HCL Enterprise Application Services (HCL EAS) provides supply chain management (SCM) solutions to help organizations optimize their supply chains. HCL EAS's SCM solutions help reduce inventory levels while improving service quality. Their solutions include advanced planning and optimization, service parts planning, supply network collaboration, event management, forecasting and replenishment, transportation management, and manufacturing operations. HCL EAS aims to maximize returns through demand and supply optimization and planning and collaboration with business partners. They offer experienced SCM consultants to help customers implement SCM solutions and achieve returns on their investments.

1. Supply Chain Management (SCM)
HCL Enterprise Application Services (EAS) provides robust Supply Chain Management solutions with
advanced features and benefits helping organizations to generate value and enable their business
through a more adaptive supply chain network thus reducing inventory whilst increasing service quality.
For example our SCM solution provides functionality for manufacturing where planning and logistics
makes your business network both agile and seamless. Deployment of SCM provides collaboration,
planning, execution and monitoring of activities across the supply chain.
HCL EAS’s solutions include:
Advanced Planner & Optimizer
Service Parts Planning
Supply Network Collaboration
Event Management
Forecasting and Replenishment
Transportation Management
Manufacturing Operations and Shop Floor Control
Sales and Operations Planning
HCL EAS’s added value:
Maximize return on assets through optimization of demand and supply
Planning and collaboration with business partners through forecasting, optimizing and scheduling time,
materials and resources
Streamlining distribution, transportation and logistics, with real time planning processes
Operational excellence – real time and well informed decision making leading to optimum inventory level
What does HCL EAS offer?
HCL EAS provides a very experienced and skilled workforce who enables supply chain solutions that help
their customers extend their ERP suite achieving maximum return on investment. Each consultant delivers
expertise in strategic planning, supply chain transformation, project management and SCM functional
design and application configuration.
A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished products
to customers. Supply chains exist in both service and manufacturing organizations,
although the complexity of the chain may vary greatly from industry to industry and
firm to firm.

2. Below is an example of a very simple supply chain for a single product, where raw
material is procured from vendors, transformed into finished goods in a single step,
and then transported to distribution centers, and ultimately, customers. Realistic
supply chains have multiple end products with shared components, facilities and
capacities. The flow of materials is not always along an arborescent network, various
modes of transportation may be considered, and the bill of materials for the end items
may be both deep and large.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing
organizations along the supply chain operated independently. These organizations
have their own objectives and these are often conflicting. Marketing's objective of
high customer service and maximum sales dollars conflict with manufacturing and
distribution goals. Many manufacturing operations are designed to maximize
throughput and lower costs with little consideration for the impact on inventory levels
and distribution capabilities. Purchasing contracts are often negotiated with very little
information beyond historical buying patterns. The result of these factors is that there
is not a single, integrated plan for the organization---there were as many plans as
businesses. Clearly, there is a need for a mechanism through which these different
functions can be integrated together. Supply chain management is a strategy through
which such an integration can be achieved.
Supply chain management is typically viewed to lie between fully vertically
integrated firms, where the entire material flow is owned by a single firm, and those
where each channel member operates independently. Therefore coordination between
the various players in the chain is key in its effective management. Cooper and Ellram
[1993] compare supply chain management to a well-balanced and well-practiced relay
team. Such a team is more competitive when each player knows how to be positioned
for the hand-off. The relationships are the strongest between players who directly pass
the baton, but the entire team needs to make a coordinated effort to win the race.
Supply Chain Decisions
We classify the decisions for supply chain management into two broad categories --
strategic and operational. As the term implies, strategic decisions are made typically
over a longer time horizon. These are closely linked to the corporate strategy (they
sometimes {it are} the corporate strategy), and guide supply chain policies from a

3. design perspective. On the other hand, operational decisions are short term, and
focus on activities over a day-to-day basis. The effort in these type of decisions is to
effectively and efficiently manage the product flow in the "strategically" planned
supply chain.
There are four major decision areas in supply chain management: 1) location, 2)
production, 3) inventory, and 4) transportation (distribution), and there are both
strategic and operational elements in each of these decision areas.
Location Decisions
The geographic placement of production facilities, stocking points, and sourcing
points is the natural first step in creating a supply chain. The location of facilities
involves a commitment of resources to a long-term plan. Once the size, number, and
location of these are determined, so are the possible paths by which the product
flows through to the final customer. These decisions are of great significance to a
firm since they represent the basic strategy for accessing customer markets, and will
have a considerable impact on revenue, cost, and level of service. These decisions
should be determined by an optimization routine that considers production costs,
taxes, duties and duty drawback, tariffs, local content, distribution costs, production
limitations, etc. (See Arntzen, Brown, Harrison and Trafton [1995] for a thorough
discussion of these aspects.) Although location decisions are primarily strategic, they
also have implications on an operational level.
Production Decisions
The strategic decisions include what products to produce, and which plants to
produce them in, allocation of suppliers to plants, plants to DC's, and DC's to
customer markets. As before, these decisions have a big impact on the revenues,
costs and customer service levels of the firm. These decisions assume the existence
of the facilities, but determine the exact path(s) through which a product flows to
and from these facilities. Another critical issue is the capacity of the manufacturing
facilities--and this largely depends the degree of vertical integration within the firm.

4. Operational decisions focus on detailed production scheduling. These decisions
include the construction of the master production schedules, scheduling production
on machines, and equipment maintenance. Other considerations include workload
balancing, and quality control measures at a production facility.
Inventory Decisions
These refer to means by which inventories are managed. Inventories exist at every
stage of the supply chain as either raw materials, semi-finished or finished goods.
They can also be in-process between locations. Their primary purpose to buffer
against any uncertainty that might exist in the supply chain. Since holding of
inventories can cost anywhere between 20 to 40 percent of their value, their
efficient management is critical in supply chain operations. It is strategic in the sense
that top management sets goals. However, most researchers have approached the
management of inventory from an operational perspective. These include
deployment strategies (push versus pull), control policies --- the determination of the
optimal levels of order quantities and reorder points, and setting safety stock levels,
at each stocking location. These levels are critical, since they are primary
determinants of customer service levels.
Transportation Decisions
The mode choice aspect of these decisions are the more strategic ones. These are
closely linked to the inventory decisions, since the best choice of mode is often
found by trading-off the cost of using the particular mode of transport with the
indirect cost of inventory associated with that mode. While air shipments may be
fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile
shipping by sea or rail may be much cheaper, but they necessitate holding relatively
large amounts of inventory to buffer against the inherent uncertainty associated
with them. Therefore customer service levels, and geographic location play vital
roles in such decisions. Since transportation is more than 30 percent of the logistics
costs, operating efficiently makes good economic sense. Shipment sizes

5. (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of
equipment are key in effective management of the firm's transport strategy.
What is Supply Chain Management?
The concept of Supply Chain Management is based on two core ideas. The first is that practically every
product that reaches an end user represents the cumulative effort of multiple organizations. These
organizations are referred to collectively as the supply chain.
The second idea is that while supply chains have existed for a long time, most organizations have only
paid attention to what was happening within their “four walls.” Few businesses understood, much less
managed, the entire chain of activities that ultimately delivered products to the final customer. The result
was disjointed and often ineffective supply chains.
Supply chain management, then, is the active management of supply chain activities to maximize
customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the
supply chain firms to develop and run supply chains in the most effective & efficient ways possible.
Supply chain activities cover everything from product development, sourcing, production, and logistics, as
well as the information systems needed to coordinate these activities.
The organizations that make up the supply chain are “linked” together through physical flows and
information flows. Physical flows involve the transformation, movement, and storage of goods and
materials. They are the most visible piece of the supply chain. But just as important are information flows.
Information flows allow the various supply chain partners to coordinate their long-term plans, and to
control the day-to-day flow of goods and material up and down the supply chain.
Supply chain management (SCM) is the management of a network of
interconnected businessesinvolved in the provision of product and service packages required by the end
customers in a supply chain.
[2]
Supply chain management spans all movement and storage of raw
materials, work-in-process inventory, and finished goods from point of origin to point of consumption.
Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning,
execution, control, and monitoring of supply chain activities with the objective of creating net value,
building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand
and measuring performance globally."
SCM draws heavily from the areas of operations management, logistics, procurement, information
technology and strives for an integrated approach.

6. Contents
[hide]
1 Origin of the term and definitions
2 Problems addressed
3 Activities/functions
o 3.1 Strategic
o 3.2 Tactical level
o 3.3 Operational level
4 Importance
5 Historical developments
o 5.1 Creation era
o 5.2 Integration era
o 5.3 Globalization era
o 5.4 Specialization era (phase I): outsourced manufacturing and distribution
o 5.5 Specialization era (phase II): supply chain management as a service
o 5.6 Supply chain management 2.0 (SCM 2.0)
6 Business process integration
7 Theories
8 Supply chain centroids
9 Tax efficient supply chain management
10 Supply chain sustainability
11 Components
o 11.1 Management components
o 11.2 Reverse supply chain
12 Systems and value
13 Global applications
14 Certification
15 See also
16 References
17 Notes
18 External links
[edit]Origin of the term and definitions

7. The term "supply chain management" entered the public domain when Keith Oliver, a consultant at Booz
Allen Hamilton, used it in an interview for the Financial Times in 1982. The term was slow to take hold
and the lexicon was slow to change. It gained currency in the mid-1990s, when a flurry of articles and
books came out on the subject. In the late 1990s it rose to prominence as a management buzzword, and
operations managers began to use it in their titles with increasing regularity.
[3][4][5]
Common and accepted definitions of supply chain management are:
Managing upstream and down stream value added flow of materials, final goods and related
information among suppliers; company; resellers; final consumers is supply chain management.
Supply chain management is the systematic, strategic coordination of the traditional business
functions and the tactics across these business functions within a particular company and across
businesses within the supply chain, for the purposes of improving the long-term performance of the
individual companies and the supply chain as a whole (Mentzer et al., 2001).
[6]
A customer focused definition is given by Hines (2004:p76) "Supply chain strategies require a total
systems view of the linkages in the chain that work together efficiently to create customer satisfaction
at the end point of delivery to the consumer. As a consequence costs must be lowered throughout
the chain by driving out unnecessary costs and focusing attention on adding value. Throughput
efficiency must be increased, bottlenecks removed and performance measurement must focus on
total systems efficiency and equitable reward distribution to those in the supply chain adding value.
The supply chain system must be responsive to customer requirements."
[7]
Global supply chain forum - supply chain management is the integration of key business processes
across the supply chain for the purpose of creating value for customers and stakeholders (Lambert,
2008).
[8]
According to the Council of Supply Chain Management Professionals (CSCMP), supply chain
management encompasses the planning and management of all activities involved
in sourcing, procurement, conversion, and logistics management. It also includes the crucial
components of coordination and collaboration with channel partners, which can
besuppliers, intermediaries, third-party service providers, and customers. In essence, supply chain
management integrates supply and demand management within and across companies. More
recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product
and service offerings has been called the Extended Enterprise.
A supply chain, as opposed to supply chain management, is a set of organizations directly linked by one
or more of the upstream and downstream flows of products, services, finances, and information from a
source to a customer. Managing a supply chain is 'supply chain management' (Mentzer et al., 2001).
[6]
Supply chain management software includes tools or modules used to execute supply chain transactions,
manage supplier relationships and control associated business processes.
Supply chain event management (abbreviated as SCEM) is a consideration of all possible events and
factors that can disrupt a supply chain. With SCEM possible scenarios can be created and solutions
devised.

8. In many cases the supply chain includes the collection of goods after consumer use for recycling.
Including 3PL or other gathering agencies as part of the RM re-patriation process is a way of illustrating
the new end-game strategy.
[edit]Problems addressed
Supply chain management must address the following problems:
Distribution Network Configuration: number, location and network missions of suppliers,
production facilities, distribution centers, warehouses, cross-docks and customers.
Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery
scheme, e.g., direct shipment, pool point shipping, cross docking, direct store delivery (DSD), closed
loop shipping; mode of transportation, e.g., motor carrier, including truckload, Less than truckload
(LTL), parcel; railroad; intermodal transport, including trailer on flatcar (TOFC) and container on
flatcar (COFC); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and
transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or third-
party logistics (3PL)).
Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to
achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the
activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per
pallet basis than LTL shipments. If, however, a full truckload of a product is ordered to reduce
transportation costs, there will be an increase in inventory holding costs which may increase total
logistics costs. It is therefore imperative to take a systems approach when planning logistical
activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM
strategy.
Information: Integration of processes through the supply chain to share valuable information,
including demand signals, forecasts, inventory, transportation, potential collaboration, etc.
Inventory Management: Quantity and location of inventory, including raw materials, work-in-process
(WIP) and finished goods.
Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities
within the supply chain.
Supply chain execution means managing and coordinating the movement of materials, information and
funds across the supply chain. The flow is bi-directional.
[edit]Activities/functions
Supply chain management is a cross-function approach including in managing the movement of raw
materials into an organization, certain aspects of the internal processing of materials into finished goods,
and the movement of finished goods out of the organization and toward the end-consumer. As
organizations strive to focus on core competencies and becoming more flexible, they reduce their
ownership of raw materials sources and distribution channels. These functions are increasingly being
outsourced to other entities that can perform the activities better or more cost effectively. The effect is to
increase the number of organizations involved in satisfying customer demand, while reducing
management control of daily logistics operations. Less control and more supply chain partners led to the
creation of supply chain management concepts. The purpose of supply chain management is to improve

9. trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of
inventory movement.
Several models have been proposed for understanding the activities required to manage material
movements across organizational and functional boundaries. SCOR is a supply chain management
model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global
Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and
operational levels. The CSCMP has adopted The American Productivity & Quality Center (APQC)
Process Classification Framework
SM
a high-level, industry-neutral enterprise process model that allows
organizations to see their business processes from a cross-industry viewpoint.
[9]
[edit]Strategic
Strategic network optimization, including the number, location, and size of warehousing, distribution
centers, and facilities.
Strategic partnerships with suppliers, distributors, and customers, creating communication channels
for critical information and operational improvements such as cross docking, direct shipping,
and third-party logistics.
Product life cycle management, so that new and existing products can be optimally integrated into the
supply chain and capacity management activities.
Segmentation of products and customers to guide alignment of corporate objectives with
manufacturing and distribution strategy.
Information technology chain operations.
Where-to-make and make-buy decisions.
Aligning overall organizational strategy with supply strategy.
It is for long term and needs resource commitment.
[edit]Tactical level
Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, scheduling, and planning process definition.
Inventory decisions, including quantity, location, and quality of inventory.
Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and implementation of best practices throughout
the enterprise.
Milestone payments.
Focus on customer demand and Habits.
[edit]Operational level
Daily production and distribution planning, including all nodes in the supply chain.
Production scheduling for each manufacturing facility in the supply chain (minute by minute).
Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the
forecast with all suppliers.
Sourcing planning, including current inventory and forecast demand, in collaboration with all
suppliers.

10. Inbound operations, including transportation from suppliers and receiving inventory.
Production operations, including the consumption of materials and flow of finished goods.
Outbound operations, including all fulfillment activities, warehousing and transportation to customers.
Order promising, accounting for all constraints in the supply chain, including all suppliers,
manufacturing facilities, distribution centers, and other customers.
From production level to supply level accounting all transit damage cases & arrange to settlement at
customer level by maintaining company loss through insurance company.
Managing non-moving, short-dated inventory and avoiding more products to go short-dated.
[edit]Importance
Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in
the global market and networked economy.
[10]
In Peter Drucker's (1998) new management paradigms,
this concept of business relationships extends beyond traditional enterprise boundaries and seeks to
organize entire business processes throughout a value chain of multiple companies.
During the past decades, globalization, outsourcing and information technology have enabled many
organizations, such as Dell and Hewlett Packard, to successfully operate solid collaborative supply
networks in which each specialized business partner focuses on only a few key strategic activities (Scott,
1993). This inter-organizational supply network can be acknowledged as a new form of organization.
However, with the complicated interactions among the players, the network structure fits neither "market"
nor "hierarchy" categories (Powell, 1990). It is not clear what kind of performance impacts different supply
network structures could have on firms, and little is known about the coordination conditions and trade-
offs that may exist among the players. From a systems perspective, a complex network structure can be
decomposed into individual component firms (Zhang and Dilts, 2004). Traditionally, companies in a
supply network concentrate on the inputs and outputs of the processes, with little concern for the internal
management working of other individual players. Therefore, the choice of an internal management control
structure is known to impact local firm performance (Mintzberg, 1979).
In the 21st century, changes in the business environment have contributed to the development of supply
chain networks. First, as an outcome of globalization and the proliferation of multinational companies,
joint ventures, strategic alliances and business partnerships, significant success factors were identified,
complementing the earlier "Just-In-Time", Lean Manufacturing and Agile
manufacturing practices.
[11]
Second, technological changes, particularly the dramatic fall in information
communication costs, which are a significant component of transaction costs, have led to changes in
coordination among the members of the supply chain network (Coase, 1998).
Many researchers have recognized these kinds of supply network structures as a new organization form,
using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation", "Global Production
Network", and "Next Generation Manufacturing System".
[12]
In general, such a structure can be defined as
"a group of semi-independent organizations, each with their capabilities, which collaborate in ever-
changing constellations to serve one or more markets in order to achieve some business goal specific to
that collaboration" (Akkermans, 2001).
The security management system for supply chains is described in ISO/IEC 28000 and ISO/IEC 28001
and related standards published jointly by ISO and IEC

11. [edit]Historical developments
Six major movements can be observed in the evolution of supply chain management studies: Creation,
Integration, and Globalization (Movahedi et al., 2009), Specialization Phases One and Two, and SCM
2.0.
[edit]Creation era
The term supply chain management was first coined by Keith Oliver in 1982. However, the concept of a
supply chain in management was of great importance long before, in the early 20th century, especially
with the creation of the assembly line. The characteristics of this era of supply chain management include
the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and
widespread attention to the Japanese practice of management.
[edit]Integration era
This era of supply chain management studies was highlighted with the development of Electronic Data
Interchange (EDI) systems in the 1960s and developed through the 1990s by the introduction of
Enterprise Resource Planning (ERP) systems. This era has continued to develop into the 21st century
with the expansion of internet-based collaborative systems. This era of supply chain evolution is
characterized by both increasing value-adding and cost reductions through integration.
In fact a supply chain can be classified as a Stage 1, 2 or 3 network. In stage 1 type supply chain, various
systems such as Make, Storage, Distribution, Material control, etc. are not linked and are independent of
each other. In a stage 2 supply chain, these are integrated under one plan and is ERP enabled. A stage 3
supply chain is one in which vertical integration with the suppliers in upstream direction and customers in
downstream direction is achieved. An example of this kind of supply chain is Tesco.
[edit]Globalization era
The third movement of supply chain management development, the globalization era, can be
characterized by the attention given to global systems of supplier relationships and the expansion of
supply chains over national boundaries and into other continents. Although the use of global sources in
the supply chain of organizations can be traced back several decades (e.g., in the oil industry), it was not
until the late 1980s that a considerable number of organizations started to integrate global sources into
their core business. This era is characterized by the globalization of supply chain management in
organizations with the goal of increasing their competitive advantage, value-adding, and reducing costs
through global sourcing.However it was not until the late 1980s that a considerable number of
organizations started to integrate global sources into their core business.
[edit]Specialization era (phase I): outsourced manufacturing and distribution
In the 1990s, industries began to focus on “core competencies” and adopted a specialization model.
Companies abandoned vertical integration, sold off non-core operations, and outsourced those functions
to other companies. This changed management requirements by extending the supply chain well beyond
company walls and distributing management across specialized supply chain partnerships.
This transition also re-focused the fundamental perspectives of each respective organization. OEMs
became brand owners that needed deep visibility into their supply base. They had to control the entire
supply chain from above instead of from within. Contract manufacturers had to manage bills of material

12. with different part numbering schemes from multiple OEMs and support customer requests for work -in-
process visibility and vendor-managed inventory (VMI).
The specialization model creates manufacturing and distribution networks composed of multiple,
individual supply chains specific to products, suppliers, and customers who work together to design,
manufacture, distribute, market, sell, and service a product. The set of partners may change according to
a given market, region, or channel, resulting in a proliferation of trading partner environments, each with
its own unique characteristics and demands.
[edit]Specialization era (phase II): supply chain management as a service
Specialization within the supply chain began in the 1980s with the inception of transportation brokerages,
warehouse management, and non-asset-based carriers and has matured beyond transportation and
logistics into aspects of supply planning, collaboration, execution and performance management.
At any given moment, market forces could demand changes from suppliers, logistics providers, locations
and customers, and from any number of these specialized participants as components of supply chain
networks. This variability has significant effects on the supply chain infrastructure, from the foundation
layers of establishing and managing the electronic communication between the trading partners to more
complex requirements including the configuration of the processes and work flows that are essential to
the management of the network itself.
Supply chain specialization enables companies to improve their overall competencies in the same way
that outsourced manufacturing and distribution has done; it allows them to focus on their core
competencies and assemble networks of specific, best-in-class partners to contribute to the overall value
chain itself, thereby increasing overall performance and efficiency. The ability to quickly obtain and deploy
this domain-specific supply chain expertise without developing and maintaining an entirely unique and
complex competency in house is the leading reason why supply chain specialization is gaining popularity.
Outsourced technology hosting for supply chain solutions debuted in the late 1990s and has taken root
primarily in transportation and collaboration categories. This has progressed from the Application Service
Provider (ASP) model from approximately 1998 through 2003 to the On-Demand model from
approximately 2003-2006 to the Software as a Service (SaaS) model currently in focus today.
[edit]Supply chain management 2.0 (SCM 2.0)
Building on globalization and specialization, the term SCM 2.0 has been coined to describe both the
changes within the supply chain itself as well as the evolution of the processes, methods and tools that
manage it in this new "era". The growing popularity of collaborative platforms is highlighted by the rise
of TradeCard’s supply chain collaboration platform which connects multiple buyers and suppliers with
financial institutions, enabling them to conduct automated supply chain finance transactions.
[13]
Web 2.0 is defined as a trend in the use of the World Wide Web that is meant to increase creativity,
information sharing, and collaboration among users. At its core, the common attribute that Web 2.0 brings
is to help navigate the vast amount of information available on the Web in order to find what is being
sought. It is the notion of a usable pathway. SCM 2.0 follows this notion into supply chain operations. It is
the pathway to SCM results, a combination of the processes, methodologies, tools and delivery options to
guide companies to their results quickly as the complexity and speed of the supply chain increase due to
the effects of global competition, rapid price fluctuations, surging oil prices, short product life cycles,
expanded specialization, near-/far- and off-shoring, and talent scarcity.

13. SCM 2.0 leverages proven solutions designed to rapidly deliver results with the agility to quickly manage
future change for continuous flexibility, value and success. This is delivered through competency
networks composed of best-of-breed supply chain domain expertise to understand which elements, both
operationally and organizationally, are the critical few that deliver the results as well as through intimate
understanding of how to manage these elements to achieve desired results. Finally, the solutions are
delivered in a variety of options, such as no-touch via business process outsourcing, mid-touch via
managed services and software as a service (SaaS), or high touch in the traditional software deployment
model.
WhatAre theAdvantages & Disadvantages for a
Supply Chain Management Buyer?
By Allison Dodge, eHow Contributor
Print this article
Supply chain management buyers obtain production supplies.
Manufacturing, production and assembly companies often employ a supply chain
management buyer. This person is responsible for purchasing supplies and goods the
company needs to produce products. According to the U.S. Bureau of Labor Statistics,
more than 500,000 people were employed in this position in the United States and earning
an average salary of about $89,000 as of 2008. Using a supply chain management buyer
in your organization can have advantages and disadvantages.

14. Other People Are Reading
The Disadvantages of Global Supply Chain Management
What Is Supply Chain Management & What Are the Advantages of Using It?
1. Cost
o Companies must pay salary and benefits for an employee serving as the supply chain
management buyer. This can be a disadvantage for a company because it has the potential
to reduce profits by increasing personnel costs.
Productivity
o A supply chain management buyer has the potential to increase productivity within an
organization. By doing his job well, the buyer ensures that production or manufacturing
never slows down or comes to a halt because the company is out of supplies to make its
products. In addition, an organization can increase its productivity by employing a supply
chain management buyer because management staff and executives who had handled
purchasing duties can focus on making the company more profitable.
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Supplies
o Supply chain management buyers who are skilled at their job may provide their company
with better supplies to make products, or they may be able to reduce the price the company
pays for those supplies. The buyer can negotiate lower costs, bulk purchases or upgrades in
supplies, all of which benefit the company that employs him.
Unskilled Buyer
o Employing an unskilled or inexperienced supply chain management buyer can be a
disadvantage to a company. She has the potential to wreak havoc on the productivity and
profits of the company if she is incapable of ordering supplies in a timely manner within a
budgeted amount. This is why it's important for companies to take time to interview and
select the right buyer for their organization.
Introduction
If your company makes a product from parts purchased from suppliers, and those products are sold to customers,
then you have a supply chain. Some supply chains are simple, while others are rather complicated. The complexity of
the supply chain will vary with the size of the business and the intricacy and numbers of items that are manufactured.
SCM is the acronym for the term “Supply Chain Management”.
Supply Chain Management is the management of a network of interconnected businesses involved in the ultimate
provision of product and service packages required by end customers (Harland, 1996). Supply

15. Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods
from point of origin to point of consumption (supply chain).
What is Supply Chain Management ?
Supply chain management (SCM) is a process used by companies to ensure that their supply chain is efficient and
cost-effective. A supply chain is the collection of steps that a company takes to transform raw components into the
final product. The following are five basic components of SCM.
1. Plan
2. Develop (Source)
3. Make
4. Deliver
5. Return.
Plan
The first stage in supply chain management is known as plan. A plan or strategy must be developed to address how
a given good or service will meet the needs of the customers. A significant portion of the strategy should focus on
planning a profitable supply chain.
This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward
meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to
monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.
Develop (Source)
Develop is the next stage in supply chain management .It involves building a strong relationship with suppliers of the
raw materials needed in making the product the company delivers. This phase involves not only identifying reliable
suppliers but also planning methods for shipping, delivery, and payment.
Companies must choose suppliers to deliver the goods and services they need to create their product. Therefore,
supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create
metrics for monitoring and improving the relationships. And then, SCM managers can put together processes for
managing their goods and services inventory, including receiving and verifying shipments, transferring them to the
manufacturing facilities and authorizing supplier payments.
Make
At the third stage, make, the product is manufactured, tested, packaged, and scheduled for delivery. This is the
manufacturing step. Supply chain managers schedule the activities necessary for production, testing, packaging and
preparation for delivery. This is the most metric-intensive portion of the supply chain - one where companies are able
to measure quality levels, production output and worker productivity.
Deliver
Then, at the logistics phase, customer orders are received and delivery of the goods is planned. This fourth stage of
supply chain management stage is aptly named deliver.
This is the part that many SCM insiders refer to as logistics, where companies coordinate the receipt of orders from
customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing
system to receive payments.
Return
The final stage of supply chain management is called return. As the name suggests, during this stage, customers
may return defective products. The company will also address customer questions in this stage.
This can be a problematic part of the supply chain for many companies. Supply chain planners have to create a
responsive and flexible network for receiving defective and excess products back from their customers and
supporting customers who have problems with delivered products.
To ensure that the supply chain is operating as efficient as possible and generating the highest level of customer
satisfaction at the lowest cost, companies have adopted Supply Chain Management processes and associated
technology. Supply ChainManagement has three levels of activities that different parts of the company will focus on:
strategic; tactical; and operational.

16. Strategic
At this level, company management will be looking to high level strategic decisions concerning the whole
organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be
manufactured and sales markets.
Strategic activities include building relationships with suppliers and customers, and integrating information technology
(IT) within the supply chain.
Tactical
Tactical decisions focus on adopting measures that will produce cost benefits such as using industry best practices,
developing a purchasing strategy with favored suppliers, working with logistics companies to develop cost effect
transportation and developing warehouse strategies to reduce the cost of storing inventory.
Studying competitors and making decisions regarding production and delivery would fall under the tactical category.
Operational
Decisions at this level are made each day in businesses that affect how the products move along the supply chain.
Operational decisions involve making schedule changes to production, purchasing agreements with suppliers, taking
orders from customers and moving products in the warehouse.
The operational category includes the daily management of the supply chain, including the making of production
schedules.
What does supply chain management software do?
Supply chain management software is possibly the most fractured group of software applications on the planet. Each
of the five major supply chain steps previously outlined is comprised of dozens of specific tasks, many of which have
their own specific software.
Some vendors have assembled many of these different chunks of software together under a single roof, but no one
has a complete package that is right for every company.
It's worth mentioning that the old adage about systems only being as good as the information that they contain
applies doubly to SCM. If the information entered into a demand forecasting application is not accurate, then you will
get an inaccurate forecast. Similarly, if employees bypass the supply chain systems and try to manage things
manually (using the fax machine or spreadsheets), then even the most expensive systems will provide an incomplete
picture of what is happening in a company's supply chain.
What is the relationship between ERP, CRM and SCM?
Many SCM applications are reliant upon the kind of information that is stored inside enterprise resource
planning (ERP) software and, in some cases, to some customer relationship management (CRM) packages.
Theoretically a company could assemble the information it needs to feed the SCM applications from legacy systems
(for most companies this means Excel spreadsheets spread out all over the place), but it can be nightmarish to try to
get that information flowing on a fast, reliable basis from all the areas of the company.
ERP is the battering ram that integrates all that information in a single application, and SCM applications benefit from
having a single major source to go to for up-to-date information.
Most CIOs who have tried to install SCM applications say they are glad they did ERP first. They call the ERP projects
"putting your information house in order." Of course, ERP is expensive and difficult, so you may want to explore ways
to feed your SCM applications the information they need without doing ERP first.
These days, most ERP vendors have SCM modules, so doing an ERP project may be a way to kill two birds with one
stone. In addition, the rise and importance of CRM systems inside companies today puts even more pressure on a
company to integrate all of its enterprisewide software packages. Companies will need to decide if these products
meet their needs or if they need a more specialized system.
Applications that simply automate the logistics aspects of SCM are less dependent upon gathering information from
around the company, so they tend to be independent of the ERP decision. But chances are, companies will need to
have these applications communicate with ERP in some fashion.

17. It's important to pay attention to the software's ability to integrate with the Internet and with ERP applications because
the Internet will drive demand for integrated information. For example, if a company wants to build a private website
for communicating with their customers and suppliers, the company will want to pull information from ERP and supply
chain applications together to present updated information about orders, payments, manufacturing status and
delivery.
What is the goal of installing supply chain management software?
Before the Internet came along, the aspirations of supply chain software devotees were limited to improving their
ability to predict demand from customers and make their own supply chains run more smoothly. But the cheap,
ubiquitous nature of the Internet, along with its simple, universally accepted communication standards, have thrown
things wide open.
Now, companies can connect their supply chain with the supply chains of their suppliers and customers together in a
single vast network that optimizes costs and opportunities for everyone involved. This was the reason for the B2B
explosion; the idea that everyone a company does business with could be connected together into one big happy,
cooperative family.
Of course, reality isn't quite that happy and cooperative. But today most companies share at least some data with
their supply chain partners. The goal of these projects is greater supply chain visibility. The supply chain in most
industries is like a big card game: the players don't want to show their cards because they don't trust anyone else
with the information, but if they showed their hands they could all benefit.
Suppliers wouldn't have to guess how many raw materials to order, and manufacturers wouldn't have to order more
than they need from suppliers to make sure they have enough on hand if demand for their products unexpectedly
increases. And retailers would have fewer empty shelves if they shared the information they had about sales of a
manufacturer's product in all their stores with the manufacturer.
The Internet makes showing your hand to others possible, but centuries of distrust and lack of coordination within
industries make it difficult.
The payoff of timely and accurate supply chain information is the ability to make or ship only as much of a product as
there is a market for. This is the practice known as just-in-time manufacturing, and it allows companies to reduce the
amount of inventory that they keep. This can cut costs substantially, since you no longer need to pay to produce and
store excess goods. But many companies and their supply chain partners have a long way to go before that level of
supply chain flexibility can be achieved.
Key Features of Supply Chain Management
Supply chain softwares are robust, feature-rich technology softwares that enhance operations from end-to-end.
Today’s popular supply chain softwares can help companies achieve and maintain a competitive edge by
empowering them to streamline and enhance their most important supply chain operations from start to finish. With
supply chain software in place, organizations can maximize cost-efficiency, increase productivity, and give their
bottom line a big boost.
This functionality is designed to fully automate and support supply chain processes from end-to-end, and includes:
Inventory Management
With a supply chain package, companies can significantly improve the way they track and manage their supplies of
raw materials and components needed for production, finished goods to satisfy open sales orders, and spare parts
required for field service and support. This eliminates excess and waste, frees up valuable real estate for other
important purposes, and minimizes related storage costs.
Order Management
Supply chain software can dramatically accelerate the execution of the entire order-to-delivery cycle by helping
companies to more productively generate and track sales orders. Supply chain also enables the dynamic scheduling
of supplier deliveries to more effectively meet demand, and more rapid creation of pricing and product configurations.
Procurement
All activities and tasks associated with sourcing, purchasing, and payables can be fully automated and streamlined
across a company’s entire supplier network with a supply chain software package. As a result, businesses can build

18. stronger relationships with vendors, better assess and manage their performance, and improve negotiations to
leverage volume or bulk discounts and other cost-cutting measures.
Logistics
As companies expand globally, their supply chains become more and more complex. This makes the coordination of
the numerous warehouses and transportation channels involved quite a challenging endeavor without supply chain
software in place. With supply chain, businesses can improve on-time delivery performance and boost customer
satisfaction by achieving complete visibility into how finished goods are stored and distributed, regardless of the
number of facilities or partners that participate.
Forecasting and Planning
With supply chain software, organizations can more accurately anticipate customer demand, and plan their
procurement and production processes accordingly. As a result, they can avoid unnecessary purchases of raw-
materials, eliminate manufacturing over-runs, and prevent the need to store excess finished goods, or slash prices to
move products off of warehouse shelves.
Return Management
Supply chain software can simplify and accelerate the inspection and handling of defective or broken goods - on both
the buy and sell side of the business - and automate the processing of claims with suppliers and distributors, as well
as insurance companies.
Many supply chain offerings also include add-on options or modules designed to enhance related activities. Through
these features, support is provided for a variety of important processes such as contract management, product
lifecycle management, capital asset management ,and more.
Advantages of SCM
Supply chain software provides numerous advantages to organizations, empowering them to improve operations
from end-to-end.
Key Benefits of Supply Chain Management Software:
Improve Your Supply Chain Network
Minimized Delays
Enhanced Collaboration
Reduced Costs.
Disadvantages of SCM
The biggest disadvantage of global supply chain management is the heavy investment of time, money, and resources
needed to implement and overlook the supply chain