J. Technol. Manag. Innov. 2007, Volume 2, Issue 4
warehouses and stores, so that merchandise is produced and distributed at the right quantities, to the right locations,and at the right time, in order to minimize system widecosts while satisfying service level requirements”.
Author emphasizes the activities undertaken by the variousactors involved in the supply chain and sets theperformance indicators as the economic production anddistribution of goods. Chopra and Meindl (2001) urges“
theprocesses which occur before manufacturing or productioninto a deliverable product or service, typically processesdedicated to getting raw materials from suppliers; and theprocesses which occur after manufacturing or productiondedicated to getting goods and services to customers.
”(p.3). Thus the processes before and after the production alongwith material and information flow are pinpointed whichwould help organization to achieve maximum profit.Global Supply Chain Forum defines Supply ChainManagement
“as the integration of key business processesfrom end user through original suppliers, that providesproducts, services, and information that add value for customers and other stakeholders”
(Lambert et al., 1998).This definition aptly includes the information flow forvalue addition instead of emphasizing the economic aspectonly like previous definitions. The process is considered asthe management of the entire value-added chain, i.e. fromthe supplier to manufacturer, to the retailer and the finallycustomers. Koch (2006) quotes
“ Supply chainmanagement is the combination of art and science that goesinto improving the way company delivers products tocustomers.”
The dent is not only tools and techniques usedto tackle the problem of purchase, production anddistribution but also skill (art) required for running businesseffectively. According to Arunachalam Raghu(2003)“
Supply chain management is concerned withplanning and coordinating the activities of organizationsacross the supply chain, from raw material procurement tofinished goods delivery”.
In global supply chain manufacturers aregraphically dispersed around the world. Each company isinvolved in a wide variety of supply chain activities such asorder fulfillment, international procurement, acquisition of information technology, manufacturing, faster and reliabledelivery of products and customer service (McIvor, 2000).SCM includes extensive research and data analysis toperform above activities efficiently. It is also observed thatwhole supply network could improve its ability to meetexpectation of consumers in terms of quality through co-management of quality and supply chain practices (Romano& Vinelli, 2001). Thus by using supply chain managementprincipals, the company will be able to reduce productdefects and to improve relationships within supply chain(Sahay et al., 2006). In today’s ERP controlled uncertainmanufacturing environments SCM ensures higheravailability of product to avoid Lost sales / Stock outages. Italso stresses the importance of the efficient consumerresponse process to achieve both customer satisfaction andbusiness efficiency (Romano & Vinelli, 2001).Thus it clear that deriving the specific objectivesand scope of SCM is a formidable task since it depends onnumerous factors.
Need To Manage The Supply Chain:
The next important issue is why the firms shouldconsiously manage the supply chain.Supply chain involvesthe cost to convey the information, produce components,store them, transport them, and transfer funds and so on.The total cost of supply chain tends to increase due to manyparameters like huge capital cost required for runningglobal businesses, mounting real estate costs and frightcharges (Koch, 2006). However the perfect planning inSCM regarding material arrival, production schedule anddistribution not only reduces the inventory and inventorycost but also reduces the wasted time and energy (Verma etal., 2006). Economic research literature has pointed out thatthere are linkages between inventory investment andbusiness cycle fluctuation. Supply chain managementdrastically alters inventory investment across a range of industries, and helps to tackle economic fluctuations (Henget al., 2005).
Issues To Ponder In Supply Chain:
It is found that SCM encompasses planning, manufacturingand operations management necessary to bring a product tothe market place, from the sourcing of materials to thedelivery of the completed product. This section wouldprovide insights on the aspects and the issues that are to bemanaged in supply chain.
Information Technology and InformationManagement
The advent of the Internet and electronic communicationhas enabled companies to be more responsive to theircustomers than ever. Sanchez and Perez (2003); Tarn et al.(2002); Wieder et al. (2006) examined functions, currentdevelopments and the rationale for IT integration byanalyzing the problems of enterprise resource planning(ERP), electronic data interchange (EDI) and presented thesolutions of SCM. Authors provided insights into theadoption of systems and the impacts on organizationalperformance. There were no significant performancedifferences found between ERP adopters and non-adopters,either at the business process level, or at the overall firmlevel. Although it was confirmed that the rich experience of firms with ERPs, tends to deliver higher overallperformance, but no evidence was found of a similar effecton supply chain performance. On the contrary EDI adoptersperceived more operational benefits, more external pressureand mutual understanding, and fewer technical andorganizational difficulties than non-adopters of EDI. Shore
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