Information Sharing in Supply Chain Management Done by : Abrar Al-Ajlan Jaya Sinha Acknowledgement Our special thanks to Dr. Astone for her valuable and consistent support. A foreword Today, many businesses are failing owing to the incompetency in achieving an effective supply chain process. Also, those who are able to successfully manage the supply chain are not successful just by managing this alone. Rather, businesses succeed when they combine other marketing strategies with a successful implementation of supply chain process.
Newer techniques already are in place and there is a need for more innovative solutions to come out with an effective supply chain management. In this paper, an attempt has been made to emphasize the important of challenges facing the organizations today, current trends and techniques existing in the marketplace with respect to supply chain process and henceforth the solutions have been suggested to help those who are in businesses. The limitation of this paper is it does not present any market data or statistical data which is only possible when a industry or a particular firm is studied in detail.
However, certain solutions are good to be taken note of and to be implemented. Table of Content Acknowledgement| | A foreword| | Introduction| 1| The components of Supply Chain| 2| Lean SCM and the necessary attributes| 3| A comparison of traditional supply chain with Collaborative Network Supply Chain| 6| Potential Benefits of E-SCM| 7| Evolution of Supply Chain| 8| Challenges in the SCM and information sharingInformation sharing and Modeling of Supply chain Management Some ExamplesAn Exclusive Example of Barnes & NobleSolutionsConclusion References | 10121415161718| |
Introduction As supply chain is an integral part of every company and every industry, it becomes imperative to view SCM from the perspective of E-commerce today. While a traditional SCM consists of the flow of materials and products or services from the first member in a supply chain process to the end consumer, the modern SCM involves the use of IT to restructure the traditional processing in order to achieve higher service level, lower inventory levels and low supply chain costs.
The use of E-commerce technologies facilitate the information sharing across the various channel partners in a supply chain and sometimes may also eliminate role and activity of certain intermediaries. The disintermediation makes the distribution network allowing for easier and effective flow of information while at the time reducing the transaction costs. During the 1980s era, the importance of information between the channel partners and between the various functional areas within an organization was overlooked because of the paper based transactions.
And as the organizations turn from paper-based to paperless, IT infrastructure has evolved and transformed to render the SCM more viable and more capable of delivering products to the end consumer. The factors that led to the growth of E-supply chains were the increasing importance of information which helps in strategic planning, to help the customer by all means and reduce the inventory and requirement of human resources and finally to reduce costs.
In the context of information flow, access and development, the first and the foremost requirement is to have all the supply chain members tightly integrated with each others to have readily available source of information. The second requirement is to reduce the number of input errors when transactions are recorded in the database so that the flow of information takes place smoothly. The important thing for the companies to understand is that conventional supply chain integration need to be expanded beyond the peripheries, only then the can the organization be successful in their businesses.
Supply Chain defined: In general, supply chain management is considered both an art and science of developing the supply chain in a way that improves the procurement and delivery of products to improve the business processes. Let’s view some of the definitions given by the experts in this area; “The delivery of enhanced customer and economic value through synchronized management of the flow of physical goods and associated information from sourcing through consumption. ”(La Londe, B. , 1998).
Johnston (1995) offered: “The process of strategically managing the movement and storage of materials, parts and finished inventory from suppliers, through the firm and to customers. ” Whatever be the definition, the essence in effectively coordinating all the transactions which take place in the supply chain process. The components of Supply Chain The SCM first starts with a strategic planning for managing the resources which are required to meet the customer demand. A set of objectives and metrics are set to monitor the supply chain. The second stage is sourcing where the SCM managers set prices, delivery and payment methods.
Here, they should try to improve their relationships with their suppliers. The third step is making of a product where the production managers in a company schedule the activities in order to manufacture the product. The next step is delivery where a firm takes orders from customers and pick the carrier to make the final delivery of the product. The last stage is return when sometimes customers are left with defective products. Here, the supply chain partners need to plan and coordinate among themselves and have a supportive attitude to help the customer genuinely.
Lean SCM and the necessary attributes As defined by Ventana Research a lean supply chain is defined as a set of processes and organizations which includes continuous flow of products and services, finance as well as information in a collaborative manner so that there is minimum waste of resources and cost reduction. The necessary attributes of a lean supply chain include demand management, process standardization, product standardization, industry standardization, collaboration and cultural change. The first and the foremost criteria of a lean SCM is the demand for a product.
If there is no demand for a product which enters the supply chain, there would definitely be a waste of material and waste of time as well as labour hours. This demand for product requires that it should come directly from the customer and not from some other sources like the intermediaries or the channel partners of the manufacturer who would just stock the product in the future anticipation of demand. The existing demand by the end customer becomes then essential in order to sell in the current period.
And, this demand component can be assessed to varying degrees from high to low. In case of low demand too, there will be significant negative effect on the profits made out of the sale. The magnitude of demand needs to be assessed and evaluated very carefully. An underlying fringe benefit of the above demand estimation is that the sales forecasting and the forecasting related to purchase of raw materials and inventory control becomes much easier. Another important aspect of supply chain is process standardization which enables continuous flow in a company.
In a company, where there are different product lines and the processes are identical to all the products, the company has significant advantages. The primary benefit of process standardization enables a company to produce whichever product is currently in demand. And, the second most important benefit is the company can shift it’s production from one supply partner to other. Both these benefits enable a smooth supply chain process and because of which there is also a standardization of information regarding the production, purchase or supply of a product.
Next, product or raw materials standardization enables a company to use the raw material in different products under the same product line. Because of the common use of the same component in various products, there is a reduced inventory levels in the raw material used. And, there is also a faster purchase of the component being used in the final product delivery and consequently it also reduces the delay in production. The information accessed and delivered regarding all of these is also faster which enhances the cross-communication across various departments.
If there is product standardization in a firm, there should also be an industry standardization from a firm’s perspective of reducing the waste in product and it’s raw material components. If an industry related to a particular product is standardized, the firm does not require to make changes in it’s existing products from time to time. Of course, introducing an entirely new product concept lends the firm a competitive advantage over others, but the initial cost of innovation and production would be more than the benefits incurred primarily because of the product being in the market penetration stage.
The cost of information acquired from the industry sources also is higher and the supply chain is then not lean and continuous. At any cost, a firm should take decision only after considering the pros and the cons of altering the supply chain of an existing product. and cultural change both within the firm and outside the firm are other necessary attributes of a lean SCM. Without collaboration, there will not be a proper information exchange between the firm with it’s suppliers and customers.
So, collaborative management becomes the buzzword for a firm to ensure continuous product flow in a supply chain. Again, organization culture is another important aspect where every participant should be eager and motivated to readily exchange information. Further, the waste reduction and the cost minimization should be the goal of every participant in the supply chain process. Collaboration Above all, if these necessary attributes are present in a supply chain, a supply chain goes on to become a value chain where the information sharing becomes an inherent part of this chain.
Toyota production system is a good example to emulate in order to identify the outline of the waste sources The effort should also be to achieve lean information technology being used with in the firm. Certain IT tools here becomes necessary to ensure faster information access and delivery. An ERP system based on a SOA (Service-Oriented-Architecture) facilitates a modular approach to the supply chain support technology. This tools can help the employees with in the firm as well the channel partners to implement ERP and apply it to the various supply chain functions.
For this, it is vital that the IT department should help the other team members in a firm and get them assigned a module from a standard set of ERP system. The SOA approach can help the employees to fine tune the supply chain process implement ERP in conjunction with the implementation of the new supply chain processes. A comparison of traditional supply chain with Collaborative Network Supply Chain The above figure (fig. 1) of simple supply chain is self-explanatory which shows how information is generated and is sent for analysis and from there goes thorough the various stages to fulfill the customer order.
In comparison to the supply chain, collaborative networks, there can be more than one manufacturer or supplier or a distributor for a single product. All of them share information and are closely linked to form a smooth supply chain. E-SCM and the potential benefits of E-SCM E-SCM differs in many ways from a simple supply chain in the sense that it uses EDI (Electronic Data Interchange) as the major tool. Internet, Intranet, Extranet, groupware and such other collaborative tools may be used. One of the greatest benefits of Electronic supply chain is the intangible goods can be delivered faster and in a secure way.
For instance, if somebody wants to stay in a vacation rental, one can contact the owner or manager of the rental company on the internet, see the pictures of the room he wants to take and book for the room through an electronic payment. Or, if a firm wants to advertise on certain well-known website, he can conduct all the transactions on the internet. Another very important benefit is the supplier can be notified in advance about the order. Also, if there is any security breach for example at the airport during cargo loading and unloading, this can be detected early through the use of an E-supply chain.
Evolution of Supply Chain Little had anyone realized that the procurement and order processing, demand forecasting and the planning prior to demand forecasting, management and control of inventory, and shipping and the tracking of shipped orders would become so feasible. After the second World War, the supply chain that existed was a far cry from the supply chain which exists today. The supply chain during the 1940s was in the form of a human or paper chain and the processes that underlined the supply chain were individualized and not so tightly integrated.
All the transactions which took place between manufacturers, wholesalers, retailers and the end consumer were on paper and this often created a gap between the front-end and the back-end systems. But, soon the need for a proper SCM was realized which incorporated the use of a hardware and a software and in 1960, the first inventory management software system was developed. This software system was particularly useful in the manufacturing sector where it aided in the inventory control.
The period of 1970s saw the SCM innovations coming through it’s way which brought forth MRP (Material Requirements Planning) which doled out faster production and purchase order requirements. The system could ensure that the manufacturer matches up with the end-product requirements by scheduling the flow of raw materials purchase and in-process production and inventories. In the 1980, MRP – II (Manufacturing Resource Planning) was introduced whereby the whole gamut of planning activities could be facilitated related to the resource requirements such as financial planning to production scheduling.
In 1988, software based on the “theory of constraints” was propounded by Sanjiv Sindhu, the founder of Texas based i2 technologies. This software would allow the manufacturing companies to communicate internally with each other to improve the flow of raw materials till the finished product. It was actually in 1980 that the need for integration of various business processes was realized from those of OEMs (Original Equipment Manufacturers) or Original Suppliers to the end user and where the exchange of information related to market fluctuation and production capability was involved. In 1980s & 1990s the U.
S. manufacturers were forced to adopt newer SCM approach along with the earlier techniques like JIT (“Just-In-Time”), “Lean Manufacturing”, TQM (“Total Quality management”) and “Agile Manufacturing Practices” or BPR (“Business Process Reengineering”) because of the intense globalization and strategic alliances between firms. The 1990s era saw a big leap in the field of internet and E-commerce where the industries transformed themselves to provide better services by developing each stage in the supply chain process. The execution and tracking became a part of some of the product-specific industries.
With the advent of E-commerce, SCM later also came to be known as B2B which includes private as well as public exchange whereby a private exchange would involve the meeting together of a buyer and a seller on a secure website to conduct the exclusive exchange of placing and fulfilling orders and which is only by invitation. A public exchange would rather be more of an auction or a bidding place. The significant change which took place in the year 2000 and beyond involved industrial buyers to rely more on 3PLs (third-party service providers) in order to improve the purchasing and delivery of products.
The main focus was on increasing the service response time through effective transportation and integrated logistics. Little doubt that the supply chain has evolved today to move towards a fully automated supply chain network. And, not only technology and effective communication form part of the supply chain process but an element of “trust” has become an important aspect. To share all sensitive information over the internet requires lot of data and internet security both between the suppliers and intermediaries as well as manufacturers and consumers. Lean SCM and the necessary attributes
As defined by the research firm Ventana Research a lean supply chain is defined as a set of processes and organizations which includes continuous flow of products and services, finance as well as information in a collaborative manner so that there is minimum waste of resources and cost reduction. The necessary attributes of a lean supply chain include demand management, process standardization, product standardization, industry standardization, collaboration and cultural change. The first and the foremost criteria of a lean SCM is the demand for a product.
If there is no demand for a product which enters the supply chain, there would definitely be a waste of material and waste of time as well as labour hours. This demand for product requires that it should come directly from the customer and not from some other sources like the intermediaries or the channel partners of the manufacturer who would just stock the product in the future anticipation of demand. The existing demand by the end customer becomes then essential in order to sell in the current period. And, this demand component can be assessed to varying degrees from high to low.
In case of low demand too, there will be significant negative effect on the profits made out of the sale. The magnitude of demand needs to be assessed and evaluated very carefully. An underlying fringe benefit of the above demand estimation is that the sales forecasting and the forecasting related to purchase of raw materials and inventory control becomes much easier. Another important aspect of supply chain is process standardization which enables continuous flow in a company. In a company, where there are different product lines and the processes are identical to all the products, the company has significant advantages.
The primary benefit of process standardization enables a company to produce whichever product is currently in demand. And, the second most important benefit is the company can shift it’s production from one supply partner to other. Both these benefits enable a smooth supply chain process and because of which there is also a standardization of information regarding the production, purchase or supply of a product. Next, product or raw materials standardization enables a company to use the raw material in different products under the same product line.
Because of the common use of the same component in various products, there is a reduced inventory levels in the raw material used. And, there is also a faster purchase of the component being used in the final product delivery and consequently it also reduces the delay in production. The information accessed and delivered regarding all of these is also faster which enhances the cross-communication across various departments. If there is product standardization in a firm, there should also be an industry standardization from a firm’s perspective of reducing the waste in product and it’s raw material components.
If an industry related to a particular product is standardized, the firm does not require to make changes in it’s existing products from time to time. Of course, introducing an entirely new product concept lends the firm a competitive advantage over others, but the initial cost of innovation and production would be more than the benefits incurred primarily because of the product being in the market penetration stage. The cost of information acquired from the industry sources also is higher and the supply chain is then not lean and continuous.
At any cost, a firm should take decision only after considering the pros and the cons of altering the supply chain of an existing product. Collaboration and cultural change both within the firm and outside the firm are other necessary attributes of a lean SCM. Without collaboration, there will not be a proper information exchange between the firm with it’s suppliers and customers. So, collaborative management becomes the buzzword for a firm to ensure continuous product flow in a supply chain. Again, organization culture is another important aspect where every participant should be eager and motivated to readily exchange information.
Further, the waste reduction and the cost minimization should be the goal of every participant in the supply chain process. Above all, if these necessary attributes are present in a supply chain, a supply chain goes on to become a value chain where the information sharing becomes an inherent part of this chain. Toyota production system is a good example to emulate in order to identify the outline of the waste sources The effort should also be to achieve lean information technology being used with in the firm. Certain IT tools here becomes necessary to ensure faster information access and delivery.
An ERP system based on a SOA (Service-Oriented-Architecture) facilitates a modular approach to the supply chain support technology. This tool can help the employees within the firm as well the channel partners to implement ERP and apply it to the various supply chain functions. For this, it is vital that the IT department should help the other team members in a firm and get them assigned a module from a standard set of ERP system. The SOA approach can help the employees to fine tune the supply chain process implement ERP in conjunction with the implementation of the new supply chain processes.
Information sharing and Modeling of Supply chain Management SCM is in no case an easy task where lot of collaboration, coordination and decision making is required at all stages from supplier to end customer. In order to understand the complex processes and dynamics of supply chain and the effect of information sharing, modeling of supply chain is imperative and for which some traditional simulation tools must be there to simulate the hierarchical production systems. Simulation technology is an emerging tool which can be used to evaluate supply chain networks whereby supply chain can be modeled as a social simulation.
At the Santa Fe Institute, a software package called as Swarm has been developed for multi agent simulation which involves divisible processes with loosely coupled command and control. With the Swarm architecture, the focus is on coordination of diverse activities like sales process, manufacturing, logistics, accounts receivable and the relation of the firm with it’s external suppliers. A swarm is represented as a multiple layers of abstraction where the interactions within one group of aqents is communicated to another group of agents. Then, the responses with in another group are aggregated to be returned to the first group.
A recursive action is set whereby the individual agents are modeled with a respective cost model to evaluate the supply chain more effectively. Here, for example, a trading partner may have various agents such as an agent for order processing, inventory management, production planning etc. A purchasing agent’s decision to choose from a number of suppliers will show up a particular decision model which relates to a cost structure. A purchaser will purchase from a supplier who offers raw material at a minimum cost and with a good product quality.
A production agent informs the purchaser his requirements and accordingly sets his own cost structure. Through this modeling of supply chain, if the transaction costs are found to be more, the firm can occasionally opt for outsourcing which may include procurement of raw materials to the outsourcing of production activities. The total cost structure in this case does not include the cost of fixed assets or the cost of final goods sold, rather it will have transaction costs, the cost of transportation and the cost of maintenance. Other costs such as direct costs of communicating new information will also be taken into account.
Costs such as stock-out costs may represent a lost sales due to inadequate inventory level and other costs such as opportunity costs for the idle capital equipment or time lag due to the delay in information access for procurement of raw materials or delivery to the channel members, all must be viewed as separate entities. If all the participants in the supply chain are viewed and analyzed separately and if each contributes equally to the information sharing and coordinate as a whole, the supply chain management becomes easier and leads to business success.
Ina nutshell, modeling of supply chain helps us to assess the cost behavior related to various supply chain activities. Dealing in detail with the modeling of SCM, however is beyond the scope of this research paper. Ofcourse, various experiments and statistical findings will lead us to better understanding of the impact of information sharing on the SCM. It is also to be understood that if a firm has less intermediaries or there is a disintermediation, then the level of information sharing is reduced to a few members.
Also, with in the company, if there is a flat hierarchy instead of a vertical hierarchy, information sharing becomes much easier and inexpensive. Another very vital issue is the cost of search. If a buyer in an industrial setting is not completely aware of the market prices of all the product components available in the market, he takes time to choose the various offerings. In any case, he incurs a search cost, the cost of the price information and information regarding the product offering. But in the Electronic supply chain, the cost of this information search is relatively reduced.
Challenges in the SCM and information sharing There are several problems existing in the current supply chain within industries and so the management of supply chain requires certain strategies to improve it. Some of the problems h are discussed here. One widespread problem in the management of supply chain is distribution network. This may include the location of the warehouse facilities or the distribution centers. If the warehouse is located too far from the distribution center, there will be a delay in the supply of products. This often also creates a miscommunication between the manufacturing firm and the distributor.
Also, the supplier of raw materials if distanced away from the manufacturing firm, often leads to delay. And, if the consumers are not able to receive the demanded product on time, there will be a shortage of demand. All of these may lead to a lack of information sharing in the existing supply chain process. Another is what mode of transportation a firm chooses. If the mode of transportation is a truckload, it may be less efficient in certain cases as compared to a pipeline. An example for this is oil shipment which would be more effective if it is transported through a pipeline carrier or a ocean carrier.
Yet another problem that exists is the cost of transportation and delivery. In order to achieve a low cost of logistics, a firm chooses it’s mode of transportation very wisely. Also, the activities must be well coordinated in order to have the fastest delivery of goods. Sometimes, in order to minimize costs, a logistics firm may choose to have a full truckload while minimizing the trips to the location of delivery. However, this is not always possible and so at times, the inventory holding costs become higher. A more bigger problem exists when there is reduced demand however, when substitute products exists in the market.
In this case, the normal supply chain gets off-the-track and the firm has to rethink about it’s production processes and consequently the purchase, procurement and delivery of products. Sometimes, the government regulations and trade barriers too may create problems for the firm. Yet another problem is mode of exchanging funds across the supply chain. A supplier of raw material would like to issue a credit note whereas a firm who buys the product may like to purchase products with cash and would like to maintain the balance of payments towards the supplier.
Today, in the information technology age, although there is a widespread use of computers, many are new to the software technologies and the platform being used today. In such cases, it becomes increasingly difficult to effectively collaborate and communicate. Many a times, the different channel members may use different mode of operations. For example, a distributor may like to have an invoice in an electronic form but some may prefer a hard copy which is stamped. Let us also mention the challenges facing the global supply chain network which is gripping the world today.
Mentzer and Firman in 1994 mentioned that the flow of materials and goods should occur in a timely and seamless manner. But, for this, one has to take into account the difference in the economy, the culture, the politics, the social aspects and the infrastructure available. A change in the economy warrants the use of transfer prices and such other considerations as tariffs and tax rates. Exchange rates and inflation also creates problem alone. Infrastructural differences may create problems for the supplier where the quality of product delivered can suffer.
This makes us to believe that the strategies which are used in the supply chain process may not work in some other country. The f low of information is also reduced when dealing with the supply chain across countries. A firm may in this case benefit more if it shifts it’s base from it’s home location to another country or have a subsidiary of it’s main operations. ————————————————- Information sharing and Modeling of Supply chain Management ————————————————-
SCM is in no case an easy task where lot of collaboration, coordination and decision making is required at all stages from supplier to end customer. In order to understand the complex processes and dynamics of supply chain and the effect of information sharing, modeling of supply chain is imperative and for which some traditional simulation tools must be there to simulate the hierarchical production systems. Simulation technology is an emerging tool which can be used to evaluate supply chain networks whereby supply chain can be modeled as a social simulation.
At the Santa Fe Institute, a software package called as Swarm has been developed for multi agent simulation which involves divisible processes with loosely coupled command and control. With the Swarm architecture, the focus is on coordination of diverse activities like sales process, manufacturing, logistics, accounts receivable and the relation of the firm with it’s external suppliers. A swarm is represented as a multiple layers of abstraction where the interactions within one group of aqents is communicated to another group of agents. Then, the responses with in another group are aggregated to be returned to the first group.
A recursive action is set whereby the individual agents are modeled with a respective cost model to evaluate the supply chain more effectively. Here, for example, a trading partner may have various agents such as an agent for order processing, inventory management, production planning etc. A purchasing agent’s decision to choose from a number of suppliers will show up a particular decision model which relates to a cost structure. A purchaser will purchase from a supplier who offers raw material at a minimum cost and with a good product quality.
A production agent informs the purchaser his requirements and accordingly sets his own cost structure. Through this modeling of supply chain, if the transaction costs are found to be more, the firm can occasionally opt for outsourcing which may include procurement of raw materials to the outsourcing of production activities. The total cost structure in this case does not include the cost of fixed assets or the cost of final goods sold, rather it will have transaction costs, the cost of transportation and the cost of maintenance. Other costs such as direct costs of communicating new information will also be taken into account.
Costs such as stock-out costs may represent a lost sales due to inadequate inventory level and other costs such as opportunity costs for the idle capital equipment or time lag due to the delay in information access for procurement of raw materials or delivery to the channel members, all must be viewed as separate entities. If all the participants in the supply chain are viewed and analyzed separately and if each contributes equally to the information sharing and coordinate as a whole, the supply chain management becomes easier and leads to business success. ————————————————-
Ina nutshell, modeling of supply chain helps us to assess the cost behavior related to various supply chain activities. Dealing in detail with the modeling of SCM, however is beyond the scope of this research paper. Ofcourse, various experiments and statistical findings will lead us to better understanding of the impact of information sharing on the SCM ————————————————- It is also to be understood that if a firm has less intermediaries or there is a disintermediation, then the level of information sharing is reduced to a few members.
Also, within the company, if there is a flat hierarchy instead of a vertical hierarchy, information sharing becomes much easier and inexpensive. ————————————————- Another very vital issue is the cost of search. If a buyer in an industrial setting is not completely aware of the market prices of all the product components available in the market, he takes time to choose the various offerings. In any case, he incurs a search cost, the cost of the price information and information regarding the product offering.
But in the Electronic supply chain, the cost of this information search is relatively reduced. ————————————————- Some Examples ————————————————- An example of several companies facing demand uncertainties before us is that of HP in the computer industry and P&G and Bristol-Myers Quibb in the pharmaceutical industry. P&G was one company which faced a bull-whip effect with their disposable diapers in their retail stores. ————————————————-
We have an example of Walmart which is linked to the P&G SCM system. It uses RFID tags to know the status of order whereby P&G logistics software tracks the trucks with the products and can reroute the trucks in case of more requirement of stock. ————————————————- We have a very good example of a Boeing aircraft, one of the leaders in the civilian aircraft industry. One gets surprised when gets to know that Boeing who relied on CAD/CAM technologies till the early 1980 went in a slump some time back.
Boeing, when came out with a new aircraft known as Dreamliner, it was worried whether this new launch would be successful. As a logical solution, Boeing collaborated with Dassault Systems and created a GCE (Global Collaboration Environment) in order to help with the new product launch. Boeing could do testing, design and maintenance and also integrated all databases associated with the Dreamliner. All the supply chain problems could be resolved when Dreamliner could handle all the physical production activity and Boeing could coordinate the movement of goods.
It also shook hands with Exostar for the software support to solve supply chain coordination and integration challenges. The inventory and maintenance problem was also solved by tagging of components deploying RFID technology ————————————————- An Exclusive Example of Barnes & Noble ————————————————- Barnes & Noble Inc. a total of 559 and 378 B. Dalton Bookstores all over the United States. The book store has selected the retailing leader Retek to help it with the supply chain planning.
The two together can plan effectively with a focus on inventory turnover and optimization of sales. The Retek planning solution will help the bookstore to maximize it’s profitability by ensuring that all the channels are in proper place. Says the director of planning and inventory control at Barnes & Noble that Retek’s hosting solution helped them to maintain multi-channel strategy. Indeed, Retek’s planning infrastructure will help them to maintain in-store planning of stocks i. e. books and the SCM will be much better with this kind of planning. ————————————————-
Solutions ————————————————- The solution to the global supply chain network is to reduce the uncertainties by carefully studying the foreign market and then devise the logistics which can be useful from a multinational standpoint ————————————————- Also, the supplier of a raw material or the final product must carefully investigate the channel partners and judge how reliable they are. By all means, the product also should be judged from the perspective of whether it is a high-value complex product or a low-value item.
A high-value, complex product should be handled with extreme care with regard to it’s mode of delivery. Technology solutions to the SCM requires the use of SAP and ERP tools. Netafim, an Israeli company became successful by implementing this technology who used to sell irrigation system products. ————————————————- Other solution is to create a RLHs (Regional Logistic Hubs) near to the customers so as to maintain minimum inventory and faster order processing. ————————————————- Other Solutions ————————————————-
Other strategies for an effective SCM is to renegotiate on terms and conditions as set earlier when the contract started between the channel partners. Occasionally, a supplier and a manufacturer can discuss the issues, renegotiate on terms and conditions prevailing which hamper the logistics process and ward off all the threats persisting. The best solution would be to have a general forum where all the channel partners can enter into a discussion and voice their opinion. If it relates to the technology problem, expert opinions can be sought and problems can be resolved.
The web forums and online discussions are currently in vogue and can be a good choice to alter any decision. Behavioral uncertainties can be counteracted in this manner. ————————————————- Quantitative risks such as stock-outs which results in lost sales can be sorted out if supplier and the buyer regularly interact. ————————————————- The need today is to have a talent supply chain. In a talent supply chain, information sharing will indeed be faster if the right kind and the trained employees are recruited in every stage of the supply chain.
A proper demand forecasting can increase the flow of products and services and for this it is also essential that CRM (Customer Relationship Management) be introduced. If a firm succesfully manages the customer relationships, it knows when to deliver, how to deliver and what to deliver. The demand can be quantified to a certain degree and assessed to take future decisions. For this, a firm may also need to have a CRM software which would keep a database and hence would enhance the supply chain process. If a supply chain is viewed as a reverse process, i. , from customers to manufacturer rather than from supplier to the end customer, the supply chain indeed becomes the most effective process. The management of suppliers of raw materials and distributors is also essential. ————————————————- Conclusion ————————————————- Although a simple supply chain has evolved to form either an E-supply chain or collaborative networks, the businesses need to refine themselves and make certain changes in order to be more viable. References Brian Fugate, Funda Sahin, Johan T. Mentzer. Supply Chain Management Coordination Mechanism ” JOURNAL OF BUSINESS LOGISTICS, VoL 27, No. 2,2006 : 129-162 Fu-ren Lin, Sheng-hsiu Huang, and Sheng-cheng Lin. “Effects of Information Sharing on Supply Chain Performance in Electronic Commerce. ” Engineering Management, IEEE Transactions on Vol 49,Aug (2002) : 258- 268 IlaManuj, John T. Mentzer. “Global Supply Chain Risk Mnagement” JOURNAL OFBUSINESS LOGISTICS, Vol. 29, No. /, 2008: 133-143 Infor Corporate Headquarters. White paper: “New dimensions in supply chainmanagement: Eight strategies for improving performance from concept to customer” Oct 11,2009 < http://www. nfor. com/company/registration/? requestedContent=%2Fcontent%2Fwhitepapers%2Fnewdimensionsscm%2F> Jingquan Li, Michael J. Shaw, Riyaz T. Sikora. “The Effects of Information Sharing Strategies on Supply Chain Performance. ” College of Commerce and Business Administration, University of Illinois at Urban-Champaign. Oct19, 2001 . Nov 12, 2009 <http://citebm. business. uiuc. edu/B2Bresearch/ieee_em. pdf> Johnston, P. , 1995. Supply chain management: the past, the present and the future. Manufacturing Engineer La Londe, B. , 1998. Supply Chain Management: An Opportunity for Competitive Advantage.
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