SCM TECHNOLOGIES AND THEIR APPLICABILITY IN THE

SC OPERATIONS
Adithya Ramesh

MBA(TT),2nd Sem
CUSAT
[email protected]

Abstract: The retailers of chain retail enterprises based on POS system can acquire
dynamic sales information. With the help of EDI, sales information can be sent in time to
manufacturers or wholesalers. Therefore, manufacturers can adjust production according
to the changes of market demands in order to avoid too much storage; retailers can also
replenish in time their product from the wholesalers or manufacturers in order to avoid the
shortage of merchandise, which will benefit all the members of the whole supply chain.

Keywords: SCM, technologies, operations, bar code.

1.0 INTRODUCTION

1.1 General Information

Supply chains include a company’s entire manufacturing and distribution process. They involve
every step of the production from planning to manufacturing to handling defective goods. The
overall goal of these chains is to keep the process running smoothly at all times and to keep all
of the components (i. e. vendors, warehouses, etc.) connected. Even for business individuals
who do understand the essence of the supply chain, they may not understand how it fits in or
how it is different from another popular technology:

ERP (Enterprise Resource Planning). In fact, supply chains often work best in conjunction with
an ERP system but they are not meant to replace or to use instead of such a system because
ERP systems involve a multitude of business activities, including customer service and
production planning that are not a part of supply chains. Supply chains are generally concerned
 with the flow of raw materials, manufacturing, production, and distribution. However, the ERP
system does organize a lot of the information supply chains use to run efficiently and without
that system most companies run into problems effectively setting up their supply chains.
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 can it 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. Additionally, companies were limited in their ability to
work with global partners because of language barriers and time differences. Using the Internet
to handle most of the elements involved in supply change management, including procurement
and communication, makes them exchange of data and the running of the supply chain faster.
One of the biggest benefits technology has given to the supply chain concept is the ability for
companies to collaborate. These collaborations are designed for the mutual benefit of all
parties.

For example, a supplier of consumer goods may be linked up via the Internet to one of its
distributors so that when the supply gets too low an order for more of those goods can be
placed automatically. In this way, the distributor never has to worry about running out of a
product and disappointing customers and the supplier doesn't have to worry about maintaining
a large inventory in expectation of demand. Similar systems have also been constructed to
send out multiple requests to vendors when an order is placed. Collaborating this way makes
better use of existing resources and paves the way for a larger profit margin on all sides of the
equation.

While the benefits of supply chain management are many, using technology to achieve those
benefits does have two main drawbacks: one is resistance from vendors and the other is
resistance from employees. Suppliers of goods are often hesitant to jump onboard because of
the initial costs involved in setting up their own end of supply chain management system and
because most vendors do not have a trusting relationship with their buyers. To overcome this
obstacle, the strong relationship must be present and the seller needs to be able to see the
profit potential on their end of the arrangement. Likewise, many employees have learned to
develop a hate-hate relationship with new technology. After all, it costs them their jobs and
often makes them feel that their work is more tedious or more complicated. Plus, software
mistakes, which are inevitable at the beginning, may cause other employees to lose faith in the
system altogether. Employees need to trust the system, the company, and their ability to use
the program if they are going to adopt the supply chain management software.

2.0 THE ESTABLISHMENT AND DEVELOPMENT OF SUPPLY CHAIN

Under the drastic competitive mechanism of market, the traditional enterprise

management pattern of Vertical Integration, which refers to the pattern to control the
whole process of raw and processed materials, manufacture, distribution and sales
transaction, has been replaced by Horizontal Integration. Making full use of external
resources, enterprises put their main emphasis on their key business and the cultivation
of their core competitive power while they give their non-core business to their partners.
Horizontal Integration establishes a chain that links all the enterprises from suppliers,
manufacturers and distributors. Since the relationships of adjacent node enterprises are
demand-and supply, all the adjacent enterprises are connected together to form a supply
chain. Supply chain, with the core enterprises as the center and through the control of
information flow, logistics (service flow) and cash flow, starts from purchasing raw and
processed materials, producing semi-finished products and final products and ends by
delivering the products to consumers through marketing networks. It is an overall function
network chain structure pattern, which connects together suppliers, manufacturers,
distributors, retailers and the final customers. It is an integrated enterprise network
characterized by the external use of resources. The structure model of supply chain is
demonstrated in Fig.1. Supply chain management is to plan, cooperate, control and
optimize the logistics, information flow and cash flow of the whole supply chain system in
order to deliver the Right Product of Right Quantity, Quality and Status in the Right Time
to Right Place, which minimizes the overall cost. Therefore, the competition of
enterprises is that of the whole
supply chain instead of that of a single enterprise. The enterprises’ major concern is not
the maximization of their own interests, but the maximization of the interests of all the
supply chain members.

In the supply chain management, the members of the supply chain widely utilize
modern information technology in order to strengthen the weakness of supply chain,
improve operating efficiency, reduce operating costs and establish Quick Response
strategies. Therefore they can handle better in the heated competition and ever-
changing market and take the upper hand of the competition

2.1 Emerging e-Enabled SCM Applications

 Web-based procurement
 Customer/Supplier Relationship Management (CRM, CSUP)
 Collaborative planning, forecasting and replenishment (CPFR)
 Web-based Multi-location Advanced Planning & Scheduling (APS)
 Product life cycle collaboration
 Web-enabled order management
 Virtual fulfillment networks
 Web-based service and support
 Commit to Promise (CTP)
 Web EDI, iVMI
3.1 Bar Code Technology and Its Application

Bar code technology is a kind of automatic recognition technology which has been
established and developed during the application practice of computers. It possesses
such characteristics as high speed input, large quantity information, high accuracy, low
cost and high reliability, therefore it has become one of the most efficient means of data
acquisition. Bar code technology provides a whole set of reliable code authentication
system for products worldwide, a universal digitalized “language” for manufacture and
trade activities such as supply, manufacture and sales, and a sign of fundamental value
for all links of supply chain and logistics. It not only paves the way for the automatic
acquisition of commercial circulation data and for the interchange of electronic data, but
also provides advantageous technical guarantee for supply chain management and
electronic commerce. Therefore, bar code technology is widely utilized in supply chain
management fields such as Electronic Order System (EOS), Quick Response(QR), and
Continuous Replenishment Planning (CRP), which greatly improves the accuracy and
speed of data acquisition and data recognition, and achieves the highly efficient operation
of logistics and supply chain management

3.2 Radio Frequency Identification and Its Application

The fun damental principle of Radio Frequency Identification (RFID) is electromagnet

theory. RFID makes use of radio frequency to carry out non-contact two-way exchange of
communication data in order to realize the identification purpose. RFID is characterized
by quick and convenient reading, high speed recognition, large quantity of data, long
service lifetime, dynamic modification of tag data, dynamic communication and its safe
property and reliability. RFID includes the reader-writer, the electronic tag (or radio
frequency card), the antenna and the host computer and so on. The basic data
information such as the characteristics and properties of the merchandise is stored in the
electronic tag. The reader-writer is used to receive or rewrite the data information in the
electronic tag. RFID possesses two kinds of working modes, that is, Reader Talk First
(RTF) and Tag Talk First(TTF). RFID is applied to the non-contact data acquisition and
interchange fields such as material track and trace, delivery means and storage racks
recognition. As a result of the RFID tags’ readability and writability, RFID is especially
utilized in the fields which demand the frequent changes on data.

3.3 EDI and Its Application

EDI refers to the interchange of information in a generally-accepted set of standardized

electronic form
Through the communication networks, EDI can realize the data interchange and
automatic management
between computer systems, improve the communication efficiency of all the members of
supply chain and logistics management, quicken the response to the customers, reduce
the operational costs, curtail the turnaround speed and strengthen enterprises
competitive power. EDI includes such elements as data interchange standards, computer
networks, data processing software, among which EDI standards is the most important
part. The process of documents transmission and management with the utilization of EDI
system

The retailers of chain retail enterprises based on POS system can acquire dynamic sales
information. With the help of EDI, sales information can be sent in time to manufacturers
or wholesalers. Therefore, manufacturers can adjust production according to the changes
of market demands in order to avoid too much storage; retailers can also replenish in
time their product from the wholesalers or manufacturers in order to avoid the shortage of
merchandise, which will benefit all the members of the whole supply chain.

3.4 GIS, GPS and Their Applications

Based on geography spatial data, Geographical Information System (GIS), provide timely
various spatial and dynamic geography spatial data with the help of geography model
analysis. GIS is utilized in logistics analysis mainly because GIS’s powerful function on
geography data can process data information on suppliers, storehouses, customers and
retailers by the chart stratification way, and can display the processing results by the
graph with the help of the arithmetic of delivery receiving model. The application models
based on GIS logistics analysis are the vehicles route model, the most short-path model,
the network flows model, the assignment set model and the installation localization model
and so on. Global Positioning System (GPS) developed by means of satellite
communication technology possess omnibearing, real- time 3D navigation and
localization capacities in the air, the land and the sea. GPS is finding its way into
automobile selflocation, follow & dispatch, railway transportation management and
military logistics management.

3.5 Electronic Commerce and SCM Based on Internet/Intranet

In supply chain management, it is necessary to guarantee the information to transmit

efficiently and accurately in order to secure competitive advantages. The development
of computers and network communication technology enables it to come true. The
supply chain management enterprise information organization pattern based on
Internet/Intranet Enterprises establish Intranet and make it connect with Internet.
Through Internet, enterprises can exchange information with the outside, realize the
communication and control of the information on distributors, branches, partners of
different places, and achieve the timely visit and information collection to the VIP
customers. Besides, they can also realize their electronic commerce and conduct
sales service and financial transactions in the Internet. While through Intranet,
enterprises’ internal affair management, information sharing, and collaboration and
computation can be achieved. Electronic Commerce(EC) lays its emphasis on the
commercialized application under the network computation environment, that is, the
application to connect buyers, sellers, manufacturers and partners through Internet,
Intranet an Extranet. Generally, the application of EC includes three phases􀎫Content
 Management, Collaboration and Messaging and Electronic Commerce. Content
Management increases the brand value of the product through making better use of
information and demonstrates itself mainly in communication and service;
Collaboration and Messaging refers to automatically processing commercial flow in
order to cut down the costs and development cycle; Electronic Commerce includes
market and pre-service, marketing, customer service, and electronic shopping and
electronic transaction.

Customer-driven
product design

Fig1. Intelligent E-Business

4.0 Goals of Supply Chain IT

• Collect information on each product from production to delivery (or point of purchase)

– Provide visibility for all parties involved in the transaction; e.g., order status for
retailers and suppliers and impact of delays

– Participants need to see data in terms of their own (e.g., supplier of cotton need
to see demand for bandages in pounds of cotton) – translation tables (Bills of
Material) required through the system

– Standardized product identification across companies and industries

 • Provide access to any data in the system from a single point of contact

– Information requested needs to be the same regardless of mode of inquiry (fax,

cell phone, PC, etc.)

• Facilitate analysis, planning of activities and make trade-offs based on information from
any part of the entire supply chain

– Strategic to tactical decision-making on how to operate the supply chain most

efficiently to reduce uncertainty!

• Facilitate collaboration with supply chain partners

– Integration of business processes and IT with suppliers & customers (SRM and
CRM)

5.0 CONCLUSION

With the formation of economic globalization, the competition between enterprises has
become increasing fierce even beyond the countries. At the same time, the expense
need of customers develop to be diverse and personal. With supply chain, modern
information technology provides a new way for the development of enterprise
management. To get advantage in competition, the enterprises are imperative to change
the traditional information system, to adopt advanced technology and optimize the supply
chain in order to share the information of all joints on the chain, thus shortening the term
for ordering in advance, lowing the stock, elevating the efficiency of transportation,
decreasing transferring time, improving ordering and sending effectiveness and timely
answering the questions from customers and improve competition edge[9]. The
development of information technology and the continuous lowering of cost make the
management of supply chain possible. The combination of information technology and
management idea of supply chain improves the competitive edge of enterprises. Many of
them have already connected with their customers and suppliers by computers. By multi-
media technology, they can timely and accurately transfer pictures, voices and words to
conveniently store and get data. In this way, the efficiency and satisfaction of customers
have been greatly improved [9]. Nowadays, an era with information explosion, whether
an enterprise can adopt advanced information technology will directly determine its
development or survival. Particular attention should be paid on how to use the modern
information technologies while adopting the methods of supply chain management, which
should be studied further by both managers and professors.

Four new technologies and business practices that harness the power of the Internet
are virtual market places, radio frequency identification tags, synchronized planning
(RFID), and supplier performance management. Virtual markets enable buyers and
sellers to come together 24/7 in effect creating a store that never closes. The additional
advantages of virtual marketplaces are the elimination of an intermediary, access to
product and vendor information, and a neutral market where all buyers and sellers are
treated equally. Virtual markets give both buyers and sellers the opportunity to re-
engineer their sales administration process.

As noted above, RFID has existed since the 1960′s, however, improvements in
technology and paring RFID with the Internet has expanded this tracking method
beyond its limited past in manufacturing plants. The three components of an RFID
system are an antenna, transceiver, and a transponder (tag).

Synchronized planning when applied across a supply chain consists of collaborative

forecasting and replenishment, coordinated production, inventory and capacity
planning, information integration, and direct linkage of ERP systems. The four key steps
in synchronized planning are information integration, planning synchronization,
workflow coordination, and the opportunity to develop new business models. Key to
synchronized planning is using the Internet for information sharing. The benefits of
synchronized planning include better job scheduling and reduction of the bullwhip
affect. The bullwhip affect magnifies oscillations upstream in the supply-chain caused
by a change in consumer sales. Synchronized planning also defines what is to be done
with shared information and how it will be done. As product life cycles grow shorter,
efficient synchronization of the supply-chain rewards firms who sees its potential.

Supplier scorecards are a method of evaluating members of the supply-chain in

increasingly intertwined organizations. As Alan Greenspan pointed out in 2001, many
firms were unable to anticipate the last recession and continued overbuilding inventory
despite having invested heavily in supply-chain automation. This statement
underscores the need develop the tools to monitor the performance of firms up and
down the supply-chain. The five steps to develop an effective scorecard are agreeing
on what is important and how it will be measured, the use of web-based incident
reports, engagement in continuous supplier management, measuring to prevent
problems, and the use of web-based software. In rolling out these tools, it is imperative
that both the buyer and the seller first agree on what is important and how it will be
measured. The other steps flow from the first.

The Internet has had an enormous impact on the personal and professional lives of
businesspersons. On the business side, the Internet has brought new life to existing
technologies and offered businesses the opportunity to engage in the world
marketplace. The harnessing of the Internet by business has enabled greater
cooperation and information exchange up and down the supply-chain. The Internet has
enabled businesses to improve the supply-chain by the way they manage inventory,
place orders, and communicate critical information with each other.
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