RECENT DEVELOPMENTS IN THE FIELD OF SCM

Aysha Mol
MBA(FT),Roll no:8 School of Management Studies CUSAT, Kochi - 22 E-mail:ayshapj@gmail.com
Abstract: This report discusses the recent developments which have taken place in the supply chain management. Supply chain management (SCM) is the practice of coordinating the design, procurement, and flow of goods, services, information and finances, from raw material to parts supplier to manufacturer to distributor to retailer to consumer. Recent advances in supply chain technological support, process design, and management strategies have created an increasingly complex set of administrative, technological, and organizational issues that must be resolved if they are to lead to competitive advantage. Key words: JIT, RFID, Benchmarking, Global SCM, ERP, EDI, Quick response, e-SCM, e-Business.Lean SCM,

1.0 INTRODUCTION

Supply Chain Management includes product design, order generation, order taking, information feedback and the efficient and timely delivery of goods and services, and typically involvesmany or more of the business functions in firms that are linked to specific supply chains. The rise of concepts like JIT, quick response, and supply chain integration has resulted in optimization through seamless connectivity of suppliers, intermediaries and customers. Efficient and effective supply chain management assists an organization in getting the right goods and services to the place needed at the right time, in the proper quantity and at acceptable cost. Managing this process involves developing and overseeing relationships with suppliers and customers, controlling inventory, and forecasting demand. Recent advances in supply chain technological support, process design, and management strategies have created an increasingly complex set of administrative, technological, and organizational issues that must be resolved if they are to lead to competitive advantage. .

Supply chain management synchronizes demand with a business unit as a whole by using materials/parts and resource capacity such as machines and workers and considering constraints (bottlenecks) to increase the flow from materials/parts supply to product selling, i.e. the cash flow speed called "throughput" . The three major elements of supply chain management are demand, materials, and resource capacity and the goal of supply chain management is to increase the cash flow speed by synchronizing business processes based on constraints. Indexes of the management are neither cost nor efficiency, which are traditional accounting concepts, but throughput (item flow), inventory, and expense aiming for total optimization . In short, supply chain management is cash flow management. In the age of mega-competition where markets and competitors expand globally, supply chain management is an indispensable measure for a company to survive. Supply chain management is a concept that challenges the conventional management index in which net profit may be posted by legally capitalizing expenses even if market values of products decrease (the same activity as "stock shuffling" by securities companies). Supply chain management is also a management tool that provides a theoretical base to build a strategic relationship such as a virtual corporation in global supply chain management .

2.0 LEAN SUPPLY CHAIN MANAGEMENT

Lean supply chain management is not exclusively for those companies who manufacture products, but by businesses who want to streamline their processes by eliminating waste and non-value added activities. Companies have a number of areas in their supply chain where waste can be identified as time, costs or inventory. To create a leaner supply chain companies must examine each area of the supply chain. Understanding the difference between value and waste and value-added and non-value-added processes is critical to understanding lean. Sometimes it is not easy to discern the difference when looking at an entire supply chain. The best way is to look at the components of the supply chain and apply lean thinking to each one and determine how to link the processes to reduce waste. 2.1 Creating Value

The value stream consists of the value-adding activities required to design, order, and provide a product from concept to launch, order to delivery, and raw materials to customers. To develop a value stream map for a product, you select a product family and collect process information. Then, you map the steps in sequence and by information flows; this is called a current-state map. The current-state map provides a clear picture of the processing steps and information flow for the process as it exists today. Next, you search the map for improvement opportunities using the concepts of lean, and create a future-state map. This will portray a vision of the future for the process or supply chain you are creating. This future-state map helps you to visualize the roadmap to get from the current state to the future state.

Mapping the value stream for the supply chain is a similar process. However, the current-state map includes product flow, transportation links, defects and delivery time and steps, and information flow. After creating the current-state map for the supply chain's value stream, supply chain partners should scrutinize it for bottlenecks, waste, and process improvements. They should use what they discover to create future-state maps for the supply chain. An idealstate map can also be created that provides a vision of how the supply chain could look if perfect integration of all components were to occur. This is in effect an entitlement map for the supply chain process. Here's how it works: A current-state map might indicate that flow within facilities is well defined, but that transportation methods between facilities is creating excess inventory and is not cost effective. The current state map may also show a weakness in the information flow that is not adding value to the process. The future-state map should create flow between facilities, leveling pull within each facility, and eliminating waste. The method for leveling pull might be to install frequent transport runs or milk runs. Information flow could be improved by installing a Web-based process to allow real-time flow of information between all supply chain partners as demand changes. The ideal-state map of this supply chain might have a greatly compressed value system with relocated operations and short transportation deliveries.

3.0 BENCHMARKING
Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost. Improvements from learning mean doing things better, faster, and cheaper. It involves management identifying the best firms in their industry, or any other industry where similar processes exist, and comparing the results and processes of those studied to one's own results and processes to learn how well the targets perform and, more importantly, how they do it. The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes. Benchmarking is most used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others. Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices. 3.1TYPES Process benchmarking - the initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration. Financial benchmarking - performing a financial analysis and comparing the results in an effort to assess your overall competitiveness and productivity.

Benchmarking from an investor perspective- extending the benchmarking universe to also compare to peer companies that can be considered alternative investment opportunities from the perspective of an investor. Performance benchmarking - allows the initiator firm to assess their competitive position by comparing products and services with those of target firms. Product benchmarking - the process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses. Strategic benchmarking - involves observing how others compete. This type is usually not industry specific, meaning it is best to look at other industries. Functional benchmarking - a company will focus its benchmarking on a single function to improve the operation of that particular function. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison. Best-in-class benchmarking - involves studying the leading competitor or the company that best carries out a specific function. Operational benchmarking - embraces everything from staffing and productivity to office flow and analysis of procedures performed Energy benchmarking - developing an accurate model of a building's energy consumption with the purpose of measuring reductions in usage.

4.0 ENTERPRISE RESOURCE PLANNING

Enterprise resource planning (ERP) integrates internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, etc. ERP systems automate this activity with an integrated software application. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP systems can run on a variety of hardware and network configurations, typically employing a database to store data. ERP systems typically include the following characteristics: An integrated system that operates in (next to) real time, without relying on periodic updates. A common database that supports all applications. A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by the Information Technology (IT) department.

4.1Advantages The fundamental advantage of ERP is that integrating the myriad processes by which businesses operate saves time and expense. Decisions can be quicker and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include: Sales forecasting, which allows inventory optimization Order tracking, from acceptance through fulfillment Revenue tracking, from invoice through cash receipt

Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced) ERP systems centralize business data. Benefits of this include: Eliminates synchronizing changes between multiple systemsconsolidation of finance, marketing and sales, human resource, and manufacturing applications Enables standard product naming/coding. Provides comprehensive enterprise view (no "islands of information"). Makes real time information available to management anywhere, anytime to make proper decisions. Protects sensitive data by consolidating multiple security systems into a single structure. 4.2 Disadvantages Customization is problematic. Reengineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities ERP can cost more than less integrated and/or less comprehensive solutions. High switching costs increase vendor negotiating power vis a vis support, maintenance and upgrade expenses. Overcoming resistance to sharing sensitive information between departments can divert management attention. Integration of truly independent businesses can create unnecessary dependencies. Extensive training requirements take resources from daily operations.

5.0 ELECTRONIC DATA INTERCHANGE (EDI)

EDI is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention. It is more than mere e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages. It also refers specifically to a family of standards. In 1996, the National Institute of Standards and Technology defined electronic data interchange as "the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media." It distinguishes mere electronic communication or data exchange, specifying that "in EDI, the usual processing of received messages is by computer only. Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations. For example, the transmission of binary or textual data is not EDI as defined here unless the data are treated as one or more data elements of an EDI message and are not normally intended for human interpretation as part of online data processing." [1] EDI can be formally defined as the transfer of structured data, by agreed message standards, from one computer system to another without human intervention.

5.0 RADIO-FREQUENCY IDENTIFICATION (RFID)

Supply chain management objective is to increase the long-term performance of individual companies and the overall supply chain by maximizing customer value and minimizing costs. RFID is a technology with unique characteristics that make it suitable to enhance data collection processes along the supply chain. EPC Global, the standards body sets the standards for how basic product information is encoded in the RFID chips. The vision that drives the developments of standards is the universal unique identification of individual items. The unique number, called EPC (electronic product code) is encoded in a Radio Frequency Identification (RFID) tag. There are three types of RFID tags, all of which can either be read-write or read only. Passive Tags - simply store data and draw power from a reader whose electromagnetic wave induces a current in the tags antenna for short-range communication (up to 10 m). Semi-passive Tags - use an integral battery to run the chips circuitry but draw power from the reader to communicate. Active Tags - are capable of communicating over greater distances (up to 100m) but are currently far more expensive. The benefit of an EPC code is primarily derived from the ability to automatically pin-point the exact location of goods and documents anywhere within an extended enterprise. Such ability leads to the following benefits: Enhance supply-chain control. As the location of a part can be identified at every transfer point with accuracy, the whole supply-chain can be controlled with close to 100% accuracy. Security and authentication. A RFID tag can be written with an identifier chosen by the enterprise. This unique identifier can be used to authenticate a part or a document. The RFID technology also supports encryption and other security models so that a tag cannot be easily duplicated or forged. Enhanced customer service. The RFID technology can promote customer service by allowing faster check-outs, returns, and personalization of service. RFID will have a significant impact on every facet of supply chain managementfrom the simple tasks, such as moving goods through loading docks, to the complex, such as managing terabytes of data as information about goods on hand is collected in real time. It has a potential to dramatically improve supply chain by reducing costs, inventory levels, lead times, stock outs and shrinkage rates; increasing throughput, quality, manufacturing flexibility, inventory visibility, inventory record accuracy, order accuracy, customer service, and the collaboration among supply chain members.

The automatic identification of products with RFID in the warehousing and distribution centre environments has a consequence: increased visibility and accuracy of the inventory. This increases the warehousing efficiency and order accuracy. At the same time it reduces shrinkage, stock outs and inventory levels. The increased warehousing efficiency has as a consequence a reduction in the operation costs, which translates into increased profits and also a reduction in lead times. Reduced lead times means increased customer service as well as decreased inventories along the supply chain. Ultimately, reduced inventories increase ROI. The use of RFID systems to track asset provide a distinctive set of benefits. RFID tags enable an increased visibility and accuracy of the asset pool. This visibility and accuracy impacts six main areas: operating costs, shrinkage, lead times, inventory visibility and accuracy, customer service and integration among parents. RFID streamline the management of assets (such as machinery or containers) and increase the efficiency by reducing the equipment needed or reducing labour, thus translating into higher profits. Reduced assets shrinkage, increase ROI. Lead times (total cycle time) are reduced with the increased efficiency to handle the assets the automatic identification of products inside the store would increase the inventory visibility and its accuracy.

5 .1BENEFITS Asset Tracking It's no surprise that asset tracking is one of the most common uses of RFID. Companies can put RFID tags on assets that are lost or stolen often, that are underutilized or that are just hard to locate at the time they are needed. Just about every type of RFID system is used for asset management. NYK Logistics, a third-party logistics provider based in Secaucus, N.J., needed to track containers at its Long Beach, Calif., distribution center. It chose a real-time locating system that uses active RFID beacons to locate container to within 10 feet. Manufacturing It has been used in manufacturing plants for more than a decade. It's used to track parts and work in process and to reduce defects, increase throughput and manage the production of different versions of the same product . Supply Chain Management RFID technology has been used in closed loop supply chains or to automate parts of the supply chain within a company's control for years. As standards emerge, companies are increasingly turning to RFID to track shipments among supply chain partners . Retailing Retailers such as Best Buy, Metro, Target, Tesco and Wal-Mart are in the forefront of RFID adoption. These retailers are currently focused on improving supply chain efficiency and making sure product is on the shelf when customers want to buy it . Payment Systems

RFID is all the rage in the supply chain world, but the technology is also catching on as a convenient payment mechanism. One of the most popular uses of RFID today is to pay for road tolls without stopping. These active systems have caught on in many countries, and quick service restaurants are experimenting with using the same active RFID tags to pay for meals at drive-through windows. Security and Access Control RFID has long been used as an electronic key to control who has access to office buildings or areas within office buildings. The first access control systems used low-frequency RFID tags. Recently, vendors have introduced 13.56 MHz systems that offer longer read range. The advantage of RFID is it is convenient (an employee can hold up a badge to unlock a door, rather than looking for a key or swiping a magnetic stripe card) and because there is no contact between the card and reader, there is less wear and tear, and therefore less maintenance. As RFID technology evolves and becomes less expensive and more robust, it's likely that companies and RFID vendors will develop many new applications to solve common and unique business problem.

6.0 GLOBAL SUPPLY CHAIN MANAGEMENT

With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Like traditional, supply chain management, the underlying factors behind the trend are reducing the costs of procurement and decreasing the risks related to purchasing activities. The big difference is that global supply chain management involves a company's worldwide interests and suppliers rather than simply a local or national orientation. Because global supply chain management usually involves a plethora of countries, it also usually comes with a plethora of new difficulties that need to be dealt with appropriately. One that companies need to consider is the overall costs. While local labor costs may be significantly lower, companies must also focus on the costs of space, tariffs, and other expenses related to doing business overseas. Additionally, companies need to factor in the exchange rate. Obviously, companies must do their research and give serious consideration to all of these different elements as part of their global supply management approach. Time is another big issue that should be addressed when dealing with global supply chain management. The productivity of the overseas employees and the extended shipping times can either positively or negatively affect the company's lead time, but either way these times need to be figured into the overall procurement plan. Other factors can also come into play here as well. For example, the weather conditions on one side of the world often vary greatly from those on the other and can impact production and shipping dramatically. Also, customs clearance time and other governmental red tape can add further delays that need to be planned for and figured into the big picture. Besides contemplating these issues, a business attempting to manage its global supply chain must also ask itself a number of other serious questions. First, the company needs to make decisions about its overall outsourcing plan. For whatever reason, businesses may desire to keep some aspects of supply chain closer to home. However, these reasons are not quite as important as other countries advance technologically. For example, some parts of India have now become centers for high-tech outsourced services which may once have been done in-house only out of necessity. Not only are provided to companies by highly qualified, overseas workers, but they are being done at a fraction of the price they could be done in the United States or any other Western country .

Another issue that must be incorporated into a global supply chain management strategy is supplier selection. Comparing vendor bids from within the company's parent-country can be difficult enough but comparing bids from an array of global suppliers can be even more complex. How to make these choices is one of the first decisions companies must make, and it should be a decision firmly based on research. Too often companies jump on the lowest price instead of taking the time to factor in all of the other elements, including those related to money and time which were discussed above. Additionally, companies must make decisions about the number of suppliers to use. Fewer supplies may be easier to manage but could also lead to potential problems if one vendor is unable to deliver as expected or if one vendor tries to leverage its supply power to obtain price concessions . Finally, companies who choose to ship their manufacturing overseas may have to face some additional considerations as well. Questions regarding the number of plants that are needed, as well as the locations for those plants can pose difficult logistical problems for companies. However, it often helps to examine these issues in terms of the global supply chain. For example, if a business uses a number of vendors around Bangalore, India than it may make sense to locate the manufacturing plant that would utilize those supplies in or around Bangalore as well. Not only will this provide lower employee costs, but overall shipping and tariff expenses should also be reduced. This would then save the company money.

7.0 INCREASED COMPETITION AND PRICE PRESSURES

Historically, price, product features and brand recognition were enough to differentiate many products in the marketplace. With the continued commoditization of many products, companies need better ways to distinguish themselves. In one case, a large global consumer goods manufacturer saw prices around some of its commodity products drop as much as 60-80 percent. Product innovation and brand equity no longer were allowing them to command a higher price in the market. In order to continue to compete with that commoditized product they made significant cost improvements with supply chain re-design and technology. Companies are looking to their supply chains in two ways to help offset this trend. First, they are looking at ways to reduce cost and are creating a more efficient value chain to remain cost competitive. Second, companies are looking at ways they can provide value-added services to meet the demands of more sophisticated customers. Cost improvements around inventory management, logistics operations, material management and manufacturing costs, including raw material and component acquisition can be found with: Sales and operations planning Transportation/distribution management Improved product lifecycle management Improved strategic sourcing and procurement

8.0 OUTSOURCING
As many companies step back and examine their core competencies, some realize that outsourcing parts or all of a supply chain can be advantageous. With marketplace improvements around (1) information media and systems (2) cost and quality of global manufacturing and distribution, and (3) product design capabilities, companies are gaining additional synergies by outsourcing all or parts of their supply chain. There can be significant economic benefits from outsourcing all or part of your supply chain operation, but without the right systems, processes, or organizational management structure

the risk to success can increase to frightening levels. In an outsource-heavy environment

companies need to put more controls and systems in place to compensate for the fact that their supply chain capabilities no longer reside onsite. In an outsourced supply chain environment the need for information, controls and excellence from the information worker becomes a high priority. Suppliers can differentiate themselves in a number of ways as well as provide value, additional services and capabilities to their customers. The differentiating factors include: Vendor Managed Inventory (VMI) RFID Labeling and packaging

Drop shipping Collaboration

Companies should not only look to their supply chain to drive cost improvement, but should increase capabilities as a means for staying competitive The optimally outsourced supply chain, either in its entirety or just a component, relies heavily on: (1) Superior supply chain network design (2) Inclusion of that outsource partner in the information chain Suppliers can differentiate themselves in a number of ways as well as provide value, additional services and capabilities to their customers. The differentiating factors include: (3) Establishment of control mechanisms to proactively monitor the various components of the supply chain and, (4) Information systems to connect and coordinate the supply chain as seamlessly as possible. A failure to excel at any one of these components can result in breakdowns affecting the entire supply chain.

9.0SHORTENED AND MORE COMPLEX PRODUCT LIFE CYCLES Today many of our clients are under pressure to develop innovative products and bring them to

market more rapidly, while minimizing cannibalization of existing products, which are still in high demand. In order to meet the needs of both customers and consumers, companies need more efficient product lifecycle management processes. This includes heavy emphasis on managing new product introduction, product discontinuation, design for manufacturability and leveraging across their entire product and infrastructure characteristics. One chief benet of PLM processes and technology is helping companies design products that can share common operations, components or materials with other products, thereby reducing risks of obsolescence writeoffs, increasing cost leverage on the purchasing of key materials and ensuring that infrastructure investments are optimally utilized. Additionally, getting this right will help to improve your time to market. By focusing product lifecycle management efforts in these areas, a company can buffer itself against the risk of an unplanned cost increase, a poor new product launch, an unplanned obsolescence writeoff and can enhance the overall customer perception of the company as an effective innovator. Typically when companies begin the process of introducing new products to market, they coordinate marketing, engineering, sales and procurement and develop sales forecasts to plan products in the pipeline. Without a formalized product lifecycle process the end result isnt always predictable. Recently, a US-based major appliance manufacturer, struggling with skyrocketing product development costs and a cumbersome, manual development process, was looking to implement a PLM initiative to help reduce the cycle time between development and entry to market. While implementing a new PLM environment the company designed innovative, common product development processes and selected a PLM solution to control engineering document management, online mark-up and web-based collaboration with suppliers and contract manufacturers. As a result, the company increased parts re-use, improved document retrieval time, reduced design cycle time, and ultimately reduced new product development cost by 15 percent. These improvements helped the company grow revenue by 25 percent, mainly from an increased rate of product introductions. As the economy becomes more global, labeling and compliance to packaging requirements and regulations have become critical to success. Without adherence to local packaging and labeling regulations a product may violate local requirements, preventing it from being distributed and sold in that market. Product lifecycle management technology and processes can help ensure that products being produced and targeted for specic markets are wellmanaged and are compliant. Product lifecycle management tools and processes have helped consumer goods companies with their efforts to try to continually drive demand through packaging and labeling innovation and design. Implementation of an optimal PLM process and technology can allow a consumer goods company to effectively produce and distribute products that are only targeted for regional promotions or consumer preferences.

10.0COLLABORATION SUPPLY CHAIN

BETWEEN

STAKEHOLDERS

IN

THE

EXTENDED

As supply chains continue to develop and mature, a move toward more intense collaboration between customers and suppliers has occurred. The level of collaboration goes beyond linking information systems to fully integrating business processes and organization structures across companies that comprise the full value chain. The ultimate goal of collaboration is to increase visibility throughout the value chain in an effort to make better management decisions and to ultimately decrease value chain costs. With the right tools, processes and organizational

structure in place, collaboration provides key people throughout the value chain with the information needed to make business-critical decisions with the best available information. Recent examples of collaboration have emerged in the expansion of Sales and Operations Planning (S&OP) processes that include upstream and downstream value chain partners as regular participants. S&OP processes help maintain a well-coordinated and valid, current operating plan in support of customer demand, a business plan and a strategy. The improved resulting operating plan provides the management of each partner with a complete picture of forecasted demand, supply capacity, corresponding nancial information with nancial implications and allows them to make informed, critical decisions. Companies that expand the usage of Sales and Operations Planning have greater visibility across their owner enterprise and respective value chain, gain the agility necessary to improve the Product Lifecycle Management (PLM) process, improve promotional planning, minimize unnecessary buildups of inventory, increase revenue predictability and execute customer service expectations. The S&OP activity enables information systems to connect the value chain participants around key demand information, such as customer forecasts, and around key supply information, such as supplier inventories and capacities. Another recent example of collaboration is seen in the increased focus around RFID (Radio Frequency Identication). Value chain leaders are looking at functional areas to better integrate the supply chains of their partners with themselves. RFID can serve as a means to quickly and efficiently ensure that critical product information is communicated as products flow through the value chain and ultimately to the consumer. Recent estimates show that major retailers can lose 3-4 percent of revenue per year due to shelf stock outs, while inventory is available somewhere in the value chain. Better coordination of store-level product availability would have a signicant impact to the entire value chain for these retailers. Additionally, better visibility of retailer product availability can reduce overall logistics costs as products move through the value chain to fulll safe stock levels and ultimately consumer demand.

11.0 Activities/functions
Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels. The CSCMP has adopted The American

Productivity & Quality Center (APQC) Process Classification FrameworkSM a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint. Strategic level Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics. Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities. Information technology chain operations. Where-to-make and make-buy decisions. Aligning overall organizational strategy with supply strategy. It is for long term and needs resource commitment. Tactical level Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone payments. Focus on customer demand and Habits. Operational level Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities, warehousing and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company.

12.0 Supply Chain Decisions

We classify the decisions for supply chain management into two broad categories -- strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain. There are four major decision areas in supply chain management: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas. 12.1 Location Decisions The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level. 12.2 Production Decisions The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends on the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility. 12.3 Inventory Decisions These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be inprocess between locations. Their primary purpose is to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

12.4 Transportation Decisions The more choice aspects of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm's transport strategy.

13.0DEMAND MANAGEMENT
Demand planning has enabled companies to more accurately forecast what their industry, market and customers will require. Armed with advanced tools, technologies and forecasting methodologies, businesses have honed their ability to view numbers and predict information within various contexts, model independent and dependent demand among products and channels, and generate statistically based forecasts based on the most recent data, causal factors and events. This has helped fulfill the demands of a more challenging customer base; better leverage past product performance; more effectively predict and manage replenishment; align price and profit margins; and maintain a leaner, more profitable supply chain overall. More recently, enterprises are focusing on managing demand, rather than simply reacting to it. Demand management takes supply chain management to the next level by enabling an automated ecosystem that simultaneously maps demand forecasting against factors like supply restrictions, customer commitments, inventory counts, financial predictions, as well as patterns of behavior that can affect demand at any given time. Demand planning has enabled companies to more accurately forecast what their industry, market and customers will require. Demand management is a more proactive approach than its predecessors relying on highly sophisticated quantitative analytics and advanced modeling techniques to preset tolerance levels, predict and pinpoint problem areas, monitor and adjust strategies dynamically, and achieve real time visibility and synergy across all channels. A comprehensive demand management solution should enable a business to: Synchronize global planning Forecast only the products and components that make sense from a profit and/or strategic perspective Utilize best-of-breed statistical forecasting techniques Employ a forecasting tool that balances performance and scalability Apply event-based planning Perform real-time data synchronization. Employ rules-based modeling Simplify multidimensional analysis with easy-to-use tools Afford a seamless workflow Benefit from an open, services-based, 64-bit architecture and a common Web interface Utilize industry-standard databases Employ automated, closed-loop, industry-specific workflows based on best practices Gather predictive intelligence with proactive demand indicators Enable more efficient collaboration with all internal stakeholders and external partners.

14.E-BUSINESS, INFORMATION SHARING AND KNOWLEDGE MANAGEMENT

The internet is playing an increasing role in the search for efficient supply chain management (SCM), but the novelty of both the concept of SCM and the internet has placed the combination of the two in the position of finding the right balance of both. The Internet has many impacts on the supply chain. One is the impact of e-business, which refers to the ability of a firm to electronically connect, in multiple ways, many organizations, both internally and externally, for many different purposes. Another impact refers to information sharing, how the Internet can be used as a medium to access and transmit information among supply chain partners. Third type of impact of the Internet on SCM is called knowledge management (KM). The Internet not only enables supply chain partners to access and share information, but also to create, storage, dissemination and application of organizational knowledge. KM refers to the set of processes or practice of developing in an organization the ability to create, acquire, capture store, maintain and disseminate the organization's knowledge. One of the most recent applications of computer technology involves the Internet in the area of information sharing and supply chain management. Like many changes experienced in other areas of business, the introduction of computer technology brought unprecedented changes in the way organizations manage their information sharing processes. From their use in product development to surveys of after-sales customer satisfaction, computers have been playing pivotal roles in the flow of information, not only within individual organizations but also between organizations.B2B exchanges have been significantly affected by the transformation in information sharing processes. Starting with the automated order entry system in the mid 1970s, computer technology has facilitated information sharing between organizations involved in inter organizational transactions. B2B exchanges using Internet-based communication systems have attracted special attention because of their market growth potential and impact on business structures throughout the world. Even before the Internet became available for commerce, business managers were thrilled by the prospect of its efficiency, effectiveness and innovation, which they believed would overcome barriers in time and geography and improve inter-organizational relationship. The core of its benefits is cost reduction, which results from timely and speedy transactions, inventory reduction, easy access to new markets and suppliers, and efficient management of the whole supply chain process, to name a few. In the 1980s and early 1990s, many American companies introduced inter organization networks in their supply chain management which enabled them just- in-time procurement. The immediate connection between a buyer and a supplier increases cooperation and efficiency between firms. The success of worldwide retail chain Wal-Mart frequently has been attributed to the electronic data interchange (EDI) system installed among its pool of suppliers. Also, the ubiquity of the Internet allows more companies to operate on a common platform without heavy investment in closed information networks such as EDI. Knowledge Management (KM) is concerned with the creation, storage, dissemination, and application of organizational knowledge. Successful KM rests upon an organization possessing a supportive culture characterized by high trust and the ready sharing of needed information, sufficient technological sophistication, and appropriate attitudes and motivation towards organizational success . To achieve success at SCM, an organization must possessand shareknowledge about many different facets of this process. The knowledge sources are both internal to the organization (e.g., knowledge of the whereabouts of subassemblies, knowledge of sources of manufacturing delays) and external to the organization (e.g., knowledge of the final customer's

expectations, knowledge of where en-route components are and when they are expected to arrive at their destinations). Lack of knowledge sharing between members of the supply chain has been shown to significantly affect overall performance. KM can enhance the degree of success of existing SCM efforts as well as increase the likelihood of success of new SCM undertakings.

15.0 QUICK RESPONSE

QR is a management concept created to increase consumer satisfaction and survive increasing competition from new competitors. It intends to shorten the lead time from receiving an order to delivery of the products and increase the cash flow. The QR (Quick Response) system, a production and distribution system for quick response to the market, was developed for the U.S. textile industry to survive the global competition with low-cost foreign companies. QR was created from a project to improve the supply chain management of the daily necessities industry such as the textile industry and ECR (efficient consumer response) concept was created by the processed food distribution industry. Both concepts were developed from the standpoint of increasing consumer satisfaction and as a mean to survive against certain types of competitors that producer-retailer alliances call discounters and category killers. These concepts intend to shorten lead times from order receipt to delivery, minimize unsold inventory by holding minimum inventory levels, and increase cash flow. QRM extends basic principles of time-based competition while including these new aspects
[6]

Singular focus on lead time reduction Focus on manufacturing enterprises Clarification of the misunderstanding and misconceptions managers have about how to apply time-based strategies Companywide approach reaching beyond shop floor to other areas such as office operations and the supply chain Use of cellular organization structure throughout the business with more holistic and flexible cells Inclusion of basic principles of systems dynamics to provide insight on how to best reorganize an enterprise to achieve quick response New material planning and control approach (POLCA) Specific QRM principles on how to rethink manufacturing process and equipment decisions Novel performance measure Focus on implementation and sustainability

Manufacturing Critical-path Time (MCT) metric to measure lead times.

16.0 JUST-IN-TIME (JIT)

Just-in-time (JIT) is an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs. Just In Time production method is also called the Toyota Production System. To meet JIT objectives, the process relies on signals between different points in the process, which tell production when to make the next part. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality. Quick notice that stock depletion requires personnel to order new stock is critical to the inventory reduction at the center of JIT. This saves warehouse space and costs. However, the complete mechanism for making this work is often misunderstood. For instance, its effective application cannot be independent of other key components of a lean manufacturing system or it can "...end up with the opposite of the desired result." In recent years manufacturers have continued to try to hone forecasting methods (such as applying a trailing 13 week average as a better predictor for JIT planning, however some research demonstrates that basing JIT on the presumption of stability is inherently flawed. 16.1benefits Main benefits of JIT include: Reduced setup time. Cutting setup time allows the company to reduce or eliminate inventory for "changeover" time. The tool used here is SMED (single-minute exchange of dies). The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management. Employees with multiple skills are used more efficiently. Having employees trained to work on different parts of the process allows companies to move workers where they are needed. Production scheduling and work hour consistency synchronized with demand. If there is no demand for a product at the time, it is not made. This saves the company money, either by not having to pay workers overtime or by having them focus on other work or participate in training. Increased emphasis on supplier relationships. A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important. Supplies come in at regular intervals throughout the production day. Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time. When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced.

17.0 CONCLUSION
Globalization and the advancement in IT has shrunken the world into a single market where the customers itself is getting internationalized or rather globalized. The increasing demands and expectations of the customers make the market highly competitive which pushes the

companies into a highly uncertain environment where survival is very difficult and at a higher cost. For an effective and efficient performance in all aspects the companies needs to be perfect in their functions enabling them to provide products and services to the needed. For this the companies should go beyond their conventional supply chain management systems. The strategic and technological innovations in supply chain will impact on how organizations buy and sell in the future. However clear vision, strong planning and technical insight into the Internet's capabilities would be necessary to ensure that companies maximize the Internet's potential for better supply chain management and ultimately improved competitiveness. The SCM application is getting advanced day by day with the aid of internet various softwares developed for particular supply operation needs. Companies must utilize these new breeds of SCM application, the Internet and other networking links to observe past performance and historical trends to determine how much product should be made as well as the best and cost effective method for warehousing it or shipping it to retailer.

18.0REFERENCES
1) Exforsys Inc., Jun 2007, Supply Chain Management : Just In Time, http://www.exforsys.com/tutorials/supply-chain/supply-chain-management-just-in-time.html downloaded on 27/08/2012 2) Anonymous ,August 2012, ERP, Http://Www.Tech-Faq.Com/Erp.Html downloaded On 27/08/2012 3) Jorge R. Len-Pea, 2008, e-business and the supply chain Management, http://www.saycocorporativo.com/saycoUK/BIJ/journal/Vol1No1/article_4.pdf downloaded on 27/08/2012 4) Narayan Rangaraj, December 2005, Modelling in e-Business and Supply Chain Management, http://www.me.iitb.ac.in/~narayan/conferences/nr-gm-8-dec-2005.pdf downloaded on 27/08/2012 5) Geeta Kathpalia, 2007,Radio Frequency Identification, http://www.mit.gov.in/content/radiofrequency-identification-rfid downloaded on 28/08/2012 6) S. Wadhwa, 2005, Knowledge Management based Supply Chain:An Evolution Perspective, http://www.giftsociety.org/docs/ebusiness_2/Paper2.pdf downloaded on 27/08/2012 7) Bjrn Andersen, Tom Fagerhaug, and Stine Randml,2008, Benchmarking Supply Chain Management: Finding Best Practices, http://www.prestasjonsledelse.net/publikasjoner/Benchmarking%20Supply%20Chain%20 Management.pdf downloaded on 27/08/2012 8) Anonymous ,2010,Supply Chain : Global Supply Chain Management http://www.epiqtech.com/supply_chain-Global-Management.htm downloaded on 27/08/2012 9) Anonymous, B e n c h m a r k i n g , http://tutor2u.net/business/strategy/benchmarking.htm downloaded on 27/08/2012 10) Wikipedia,2006,e-business,http://en.wikipedia.org/wiki/Electronic_business downloaded on 27/08/2012 11) Wikipedia,2006, Just In Time(business), http://en.wikipedia.org/wiki/Just-intime_(business) downloaded on 27/08/2012

12) Wikipedia,2006, Enterprise resource planning (ERP) ,http://en.wikipedia.org/wiki/Enterprise_resource_planning downloaded on 27/08/2012 13) Wikipedia,2006, Benchmarking, http://en.wikipedia.org/wiki/Benchmarking downloaded on 27/08/2012 14) Wikipedia,2006, Supply Chain Management, en.wikipedia.org/wiki/Supply chain management downloaded on 27/08/2012 15) John T. Mentzer Theodore P. Stank Matthew B. Myers,2009, Why Global Supply Chain Management? ,http://www.corwin.com/upm-data/11202_Chapter1.pdf downloaded on 27/08/2012