Critique of Literature on Past, Present and Future Information Systems: A Case of JD.Com in China
Introduction
Information system is one of the most important components of 21st century e-commerce sector. According to Daneshvar, Kakhki and Gargeya (2019), information system includes a set of individuals, resources, and procedures that collect, transform, and disseminate information within an organization. As such, it can be summarized to be a system that has a primary function of accepting data resources as inputs and processing these into outputs in the form of information products. The most significant role of information systems is in the management of the supply chain, in customer experience management, and in stock control (Gonzálvez-Gallego et al., 2015). The main aim of information system is to offer appropriate information for different business segments to improve the overall use of resources into effective and efficient outputs. For JD.com, major emphasis will be laid on how it uses information system in its supply chain management. This report deals with the case of JD.com, a company in the e-commerce sector. Recently, the organization has shifted focus to building of a larger market share as opposed to its current profit maximization operations. The company is likely to lose out on its net profits as margins shrink. As a result, the supply chain management strategy is now the focus of the organization, regarding how it can be made more efficient using information systems. As a leader in the e-commerce sector in China, Shen & Sun (2021) found that JD.com’s strategy in the ongoing COVID-19 pandemic should be adopted by other e-commerce players in terms of maintaining an efficient supply chain management strategy. In this report, the focus is on JD.com as a leader in the e-commerce industry in China. The aim of the paper is providing a critique of literature review, with reference to JD.com, on the role of past, present, and future information systems. There will also be a focus on the benefits of information system for JD.com including drawbacks and recommendations for future.
The Role of Past Information Systems
Past Usage of Information Systems in the Supply Chain Management
In order for a supply chain to be functional, information must be available at all times. This is because information serves as the foundation for decision-making by supply chain management. Information technology refers to the technologies that are used to raise awareness of information, assess it, and take action on it in order to improve the performance of the supply chain overall (Boiko, Shendryk, & Boiko, 2019). Information is crucial for making great supply chain decisions because it provides the broad view that is required to make the best judgments. Without information, it is impossible to make sound decisions. In order to make the best supply chain decisions, information technology (IT) facilitates the collecting and analysis of this data. Past structures relied on manual storage and retrieval of information.
Historically, information technology was a critical component of supply chain management. With the progress of technology, new items were released in fractions of seconds, significantly boosting their market demand. Historically, the benefits of utilizing information systems in supply chain management included cost reduction, productivity improvement, and product/market strategy (Daneshvar Kakhki & Gargeya, 2019). Additionally, technological advancements have resulted in the widespread availability of all items with varying offers and discounts. This results in a decrease in the cost of items. In terms of productivity, the advancement of information technology was employed to boost output through the introduction of new tools and software. This increased productivity and reduced time spent on administrative tasks. Not just the technology, but also the market itself, witnessed significant progress in terms of improvement and product/market strategies. New techniques have been developed to attract customers, and new concepts are being tested to improve the product.
Information systems, in the past especially in supply chain management, was a major challenge to the e-commerce sector (Alter, 2008). In the past, information systems were used to describe any amalgamation of processors which only deal with information. However, Carvalho (2000) and Zhu and Kraemer (2002) highlights that the four object types entirely deal with information and they are in one way or another linked to organizations or the work or activities conducted within an organization and they are all linked to information technology. Therefore, information system in the past referred to a system that gathered and saved information important to an institution (or to community) in such a manner that the information is available and helpful to the ones who choose to utilize it, like managers, employees, customers and residents. It is also known as an information management system (IMS).
In the past, information systems referred to companies and autonomous systems whose primary mission is to deliver information to their customers (Jeyaraj & Zadeh, 2020). Secondly, the phrase information systems was used to describe a sub-system which occurs within a system having the capability of controlling itself, that is, autonomous system. The information system secured the connection between the managerial and operational sub-systems of a firm, that being its objective. A memory for messages storage was essential such kind of communication is asynchronous. In the past, information systems were not used as a competitive advantage tool, but rather just a way to automate business processes (Goyal, Ahuja, & Guan, 2018). Further, a study by Hsu and Chiang (2017) found that among the three categories of information systems (operational-level, management-level, and strategic-level system), only the operational-level systems were used by firms. Even in their usage, only large firms and organizations were able to use computers and other forms of machines to automate operations.
Past Information Systems and Competitive Advantage Creation
Information systems was used in a number of ways by organizations through the Porter’s five framework to gain a competitive advantage. This framework provided a general perspective of an organization, the environment along with its competitors. The five elements of the framework were used to determine the future of the firm (Hemmatfar, Salehi, & Bayat, 2010). The first element was used to create barriers for rivals to compete effectively. Using this method, a company can deliver products or services that are impossible of hard to copy or that are utilized to serve specialized markets that are tough to penetrate. This inhibits new rivals from entering the market since the costs of implementing a comparable strategy are too expensive for them. The second element was used to generate databases to enhance marketing otherwise known as the bargaining power of suppliers.
Organizations gained an advantage over their competitors by using information systems to generate databases that can be used to better their sales and marketing tactics. Extant information is treated as a resource by these systems. For instance, a company may utilize its databases to keep track of the purchases made by its consumers, to pinpoint distinct sectors of the marketplace, and so forth. The third element of the information systems was used to ‘lock in’ suppliers and customers (Yoshikuni & Albertin, 2018). Obtain a competitive edge through client and supplier retention is yet another strategy. The goal of this notion is to leverage information systems to deliver such benefits to a consumer or a supplier that switching from one vendor to another becomes challenging. For instance, a business may invest in the development of its information system, which will provide several advantages to its clients, such as dependable order fulfillment, lower transaction costs, enhanced management assistance, and quicker delivery service.
Information systems were also used to assist firms to lower the prices of their products or services. It is also possible that strategic information systems may assist firms in lowering their corporate expenses, enabling them to offer commodities at a cheaper price in comparison to their rivals. Such information systems can therefore result in a long existence and expansion of a company or organization. For instance, airlines utilize information systems deliberately to reduce expenses in an effort to compete with rivals’ low-cost flights by offering lower prices themselves. Lastly, information systems were used to leverage technology within the value chain. This technique identifies certain activities inside a company where competitive strategies may be most effectively implemented and also where information systems will possibly have a higher strategic influence than they otherwise would. This concept suggests that information technology may be leveraged to generate competitive advantages by finding certain, crucial areas of opportunity that may be exploited to their full potential.
Sample Firms that Developed Due to Use of Information Systems in the Past
Walmart, the universal’s largest retailer is an example of a firm that makes use of information system. The firm has been using information systems over the years to maintain its position as the largest retailer in the world. The introduction of Retail Link, a supply-chain management system, was one of the factors that contributed to this achievement. At the time of its first implementation in the mid-1980s, this program was unusual in that it permitted Walmart’s suppliers to have a direct access to the inventory levels and sales statistics for their items in any of the companies over ten thousand shops worldwide (Gonzálvez-Gallego et al., 2015). Suppliers may use Retail Link to examine how well their products are being sold at one or more Walmart shops, and a variety of reporting choices available to them. Using information systems, Dell has been effective in differentiating their product from the competition. It has provided them a significant competitive edge in the field of personal computers and laptops since they employ information systems to customize and personalize their goods.
Amazon is yet another company that has achieved a competitive edge via the use of information systems. The firm cultivate a close relationship with their customers by keeping track of previous purchases, which enables the company to propose new things that the consumer may also find interesting as well as previous purchases. Information, information systems, and people helped Apple attain profitability by figuring out a method to make their merchandise more appealing to customers. Apple determines in sales what will sell and who will profit from their item via the use of information. They also decide whether the advantages of their item exceed the disadvantages of their item. For instance, with particular items they manufacture, such as the iPad, the dimension is convenient for carrying, one can enjoy games and watch films, one can compose articles and snap photographs, and the touch screen is something that buyers like. Toyota is another company that makes use of information technologies to obtain a competitive advantage over its competitors. By integrating information sources throughout all stages of the manufacturing process inside its facilities, information systems aid in the rapid transition of production processes. Moreover, they aid employees in recognizing present and potential constraints, which in turn helps to expedite the solution of those bottlenecks.
The analysis of data via the use of an information system may considerably improve the efficiency of manufacturing operations (Zhang et al., 2020). When it comes to managing its operations, the corporation has a variety of information systems at its disposal. It does have a customer relationship management system, which is provided by Oracle, and customers utilize it to improve their connections with customers. Moreover, the company has a number of systems in place to oversee the manufacturing process, including a plant scheduling system and a plant monitoring system, among other things.
The Role of Present Information Systems
Understanding of Information Systems Today
Supply Chain Information System (SCIS) can be described as a computer system, basically, a software that is utilized for coordinating information among customers, suppliers, distributors, and other participants in the supply chain (Zhang et al., 2020). As a rule, traditional supply chain systems facilitated just two organizations; for instance, they facilitated only communication between the wholesaler and retailer (Varma & Khan, 2014). Today’s more complex systems combine three or more businesses, allowing a retailer, for instance, to indicate a recall to both its wholesaler and the wholesaler’s supplier simultaneously, therefore saving time and money. It is especially useful in the e-commerce sector, as seen through JD.com’s use in China, to ensure that automation is aligned to other business needs.
The SCIS, just like the Management Information System (MIS), is meant to cater to the information requirements of managers generally. It is also tailored to meet the information requirements of managers in the domains of supply chain management (SCM) (Hidayat, Dewantara, & Saifullah, 2020). SCIS consists of a number of components, including information sources, an information gathering system, storing, processing, retrieving, and report formatting, among others. A succinct definition of SCIS is “the vehicle for Supply Chain expertise.” From this description of information systems, it is clear that organizations today see it as a way to generate an advantage through its basic function of automation, streamlining processes, using it to reduce drags in the supply chain, providing superior customer service, and cutting down on costs. Therefore, it is a tool to create competitive advantage in an era where there is intense competition in the e-commerce sector with new entrants and older firms that have a very large market share.
JD.Com’s Information Systems Use Today
When it comes to establishing the most intelligent and efficient logistics systems, JD Logistics is focusing on the Chinese market, where it is utilizing its Big Data resources, information systems, and industry knowledge (Zheng, Zhang, & Song, 2020). The organization places a high importance on innovation and thinks that technology will be at the forefront of the future of smart logistics. It has already completed the construction of its first fully-automated warehouse in Shanghai, and the firm is presently working on the creation of automatic delivery robots. JD.com invested in smart supply chain back in 2007. The uses of the smart supply chain have particularly been witnessed during this period of corona virus pandemic.
Collaboration with suppliers to effectively distribute items, collaboration with factories to restart manufacturing relying on big data analysis, and continuous delivery all over the state, including in Wuhan, have entirely been achieved through JD’s strategy. JD.com completely involves a range of commercial operations in its business, from buying and selling to electronic business procedures like as customer service. Providing exceptional applications in data mining with its comprehensive terrain in e-commerce, the organization has developed a sequence of big-databased applications, like user profiles, mining tools, as well as a knowledge system, and has implemented them to every connection of the JD procedures (Zheng, Zhang, & Song, 2020). JD makes use of different logistic distribution modes derived from the big data which are modes where all connections of enterprise logistics distribution. The self-management logistic distribution mode is a mode where all connections of all logistics distributions are created and governed by the firm to realize internal as well as external commodity distribution. JD has embraced this way of operation for its supermarkets, fresh items, self-supporting goods, and small electronic commerce businesses that make use of its selling platform, among other things. JD has embraced this way of operation for its supermarkets, fresh items, self-supporting goods, and small e-commerce businesses that make use of its platform to sell, among other things (Chan, Chen, & Zhao, 2018). Another mode is the third-party logistics distribution, which describes a form of logistics operation in which a third party besides the provider or the demander of logistical services completes the logistics operation. This distribution mechanism is utilized by JD for the significant flagship items that are sold on JD.com, like L’Oréal Paris, Estee Lauder, Timberland, and various furniture brands, as well as for some other products.
Required Improvements on Information Systems Use Today
For further improvements, placing a supplier’s goods into the closest distribution hub will aid in the implementation of smart dispersion by utilizing big data statistical insights on customer demand and incorporating a high-quality distribution route of customers (Wang, Yu, & Shen, 2019). JD.com has achieved very high usage of information systems in ensuring a better and quality-driven supply chain management. Further improvements in the use of supply chain management will increase the efficiency as well as quality of distribution while also reducing logistics costs and the time for delivery. Virtual distribution centers, which operate on the basis of a virtual logistics network, do not store products once they have been received anymore, but instead provide them straight to the demand of their clients for dissemination. Data distribution stages may be correctly studied with the use of big data analysis, allowing for the creation of suitable plans for data distribution modalities.
Benefits and Drawbacks to JD.com
JD.com benefits from the real time data provided by the information systems. Because all of the data is combined into a single system, the entire data is up to date. Every aspect of the organization, from marketing communications to finance, is dependent on this thereby making it essential. Information systems provides the firm the advantage of reduced risk of errors. Because data would not have to be copied, this significantly reduces the opportunities for human mistake to occur, resulting in more precise information being provided.
In as much as information systems have several advantages to JD, the firm also experiences some drawbacks in association with the information system. Among the most prominent drawback that the organization has is the risk of security. Individual identity theft and hacking are common, while corporate sabotage targets critical firm data is common. Data on vendors, bank details, intellectual property, as well as personal data about firm management are examples of this type of data (Boiko, Shendryk, & Boiko, 2019). The attackers can then broadcast the material across the Internet, sell it to other firms, or use it to destroy the brand’s reputation by damaging its reputation and credibility. Lastly, the firm experiences the disadvantage of implementation costs which are costly. In order to incorporate the information system, a significant amount of money is required in terms of software, hardware, and human resources. Software, hardware, among other services ought to be available for rental, purchase, and support. Workers must be taught on new information technology and applications that they are not familiar with.
The Role of Future Information Systems
The advancement of technology is inextricably linked to the success of supply chain management in the coming years. Recently developed tools and technologies, whether they enable supply chain personnel to better or contribute to their present operations in one way or another, are all but crucial for survival in the future. More precisely, over the next decade, the usage of autonomous mobile robots (AMR) is expected to become more widespread among businesses (Zhang et al., 2020). Companies will have the capacity of automating and streamlining their picking and packaging operations, in particular, as a result of implementing this technology. To be clear, this does not imply that robotic technology will entirely replace humans in some tasks along the supply chain. For the coming years, supply chain teams will continue to require a hands-on engagement to their different functions, at the very minimum.
Warehouses are set to become smart through the help of Internet of Things (Zhang et al., 2020). Over time, the world will witness the many tools and techniques in use by supply chain personnel become more and more tightly connected with each other. For instance, the present warehouse management system is set to be replaced by the used collaboratively with AMR tech. Consequently, not only will supply chain technology become more linked with other tools of the trade, but it will also probably grow more sophisticated as well. Supply chain groups who implement this highly-integrated and specialized technology in the future will almost surely see a significant increase in output across their entire process.
In today’s world, AI and machine learning (ML) are being enthusiastically embraced by businesses across all sectors, and the supply chain is not an exception. Organizations have seen advantages from utilizing AI and machine learning, such as a decrease in physical work (Daneshvar Kakhki & Gargeya, 2019). As a consequence, software may be used to automate operations such as data collecting, report creation, and planning. AI may also undertake data analyses in order to provide valuable intelligence, therefore saving both effort and time for the user. As a consequence of the integration of the two, better informed decision-making has been achieved particularly for e-commerce. Whilst JD.com has experienced significant growth in the e-commerce sector, the company has also extended to provide customers with services in cutting-edge digital technology industries like intelligent cities, fintech, artificial intelligence, and robotics.
Conclusion and Recommendations
In conclusion, JD.com’s integrated supply chain architecture fosters greater level of cooperation, sharing of information, and agility, resulting in higher levels of supply chain resilience in comparison to other companies. Moreover, the integrated supply chain is predicted to function far much conveniently than the conventional structure since JD.com virtually completely rules the supply chain and has the ability to considerably enhance the performance of the supply chain through its initiatives. In the future, this critique projects even further improvements that will firmly place JD.com at per with some of the world’s leaders in e-commerce through the use of information systems. Because of the high degree of coordination, customers may benefit from larger rewards and better service while saving time, money, and effort throughout the negotiation process. As a result of this discussion, it is recommended that JD.com should take initiatives and be among the first organizations to leverage the future technologies that are yet to hit the supply chain and reap the benefits. An example is the Internet of Things. Such initiatives increase the resilience of firms especially in unavoidable circumstances that disrupts the supply chain such as the coronavirus.
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