“Domain Of Supply Chain Management - A State Of Art”

Abstract

A supply chain is a network of facilities and distribution channels that encompasses the procurement of materials, production, assembly and delivery of product or service to the customer. The management of the supply chain and the roles of various actors involved differ from industry to industry and company to company. As a result Supply Chain Management (SCM) has become a vital issue for manufacturers, professionals and researchers. It is felt that to manage the supply chain effectively entire structure of supply chain must be understood properly. This paper attempts to provide the reader a complete picture of supply chain management through a systematic literature review. It presents a state of art on SCM by systematically arranging main activities in supply chain. In addition the step-by-step approach for understanding the breadth and depth of Supply Chain is proposed which consequently explores the domain of SCM.

Full text

J. Technol. Manag. Innov. 2007, Volume 2, Issue 4
Received June 16, 2007 / Accepted September 20, 2007
“DOMAIN OF SUPPLY CHAIN MANAGEMENT – A STATE OF ART”
Atul B. Borade
Jawaharlal Darda Institute of Engineering and Technology,
Yavatmal (M.S), India.
atulborade@rediffmail.com.
Satish V. Bansod
Professor Ram Meghe Institute of Technology and Research,
Badnera (M.S), India.
satishbansod@rediffmail.com.
Abstract:
A supply chain is a network of facilities and distribution channels that encompasses the procurement of materials,
production, assembly and delivery of product or service to the customer. The management of the supply chain and the roles
of various actors involved differ from industry to industry and company to company. As a result Supply Chain Management
(SCM) has become a vital issue for manufacturers, professionals and researchers. It is felt that to manage the supply chain
effectively entire structure of supply chain must be understood properly. This paper attempts to provide the reader a
complete picture of supply chain management through a systematic literature review. It presents a state of art on SCM by
systematically arranging main activities in supply chain. In addition the step-by-step approach for understanding the breadth
and depth of Supply Chain is proposed which consequently explores the domain of SCM.
Key Words: Supply Chain, Supply chain activities, Supply chain management, Implementation strategy.
Introduction:
Organizations adopt numerous business improvement
methodologies to improve the business performance.
Researchers, Manufacturers advocates the manufacturing
strategies like Quality Circles, Just In Time, Concurrent
Engineering, Business Process Reengineering, Total
Quality Management, and Six Sigma etc. according to the
need of industry or the trend prevailing at the time for
business performance improvement. These strategies
surfaces and loose the shine in no time, but Supply chain
management stands tall against all the odds and has become
an integral part of corporate strategies. Manufacturers and
researchers have noted a number of problems regarding
supply chain activities in their research and practice
(Sridharan et al., 2005). It is observed that usually either a
system (Integrated approach) or a subcomponent in supply
chain (Dis-Integrated approach) is focused and discussed in
the literature but fails to answer the rational (why, what,
how) behind supply chain activities (Spens & Bask, 2002).
This paper addresses these questions with the help of
structured literature review, which not only helps to
understand the management of supply chain but also
delimits research scope of SCM.
Review of Literature:
Adoption of Supply chain management practices in
industries has steadily increased since the 1980s. A number
of definitions are proposed and the concept is discussed
from many perspectives. However Cousins et al. (2006);
Sachan and Datta (2005); Storey et al. (2006) provided
excellent review on supply chain management literature.
These papers define the concept, principals, nature, and
development of SCM and indicate that there is an intense
research being conducted around the world in this field.
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They critically assessed developments in the theory and
practice of supply management and through such an
assessment identified barriers and enablers. Authors found
gaps in theory and practice and explored future research
areas.
Studies on supply chain management suggest that
the scope of business processes being coordinated across
supply chains is broad. Mejza and Wisner (2001)
determined the scope of processes that are being integrated
across organizational borders and indicated that a large
number of companies that practice supply chain
management are attempting to integrate logistics,
marketing, and operations-oriented processes across supply
chains. Gunasekaran and McGaughey (2003) extended the
scope of SCM beyond material management, partnership,
information technology to the Total Quality Management
areas like management commitment, organizational
structure, training and behavioral issues. As firms' survival
lies on integration, a good understanding of the integration
process is a key aspect in SCM. Stonebraker and Liao
(2006); Yih Wu et al. (2004) studied how to integrate the
supply chain management business process .It is concluded
that the level of investments to supply chain partners, the
degree of dependence between supply chain partners, and
the level of product salability of manufacturer would
enhance commitment and, consequently, the integration of
the SCM business process. Håkansson and Persson (2004)
provided a theoretical framework and proposed the
theoretical as well as empirical reasons for enhancing the
underlying logic of process integration in supply chain
management to capture pooled and reciprocal
interdependencies. Mouritsen et al. (2003) discussed that
basic hypothesis “the more integration (more wider the
scope)– the better the management of the chain” is not
always true and proved that it depends very much on the
“environment” of the supply chain and the power relations
between the participants in the supply chain.
Varma et al. (2006); Cigolini et al. (2004) discussed
strategy formulation, identified decision-making areas for
improving material flow, and finally performance
evaluation in order to determine how well the supply chain
initiative has been implemented. Authors proposed a set of
management techniques and tools to analyze successful
SCM strategies. As traditional supply chain too often, is a
sequence of weakly connected activities both within and
outside the organization and leads to many misalignments.
Piplani and Fu (2005) presented a coordination framework,
called ASCEND, to align the inventory decisions in
decentralized supply chains. The framework was based on
multi-agent technology, coordination theory, and
optimization technology.
It is also observed that research is not limited to
hypothesis testing and data analysis, but more advanced
techniques like simulation, Artificial Neural Network, and
Fuzzy logic are also used for optimization and decision
making in SCM. Chan et al. (2002) proposed a simulation
approach for measuring supply chain performance, which
incorporates order release theory. The importance of order
release is first examined and its applicability to monitor the
performance of the supply chain is proposed. Using the
simulation model, a new order release mechanism was
developed which improved the supply chain performance.
Koh and Tan (2006) used the principles of fuzzy logic for
analyzing and monitoring performance of suppliers based
on the criteria of product quality and delivery time where as
Chiu and Lin (2004) showed how the concepts of
collaborative agents and artificial neural networks (ANNs)
can work together to enable collaborative supply chain
planning (SCP).
It appears from literature review that researchers
have studied supply chain management from a system
perspective, or the systemic natures of interactions between
the participants of supply chain are observed. Although
numerous studies views SCM from different perspectives,
this paper gives the better understanding of supply chain
activities and its mapping by answering the rational behind
SCM.
Understanding Supply Chain Management:
Concept of Supply Chain Management.
SCM is management of material, money, men, and
information within and across the supply chain to maximize
customer satisfaction and to get an edge over competitiors.
Customers want products at the right place and at the right
time. For this, there should be an excellent synchronization
between the manufacturer and the customers. This was the
origin of the “Barter system” as we all know. As things
started becoming complicated, where one person had to
reach many individuals for his needs, one of the individuals
started management of gathering the products from
different people and supplying to those who are in need and
thus fulfilling his needs in return. This was the
revolutionized form of the Barter system and today it is
known as the supply chain management (Chopra & Meindl,
2001).
Researchers found that the lack of commonly
accepted definition of supply chain management and the
problems associated with supply chain activities makes the
understanding of supply chain management difficult. Let us
try to understand what is SCM. Supply chain management
is an enormous topic covering multiple disciplines
deploying many quantitative and qualitative tools (Johnson
& Pyke, 1999). There are numerous definitions of SCM;
few definitions discussed here would give an idea in a
nutshell. For example, Simchi-Levi et al. (2003) defines
Supply chain management as “a set of approaches utilized
to efficiently integrate suppliers, manufacturers,
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warehouses and stores, so that merchandise is produced
and distributed at the right quantities, to the right locations,
and at the right time, in order to minimize system wide
costs while satisfying service level requirements”. (p. 1).
Author emphasizes the activities undertaken by the various
actors involved in the supply chain and sets the
performance indicators as the economic production and
distribution of goods. Chopra and Meindl (2001) urges“the
processes which occur before manufacturing or production
into a deliverable product or service, typically processes
dedicated to getting raw materials from suppliers; and the
processes which occur after manufacturing or production
dedicated to getting goods and services to customers. ”(p.
3). Thus the processes before and after the production along
with material and information flow are pinpointed which
would help organization to achieve maximum profit.
Global Supply Chain Forum defines Supply Chain
Management “as the integration of key business processes
from end user through original suppliers, that provides
products, services, and information that add value for
customers and other stakeholders” (Lambert et al., 1998).
This definition aptly includes the information flow for
value addition instead of emphasizing the economic aspect
only like previous definitions. The process is considered as
the management of the entire value-added chain, i.e. from
the supplier to manufacturer, to the retailer and the finally
customers. Koch (2006) quotes “ Supply chain
management is the combination of art and science that goes
into improving the way company delivers products to
customers.” The dent is not only tools and techniques used
to tackle the problem of purchase, production and
distribution but also skill (art) required for running business
effectively. According to Arunachalam Raghu
(2003)“Supply chain management is concerned with
planning and coordinating the activities of organizations
across the supply chain, from raw material procurement to
finished goods delivery”.
In global supply chain manufacturers are
graphically dispersed around the world. Each company is
involved in a wide variety of supply chain activities such as
order fulfillment, international procurement, acquisition of
information technology, manufacturing, faster and reliable
delivery of products and customer service (McIvor, 2000).
SCM includes extensive research and data analysis to
perform above activities efficiently. It is also observed that
whole supply network could improve its ability to meet
expectation of consumers in terms of quality through co-
management of quality and supply chain practices (Romano
& Vinelli, 2001). Thus by using supply chain management
principals, the company will be able to reduce product
defects and to improve relationships within supply chain
(Sahay et al., 2006). In today’s ERP controlled uncertain
manufacturing environments SCM ensures higher
availability of product to avoid Lost sales / Stock outages. It
also stresses the importance of the efficient consumer
response process to achieve both customer satisfaction and
business efficiency (Romano & Vinelli, 2001).
Thus it clear that deriving the specific objectives
and scope of SCM is a formidable task since it depends on
numerous factors.
Need To Manage The Supply Chain:
The next important issue is why the firms should
consiously manage the supply chain.Supply chain involves
the cost to convey the information, produce components,
store them, transport them, and transfer funds and so on.
The total cost of supply chain tends to increase due to many
parameters like huge capital cost required for running
global businesses, mounting real estate costs and fright
charges (Koch, 2006). However the perfect planning in
SCM regarding material arrival, production schedule and
distribution not only reduces the inventory and inventory
cost but also reduces the wasted time and energy (Verma et
al., 2006). Economic research literature has pointed out that
there are linkages between inventory investment and
business cycle fluctuation. Supply chain management
drastically alters inventory investment across a range of
industries, and helps to tackle economic fluctuations (Heng
et al., 2005).
Issues To Ponder In Supply Chain:
It is found that SCM encompasses planning, manufacturing
and operations management necessary to bring a product to
the market place, from the sourcing of materials to the
delivery of the completed product. This section would
provide insights on the aspects and the issues that are to be
managed in supply chain.
Information Technology and Information
Management:
The advent of the Internet and electronic communication
has enabled companies to be more responsive to their
customers than ever. Sanchez and Perez (2003); Tarn et al.
(2002); Wieder et al. (2006) examined functions, current
developments and the rationale for IT integration by
analyzing the problems of enterprise resource planning
(ERP), electronic data interchange (EDI) and presented the
solutions of SCM. Authors provided insights into the
adoption of systems and the impacts on organizational
performance. There were no significant performance
differences found between ERP adopters and non-adopters,
either at the business process level, or at the overall firm
level. Although it was confirmed that the rich experience of
firms with ERPs, tends to deliver higher overall
performance, but no evidence was found of a similar effect
on supply chain performance. On the contrary EDI adopters
perceived more operational benefits, more external pressure
and mutual understanding, and fewer technical and
organizational difficulties than non-adopters of EDI. Shore
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and Venkatachalam (2003) assessed information sharing
capability of potential supply chain partners. Fuzzy logic, a
subset of artificial intelligence, together with analytical
hierarchy process was used to model the process and rank
potential suppliers. The methodology implicitly aids supply
chain design decisions since it explicitly handles vague,
ambiguous, and imprecise data. Kian Ng et al. (2003)
described the development of a simulation workbench for
modeling and analyzing multi-echelon supply chains. The
workbench facilitates study of inventory and forecasting
policies practiced by the echelons, and models different
information exchange mechanisms. An experiment was
conducted, to test the workbench and its capabilities and it
was confirmed that the workbench is a useful tool for
gaining valuable insights into information exchange in a
particular supply chain.
Information sharing practices such as vendor-
managed inventory (VMI) give manufacturers access to
more accurate demand information, e.g. customer sales
data, than before. Småros et al. (2003) used discrete-event
simulation to examine how a manufacturer can combine
traditional order data available from non-VMI customers
with sales data available from VMI customers in its
production and inventory control and what impact this has
on the manufacturer's operational efficiency. The key
finding was that even for products with stable demand a
partial improvement of demand visibility could improve
production and inventory control efficiency. Other finding
was that the value of visibility greatly depends on the target
products’ replenishment frequencies and the production
planning cycle employed by the manufacturer.
Knowledge Management:
Global competition and accelerating technological changes,
especially in information communication and Internet
technologies makes competition knowledge-based thereby
affecting supply chain management across firms (Lang,
2001) .A stronger emphasis on knowledge management as
part of business strategy may help supply managers to
manage uncertainty better. Fan et al. (2000); Warkentin et
al. (2001) proposed a framework of knowledge
management and “e-knowledge networks” in inter-
organizational systems to support organizational
collaboration. It is observed that establishing internal
knowledge management systems for organization creates
opportunities to minimize knowledge isolation in functional
departments and creates a greater base for tacit learning to
be leveraged. On the other hand external knowledge
management systems bring value chain members closer
together and add value to the product (i.e. increased quality,
customer perceptions of brand platforms) throughout the
value chain. Koh and Tan (2006) found that only
knowledge management is many times inadequate for
managing a supply network in uncertain environment hence
a new approach – called the “intelligence handbook” was
proposed to discover operational intelligence in order to
map knowledge in a supply network with uncertainty.
Desouza et al. (2003) linked the impact of organizational
structure in knowledge transfer and utilization among the
different participating functions in the perspective of
systems theory. Authors then exploits the rational behind an
effective process of knowledge movement in any
organization, and the probable factors that influence such
movements.
Customer - Supplier Relationship Management:
Customer satisfaction is absolute for staying abreast in
competitive environment that can be achieved only by
quickly responding to customer needs. Efficient consumer
response (ECR) is a supply chain management strategy that
attempts to address the inefficiencies in the supply chain.
Hoffman and Mehra (2000); Harries et al. (1999); Sparks
and Wagner (2003) discussed efficient consumer response
(ECR) as a supply chain strategy by analyzing the adoption
of ECR strategy in some industries. Furthermore, a
management action plan is presented for future adoption of
ECR strategy by similar business operations Authors
recommended flexible supply chain by involving change in
layouts, establishing faster set-ups and by developing
partnership with vendors for quicker response.
The advent of the Internet allows electronic
communication with suppliers regarding matters of stock
availability, ordering and delivery without the associated
costs of Electronic Data Interchange. As a result
organizations can deal with a larger network of suppliers.
Power (2004) examined the relationship between suppliers
and manufacturers, and the effectiveness of business to
business (B2B) e-commerce implementations. The results
indicated that there is a clear link established between
effective management of human resources and effective
implementation of B2B e-commerce. Jonsson and Zineldin
(2003) proposed conceptual model including behavioral
dimensions of supplier-dealer relationships and presented
hypotheses about how to achieve satisfactory inter-
organizational relationships. It is concluded that long-term
relationships between customer and supplier can lead to
higher satisfaction. Lambert and Pohlen (2001) provided a
framework for developing supply chain metrics that
translates performance into shareholder value. The
framework emphasized on managing the interface between
customer relationship management and supplier
relationship management at each link in the supply chain.
Supply chain Design:
Manufacturing firm’s supply chain design is based on
effective integration. Although supply chain management
mainly concentrates on the manufacturing function,
Braganza (2002) and Power (2005) examined different
perspectives on integration and suggested that integration of
several functions at different organizational levels achieve
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above average financial and performance results. It is
observed that current static approaches and theoretical
models are ineffective in considering all variables and
constraints for designing supply chain. These often require
a lot of computing time and present poor flexibility in terms
of model changes as a result a large number of firms have
reconfigured their supply chains. Reconfiguration is to be
done through the reduction, centralization and re-location
of plants and distribution centers, design of new distribution
systems, and reduction of the supplier base. Lemoine and
Larsen (2004) analyzed implications of such
reconfiguration for freight transport showing how changes
in logistic structures and decisions could affect the supply
chain decision.
The manufacturing firms has witnessed lean
production paradigm positively, and there is much evidence
to suggest that level scheduling combined with the
elimination of waste has successfully delivered a wide
range of products. This has led to the emergence of the
agile paradigm characterized by “quick response” and
similar schemes.Manson- Jones et al. (2000) demonstrated
how the “lean” and “agile” paradigms might be integrated.
They designed a total performance metric and developed a
route map for integration of lean production and agile
supply in the total chain. The supply chain dynamics and
associated control problems calls for reengineering the
supply chain. In practice many organizations have adopted
business process-reengineering (BPR) initiatives but the
results are disappointing. Lalwani et al. (2006) suggested
that one of the reasons for this might be the difficulty of
grasping the full dynamic complexity of the processes and
systems encountered. Authors proposed that current
developments in systems thinking and continuous system
simulation, when applied within the context of an
operations management framework, may offer the good
design of SC and improved success ratios in BPR projects.
Logistics and Distribution management:
Many years practitioners and professionals were confused
between “logistics” and “supply chain management”, the
usage of each term varied according to the industry.
Lummus et al. (2001) examined the historical definitions of
both terms, and proposed a hierarchy for the relationship
between logistics and supply chain management. In context
of changing environments resources are dispersed world
wide, and the distances between production facilities has
increased .It is felt that effective logistics planning with
respect to warehouse location and choice of vehicle
routings will guarantee organizations to respond quickly in
harsh business ambiance. Gimenez and Vetura (2005)
studied the internal and external integration influence of
logistics on other functions of supply chain management.
The study reveled that integration in the logistics-marketing
interface does not lead to reductions in costs, stock-outs and
lead-times. The integration achieved in the logistics-
production interface does improve these performance
measures, if there is no external integration; but the external
collaboration among supply chain members does always
contribute in improving firms’ logistical performance. A
product return is another worry for the supply chain
managers. Srivastava and Srivastava (2006); Meade and
Sarkis (2002) presented a framework to manage product
returns in reverse logistics by focusing on product
ownership data, average life cycle of products, past sales,
forecasted demand and likely impact of environmental
policy measures .It is observed that reverse logistics is one
of the toughest supply chain challenges.
Once the product has been manufactured it is very
important that there should be an adequate structure to
distribute it to the customers. Neves et al. (2001); Ma and
Davidrajuh (2005) proposed distribution channels planning
model. Authors explored the use of an iterative approach
for designing distribution chain in an agile virtual
environment; and proved that quick adaptation to changing
market situation and automation of supply chain
management processes are essential. First, the strategic
model (including number of distributors, location of
distributors) is determined. Then, based on the output of the
strategic model, the tactical model (i.e. the inventory
planning at each node, and vehicle routing between
different nodes of the chain) is determined. After
determining the tactical model, the operation-related
parameters from the tactical model are input into the
strategic model again, and the configuration of distribution
chain is re-optimized.
Outsourcing & Global Issues
Shortened product life cycles and increasing global
competition has tempted traditional manufacturers to
contemplate on their competencies, such as product design
and development, and a decision to outsource. Although the
decision to outsource can have both positive and adverse
effects on key areas of the manufacturing supply chain, one
positive effect is that the manufacturer’s supply chain
agility is increased (Mason et al., 2002). The logistics costs
often comprise a large portion of the total global sourcing
cost, thereby determining the effectiveness of procurement
strategy. Although the literature on the strategic aspect of
global sourcing is large, detailed studies on this
procurement strategy from a process perspective are
limited. Jennings (2002) and Zeng (2003) projected
strategic benefits and problems relating to the outsourcing
decision. These include issues of cost, quality, flexibility,
strategic focus, and diversification, the potential loss of
critical skills and knowledge, and appropriation of final
product value. A model was developed, structuring the
contextual factors: capability, cost, technology, supply and
product market conditions, to enable a consideration of the
outsourcing decision. Buxey (2005) and Svensson (2001)
explored the linkage between firms' outsourcing activities
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and the occurrence of supply chain disruptions. It was
based upon a two-phase process utilizing methodological
triangulation. Phase one applied qualitative methods that
explored the overall environment of outsourcing and
disruptions in supply chains while phase two applied
quantitative methods to test the findings from phase one in
a wider context.
Blowfield (2005) discussed the experience of
employing global social and environmental standards, in
terms of a global ethic. It is concluded that, with certain
important caveats, current approaches to managing the
social and environmental dimensions of global supply
chains provide a crude means of tackling societal
expectations and this can mislead managers to tackle the
problem in hand.
By continuously analyzing the performance of the
enterprise over a range of functions managers identify
areas of weakness and opportunities for improvement.
Tracey and Tan (2001) empirically tested the impact of
supply-chain management (SCM) capabilities on business
performance so as to determine to what degree customer-
oriented SCM influence competitive position and
organizational performance. It was concluded that strategic
development of SCM capabilities such as efficient inbound
and outbound transportation, warehousing, inventory
control, production support, packaging, purchasing, order
processing, and information dissemination enables a
manufacturing firm to identify key performance measures.
Agarwal and Shankar (2002) proposed an analytic network
process (ANP)-based model. It provided an effective
framework for analyzing the alternatives affecting supply
chain performance. It also provides the decision
methodology to prioritize these alternatives, so that supply
chain performance can be improved. Chan and Qi (2003);
Jain et al. (2004) evaluated the performance by applying
evolutionary fuzzy system to the attributes associated with
the suppliers and manufacturing units. A process-based
systematic perspective was employed to build an effective
model to measure the holistic performance of complex
supply chains. Fuzzy set theory was introduced to address
the real situation in judgment and evaluation processes.
Further author investigated how the dynamics of supply
chain (SC) relationships impact on manufacturing
performance. Usually in SCM the emphasis is on
performance measures dealing with suppliers, delivery
performance, customer-service, and inventory and logistics
costs. Fynes at al. (2005), Gunasekaran et al. (2001)
developed a conceptual framework to link up SC
relationship dynamics and manufacturing performance and
found out the less evidence of SC relationship dynamics on
manufacturing performance.
Partnership Issues:
As global markets grow increasingly efficient, competition
no longer takes place between individual businesses, but
between entire value chains. Therefore executives are
developing supply chain partnerships/collaboration in an
attempt to reduce costs, improve service and to gain
competitive advantage. Collaboration requires individual
participants to adopt simplified, standardized solutions
based on common architectures and data models. Horvath
(2001) proposed that Collaboration through intelligent e-
business networks would provide the competitive edge to
all the participants in a value chain to prevail and grow. It is
found that collaborative partnerships can be achieved both
via trust and through electronically mediated exchange.
Myhr and Spekman (2005) investigated how supply-chain
partners can achieve collaboration under varying
circumstances (transactional types) by developing trust-
based social foundations and by utilizing electronically
mediated exchange. Results also indicated that
electronically mediated exchange more readily enhances
collaboration in exchange relationships involving
standardized products, while trust plays a larger role when
customized products are being exchanged.
. Barratt and Oliveira (2001) proposed collaborative
planning, forecasting and replenishment (CPFR) as a
strategy to overcome barriers through joint planning, joint
decision-making and the development of a clearer
understanding of the supply chain replenishment process to
achieve some of the promised benefits of actual supply
chain integration. Frankel et al. (2002) showed that one of
the most common usages of partnerships is in the provision
of transport and distribution services. Authors
recommended that rather than devoting effort and resources
to build an in-house supply chain it can often be much more
cost-effective to form a partnership with a shipping
company, and allow them to perform the job of distribution
at a lower cost than the enterprise could manage itself. It is
concluded that although change has been slower than
desired, many firms have collaborated effectively and
achieved significant results through coordinated supply
chain activities
Performance Measurement:
Environmental issues:
Lin (2001) et al.; Stonebraker and Liao (2006) discussed
several analytic models currently evaluated in
environmentally conscious business practices. Author
contended that the process of environmentally conscious
business practice should be studied as a multi-dimensional
issue. These dimensions include an analytical dimension of
strategy and decision procedure, a behavioral dimension
addressing corporate culture and an organizational
dimension concerned with regulatory environment and
supply chain management. Authors posits that, for
efficiency and success, a strategic fit must exist between
environmental, strategic and operations variables.
Subsequently, the stage of product/process life cycle and
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environmental variables such as complexity and
munificence are examined in detail and are taken as a basis
for the theoretical model and propositions. Simpson and
Power (2005) presented a conceptual framework to
investigate supplier relations, lean manufacturing,
environmental management practices; and their relationship
to one another. It is found that efforts to improve a
supplier’s environmental management practice raise critical
issues of transaction costs and efficacy of approach for the
buyer.
In the rapidly changing circumstances; Year Two
Thousand (Y2K) problem was unique to some extent, but it
was only one of many potential environmental changes that
organizations have to respond. Dewhurst et al. (2000)
studied Y2K event and found that this event could
provide useful information for future significant
environmental changes; changes in trading and market
environments; changes in employment law and assessed the
impact on supply chain. In order to understand and reduce
those impacts, it is recommended that an environmental
bias is to be introduced into the decision making process
which would allows more environmentally conscious
decisions to be made.
Managing Supply Chain
For successful SCM implementation managers must
understand the issues concerned with planning the supply
chain. While developing supply chain they will have to
analyze the critical factors for external and integration .The
totality of SCM would be incomplete without the
distribution and return management of goods. In this
section highlights necessary stages required for adoption
and implementation of SCM practice. These six stages are:
Plan, Analyze, Develop, Integrate, Deliver, and Return.
Stages:
Plan: The first stage in supply chain management is
known as a Plan. A plan or strategy must be developed to
address how a given product or service will meet the needs
of the customers (See:http//www.wisegeek.com). A
significant portion of the strategy should focus on planning
a profitable supply chain. Sadler and Hines (2002)
investigated how a team of managers from the companies in
a supply chain can help to formulate strategic plans for
operating the whole chain, to benefit each company and to
benefit the whole chain. Varma et al. (2006) suggested a
broad framework for implementing supply chain
management (SCM) in a firm. This consists of strategy
formulation, identification of areas for improving material
flow, and finally performance evaluation in order to
determine how well the supply chain initiative has been
implemented. The guideline for SCM implementation is
recommended. Kaipia et al. (2006) presented a framework
for supply chain decision-making. A data analysis of the
quality of plans for demand and supply was generated in
decision-making point by collecting planning and actual
data of two products. The results show that planning
accuracy varies between the parties in the supply chain. The
Supply Chain Operations Reference (SCOR) model,
developed by the Supply Chain Council, is a strategic
planning tool that allows managers to simplify the
complexity of supply chain management. It is firmly rooted
in industrial practices and is poised to become an industrial
standard that enables next-generation supply chain
management. Huan et al. (2004) introduced the SCOR
model, analyzed its strength and weakness, and discussed
how it can be used to assist managers for strategic decision-
making.
Analyze: The second stage would be to analyze the various
factors involved in supply chain. The analysis would be
useful for the practicing managers in developing strategies
for their supply chains. Today, organizations global supply
chains deals with large amount of uncertainty. Prater et al
(2001); Koh and Gunasekaran (2006) provided a new
approach for understanding the different types of
uncertainties that can impact supply chains and information
systems. The approach presented allows researchers and
practitioners to analyze the exact problems encountered in
the management of supply chains and the tools that are
needed to address these problems. Zsidisin et al. (2004)
explored, analyzed, and derived common themes on supply
risk assessment techniques. The research indicated that
purchasing organizations could assess supply risk with
techniques that focus on addressing supplier quality issues,
improving supplier processes, and reducing the likelihood
of supply disruptions. Emiliani (2003) analyzed the source
of conflict between buyers and sellers as it relates to the
price of goods purchased for use in production. Authors
argued that conflict between buyers and sellers is an
inevitable outcome when buyers make decisions principally
centered upon the literal interpretation of management’s
role as agents of the board whose primary responsibility is
to maximize shareholder value. Lockamy and Smith (2000)
analyzed use of target costing as a means to improve the
management of supply chains. Customer requirements and
supply chain relationships are identified as key criteria in
SCM for selecting the most appropriate method of target
costing for supply chains. Price-based, value-based, and
activity-based cost management approaches to target
costing are discussed, and recommendations for their use
based upon customer requirements and supply chain
relationships are offered.
Develop: This phase not only identify reliable suppliers
but also includes development of mutual trust, information
system and cordial relations between the various partners
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J. Technol. Manag. Innov. 2007, Volume 2, Issue 4
involved in supply chain (See:http//www.wisegeek.com).
In this stage SCM concepts are applied for developing
methods of payments, shipping, delivery to provide better
customer services. Claro et al. (2006) discussed the value of
trust and the effects of transaction specific investments for
the relative degree of collaborative joint efforts, and also to
assess the moderating effect of the information network on
such joint efforts. It is found that although information
network does not moderate the relation between trust and
joint efforts, there is a significant moderating effect of the
network on the relation between transaction specific
investments and joint effort. The results suggested that
buyers temper their specific investments to the degree of
joint effort according to the information that is obtained in
the network. It has been concluded that supply chain
collaboration is difficult to implement; when there is over-
reliance on technology, and fundamentally a lack of trust
between trading partners. Emiliani (2003) examined the
ability of online auctions and its effects on relationships
between suppliers and buyers. It is concluded that buyers
will have to consider relationships with their own company,
existing suppliers and new suppliers, for building trust and
competing objectives. Author shows how an auction
changes the dynamics of these relationships, outlined the
positives results obtained by online auctions, and
highlighted some possible abuses of the system.
Integrate: The next stage in supply chain management is
to integrate. SCM needs integration of all activities like
sourcing, procurement, production scheduling, order
processing, inventory management, transportation,
manufacturing, warehousing, and customer services.
Research suggests that integration of several functions at
different organizational levels could give above average
financial and performance results. However, Braganza
(2002) found that enterprise integration is associated with
many problems; at the root of these is a fundamental
assumption: that all enterprise integration initiatives are
equally important. He proved that enterprise initiatives
differ by their purpose; and proposed a framework for
typifying enterprise integration initiatives based on the
capabilities of organization. Zailani and Rajagopal (2005)
presented a model of an integrated business process, which
highlights the importance of communication between
processes and between partners in the supply chain. It is
urged that though there is a wide acceptance of the strategic
importance of integrating operations with suppliers and
customers in the supply chain, many questions remain
unanswered for supply chain strategies. Authors sought
connections between supplier and customer integration, and
found out how these strategies actually differ and affect
performance of the companies
Deliver: Then, at the logistics phase, customer orders are
received and delivery of the goods is planned
(See:http//www.wisegeek.com). This stage of supply chain
management stage is aptly named Deliver. The distribution
function in a supply chain is an important internal service
function for any firm, and has been increasingly recognized
as playing a strategic role in achieving competitive
advantage. For developing distribution channels, companies
will decentralize their final manufacturing into their
distribution centers. Johnson and Anderson (2000)
suggested both the repositioning of final manufacturing into
the distribution channel and the move towards
customization-on-order are related to the implementation of
postponed manufacturing. Results suggest that the
implementation of postponed manufacturing require not
only the reconfiguration of the logistics systems, but also
that of other operations in the supply chain, thus creating a
cross-functional effect.
Radio frequency identification (RFID) is currently
used in many industries in transportation, distribution,
manufacturing, processing and security. Smith (2005)
suggested that such technologies with the appropriate IT
infrastructure could help major distributors, manufacturers;
to deal complex and global supply chains. Because of cost,
or security, or safety, or because parts are subject to
corrosion, or food/medicine is subject to quality
degradation, or products and product shipments must be
traced and identified in a non-contact, wireless fashion is
used in computer network. All of these requirements point
to an automated, wireless-readable sensory-based
identification method, and network, that offers more
functionality and is significantly “smarter” than the well
known bar code or the unified product code. Kärkkäinen
and Holstrom (2002) analyzed the opportunities of wireless
product identification technology in transforming supply
chain management. A new concept of item level supply
chain management and enabling steps to achieve the
benefits are proposed. Innovative companies already use
wireless product identification with great benefits in
specific functional areas, e.g. manufacturing and
warehousing. It is observed that the biggest potential is in
item level supply chain management.
Return: The final stage of supply chain management is
called Return (See:http//www.wisegeek.com). Returns
management is the supply chain management process by
which problems associated with returns, reverse logistics,
gate keeping, are managed within the firm and across key
members of the supply chain. The correct implementation
of this process enables management not only to manage the
reverse product flow efficiently, but also to identify
opportunities to reduce unwanted returns and to control
reusable assets such as containers. Rogers et al. (2002);
Mukhopadhyay and Setoputro (2004) developed a profit-
maximization model to obtain optimal policies for price and
the return policy in terms of certain market reaction
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J. Technol. Manag. Innov. 2007, Volume 2, Issue 4
parameters. It obtains a number of managerial guidelines
for using marketing and operational strategy variables to
influence the reaction parameters so as to obtain the
maximum benefit from the market. Furthermore author
emphasized the need to focus on the capability of human
resources, the pricing of activities rather than products, and
the use of information on consumer behavior.
Remanufacturing of used products is a innovative
way in return management from economic and
environmental point of view. Inderfurth (2005) studied a
product recovery system where a manufacturer of original
products is engaged in remanufacturing used products taken
back from its customers, in the context of extended product
responsibility. Moreover investigated to what extent profit
orientation in product recovery management will stimulate
an environmentally conscious behavior in manufacturers
Discussion and Conclusion:
Organizations have multiple objectives like enhanced
competitiveness, better customer service and increased
profitability etc. To seek these objectives organizations
employ various defensive as well as offensive business
performance improvement approaches. Often these
approaches focus on any one operational area of
organization. But the approach we have discussed (SCM)
covers all functional areas of organization. It is the network
of customers, suppliers, manufacturers, and distributors
concentrating the flows of material, information, and
finance through physical and human resources. Due to
globalization organizations cannot work as standalone
units. There is a continuous need to interact with supply
chain partners to achieve the basic objective of
organization. SCM requires concerted action of all the
participants therefore adoption and implementation cannot
be as straightforward as other approaches. Researchers and
practitioners have developed a sustainable body of
knowledge by deploying various qualitative and
quantitative tools and techniques. It is observed that
organizations have unique products, operations, culture;
and have a different level of compatibility & adaptability.
Therefore there cannot be one fix solution for all
organizations. Depending upon corporate strategy
organizations will have to develop a suitable supply chain
management strategy .It would be a formidable task for
managers if they do not understand the theoretical
foundations and practical implications of SCM.
In this paper we have suggested that managers must
probe why to manage, what to manage and how to manage
the supply chain. We discussed the concept of supply chain
management along with the need of SCM from
organization point of view. This provides deeper insights
for those managers investigating the concept of supply
chain management .In order to explore the domain of
supply chain management we have argued that one must
examine the nature, interrelations and dependency among
business operations .We interrogated the theory and
research practice to find what are the various supply chain
activities. This through analysis of activities sheds light on
the potential of supply chain management. Next big
challenge for organizations is to make a suitable roadmap
for adoption and implementation .We have suggested a six-
step approach to meet this challenge. This step-by-step
assessment of business operations would certainly assist
organizations to completely understand the concept of
supply chain management. Sooner or later all organizations
would adopt SCM; therefore we recommend that managers
should examine the domain of SCM to achieve business
excellence.
Current trends like outsourcing, information technology
adoption and third party logistics presents an opportunity
for development of SCM. It is felt that in future all
organizations will have to adopt partnership information
sharing initiative with suppliers. Therefore establishment of
mutual trust within supply chain to share the vital
information for effective SCM practice; and development
of suitable mathematical model for the same would be the
greatest challenge for researchers and practitioners.
Acknowledgement: Authors would like to thank the
reviewers and editorial team of JTIM for improving the
earlier versions of this paper. Authors would also like to
extend thanks to Prof. Nitin Ingole, Prof Ram Meghe
Institute of Research and Technology .Badnera, India, for
his continuous guidance and help.
About Authors:
Atul Borade is working as Senior Lecturer in Mechanical
Engineering Dept. at Jawaharlal Darda Institute Of
Engineering and Technology. Yavatmal. (M.S) India. He is
a Ph D candidate at Amravati University. India. His areas
of interest are Ergonomics, Production Management and
Supply Chain Management. He can be reached at
atulborade@rediffmail.com.
Prof. Satish Bansod is working as a Professor in
Mechanical Engineering Department at Professor Ram
Meghe Institute of Research and Technology. He has
published many papers in International Conferences and
Journals. His research areas are. Ergonomics, Production
Management and Supply Chain Management .He can be
reached at satishbansod@rediffmail.com.
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J. Technol. Manag. Innov. 2007, Volume 2, Issue 4
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