ABOUT SUPPLY CHAIN MANAGEMENT

1. By -
Girish G.
Assistant Professor of Commerce,
Govt. Arts College,
Thiruvananthapuram.

2. 1.1 Supply Chain
 All stages involved, directly or indirectly in fulfilling a
customer request.
 Includes manufacturers, suppliers, transporters,
warehouses, retailers and customers.
 Integrates demand and supply.
 Within each company, the supply chain includes all
functions involved in fulfilling a customer’s request.
 The functions of supply chain include- product
development, marketing, operations, distribution, finance
and customer service.

3. 1.2 Supply Chain Management
 Introduction-
 Since the beginning of the 1990s, there has been a paradigm
shift in the business scenario, mainly due to the liberalisation
policy of various economies all over the world, and revolutionary
innovations in the field of science and technology.
 Information technology and communication infrastructure has
resulted into a continuous acceleration in the magnitude of
competition.
 This scenario has changed the entire spectrum of business as
well as the way in which it is managed.
 To sustain themselves in such an erratic environment where too
many products are chasing too few customers and demand is a
problem and not supply, firms need to meet customer demand
on real time basis.

4.  For this purpose, they need to have more systematised and
integrated activities related to movement and storage of
goods for making products available at a short notice with
the lower inventory level.
 The fight for market dominance is no longer a battle
between rival firms.
 The new competition is in between supply chain
configuration of various competing firms.
 To sustain their competitive strengths and advantages,
offering the best quality product at a reasonably least price
as and when required is the need which has given
importance to as the concept of Supply Chain Management.

5. Nature and concepts of supply chain
management
 The phase from 1990s onward is recognised as the era
of Supply Chain Management which has been defined
by the Global Supply Chain Forum of 1994 as ‘the
integration of key business processes from the end
user through original suppliers that provides products,
services and information that add value for customers.

6.  Definitions-
 ‘A supply chain is the network of organisations that are involved
through upstream and downstream linkages, in the different
processes and activities that produce value in the form of
products and services in the hands of ultimate consumers.’
-Christopher (1992)
 ‘The systematic, strategic coordination of the traditional business
functions within a particular company and across businesses
within the supply chain, for the purpose of improving the long
term performance of the individual companies and the supply
chain as a whole.’
-The Supply Chain Research Group at the University of Tennessee
(Mentzer, 2000)

7. Features of Supply Chain
Management
a. Superior Customer Value-
 The ultimate objective of Supply Chain Management is
to fulfil customers’ requirements in cost efficient
manner as well as a better way than the rivals.
b. Single Entity-
 Supply Chain Management is about inter and intra firm
process integration that requires a variety of planning
and control mechanism across the supply chain. For
this purpose Supply Chain Management is always
viewed as a single entity.

8. c. Inventory Perspective-
 In Supply Chain Management inventory is viewed in the
perspective of speedy flow and a buffer to be used as a
last resort after ensuring proper information sharing and
coordination.
 Improving flexibility, reducing replenishment cycle time,
reducing uncertainties without keeping safety stocks,
enhancing market responsiveness capability and improving
quality are some of the key perspectives of inventory in the
era of Supply Chain Management.

9. d. Strategic Orientation-
 The orientation of decision in the supply chain is view
strategically rather than viewing it as operational.
 Eg. Rather than being concerned with just sourcing trucks
from the market, one could consider long term contracts with
transporters.
e. Flexible Approach-
 Today’s supply chains are designed for flexibility in all the
processes of firm’s system, starting from procurement to
manufacturing to warehousing to delivery, which plays a very
important part in improving the customer service.

10. 1.3 Contemporary Issues in Supply Chain
Management
 Globalisation of the world economy with diversity in
complexities of environmental factors influence a firm’s
strategies and approach.
 Firms are experiencing different sets of issues and
challenges in the marketplace.
 Understanding and managing the greater complexity and
risks inherent in the global environment requires different
approaches towards supply chain integration, strategies
and structure.

11.  To sustain growth, long term performance and gain and
leverage differential advantage, various issues and
challenges before Supply Chain Management that needs to
be sorted out are as follows:
a. Minimising Uncertainty-
 Supply uncertainty due to unreliability of vendors; process
uncertainty due to internal processes; and demand
uncertainty due to rapid changes in taste and preferences of
consumers are some of the major hurdles to be crossed for
effective Supply Chain Management.

12. b. Reducing Replenishment Cycle Time-
 The focus of supply chain is largely towards reduction of
replenishment cycle time of all kinds of goods at the
stages of procurement, conversion, and distribution by
faster modes of transport, better planning practices, and
process technologies.
 A replenishment time is time incurred in the completion
of series of events that manage the three key flows in
the replenishment process: order flow, product flow and
cash flow.

13. c. Minimising the Number of Linkages or Stages in the
Network-
 While making products available on real time basis, there
is a complex network of processes and firms getting
involved for goods and services flow.
 Reducing the number of stages for unification of tasks,
avoidance of duplication of activities and processes, and
better coordination, and successful implementation of
decisions is another critical challenge before Supply Chain
Management.

14. d. Improving Flexibility-
 In the dynamic market scenario, Supply Chain
Management is expected to be flexible for responding to
quickly changing demand pattern on real time basis in
cost efficient manner.
 Flexible Supply Chain Management reduces set up or
changeover times in various processes and make
manufacturing, assembly, and distribution systems that in
turn enhance the flexibility of response which is very
much required for the time being.

15. e. Improving Process Quality-
 Another important issue before Supply Chain Management is
to have zero defect delivery of goods and services.
 With increasing awareness about quest for quality and
perfection and decreasing tolerance level among consumers,
effective Supply Chain Management is to do things right the
first time itself.
f. Enhancing Demand Fulfilment Capability-
 In competitive global market scenario, where products lack
differentiation, most of the firms are using sales and trade
promotions very frequently to sustain in the competitive
marketplace.
 Supply Chain Management is required to perform under
demand uncertainty and deal with the challenges imposed by
promotion and branding.

16. g. Minimising Variety and Delaying Differentiation-
 Increasing stock keeping units (SKUs) in terms of new
variants and pack sizes is one of the major causes for
complicating inventory management in the downstream
part of the supply chains.
 One response is to modularise product designs so that
variety is offered in a controlled way and some economies
of scale can be exploited.
 Value addition through product differentiation should be
postponed as far as possible, so that precise customer
needs can be met without holding committed stocks in the
entire chain.

17. 1.4 Web-enabled Supply Chain
Management
 With the emergence of the internet, customers seek out specific
products they want at the prices affordable.
 Modern supply chain focus on the customer.
 Manufacturers need to precisely gauge what a customer want,
how to pack it and where to ship.
 The internet supply chain is a means of communicating and
doing business with suppliers and customers.
 Web-enabled supply chains assist companies to optimise
business processes both within and outside the four walls of the
enterprise and to more efficiently deliver the new products
customers want, when they want them and where they want
them.

18. Importance of Web-enabled Supply Chain
Management
 The internet has transformed old-fashioned process of
inventory forecasting, rigid manufacturing plans and
hypothetical shipping schedules into something closer to
an exact science.
 Web-enabled supply chain helps companies:
a. Avoid costly disasters
b. Reduce administrative overhead
c. Reduce unnecessary inventory (thereby increasing
working capital)
d. Decrease the number of hands that touch goods on their
way to the end customer

19. e. Eliminate obsolete business processes
f. Reap cost-cutting and revenue-producing benefits
g. Speed up production and responsiveness to
consumers
h. Garner higher profit margins on finished goods.
 Effective integration of an organisation’s supply chain
can save millions, improve customer service and
reduce inventories.
 The key to getting optimum value out of automating
supply chain is to make sure that a business is having
a good internal system before extending it to the
internet.

20. 1.5 Supply Chain Planning
 Supply chain planning is the component of Supply Chain
Management.
 It is involved with predicting future requirements to balance supply
and demand.
 Supply Chain Management is broken down into the stages of
planning, execution and shipping.
 Supply chain planning and supply chain execution are the two
categories of Supply Chain Management software.
 Supply Chain Management products may include supply chain
modelling, and design, distribution and supply network planning.
 Supply chain execution software applications track the physical
status of goods, the management of materials and financial
information involving all parties.

21. 2. e-procurement
 Introduction-
 Electronic procurement also known as supplier exchange is
the business-to-business (B2B) or business-to-consumer
(B2C) or business-to-government (B2G) purchase and sale of
supplies, work and services through internet as well as other
information and networking systems, such as electronic data
interchange and enterprise resource planning.

22. Meaning of e-procurement
 The e-procurement value chain consists of indent management, e-
tendering, e-auctioning, vendor management, catalogue
management, Purchase Order Integration, Order Status, Ship
Notice, e-invoicing, e-payment and contract management.
 Indent management- Indent management is the workflow involved in
the preparation of tenders.
 Elements of e-procurement include-
a. Request for information
b. Request for proposal
c. Request for quotation
d. RFx (the combination of former three)
e. eRFx (software for managing RFx projects).

23. Applications of e-procurement
 Public sector organisations use e-procurement for contracts to
achieve benefits such as increased efficiency and cost savings
in government procurement and improved transparency in
procurement services.
 E-procurement in pubic sector is emerging internationally.
 Initiatives have been undertaken in Singapore, UK, USA,
Malaysia, Australia, EU and Kazakhstan.
 E-procurement projects are part of a country’s larger e-
governance efforts aimed at better service to citizens and
businesses in the realm of digital economy.
 Eg. Singapore’s GeBIZ was implemented as one of the
programmes under its e-government masterplan.

24. Benefits of E-procurement
1. Enables indent management
2. Helps e-procurement and e-auctioning
3. Purchase order integration made easy
4. e-payment made easy
5. Ensure speed in purchasing and
6. Ensure transparency in purchasing.

25. 3. Knowledge Repository
 Meaning-
 A knowledge repository is a computerised system that
systematically captures, organises and categorises an
organisation’s knowledge.
 A knowledge repository can be searched and quickly
retrieved.

26.  A knowledge repository can take many forms to contain the
knowledge. For instance-
1. A customer database is a knowledge repository of
customer information and insights or electronic explicit
knowledge.
2. A library is a knowledge repository of books.
3. A panel of experts is a knowledge repository of tacit
knowledge or experience.
 The nature of repository changes to contain type of
knowledge it is envisaged to hold.
 A repository is designed to get the knowledge that it holds.

27.  A repository is required to have some rules of structure,
classification, taxonomy, record management etc to facilitate
user engagement.
 Dynamic Knowledge Repository-
 Doug Engelbart defined that a true exemplary Dynamic
Knowledge Repository emerges and evolves as a result of
best practice and conventions for working collectively,
supported by enabling tools designed to facilitate the
collective work in a way that optimise the capture,
organisation and enhanced utility of the repository.

28. Key Features of Knowledge
Repository
 Centralisation-
 A wide variety of digital courseware and content gathered and
treated from multiple sources can be stored in a central location
where it can be tagged, shared and commented in a global
manner within one consistent interface.
 Content management-
 The richness of learning content can be enhanced by including
audio-visual files, simulations, data learning modules, articles,
blogs, You Tube video etc.
 The content can be searched by key words, learning outcomes
and other mediums.

29.  Savings in cost-
 Repositories can reduce cost of training and education by
making affordable course materials accessible, reducing the
need for classroom training and stimulating productive informal
learning.
 Access control-
 The access to repository can be regulated by password
authentication and other security features.
 Access control involves safeguarding proprietary information
and intellectual property.
 Some repositories employ Digital Rights Management (DRM) to
protect and monetise intellectual property in the market.

30.  Record Management-
 Repositories can be integrated with learning management
system.
 The integration of repositories enable to blend seamlessly
with learning and talent management programs.

31. 4. Data Mining
 Definition-
 Data mining is defined as extracting the information from a
huge set of data.
 In other words, data mining can be defined as the mining of
knowledge from data.
 Utilities of Data Mining-
 Market analysis
 Detection of frauds
 Customer retention and
 Production control

32. Data Mining Engine
 Data mining engine is the key to data mining system.
 It contains functional modules.
 The functional modules are meant for the following tasks:
 Characterisation
 Association and correlation analysis
 Classification
 Prediction
 Cluster analysis (The classification of objects into different
groups)
 Outlier analysis (A value in a statistical sample which does not fit
a pattern that describes most other data points) and
 Evolution analysis

33. Features of Data Mining
a. Knowledge Base-
 Data mining provides a knowledge base.
 The knowledge so retrieved can be used to guide search
or evaluate interests evolving from resulting patterns.
b. Knowledge Discovery-
 People vary in the opinion as to the role played by data
mining. Some believe data mining is synonym of
knowledge discovery while some others consider it as the
step to the discovery of knowledge.

34.  Steps involved in knowledge discovery process:
1. Data cleaning- Involves removing noise and inconsistent data.
2. Data integration- In this step multiple data sources are
combined.
3. Data selection- This step involves retrieval of relevant data.
4. Data transformation- The step is concerned with transformation
or consolidation of data into forms appropriate for mining by
performing summary or aggregation operations.
5. Data mining- This step is aimed at application of intelligent
methods to extract data patterns.
6. Pattern evaluation- In this step data patterns are evaluated.
7. Knowledge presentation- In the last step, the knowledge
derived is presented.

35. 5. Social Media Platform
 Social media-
 Social media are computer enabled interactive
technologies that facilitate the creation and sharing of
information, ideas, career interests and other forms of
expressions via virtual communication and networks.
 Social media in a broader sense are interactive internet
based applications.

36. Applications of Social Media
a. User generated content such as text posts or
comments, digital photos or videos and data
generated through all online interactions can be
effectively shared using the social media platform.
b. Users can create service-specific profiles for the
website or application that are designed and
maintained by the social media organisations.
c. Social media can be used to facilitate the development
of online social networks by connecting a user’s profile
with those of other individuals or groups.

37. Reference
 Agarwal., D.K. Supply Chain Management-Strategy,
Cases and Best Practices. Cengage Learning India
Pvt. Ltd., Delhi (2017).