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THE ROLE OF INFORMATION TECHNOLOGY AND

CUSTOMER RELATION MANAGEMENT IN THE SUPPLY
CHAIN
Mina Beig
Master of Industrial Management (OM), Department of Human Science, Najafabad Branch, Islamic Azad
University, Isfahan, Iran
Mohammad Hassan Pourhasomi
Master of Industrial Management (OM), Department of Management and Economy, Science and Research
Branch,
Islamic Azad University, Tehran, Iran.
Yaser Ghorbanzad
Master of Industrial Management (OR), Department of Management and Economy, Science and Research
Branch, Islamic Azad University, Tehran, Iran
Abstract
Supply chain starts with customer demand and ultimately leads to customer. The increasing development of
technology leads to the rapid change in everything. These changes affect all aspects of human life, including the
production and service organizations. Hence this study briefly examines the importance of customer role in light
of the information technology in the supply chain.
Keywords: supply chain, supply chain management, customer relation management, information technology
1. Introduction
According to Christopher (1998) today not the size of products and economic scale, but the supply chain
management is necessarily a powerful solution to achieve a cost advantage. He believes that the supply chain is
a network from upstream and downstream organizations. These organizations are involved in different processes
and activities that produce value in the form of products and services on their final customers.
(Christopher,1998)
Moreover, we can say that today all organizations are exposed to the developments in information technology.
And the application of information technology and communication are obvious in all areas of the supply chain
including the communication with suppliers and production and customer relation. So the use of information
technology affects on the improvement of the supply chain management. (Aghajani, 2008 )
This paper attempts to review the literature and previous studies, and investigates the role of information and
customer relation management in the supply chain. It finally presents the importance of information technology
in customer relation management and supply chain.
2. Review of Literature
This section provides the definitions of supply chain, customer relation and information technology, then
reviews the related research literature.
2.1. Supply chain
The concept of supply chain management has been analyzed and described by many researchers. Some
researchers define it as logistics, operations management, procurement or a combination of these three.
(Monzka, Trent and Handfield, 1998)
2.1.1. Definition of supply chain
A supply chain is a network of facilities and activities such as raw preparing materials, converting these
materials to manufactured and semi-manufactured products and distributing the products between customers. (
Nematbakhsh, N & et al, 2004)
2.1.2. Supply chain management
Supply chain management is the integration of key business processes from the final user to the major supplier
which is responsible for the supply of products, services and information that creates added value for customers
and interested parties. In recent years, many organizations have accepted the reference model of supply chain
operations as a powerful and comprehensive tool for describing, analyzing and improving supply chain: the
model is based on the main supply chain processes such as sourcing, manufacturing and distribution. (Council
of supply chain management, 2006)
2.1.3. Definition of supply chain management
Supply chain management coordinates the all activities of the supply chain. The term supply chain
management was first used by two researchers Oliver and Webber (1982), and then it was used widely in the
1990s. Earlier, the terms logistics and operations management were used. According to Oliver and Webber the
supply chain includes logistics and is posed at the level of senior management. (Eshtedler, Hartmot and Kigler,
Christoph. 2007)

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Another definition of supply chain management is as follows: coordinating the activities of production, products
stock, positioning and transportation between supply chain participants to achieve greater efficiency and meet
customer expectations. ( Hugos, 2006)
According to Christopher, supply chain is a network of upstream and downstream organizations. These
organizations are involved in different processes and activities which create value in the form of products and
services. This definition focuses on satisfying customers' needs at all supply chain activities. (Rahman Seresht,
Afsar, 2008)
2.1.4. History of Supply Chain
The term supply chain management dates back to Pre-1980s, but the supply chain existed since the human
produced and trade. Transportation of natural resources as products and services seems to be very simple
through individuals and organizations chain. But managing this transportation is not so easy, even in many
cases; organizations involve numerous products and countries around the world. The purpose of supply chain
management is to do the process of this displacement efficiently. (Christopher, 2011)
Supply chain management is the result of the logical progression of logistics management. In the 1960s experts
studied the internal relation between the storage and transportation that resulted in a distribution management. In
fact the logistics was created by adding construction management, procurement and orders to the distribution
management. Supply chain management was studied as a serious debate in the scientific community since early
1980 and many researchers have proposed a framework and a model for it. For example, Forrester presented a
model as the first model which was considered as an appropriate model for the supply chain. (Ibid)
2.2. Customer Relationship Management
Todays challenge is to see how companies understand the needs of individual customers and how meet their
expectations while keeping costs down and improving quality, Customer relationship management is a tool to
apply this concept. Customer relationship management forced many organizations to think on providing better
service to customers. It is important to note that customer relationship management is not a product or service
offered by an organization, but it is organization's business strategy. In other words, it is not considered as an
information technology; but uses information technology to achieve its goals.
2.2.1 Definition of customer relationship management
Customer relationship management is a strategy manages the relationships between customers and business
processes. It uses technology to management, automation and making business process simultaneously.
The benefits of customer relationship management. (Robert, 1991)
1. To increase sales
2. To better understand customer demands
3. To understand that customers are profitable
4. Customer satisfaction and reputation of the organization
5. To Reduce marketing costs (Ghahremanlou, Dhake, Sane and Vaidya, 2012)
2.3 Information technology
Information technology consists of four basic elements of human, mechanism, tools and structure. In this
technology the information is created through the value chain to join these elements and continues the
improvement and development of the organization.
Human: Human resources, concepts and ideas, innovation
Mechanism: Rules, regulations and procedures, improvement and growth mechanisms, Valuation and financial
mechanisms
Tool: Hardware, Software, Network and Communications
Structure: organizational, related ultra-organizational, universal
Many concepts merge information technology with computer and informatics, while these are only the
information technology tools. As Seyed Hamid Khosravani Shariati wrote in his paper: By assuming that
information technology is an apple, computers, networks, software and other related tools are considered as the
tail of apple which feeds the apple
However, apple is the main product and summarizes the results and goals.( Khosrovani, 2010)
2.3.1. Definition of Information Technology
There are various definitions for technology. According to one definition, technology is divided to four
elements as follows:
1. Technical tools: a device which includes technology.
2. Human tool: the set of people who are engaged in a production system.
3. information tools or documents: Documents which define and describe technology
4. organizational tools: an atmosphere in which these three components can be coordinated and conducted
Each technology has combined these four components.

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Definition of information and communication technology:

Information and communication technology is the production management networks, processing, distributing
and the optimum use of information in order to improve system performance. ( Hazhbar Kiyani, 2004)
Information technology is a revolution and its purpose is to create the foundation of electronic supply chain. The
intelligent use of information technology causes the information exchange through internet, prevents redundant
data entry, provides the required information within the required time, allows managers to receive the complex
information more efficiently and exchanges the information easier among supply chain members, so the
provider customer communication can be improved.( Moore, 2008)
2.4 Research background
Fang Wu has examined the impact of information technology on supply chain capabilities in 2006. They
concluded that the ability of information technology is specific in the supply chain capabilities and can it hardly
be employed in the same organization. (Fang Wu, Sengun Yeniyurt, Daekwan Kim, S. Tamer Cavusgil, 2006)
Jabir Ali and Sushil Kumar studied on ICT and decisions of farmers in the agricultural supply chain in 2011.
The results obtained in this study have shown that someone who used information and communication
technologies had made better decisions and had better results. Jao-Hong Cheng presented a model to evaluate
the factors affecting information on the implementation of inter-organizational relationships. (Jabir Ali, Sushil
Kumar, 2011)
Yu and his colleagues studied the impact of information technology on the supply chain capabilities and firm
performance. The results showed that the placement of information technology in supply chain communication
systems can provide better facilities in the supply chain in areas such as information exchange, coordination,
activities integration and sensitivity (influence)( Jao-Hong Cheng, 2011)
Bird and Davidson in 2003 investigated the effect of information technology on the supply chain and business
performance. The results showed that the three factors of information technology technical quality, useful
applications of information technology and the support of administrators from information technology positively
and significantly affect the impact of information technology on the supply chain. In this regard, they have
significant and positive relationship with financial performance at the firm level. (Blankley A. 2008)
Michael Ahearne and his colleagues in 2007 have studied the effect of customer relationship management based
on information technology on effective sales. The two companies have collected data and the results of positive
impact on sales performance are reported. (Michael Ahearne, Douglas E. Hughes, Niels Schillewaert, 2007)
Seungjeong and his colleagues in 2009 have researched on the integration of customer relationship management
for the effective implementation of customer relationship management in small and medium organizations.
(Seungjeong Yang, Jongtae Rhee, 2009)
Timon and his colleagues in 2012 have examined the willingness to share information in a supply chain. They
suggest that if colleagues are closer to each other, the tendency toward sharing the information will increase and
the information will spread in the organization. (Timon C. Du, Vincent S. Lai, Waiman Cheung, Xiling Cui,
2012)
Davood Ghahremanloo and his colleagues in 2012 have examined the effect of customer relationship
management on the supply chain management. They concluded that if the customer relationship management is
applied in the organization, everything will be written and recorded and everyone knows his/her job because
they have common goals. ( Ghahremanlou, Davoud, R.J. Dhake, S.M. Sane and P.R. Vaidya, 2012)
There is summarizes briefly of some studies on the subject in table (1).
Insert Table (1)
3. The role of customer relationship management in the supply chain
One concern of business is the customer satisfaction and contentment. (Morteza Poor, 2002) Best customer
service will be formed in an efficient and effective manner with information such as order status, product
availability, delivery scheduling and billings. Therefore, the importance of information in the field of customer
service and their satisfaction and contentment is clear. (ibid)
Therefore the main purpose of the activities related to the supply chain is satisfying customer demand, so that
they can deliver a product with a maximum quality and a minimum cost.( Amid, Rezaiyan , Bagheri, 2008)
When the kind of relationship between customer relationship management and supply chain management is
defined precisely, then the actual performance of customer relationship management in the supply chain can be
observed. Customer relationship management system is based on three fundamental variables such as
engineering, economics and customer psychology. (Dimitris, 2001)
The first variable is an intra-organization variable. This variable will be effective when the supply chain
management provides comprehensive and accurate statistical information of the supply chain abilities. As a
result the customer relationship management system will be able to classify customers and to identify the group
who ask to receive a product at this level of quality.
The second variable is associated with three components of the organization, customers and the community. In
fact, study and work in the scope of this variable enables the customer relationship management to provide the
supply chain management with a comprehensive information of Customers views toward the cost of a product

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which they are willing to pay, and the ability of the supply chain in providing a product at different levels of
cost in order to achieve the best production plan. The third variable is an extra-organization variable that can be
very effective and efficient due to the competitive share in the supply chain of global markets. Identifying the
needs of customers in all areas that can cause customer satisfaction or even creating demand (induced demand)
is a key objective to achieve the supply chain success, and this is one of the most prominent targets of the supply
chain management. (Andreas Reichhart and Matthias Holweg, 2001)
Furthermore, as it is shown in Figure (1) the customer relationship management is between the different
elements of the organization. Suppliers, manufacturers and distributors all participate to meet the needs of
customers. So all aspects of customer relationship management in the supply chain are not only inevitable, but
they are important.
Insert Figure (1)
4. The role of information technology in supply chain
Nowadays the use of information technology is considered as a prerequisite for the effective control of
complex supply chains.( Moore K.A. 2008) A supply chain which is fully integrated with information
technology is a chain in which all important business communications of the organization suppliers and
customers are enabled or disabled as digital. (ibid)
Using information technology has the potential of developing supply chain partners to work together and deliver
the products to consumers more efficiently. Information technology allows the supply chain partners to have a
performance as a single entity. Interestingly, the idea of using information technology to cross the companys
borders in order to improve efficiency is not a new idea. Forester in 1958 suggested that the data transfer
between companies reduces the demand distortion in the supply chain.
In fact, the new millennium with the advent of information technology and the new business environment, has
led to the creation of the electronic supply chain, and unlike the conventional supply chain, the electronic supply
chain focuses on the customer.( Rajab Zadeh & et al, 2011)
Furthermore, the use of information technology in the supply chain, improves the chain efficiency by reducing
the uncertainty due to the unavailability, incompleteness and distorted information.( NiuY. 2010)
Information technology plays an important role in strengthening cooperation and coordination in the supply
chain through sharing the information. Information technology supports the decision-making process in the
supply chain. In this case, Computer analysis can be used to help make management decisions. (Rajab Zadeh &
et al, 2011)
The term supply chain management indicates the integrating task of organizational units along a supply chain
and the integration of material, financial and information flows, in order to meet the customer demands; it is
aimed at improving the competitiveness of a supply chain. So we can say that the supply chain management is
based on integration and synchronization. Figure (2). In discussing integration issues such as the selection of a
suitable partner for collaboration, inter-organization and intra-organization and leadership are expressed in order
to coordinate the strategies of partners. The use of information and communication technology is so important
which indicates the importance of information technology in the supply chain.
Cooperation includes two distinct concept is two distinct concepts of internal and external cooperation. Internal
cooperation is a shared a two-way process in two or more parts which have mutual understanding and a shared
vision, shared resources and collective goals. External cooperation is similar, to internal cooperation; the
difference is that it focuses on the chain. It should be noted that cooperation does not have the meaning similar
to information technology. Many companies think they can use information technology to obtain the
coordination, while cooperation is the result of human interaction that is supported by information technology.
In fact, information technology is a concept that promotes the internal and external relationships. Due to the
impact of information technology on internal collaboration and external collaboration, it can be stated that
information technology has a considerable impact on the efficiency of organization performance. Sandres and
Premus proposed a model to determine the impact of information technology on internal and external
collaboration on the efficiency of organization performance. ( Sanders N.R. , Premus R. , 2005)
Different technologies can be used to improve the performance of the organization. Such as electronic data
interchange, internet, coding, identification of codes, and so on. Note that each of them is beyond the scope of
this article.
Insert Figure (2)
5. The role of IT and CRM in the supply chain
Development and utilization of information systems needs diverse information technologies. Information
technology can support the internal operations of companies and their cooperation in the supply chain, and the
effective use of this technology is a key factor in the success of the company. The systems supported by
information technology are applicable in all the major areas of supply chain management. The main areas of
supply chain management include product and service design, production, marketing and sales, customer service
and logistics. ( Jiang H., Jiang Y., 2007)

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As described in the previous section, customer relationship management systems automate many tasks and
activities associated with providing service to existing customers and attract new customers. These systems
track and record customer buying patterns and provides the customers with a faster access to the data through
integrating relevant data to customers with sales and service units. Customer relationship management can also
increase customer satisfaction and it has a positive effect on them and their preservation. However, to achieve
this purpose alone would not be possible without information systems and information technology.
The aim of the present study was to examine the role and importance of customer relationship management and
information technology. Thus, Figure (3) provides the hybrid model of customer relationship management
which exists in all parts of the supply chain.
Insert Figure (3)
6. Conclusion
Today's competitive world is based on information and the profits of any organization depends on the extent to
which the service and product are considered, Hence the placement of information technology in supply chain
communication system can create better opportunities in the supply chain in areas such as information
exchange, coordination, integration activities and sensitivity (influence). In other words, the adoption of
information technology in communication systems can improve onformation sharing and coordination among
different parts of a particular sector especially customer relationship management. In this regard, suppliers,
manufacturers and distributors are also important because they all participate in customer relationship
management. Since the purpose of customer relationship management is customer satisfaction and the ultimate
goal of supply chain management is to gain more profit, so if the supply chain management is conducted in the
best way, it will act as a solution for the supply chain in order to meet the goal.

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Annexure
Table (1) Research Background

Theorists

Reviewed subject

year

Bird and
Davidson

the effect of information technology on the supply chain and

And business performance.

2003

Fang Wu

the impact of information technology on supply chain

capabilities

2006

Yu and et.al

the impact of information technology on the supply chain

capabilities and firm performance

2006

Michael
Ahearne and
et.al

the effect of Customer Relationship Management Based on

information technology on Effective sales

2007

Seungjeong
and et.al

the integration of customer relationship management for the

effective implementation of customer relationship management

2009

Jabir Ali and

Sushil Kumar

ICT and decisions of farmers in the agricultural supply chain

2011

Jao-Hong
Cheng

Evaluation of influencing factors on inter-organizational

relationships

2011

Timon and et.al

the Willingness to share information in a supply chain

2012

Davood
Ghahremanloo
and et.al

the effect of customer relationship management on the supply

chain management

2012

Figure (1) Customer Relationship Management in the Supply Chain

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Figure (2) Information Technology in the Supply Chain

Figure (3) Information technology and customer relationship management in the supply chain

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