Quantifying benefits of electronic technology applied to bulk materials management

There is a need within the industrial construction industry to comprehensively evaluate emerging technologies for electronic information management to determine their potential for enhancing the business processes defining the materials management functions. Establishing and maintaining a strategic advantage in a globally competitive business environment requires focus on technologies which facilitate work flow automation and process reengineering. Corporate implementation of electronic data management technologies such as integrated data bases, electronic data interchange, and bar coding should result in an improved materials management process characterized by higher levels of productivity, fewer processing errors, compressed durations and cycle times, and the formation of strategic customer-supplier partnerships. Effective implementation of these electronic data management technologies requires a strategic, innovative and cooperative approach to electronic document management and customer-supplier relationships. This frequently results in significant modifications to traditional industry procedures for materials management. To date, a methodology for quantitative analysis of time and cost benefits attributable to electronic data management technologies has been difficult to structure due to the complexity of predicting the subsequent organizational changes. Additionally, implementation of technologies such as these will impact work task durations and resource requirements. Without a technique for accurate quantitative prediction of technology benefits, cost justification of electronic data management innovation is considered for concurrent implementation. This research develops a methodology for quantifying the time and cost benefits attributable to implementation of electronic data management technologies applied to the materials management process. Data directly provided from leading engineering/construction companies are incorporated into four generalized materials management process models, each representing a distinct level of corporate information integration. By using a process of computer simulation, it is possible to quantitatively determine and measure the time and cost impacts of technology implementation. The research shows that the process benefits attributable to electronic data management are significant. Total reduction in cycle time for materials management was equivalent to 85% when electronic technologies were fully exploited to effect work flow automation and process reengineering. Similarly, process cost was reduced by 75%.