8.3 Supply Chain Opportunities

In recent years there have been many progressive changes in supply chain management (SCM). It has now become a common practice to share information along the supply chain, this is known as a collaborative supply chain because the various components work together. Companies that use a collaborative supply chain use master data management (MDM) systems to organize all information. Some providers of such systems are SAP, Oracle Corp.and IBM. MDM systems manage a large amount of information form both internal and external sources.

Example: Wal-Mart is known for its collaboration with P&G.

Managing E-Business
The increase in e-business has resulted in the utilization of the Internet in SCM. Using the Internet for SCM has several benefits including speed, it's less expensive, flexibility, and the possibility of shortening the supply chain. Overall, the increase of e-businesses has improved SCM performance and customer satisfaction.

Electronic marketplaces allow identification of upstream suppliers. E-marketplaces also allow for a better dispersion of resources as well as an increase in shared information.

Supply chain participants in e-businesses are also using electronic ordering and funds transfer (EOFT) and advanced shipping notice (ASN) to improve customer service. These transactions are conducted by using electronic data interchange (EDI).

SCM has morphed from a linear form into a "hub." Companies using linear SCM follow a sequence which can take longer. In the "hub" information is shared and steps can be skipped to expedite the process.

Managing Logistics
Logistics involves the movement of materials amongst the supply chain, including shipping, storage, and inventory management. Fixed management systems uses a technology based system to fully integrate all components of the supply chain. E-logistics involves drop shipping that allows the vendor to ship directly to the end consumer.

Managing Inventory
Inventory management is very important in providing timely delivery of goods. Some companies keep inventory on hand as a type of "insurance". However, this can be expensive to maintain. Collaborative fulfillment networks (CFNs) can be used to reduce inventory and transportation costs. Vendor managed inventories (VMI), the vendor is responsible for storing inventory in warehouses for the manufacturer or retailer.

Collaborative management, if coordinated properly can be more efficient and cost reductive.

Managing Other IT-Assisted Solutions

The supply chain hub has resulted into the formation of supply chain teams. Supply chain teams are comprised of several individuals with their own area of expertise. These individuals then address customer issues within their area of knowledge. For example one person may be designated to address delivery issues.

Virtual factories have been developed to let organizations simulate and make changes to their supply chain design before implementing the practice into the actual factory.

There are now more wireless options like RFID that can improve supply chain issues.

Ethical Issues Related to SCM

Collaborative supply chain management involves sharing information. This must be done in a responsible and secure manner. Also, by eliminating parts of the supply chain, jobs are also eliminated. Long-time employees may be displaced.

Source:
Turban, Leidner, McLean, Wetherbe. Information Technology for Management Transforming Organizations in the Digital Economy. 6th ed. John Wiley & Sons, 2008. p. 307-312.