Information Technology Used for Supply Chain Management

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  • 0:00 BTO (Build to Order)
  • 1:25 ERP (Enterprise…
  • 2:21 RFID (Radio Frequency…
  • 3:50 Barcodes
  • 5:28 E-Business
  • 6:11 Lesson Summary
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Lesson Transcript
Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

Watch this video lesson to learn about the different types of technology you can use to manage your supply chain. Learn how these technologies make keeping track of your supplies and inventory easier.

BTO (Built to Order)

Walk into any department store and you will see aisles and aisles of products. These products have all been shipped to the store but how does the store make sure it gets the products it needs when it needs them? Managing how products move from where they are made to the store you are shopping at is called supply chain management. This management includes the storage of the materials used to make the product and any inprocess and finished goods. And of course, it includes how these goods and materials are transported from one place to another.

Many technologies exist today that will help you when managing your supplies and inventory. Let's take a look at a few of these. BTO stands for build-to-order. This is not a technology per-se, but a way to manage the supply chain. With build-to-order, companies only produce a product when it is purchased, instead of having a warehouse full of finished products. When companies use the build-to order supply chain management style, they do not need a warehouse to store finished products because a product is directly shipped to the customer who bought it once it is made.

However, the business does need storage for the raw materials used to make the product. The benefit of a BTO system is that customers get exactly what they want. Businesses that have very customizable products benefit from this type of supply chain management. For example, some computer companies wait for an order before building a computer to the specifications of the customer.

ERP (Enterprise Resource Planning)

Enterprise resource planning (or ERP), refers to software that helps businesses to manage and automate many back office tasks. When used in supply chain management, ERP software helps businesses to easily see how their materials and inventory are being used. It can also automate the purchasing materials when stock levels drop below a certain point so that the production of new products won't be stopped due to a lack of materials.

For the department store that you are in, ERP software can automatically place orders with the store's venders when products drop to a certain level. For example, if the store's inventory of bar soap falls below ten, the ERP software will automatically place an order with the soap vender. Since the department store has thousands upon thousands of items to keep track of, you can see how ERP software really helps the business to keep track of its items. The ERP software also ensures that the store shelves are never empty.

RFID (Radio Frequency Identification)

RFID stands for radio-frequency identification. This technology uses electromagnetic fields to wirelessly identify and track tags. This type of technology is great for keeping track of your supplies and inventory because items can be scanned by the hundreds. You won't have to scan or manually count each product individually. This can save businesses a lot of time.

RFID tags can also store electronic data. In addition to keeping track of your items, you can also add information, such as ownership information. RFID tags can be scanned no matter where they are located in the product, so these chips that people put in their pets to help them locate lost pets, are an example of RFID tags in use.

The department store that you are visiting can use RFID tags in its clothes and perhaps its very expensive items. Because RFID tags can be scanned wirelessly, they can be scanned as people walk past a sensor. So when stores use RFID tags in their very expensive items, if someone decides to walk out of the store without paying, it can trigger an alarm to alert the store that someone hasn't paid for an item.

When used for inventory tracking, items with RFID tags in them can be scanned by the hundreds. So when a shipment of clothes comes into the department store, the department store can simply pass the box near an RFID sensor and it will be able to count all the items in the box without the store having to individually scan or count each piece of clothing.


A technology that is not as complicated as RFID tags is the barcode. Barcodes are optical patterns that represent data. When you look at almost any packaged item in the department store, you will find a barcode on it in the form of vertical lines of varying widths with a product number underneath. When scanned, the barcode can be used at the cash register to provide information, such as cost and item description.

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