Supply Chain Management

Supply Chain Management

E-commerce is slowly affecting the distribution channels through which consumers and businesses have traditionally bought and sold goods and services. The online channel provides sellers with the ability to reach a global audience and operate with minimal infrastructure, reduced overheads, and greater economies of scale, while providing consumers with a broad selection and unparalleled convenience.

As a result, a growing number of consumers do business transactions on the web, such as buying products, trading securities, paying bills, and purchasing airline tickets. Essentially, e-commerce is all about the transactional business process of selling and buying via the Internet. E- Supply Chain refers in particular to the management of supply chain, using the internet technologies.

Supply Chain

Supply chain is a process umbrella under which products are created and delivered to customers. From a structural standpoint, a supply chain refers to the complex network of relationships that organizations maintain with trading partners to source, manufacture and deliver products.

The organizational process of making the product and selling it stands between the supply markets and the customer markets. In the old way of doing things, the following seven processes were not integrated.

Procurement planning

Production planning

Demand planning

Inbound logistics

Capacity utilization

Distribution of products

Customer service

But Supply Chain Management (SCM) attempts to integrate them. In short, SCM is a cross-functional inter-enterprise system that uses IT to help support and manage the links between some of a company’s key business processes and those of its suppliers, customers and business partners. The goal of SCM is to create a fast, efficient and low cost network of business relationships or supply chain, to get a company’s products from concept to market.

Figure helps to understand the roles and activities of SCM in business. The top three levels show the strategic, tactical and operational objectives and outcomes of SCM planning, which are then accomplished by the business partners in a supply chain at the execution level of SCM.

The role of IT in SCM is to support these objectives with inter-enterprise information systems that produce many of the outcomes a business needs to effectively manage its supply chain.

The New Way

The flow of materials and information through a business, from the initial pur-chasing function through the operation and eventually to the customers, is known as supply chain.

The concept of SCM is a holistic view of coordinating functions that transfer data and material resources from the suppliers to consumers in the finished form to make the process efficient and cost effective. The importance of e-commerce to manufacturing and distribution is undoubtedly a part of SCM. If high speed, low cost, communication and collaboration with customers and suppliers are critical success factors for effective SCM, then the e-chain is the future.

The very essence of SCM is its effective collaboration throughout a network of customers and suppliers. The potentials in productivity, cost reduction and customer service are enormous. Of course, the benefits are based on effectively employing e-commerce, which makes information quality an even higher priority than before. Providing the right amount of relevant information to those who need to know when they need to know, is in fact an effective supply chain management from an information point of view.

Good supply chain practitioners know that information should be passed on only to those who need to know it, and in the form in which they should receive the information. For example, demand information, inventory positions, order- fulfillment, supply management and a whole host of other information exchange activities will change how we sell products, supply products, and make and receive payments for goods and services.

The e-supply chain will have customers and suppliers seamlessly linked together, throughout the world, exchanging information almost instantly. The velocity of relevant information flow will be so fast that responding to the inevitable changes in expected vs actual customer demand will allow faster changes in the actual material flow.

Fast access to relevant supply information can pay-off handsomely at a lower cost, less inventory, higher quality decision-making, shorter cycle times and better customer service. One of the biggest cost savings is in the over heads associated with lots of paperwork and its inherent redundancies. The non-value added time of manual transaction processing could instead be focused on higher revenue creation activities without proportional increases in expense. For example, a customer’s purchase order instantly becomes the supplier’s sales order, which then results in packing, shipping and subsequently, an invoice.

The result in cycle time compression, lower inventories, decision-making quality, reduced overhead costs among other benefits, makes e-chain processing a highly desirable web application. Supply chain processes can now be more streamlined and efficient than was even thought is where the profit and competitive advantage will emerge.