Module 5

Current Trends:
Supply Chain Integration,
Supply chain integration is a strategy that establishes a single system that can bring together
multiple stakeholders involved in the process for greater efficiency, both in terms of productivity
and cost savings.

Need / Objectives
Supply chain integration is done to create an efficient system that starts from raw materials from
the supplier to the end product going to the consumer without delays. This will reduce increase
in cost, orreduce poor customer experience. Also helps to build a superior supply chain with the
help of integration

Elements
Integration, operations, purchasing and distribution are the four elements of the supply chain that
work together to establish a path to competition that is both cost-effective and competitive

Benefits
Companies that have an integrated supply chain increase their flexibility to adjust to client
requests, competitors' actions, and events within the industry. They also reduce waste and lower
costs.Increases in efficiency (whether via increased collaboration or analytics-based insights) can
help save money through reduced warehouse space and generally lean supply chain
management. Flexibility and improved disruption management can help you maintain value in
the face of the unexpected, meaning fewer late shipments.

Companies that have an integrated supply chain increase their flexibility to adjust to client
requests, competitors’ actions, and events within the industry. They also reduce waste and lower
costs. Overall, with an integrated supply chain they are gaining an advantage over the
competition and the whole business benefits.

Advantages in day-to-day operations

Flexibility
The ability to be flexible and adapt to different situations is important in any competitive
industry. Having an integrated supply chain allows companies to do that much more quickly and
fluidly than would be possible with a traditional logistics model.
One example of this flexibility is just-in-time capability, in which just enough freight is used to
meet daily demand. This limits the amount of warehouse space used and helps keep costs down.
While very beneficial to a company’s costs and space, this method can be detrimental if the
supply chain isn’t effective or responsive enough, limiting inventory and creating delays and
ultimately costing more than the savings are worth.
Eliminate Waste
Reducing or eliminating waste is a constant goal for most companies, partly for the long-term
cost savings, but also to meet increasingly numerous requirements for eco-friendly
manufacturing.
Integrating your supply chain will dramatically reduce waste in several areas. You will save on
space in warehousing due to better route management. This will also save on emissions helping
you to meet low-waste environmental goals. Trucks will be filled on every leg of the route
maximizing cube and ensuring that you don’t have empty trucks driving around. This means that
you will be more efficient and save money.
Lower Costs
How can you be more effective and save money while doing it? Being flexible and getting rid of
waste will help to lower costs. There are other things that can help such as the expertise of your
team, the dependability of equipment and cost sharing. Having a dedicated, knowledgeable team
will increase productivity and improve workflow.
Finally, cost-sharing by using Supply Chain Management providers instead of working
independently is a great way to cut cost without losing any quality or deadline requirements
whatsoever. A fully integrated supply chain is a requisite strategy for companies who wish to
become or remain competitive.

Building partnership and trust in Supply chain

Every business has suppliers and stakeholders that they enjoy working with. They are the ones
that seem to understand your needs and expectations. These partners know when to question
instructions and check before moving forward. You trust them to do their best.
Wouldn’t it be wonderful if you had a trusting relationship with every organization in your
supply chain? There would be no need to stress about the work being done. You know it will be
as expected.
Building trust takes time. It comes from positive work experiences that confirm that a company
can be trusted to deliver as promised. Trust is strengthened when a problem occurs. No business
is perfect: but, trustworthy partners accept responsibility for their mistakes and work to fix them.
Not only does building trust take time, but the process also requires demonstrating the following:
 Transparency
 Collaboration
 Responsibility
 Empathy
 Logic
Incorporating these elements into business relationships is one way to build trust in a supply
chain.
1. Transparency
Trust begins with transparency. According to Alexis Bateman of MIT, transparency requires two
components — visibility and disclosure. Businesses first have to identify and collect data from
every supplier in the supply chain. Then, they must communicate the information to all
stakeholders, both internally and externally.
Some companies such as Nike and Apple create maps showing each contributor to their supply
chain. They include pertinent information on supplier performance so that improvements can be
made. This mapping creates a complete picture of the organizations within a supply chain. It
doesn’t show the flow of goods but identifies the actors at each stage of the process. This process
highlights the relationships among suppliers.
Supply chain transparency is one way to enable communication among suppliers. With open
discussions, all parties can tackle issues that impact pricing, quality, and competitiveness. If a
supplier is unwilling to share data, a company has to wonder why. What is the supplier trying to
hide?
2. Collaboration
McKinsey surveyed more than 100 large organizations in multiple sectors about collaboration in
their supply chain. Companies that regularly collaborated with suppliers experienced higher
growth, reduced operating costs, and greater profitability. However, achieving high-level
collaboration was difficult, with many organizations lacking trust that everyone would put the
collaborative goals ahead of their individual goals.
To be successful, companies need to start with small collaborative efforts to demonstrate a
willingness to be transparent. L’Oréal uses transparency to build collaboration through its supply
chain. At an annual exhibition, the cosmetic company previews consumer trends that will be
addressed in the coming year. The company then asks its suppliers to create packaging solutions
to support those trends. L’Oréal’s willingness to share its upcoming product offerings and
insights illustrates its desire for transparency and its value on collaboration.
When companies are unwilling to collaborate, they need to ask if it is them or their suppliers. If
the hesitancy comes from a lack of trust in the supply chain, maybe it’s time to reassess
suppliers.

3. Responsibility
Transparency and collaboration can demonstrate a willingness to build trust, but it is accepting
responsibility for failures and successes that determines how trustworthy a supplier may be. If a
supplier refuses to take responsibility for an error, it weakens the relationship.
Everyone makes mistakes. A company demonstrates they can’t be trusted by refusing to accept
responsibility for a missed deadline or a damaged shipment. It may be human nature to blame
others rather than own a mistake, but it isn’t very ethical. If suppliers fail to acknowledge their
part in an error, can they be trusted?
Conversely, companies that take responsibility for a mistake demonstrate integrity. They show
others that they can be trusted, even when they may suffer negative consequences. In a trusting
environment, suppliers can work together to rectify the mistake and discuss ways to ensure it
doesn’t happen again.
4. Empathy
Emotion researchers define empathy as the ability to sense what others are feeling or thinking.
Empathy may be cognitive, or it may be emotional. In other words, people can understand what a
person might be thinking, or they can feel what another is experiencing. In business, empathy is
understanding a relationship from different perspectives.
As companies look at their supply chain, they need to be empathetic and expect empathy. They
need to understand what their suppliers may be going through. For example, eBay saw small
businesses failing at an unprecedented rate in early 2020, so they launched an accelerator
program for small businesses. The program called “Up and Running” offered small businesses a
free platform for moving their companies online.
In the same way, suppliers should identify with their customers’ priorities. If an organization
values product presentation, does the supply chain reflect that? For example, are suppliers
dedicated to displaying the product, in the same way, every time it is shipped? Are they more
concerned with getting it out the door than getting the presentation right? If so, suppliers may not
be as empathetic to their customers’ goals as they should be.
5. Logic
How does reasoned thinking build trust? Logic equals judgment. Can the companies in a supply
chain be trusted to use sound judgment? No company can, or should, control every decision a
supplier makes. Instead, businesses have to trust that companies will use sound judgment when
faced with unusual circumstances.
For example, a shipping route is closed because of extreme weather. The logistics company has
to decide how to reroute the shipment so it arrives on time. Can the company be trusted to make
a data-driven decision? Are they more likely to react rather than respond to the situation? If the
company cannot be trusted to make the best decision, does it belong in the supply chain?
Building Trust
Creating a supply chain that you can trust takes time. It also requires continuous evaluation. With
the day-to-day pressures facing most companies, determining a supply chain’s trustworthiness
can be pushed aside. Yet, developing trust throughout the supply chain is crucial to business
success.
Over its 30 years of experience, Symbia Logistics has become a trusted 3PL partner for small
businesses and Fortune 500 companies. Our commitment to our clients’ success forms the basis
of our operations. We are proud of our transparent and collaborative environment that enables us
to work with our customers to become trusted members of their supply chain. Contact us if
you’re looking for a logistics partner you can trust.

Responsibility. Transparency and collaboration can demonstrate a willingness to build trust, but
it is accepting responsibility for failures and successes that determines how trustworthy a
supplier may be. If a supplier refuses to take responsibility for an error, it weakens the
relationship.

Need / Importance
Through these technologies, informed decisions can be made quickly and flexibly, and in so
doing, reduce the amount of negative impact on every stakeholder when challenges arise.
Building trust between buyers and suppliers improves communication, and thus,
transparency.collaborating with a supply chain partner allows you to work together towards
greater supply chain transparency, promote higher ethical and environmental standards, and exert
better leverage over parts of your supply chain that are resistant to positive change.

Advantages / Benefits
Trrust is important in relationships because it allows you to be more open and giving. If you trust
your partner, you are more likely to be forgiving of their shortcomings or behaviors that irritate
you because overall you believe in them and know they have your back.Without a purposeful
and consistent effort to foster trust and build strong relationships at every step of the way, even
the best-designed and thoughtful engagement processes will almost certainly either fail or fall far
short of the success you seek to achieve.
Cost reductions. Increased efficiency.Lower risk of price volatility.Streamlining your purchasing
process.Opportunity to outsource tasks.Product and process improvement.

Types of Collaboration
There are two main types of supply chain collaboration: vertical collaboration and horizontal
collaboration.
vertical collaboration which includes collaboration between suppliers and customers,
horizontal collaboration which includes collaboration with competitors and other supply chain
actors, e.g. in sharing manufacturing capacity.
Horizontal logistics cooperation may be defined as cooperation between two or more firms that
are active at the same level of the supply chain and perform a comparable logistics function
Vertical collaboration brings two or more businesses from different stages in the supply chain
together, increasing productivity and performance: for example, a buyer forming a long-term
relationship with one or several suppliers of their product and/or components.

Good relationships with your suppliers

1. Choose suppliers that align with your values. ...
2. Understand your suppliers' needs. ...
3. Be a great customer. ...
4. Maintain regular communication. ...
5. Give timely feedback. ...
6. Reward good service with loyalty

Value of Information

The Value of Information. Helps reduce variability in the supply chain. Helps suppliers make
better forecasts, accounting for promotions and market changes
The information system plays an important role in the supply chain management (planning and
performance, platform and transport), in order to ensure good coordination between them, as
well as allowing optimization of the supply chain (production, storage, and transport).

Need / importance
Good information, it is believed, improves decision making, enhances efficiency and provides a
competitive edge to the organization which knows more than the opposition.
What are the examples of information in supply chain?
Some familiar types of Information may be categorized as: 1) Inventory Information; 2) Sales
Data; 3) Sales Forecasting; 4) Order Information; 5) Product Ability Information; 6) Exploitation
Information of New Products; and 7) Other Information.

Information Types
• Inventory levels
• Orders
• Production
• Delivery status

Impact / advantages
The advantages of information technology on supply chain management is also driving down the
costs of operations and increasing the efficiency of the processes. Technology will continue to be
more widely adopted and deployed within the supply chain and logistics areas.
 • Helps reduce variability in the supply chain.
• Helps suppliers make better forecasts, accounting for promotions and market changes.
• Enables the coordination of manufacturing and distribution systems and strategies.
• Enables retailers to better serve their customers by offering tools for locating desired
items.
• Enables retailers to react and adapt to supply problems more rapidly.
• Enables lead time reductions.

Bullwhip Effect –

he bullwhip effect occurs when small fluctuations in retail demand cause fluctuations in
wholesale, distributor and manufacturer demand, resulting in inefficiency and disorganization
throughout the supply chain.
What is the bullwhip effect on a supply chain and how it can be avoided?
The bullwhip effect is a phenomenon that can be seen in supply chains when retailers overreact
to changes in demand. This can cause shortages and disruptions further down the line. By
understanding and recognizing the causes of the bullwhip effect, businesses can work to avoid it
This phenomenon is named after the movement of a bullwhip, where a small movement of the
wrist becomes a much larger, uncontrolled movement at the end of the whip. In a supply chain,
the bullwhip effect occurs when each party gradually escalates an initially small spike in
demand.
Impact of Bullwhip effect
Distorted information from one end of a supply chain to the other can lead to tremendous
inefficiencies: excessive inventory investment, poor customer service, lost revenues, misguided
capacity plans, ineffective transportation, and missed production schedules.15-Apr-1997
Causes
The main causes of the bullwhip effect are – lead time difficulties, least optimal decisions at
every point of the chain, adopting the order batching of products, making wrong demand
forecasts of goods, and putting up sales promotions.
How bullwhip effect can be reduced?

Reduction of order-to-delivery time can significantly reduce the risk of bullwhip effect. The
quicker materials move through the supply chain to become finished products, the less inventory
is accumulated.
Here are 5 main factors that contribute to the bullwhip effect: demand signaling, lead time, order
batching, price fluctuation, and shorting. The greater the supply chain, the greater the potential
distortion for upstream partners.13-Oct-2021 here are many things firms in a supply chain can do
to prevent, or at least reduce the likelihood and severity of, a bullwhip effect. First and foremost
they can ensure clear and consistent communications between companies up and down the
supply chain. This will help avoid temporary or localized shifts in supply from being
misinterpreted as broader than they are. Firms can also make sure to take a wider viewpoint
when making forecasts for demand to reduce the effect of any temporary or limited shifts.
Finally, companies can work to increase the speed at which they are able to respond to shifts in
demand, meaning that they can readjust more easily if they incorrectly assess demand. This also
reduces the need to overproduce or overorder to have a buffer in case of demand shifts.
The bullwhip effect can be difficult to identify in real time, in part because it is caused by a lack
of communication throughout a supply chain. Frequently, it is a phenomenon that is observed
after the fact, when inefficiencies have already been created.

Effective forecasting–
Supply chain forecasting refers to the process of predicting demand, supply or pricing for a
product — or a range of products — in a particular industry. For example, the algorithms behind
a forecasting model can look at data from suppliers and customers and forecast the price of a
product.
Need
Integration of demand forecasting into supply chain management is essential for optimizing
operations and improving overall efficiency. Demand forecasting provides valuable insights into
anticipated customer demand, enabling manufacturers to make informed decisions and align their
supply chain activities accordingly.
When forecasting, focus on the most meaningful data. Begin by using only the most reliable
sources. If making comparisons with other companies, focus on your true peers – companies in
your industry, niche or specific market, and ideally companies of a similar size of with similar
resources.

Components of Forecasting in Supply Chain

 Historical sales data.
 Various lead times like purchasing, manufacturing & shipping lead times.
 Planned advertising and marketing efforts.
 Planned pricing discounts and rebates.
 Macroeconomic.
 Operating business scenario.
 Market intelligence and competitor moves.
27-Nov-2018
What are the characteristics of forecasting?

Some important features or characteristics of forecasting are as follows: Forecasting is strictly

concerned with future events only. It analysis the probability of a future event or transaction
occurring or happening. It involves analysis of data from the past and the present.
What are the 4 forecasting methods in supply chain management?

The top five methods for quantitative forecasting in supply chain management are: Simple
moving average. Adaptive smoothing. Autoregressive integrated moving average.

What are the five 5 steps of forecasting?

 Step 1: Problem definition.
 Step 2: Gathering information.
 Step 3: Preliminary exploratory analysis.
 Step 4: Choosing and fitting models.
 Step 5: Using and evaluating a forecasting model.

What is Forecasting in Supply Chain Management?

In supply chain management, forecasting is the act of predicting demand, supply, and pricing
within an industry. Forecasting involves investigating the competition, collecting supplier data,
and analyzing past patterns in order to predict the future of an industry. Forecasting is an
important skill for a supply chain manager to have, and it encompasses multiple skills that one
should acquire as they grow in their career.

1. Planning Processes
The scheduling and planning process is vastly improved through forecasting. Paying attention to
the past and present demand for products allows a supply chain to stay on top of the game.
2. Seasonal Variations in Demand
Among the many reasons that forecasting is needed in supply chain management is being able to
predict and plan for seasonal variations in demand. In a similar vein, planning for promotional
activity and product launches are just as important and benefit greatly from demand forecasting.
With data to back up predictions, there is less guesswork to fret over.

3. Predict Product Demand

In a broader sense of the term, demand forecasting allows for the prediction of product demand
in even the most specific of situations. While no company can predict the future with complete
accuracy, relying on patterns and making informed decisions based on past and present data will
get a company as close as possible.

4. Customer Satisfaction
Understanding customer needs is essential in product-focused industries. Being able to predict
customer demand will result in fulfilling orders with short lead times on time. This will also have
the effect of increasing trust between customer and supplier.

5. Reduce Safety Stock

By definition, safety stock is the excess stock that is kept around as a safety net in case demand
for a product increases. With forecasting, however, this extra measure is not needed. This frees
up storage space and saves time and worry.
 6. Reduce Inventory Stockouts
When it comes to JIT (Just In Time) systems and buying from long lead time suppliers,
forecasting demand is essential. When it comes to JIT systems, demand forecasting allows for
products to sit in storage for less time, thus less money is wasted than if items were to take up
space in the warehouse for an extended period of time. For long lead time suppliers, forecasting
demand is needed in order for suppliers to get your products to you in a timely manner.

7. Improve Shipping
Supply and demand affect every aspect of the supply chain process. For example, being able to
predict the demand for a certain product will allow supply chain managers time to ensure that
enough workers are present to ship a certain amount of product. Not having enough workers
results in orders not getting to customers on time. Likewise, having too many workers on the
clock results in high labor costs.

8. Improve Pricing
Price forecasting puts the power back into the hands of a company. The impact price changes
have on a particular area of a supply chain can be predicted and handled accordingly.

Coordinating the supply chain

Supply chain coordination (SCC) is an effective approach to improve supply chain (SC)
performance. The coordination can be achieved when interdependent entities work together by
sharing resources and information to achieve common objectives aligned to maximise customer
value for the entire SC.
What is an example of coordination in supply chain?

Example • When Walmart pays HP for each printer sold and gives HP the power to make
replenishment decisions while limiting the amount of printer inventory that can be held at a store.
This setup improves coordination because both parties gain if the supply of printers at a store
matches found

Coordination in supply chain management

Ways to Coordinate Your Supply Chain

1. Involve the Supply Chain Earlier. As your supply chain team realizes more success leveraging its
plan, involve everyone earlier in the new part development process. ...
2. Automate Processes. ...
3. Leverage Managed Services to Lower Fixed Costs.
What are the types of coordination in supply chain?
Logistics synchronisation, incentive alignment, collective learning, price, non-price, flow
coordination, supply chain contracts, information sharing, information technology, and joint
decision making are found as some prominent coordination mechanisms to improve performance
of supply chain.
 Supply Chain restructuring

Supply chain restructuring is the process of redesigning or reorganizing the components of a

supply chain to improve its efficiency, reduce costs, enhance agility, and increase customer
satisfaction.

What is the importance of supply restructuring?

Reshoring and nearshoring suppliers and inventory closer to markets create competitive
advantages that encourage growth during a recession: Minimizing logistics costs and fuel
consumption. Reduced exposure to geopolitical conflict and domestic policies. Accelerating
sustainability goals and promoting local interests.
What are the objectives of supply chain redesign?
The key objectives of supply chain design are to reduce inventory, working capital and
transportation costs, increase transparency, and identify opportunities for cost savings.
What is the purpose of restructuring?

Restructuring is a type of corporate action taken that involves significantly modifying the debt,
operations, or structure of a company as a way of limiting financial harm and improving the
business.

Process of restructuring

Company reorganization often includes a change in the organizational or financial structure of a

business. This is normally done through a merger, rebranding, acquisition, recapitalization, or
change in leadership. This part of the reorganization process is referred to as restructuring.

Impact of restructuring

Theoretically, restructuring leads to a more efficient and modernized entity, however it may lead
as well to the deletion of jobs and the layoff of personnel. The procedure of restructuring
generally focuses on problems with financing debt and very often, involves selling portions of
the company to investors

Benefits
 Better collaboration. ...
 Improved quality control. ...
 Higher efficiency rate. ...
 Keeping up with demand. ...
 Shipping optimization. ...
 Reduced overhead costs. ...
 Improved risk mitigation. ...
 Improved cash flow.

Supply Chain Mapping–

Supply chain mapping (SCM) is the process of documenting information across companies,
suppliers, and individuals who are involved in the company's supply chain, to create a global
map of their supply network. For example, the exact source of materials and all shipments used
will be mapped.

Importantance of Supply chain mapping

Supply chain mapping allows you to put strategies in place to rapidly react when there are supply
chain problems like a supplier faces a shortage, an order gets lost in the system, there’s a surge in
demand or something even more unexpected happens. You also develop a deeper understanding
of the surrounding costs, timeframes, and risks, and thereby gain an advantage over competitors
who lack this important knowledge.

The benefits of mapping your supply chain

By mapping your supply chain, you can:
 Identify where value is added or lost. E.g., Quality issues with your raw materials could
be slowing down production
 Mitigate the impact of risks ahead of time. E.g., How would your brand be affected if a
third-tier supplier broke environmental laws?
 Strengthen the entire chain. By bolstering relationships between companies in your
supply chain through clear communication, you help them better understand their place in
the business ecosystem, including your expectations and goals.
 Streamline and speed up processes. By analysing the connections between the entities
in your supply chain, you can spot where delays originate and focus on fixing them. E.g.,
You have three suppliers from whom you buy the same materials. One is 30% faster at
fulfilling your orders than the other two. Can you order more from the faster supplier, or
negotiate with the others to speed them up?
 Discover the elements that most affect your cashflow. Some suppliers may have
shorter payment terms, and some customers may tend to pay later than others. In
fact, research by FSB showed that the biggest risk to smaller suppliers’ supply chains was
customers failing to pay for goods or services. If mapping your supply chain shows that
your cashflow is at risk, you could benefit from using a Business Card to pay expenses.
Mapping supply chain

Mapping your supply chain is a five-step process in which you create a visual representation of
all the entities and functions that exist within and around your business.
At each stage, you can ask questions to work out if the process could be more efficient, or less
risky, expensive or time-consuming.
1. Identify stakeholders
Identify everyone who contributes to the production, storage and distribution of your product.
You can document the name of the business and your points of contact either on paper or using
supply chain planning software. You may have different supply chains for different products.
 Are you using the most efficient communication channel for the key businesses? Perhaps
you could suggest creating a dedicated space for consistent, real-time communication
with the contractor who handles your returns (such as a shared channel on Slack).
2. Understand supplier relationships
Understand the relationships between all parties (e.g., are they each other’s sole supplier or one
of many?).
 Ask your first-tier suppliers to join the mapping process. They can then send the same
invitation to second-tier suppliers, and so on. Each entity details what they sell, to whom,
and what they buy next in the chain. As the map expands, you and your suppliers get a
better view of potential risks, bottlenecks, and the dangers of relying on single suppliers
and businesses with long lead-times.
3. Establish costs and timings
You should work out the costs and time frames involved in each part of the chain.
 Which functions offer the most and least value to your business? It can be helpful to think
of the supply chain as a “value chain” by considering how costs and time frames either
produce or prohibit value. Calculate how long each element takes on average, including
small things (e.g., receiving an email reply from your supplier) and bigger things (e.g.,
transportation of goods to the customer).
4. Acknowledge risks
Acknowledge the risks associated with each entity, including political, legal, economic, and
environmental threats.
 Are unseen silos increasing the risk of disruptions? E.g., between procurement,
marketing, sales, and fulfillment, or between your business and your suppliers and
customers? Can you remove these silos by improving knowledge sharing?
5. Data tracking
Track the flow of information and data through the supply chain. Transferring information
efficiently, including orders, shipments, and returns, can be as important in controlling costs as
the movement of physical goods.
Supply Chain process restructuring

Supply chain restructuring enables companies to uncover the weaknesses in their supply chain
and develop specific strategies to rectify the flaws. Restructuring can include optimizing the
manufacturing, transportation, storage of goods, as well as finding new suppliers to better fit the
needs of the enterprise.
What are the objectives of supply chain redesign?
The key objectives of supply chain design are to reduce inventory, working capital and
transportation costs, increase transparency, and identify opportunities for cost savings.

Supply chain restructuring may involve a range of activities, including:

1. Network design: The first step in supply chain restructuring is often to redesign the network
to optimize the flow of goods and services. This may involve changing the number and
location of warehouses, transportation modes, and the allocation of resources across the
supply chain.

2. Process redesign: Supply chain restructuring may also involve redesigning the processes
involved in manufacturing, logistics, and delivery to improve efficiency and reduce costs.
This may involve the adoption of new technologies or the automation of certain tasks.

3. Supplier management: Restructuring the supply chain may also involve reviewing and
renegotiating supplier contracts to ensure that they are aligned with the company’s strategic
goals and objectives.

4. Technology adoption: The adoption of new technology, such as IoT devices, artificial
intelligence, and block chain, can also play a significant role in supply chain
restructuring. These technologies can enable greater transparency, accuracy, and
efficiency across the supply chain.

5. Collaborative partnerships: Restructuring the supply chain may also involve forming
collaborative partnerships with other companies in the supply chain to enhance agility
and reduce costs. These partnerships may involve sharing resources, knowledge, and
expertise to optimize the supply chain for mutual benefit.

These five dimensions are as follows: strategic supplier partnership, customer relationship, level
of information sharing, quality of information sharing, and postponement.
What is the supply chain management process? The supply chain management process is
composed of four main parts: demand management, supply management, S&OP, and product
portfolio management.

key benefits of effective supply chain management

Better collaboration. Information flow is a prominent challenge for companies. ...
Improved quality control. ...
Higher efficiency rate. ...
Keeping up with demand. ...
Shipping optimization. ...
Reduced overhead costs. ...
Improved risk mitigation. ...
Improved cash flow.

Postpone the point of differentiation –

Delayed differentiation or Postponement is a concept in supply chain management where the
manufacturing process starts by making a generic or family product that is later differentiated
into a specific end-product.

Postpone the Point of Differentiation

According to this approach, the point of differentiation should be close enough to the end of the
value curve. It means that all changes that are made to introduce differentiation in a product
should be made near the customers at the delivery time. It is important as this may help in
carrying out the majority of activities at the aggregate level instead of the variant level. For
example, paint companies produce paints of different varieties in different colors.
They usually postpone the point of differentiation till the far end of the value addition curve. For
example, Asian Paints offers four types of emulsion brands. All emulsions comprise a base and a
stainer. The stainer is the element that when added to the base, produces an emulsion of the
desired color. Paints comprise 99 percent of the base and 1 percent of the stainers.
The advantage of postponing the point of differentiation is that it helps in reducing inventories.
Additionally, the period for which an organization has to carry out forecasting at the variant level
is also reduced. These lead to improved customer service and reduced product obsolescence.
The advantage of postponing the point of differentiation is that it helps in reducing inventories.
Additionally, the period for which an organization has to carry out forecasting at the variant level
is also reduced.
These lead to improved customer service and reduced product obsolescence. The postponement
of the point of differentiation can also help in reducing transportation costs. Let us now discuss
how the postponement of the point of difference helps in reducing transportation costs.

Postponement for Reducing Transportation Cost

Usually, the differentiation process is postponed to producing customized products as per the
requirements of customers. However, organizations may also use the postponement strategy for
delaying the operational process to a later stage in the supply chain to reduce transportation
costs.
Some organizations achieve this reduction in transportation cost by shifting the assembly of the
final (bulky) finished products toward the customers’ end. This practice is generally followed in
cases where the product can be transported as a kit consisting of various parts, which can be
easily assembled by the customer after he/she purchases it.
n such a case, transportation costs are significantly reduced because transporting kits is easier
and cheaper as compared to the transportation of a finished product.
Organizations that manufacture bicycles in India have been quite successful in implementing the
postponement strategy. Bicycle manufacturers usually manufacture cycle frames, handles, and
transmission parts in-house whereas all other parts such as tires, tubes, seats, brakes, etc. are
sourced through their respective suppliers. Retail dealers of bicycles stock frames and other
components separately.
The postponement strategy is helpful in the following cases:
 Mass product customization
 Modular product designs
 Large fluctuations or variability in demand
 Large transportation lead time
 Small value addition during transportation
 Short lead time in postponed operation
 Significant value addition in the delayed operati

As discussed above, the postponement strategy brings various advantages such as reduced
inventory, warehousing, and transportation costs, and increased responsiveness to customers.
However, there are some problems associated with the postponement strategy. These problems
are as follows:
 Economies of scale are reduced due to mass customization

 Product quality may be affected (in certain cases) when a manufacturer shifts the final
assembling processes to the dealers’ end

 Relationships with other members of the supply chain may get affected

Postponing the point of differentiation involves shifting the point of differentiation toward the
end of the value-addition curve. This can be achieved in reality by deferring the operational
(differentiation) process to a later stage in the supply chain. A differentiation process is an
activity that results in producing differentiated products using the base products.
For example, suppose an organization manufactures potato chips in various flavors. The process
of producing chips in different flavors remains the same till the flavoring agents and spices are
added to produce chips.

IT in Supply Chain
The role of IT in supply chain management is to speed up business processes and prevent
bottlenecks. Companies are closer to accomplishing on-time procurement, shorter inventory, and
better efficiency, particularly in manufacturing.06-Oc
The Role of IT in Supply Chain Management
IT is leaving a mark everywhere. Nothing remains untouched. No wonder every aspect of a
business is now under its command! The role of IT in Supply Chain Management is highlighted
in the following points.
1. Integrated and Coordinated Supply Chain
A supply chain can only work efficiently when it is properly integrated and well-coordinated. IT
performs this crucial task by bringing in multiple technologies and combining them to optimise
the supply chain. These technologies make data collection possible and much easier and more
accurate. In turn, this allows precise and detailed data analysis leading to sound business
decisions.
2. Increased Productivity
Smooth flow of information, new technologies and effective communication increase the
productivity of all entities in the supply chain. It is like a trigger for product movement. Instead
of going back and forth, IT provides the link that passes the needed information continuously.
3. Cost Reduction
IT permits optimum utilisation of resources and assets. Old data is used to study the trends, and
technology is used to analyse it for improving performance. When resources are used optimally,
they result in cost reduction.
In a supply chain, the role of IT becomes more prominent because it motivates all parties to use
their respective resources in the most cost-efficient manner. When IT is used as it should be,
there is a dramatic fall in overall expenses.
4. Product Improvement
IT consists of tools and applications which can be used to gain early awareness. In a market
where consumers always want something new, the product will either have to evolve or it will go
out of demand. To stay in business, you must introduce product improvement and innovation
sooner rather than later. The kind and extent of product improvement can be validated with the
help of IT.
5. Supply Chain Visibility
Information makes the entire supply chain visible to supply chain managers. The manner in
which the information flows from one collaborator to the other and the impact it has on others is
used by the managers in making strategic decisions.

The role that IT plays in supply chain management or SCM is so important. IT provides the tools
which can pick up relevant information, break it down for proper analysis and execute it for
optimum performance of the supply chain. Data is pivotal to the execution of the supply chain,
primarily because it provides the base on which the supply chain managers can take decisions.
Real-time or almost real-time information is the key to proper supply chain management. With
information about the various stages of the supply chain, decision-makers can plan, manage, and
adjust processes to achieve goals in procurement, inventory, manufacturing, etc.
How does information technology affect supply chain management?
Supply chain management is all about producing the right product in the right quantity and
sending them to the right place at the right time. It seems simple, but it can quickly become
complicated.
How Suppliers Can Utilize Information Technology
The supply chain starts with the supplies. With a reliable supply chain software that allows real-
time information sharing, manufacturers and suppliers can collaborate better and avoid
production delays due to insufficient raw materials.
Normally, manufacturers initiate transactions with suppliers but if you are a supplier, you can
monitor your clients’ inventory, forecast future demands, and make sure that you’re ready to
fulfil orders for raw materials. Suppliers can also use historical data to make informed decisions
in aspects like partnership and contract management.
Be the most reliable supplier in your area! Take advantage of the latest technology for
supply chain management.

Manufacturers Benefit From IT

IT offers better visibility and transparency that lead to better accountability and control over the
production of goods. Manufacturers that have clear visibility on production can make
adjustments to make the process more efficient as well as foresee problems and prevent them.
For example, with IT, a manufacturer can foresee delays and make changes in the production
schedule.
Information Technology in Shipping
Timely delivery is essential in any industry. Delivery that’s done on time usually results in
customer satisfaction, and customer satisfaction normally leads to customer retention.
As a shipper or logistics provider, you can ensure customer satisfaction by improving order
tracking and delivery. Keeping the manufacturers and distributors informed of the entire delivery
process and possible delays already puts you a step closer to repeat business. What more if you
can avoid delays by utilizing data from the tools? Many supply chain management tools for
delivery and shipping service providers also let you give clients access to a platform where they
can enjoy a sense of control.
Utilize the best supply chain management tools to keep your clients satisfied.

Advantage of IT in Distribution
Distributors that are spending a lot of time and wasting money on inventory management can
rely on supply chain management tools for some badly needed assistance. With the right tool and
documented process, distributors no longer have to worry about excess or insufficient stock.
Instead, they can predict demands and effectively manage inventory and orders.

Retailers benefit- Information Technology

In the supply chain, retailers are the ones who face consumers. They need flexibility and
visibility as well as integration. Retailers can integrate their POS systems, which capture their
sales, with their tool for monitoring the stock level, which is also visible to the distributor.
Retailers can also set a reorder point that when reached will automatically generate an order.

Predict demands and manage orders effectively. Get the most reliable supply chain tools
for sales and orders.

Information is crucial to the performance of a supply chain because it provides the basis on.
which supply chain managers make decisions. Information technology consists of the tools used
to gain awareness of information, analyze this information, and execute on it to improve the
performance of the supply chain.
Is supply chain a part of IT industry?
It would be appropriate to say that information technology is a vital organ of supply chain
management. With the advancement of technologies, new products are being introduced within
fraction of seconds increasing their demand in the market.
What is the impact of information technology on a supply chain management?
One way is to streamline the process of tracking and distributing inventory. But the biggest
benefits of technology in supply chains Management come from reducing costs, improving
customer service, and increasing operational efficiency
Software for Supply Chain Management
There are many tools that are used for effective supply chain management. These are primarily
categorised as:
1. Enterprise Resource Planning
Materials requirement planning, which was earlier used to distribute resources for a
manufacturing operation, resulted in enterprise resource planning (ERP), a system that links
individual IT applications into a single one. This results in the integration of the data and the
processes of the complete business.
When all operations are consolidated, information related to cash flow and material flow starts
making more sense. ERP has now become the backbone of the supply chain and provides an
integrated view of the organisation as a whole. Today, ERP has also led to the automation of
many functions so that there is minimal human intervention.
2. Electronic Data Interchange
Electronic Data Interchange (EDI) is the exchange of business data from one computer to
another. It is usually done in a standard format so that all concerned parties can use it according
to their need without having to constantly ask for it. EDI allows companies, across the industry,
to communicate with one another.
Everyone who uses EDI follows the same rules and methods. This makes for efficient inventory
management, better business relationships, and improved customer service.
3. Supply Chain Management Systems
An ideal supply chain management system will help in planning, selecting the vendor,
manufacturing, logistics, and building the customer relationship. To provide the necessary
assistance Supply Chain Planning (SCP) software and Supply Chain Execution (SCE) software
are used.
4. Customer Relationship Management
CRM or e-CRM uses IT to assist an e-business in managing its customer base. It matches
customer needs with the product plans to increase sales.

Agile Supply Chains

An agile supply chain puts constant emphasis on efficient processes and empowered employees.
Agile supply chains are nimble enough to respond smoothly to sudden changes in supply and
demand. Adopting an agile model benefits the greater organization by allowing it to act quickly
and decisively.
Agile supply chain management (SCM) is a supply chain wide reorganization around a new set
of principles that emphasise the need for new structures, value chain configurations,
communications and information systems and a whole new mindset when it comes to how a
supply chain should operate
What are the 4 components of agile supply chain?

Four components of an agile supply chain strategy

Demand forecasting. This is key to ensuring that an agile supply chain is always able to meet
demand. ...
Flexible inventory management. ...
Digital centralized workflows. ...
Robust supplier management strategy.

Example of an agile supply chain

Example of Successful Agile Supply Chain

Nike: Nike is well-known footwear and apparel firm; it has close to 700 factories spread over 42
countries around the world. It focuses on labor productivity, consolidating materials to reduce
wastage, and introducing modern technologies in their manufacturing process.
 Characteristic of an agile supply chain
The traditional practices of the supply chain are inadequate. Trends have made it important to
deliver only high-quality products within a shorter span of time in varying volumes of the
production process. Agility in your supply chain means that a business can rapidly adjust to
market disruptions.
One of the biggest benefits of having an agile supply chain is that it enables you to consistently
meet customer demand around fast, affordable shipping, despite fluctuations in order volume.
However, to meet ever-changing market demands takes deliberate supply chain planning and
execution

Reverse Supply chain

The reverse supply chain is a process that is almost opposite of a traditional supply chain,
meaning the product moves from a customer back to a vendor/supplier/retailer. Reverse supply
chain management includes pickups, disposing or cleaning, sorting, repackaging, restoring, and
finally reshipping.

What are the objectives of reverse supply chain management?

Two primary objectives of reverse logistics are to regain value and ensure returning customers.
Hence, innovative companies use the concept of reverse logistics to attain customer loyalty and
get returning customers to reduce return-related costs.

Some reverse logistics examples are:

 Return of goods by customers.
 Return of unsold goods by distribution partners due to contract terms.
 Re-use of packaging.
 Refurbishment of goods.
 Repairs and maintenance as per guarantee agreements.
 Re-manufacturing of goods from returned or defective items.

What are the activities involved in reverse supply chain?

The reverse logistics process usually involves returns, recalls, repairs, repackaging for restock or
resale, recycling and disposal. Traditional logistics involves direct order fulfillment, hub
services, pick-and-pack services and shipping.

What are the challenges of reverse logistics?

Common Reverse Logistics Challenges

 Warehouse space.
 Time and costs of damaged returns.
 Fraud.
 Customer expectations.
 Reducing carbon emissions.
 Complex return flows.
 Mobile productivity solutions.

Future of IT in supply chain

The future of IoT will increase productivity in delivery and supply chain industries. Many
logistics experts use these new resources to enhance their supply networks, reduce costs and
generate revenues.” He also predicts an increase in artificial intelligence to solve the many
inefficiencies in today's supply chains.12-Apr-2023

Impact of IT on supply chain management

One way is to streamline the process of tracking and distributing inventory. But the biggest
benefits of technology in supply chains Management come from reducing costs, improving
customer service, and increasing operational efficiency.
The future of IoT will increase productivity in delivery and supply chain industries. Many
logistics experts use these new resources to enhance their supply networks, reduce costs and
generate revenues.”

E- Business in supply chain

Supply chain management in e-businessSupply chain management is the backbone of any e-

commerce business. It aids in streamlining the process of taking your goods from point A to
point B. For instance, it could involve moving materials from the factory to your warehouse and
then from your warehouse to your customers.

Supply chain management important in e-business

Effective supply chain management is essential for every e-commerce business's success.
It ensures on-time delivery, inventory management, cost reduction, enhanced efficiency,
improved customer experience, and increased customer loyalty.1

Benefits of e-business integration in the supply chain?

An eCommerce integrated supply chain helps businesses get feedback and requirements about
their products directly from the consumers. Cost reduction – One of the principal reasons due to
which the customers invest their time and money in eCommerce is reduced costs.0

Types of supply chain as used in e-commerce

Generally speaking, this type of supply chain can be categorized into six different
segments: supply and demand; warehousing; inventory tracking; order entry; order management;
and distribution, delivery, and returns.
Supply chain management in eCommerce refers to managing and overseeing all parts of the
supply chain. There are three main ways a B2B supply chain for ecommerce can benefit a
business. These are inventory visibility and stock availability, enhancement of customer
experience, and improvement of profitability.
Inventory Visibility and Stock Availability
An effective eCommerce Supply chain solution can help streamline tasks related to stock
monitoring or ensure availability of resources before the “out of stock” point. It can also
“connect” customers to the inventory, allowing for transparency and the ability to know if or
when the requested product will be available. This can empower customers and build trust, an
attribute critical for any business, especially B2B eCommerce.
Customer Experience
Speaking of customer empowerment and trust, a good SCM system can do wonders for
customers’ experience through the eCommerce platform and help a company’s reputation
tremendously. Happy customers tend to leave great reviews. They can build a company’s
reputation, helping towards customer loyalty and securing new customers. In an era where most
potential customers are checking reviews before purchasing a product or a service, investing in a
refined eCommerce SCM system that can help customer satisfaction is a no-brainer.
Profitability Improvement
Some business sectors, such as manufacturing and distribution, do not allow for big
profitability margins due to the market’s saturation. A good SCM system can help Identify
problematic areas within the business’s operations that can cause additional costs, delays, or
mistakes, all of the aforementioned affecting profitability. Solving these problems through an
SCM system that offers better SCM interactions, cost-efficient operations, and optimized
inventory availability can increase profitability and help a business jump ahead of the
competition.
SCM is extremely relevant to the sectors of manufacturing and distribution, affecting both in
various ways. An efficient SCM system can make or break a company with business activities
related to product manufacturing or distribution. An effective B2B supply chain for
eCommerce that embraces the latest technological advancements towards seamless, time-
effective, and cost-effective operations within a company or several companies can tremendously
benefit the manufacturing and distribution sectors.
This has led to a surge of competitiveness among eCommerce businesses. For long term success,
businesses not only require a user-friendly eCommerce platform but a well-connected supply
chain as well.
eCommerce supply chain solutions do not operate in silos. For them, proper supply chain
connectivity during the entire process, from procuring to delivering, is necessary to generate
more leads, build relationships, and grow sales.
In today’s world, anyone within a few clicks can buy almost everything from a manufacturer in
India and have it delivered anywhere in the world. The growth of eCommerce has brought a lot
of new opportunities and challenges to the traditional business models.
Business efficiency has become critical at all operational levels. Furthermore, the demands and
expectations of the customers have evolved.
 As per survey,(survey by Investp) 56% online consumers between the age of 18-34 years expect
to have same-day delivery. And, 80% of the online shoppers expect same-day shipping. It is the
movement of goods that needs to happen in a correct and timely manner. But, speed and
efficiency cost money. And, at the same time, it’s important that you strike a balance between
being highly efficient and reducing costs, thereby the need for supply chain management arises.
The following are the major advantages of supply chain management for eCommerce:
 Visibility across the entire network – Supply chain management brings transparency in the
network and helps oversee the status of all the activities happening across supply, production,
warehousing, and distribution. This ensures a more comprehensive tracking and management of
all processes from procuring to shipping of finished goods to the end consumer.
 Enhanced Customer Relationships – Effective supply chain management ensures on-time
deliveries, which makes a direct impact on strengthening customer relationships. Furthermore,
SCM aids the brands to keep an eye on customer requirements. It makes sure that the business is
attuned to the changes in the demands of the products and services. An eCommerce integrated
supply chain helps businesses get feedback and requirements about their products directly from
the consumers.
 Cost reduction – One of the principal reasons due to which the customers invest their time and
money in e Commerce is reduced costs. E Commerce based SCM can significantly reduce costs
in the supply, production, and distribution processes, which, in turn, leads to higher profits.
 Minimized Delivery Delays – Delayed shipment from vendors, holdups during production, and
logistic errors in distribution channels massively impact brand reputation in the market.
Minimizing delivery delays can prevent losing out on business and streamline your image and
relationships with the customer.
 Scaling omni channel practices – A well-structured supply chain management in e Commerce
facilitates omni channel engagement that ultimately leads to increased customer engagement on
all major platforms.
E Commerce businesses in an omnichannel environment pretty much conclude the new shopping
touch points of the majority of consumers today. It is incredibly crucial for brands to consider
customer convenience and expectations first. And, it starts from the very first step of the supply
chain. An adequately managed eCommerce supply chain assists brands with an omnichannel
scaling of their businesses and expands their selling horizons with content customers spread
across channels.