CHAPTER 3 INFORMATION, INFORMATION FLOW AND RELATED CONCEPTS
Information and the flow of information always have played an important role in supply chain management (Reeker & Jones, 2002:1) with the bullwhip effect as the classic example underpinning this statement. The bullwhip effect is represented by the propagation and enlargement of small fluctuations of demand or inventory levels in either the final company or customer in a supply chain, extending back through the supply chain to the initial supplier. These fluctuations,as well asincreases in these small fluctuations in the beginning of the demand cycle,may be attributed to the fact that organisationsare in possession of incomplete information about the needs of the other supply chain members and, thus, respond to the imperfect demand projections with an disproportional increases in inventory which, in turn, creates an even larger requirement on the part of the company downstream (Trkmanet al., 2005:560). Trkmanet al. (2005:560)contend that if information is transmitted more rapidly between the organisations of the supply chain, i.e. directly from the customer to the manufacturer, then production peaks may be reduced by as much as 20%.
According to Reeker andJones (2002:1), information will play an important role in the manufacturing systems and supply chains of the future. Jones, Reeker andDeshmukh (2002:1) assert that the manufacturing aspect of the supply chain, in particular, has changed in two important ways. Firstly, automated data collection systems on the shop floor support real-time scheduling decisions, and secondly the Internet supports the movement towards global supply chain management decisions on an organisation level. However, in both cases, the availability of information in real-time is crucial in terms of the success of any supply chain decisions that may be taken. According to Manjappa, Del Angel, Shan, Zhao Becerra andThomson (2008:10), information is the main asset that organisationspossesswhich enables these organisationsto provide the necessary linkages across supply chains for both clarity of purpose among the partners in the supply chain and timely service to customers Jones et al. (2002:1) point out that, although current technology may provide information in real-time, it is not able to assure that the information provided will be accurate and meaningful and that it will be used correctly. The dichotomy of information, in terms of both its provision and characteristics, arises from the fact that information is often obtained through the use of the optimisation algorithms implemented in software. However, despite the fact that algorithms are designed to complete computations fast, the processing decisions for the data require a common understanding amongst the supply chain members if they are to be meaningful.
Information, which is needed in order to arrive at meaningful decisions, has a direct impact on the performance of an enterprise (Jones et al., 2002:1; Madhani, 2008:239; Trkman et al., 2005:561) with information being required in order to make the correct decisions about the future state of the supply chain. Accordingly, information is required at different places in the supply chain simultaneously. However, as detailed in section 2.2.4, chapter 2, it is not possible to assume that either the information transfer between the supply chain members or information sharing will happen with ease and barriers to information sharing are a reality (Katunzi, 2011:107–109).
It is as a result of these barriers that the totality of information needed to describe a specific scenario may not be available and it is, therefore, understandable that organisations and supply chains may miss out on better decisions and improved performance as in the case of real time information sharing. It is for this reason that this research study aims to contribute to the existing body of knowledge on the role and importance of an efficient information flow both in supply chains as well as within and between member organisations, by measuring the efficiency with which information flows between supply chain members and then correlating these measurements with supply chain performance.
Apart from the human and systems difficulties involved in transferring information, information itself is not a straightforward concept. In fact, as shown in chapter 1, an all-encompassing definition of information is still lacking. A useful definition was found in terms of the origin and value of information but this definition does not incorporate either the technical or the etymological nature of information, or any of the pragmatic, epistemic, doxastic or modal properties of information.
If supply chain members are to be able to access information, then the information must be transferred from its point of inception to the next point(s) of use. Information is typically conveyed in physical symbols such as marks on paper, sounds, electrical pulses, light waves and others (Jones et al., 2002:1).
Based on the characteristics of information itself, as well as the various and complex methods of transferring information, it is clear that a detailed understanding of information, information flow and related concepts is required in order to attain the insights necessary to define the characteristics of the quantities of information flow that must be measured, as well as to define suitable measures for information flow efficiency.
Information as a concept
Chapter 1 provided a definition of information using a multitude of other definitions and concepts. The description of information arrived at then led to a categorisation of information based on both the types of information (see table 1.1) as well as the properties of information. In order to gain a better understanding of the way in which these different concepts fit into the overall concept of information, it may be useful to construct a concept map for information.
Concept maps are diagrams showing the relationships between concepts (encyclopaedia at http:/www.answers.com/topic/concept-map). The concepts are connected with labelled arrows, in a downward branching hierarchical structure. The relationship between concepts is articulated in linking phrases, for example, “gives rise to”, “results in” or “contributes to”. Based on the concepts linked to information it was possible to construct a concept map − see figure 3.1.
The concept map indicates that the main concepts linked to information are data, communication, knowledge, information systems and people. It also reveals that information is gained from the processing of data and that information may be transmitted via communication to other entities. Such communication may be conducted between two or more persons, between a person and an information system (e.g. computer), between an information system and persons or between two or more information systems.
Communication itself requires an information source, a transmitter, a receiver, a destination and a medium or channel through which to transmit information. This principle was established as early as 1948 by CE Shannon (Shannon, 1948:2–3).
Information may be integrated into a body of knowledge to create new knowledge. However, this integration process requires prior knowledge in order to be able to recognise the information content and to process the new information (Boisot & Canals, 2004:1–5).
Boisot andCanals (2004:1–5) contend that data is something that may be made public, but that only those who hold a “key” (or prior knowledge) are able to extract information and, thus, further meaning from the bare data. They also maintain that information is not equal to knowledge. This fact may be proven through the use of encryption. Although encrypted information may appear normal and may be understood in the sense in which it appears, it is only the entity that possesses the key to the encryption algorithm that will be able to extract the actual information transmitted. In addition, this information will be understood only if prior knowledge exists which is able to contextualise the information extracted correctly.
CHAPTER 1 INTRODUCTION
1.2 SUPPLY CHAINMANAGEMENT AND INFORMATION FLOW
1.3 PROBLEM FORMULATION.
CHAPTER 2 THE SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT
2.2 THE SUPPLY CHAIN
2.3 SUPPLY CHAIN MANAGEMENT (SCM)
2.4 SUPPLY CHAIN PERFORMANCE MEASUREMENTS
CHAPTER 3 INFORMATION, INFORMATION FLOW AND RELATED CONCEPTS
3.2 BASIC CONCEPTS
3.3 INFORMATION AS AN INTERDISCIPLINARY CONCEPT
3.4 THE CATEGORISATION OF INFORMATION
3.5 INFORMATION FLOW AND COMMUNICATION
3.6 INFORMATION FLOW AND KNOWLEDGE
CHAPTER 4 THE ROLE OF MANAGEMENT INFORMATION SYSTEMS (MIS) IN THE SUPPLY CHAIN
4.2 BASIC CONCEPTS
4.3 INFORMATION SYSTEMS IN SUPPLY CHAINS
4.4 COMMONLY ENCOUNTERED APS, ERP AND SCM SYSTEMS IN
CHAPTER 5 BUSINESS AND SUPPLY CHAIN PERFORMANCE MEASUREMENT
5.2 BASIC CONCEPTS
5.3 PRINCIPLES OF PERFORMANCE MEASUREMENT FRAMEWORKS246 5.3.1 INTRODUCTION
5.4 ELEMENTS, LEVELS AND DIMENSIONS REGARDING THE MEASUREMENT OF INFORMATION FLOW EFFICIENCY
5.5 EXISTING PERFORMANCE MEASUREMENT SYSTEMS THAT INCLUDE INFORMATION FLOW OR COMMUNICATION
5.6 THE INCLUSION OF INFORMATION FLOW EFFICIENCY MEASUREMENT IN THE SUPPLY CHAIN SCORECARD (SCS)
CHAPTER 6 THE MEASUREMENT OF INFORMATION FLOW EFFICIENCY IN THE SUPPLY CHAIN.
6.2 INFORMATION AND INFORMATION FLOW MEASUREMENT
6.3 SOURCES OF INDICATORS OF INFORMATION FLOW EFFICIENCY
6.4 DEVELOPING INDICATORS AND ASSOCIATED METRICS
CHAPTER 7 RESEARCH METHODOLOGY
7.2 PROBLEM STATEMENT
CHAPTER 8 RESEARCH RESULTS AND CONCLUSIONS
8.2 SURVEY RESULTS
8.3 EXPLORATORY TESTING OF THE MEASUREMENT OF INFORMATION FLOW EFFICIENCY
8.4 SUMMARY OF THE RESULTS
8.5 LIMITATIONS OF THE RESEARCH.
8.7 RECOMMENDATIONS AND FURTHER RESEARCH
GET THE COMPLETE PROJECT