E-SUPPLY CHAIN MANAGEMENT

THE ADVENT OF SUPPLY CHAIN MANAGEMENT: ARCHITECTING

THE SUPPLY CHAIN FOR COMPETITIVE ADVANTAGE

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BUILDING BLOCKS OF E-SUPPLY CHAIN
MANAGEMENT

E-Supply
Chain
Management

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FIRST STAGE: DECENTRALIZATION

 Era of internal logistics decentralization

o Companies divided logistics activities among operation functions such
sales, production and accounting,..
o Logistics responsibilities scattered throughout the organization
o No single manager responsible for integrating channel management activities

 Logistics decentralization made it impossible to effectively reduce cost

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 SECOND STAGE: CENTRALIZATION

 Logistics migrated from organizational decentralization to

centralization of core functions driven by cost optimization and
customer service.
o Companies’ effort to centralize logistics functions into a single management
system (merging fragmented functions into a single department),
o Stage objective  minimize the total cost of logistics, rather than reduce
individual costs of logistics functions, such as transportation or warehousing,
o Logistics should rather be considered as a single integrated supply system,
o Computers became much more sophisticated, less costly, and more accessible.

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 THIRD STAGE: INTEGRATED FUNCTIONS

 “Integrated Functions” - Linkage of internal operations with

functions performed by channel trading partners
o Focus on : competition and quality management.
o Management concepts, driven by JIT and total quality management (TQM)
philosophies, provide tools to compress time out of development cycles.
 Summary: main feature of integrated logistics model was the merger of
channel management functions with those of trading partners to
improving customer service & total cost reduction across channels.

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STAGE FOUR: SUPPLY CHAIN MANAGEMENT

 A concept of channel relationship grew, leading to full supply

chain management
o SCM organizations possess the power to move beyond a narrow
focus on channel logistics optimization to identifying the best
core competencies and collaborative relationships among
their trading partners.
o Using SCM tools, enterprises have the capability to view themselves
and their channel partners as extended virtual organizations
through the use of ‘extranets’.

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STAGE FIVE: E-SCM

 Use of internet application to introduce “e-SCM”

o Utilizing the power of the Internet to synchronize the
channel functions of the entire supply network into a
single “virtual” enterprise,
o capable of optimizing core functions and resources from
anywhere at any time in the supply chain to meet market
opportunities.

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Main Building Blocks

E-Supply
Chain
Management

Stages Order
a. Logistics centralization 2
b. e-SCM 5
c. Logistics decentralization 1
d. Integrated Functions 3
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e. Supply chain management 4
LOGISTICS & LOGISTICS MANAGEMENT

 Logistics
o Deals with all move store activities that facilitate product flow from raw
materials to final destination,
o as well as the information flow that set the product in motion for the purpose
of providing adequate levels of customer service at a reasonable cost.
 Logistics Management
o is the process of planning, implementing and controlling the efficient,
cost-effective flow and storage of raw materials, in-process inventory, finished
goods and related information from the point of origin to point of
consumption for the purpose of conforming to customer requirements.
 The goal is achieving customer satisfaction by meeting customer
requirements and order fulfillments.
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E-LOGISTICS
 It’s a dynamic set of communication, computing and
collaborative technologies that transform key logistical
processes (move-store activities) to be customer centric
by sharing data, information and knowledge with the
supply chain partners.
 E-logistics are part of existing e-Commerce world.
o Describes 3 core back-end processes required to get an order from
the “buy” button to the bottom line:
o warehousing,
o delivery and transportation,
o and customer interaction (usually handled through a call center where
customers can ask questions, place orders, check on order status, and
arrange for returns). 10
 SUPPLY CHAIN AND SCM
 Supply Chain:
o The flow of materials, information, money and services from raw material suppliers
through factories and warehouses to the end customers
o A network of activities that deliver a product/service to the customer

 Supply Chain Management:

o It is the integration of logistics activities through improved supply chain
relationships to achieve a sustainable competitive advantage.
o Is the business function that coordinates all of the network links
o Coordinates movement of goods through supply chain from suppliers to
manufacturers to distributors.
o SCM Promotes information sharing along chain like forecasts and
sales data to achieve a sustainable competitive advantage. 11
COMPONENTS OF THE SUPPLY CHAIN

Processing, purchasing,
planning, quality, shipping
Tier one, two, three Material movement including
suppliers selection and monitoring
carriers

Inventory levels, delivery schedules, payment terms, orders, return

requests, repair and service requests, ....

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SUPPLY CHAIN PROBLEMS AND SOLUTIONS

 Problem: The need for Information Sharing along the Supply Chain to
and from all participating entities.
o It includes product pricing, inventory, shipping status, financial information,….

 Solution: E-Supply Chain Management (E-SCM)

o It is a tactical (finance, marketing/sales, manufacturing, procurement and
logistics) and strategic management,
o that seeks to network the collective productive capacities and resources of
intersecting supply channel systems,
o through the application of Internet technologies,
o in the search for innovative solutions and the synchronization of
channel capabilities dedicated to the creation of customer value.
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GOALS OF E-SCM

 Why e-SCM?
o Extends channel management systems beyond traditional
boundaries to integrate in real time the customer/product
information.
o Offers agile, flexible systems for customer-supplier partnership
and critical information flows.
o Having a more adaptive supply-chain.

 https://www.youtube.com/watch?v=1SYfHllsqbs&t=38s
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 ADAPTIVE SUPPLY CHAIN

 “An adaptive supply chain network means having the

ability to rapidly anticipate and/or respond to
changing environmental conditions”.
 How to respond to changes in demand without carrying lots of inventory?
 How can the company work with suppliers to change plans quickly?

 Creating adaptive supply chain networks for

suppliers, manufacturers, distributors, and customers
require:
o sharing information dynamically across the network.
o capturing customer demand (sharing that information
throughout the network),
o coordinate planning and execution so partners in the
network are working together toward a common goal
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 ENTERPRISE E-BUSINESS SYSTEM

Distributor COMPANY Business

partner

B2B B2C Customers

Suppliers

Customer facing Applications

Business Enterprise
Partner
partner Resource Goal: optimize relationships
Planning (ERP) with customers to increase
“the Backbone” service effectiveness and sales
Applications facing Supplier / Distributor
/ Business Partner
Goal: optimize relationships and reduce cost Internal operations
of goods sold Goal: facilitate integration of
internal operations and increase
productivity
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ACTIVITIES AND INFRASTRUCTURE OF E-SCM

 E-Procurement  Corporate (enterprise) portals

o B2B transactions o A gateway for entering a
corporate Web site, enabling
 Supply chain monitoring and communication, collaboration, and
access to company information
control
 Groupware & Collaborative tools
o RFID - GPS
o Software that support
 E-Logistics collaboration among groups of
people who share a common
 E-Fulfillment task/goal
o the activity of delivering products  E-Payment
and services placed in the network
supply system through e-commerce  E-Customer Relationship
transactions management (e-CRM)

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 CHARACTERISTICS OF E-SCM

 Web applications provide whole supply chains with the capability

of sharing
 databases,
 forecasts,
 inventory,
 and product information
 needed for effective decision making.

 Integration can be global, 24x7x365,

 with 100% accuracy.
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 E-SCM PRINCIPLES

 e-SCM requires understanding the following principles:

A. e-SCM enables a whole new view of the function of information in
the supply chain
B. e-SCM enables enterprises to form Customer-Winning
Relationships with Supply Chain Partners
C. Supply Chain Synchronization

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A. E-SCM ENABLES A WHOLE NEW VIEW OF
THE FUNCTION OF INFORMATION IN THE SC

 “We are moving to a world where the fast eats the slow”.
 Speed is the most crucial competitive advantage.
 Technology tools enabled enterprises to effectively
accumulate, track and monitor e-information
o from anywhere in the supply chain in real time.

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B. E-SCM ENABLES ENTERPRISES TO FORM
CUSTOMER-WINNING RELATIONSHIPS WITH
SUPPLY CHAIN PARTNERS

 Ability of e-SCM to provide a seamless channel structure whose

boundaries appear invisible to the customer,
 The entire channel is enabled to act as if it were a single
company,
o Example: Cisco System’s e-planning applications automatically alert
suppliers when actual customer demand deviates from forecasts,
o thereby reducing inventory imbalances throughout the entire supply channel.

o If a company is able to include more suppliers in the planning system, their

ability to be more flexible to meet any customer order grows.

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 C. SUPPLY CHAIN SYNCHRONIZATION:

 The ability to transmit and share supply channel information electronically is

simply not enough, constitutes only two of the three components of the e-SCM
concept.
 A company outsources much of its manufacturing to multiple trading partners.
o A single customer order might be manufactured & delivered from 4 supply locations.
o Successfully executing such a strategy means that the organisation must be able not
just to transmit e-information, but also to perfectly integrate that
information across manufacturing processes owned by supply chain partners.
 The value of the information is as important as the actual
manufacturing and delivery of the product.
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CHARACTERISTICS OF E-SCM CONT’D

 Organizations have been engineering new methods for linking together

real-time e-information. The result of this effort is the concept of
 e-supply chain synchronization (e-SCS):
o Transmitting e-information as fast as possible through the supply channel,
o Interlinking all network nodes to achieve a seamless supply chain response to
the customer.
o Getting all of the partners operating in a manner that is mutually supportive
(flexible, cooperative) and seamless (smooth, unnoticed by customers).
 Goal: using technology to achieve a direct linkage between demand
and supply at all points in the channel network.

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