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Definition: Supply Chain Management is the discipline related to the management of the planning, manufacturing and operations necessary

to bring a product to the market place, from the sourcing of materials through to the delivery of the completed product. The deciding factor in the success or failure of any given product is in the efficiency with which it can be brought to the market place. If the revenue derived from the sale of a product does not create a required profit margin over the cost of its production then that product is doomed to failure, and the health of the enterprise that manufactures the product will suffer. supply chain management softwareWith that in mind it is clear that the most important factor in the life cycle of a product is the budget and time frame within which it is manufactured. The discipline of supply chain management and the ranges of software used to control it have been developed in order to make this cycle more efficient and cost effective. The field is led by the Council of Supply Chain Management Professionals (CSCMP) Aspects of Supply Chain Management Supply chain management is a complex field encompassing every process involved in manufacturing a product. Supply chain management software assists enterprises in controlling streamlining the process through several logistical areas. Customer Service Management: Customer relations provide information to the manufacturer on the level of demand for the product, and also provide feedbackto the customer on promised delivery schedules. Supply chain management software provides reporting modules to track both current demand and answer a range of what if questions to assist in the prediction of future demand depending on changes in strategy. Procurement Process: Strategies are developed with suppliers to ensure that materials can be provided on time to meet both current demand and predicted demand for the future, avoiding the bottlenecking of resources that comes with inadequate procurement planning. Supply chain management software can assist in resource planning for the manufacture of products, recommending order schedules to reduce manufacturing cycle times. Product Development and Commercialisation: Product development managers must work to identify customer needs and preferences in developing new products, and then work closely with suppliers and the manufacturers to reduce cycle times and ensure that customer needs are met. While supply chain management software cannot advise on the development of new products it can be used to ensure best practices for their manufacture and distribution.

Manufacturing Flow Management: The primary aim of manufacturing flow management is ensure that the manufacture of goods is optimised to operate on a justin-time (JIT) basis, manufacturing orders to precisely meet customer demand so as to maximise efficiency and reduce excess stock. Supply chain management software can assist in this process by analysing past performance and future predictions to suggest the optimal manufacturing schedule, while ensuring that materials to meet that schedule are procured and available in time to synchronise with the manufacturing schedule. Distribution: Once the product has been manufactured it is vital that there be an adequate structure in place to distribute it to the customer. Supply chain management software should assist in the process of planning and implementing an efficient distribution schedule by optimising manufacturing schedules to allow for the best possible distribution of the product. Outsourcing & Partnerships: It is a fact that it is often more cost effective in the development, manufacturing and distribution of a product to form partnerships with other enterprises. Especially in the case of overseas outsourcing, it is often the case that another enterprise can perform a function or process at a lower cost or a higher level of efficiency than the enterprise manufacturing the product. In these cases it would be wise from a business standpoint to form a partnership rather than perform the process in-house, enabling the enterprise to focus its attention and resources on those activities in which it has an advantage. One of the most common usages of partnerships is in the provision of transport and distribution services. Rather than devote effort and resources to building an in-house supply chain it can often be much more cost-effective to form a partnership with a shipping company, and allow them to perform the job of distribution at a lower cost than the enterprise could manage itself. Supply chain management software can offer financial reporting functions, allowing project managers to analyse areas of the supply chain in which the enterprise could gain be outsourcing to an outside firm. Performance Measurement: Performance measurement performs a vital function in any supply chain. By continuously analysing the performance of the enterprise over a range of functions it enables managers to identify areas of weakness and opportunities for improvement. Through customer perception measurement and best practice benchmarking it is possible to create a positive feedback loop, continually improving supply chain processes to deliver improved services and increased profits. Further information regarding supply chain management can be found at CIOs supply chain management research centre, NIST and the National Science Foundation.

ABSTRACT This paper focuses the role of Information technology (IT) in supply chain management. It also highlights the contribution of IT in helping to restructure the entire distribution set up to achieve higher service levels and lower inventory and lower supply chain costs. The broad strategic directions which need to be supported by the IT strategy are increasing of frequency of receipts/dispatch, holding materials further up the supply chain and crashing the various lead times. Critical IT contributions and implementations are discussed. Fundamental changes have occurred in today's economy. These changes alter the relationship we have with our customers, our suppliers, our business partners and our colleagues. It also describes how IT developments have presented companies with unprecedented opportunities to gain competitive advantage. So IT investment is the pre-requisite thing for each firm in order to sustain in the market. INTRODUCTION: Supply chain management (SCM) is concerned with the flow of products and information between supply chain members' organizations. Recent development in technologies enables the organization to avail information easily in their premises. These technologies are helpful to coordinates the activities to manage the supply chain. The cost of information is decreased due to the increasing rate of technologies. In the integrated supply chain model (Fig.1) bi-directional arrow reflect the accommodation of reverse materials and information feedback flows. Manager needs to understand that information technology is more than just computers. Except computer data recognition equipment, communication technologies, factory automation and other hardware and services are included.

Integrated supply chain model Bi-directional arrow reflects the accommodation of reverse materials and information feedback flows.

Managers need to understand that information technology is more than just computers. Except computer, data recognition equipment, communication technologies, factory automation and other hardware and services are included. The importance of information in an integrated supply chain management environment: Prior to 1980s the information flow between functional areas with in an organization and between supply chain member organizations were paper based. The paper based transaction and communication is slow. During this period, information was often over looked as a critical competitive resource because its value to supply chain members was not clearly understood. IT infrastructure capabilities provides a competitive positioning of business initiatives like cycle time reduction, implementation, implementing redesigned cross-functional processes. Several well know firms involved in supply chain relationship through information technology. Three factors have strongly impacted this change in the importance of information. First, satisfying in fact pleasing customer has become something of a corporate obsession. Serving the customer in the best, most efficient and effective manner has become critical. Second information is a crucial factor in the managers' abilities to reduce inventory and human resource requirement to a competitive level. Information flows plays a crucial role in strategic planning. Supply chain organizational dynamics: All enterprises participating in supply chain management initiatives accept a specific role to perform. They also share the joint belief that they and all other supply chain participants will be better off because of this collaborative effort. Power with in the supply chain is a central issue. There has been a general shift of power from manufacturers to retailers over the last two decade. Retailers sit in a very important position in term of information access for the supply chain. Retailers have risen to the position of prominence through technologies. The Wal-Mart & P&G experiences demonstrate how information sharing can be utilized for mutual advantage. Through sound information technologies Wal-Mart shares point of sale information from its many retail outlet directly with P&G and other major suppliers. The development of Inter organizational information system for the supply chain has three distinct advantages like cost reduction, productivity, improvement and product/market strategies. Barrett and Konsynsik have identified five basic levels of participation of individual firms with in the interorganizational system. 1. Remote Input/Output mode: In this case the member participates from a remote location with in the application system supported by one or more higher-level participants. 2. Application processing node: In this case a member develops and shares a single application such as an inventory query or order processing system. 3. Multi participant exchange node : In this case the member develops and shares a network interlinking itself and any number of lower level participants with whom it has an established business relationship. 4. Network control node: In this case the member develops and shares a network with diverse application that may be used by many different types of lower level participants.

5. Integrating network node: In this case the member literally becomes a data communications/data processing utility that integrates any number of lower level participants and applications in real times. Four fundamental mistakes made when determining information requirements are as follows: 1. 2. 3. 4. Viewing system as functional instead of cross-functional. Interviewing managers individually instead of jointly. Not allowing for trial and error in detail design process. Asking the wrong question during the interview

Information and Technology: Application of SCM: In the development and maintenance of Supply chain's information systems both software and hardware must be addressed. Hardware includes computer's input/output devices and storage media. Software includes the entire system and application programme used for processing transactions management control, decision-making and strategic planning. Recent development in Supply chain management software is: 1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution Sciences Inc. which is useful for computing freight costs, compares transportation mode rates, analyze cost and service effectiveness of carrier. 2. A new software programme developed by Ross systems Inc. called Supply Chain planning which is used for demand forecasting, replenishment & manufacturing tools for accurate planning and scheduling of activities. 3. P&G distributing company and Saber decision Technologies resulted in a software system called Transportation Network optimization for streamlining the bidding and award process. 4. Logitility planning solution was recently introduced to provide a programme capable managing the entire supply chain. Electronic Commerce: It is the term used to describe the wide range of tools and techniques utilized to conduct business in a paperless environment. Electronic commerce therefore includes electronic data interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic/optical data capture. Companies are able to automate the process of moving documents electronically between suppliers and customers. Electronic Data Interchange: Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business documents in a standard format. EDI describe both the capability and practice of communicating information between two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI are: 1. 2. 3. 4. Quick process to information. Better customer service. Reduced paper work. Increased productivity.

5. 6. 7. 8.

Improved tracing and expediting. Cost efficiency. Competitive advantage. Improved billing.

Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information. Bar coding and Scanner: Bar code scanners are most visible in the check out counter of super market. This code specifies name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants. Data warehouse: Data warehouse is a consolidated database maintained separately from an organization's production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated. Enterprise Resource planning (ERP) tools: Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data. Conclusion: World is shrinking day by day with advancement of technology. Customers' expectations are also increasing and companies are prone to more and more uncertain environment. Companies will find that their conventional supply chain integration will have to be expanded beyond their peripheries. 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. Internet technology, World Wide Web, electronic commerce etc. will change the way a company is required to do business. These companies must realize that they must harness the power of technology to collaborate with their business partners. That means using a new breed 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. REFERENCES: 1. Anderson, David L., Britt. Frank E., and Favre. Donavon J., The seven principle of Supply Chain Management, Logistics Management.

2. Bearnon, B.M (1998), "Supply Chain design & analysis: Models & Methods," International Journal of Production Economics, Vol. 55 pp. 281-294. 3. Chandra P., Saastry, T., "Competitiveness of Indian Manufacturing", Vikalpa, Vol. 23. No. 3, July- September 1998. 4. Cock, M, "The Complexity of Managing Complexity" Transportation and Distribution Magazine, 2000. 5. Drew, S. & Coulson. Thomas, C., (1997) "Transformation through team work" The path to the new organization, Team performance Management, 3., 162-178 6. King, J. (2000), "B2B exchanges Tighten Buyer seller Data Links", Computer world, Vol. 34 (10), pp. 42 March 2000. 7. Kraker, J. (2000), "Buyers Expect systems soon will deliver them", Engineering News Record, 11 Dec 2000, 2 May 2001, http://www.enr.com/new/c12111 a. asp, 2000. 8. Lietka, J., (1996) "Collaborating across lines of business for competitive advantage", Academy of Marketing Excellence, 10, 20-37. 9. Wynstar, F., Axeleson, B. and Van Weele, A., 2000. "Driving & enabling factors for purchasing involvement in new product development, European Journal of Purchasing & Supply Management, 6, 49-57.

Supply Chain Management


Despite persistent implementation problems, SCM remains a top priority for companies eager to optimize operations
By Yasemin Aksoy and Ana Derbez

This supply chain management (SCM) software survey has been prepared with operations research professionals in mind and includes software products for supply chain planning and execution excluding products that are solely for execution. Such products are expected to help reduce costs and inventories, cut cycle times, improve forecasting and increase flexibility and responsiveness in areas such as planning and execution, order fulfillment, procurement, production scheduling, logistics, transportation management and warehouse management. The survey questionnaire was designed by the Tulane Consortium for Supply Chain Management and administered by theOR/MS Today staff. The purpose of this article is not to provide guidelines for selection of SCM software or to evaluate which software is the best in class. Rather, it is to present a collection of supply chain planning software companies that are available along with the types of markets they serve and services they provide. Given the complexity of the methodologies applied, the data requirements and the modeling challenges involved in SCM software, one would expect OR professionals to routinely be involved in a company's SCM selection. However, anecdotal evidence suggests that this is not the case. The decision typically belongs to the chief information officer, the senior vice president of supply chain management or an IT professional. These people generally have no background in operations research, yet virtually every SCM software product claims to "optimize" the supply chain. One of the difficulties in designing the survey was the wide spectrum of business functions from auctions to warehouse management that are covered within SCM. Forty such functions are shown in Table 1 and in thesurvey data that begins on page 36. We asked the vendors not only to present which types of business functions they support, but also to identify the approaches they use (such as optimization, simulation, decision support, execution and data collection). Table 1 shows the cross-tabulation of the business functions and the approaches. The numbers in the cells correspond to the numbers assigned to each software product in the survey data. We explicitly stated in our survey that we define optimization as in the OR literature, as opposed to its vague definition in the popular literature from the Web, TV ads, newly printed books and publications from the consulting industry. We don't know if a vendor chose one of its public relations, marketing or product design associates to fill in the survey, and we are not sure if some of the answers

use the same definition used by OR professionals. While this may or may not make a difference in the survey data beginning on page 36, we suspect that it may in Table 1, which identifies different types of methodologies vendors use when solving different types of business problems. Through an extensive Web search, we identified 160 software companies that provide SCM support. On a first glance to a vendor's Web site, it is rather difficult for a manager to get a clear understanding of the services provided and the underlying methodologies utilized. We employed three MBA students nearing graduation each with a strong SCM background to visit the Web sites of all 160 companies. Based on their observations, the students determined if a company provides planning support as opposed to only day-to-day execution support. As a result of this effort, about two-thirds of the companies were eliminated from the initial list and not included in the survey. Of the 52 we approached, 30 responded by the deadline. As indicated in the survey data that follows on page 36, our survey asked questions whose answers address primary concerns that a company may have when deciding to purchase new software: how much will it cost, how long will installation take and how will it be integrated with existing software. Customers want to know whether SCM software is compatible with their existing legacy or ERP systems. We asked the vendors if they also sell ERP software. Some of the SCM software providers indeed sell ERP systems and accordingly provide a comprehensive IT package. Others do not have an ERP system, but are able to link their software with any legacy system or an ERP system that a company may have. Some SCM software vendors target only small companies, while others target medium or large companies. Narrowing the list down to a potential few is a process that may seem daunting for a potential buyer. A few years ago we included application of a supply chain network design software in a second-year MBA elective course on SCM. This required a two-day training for the instructor on the company site before the installment of the software. The vendor was not willing to provide copies of the software for each student and instead allowed us to put the software on our server. However, the software was better suited to run as a stand-alone, and we spent an excessive amount of time reinstalling it after several rounds of crashing. Students could not go beyond data entry and initialization. The semester ended before they could run any scenarios and make decisions. While our purpose was to train them in using such software, they ended up with an experience of implementing SCM software. When asked, students found the experience valuable and recommended that we include the software in the course

the following year as well. However, the instructor cancelled its use after one more semester of trials because repeated failures to implement by students and downtime around the server yielded a very low return on investment (ROI). Unfortunately, today we hear similar stories in the SCM software industry. A recent study by Capital Consulting and Management Services reveals the majority of investments in supply chain technology have not yet paid off in bottom-line improvements. According to the study, fewer than 20 percent of companies believe their supply chain software package has "definitely" shown a clear and favorable ROI. There have been numerous cases of companies turning off their new systems, reverting to their old practices and writing off multi-million dollar investments. While the supply chain planning side of the industry seems to be hit more strongly than the supply chain execution software, a majority of the problems afflicting supply chain planning software are common in most other IT applications. Less than half of business software purchased in 2001 is up and running. Some of the problems relate to product complexity, inadequate management and technical support (internal and external), implementation lead times and flaws, poor project management, and unrealistic customer expectations that eventually result in customer dissatisfaction. Despite all the bad news, supply chain management is still a priority for a majority of business executives who are currently operating under excessive cost containment pressures, extra capacity in their markets, and volatility of global markets affected by wars, terrorism and health threats. The scope of SCM keeps growing within a company and across enterprises, and the demand for effective planning and execution makes it extremely difficult to dismiss new technology and cling to traditional solutions over the long term. Operations research provides excellent procedures for planning at strategic, tactical and operational levels, and supply chain software companies contribute to further adoption of OR procedures. We need to understand and benefit from the lessons companies learned in the past five years and keep pushing for a successful collaboration of the fields of IT and OR and their joint contribution to supply chain management.

OR/MS Today

2003 Supply Chain Management Software Survey

The information in the survey that follows was provided by the vendors in response to a questionnaire developed by Tulane Consortium for Supply Chain Management. The survey should not be considered as comprehensive, but rather as a representation of available SCM packages. Questionnaires were sent to vendors drawn from various Web sources. It includes the products of those vendors who responded by the deadline. The survey is broken down into 13 separate pages, as well as a table of functions cross-tabbed by methodology and a vendor contact directory: Page 1: Page 2: Page 3: Page 4: Page 5:

Year Product Introduced Platforms Supported: Windows 2000, Windows NT, Unix, Mac/Mac OSX, Web, Other (specify) Recommended Hardware: Processor Speed, Memory, Hard Disk Space Price Information: Single Site License, What Does License Fee Include?, Installation Support Cost: ($/hour), Typical Support Hours Needed for Installation Industry Specifications: Industry Specific?, Which Industry(ies)? Target Company Size: Small, Medium, Large ERP Software Specifications: Does Your Company Sell ERP Software?, Is Your Software Compatible with Other ERP Software?, Which ERP Software is it Compatible with?, Does the Software Allow Customization? Methodology Used by Software: Auctions, Automatic Replenishment, Benchmarking, Contracts, CrossDocking, Customer Relationship Management. Methodology Used by Software (continued): Cycle Time Reduction, Distribution Requirements Planning (DRP), E-Commerce, Electronic Funds Transfer (EFT), Enterprise Resource Planning (ERP), Environmental / Green Concerns Methodology Used by Software (continued): E-Procurement, Facility Location, Forecasting, Inventory Management, Just-in-Time (JIT) Deliveries, Logistics Management

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Methodology Used by Software (continued): Logistics Provider Development, Logistics Provider Selection / Evaluation, Material Requirements Planning (MRP), Negotiation, Order Processing, Pick & Pack Page 10: Methodology Used by Software (continued): Point-of-Sale (POS) Transactions, Postponement, Production Scheduling, Productivity Analysis, Profitability Analysis, Reverse Logistics Page 11: Methodology Used by Software(continued): Supply Chain Network Design, Supplier Development, Supplier Selection / Evaluation, Supply Management, Total Cost of Ownership (TCO), Tracking & Tracing Page 12: Methodology Used by Software (continued): Transportation, Vehicle Routing, Vendor Managed Inventory (VMI), Warehouse Management Systems (WMS), Other Page 13: # Companies Using Software / % of Industry Specific Companies Significant Installations Table of functions cross-tabbed by methodology Vendor List: Software vendor contact information