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Opportunities and Challenges of Supply Chain Management

Opportunities and Challenges of Supply Chain Management



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Published by Sandeep

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Published by: Sandeep on May 26, 2009
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Opportunities and Challenges of Supply ChainManagement
School of Management StudiesCUSAT, Kochi-22Email:spsfriends84@gmail.com
: The main objective of this paper is to understand scm and explorethe various challenges and opportunities evolving day by day. Firms fromestablished and mature economies are increasingly expanding into emergingmarkets. Globalization forced companies to change their competitivepriorities and redesign the supply chain aggressively with a global focus. For some companies the driving factor is the new market for its products and for some other it is the access to new suppliers or raw materials from any wherefrom the world at low cost, for a third it is about lowering the cost of manufacturing and services through outsourcing . Regardless of a galore of opportunities there are many common supply chain challenges as they enter or expand their business in emerging markets: new risk of disruption of quality, financial uncertainties of the partner, unfamiliar cultures, variedinfrastructure, historical reasons and rapid growth and change. Globalization,vertical disintegration, outsourcing and off-shoring, shorter product lifecycles, lesser lead time, JIT inventory are also some factors which led tochallenges like information integration, co-ordination and resource sharing,organisational relationship linkage. Information is the power of modern scm.A company with modern technology and having and effective supply chainmanagement system with information integration as its foundation will have adefinite edge over competitors and various scm challenges
Key words:
Information Integration, Globalization, Resource Sharing,Outsourcing, e-supply chain, Real time information challenges
1. INTRODUCTION1.1 Supply Chain Management
“Supply chain is defined as the network of organisations that are involved, throughupstream and downstream linkages, in the different process and activities that producevalue in the form of products and services delivered to the ultimate consumer”.
Supply chain management is defined as management of a network of retailers,distributers, transporters, storage facilities and suppliers that participate in the sale,delivery and production of a particular product”.
2.1 Information Technology in SCM
The internet wave and the emergence of e-business have highly influenced the traditionalsupply chains by enhancing co-ordination and communication between the partners. Theenabling technologies like EDI, Intranet, Extranet, Electronic market places, ERP, DRP,ware house management system, CRM,CPFR etc has tremendously improved theintegration among the buyers and sellers. Information technology has removed theroadblocks of information sharing making the firm smarter everyday. E-business hasenhanced both supply chain efficiency and responsiveness by sharing real timeinformation regarding inventory, shipment status and other key information like productdesign, product availability and demand between partners. The e-supply chain will havecustomers and suppliers seamlessly linked together, through out the world, exchanginginformation almost instantly. As a result of e-speed information sharing the companies areadopting pull strategy instead of push strategy. Fast access to relevant supply chaininformation can pay-off handsomely in lower product acquisition costs, lower procurementtransaction, less inventory, higher quality decision making, shorter lead times, profitablemeans of disposing unused excess inventory and better customer services. Effectivesupply chain management can impact and improve upon virtually all business processes,such as data accuracy, operational complexity reduction, supplier selection, purchasing,and warehousing and distribution. Other benefits include
Quicker customer response and fulfillment rates
Shorter lead time
Greater productivity and lower costs
Reduced inventory throughout the chain
Improved forecasting precision
Fewer suppliers and shorter planning cycles
More reliable and quality information
2.1.1 Supply Chain Management Software
Supply chain management software (SCMS) is a business term which refers to a range of software tools or modules used in executing supply chain transactions, managing supplier relationships and controlling associated business processes. Some common features of these softwares are as follows
Customer requirement processing
Purchase order processing
Inventory management
Goods receipt and warehouse management
Supplier management/sourcingA requirement of many SCMS often includes forecasting. Such tools often attempt tobalance the disparity between supply and demand by improving business processes andusing algorithms and consumption analysis to better plan future needs. SCMS also oftenincludes integration technology that allows organisations to trade electronically with supplychain patterns
2.1.2 ERP and SCM
ERP is the battering ram that integrates all that information together in a single application,and SCM application benefit from having a single major source to go to for up-to-dateinformation. New initiative in resource planning, electronic commerce and extended supplychain are fuelling the trend among corporations toward integrating strategic businessapplications. ERP systems assist enterprises in automating and integrating corporatecross functions. SCM systems support information flow from various players in the supplyside, reducing the transaction cost and facilitating supplier-customer interactions. NormallySCM applications simply automate the logistic aspect of SCM are less dependent upon ongathering information from around the company and are independent of the ERP decision.But current trends in the market are such that you will need to have these applicationscommunicate with ERP in some fashion. It’s important to pay attention to the software’sability to integrate with the Internet and with ERP applications because the internet willdrive demand for integrated information.
2.1.3 RFID and SCM
It is one of the most notable is Radio Frequency Identification, or RFID. RFID tags areessentially barcodes on steroids. Whereas barcodes only identify the product, RFID tagscan tell where the product is, where it has been, when it expires, what ever informationsomeone wishes to programme with it. RFID technology is going to generate mountains of data about the location of pallets, cases, cartons, totes, and individual products in thesupply chain. It will be able to produce piles of information about when and wheremerchandise is manufactured, picked, packed and shipped. Its is also be able to tellretailers about the expiration dates of their perishable items-numbers that will have to bestored, transmitted in real-time and shared with warehouse management, inventorymanagement, financial and other enterprise systems. Another benefit of RFID is that,unlike barcodes, RFID tags can be read automatically by electronic readers.

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