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					INTRODUCTION OF SUPPLY CHAIN MANAGEMENT (SCM)
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. 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 (stick), but the entire team needs to make a coordinated effort to win the race. 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.

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To simplify the concept, supply chain management can be defined as a loop: it starts with the customer and ends with the customer. All materials, finished products, information, and even all transactions flow through the loop. However, supply chain management can be a very difficult task because in the reality, the supply chain is a complex and dynamic network of facilities and organizations with different, conflicting objectives. 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. Unlike commercial manufacturing supplies, services such as clinical supplies planning are very dynamic and can often have last minute changes. Availability of patient kit when patient arrives at investigator site is very important for clinical trial success. This results in overproduction of drug products to take care of last minute change in demand. R&D manufacturing is very expensive and overproduction of patient kits adds significant cost to the total cost of clinical trials. An integrated supply chain can reduce the overproduction of drug products by efficient demand management, planning, and inventory management. 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 integration can be achieved.

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IMPLICATIONS OF SCM ON LOGISTIC MANAGEMENT
The challenge of integrating and coordinating the flow of materials from multitude of suppliers, including offshore, and similarly managing the distribution of the finished product by way of multiple intermediaries. Achieving cost reduction or profit improvement at the expense of their supply chain partners does not make companies more competitive. Transferring cost upstream or downstream leads to “logistics myopia” as all costs ultimately will make way to the final market place to be reflected in the price paid by the end user. Therefore, the leading edge companies seek to make the supply chain as a hole more competitive through the value it adds and the cost it reduces overall. Thus today the real competition is not the companies against the companies but rather supply chain against supply chain.

DEFINITIONS
Supply Chain Management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. 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. According to the Council of Supply Chain Management Professionals (CSCMP), a professional association that developed a definition in 2004, Supply Chain Management “encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities”. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.

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According to Cohen & Lee (1988) Supply Chain Management is “The network of organizations that are having linkages, both upstream and downstream, in different processes and activities that produces and delivers the value in form of products and services in the hands of ultimate consumer.” Thus a shirt manufacturer is a part of supply chain that extends up stream through the weaves of fabrics to the spinners and the manufacturers of fibers, and down stream through distributions and retailers to the final consumer. Though each of these organizations are dependent on each other yet traditionally do not closely cooperate with each other. An integrated supply chain management streamlines processes and increases profitability by delivering the right product to the right place, at the right time, and at the lowest possible cost. According to Ganeshan & Harrison (2001) Supply Chain Management is a “systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer.” Supply chain event management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned. Some experts distinguish supply chain management and logistics management, while others consider the terms to be interchangeable. From the point of view of an enterprise, the scope of supply chain management is usually bounded on the supply side by your supplier's suppliers and on the customer side by your customer's customers. Supply chain management is also a category of software products.

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DIFFERENCE BETWEEN LOGISTICS MANAGEMENT AND SCM
Logistics Management Logistics management is primarily concerned with optimizing flows within the organization. Supply Chain Management Supply Chain Management deals with integration of all the partners in the value chain.

Logistics is essentially a framework that creates a single plan for the flow of products and information through a business

Supply chain builds upon this framework and seeks to achieve linkage and coordination between process of other entities in the pipeline i.e. suppliers and costumers, and the organization it self.

COMPONENTS OF SUPPLY CHAIN MANAGEMENT
The following are the five basic components of Supply Chain Management: 1. Plan:This is the strategic portion of SCM. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of 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. 2. Source:Choose the suppliers that will deliver the goods and services you need to create your product. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments.
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3. Make:This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity. 4. Deliver:This is the part that many insiders refer to as logistics. 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. 5. Return:The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

OBJECTIVES/NEED FOR SCM
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 integration can be achieved.

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Moreover, shortened product life cycles, increased competition, and heightened expectations of customers have forced many leading edge companies to move from physical logistic management towards more advanced supply chain management. Additionally, in recent years it has become clear that many companies have reduced their manufacturing costs as much as it is practically possible. Therefore, in many cases, the only possible way to further reduce costs and lead times is with effective supply chain management. In addition to cost reduction, the supply chain management approach also facilitates customer service improvements. It enables the management of:  inventories,  transportation systems and  whole distribution networks so that organizations are able to meet or even exceed their customers' expectations. The major objective of supply chain management is to reduce or eliminate the buffers of inventory that exists between originations in chain through the sharing of information on demand and current stock levels. Broadly, an organization needs an efficient and proper supply chain management system so that the following strategic and competitive areas can be used to their full advantage if a supply chain management system is properly implemented. 1. Fulfillment of raw materials: Ensuring the right quantity of parts for production or products for sale arrive at the right time. This is enabled through efficient communication, ensuring that orders are placed with the appropriate amount of time available to be filled. The supply chain management system also allows a company to constantly see what is on stock and making sure that the right quantities are ordered to replace stock.

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2. Logistics: The cost of transporting materials as low as possible consistent with safe and reliable delivery. Here the supply chain management system enables a company to have constant contact with its distribution team, which could consist of trucks, trains, or any other mode of transportation. The system can allow the company to track where the required materials are at all times. As well, it may be cost effective to share transportation costs with a partner company if shipments are not large enough to fill a whole truck and this again, allows the company to make this decision. 3. Smooth Production: Ensuring production lines function smoothly because high-quality parts are available when needed. Production can run smoothly as a result of fulfillment and logistics being implemented correctly. If the correct quantity is not ordered and delivered at the requested time, production will be halted, but having an effective supply chain management system in place will ensure that production can always run smoothly without delays due to ordering and transportation. 4. Increase in Revenue & profit: Ensuring no sales is lost because shelves are empty. Managing the supply chain improves a company flexibility to respond to unforeseen changes in demand and supply. Because of this, a company has the ability to produce goods at lower prices and distribute them to consumers quicker then companies without supply chain management thus increasing the overall profit. 5. Reduction in Costs: Keeping the cost of purchased parts and products at acceptable levels. Supply chain management reduces costs by increasing inventory turnover on the shop floor and in the warehouse controlling the quality of goods thus reducing internal and external failure costs and working with suppliers to produce the most cost efficient means of manufacturing a product.

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6. Mutual Success: Among supply chain partners ensures mutual success. Collaborative planning, forecasting and replenishment (CPFR) is a longer-term commitment, joint work on quality, and support by the buyer of the supplier‟s managerial, technological, and capacity development. This relationship allows a company to have access to current, reliable information, obtain lower inventory levels, cut lead times, enhance product quality, improve forecasting accuracy and ultimately improve customer service and overall profits. The suppliers also benefit from the cooperative relationship through increased buyer input from suggestions on improving the quality and costs and though shared savings. Consumers can benefit as well through higher quality goods provided at a lower cost.

ACTIVITIES/FUNCTIONS OF SCM
Supply chain management is a cross-functional approach to managing the movement of raw materials into an organization and the movement of finished goods out of the organization toward the end-consumer. As corporations strive to focus on core competencies and become more flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other corporations that can perform the activities better or more cost effectively. The effect has been to increase the number of companies involved in satisfying consumer 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 trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity. Several models have been proposed for understanding the activities required managing 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 of activities.

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(a) Strategic: Strategic network optimization, including the number, location, and
size of warehouses, distribution centers and facilities.

 Strategic partnership with suppliers, distributors, and customers,
creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.

 Products design coordination, so that new and existing products can be
optimally integrated into the supply chain.

 Information Technology infrastructure, to support supply chain
operations.

 Where to make and what to make or buy decisions. (b) Tactical: Sourcing contracts and other purchasing decisions.  Production decisions, including contracting, locations, 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 implementation of best practices throughout the enterprise. and

(c) Operational:-

 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).

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 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. Inbound operations, including transportation from suppliers and receiving inventory.  Production operations, including the consumption of materials and flow of finished goods.  Outbound operations, including transportation to customers. all fulfillment activities and

 Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. Performance tracking of all activities.

INTEGRATED SUPPLY CHAIN MANAGEMENT
An integrated supply chain management streamlines processes and increases profitability by delivering the right product to the right place, at the right time, and at the lowest possible cost. Unlike commercial manufacturing supplies, clinical supplies planning is very dynamic and can often have last minute changes. Availability of patient kit when patient arrives at investigator site is very important for clinical trial success. This results in overproduction of drug products to take care of last minute change in demand. R&D manufacturing is very expensive and overproduction of patient kits adds significant cost to the total cost of clinical trials. An integrated supply chain can reduce the overproduction of drug products by efficient demand management, planning, and inventory management. Implementation of ERP system (such as SAP) in R&D can have major ROI by an efficient supply and inventory management system and also by reducing overproduction.

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

How Integration Is Achieved In Supply Chain? Stage 1: Complete functional independence where each business function such as production or purchasing does its own thing in complete isolation from other business function. For instance, production function seeking to optimize its unit cost of manufacture by long production runs with out regard for build up of finished goods inventory and advance impact it will have on the warehousing as well as working capital. Stage 2: Companies recognize the need of limited integration between adjacent functions such as distribution and inventory management or purchasing and material control. Stage 3: A natural extension of stage two, leading to establishment and implementation of end- to-end integration. A concept of linkage and coordination is achieved. STAGE 4: The linkage achieved in stage three is extended upstream to suppliers and down stream to customers. It represents true supply chain integration. This concept is also called „co-managed inventory‟ (CMI). Force of supply chain management is on trust and cooperation and the recognition that is properly managed „the whole cane be greater then the sum of its part‟.  Is Supply Chain Management Same As Vertical Integration? No. supply chain management is not the same as vertical integration. Vertical integration normally implies ownership of upstream suppliers and down stream customer. Once, the vertical integration used to be describable strategy but increasingly the companies are focusing on their „core business‟ i.e. the activities that they do really well and where they have a differential advantage. Every thing else is „out-sourced‟ i.e. procured from outside the firm.

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SUPPLY CHAIN DECISIONS
We classify the decisions for supply chain management into two broad categories – Short term & Long term decisions. As the term implies, short term decisions focus on activities over a day-to-day basis. On the other hand, long term decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy and guide supply chain policies from a design perspective. There are four major decision areas in supply chain management: 1). Location, 2). Production, 3). Inventory, and 4). Transportation (distribution), and there are both short term and long-term elements in each of these decision areas. 1). 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. Although location decisions are primarily long term they also have implications on short term level. 2). Production Decisions: The long term 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
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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. Short term decisions focus 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. 3). Inventory Decisions: These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, 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 long term in the sense that top management sets goals. However, most researchers have approached the management of inventory from short term 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. 4). Transportation Decisions: The mode choice aspect of these decisions is the more long term 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 (consolidated bulk shipments versus Lot-forLot), routing and scheduling of equipment are key in effective management of the firm's transport strategy.

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SCM PROCESS INTEGRATION
Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. The purchasing department placed orders as requirements became appropriate and marketing, responding to customer demand, interfaced with several distributors and retailers and attempted to satisfy this demand. Shared information between supply chain partners can only be fully leveraged through process integration. Process integration means collaborative working between buyers and suppliers, joint product development, common systems and shared information. According to Lambert and Cooper (2000), operating an integrated supply chain requires continuous information flows, which in turn assist to achieve the best product flows. However, in many companies, such as 3M, management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The key critical supply business processes stated by Lambert and Cooper are as follows: 1. Customer service management process: Customer service provides the source of customer information. It also provides the customer with real-time information on promising dates and product availability through interfaces with the company production and distribution operations 2. Procurement process: Strategic plans are developed with suppliers to support the manufacturing flow management process and development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship, where both parties benefit, and reduction times in the design cycle and product development is achieved. Also, the purchasing function develops rapid communication systems, such as electronic data interchange and Internet linkages to faster transfer possible requirements. Activities related to
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obtaining products and materials from outside suppliers requires performing resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage and handling and quality assurance Also, includes the responsibility to coordinate with suppliers in scheduling, supply continuity & research to new programmes. 3. Product development and commercialization: Here, customers and suppliers must be united into the product development process, thus to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched in ever shorter time-schedules to remain competitive. According to Lambert and Cooper, managers of the product development and commercialization process must: a) coordinate with customer relationship management to identify customer-articulated needs; b) select materials and suppliers in conjunction with procurement, and c) develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination 4. Manufacturing flow management process: The manufacturing process is produced and supplied products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes, and must accommodate mass customization. Orders are processes on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency of demand to customers. Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations.

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5. Physical Distribution: This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g. links manufacturers, wholesalers, retailers). 6. Outsourcing/ Partnerships: Not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage and everything else it will outsource. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, to manage and control this network of partners and suppliers requires a blend of both central and local involvement. Hence, strategic decisions need to be taken centrally with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level. 7. Performance Measurement: By taking advantage of supplier capabilities and emphasizing a longterm supply chain perspective in customer relationships can be both correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes narrower. As Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity. According to internal measures are generally collected and analyzed by the firm including 1) Cost, 2) Customer Service, 3) Productivity measures, 4) Asset measurement, and 5) Quality…..
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Force of supply chain management is on trust and cooperation and the recognition that is properly managed 'the whole cane be greater then the sum of its part'. For example: Let's look at consumer packaged goods for an example of collaboration. If there are two companies that have made supply chain a household word, they are Wal-Mart and Procter & Gamble. Before these two companies started collaborating back in the '80s, retailers shared very little information with manufacturers. But then the two giants built a software system that hooked P&G up to Wal-Mart's distribution centers. When P&G's products run low at the distribution centers, the system sends an automatic alert to P&G to ship more products. In some cases, the system goes all the way to the individual Wal-Mart store. It lets P&G monitor the shelves through real-time satellite link-ups that send messages to the factory whenever a P&G item swoops past a scanner at the register. With this kind of minute-to-minute information, P&G knows when to make ship and display more products at the Wal-Mart stores. No need to keep products piled up in warehouses awaiting Wal-Mart's call. Invoicing and payments happen automatically too. The system saves P&G so much in time, reduced inventory and lower order-processing costs that it can afford to give Wal-Mart "low, everyday prices" without putting itself out of business.

ROLE AND APPLICATION OF SOFTWARE’S IN SCM
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 composes 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. For example: Most companies need to track demand, supply, manufacturing status, logistics (i.e. where things are in the supply chain), and distribution. They also need to share data with supply chain partners at an ever increasing rate. While products from large ERP vendors like Sap‟s Advanced Planner and Optimizer
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(APO) can perform many or all of these tasks, because each industry's supply chain has a unique set of challenges, many companies decide to go with targeted best of breed products instead, even if some integration is an inevitable consequence.  Goal of installing SCM software’s: 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, you can connect your supply chain with the supply chains of your 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 you do 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 goes up. 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.  Relationship between ERP and SCM: Many SCM applications are reliant upon the kind of information that is stored in the most quantity inside ERP software. Theoretically you could assemble the information you need 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 together in a single application, and SCM applications benefit from having a single major source to go to for up19

to-date information. Most CIO‟s 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. 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, you'll need to have these applications communicate with ERP in some fashion. 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 you want to build a private website for communicating with your customers and suppliers, you will want to pull information from ERP and supply chain applications together to present updated information about orders, payments, manufacturing status and delivery.  Roadblocks in installing SCM Software’s: There are some hurdles which come in way while installing the SCM software‟s in the organizations. They are: 1. Gaining trust from your suppliers and partners:Supply chain automation is uniquely difficult because its complexity extends beyond your company's walls. Your people will need to change the way they work and so will the people from each supplier that you add to your network. Only the largest and most powerful manufacturers can force such radical changes down suppliers' throats. Most companies have to sell outsiders on the system. Moreover, your goals in installing the system may be threatening to those suppliers, to say the least. For example: Wal-Mart's collaboration with P&G meant that P&G would assume more responsibility for inventory management, something retailers have traditionally done on their own. Wal-Mart had the clout to demand this from
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P&G, but it also gave P&G something in return-better information about WalMart's product demand, which helped P&G manufacture its products more efficiently. To get your supply chain partners to agree to collaborate with you, you have to be willing to compromise and help them achieve their own goals. 2. Internal resistance to change:If selling supply chain systems is difficult on the outside, it isn't much easier inside. Operations people are accustomed to dealing with phone calls, faxes and hunches scrawled on paper, and will most likely want to keep it that way. If you can't convince people that using the software will be worth their time, they will easily find ways to work around it. You cannot disconnect the telephones and fax machines just because you have supply chain software in place. 3. Many mistakes at first:There is a diabolical twist to the quest for supply chain software acceptance among your employees. New supply chain systems process data as they are programmed to do, but the technology cannot absorb a company's history and processes in the first few months after an implementation. Forecasters and planners need to understand that the first bits of information they get from a system might need some tweaking. If they are not warned about the system's initial naiveté (simplicity), they will think it is useless. In one case, just before a large automotive industry supplier installed a new supply chain forecasting application to predict demand for a product, an automaker put in an order for an unusually large number of units. The system responded by predicting huge demand for the product based largely on one unusual order. Blindly following the system's numbers could have led to inaccurate orders for materials being sent to suppliers within the chain. The company caught the problem but only after a demand forecaster threw out the system's numbers and used his own. That created another problem: Forecasters stopped trusting the system and worked strictly with their own data. The supplier had to fine-tune the system itself, and then work on reestablishing employees' confidence. Once employees understood that they would be merging their expertise with the system's increasing accuracy, they began to accept and use the new technology.

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 Conclusions: What has enabled the effective implementation of supply chain management? The answer is found from the rapid developments in information and communications technologies. Use of databases, communication systems, and foremost advanced computer software are crucial for the development of a modern cost-effective supply chain management.

MANAGING THE GLOBAL SUPPLY CHAIN
We live in interesting times. Powerful forces are re-shaping the global business scene: financial and economic upheaval in the Far East, Latin America & China is creating a tidal-wave of change in the competitive environment. Organisations that once felt insulated from overseas low-priced competitors now find that they too must not only continue to constantly create new value for customers, but must do so at a lower price. To meet the challenge of simultaneously reducing cost and enhancing customer value requires a radically different approach to the way the business responds to marketplace demand. One of the keys to success is the creation of an agile supply chain on a worldwide scale.  The Agile Supply Chain: There is now widespread recognition of the role that supply chain management can play in enabling organisations to compete in volatile markets. However, experience suggests that there are significant barriers both within the company and between its upstream and downstream partners in achieving the required level of responsiveness across the chain as a whole. Continuous change is a phenomenon with which the supply chains have had to cope for some time. But due to high rate of competition in today‟s market the logistics environment of the new millennium will have to contend with: i.) turbulent markets that change rapidly and unpredictably, ii.) highly fragmented 'niche' markets instead of mass markets, iii.) ever greater rates of technological innovation in products and processes, iv.) shorter product life-cycles,

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v.) growing demand for tailored products - 'mass customisation', vi.) the delivery of complete 'solutions' to customers, comprising products and services. And all of the above to be achieved at less cost! These severe challenges mean that a new operating paradigm is needed. The key factor is agility - rapid strategic and operational adaptation to large scale, unpredictable changes in the business environment. Agility implies responsiveness from one end of the supply chain to the other. It focuses upon eliminating the barriers to quick response, be they organisational or technical. Figure 1 suggests that whilst there will still be conditions where lean concepts are appropriate, in particular where the product is standard and volume demand is high and predictable. Increasingly however these situations are tending to become fewer as the global forces we have described lead to higher levels of market volatility.

How do global supply chains achieve agility? In a sense the very process of globalisation has retarded agility. For example, many companies in their search for lower production costs have moved much of their manufacturing and assembly offshore. The main driver for such moves often being low labour costs. However, in so doing they run the risk of extending

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their lead-times significantly thus generating the need for more inventory in the pipeline. As a result their agility is reduced. Some organisations have actually sought to reverse this trend by bringing manufacturing back closer to their main markets - Dell Computer being a case in point. Other companies are using low cost sources of supply to manufacture products where there is a predictable demand and using more local, flexible facilities for producing less predictable, more volatile products. Zara, the successful Spanish fashion retailer, has followed a very similar strategy enabling it to respond more rapidly to changes in demand. To overcome the potential loss of agility through extended global supply chains, companies need to adopt a number of guiding principles: Remove the organisational barriers: Too many companies are hindered in their attempts to streamline their supply chains because of their out-molded organisational structures. It is not possible to even contemplate a seamless global pipeline if there are quasiindependent national subsidiaries making their own decisions on sourcing, distribution facilities and inventory for example. Similarly, it is still the case that for many businesses the functional 'barons' still wield significant power. As a result decisions are taken which are based on a narrow definition of 'optimisation' - in other words the focus is on improving performance within a function without regard for its wider supply chain impact. Thus we find, for instance, that often factories are designed and built to maximise the economies of scale rather than to enhance flexibility of response. In a global marketplace this tunnel vision can lead to a damaging loss of competitiveness. The solution has to be to re-engineer the organisation structure so that supply chains are managed on a truly integral basis with cross-functional teams being given the responsibility for managing the pipeline from source to final market.

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 Make the supply chain the value chain: The idea that companies should focus on their core competencies is rapidly taking hold. As a result there is a greater willingness to out-source than was previously the case. This trend has been particularly observable in global corporations where there has been recognition that the complexity of managing a worldwide logistics chain requires specialist resources. There is now a great opportunity to start thinking of the supply chain as a value chain. Rather than accepting the conventional view that believes that all value-creating activities need to be conducted under the same corporate roof, forward-looking organisations are taking a different view. Particularly as supply chains become global it will often make sense to move to a greater level of 'localisation', i.e. the final finishing or configuration of the product being performed much closer to the point of demand. To enable this to be achieved on a global basis, specialist third party logistics service providers have emerged who can now act as extensions of the company's value chain. In structuring cost-effective and agile global supply chains the question of where in that chain the value creation should take place becomes crucial. By working more closely with specialist providers, greater levels of customer value can often be achieved at less cost to the supply chain as a whole. Hewlett Packard has adopted this concept for many of its products such as the Desk Jet printer, even going to the lengths of re-designing it so that a generic semi-finished global version could be built centrally with localisation being performed by regional partners.  Shift the de-coupling point: A major problem in all supply chains, but significantly worse for global business, is that they have little visibility of 'real' demand. Because global supply chains tend to be extended with multiple echelons of inventory between the point of production and the final market place they tend to be forecast driven rather than demand driven. In other words decisions on production and distribution are based upon forecasts or orders (which themselves do not necessarily reflect demand but rather tend to be based on arbitrary 'rules' such as re-order points and re-order quantities).

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The point to which real demand penetrates upstream in a supply chain is termed the decoupling point. These decoupling points also tend to dictate the form in which inventory is held. Thus in the uppermost example in Figure 2 demand penetrates right to the point of manufacture and inventory is probably held in the form of components or materials. In the lower example demand is only visible at the end of the chain; hence inventory will be in the form of finished product. Ideally, information from the marketplace should flow as far upstream and in as close to real time as possible. In this way all the parties in the supply chain work to the same information and reduce their dependency on the forecast. At the same time opportunities for postponing the final configuration of finished inventory should be investigated. The aim of the global supply chain should be to carry inventory in a generic form, i.e. standard semifinished products awaiting final assembly or localisation. Managing the global supply chain requires a level of agility and responsiveness several magnitudes greater than that required in the old model of 'local for local' manufacturing. Emphasis will increasingly have to be placed on creating a business model that recognises that competitive advantage is created through the management of the supply chain as a single entity rather than through fragmented, locally-focused decision making units. For the foreseeable future leadership in global markets will belong to those organisations that exhibit greater agility than their competitors.

FUTURE OF SCM
The most notable is Radio Frequency Identification, or RFID. RFID tags are essentially barcodes on steroids. Whereas barcodes only identify the product, RFID tags can tell what the product is, where it has been, when it expires, whatever information someone wishes to program it with. RFID technology is going to generate mountains of data about the location of pallets, cases, cartons, totes and individual products in the supply chain. It's going to produce oceans of information about when and where merchandise is manufactured, picked, packed and shipped. It's going to create rivers of numbers telling retailers about the expiration dates of their perishable itemsnumbers that will have to be stored, transmitted in real-time and shared with warehouse management, inventory management, financial and other enterprise systems. In other words, it is going to have a really big impact.
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 The a b c...... D of RFID: "DATA" In current systems, you may know there are 10 items on the shelf, and that information is compiled in an enterprise planning software system. With RFID, you know there are 10 items, their age, lot number, and expiration date and warehouse origin. It's like knowing there are 1,000 people in a city. With RFID, you know their names. Think like you are a HR manager of a global corporation who remembers all the employees by their names!! Wouldn't that be great? That's the power of RFID- the DATA. Radio frequency identification (RFID) can be broadly categorized as an 'e-tagging' technology. RFID enables passive object tagging and automatic data capture, using RF sensing as opposed to optical sensing in the case of barcodes. RFID is fast, reliable, and does not require physical sight or contact between reader/scanner eliminating the problems mentioned for barcodes. The range of sensing RFID tags from a reader varies from a few centimeters to a few meters, depending on the frequency and the type of tags (active or passive). The amount of data that can be stored inside RFID tag ranges from few bits to 1 MB for active tags.  Benefits: The main benefit of RFIDs is that, unlike barcodes, RFID tags can be read automatically by electronic readers. Imagine a truck carrying a container full of widgets entering a shipping terminal in China. If the container is equipped with an RFID tag, and the terminal has an RFID sensor network, that container's whereabouts can be automatically sent to Widget Co. without the truck ever slowing down. It has the potential to add a substantial amount of visibility into the extended supply chain. The benefits are divided into two parts (a) Benefits to Organisation:  Inventory Management: Maintain a real-time view of tagged inventory as it flows through the supply chain.  Track discrete movement of tagged inventory.  Trigger alerts around inventory movement based on business rules you construct.  Allowing just-in-time practices.

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 Maximizing warehouse space:With the high costs associated with storage real estate, the goal is to maximize warehouse space. This will improve utilization without undermining the ease with which goods can be moved in and out.  Minimizing goods shrinkage:Theft combined with imprecise inventory management can create a significant shortfall in actual versus expected goods available. Within the retail environment goods shrinkage is widely perceived to account for up to one per cent of stock, representing a significant dent in profit margin.

(b) Benefits to Consumers:
 Value Innovation in customer service Marks & Spencer, a British retailer, has just extended a trial in which tags are applied to suits, shirts and ties for men, allowing retailers to monitor and replenish stock levels with far more accuracy at the end of each day to make sure that every size, style and color remains in stock. Beyond improving efficiencies, the smart tags could help to drive sales. One example of improving customer service: a customer could take a tagged suit to a kiosk, which could then suggest a matching shirt and tie.  Minimizing errors in delivery Misdirected deliveries or incorrect orders can immediately result in on-shelf out-of-stock situations leading to reduced sales and damaged customer relationships. Indeed, for organizations relying on the delivery of specific components to fulfill their own order schedule, such errors can have a serious impact on customer satisfaction. RFID tags represent a significant step forward from traditional bar code technology and offer highly reliable data most notably, the US Department of Defense requires their suppliers to ship products with RFID tags from 2006 onwards. Therefore, the broad adoption of RFID is on its way. By 2010, RFID should be ubiquitous throughout industries. Right now the two biggest hurdles to widespread RFID adoption are the cost of building the infrastructure and the lack of agreed-upon industry standards.
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Some Key technologies which are going to change the face of SCM in coming days are: 1. EDI (for exchange for information across different players in the supply chain); 2. Electronic payment protocols; 3. Internet auctions (for selecting suppliers, distributors, demand forecasting, etc.); 4. Electronic Business Process Optimization; 5. E-logistics; 6. Continuous tracking of customer orders through the Internet; 7. Internet-based shared services manufacturing; etc.

SUPPLY CHAIN MANAGEMENT PROBLEMS
Supply chain management must address the following problems: 1.) Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers. 2.) Distribution Strategy: Centralized versus decentralized, direct shipment, cross docking, pull or push strategies, third party logistics. 3.) Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation. 4.) Inventory Management: Quantity and location of inventory including raw materials, work-inprocess and finished goods.

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SUPPLY CHAIN MANAGEMENT CURRENT KEY TOPIC: TRADEOFF CURVES
One of the fundamental tradeoffs in supply chain management is that between inventory levels and customer service. For any given supply chain, increasing the level of service (product/spare part availability) typically means higher levels of inventory. Most companies have discovered their "best place" on the curve, depending on what their customers require and what their competition offers. However, supply chain strategies can shift the entire curve, lowering your inventory levels without adversely affecting your customers (or the reverse, improving customer service levels with no increase in inventory). How might this work? Through effective supply chain management you may be able to reduce lead times. This would shift the curve to the right, speeding up customer response times without raising inventories. Supply Chain Module SCM106 reviews a strategy called postponement, or risk pooling, that can lower the curve, allowing you to maintain (or enhance) service levels with less finished-goods inventory.

This tradeoff curve provides a perfect example of how silo behavior (in which functional areas lose sight of cross-functional optimizations) can cause problems in supply chains. One of the first steps in improving a supply chain is making sure that organizational responsibility for inventory levels and customer service are appropriately managed. These two responsibilities should not be separated - in fact, they should report to the same desk. Doing so enables a company to set expectations and properly manage this tradeoff, without costly swings from one place on the curve to another as different functional groups "fight" for either lower inventories or higher service.

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CURRENT SITUATION OF SUPPLY CHAIN MANAGEMENT
Nowadays, one of the few outcomes in the constantly changing business world is that organizations can no longer compete solely as individual entities. Increasingly, they must rely on effective supply chains, or networks, to successfully compete in the global market and networked economy (Baziotopoulos, 2004). Peter Drucker‟s (1998) management‟s new 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 trade-offs that may exist among the players.From a system‟s point of view, 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 internal management control structure is known to impact local firm performance (Mintzberg, 1979). In the 21st century, there have been few changes in business environment that contributed to the development of supply chain networks. First, as an outcome of globalization and proliferation of multi-national companies, joint ventures, strategic alliances and business partnerships were found to be significant success factors, following the earlier “Just-In-Time”, “Lean Management” and “Agile Manufacturing” practices (MacDuffie and Helper, 1997; Monden, 1993; Womack and Jones, 1996; Gunasekaran, 1999). Second, technological changes, particularly the dramatic fall in information
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communication costs, a paramount component of transaction costs, has led to changes in coordination among the members of the supply chain network (Coase, 1998). Many researchers have recognized these kinds of supply network structure as a new organization form, using terms such as “Keiretsu”, “Extended Enterprise”, “Virtual Corporation”, Global Production Network”, and “Next Generation Manufacturing System” (Drucker, 1998; Tapscott, 1996; Dilts, 1999). In general, such structures, 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).

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References: 1. <http://www.lancoglobal.com/index.html> 2. <http://en.wikipedia.org/wiki/Supply_chain_mamagement> 3. <http://en.wikipedia.org/wiki/Demand_chain_management> 4. Arntzen, B. C., G. G. Brown, T. P. Harrison, and L. Trafton. Global Supply Chain Management at Digital Equipment Corporation. Interfaces, Jan.-Feb., 1995.

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