SCM Technologies and Their Applicability in the SC Operations
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Transcript of SCM Technologies and Their Applicability in the SC Operations
Supply Chain Management Technologies and their
applicability in the Supply Chain operations
Fadhili Kiyao
School of Management Studies
CUSAT, Kochi - 22
E-mail:[email protected]
Abstract: Supply chain management is a popular concept in business theory. Its research results are widely used in practice, too. During the development of supply chain management (SCM) useful practices have emerged. These practices or management tools aim at enhance supply chain (SC) effectiveness and/or efficiency by introducing new planning, controlling and monitoring methods. The success of their implementation, however, depends on several factors which have to be analyzed before making decisions on the application. Technology also plays an important role in the success of supply chain management. Even though the supply chain concept pre-dates the Internet, only through the use of web-based software and communication it can truly reach its full potential. Before the Internet, companies were limited because they were not able to receive or to send updates, feedback, or other important information in a timely fashion. Using the Internet to handle most of the elements involved in supply change management, including procurement and communication, makes the exchange of data and the running of the supply chain faster. Internet based Supply Chain Management is the solution that supports collaboration in the Supply Chain as the foundation for gaining competitive advantage and maintain market share. There are many Web technologies necessary for the design and implementation of a Web based SCM application, their employment being determined by the SC partner’s information systems and applications and the level of integration needed.
Key words: Cloud based SCM, mSCM, RFID, eSCM, GSCM, SCM technologies, SC Operations
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1.0 INTRODUCTION
1.1 General
A Supply Chain is a network of suppliers, manufacturers, warehouses, distributors
and retailers who, through coordinated plans and activities, develop products by
converting raw materials to finished goods. Supply Chain Management (SCM)
involves various approaches used to integrate suppliers, manufacturers and
distributors in performing their functions: materials procurement, materials
transformation in intermediate and finished products, the distribution of these products
to distribution centers and from here to point of sales and to the final customer. The
management of Supply Chain assumes to provide the appropriate strategy to deliver
products and services to customers in the right quantities, to the right locations and at
the right time to meet the required service level with minimal cost. Through
collaboration, information sharing and usage of internal information systems and
Internet technologies, companies can create efficient value systems, and get
competitive advantage. The Internet has brought new opportunities for the Supply
Chain field. Companies have to adapt their Supply Chain to the Internet and to
connect through Web technologies with their business partners to create Supply
Chain networks [1].
2.0 CLOUD-BASED SUPPLY CHAIN MANAGEMENT (SCM)
Enterprise Application Software companies have been toying with a transition into the
cloud for the past few years and more are starting to take the dive. Once thought of as
a technology that would replace legacy systems, the cloud is now viewed as a
complimentary delivery option, allowing for two types of next generation applications.
The successes of cloud-based companies such as Salesforce.com have proven that
cloud enterprise applications are not only cost cutting, but sustainable and innovative.
Given this success, more companies are apt to start focusing on the cloud as their
application delivery method of choice.
The growth of cloud-promoting technologies (faster internet connectivity, mobile
technology, net books, social networking, etc.) is helping to spur increased interest in
cloud technology. This is evidenced through CDC Software’s recent acquisition of
Trade Beam, a provider of on-demand software-as-a-service (SaaS) supply chain
visibility and global trade management solutions, as well as e-Commerce giant GSI
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Commerce’s recent acquisition of Vendor Net, a provider of e-commerce SCMs, to
expand its multi-channel expertise [2].
2.1 What is an SCM Cloud?
The SCM cloud is a set of services that provide SCM functions to any cloud user in an
efficient, scalable, reliable and secure way. It abstracts the inherent details of package
implementation and the challenges associated with integrating these packages with
the other enterprise applications. This enables the user to get a simplified view of
SCM functions (rather than SCM applications) like order management, warehouse
management, demand forecasting etc. A user merely signs up on the cloud,
subscribes to the necessary SCM functions, and starts using it. It is that simple.
Figure 1 provides an illustration of the layer of abstraction provided by the SCM
functions that leverage machine instances from the infrastructure cloud [3].
Figure 2 presents a detailed view of various tiers of SCM applications consisting of a
variety of associated vendor-specific hardware and software components.
Traditionally, retailers must go through a laborious and time-consuming exercise to
find a suitable application that can place, manage and fulfill orders. They need to
choose a product after evaluating many of the best-of-breed solutions and
accommodate technology constraints that come with it. They must then configure the
product to meet business logic, integrate the application with other applications, test,
procure the hardware to host the application stack, and finally, go live. After this
comes the additional challenge of post-production maintenance [3].
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Figure 1 SCM Cloud providing an abstraction of SCM functions
F
igure2 Detailed view of a multi-tiered SCM application
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This is an onerous process considering the fact that most retailers are only asking for
a simple mechanism to capture, manage and fulfill orders. Only retailers with mature
IT departments and big budgets can sustain the long process of software
implementation. However, with the advent of cloud computing, a layer of abstraction
can be built to mask the inherent details to have an order management system
offering in a more economical way. With SCM cloud, Figure 3 gets transformed
to Figure 3 - a simple SCM function instance for order management.
This model also works well for small businesses which lack dedicated IT departments
and cannot afford a data center. The cloud also provides these abstractions in a
scalable, reliable and secure way which aligns the solution in line with the business
growth pattern. In sluggish economic conditions, downsizing the environment also
becomes equally easy.
Figure 3 SCM function instance for order management.
2.2 Implementing an SCM Cloud
Although the enormous benefits of an SCM cloud are obvious, ranging from scalability
and cost control and requirement-based expansion and reduction in capacity, much
still needs to be done in terms of streamlining the process. The following are some
key factors that must fall in place for SCM cloud implementation to succeed.
The SCM Cloud can provide a win-win situation for all participants – infrastructure
vendors, SCM product vendors, service providers, and users. In the reverse order,
users benefit because of reduced CAPEX and huge OPEX savings, service providers
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benefit because they are the builders of such logical groups of functions, SCM
product vendors and infrastructure vendors gain because the SCM cloud opens up
the gates to a legion of users who would have otherwise resorted to age-old ledgering
and suffered growth.
Further, it is possible for developers to come up with their own ideas and host them as
a service on the cloud and get paid when users sign up and use their services. A
good example is a rule-based engine for demand forecasting. Users can prepare the
inputs for a forecasting function and use it only once every quarter to generate the
demand forecast and unplug from the forecasting function. If Vendor A's forecasting
service does not work well, user can easily switch over to Vendor B the next time. In
essence, there is a lot of potential in Cloud Computing for everyone including IT
service providers. It is therefore imperative to adapt to the change in the way IT
applications are packaged, configured, hosted and used and accept the challenges
this notion has to offer and strategically work towards solving them. Sooner or later
this is a cold that everyone ought to catch and when they do, they will want the luxury
of proactive and reactive environments for their applications but at a cheaper price.
This view of the cloud makes us, the service providers the best ones to take the
cudgel to implement the CLOUD. We must therefore prepare a pool of requirements
and a pool of plausible technologies and create a layer of abstraction to free the user
from choosing packages, best-of-breed solutions, databases, integration middleware,
and infrastructure and think only about the required functionality and how much he
can/should pay for it. Here is a simplified tiered-illustration of SCM cloud components
[4].
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Figure 4 illustrations of SCM cloud components
Manufacturing companies around the world, with their inherent penchant for low IT
budget, are paying much closer attention to cloud computing and its potential value to
supply chain processes - from sourcing to after-sale service.
Supply Chain Management space is the ideal breeding ground for cloud computing.
Let's start with procurement. Enterprise applications in supply chain space, and
especially in procurement domain, are mostly about B2B or inter-company
coordination and collaboration among hundreds of supplier companies on a global
scale. This geographical spread and need for collaboration makes it an ideal
candidate for Cloud computing. One of the main value-proposition from Cloud
computing is said to be reduction in 'total cost of ownership' and it is also the most
commonly cited success metric in sourcing and procurement.
Now let's move to Supply Chain Planning. Production planning and forecasting are
not normally the core components of companies' ERP systems. Clients therefore can
run one vendor's ERP application and can leverage another's best-of-breed planning/
forecasting application via the Internet [5].
Now coming to Supply Chain Execution and visibility, Control Tower Systems, the
most recent addition to supply chain visibility tools is now available in cloud. Control
Tower technology for supply chain, in simple terms, is a Single-Version of Supply
Chain Truth. A platform that makes that truth available across the value chain in an
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agile manner and that connect trading partners and service providers to create a
vibrant, "always on" electronic community.
This inevitable and imminent adoption of cloud is going to bring about a paradigm shift
in the way enterprise applications are dealt within manufacturing industry. The supply
chain application vendors who are quick to internalize this change are going to hugely
benefit from this [5].
3.0 MOBILE SUPPLY CHAIN MANAGEMENT (mSCM)- KEY
TECHNOLOGIES AND APPLICATIONS
Modern supply chain management is often based on extensive usage of information
communication technologies. In order to improve the quality of service and goods and
provide more efficient work and better communication and coordination among all
participants in the supply chain, in the recent years a special emphasis was put on the
implementation of mobile devices and wireless communication systems [6].
Also, the main characteristics and applications of mobile supply chain management
are presented. The most obvious advantage of using modern wireless and mobile
technologies in supply chain management is in providing highly efficient, fast and
accurate means of collecting and sharing information and data on the movement of
goods and other important events. These features make it easier to control and
monitor work activities and provide updated information on the status process, which
enables a company to establish and maintain complex adaptive supply chain network
[6].
3.1 Mobile Supply Chain Management
Mobile supply chain management (mSCM) is defined as the use of mobile devices
and applications to assist in the efficient and effective management of various
activities in modern supply chains, contributing to better company's operations by
reducing costs, faster response system and achieving competitive advantage. The
most obvious advantage of using wireless and mobile technologies in the
management of modern supply chains is that companies are now able to provide
customer service no matter where they are and at a time that best suits them. In
addition, mobile applications for supply chain management can be used to improve
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the business processes of different business functions by ensuring efficient flow and
exchange of information and goods between the various supply chain activities, from
product concept, its design, manufacturing, sales, customer service, and all by the
end of its life cycle, i.e. use. Mobile systems for supply chain management integrate
software applications with mobile devices (e.g. mobile phones, PDAs, pocket
computers, etc.), in order to provide flexibility for users to work in the wireless
computing environment from any location (e.g. shop or warehouse, using mobile
devices and possibly other wireless units (e.g. RFID readers)). Mobile devices
connect to the company server via a wireless infrastructure (mobile network or WiFi-
WLAN), which enables data and information exchange between different functions
within a company and along the supply chain. In this way, a software application for
mobile supply chain management enables intra-company and inter-company business
systems, enabling participants in the supply chain to realize business activities such
as online transactions, share and exchange of updated information, providing
customer service, logistics and transport management, warehouse management, and
so on.
Application areas Information – Information management i.e. fast and efficient
reception, transfer and exchange of information is one of the key aspects of mobile
supply chain management.
Mobile inventory management – Accurate and efficient inventory management, based
on the solutions with bar codes or RFID tags, is used to track the level of the stocks of
those products that are critical for the company. In this way, companies can reduce
the problems of duplication or lack of entries, and enable people to know exactly
where some item is.
Mobile sale - Using mobile systems for supply chain management, retailers can
increase sales by providing the right amount of right products at the right place at the
right time. The system improves customer satisfaction by informing them about the
status of their orders and reducing the probability of delays or incomplete orders.
Tracking goods in supply chains – By using GPS systems, mobile devices and
networks, now is possible to monitor the progress of each transport vehicle in real
time efficiently, and thus to know exactly its position and time of arrival at the final
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destination, and the type and quantity of goods carried by transporter, thus opening to
possibilities of transport optimization and lowering the costs.
4.0 RFID
RFID (Radio Frequency Identification) is a technology which uses radio waves to
communicate and exchange data between a reader and tags attached to an object,
for purposes of identification and tracking. RFID tags are being developed to replace
bar codes. Bar codes have a number of limitations: they require optical visibility with
scanner, are printed on paper and can easily be tear, soil or lose, only identify the
manufacturer and product, but not individual items, etc. Each RFID tag has a unique
identifier, assigned to a particular product or packaging. Depending on whether they
have their own power supply (battery) or not, tags are divided into active (with own
power supply) and passive. Reader through the electromagnetic (radio) waves reads
data from the tag and forwards them to the system for data exchange and
management for further processing. Active RFID tag reading range is 10-100 m, and
for passive ones is 10 mm to 5 m. Tags are becoming smaller and smaller (Hitachi
has made RFID chip measuring 0,05 x 0,05 mm, which can store 38-digit number).
Compared with its predecessor, the bar code technology, RFID has the following
advantages:
does not require optical visibility for reading, can store a larger amount of data than bar code (e.g. it is possible to keep the
information on each individual product, not just a class of type) smaller size, come in many forms and shapes, Much safer. Given that the electronic nature, may use content protection code, so it's
not easy to read and forge the content data is stored in the RFID tag can be changed or added, resistant for work in dangerous environments, a large number of RFID tags can be read almost instantaneously, rapid response system, Cost reduction (in the long run), and so on.
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Figure 5 The structure of RFID-based Chain
RFID technology has increasingly been applied in different areas of the economy and
parts of the supply chain, such as: the production, receipt and issue of goods,
transportation, distribution, warehouse operations, retail, etc. Some of the world
largest retailers (e.g. Wal-Mart in the U.S., Tesco in the UK) and government
institutions (US Ministry of Defense) bind all of its suppliers to introduce RFID
technology.
4.1 RFID Applications in Supply Chain Management
There are as many RFID applications as there are businesses. Some RFID
applications have been around for decades, others are just starting to emerge. RFID,
itself, is not a new technology; however, it is being used in many new and different
ways. The roots of RFID technology can be traced back to World War II when radio
waves were used to identify friendly aircrafts; in the 1970s New York Port Authority
introduced an RFID device used for toll collection. While RFID applications used
earlier are still around today, many more RFID applications have emerged since then.
Today, the largest RFID application aids companies and governments in supply chain
management. RFID is being used to manage products through production, distribution
and retail. Manufacturers can especially benefit from implementing RFID applications
in supply chains because they can decrease costs associated with product tracking
and inventory management and increase the accuracy and timeliness of inventory
data. Experts say that early adaptors of RFID applications in supply chains have seen
a significant increase in revenue.
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RFID Applications in the Distribution Chain: RFID Applications can be used to monitor
and manage the movement of the finished products throughout a supply chain. RFDI
tags can be attached directly to the items and materials or they can be attached to the
containers that carry them. Pallets, trailers, totes, carts, cargo containers, and
reusable transport items can all be tagged. Readers placed throughout a facility can
monitor movement and location of inventory, thus providing real time data. This can
be within a warehouse, a freight yard or within a retail location. RFID applications in
the supply chain enable more frequent and accurate inventory counts RFID
applications in the supply chain can also decrease costs associated with inventory
counting
In addition, RFID applications in fleet management have demonstrated significant
ROI. RFID applications in fleet management enable a more cost-effective long-range
tracking solution, global tracking of containers and cargo, reliable tracking of capital
and inventory assets during transportation and increased security. By placing RFID
tags on long range vehicles, trailers or other mobile assets, companies can gain
visibility into their business’ assets’ utilization.
RFID Applications in Retail and Product Marketing: As in the distribution chain, RFID
application in retail can greatly aid in reducing the cost of keeping accurate inventory
data. With fewer people and less time, retailers can keep accurate inventories.
Associates can spend more time providing service to customers rather than counting
product. RFID Applications in retail can greatly aid in ensuring proper product mix and
availability are maintained for customers. The accuracy of the real time inventory data
that is provided by RFID applications, enables product marketing managers to ensure
that hot selling items are properly stocked and to ensure replenishment order for
these items are placed as quickly as possible. Slow moving items can be quickly
identified. This allows product marketing managers to take corrective action to goose
demand through promotional or advertising activity before a ‘fire sale’ is needed. Thus
RFID applications help product marketing managers maintain their margins. RFID
applications are, also, a significant aid in deterring theft in retail environments. Items
tagged with RFID devices can trigger alarms when they are removed from the store
without being properly deactivated. RFID applications have been successfully
deployed for anti-theft purposes for several decades.
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RFID Applications in Brand Protection: RFID applications can be used to protect
brand identity by product marketing managers and to protect consumers from
counterfeited products. RFID applications in anti-counterfeiting are, generally, aimed
at high-value end consumer products. The unique identification number on standard
RFID tags can be used to verify the authenticity of the products to which they are
attached. These unique numbers combined with encryption algorithms can create
authentication schemes that are extremely difficult for counterfeiters to circumvent.
RFID applications in anti-counterfeiting can be used in many industries, including
pharmaceuticals, electronics, entertainment, retail, IT and many more. It is estimated
that counterfeiting costs legitimate companies nearly $600B worldwide each year.
The payback even modestly successful anti-counterfeiting efforts can be very high.
RFID applications represent one of the most promising methods for countering this
major problem.
By placing RFID tags on products at the point of manufacture, manufacturers can
trace products throughout the supply chain. The pharmaceutical industry is creating
an RFID application that will document the authenticity of their products at retail. Not
only will the products have a unique ID, but information about the chain of custody for
the product will be stored on the RFID tag or in an associated database. If the
product is not properly tagged or the tag is not associated with the proper chain of
custody – then you know the product is counterfeit.
While many anti-counterfeiting efforts are a large expense that most US companies
face, RFID applications in anti-counterfeiting have a high ROI. By placing RFID tags
on products at the point of manufacture, not only can products be traced throughout
the supply chain, but it can also prevent counterfeit products from entering into the
supply chain [7].
5.0 ENHANCING SCM WITH VOICE TECHNOLOGY
With small mobile computers, smart phones and applications hosted offsite and
accessed through the internet cloud, users with only the need of a web browser can
perform the same tasks as it used to take dozens of individuals working on a large
enterprise system. The newest technology impacting how business is operated is the
implementation of voice technology. Now employees with mobile computers do not
even have to touch a keyboard in order to run business applications. Voice
technology is even providing new opportunities in supply chain management [8].
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Now voice recognition software and associated technologies provide efficiencies to
the supply chain management process by allowing employees to order and ship
supplies using simple language instead of a computer keyboard. Using the most
widely used supply chain management software, employees selecting orders from a
supply warehouse have reported as much as a 25% increase in productivity and a
35% decrease in human error.
When integrating voice technology into the supply chain management system,
workers use a headset and microphone connected to a mobile computer that they
carry with them. The mobile computer communicates wirelessly with a server that
hosts the supply chain management software package. Information from the server is
translated into simple language that can be heard through the headset. For example,
the worker is told that an order has been filled and is then directed to the location
where the items can be retrieved in the warehouse. The worker can also
communicate information back to the server using simple language spoken through
the microphone. Without the need to input information or read a screen, the worker
can tell the supply chain management system that the order has been physically filled
and that it has been transferred to shipping. This type of voice technology integration
is not limited to supply chain management but has also been used to operate factories
and distribution centers for almost a decade. Applications that have proven to be very
successful are those that support quality control, package sorting, and inventory
management.
Right now the use of voice technology for supply chain management has still only
been implemented in a small percentage of the large distribution centers. In addition
to decreasing costs, new features such as multilingual voice recognition and synthesis
and new supply management functions, such as restocking, will increase utility and
drive continuous growth in sales and market penetration.
Although, at this point, voice technology integration with supply chain management
may not be a solution for all small businesses, it is a tool that will eventually be part of
most warehouse and distribution centers. Business owners should take the time and
research existing solutions to see if any of them would be appropriate for their
particular business. It seems that the continued trend for supply chain management is
to increase safety, decrease errors, and decrease management costs by freeing
employees from the need to physically interact with the company’s computer system.
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6.0 SOFTWARE AGENTS
Monitoring and Surveillance agents and Data mining agents are being considered for
applications in SCM. For example, NASA's Jet Propulsion Laboratory has an agent
that monitors inventory, planning, and scheduling equipment ordering to keep costs
down, as well as food storage facilities. These agents usually monitor complex
computer networks that can keep track of the configuration of each computer
connected to the network. Agent-based solutions are being introduced for SCM. Air
Liquide America LP, a producer of liquefied industrial gages, reduced its production
and distribution costs using agents. Merck and Co, a leading research-driven
pharmaceutical company used agents to help it find more efficient ways to distribute
anti-HIV drugs. Proctor and Gamble used agents to transform its supply chain network
into a network of software agents whose behaviors are programmed through rules.
Artificial Intelligence emerged into the paradigm of software agents with the
application area of multi-agent systems. A software agent is a software system, which
has attributes of intelligence, autonomy, perception or acting on behalf of a user.
Agents can behave autonomously or proactively. The intelligence of an agent refers to
its ability of performing tasks or actions using relevant information gathered as part of
different problem-solving techniques such as influencing, reasoning and application
specific knowledge. Java has been the most common tool for building such intelligent
agents which are increasingly becoming mobile. Most of the agent platforms available
today like AgentBuilder, Aglets, Voyager, JADE, ZEUS and FIPA are implemented
using this language. One classification of agents given by Haag (2006) suggests that
there are only four essential types of intelligent software agents [9]:
• Buyer agents or shopping bots - Buyer agents travel around network (i.e. the
internet) retrieving information about goods and services. These agents, also known
as 'shopping bots', work very efficiently for commodity products such as CDs, books,
electronic components, and other one-size fits- all products. Amazon.com is a good
example of a shopping bot. The website will offer you a list of books that you might
like to buy on the basis of what you're buying now and what you have bought in the
past [10].
• Monitoring and Surveillance Agents are used to observe and report on equipment,
usually computer systems. The agents may keep track of company inventory levels,
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observe competitors' Prices and relay them back to the company, watch stock
manipulation by insider trading and rumors, etc.
• User agents (personal agents) - User agents, or personal agents, are intelligent
agents that take action on your behalf. In this category belong those intelligent agents
that perform tasks like checking your e-mail and sorting it according to the user's
order of preference, and alert you when important emails arrive; Play computer games
as your opponent or patrol game areas for you; Assemble customized news reports
for you. There are several versions of these, including newshub and CNN.
• Data mining agents - This agent uses information technology to find trends and
patterns in an abundance of information from many different sources. The user can
sort through this information in order to find whatever information they are seeking.
Classification is one of the most common types of data mining, which finds patterns in
information and categorizes them into different classes.
7.0 ELECTRONIC COMMERCE
Electronic commerce refers to the wide range of tools and techniques utilized to
conduct business in a paperless environment. Electronic commerce therefore includes
electronic data interchange, e-mail, electronic fund transfers, electronic publishing,
image processing, electronic bulletin boards, shared databases and magnetic/optical
data capture [11]. Companies are able to automate the process of moving documents
electronically between suppliers and customers. This system provides access to
customers all over the world and thus eliminates geographical limitations [12].
Some of the E-commerce applications with applications in B2C (Business to
Consumer) and B2B (Business to Business) space, which are changing the dynamics
of Supply Chain Management include:
E-tailing: using the Internet for selling goods over the internet. The archetypal e-tailing
application is that of a bookseller such as Amazon. This company is renowned for the
fact that it only sells books over the internet and doesn't even take telephone orders.
Customers of Amazon interact with its website and carry out a number of functions
including:
browsing readers’ reviews of books; reading feature articles about books and authors similar to those found in magazines
and newspapers;
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searching for details of a book based on information such as the author's name or the title of the book;
browsing the books which are the Amazon bestsellers; ordering books using credit cards or some other similar payment method; tracking the progress of an order.
e- Procurement: The term procurement is used to describe the purchase of goods and
services which are not directly used in the main business of a company. For example,
a car manufacturer will procure stationery for its employees or procure training
courses for them to attend in order to improve their skills. An e-procurement system
which would automatically take the form produced by the person making the
procurement, check that it satisfies all the company rules for procuring the item that is
required, carry out authorization if it is below a certain limit or send the form to
someone who can carry out authorization and then log the purchaser into the site of
the supplier. He or she is then able to use this site to make the purchase, quoting an
automatically generated procurement requisition number.
E-Auctions: These are sites on the web which run conventional auctions. There are
two types of auction: those that are carried out in real time, where participants log in to
an auction site using a browser at a specified time and bid for an article until the
highest price is reached and no other bids are forthcoming. The other type of site –
and the most common – is where an item is offered for sale and a date advertised
after which no more bids are accepted. Such sites make a profit from two sources:
first they usually charge a commission on the items that are sold and, second, they
display adverts which are viewed by visitors to the site. The auction site will then
receive some fee for displaying the advert, a further fee if a visitor clicks on an advert
and it takes them to the advertiser's website and another fee if they purchase
something from this site. Again, this is just an online analogue of a conventional
business.
7.1 Electronic Supply Chains
Electronic Supply Chains (ESC) refers to those supply chains that are electronically
facilitated between or among participating firms. Also called Virtual Supply Chains,
these are realized in two forms, EDI-based or Internet based. EDI generally connects
firms through proprietary Value Added Networks (VAN) [13], whereas the Internet
generally connects firms through open networks which use standard protocols. The
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ESC links trading partners to allow them to buy, sell and move products, services and
cash. Due to the low implementation costs, the introduction of the Internet has
brought about opportunities that allow firms to transact with other enterprises
electronically. Amazon is one such example. New types of intermediaries have been
created as a result of virtual supply chains. The e-supply chain also envisages use of
internet-based applications to transact and exchange information like product and
inventory information with their downstream or upstream trading partners. Supply
Chain initiatives like Collaborative Planning, Forecasting and Replenishment (CPFR),
Vendor Managed Inventory (VMI), Efficient Customer Response (ECR) and Quick
Response have been increasingly facilitated in the new e-supply chain paradigm.
Information sharing among suppliers, manufacturers, distributors and retailers are
greatly improved.
7.2 Virtual Market Places
Virtual marketplaces have many names such as e-markets, net market places, and
electronic markets. These markets all have common characteristics [14]:
Producers Reliance on the Internet Buyers and Sellers come together without an intermediary Neutrality (all buyers and sellers are treated the same) Information is provided about sellers and products
Metal Junction [15] is the virtual marketplace owned by two of India’s largest steel. In
its most fundamental form, a virtual market place brings together buyers and sellers
through the internet. At its highest level, a virtual market place gives a purchaser and
supplier the opportunity to re-engineer the sales administration process, improve
forecasting and scheduling, renew its go-to-market approach, shorten its order-to-
cash cycle, and enhance customer service. Ideally, virtual market places are centered
on a particular industry. Some prominent examples are steel, agricultural products,
and automotive parts. In addition to providing information on vendors and general
information about its products, a virtual market may also offer product specifications,
side-by-side comparisons, technical papers, and market analysis.
Many challenges exist in setting up an e-marketplace. Primary among these are
identifying the tools necessary to use the market, providing a secure environment,
pricing, payment, and fulfillment. For an orderly marketplace, Internet protocols must
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be selected. The cost of the technology to access and engage in the market must not
be prohibitive. Security and privacy must be adequate to ensure confidential
transactions. Authentication and authorization of users from many organizations must
be possible. Private communication must be assured.
Pricing policies may be set or bartered. A common example of bartering, or
auctioning, is E-Bay for consumer products. Payment procedures can be
predetermined or arranged between the buyer and the seller. Finally, fulfillment of
orders must be insured. As in the case of traditional marketplaces, failure to deliver in
a timely manner will result in firms losing market power and ultimately may lead to
failure.
8.0 GREEN SUPPLY CHAIN MANAGEMENT (GSCM)
Patrick Penfield of the Whiteman School of Management defines Green Supply Chain
Management (GSCM) as "the process of using environmentally friendly inputs and
transforming these inputs into outputs that can be reclaimed and re-used at the end of
their lifecycle thus, creating a sustainable supply chain.”
GSCM integrates ecological factors with supply chain management principles to
address how an organization's supply chain processes impact the environment.
Organizations are increasingly becoming aware of the impact of tight integration of
supply chain and environmental management systems in enabling a sustainable
business strategy. Many are now seeking out solutions and guidance on how to
implement a sustainable supply chain. A sustainable supply chain is supply chain that
is not only optimal for the organization, but is optimal relative to its limited
environmental impact.
8.1 Software Perspective - Streamlining / Transforming Business
Processes
Green Supply Chain Planning: Information Technology can optimize transportation
planning routes and ensure that goods/services are delivered in the most energy
efficient and cost- effective manner. Automation of the transportation planning
process enables transportation managers to manage by exception to mitigate the
effects of unexpected events. The Supply Chain Council has documented the best
practices for transportation and distribution in its SCOR framework. Some
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organizations like IBM have developed Business Process Modeling software based
on the SCOR framework to enable efficient planning of supply chain functions. Many
IT solutions exist that can evaluate the impact that various supply-chain network
configurations and transportation strategies have on the carbon footprint. For
example, LogicNet plus XE solution with the carbon extension from ILOG takes into
consideration multiple parameters-including environmental factors - to help
organizations choose the right kind of supply network configuration.
Green Supply Chain Execution: Information can help in streamlining business
processes and thereby, enable reduction in resource usage while executing business
processes. For example, visibility solutions provided by Cognizant to leading logistics
players for asset tracking helped them reduce their resource consumption while
achieving higher service levels. Automation for enabling end-to-end paperless
operations is a major target for waste reduction.
RFID technology can also be a huge enabler for GSCM strategies. RFID-enabled
tracking of energy footprint data can make it possible for organizations to understand
the “who, why and how” a product reached a particular stage in the supply chain.
RFID labels can carry information related to the carbon/energy footprint and help
organizations more accurately analyze their supply chains from a variety of
environmental perspectives. At Cognizant, there is a dedicated Center of
Excellence for RFID that has helped in the implementation of RFID solutions
for leading logistics providers and retailers.
Green Supply Chain Collaboration: Collaborative Transport Management
(CTM) goes hand-in-hand with GSCM. IT solutions for facilitating the
involvement of all partners in the supply chain can help organizations
achieve better utilization of transportation assets and reduce overall
energy requirements [16].
IT can also facilitate collaborative planning forecasting and replenishment
resulting in higher accuracy of forecasting thus reducing the resources
consumed in production.
9.0 CONCLUSION
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There is estimated to be around $107 billion in overall revenue opportunity for the
cloud-based market in the next three to five years, and there is seemingly no limit to
what the cloud can contain for enterprise applications. As the definition of “cloud”
becomes more all encompassing, so does the technology companies are rolling out
for clients. The market for cloud-based services is expected to reach nearly $150bn
by 2014. Manufacturing companies around the world, with their inherent penchant for
low IT budget, are paying much closer attention to cloud computing and its potential
value to supply chain processes - from sourcing to after-sale service. RFID application
in the supply chain offer solutions when it is impractical to use other technologies or
manual labor to collect data. RFID applications have many benefits; RFID applications
can help in asset tracking, inventory and product management and provide solutions
for anti-counterfeiting. Data collected to accomplish all these goals can provide
suppliers and end users with the tools and information to make management
decisions on the fly resulting in a better ROI. Voice technology is even providing new
opportunities in supply chain management. Now voice recognition software and
associated technologies provide efficiencies to the supply chain management process
by allowing employees to order and ship supplies using simple language instead of a
computer keyboard. Using the most widely used supply chain management software,
employees selecting orders from a supply warehouse have reported as much as a
25% increase in productivity and a 35% decrease in human error. With increase in
environmental concerns during the past decade, a consensus is growing that
environmental pollution issues accompanying industrial development should be
addressed together with supply chain management, thereby contributing to green
supply chain management. Green supply chain management has emerged as a
proactive approach for improving environmental performance of processes and
products in accordance with the requirements of environmental regulations.
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