Role of IT in Supply Chain Management Explained
Published on October 30, 2025
• 8 min read
In today’s fast-paced business environment, the role of IT in supply chain management has become more critical than ever. Modern supply chains are no longer just about moving goods from point A to point B. They involve complex networks of suppliers, manufacturers, warehouses, and customers that require smooth coordination.
Supply chain and information technology work hand in hand to bring visibility and agility to these processes. IT is transforming traditional supply chains into intelligent, data-driven systems that can respond quickly to market demands. Understanding this synergy is crucial for businesses seeking to deliver exceptional customer experiences. In this guide, you will learn about the role of IT in supply chain management.
Why IT Matters in Modern Supply Chains
Information technology in supply chain management is essential for efficiency and competitiveness. It enables real-time tracking, accurate forecasting, and better decision-making across networks.
Supply chains involve suppliers, manufacturers, transporters, and customers collaborating to work together. Information and supply chain management ensure smooth coordination among these entities.
Globalisation has increased competition, demanding smarter and faster operations. IT tools improve visibility, minimise delays, and help predict disruptions effectively.
Traditional centralised systems are vulnerable to attacks and failures. Decentralised solutions like blockchain provide secure, transparent, and reliable data sharing.
Blockchain creates immutable records that are independent of third parties. This strengthens trust, enhances performance, and supports efficient supply chain flows.
Modern supply chains must adopt emerging technologies to remain competitive and survive. Information technology in supply chain management drives resilience, innovation, and long-term growth.
Functions of Information Technology in Supply Chain Management
Procurement and Supplier Management
Modern procurement relies heavily on data analysis to optimise supplier relationships and enhance overall efficiency. Spend analysis provides a clear view of expenditure patterns, highlighting opportunities for cost reduction and supplier consolidation.
Supplier performance analysis helps organisations assess vendors using KPIs like quality, timeliness, and reliability. This supports smarter supplier selection and builds stronger partnerships.
Predictive analytics further strengthens procurement by forecasting demand and inventory needs. It reduces risks of overstock or shortages, ensuring smoother supply chain operations.
Logistics, Transportation, and Last-Mile Delivery
Technology has transformed logistics with real-time tracking and visibility. Expensive and sensitive goods are now monitored using IoT-enabled tracking devices.
Cloud-based platforms integrate tracking data from multiple sources. This creates a centralised view of goods movement, improving control and responsiveness.
IoT sensors form the backbone of logistics data collection. They can be simple passive tags on packages or advanced edge devices with GPS on trucks and containers.
Edge devices provide precise location and long-range communication capabilities. Combined with base stations, they transmit data to the cloud for continuous monitoring.
Distribution centres and warehouses benefit from these systems by gaining accurate, real-time insights into asset location and condition.
Case Study – Role of IT in Supply Chain Management in Action
The role of IT in the supply chain management case study is well illustrated by Lotus Herbals’ collaboration with WareIQ. By adopting WareIQ’s full-stack fulfilment solution, the brand streamlined its operations and achieved rapid growth.
Key IT-Enabled Advantages for Lotus Herbals
- Pan-India Network Access: On-demand fulfillment centres, including temperature-controlled warehouses, eliminated upfront investment and supported expansion into two new locations.
- Smart Fulfillment Platform: Seamless integration with multiple sales channels, lightning-fast order processing, analytics-driven control, and simplified returns management.
- Shipping Engine: Automated courier selection across 29,000+ pin codes, optimised cost and delivery speed.
- AI-Powered Inventory Optimisation: Placing the right SKUs in the right quantities at the right locations reduces holding costs and accelerates deliveries.
- Operational Support: Skilled WareIQ teams managed inwarding, processing, packing, dispatch, returns, and SLA compliance.
- Marketplace Enablement: Catalogue listing, inventory transfers, pricing, and promotions for Amazon, Flipkart, Meesho, and more boosted marketplace sales.
Impact Achieved by Lotus Herbals
- 3x increase in sales across channels
- 11 percentage point improvement in regional shipments
- 1-day reduction in average delivery timelines (1.3x faster deliveries)
- 7.5% lower average cost per shipment
- 20-point reduction in product returns
SCM IT – Key Technologies Powering Supply Chains
Role of AI in Supply Chain Management
Artificial Intelligence enables predictive insights and smarter decision-making. AI algorithms analyse historical data to forecast demand, optimise inventory, and minimise stockouts. Machine learning models improve supplier selection, delivery scheduling, and risk management. AI-powered chatbots also enhance customer service by providing real-time order updates. The role of information technology in supply chain management is strengthened by AI’s ability to learn continuously and improve accuracy over time.
Role of IoT in Supply Chain Management
The Internet of Things connects physical assets through sensors and tracking devices. The IoT enables real-time monitoring of goods, from warehouses to the last mile of delivery. Sensors measure temperature, location, and movement, making them vital for industries handling perishable or sensitive items. IoT devices enhance visibility, minimise losses, and provide actionable data for informed decision-making. Its integration demonstrates the growing role of IT in SCM.
Role of Blockchain in Supply Chain Management
Blockchain provides an immutable and decentralised ledger, ensuring transparency and trust. It allows all stakeholders to access a single source of truth for transactions, from raw material sourcing to final delivery. This reduces fraud, improves traceability, and strengthens compliance with regulations. The role of information technology in supply chain management is amplified by blockchain’s ability to secure and validate every transaction without relying on third-party dependencies.
Role of Cloud in Supply Chain Management
Cloud technology enables real-time collaboration across global supply chain networks. It centralises data storage, making information accessible to suppliers, manufacturers, logistics providers, and retailers from any location. Cloud platforms scale easily, adapt to business needs, and lower IT infrastructure costs. By providing a unified view of operations, the cloud highlights the role and importance of IT in supply chain management for agility and responsiveness.
Role of Automation in Supply Chain Management
Automation enhances efficiency by reducing manual tasks and errors. Robotics in warehouses accelerate the processes of picking, packing, and sorting. Automated systems streamline order processing and inventory management, enhancing efficiency and accuracy. In transportation, automated scheduling tools optimise routes and lower costs. The role of IT in SCM is evident, as automation directly improves speed, accuracy, and scalability.
Strategic Benefits of Information and Supply Chain Management
It is no longer optional to leverage modern technology in managing supply chain functions. To stay competitive in today’s fast-paced global economy, brands must rely on tools that optimise, scale, and move products efficiently around the world. Here are the top five reasons technology outperforms traditional solutions:
Visibility
Technology centralises and controls supply chain information. Operators gain complete visibility, from manufacturing and procurement to assembly, distribution, and last-mile delivery. Greater visibility enables accurate forecasting and informed decision-making based on historical data.
Lower Error Rates
Accuracy is crucial for global product distribution, particularly in e-commerce. Automation tools significantly reduce human errors. For instance, picking robots have near-zero error rates, whereas manual warehouse operations can have error rates of 1–3%. Fewer mistakes mean less revenue loss due to mismanaged shipments, damages, or lost items.
Ease of Implementation
Many technology solutions are off-the-shelf and require little to no coding. Unlike analogue or manual procedures, which demand extensive experience and time to implement, these tools can be deployed quickly and efficiently.
Flexibility
Technology enhances organisational agility, allowing quick adaptation to dynamic market conditions. Businesses can respond to changing demands, capture new opportunities, and increase market share, revenue, and profitability.
Cost Efficiency
While some solutions may appear expensive initially, most deliver a high return on investment. Software solutions are cost-effective to implement, and hardware costs are decreasing due to technological advances and widespread adoption. Combined with operational improvements, these tools provide exponential benefits that justify the investment.
FAQs
How does IT help in risk management within supply chains?
IT enables real-time monitoring of disruptions, predictive analytics for demand fluctuations, and automated alerts for delays, helping companies proactively manage risks.
Can cloud-based SCM systems reduce operational costs?
Yes, cloud SCM platforms reduce the need for on-premise infrastructure, minimise manual errors, and allow scalable operations, which lowers overall supply chain costs.
What role does data analytics play in improving supplier performance?
Data analytics tracks supplier KPIs, delivery times, and quality metrics, enabling informed decisions, fostering stronger partnerships, and optimising procurement strategies.
How does IT enhance sustainability in supply chains?
IT tools optimise routes, reduce excess inventory, and track carbon footprints, helping organisations minimise waste and adopt environmentally friendly practices.
Can small businesses benefit from IT in supply chain management?
Absolutely. Even SMEs can leverage cloud-based SCM, automation, and analytics to improve inventory control, reduce lead times, and enhance customer satisfaction.
