, sales turnover and customer satisfaction, no published academic literature has yet examined the implications for successful implementation of mobile technology in SCM. Some industry analysts also note that many companies are struggling to implement mobile software application to their business and end users. Mobile technology and software implementation challenges the current coordination of different functions and activities for SCM in terms of providing supply chain services on demand at any location. Of particular concerns are the implementation challenges of leveraging wireless technology for developing competitive advantage, relationship management, and for improving coordination and integration of disparate supply chain activities. It is therefore important to understand the characteristics of wireless technology application and their challenges for the likelihoods of successful implementation of mscm. 3. Characteristics of wireless technology and challenges for mscm Mobile technology application together with the Internet are changing the landscape of business and introducing new concepts for SCM. The main concerns of mobile technology in the context of SCM are: place for efficient distribution of goods and services, timing for meeting customer demand and managing logistics, and service quality for responsiveness and customer satisfaction. These are examined and discussed in terms of real-time events, ubiquity and personalization as an extension of wired technology to mscm. Real time events in the supply chain refer to live or instantaneous broadcasts of occurrence using wireless technology and mobile devices. There is no waiting time, and transactions carried out along the supply chain are efficient. The benefits of real time communications have been recognized in wired systems through electronic data interchange and enterprise resource planning within an

684 T.-Y. Eng / Technovation 26 (2006) 682 686 organization (e.g. Eng, 2004). In mscm, integration of real time events using wireless technology provides a constant flow of up-to-date information from both inside and outside the organization. Since SCM is concerned with information exchange and market response, real time events enhance supply chain performance. Real time information eliminates response lag time, delays in transaction processing and customer service, and missed market opportunities such as order-to-demand. It also helps companies to cope with changes of uncontrollable external factors affecting demand (e.g. prices, customers general confidence) through measurement of demand in real time. In particular, prices of products and services can be changed using real time events (dynamic pricing) rather than being based on rules of thumb. Real time events also pose many challenges to SCM in terms of managing functions along the supply chain for successful implementation of wireless technology. In a fast changing business environment, wireless technology presents conventional supply chains new challenges of: (1) transient value creation points of a value chain that have implications for competitive advantage. In other words, there is constant adaptation of critical points in real time for value creation of value chain analysis. (2) A dynamic supply chain, where interactions can occur at any point along the supply chain. This demands real time integration of combining numerous business processes with little margin for errors. (3) Transparent activities and processes that cannot rely on organizational structures and hierarchies to absorb uncertainties and environmental shocks. This questions the sources of competitive advantage based on inefficient markets, which lack both real time data and flexibility to respond to changes regardless of physical locations. Ubiquity. In the context of mscm, ubiquity means that supply chain activities and goods can be provided everywhere regardless of time and location. Mobile supply chain applications allow users to request information and conduct whatever they want, whenever they want and how they want. Ubiquitous existence is mainly supported by the Internet, where a company s website is available 24/7, and accessible from any location around the world (e.g. using cell phones with satellite connection). Wireless technology further enhances the notion of ubiquity by enabling users to be connected to each other, to a computer server and database, and to the Internet regardless of geographical location. Mobile SCM is endowed with both the benefits of using the Internet for SCM (e.g. e-marketplaces), and functioning in virtual space wherever and whenever needed. Thus, disparate global supply chain functions can benefit from the increased visibility and ubiquity of business processes to help reduce uncertainties of demand forecasting and planning. A ubiquitous supply chain based on wireless technology is changing conventional understanding of SCM in at least three important ways. First, mscm is offering geographical reach on an unparalleled scale by deconstructing the process of SCM and logistics. For example, supply chain services (product information in transit) can be requested at any location without reaching a certain stage of logistics. Also, location-based services automatically match services according to customer profile in specific locations without relying on initiation of demand from the customer. Second, ubiquity is changing the collective nature of SCM by dispersing and unbundling supply chain functions and activities in a virtual environment without fixed coordination and integration points. Mobile SCM creates the need to manage dispersed resources in order to coordinate and integrate them for the benefit of the entire supply chain. Third, ubiquity is challenging reliance on structural coordinating mechanisms (e.g. organizational designs and hierarchies), when supply chain activities can take place anywhere and whenever needed in real time. These highlight the importance of change management for the implementation of mscm in adapting and changing existing business systems particularly functional roles of conventional SCM. Personalization can be described as an act of customizing and targeting specific supply chain information based on individual needs and circumstances. In mscm, wireless technology coupled with software applications (e.g. electronic customer relationship management) can be used to deliver personalized services to users in the supply chain and to customers. The concept of personalization has been applied in electronic customer relationship marketing (e.g. Ryals and Payne, 2001). The main purpose is to develop long lasting and profitable customer relationships. Some notable benefits of personalization in SCM include effective use of resources such as filtering information to relevant users, personalizing services to increase customer satisfaction, automating sales force in the field, and exploiting opportunity to cross-sell related services based on customer purchase history. Wireless technology extends the benefits of personalization by not only offering instant services and user interfaces but also enabling execution of multiple tasks at remote locations. Personalization using mobile supply chain applications is creating new types of challenges for SCM by enabling a closer integration between operations and marketing activities than efforts based on ad hoc cross-functional teams in the supply chain. Managers or sales people in the field connected to their companies database and supply chain systems by mobile devices are confronted with the autonomy to make personalized decisions and/or carry out supply chain activities on the spot (on demand). While such autonomy provides flexibility and empowers staff members, personalization in a wireless environment demands new ways of looking at control and accountability. For example, personalized services provided by an individual function may be disintermediated or reintermediated with other functions along the supply chain depending on operational and/or customer needs. This has implications for the interplay of power and dependence among relationships in the supply chain. Therefore, personalization in mscm changes the dynamics of relationship management in

T.-Y. Eng / Technovation 26 (2006) 682 686 685 terms of content and relational aspects such as trust and commitment. 4. Successful implementation likelihoods of mscm The above characteristics of wireless technology and their challenges for SCM have implications for the likelihood of successful implementation of mscm, particularly for competitive advantage, relationship management, and coordination and integration. In other words, mobile supply chain relationships and activities across functions need to be managed, coordinated and integrated for the development of competitive advantage. 4.1. Competitive advantage The competitive advantage of a supply chain can be examined in terms of responsiveness, cost reductions, speed to market (lead times), profitability, and performance of supply chain functions (e.g. distribution, inventory, transportation). As indicated in the preceding sections, mobile supply chain applications are creating new sources of competitive advantage as well as challenges for SCM. An important implication of mscm for implementation is the shift of critical points of a value chain analysis for value creation. This makes it difficult for firms to identify, create and manage the sources of value creation along the supply chain. Real time events have two implications for competitive advantage: (1) creation of real time capabilities based on specific interactions and/or combinations of business processes, and (2) socialization among supply chain participants to acquire dispersed knowledge of collective supply chain activities. Therefore, the task of developing competitive advantage based on mscm is likely to be influenced by knowledge of activities and processes in the supply chain through both interaction (Nonaka and Takeuchi, 1995) and socialization (Van Maanen and Schein, 1979), which have a real time effect on capabilities. The development of competitive advantage based on real time and dynamic capabilities is better suited to a process approach to supply chain analysis than to structural analysis of supply chain advantages. The process approach based on a detailed analysis of activities, steps and channels is likely to capture the sources of value creation in mscm. The visibility of transparent processes in a wireless environment also necessitates an understanding of how supply chain processes operate together to produce final outputs in an efficient market (real time business exchange). For example, the technique of successive decomposition can be used to diagnose workflow and virtual systems in order to identify and create value in the supply chain. Successive decomposition requires the firm s interaction with supply chain participants in the process of dividing and subdividing components of the supply chain in order to understand its interaction with individual and different processes that contribute to competitive advantage. This provides knowledge for the integration and implementation of wireless technology in dispersed context-specific real time capabilities for mscm. In general: Proposition 1. The likelihood of successful implementation of mscm may be enhanced where the firm adopts a process approach to interacting with its supply chain participants due to an increase in knowledge through socialization. 4.2. Relationship management The numerous types of relationships inside and outside an organization s supply chain have to be managed as each relationship affects, brings, and contributes to the supply chain differently. Mobile SCM can deconstruct and extend the supply chain through flexible interfaces between users and processes at different channels along the supply chain, and/or through high reach and connectivity of wireless technology. For example, customer and market information from marketing research can be shared in real time throughout the supply chain to help forecast inventory levels and avoid the bullwhip effect. It is crucial that firms manage disparate supply chain activities created when and where needed using wireless technology for successful implementation of mscm. In particular, trust and closeness in relationships may be fickle as the benefits of transacting on the Internet are transparent as they occur in real time. Also, some business relationships may be set up to take advantage of short-term opportunity, or need to be managed carefully as companies compete and collaborate in the same industry. The content of individual relationships in the supply chain provides a source of resources (e.g. information, knowledge, technology) that needs be examined, selected and managed to fulfil both short and long-term supply chain goals. As companies apply mscm and relate to partners, they adapt their physical systems architecture to complement and maximize the benefits of interaction along the supply chain. Learning occurs in the interaction to explore the content of different relationships, which involves investment in scarce organizational resources particularly investment in physical architecture. It is important to examine the roles of different supply chain relationships to distinguish between transaction based and strategic benefits (Eng, 2004) that can derive from resource investment in the implementation of mscm. Scarce organizational resources necessitate relationship selection in the process of interaction and socialization, where cooperative behavior and sharing between firms are critical for the development of trust. For example, a high visibility and transparency of processes in mscm also exhibits the presence of a high trust relationship with certain partners in the supply chain. Successful implementation of mscm depends on interfirm investment in wireless systems and therefore, commitment in the form of sharing and investment in relationships affect mscm. This leads to:

686 T.-Y. Eng / Technovation 26 (2006) 682 686 Proposition 2. The likelihood of successful implementation of mscm will be enhanced the more companies share resources with members in the supply chain due to an increase in trust and commitment. 4.3. Coordination and Integration The importance of coordination and integration of different functions for supply chain performance has been widely documented in literature (e.g. Morash and Clinton, 1998; Johnson, 1999; Stank et al., 2001). In mscm, wireless technology not only facilitates coordination and integration across functions and firms, but also challenges conventional mechanisms of structures and hierarchies in an organization through simultaneous and real time coordination of multiple tasks. The collective inputs of a supply chain are further dispersed in an organization and between supply chain partners in mobile supply chain applications. For example, supply chain activities of mscm can be conducted by different members located beyond the traditional boundary of a wired physical connection. Whilst mscm creates new opportunities, the dispersion of supply chain activities without fixed points of integration and coordination presents new challenges for implementation. Successful implementation of mscm requires knowledge embedded in systems of interactions in the supply chain. Mobile access to a computer server allows users to carry out the tasks of coordination and integration with possible elimination of response lag time. For example, a dynamic alteration of supplies to match market demands (e.g. prices and stock levels) can lower transaction costs and lead times. Although mscm increases flexibility and responsiveness through real time transmission of information in the supply chain, the success of implementation of mscm is likely to derive from knowledge of the supply chain across different activities and functions. For example, customer order processes can be completed remotely using wireless technology and knowledge of such processes cannot be achieved by concentrating on an individual function. The influence of cross-functional coordination and cross-functional teams on performance has also been examined in the SCM literature. The main implications for successful implementation of mscm are: embedded knowledge of systems for the coordination and integration of real time processes, and application of such knowledge across different functions in the supply chain. This suggests that: Proposition 3. The likelihood of successful implementation of mscm will be enhanced where supply chain participants possess cross-functional knowledge of disparate supply chain functions and activities, because higher coordination and integration success in mscm depends on embedded knowledge of systems. 5. Conclusion The article explores the characteristics of wireless technology and their challenges for mscm. The implications of wireless technology for SCM are examined against three critical areas of SCM: competitive advantage, customer relationship management, and coordination and integration. The challenges for successful implementation are discussed in terms of mobile technology concepts of real time events, ubiquity and personalization. The article develops three propositions concerning the challenges of wireless technology for the likelihoods of successful implementation of mscm particularly some key impediments or issues to consider if mscm is desired. They should help SCM scholars to develop research framework for investigating the implementation of mobile supply chain applications or further conceptual development of mscm. Importantly, this article has attempted to lay some foundations of what issues scholars and supply chain managers should consider for successful implementation of wireless technology in SCM. References Eng, T.Y., 2004. 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Supply chain collaboration and logistical service performance. Journal of Business Logistics 22 (1), 29 47. Van Maanen, J., Schein, E.H., 1979. Toward a theory of organizational socialization. In: Staw, B.M. (Ed.), Research in organizational behaviour, vol. 1. JAI Press, Greenwich, CT, pp. 209 264. management. Teck-Yong Eng is a Senior Lecturer in Marketing at The Management Department, King s College London, University of London, UK. He gained a PhD in Business-to-Business Marketing from The University of Manchester, UK. His teaching and research interests include industrial marketing and supply chain management. He has consulted for various retail and food service firms and high-tech firms on issues in supply chain