The Impact Of Information Technologies On Supply Chain Risk Management

Due to environment complexity, uncertainty and the pursuit of lean manufacturing, thevulnerability of supply chains to disturbance or disruption has increased. Considerable evidence hasshown that when the potential risks come into reality, they seriously impact the supply chainoperations. The sphere of influence diverses from yield decrease to failure in the market. Therefore,it is necessary to take risk into consideration for supply chain management. Supply chain riskmanagement (SCRM) is a nascent area emerging from a growing appreciation for supply chain riskmanagement by practitioners and by research. However, the previous studies mainly focus onframework or analytical models; there is a shortage of empirical study in SCRM. Meanwhile, thedebate about the value of IT still exists due to the argument of―IT paradox‖,―IT doesn‘t matter‖,Information distortion and―system nervousness‖. Base on the theoretical framework of―Risk Spiral‖developed by Christopher and Lee (2004), one key element to mitigate supply chain risk is toimprove the end-to-end‘visibility and control through enhanced confidence of partners in thesupply chain. To enhance information visibility and control in the supply chain, IT plays a significantrole.Based on existing theories and frameworks, including Resource-based view, Capability-basedView, Relationship View, Swift and Even Flow Theory and Christopher and Lee‘s Risk Spiral‘, thisstudy proposes a framework containing Information Technology Capability, Supply Chain Visibility,Supply Chain Control and SCRM. Data was collected from257manufacturing enterprises inYangtze River Delta and analyzed to address the research questions using partial least squaresregression (PLS).The analyses show that there is no direct benefit of IT talent capability on supply chainvisibility and supply chain control; however other IT capabilities influence supply chain visibilityand supply chain control except there is no effect of IT internal collaboration capability on supplychain control. According to the results of return visit to sample enterprises, it is widely believed thatmost IT professionals have high level technical competences; on the contrary, they lack businessskills and managerial skills. Most IT technicians are enthusiastic on improving their professionalskills, so called technology-oriented viewpoint. Internal IT coordination capability has no directeffect on supply chain control indicates that departmentalism still impedes internal collaborationbetween different departments.IT infrastructures capability has a positive effect on supply chain visibility and control meansIT infrastructure plays an important role in supply chain management. Although Carr (2003) regardsIT as electronic power which cannot bring competitive advantages to the firm, and suggests firmmanager to take three guidelines such as spending less, following and focusing on vulnerabilities,most scholars disagree to his opinions. It obfuscates the difference between IT resources and ITcapability. Admittedly, commercialized IT applications such software and hardware cannot makecompetitive advantage to firms, however, the capability of utilizating these applications is different across firms. The administrative staff may focus on improving the performance of IT infrastructurefrom the capability perspective. The uniqueness of IT capability may not be obtained from market.IT external coordination capability has positive effect on supply chain visibility and controlindicates the growth in inter-organizational information systems (IOIS) has made it possible toelectronic flow of information across the supply chain. The wide spread of IOIS and the adoption ofopen standards in these systems have considerably reduced the coordination cost and enhanced theresponsiveness to supply chain risk.IT internal coordination capability has positive effect on supply chain visibility means internalcollaboration can overcome function myopia, and has the potential to enable internal integration.Internal integration is prerequisite to mitigate supply chain risk.The finding in this study is important for managers in the areas of SCRM and IT/IS. It providesmanagers with empirical evidence and theoretical framework on the relationship between ITcapability and SCRM. It is also helpful to emphasize the roles of risk management in supply chainmanagement and develop the risk management system.Based on the findings, the theoretical model about―IT capability→supply chain visibility andcontrol→supply chain risk management‖is reasonable both in theory and practice. Although, supplychain complexity and uncertainty impede the effect of supply chain visibility and control, it isnecessary for the firms in complex and uncertain supply chain to enhance information visibility andsupply chain control.