The Role of Information Technology in Inventory Management

A Study of the Logistics Sector of Pakistan

Project Report, 2014

15 Pages, Grade: 3.3



1.0 Introduction and Background of Study

2.0 Literature Review
Information Technology Systems
Supply Chain Management
The relationship between IT and SCM
The Impact of IT on Inventory Management
Impact of IT on Logistics

3.0 Problem Statement

4.0 Research Questions

5.0 Theoretical Framework
Hypothesis Development

6.0 Methodology
Research Design
Population and Sample
Data Analysis

7.0 Significance of Study



This study will investigate the impact and role of information technology on inventory management. Supply chain management (SCM) addresses the handling of information and material across the entire chain that includes the producers to suppliers, retailers, distributors and customers. By increasing focus on use of rapid and advance technologies in enhancement of supply chain management, the businesses are seeking to developed and organized material handling system for its use. The purpose of this study is to examine the effectiveness and role of developed technology in handling of material. This will be a descriptive type of research. This study will also document the relationship of inventory management on supply chain management. The questionnaire will be used to gather the data. The KSE list firms will be used as sample of the study. The advance econometric techniques will be implemented for analysis of data. The results of study will help in efficient management of inventory of firm.

Keyword: Supply Chain Management, KSE, Suppliers, Distributors

1.0 Introduction and Background of Study

In today’s modern word, large and small organizations are using the more advanced technologies and computerized inventory management systems. Now a days, the IT based technologies is considered as the prerequisite for control and management of supply chain. A recent study conducted in U.S revealed that the U.S. based manufacturers were heavily depends on the benefits brought by IT. These benefits include the advanced supply chain quickness, achieve higher efficiency, reduce cycle time and deliver products to customers in timely manner (Shore.B & A.R. Venkatachalam, 2003). The researchers also found that the use of IT is not a guarantee of better performance of firm (Lucas Jr. H.C & V.K. Spitler, 1999). Some researchers argued that that adaptation of new technology can be easily duplicated y the other firms operating in your industry and it cannot provide a sustained competitive edge to the firm (Powell & A. Dent-Micallef, 1997). The use of IT in supply chain management (SCM) enables the firm to maintain record of inventory, suppliers and customers. But it does not mean that there is no outlet using the manual inventory management system.

In fact, the use of computerized inventory management system for small retail outlets, convenience stores, shoe stores and small manufacturers might be a waste of financial resources. The use of these advance level of computerized inventory management systems for large industries that have high volume of raw and finished products have appeared as major and important element of business strategies that aimed the increasing level of productivity and maintains the competitiveness. The new powerful computer programs manages the great volume data and keep the records that needs, including inventory control systems. By keeping in view the developments, the business experts can spell and forecast the success and failure in today’s competitive environment.

Information technology is the key source of competitive power for a number of companies. It plays the vital role especially in service provider industries like big retailers, airways companies and transportation companies. The cost can be reduced by timely information for supply chain management. A number of companies are offering competitive and innovative technologies to their customers in order to sustain the long term relationships and gain the competitive advantage over other firms. The innovative service that is offered by a single firm makes its obligation to other firms in the same industry. According to the research conducted by Subramani (2004), the relationship-specific intangible investments play a mediating role linking SCM systems use to benefits.

This study will examine the relationship between the information technology and inventory management. This is a descriptive research. This study will use the logistic enterprises as the sample. The primary data will be gathered through questionnaire. The advance econometric techniques will be used for analysis and interpretation of data. This study will determine the integration of technology on inventory management. This study will determine the impact of technology one procurement of inventory. The findings of study will help the employees of firms to adopt the new technologies and contribute the better performance in the firm. The findings will also help to managers of firms to gain the customers confidence and can increase the growth rate and profitability of the firm.

First section deals with the background and introduction of the study. In this overview of the desire study is explained. Section 2 deals in depth literature review of the study. Variables are also defined in this section. Section 3 deals with the problem statement of the study. In section 4, the research questions are defined. Section 5 deals with theoretical framework and hypothesis of the study. Next section deals with research design and methodology of the study. Proposed model for this study is also included in this section Last section deals with significance of study with support of previous literature

2.0 Literature Review

This section deals with the literature review on the information technology (IT) and inventory management systems. This section also explains the results of prior studies.

In this study, Supply chain management (SCM) refers to the practices and processes aiming for effective and efficient flow of materials and information between a company and its immediate suppliers and customers. In the modern organizations, the information technologies play an important role for providing the efficient and effective’s products and services to its customers to satisfy. In the today’s competitive environment, the customers demand the customized services and products. On one hand, the customers require that their orders are completed quickly and efficiently and on other hand, they do not want to pay the any sort of premium for this customization (Graman and Magazine, 2006). Therefore, organizations are exploring ways toward postponement strategy in response to constantly changing demands (Yang et al., 2004). The researchers argued that the information sharing and technology plays an important role in inventory management (Sabbath, 2008). This sharing of information enables the supply chain partners to plan effectively, avoid safety stocks and avoid bottleneck for all the members of chain (Cetinkaya.S & Lee, 2000). Usually, when a buyer needs a product, he placed an order to a supplier. With the help of shared information, the supply chain partners could know when and how much to order and what to put in the inventory plan (Evans, M.M, & Towill, 1993). In order to share information between the supplier and the buyer, a partnership is formed so that supplier takes care of orders and refills (Dai & Kauffman, 2001). To accomplish this objective, the supplier must regularly get information on the sale and inventory level through the web or electronic data interchange (Homburg, 2007).

The RFID systems can also be used for identification purposes (Auramo, Kauremaa, & K. Tanskanen., 2005). With the help of developed technology and computer programs the inventory can be managed and when the inventory drops from the certain level, the orders are generated automatically on behalf of buyer According to Skjoett, (2003), the vendor management and continuous replenishment systems can be used to share and manage the inventory at certain level. The researcher also argued that the inventory control with efficient and true information is beneficial (Fisher, 1997). The control of inventory with poor or bad information is useless (Taylor, 2000). The all refill decisions are based on the status of inventory management system (Sahay, 2003). The supply chain partners should keep the inventory record updated and make reliable delivery promises and should keep the low level of inventory every day. Researchers argued that the inaccurate inventory records show the lack of teamwork.

The expectations of customers in terms of range, new products, services and promotions entail that the chain patterns should be flexible indeed (Howgego, 2002). As the result of providing the pre and post purchase satisfaction to customer, brand loyalty increases (Croom & Brandon-Jones, 2004). The chain members should have to end to end integration in order to achieve the full benefits of downstream chain and as result of this integration, the costs will be reduced, inventory management and distribution will be reduced (Lewis, 2006). The digital loyalty network (DLN) can be used to gather the continuous data and monitor the customers and precisely adjust the production, engineering, distribution and sales activities to meet the demands with suppliers (Introna, 1991). More and more chain partners are using inventory-management information to improve their ability to fulfill key customer demand and having the right product at the right time. According to researchers, the understanding of market trends and consumer behaviour can help the supply chain partners to satisfy customer needs and mange the inventory information efficiently (Lee & Tang, 2000)


Excerpt out of 15 pages


The Role of Information Technology in Inventory Management
A Study of the Logistics Sector of Pakistan
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
501 KB
supply chain management, scm, KSE, suppliers, distributors
Quote paper
Muhammad Arslan (Author), 2014, The Role of Information Technology in Inventory Management, Munich, GRIN Verlag,


  • No comments yet.
Read the ebook
Title: The Role of Information Technology in Inventory Management

Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free