INFORMATION COMMUNICATION TECHNOLOGY AS A KEY CONTRIBUTOR TO SUPPLY FUNCTION IN AN ORGANIZATION (A CASE STUDY OF SILOAM HOSPITAL)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The control of inventories and the management of supplies have, in common with the other major branches of commercial and industrial work, become specialist activities. The supply function has the responsibility for the receipt, custody and distribution of very large sums of money in the form of goods, and for the determination of appropriate quantities of material to be held in order that operational needs may be met in as economic a manner as possible. The supply function must be managed and operated in a highly efficient way. The contribution that a good supply function can make to the success of an organization is today almost universally recognized, in terms of the contribution to the bottom line profit. The stores should be considered as a temporary location for materials needed for operational purposes, and should be planned, organized and operated in such a way that the period of stay of one of the item is as short as possible consistent with economic operation. The only reasons for carrying operating stocks are that the material is needed and that supply cannot be exactly matched with demand. A single transaction in direct supply replaces the three operations, receive – store – issue. One activity replaces three. Obsolete, redundant or surplus material is simply money sitting on a shelf, requiring more money to be spent on its custody. It should be pointed out that as short a time as possible may range from the hour or two that deliveries of bulk milk may remain in the receiving tanks at a processing plant, through to the several years that emergency equipment, for example, a blowout preventer in an oilfield store, can justifiably be kept. In general, if demand is steady or highly predictable, then we should store for very short periods if at all. The rapid adoption of just-in-time (JIT), lean supply and agile supply approaches in recent years reflects the general awareness that stocks are expensive to hold, and that opportunities should be sought to make better use of the money they represent. When demand is highly unpredictable then storage for longer periods may be necessitated. The competitive environment has changed dramatically in past two decades and has become very complex (Stock et al., 2010; Christiansen and Kumar, 2012). Globalization also has a vital influence on businesses and its environment and on all business organizations, especially in last two decades. In the 1980s when various pressures, especially from customers and organizational environment, were weak, the collaboration with entities outside organizational borders was weak (Rushton et al, 2015; Murphy and Wood, 2015). Especially in the 1990s, occurred the shift form adversarial price-driven relationships between organizations towards collaborative partnerships-driven partnerships between organizations (Howard, 2014). Organizations started to realize that they are not able to act independently (anymore) on the global market. Globalization has made organizations, to look for more effective ways to coordinate the flow of materials into and out of the organization. Way to such organization of materials is collaboration and closer relationships with suppliers (Mentzer et al., 2015).when there is Collaboration with organizations outside organizational borders this could bring substantial benefits for all organizations involved (Drew and Smith, 2009; Ballou, 2013; Rushton et al., 2015; Murphy and Wood, 2015; Balou, 2010). In the early beginnings organizations focused primarily on the integrations with its suppliers (Slack et al., 2012; Deffe and Stank, 2014; Ballou,2010). Organization are integrated, especially with its suppliers and other entities outside organizational borders is known as a supply chain (SC) concept, which emphasized that several different organizations are involved in getting the product to the end user (Rushton et al, 2015; Cooper et al, 2011). Due to innovations in business environment, participation in one or even more supply function has become a vital (pre)condition for organization’s present/future success (Lummus and Vokurka, 2010). Supply function exists as a concept, but it needs to be properly managed, which is known as supply function management  (Mentzer et al., 2015). Supply function has become a topic of interest among educators and practitioners recently (Larson and Halldorsson, 2010, Phillips-Connolly et al., 2014; Gibson et al., 2014; Burgess et al., 2014). Due to the many participants of supply function, which are becoming more and more scattered around the globe, an important issue in the problematic of supply function is also its organization (Browne and Zhang, 2010). Supply function could be organized in various ways. Due to the increased influence of virtuality and virtual design on the organizations, supply function could also be organized virtual. Therefore supply function could be organized traditional at one end of continuum and virtual on other end of continuum (Daft, 2012; Daft, 2013; Hatch, 2011; Tsoukas and Knudsen, 2013). Information and communication technology (ICT) has a crucial role in the organization of supply function. Therefore ICT is a central construct which makes virtual organizing of supply function possible. Every organization is struggling in order to survive in today’s competitive marketplace. Information communication technology plays a vital role in improving and enhancing the supply chain driver’s performance. Information communication Technology is the use of inter organizational systems that are used for information sharing and/or processing across organizational boundaries. There is an always increasing need for fully integrated supply chain management solutions which incorporate all the functionality of network strategy, configuration of supply chain, planning of demand, transportation and warehouse management systems for any organization.

1.2 STATEMENT OF PROBLEM

It has often been claimed that in the modern world the competition is no longer between single companies but between supply chains .Anecdotic evidence also supports this claim (e.g. the problems in automotive industry due to supplier failures or the infamous Nokia Eriksson-Phillips example). However, most of the papers are focused on mathematical methods for supply chain optimization instead of an overview of business related challenges connected to supply chains The challenge for firms today is namely not just to take up a supply chain management (SCM) initiative but to implement it successfully. An informatics perspective is vital since information flow is an integral part of SCM and material flow is closely dependent on information flow. But SCM initiative can be a failure unless one is aware of the issues that may arise during its planning or implementation. However, SCM is, at best, still emergent in terms of both theory and practice, therefore both further research and classification of previous research efforts is needed. This paper mainly contributes to the second purpose; namely it presents several important issues in SCM.

1.3 AIMS OF THE STUDY

The major aim of the study is to examine information communication technology as a key contributor to supply function in an organization.  Other specific objectives of the study include;

1. To identify the basic concepts involving in the design and operation of information system in relation to supply function.
2. To identify the innovative approaches that has been recently developed in relation to information communication technology in the supply of Siloam hospital equipment.
3. To determine whether information communication technology is reliable enough in ensuring efficiency and effectiveness in increasing organization performance.
4.  To examine the impact of information technology on the supply function of Siloam hospital.

1.4 RESEARCH QUESTIONS

1. What are the basic concepts involving in the design and operation of information system in relation to supply function?

2. How can the innovative approaches that have been recently developed in relation to information communication technology in the supply of Siloam hospital equipment?

3. How can we determine if information communication technology is reliable enough in ensuring efficiency and effectiveness in increasing organization performance? 

4. What are the impacts of information technology on the supply function of Siloam hospital?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no significant impact of information technology on the supply function in Siloam hospital.

H1: There is a significant impact of information technology on the supply function in Siloam hospital.

Hypothesis 2

H0: There is no significant relationship between information communication technology and supply function in Siloam hospital.

H1: There is a significant relationship between information communication technology and supply function in Siloam hospital.

1.6 SIGNIFICANCE OF THE STUDY

The study would be of benefit towards the development and implementation of proper supply function initiative which will ensure reliability of information communication technology in efficiently and effectively increasing organization performance. The study would also be of immense benefit to students, researchers and scholars who are interested in developing further studies on the subject matter

1.7 SCOPE AND LIMITATION OF THE STUDY

The study is restricted to information communication technology as a key contributor to supply function in an organization.

LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Information communication technology: Encompasses all technical equipment and facilities that converts, process, save and transfer various types of information in a digital form. It includes voice telephony, data communications and computer, radio, televisions and similar technologies.

Supply function: is the systemic, strategic coordination of the traditional business functions and tactics across these businesses functions within a particular organization and across businesses within the supply chain for the purposes of improving the long-term performance of the individual organizations and the supply chain as a whole. Again, this is a well-accepted definition that incorporates many different aspects.