Introduction
Supply chain management is concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed:
In the right quantities
To the right locations
At the right time
In order to
Minimize total system cost
Satisfy customer service requirements
Fierce competition in today’s global markets, the introduction of products with shorter life cycles, and the heightened expectations of customers have forced business enterprises to focus attention on, their supply chains.
This has been made easier by the use of software for managing the demand and supply chain. Using supply chain software, a manufacturer can communicate with his suppliers constantly about the raw materials required for production. This enables the supplier to plan and supply the raw materials according to the manufacturer’s demand. On the other hand, demand chain software provides the channel members and the employees of a manufacturer with accurate and up-to-date information about the goods and services available with the manufacturer, their prices, the distributors and the suppliers in a particular region.
Supply chain management is a set of processes which helps organizations develop and deliver products. A supply chain comprises of multiple companies working together as a single entity with complete transparency of information and accountability between them. Through the supply chain, the flow of information, material and payment between the business entities takes place. The product flow describes the processes involved in transforming raw materials into finished goods. The information flow describes the future requirements (raw material, tools, products etc.) and the order delivery status.
Supply chain management also involves the integration of ad hoc and fragmented processes into a consolidated system. Process optimization helps organizations reduce the total cost of the order to delivery process by trading off inventory, transportation and distribution costs. Though traditional optimizations methods help reduce costs, they can’t handle real life interdependencies between processes. If the business applications are not integrated retailers, manufacturers, distributors and other business entities will only be able to reduce their direct cost and not the operational costs.
Till large scale optimization models were developed, the visibility of information required to synchronize supply chain operations was minimal. Inadequate information visibility led to excess inventory and huge transportation costs. But now organizations are well equipped with sophisticated tools like Rhythm from i2 technologies and advanced planning and optimization tool from SAP. These technologies help the organizations predict demand, convey inventory levels and solve transportation costs.
