GLOBAL SUPLY CHAIN MANAGEMENT

1.ABSTRACT:

Technology improves day by day. What is the latest Technological

trend today will eventually be an outdated one tomorrow. Man,
ever since evolution has found new things and transformed
himself from the Stone Age to an Age called the "Information
Age". Now we live in a world where Information in the right sense
at the right time and right place is what determines the economic
success of nations.

This Report presents a Comprehensive review of the

fundamentals of Supply Chain Management and the various
issues related to it. The Report also explains a few complex
problems each entity in the Supply Chain faces and about the
hardships that arise out of it. Finally the ways and means to
tackle these issues are dealt with. It is at this stage that we find
that We could solve all these complex issues through the latest
cutting edge information technology tool called e-commerce. So
the concluding part of the report presents how E-Commerce
Technology can be used to tackle the complex problems in the
Modern day Supply Chain. It provides examples of how these
concepts that have been applied in various organizations.

2.INTRODUCTION

Globalization is one of those politically charged words that often

implies more than it actually means. From the relatively benign
the world is flat philosophy that suggests offshore factories help
stimulate U.S. imports, to the offshoring costs American jobs
idea that everything can and should be made in the United
States, everybody in manufacturing has an opinion on whether
globalization is good or bad for their companies and/or their fellow
citizens.

Some might suggest, in fact, that globalization is a fait accompli.

As Daniel Akerson, chairman and CEO of General Motors Co. (IW
500/4) pointed out at a news conference in 2011, seven out of 10
of all GM vehicles are made outside the United States, and the
trend shows no signs of stopping.

Theres nothing very new about globalization, though, a concept

that basically refers to the practice of sourcing, manufacturing,
transporting and distributing products outside of your native
country. Its modern application predates the rise of the Internet
by a good 40 years, beginning in the early 1950s when container
shipping was introduced, making it possible to quickly, efficiently
and economically move entire container loads onto ocean vessels
at ports of call throughout the world.

As the world has gotten flatter and supply chains have gotten
longer, the need for companies to follow best practices in global
supply chain management has intensified. Gary Miller has a deep
familiarity with such a role, having spent 40 years as vice
president, global supply chain and chief procurement officer with
$23 billion tire manufacturer Goodyear Tire and Rubber Co. (IW
500/54) before taking on the same role in 2008 at A. Schulman
Inc. (IW 500/343), a $2.5 billion plastics manufacturer. As Miller
explains it, hes responsible for Schulmans supply chain and
procurement activities to better leverage its worldwide purchasing
power, reduce materials inventories, eliminate waste and improve
efficiency. The company has 35 facilities globally, with nearly 70%
of its revenues derived out of the European market.

We have global customers that we service around the world, he

says. Europe is a very large region for us, so we have deep
relationships with our customers there. As those customers
expand around the world, theyre also looking for us to come with
them.

For instance, Schulman has some large customers in the German

automotive market who are opening facilities in China.
Consequently, Schulman is following its customers into China to
manufacture and supply the same plastics products that are being
used in Germany. Now we can continue to supply them our
products from Germany if we want to, but the advantage is that if
theyre in China and we have manufacturing in China, then we
can transfer our manufacturing technology to China and provide
those parts on a local basis. Its much better for our customers
because they get our products with a much shorter supply chain.
Its much better for us because we can get our products to the
customer with a shorter supply chain as well.

3.BASIC CONCEPTS OF SUPPLY CHAIN AND ITS

MANAGEMENT

Definitions and Benefits

Definitions.

A supply chain refers to the flow of materials, information and

services, from raw material suppliers through factories and

warehouses to the end customers. A supply chain also includes

the organizations and processes that create and deliver these

products, information and services to the end customers.

According to the SCM Forum at Ohio State University, a supply

chain management (SCM) is the integration of business

processes from the end user through original suppliers, that

provide products, services and information that add values for

customers. It includes many activities such as purchasing,

materials handling, production planning and control, logistics and

warehousing, inventory control, and distribution and delivery.

The function of the SCM is to plan, organize and coordinate

all the supply chain's activities. Today the concept of SCM

indicates a holistic approach to managing the entire supply chain.

For an overview of SCM see Handfield and Nichols Jr. [1999] and

Poirier [1999].

The efficiency and effectiveness of supply chains in most

organizations are critical for the success of EC and are greatly

dependent upon on the supporting information systems, as will be

described soon.

Benefits of SCM

The goals of modern SCM are to reduce uncertainty and risks

along the supply chain, thereby positively affecting inventory
levels, cycle time, processes and customer service. All these
contribute to increased profitability and competitiveness.
 The benefits of supply chain management were long

recognized not only in business but also in the military. Clerchus

of Sparta said, as early as 401 BC, that the survival of the Greek

army depended not only upon its discipline, training and morale,

but also upon its supply chain. The same idea was echoed later

by famous generals such as Napoleon and Eisenhower, and by

entrepreneurs such as Henry Ford, who purchased rubber

plantations to ensure a supply of tires for the cars he

manufactured. (Vertical integration strategy)

The flow of goods, services, information etc., is usually

designed not only to effectively transform raw items to finished

products and services, but also to do it in an efficient manner.

Specifically, the flow must be followed by an increase in value.

One of the major goals of SCM is to maximize this value, and this

is where information technology enters the picture as will be

shown later in sections 13.6, 13.11 and 13.12. Let us now pay

attention to a special case of supply chain, where two or more

countries are involved in the order fulfillment process.

4.GLOBAL SUPPLY CHAINS

 Supply chains that involve suppliers and/or customers in
other countries are referred to as global supply chains. The
introduction of electronic commerce made it much easier to find
suppliers in other countries (e.g., by using electronic bidding for
RFQ, see Chapter 6). Plus, it is much easier and cheaper to find
customers in other countries.
Global supply chains are longer and may be very complex.
Therefore, information needs to flow, sometimes in different
languages and subject to different regulations. Information
technologies are found to be extremely useful in supporting global
supply chain. For example, TradeNet in Singapore connects
exporters, importers, shippers, ships and government agencies
via EDI. A similar network called TradeLink operates in Hong Kong,
using both EDI and EDI/Internet to connect about 70,000 trading
partners. Some of the issues that may create delays in global
order fulfillments are legal issues, tariffs customs fees and other
taxes, language and cultural differences, fast changes in
currencies exchange rates and political instabilities. (See
Chapter 12 for a discussion.)
IT facilitates global SCM not only by providing EDI and other
communication options, but also by providing expertise online in
sometimes difficult and quickly changing regulations. IT also can
be instrumental in helping to find trade partners (via electronic
directories and search engines e.g., see www.alibaba.com).
Finally, IT facilitates outsourcing of products and services to
countries with a plentiful and less expensive labor supply.
Companies are going global not only to find buyers or
suppliers, but also to establish their manufacturing plants. The
major reasons why companies going global are: lower prices of
material, products and labor, availability of products which are
unavailable domestically, firms global operations and attitudes,
advanced technology available in other countries, high quality
products available, intensification of global competition which
drive companies to cut costs, the need to develop foreign
presence and fulfillment of counter trade. For further discussion
and details see Chase et al., [1998].
Now that you are familiar with the concepts of supply chain
and order fulfillment we can return to analyze the Y2K e-toys and
other EC order fulfillment problems.
5.WHAT IS THE SCOPE OF SUPPLY CHAIN MANAGEMENT?

The following diagram explains the Scope of Supply Chain

Management. The arrow marks in the diagrams indicate orders
placed by adjacent Supply Chain entity to his predecessor. The
triangles indicate the Inventory of goods each entity has.

Why are
these Orders for products and its Supply important?

This can be explained by a Diagram called the "Feast or Famine"

Diagram.
Let us consider the demand and supply curves for a product, We
see that at one point of time we have excessive inventories and
at another point of time we have a stock out and thereby we are
unable to meet the demand. So both these result in either huge
amount of losses and capital blockage for the supply chain
entities or results with Dissatisfied customers.

What is the time involved in the Process?

The time involved in a traditional supply chain process is

enormous. As there are many orders which are placed by each
entity to his adjacent entity, each order(demand) and supply
process takes its own time. For ex. The procurement order time in
a company was as follows:
So each order and supply cycle alone might take a vast amount of
time thus delaying the Supply Chain Process (traditional).

HOW CAN WE EFFECTIVELY MANAGE THE SUPPLY CHAIN

PROCESS?

Next comes the question of how well a Supply Chain and its
Process can be managed in order to achieve our aims and
ambitions. Effective Supply Chain Management involves in

Managing the whole supply chain as a single entity.

Our aim is to Optimize the Supply chain as a single entity (as
a whole). i.e. We try to

optimize the profits of each and every entity in the supply

chain and not just one of

them alone and at the same time provide the utmost value to
the customers.

Recognizing end user (Customer) service requirements as a

function of time, Quantity
 and place .

i.e. Customer Utility = f (time, quantity, place).

Effective use of Inventory.

Continous Improvement & reduced Supply Chain Process time.
Recognizing time as a basis of competitive advantage.
WHAT IS THE EFFECT OF THIS TIME CONSUMING &
IMPROPER SUPPLY CHAIN MANAGEMENT PROCESS?

Excessive Inventories as a result of forward buy:

If the demand and supply process is exactly same, then it
will not result in Inventory

stocks at all. But in reality for these entities they cant be

same, so each entity in the

Supply Chain has his own inventory stocks. The Grocery

Supply Chain alone as an

excessive inventory of $30 Billion.

Poor Product Forecast & Capacity Planning

As the time involved in the supply chain process is large,
Product forecasts by each

entity becomes poor and gives rise to more Stock out or

Excessive Inventory

problems.

Poor Customer Service

High Corrective costs - Overtime, Subcontracting Cost,
Transportation Problems
Optimized Supply Chain as a whole entity is not possible
Internationalization of the Supply Chain is not possible as the
problems become even
more worse.
TYPICAL PROBLEMS ALONG THE SUPPLY CHAIN

As shown earlier, supply chains can be very long, involving

many internal and external partners located in different places.
Both materials and information flow among several entities, and
especially when manually handled can be both slow and error
prone.
OVERVIEW

Supply chain problems have been recognized both in the

military and in business operations for generations. These

problems caused some armies to lose wars and companies to go

out of business. The problems are most apparent in complex or

long supply chains and in cases where many business partners

are involved.

The Y2K toys problem is not an isolated case. In the offline

world there are many examples of companies that were unable to

meet demands of certain products while having too large and

expensive inventories of other products. Several other corporate

problems are related to deficiencies in their supply chains (e.g.

see Chase et al. [1998] and Handfield and Nichols [1999]). For

example, high inventory costs, quality problems due to

misunderstanding, shipments of wrong materials and parts, and

high cost of expediting operations or shipments. On the other

hand some of the world-class companies such as Wal-Mart,

Federal Express and Dell Computers have superb supply chains

with innovative applications, some of which will be described

later. In EC there is a larger chance that supply chain problems

will occur due to the lack of appropriate infrastructure and

experience, as in the Y2K toys case, as well as due to the special

characteristics of EC, or of regular retailers that are adding EC. For

example, warehouses of conventional retailers are designed to

ship large quantities to stores; they cannot optimally pack and

ship small quantities to customers doors.

SPECIFIC PROBLEMS ALONG THE SUPPLY CHAIN

The problems along the EC supply chain of the toy retailers

and other companies stem mainly from uncertainties, and from

the need to coordinate several activities and/or internal units and

business partners.

The major source of the uncertainties in EC is the demand

forecast, which may be influenced by several factors such as

consumer behavior, economic conditions, competition, prices,

weather condition, technological development, customers

confidence and more. As we will show soon, companies attempt

to achieve accurate demand by using methods such as IT-

supported forecasts, which are done with business partners.

Other uncertainties exist in delivery times which depend on many

factors ranging from machine failures to roads conditions. Quality

problems of materials and parts may also create production time

delays, and a labor strike may interfere with shipments.

Several other possible factors may create supply chain

problems (see Ayers [2000] for details). A major symptom of poor

SCM is poor customer service - people do not get the product or

service when and where needed, or they get it in poor quality.

Other symptoms are high inventory costs, interferences with

production or operation, loss of revenues, and an extra cost of

special and expedited shipments.

 Pure EC companies are likely to have more problems

because they do not have a logistics infrastructure and are forced

to use external logistic services. This can be both expensive, plus

it requires more coordination and dependence on outsiders who

may not be reliable. For this reason large virtual retailers such as

Amazon.com and eToys are developing physical warehouses and

logistics systems.

SOLUTIONS TO SUPPLY CHAIN PROBLEMS AN OVERVIEW

Supply chain problems have existed in military organizations

for thousands of years and in industrial organizations since the

beginning of the industrial revolutions. Solutions to these

problems have existed for generations. However, with the arrival

of the information and Internet revolutions, new and very

effective solutions had to be developed.

PRELIMINARIES

The solutions to supply chain problems, regardless if they

are online or offline, involve a combination of tools and
techniques, some of which are manual while others are IT
supported.
 The theory and practice of supply chain problem resolution is

beyond the scope of this book. The interested reader should refer

to Handfield and Nichols [1999], Ross [1998], Chase et al., [1998],

and Gattorma [1998]. In this chapter we will present only a few

interesting EC-related solutions.

However, before we present these solutions, it is worthwhile

to list some generic activities that must precede IT or EC
solutions, or must be done concurrently with them.
Most organizations are simultaneously members of multiple

supply chains. Work in any chain may impact others. So it is

necessary to look at all the major ones simultaneously.

Understanding of each major chain is a must. Using flow

charts and process maps (software is available) is

recommended.

Both internal and external portions of the chains must be

studied.

The performance of existing supply chains need to be

measured and compared in order to find problems

(opportunities). Benchmarking is recommended.

 Supply chain performance is measured in several areas

including: customer service and satisfaction, cycle times,

delivery, responsiveness, cost, quality, products (services)

offered, and assets utilization.

The supply chain may require business processes

reengineering (BPR) before a software solution is attempted.

(See ch.3, in Handfield and Nichols [1999].)

It is essential to develop and maintain relationships with

business partners and with key employees in these

organizations (See Chapter 4 in Handfield and Nichols

[1999].)

Opportunities for SCM improvements exist in several places

along the supply chain. Potential candidates include:

Manufacturing processes

Warehousing operation

Packaging and delivery

Material inspection/receiving

Inbound and outbound transportation

Reverse logistics (returns)

 In-plant material handling

Vendor management program

Customer order processing

Invoicing, auditing and other accounting activities

Collaboration procedures with partners

Employee training and deployment

Labor scheduling

Use of teams and empowerment of employees

Automation of processes

Use of software for facilitating all the above

Inventory management and control

Lets examine inventory management in more detail.

USING INVENTORIES TO SOLVE SUPPLY CHAIN
SHORTAGES
A most common solution in the offline world is building

inventories as an insurance against the uncertainties. This way

products and parts flow smoothly. The main problem with this

approach is that it is very difficult to correctly determine inventory

levels, which must be done for each product and part.

Furthermore, if the finished products are customized, as in some

EC situations (e.g., Dell computers), one cannot have an inventory

of finished goods; only components can be stocked. If inventory

levels are set too high, the cost of keeping the inventory will be

very large. If the inventory is too low, there is no sufficient

protection against high demand or slow delivery times, and

consequently revenues (and customers) may be lost. In either

event, the total cost, including opportunities and reputation lost,

and bad reputation, can be very high. Thus, major attempts are

made to properly control inventories using information

technologies, as shown in application case 13.2.

Application case 13.2 How Littlewoods Stores improved

its SCM

Littlewoods Stores is one of Britains largest retailers of high-

quality clothing, with 136 stores around the UK and Northern

Ireland. The retail clothing business is very competitive, so the

company embarked, in the late 1990s, on an IT-supported

initiative to improve its supply chain efficiency. A serious SCM

problem was overstocking.

In order to get a better SCM, the company introduced a Web-

based performance reporting system. The system analyzes, on a

daily basis, marketing and financial data, space planning,

merchandizing, and purchasing data. For example, the marketing

department can now perform sophisticated sales, stock and

supplier analyses to make key operational decisions on pricing

and inventory.

Using the Web, analysts can view sales and stock data in any

grouping of levels and categories, even at a stock keeping unit

(SKU), and at a daily levels. Furthermore, users can easily drill

down to detailed sales and other data.

The system uses a data warehouse, DSS and other end-user

oriented software to make better decisions. Here are some of the

results:

Reducing back up inventory expenses by about $4 million a

year. For example, due to quick replenishment, stock went

down by 80%.
 The ability to strategically price merchandise differently in

different stores saved $1.2 million in 1997 alone.

Reducing the need for stock liquidations saves $1.4 million a

year.

Marketing distributions expenses were cut by $7 million a year.

Reduction of the logistic staff from 84 to 49 people resulted in a

savings of about $1 million annually.

Within a year, the number of Web-based users grew to 600.

Source: condensed from www.microstrategy.com (Jan. 2000,

Customers Success Stories)

Proper SCM and inventory management requires

coordination of all different activities and links of the supply

chain so that goods can move smoothly and on time from

suppliers to customers. This keeps inventories low and cost

down. The coordination is needed since supply chain partners

depend on each other but don't always work together toward the

same goal.
 To properly control the uncertainties mentioned earlier, it is

necessary to identify and understand the causes of the

uncertainties, determining how uncertainties will affect other

activities up and down the supply chain, and then to formulate

ways to reduce or eliminate the uncertainties. Combined with this

is the need for effective and efficient communication among all

business partners. To do the above effectively and efficiently, we

need to use information technologies as the major enabler.

INFORMATION TECHNOLOGY AND SCM

By definition, a supply chain includes the flow of information

to and from all participation entities. Many, if not most, of the
supply chain problems are the result of poor flow of information,
inaccurate information, untimely information, etc. Information
must be managed properly in each supply chain segment.
Information systems are the links that enable the

communication and collaboration along the supply chain. They

represent one of the fundamental elements that link the

organizations of supply chain into a unified and coordinated

system. In the current competitive climate, little doubt remains

about the importance of information and information technology

to the ultimate success, and perhaps even the survival, of any

SCM initiative(Handfield and Nichols [1999]).

Case studies of some world-class companies such as Wal-

Mart, Dell Computers and Federal Express, indicate that these
companies created very sophisticated information systems,
exploiting the latest technological developments and creating
innovative solutions. Representative IT solutions are shown,
together with the problems they solve, in Table 13.1

Supply chain problem IT solution

Linear sequence of Parallel processing, using

processing is too slow. workflow software.
Waiting times between Identify reason (DSS
chain segments are software) and expedite
excessive. communication and
collaboration (Intranets,
groupware).
Existence of non-value Value analysis (SCM
added activities. software), simulation
software.
Slow delivery of
paper Electronic documents and
documents. communication system (e.g.
EDI, e-mail).
Repeat process activities Electronic verifications
due to wrong shipments, (software agents),
poor quality, etc. automation; eliminating
human errors, electronic
control systems.
Batching; accumulate work SCM software analysis,
orders between supply digitize documents for
chain processes to get online delivery
economies of scale; e.g.
save on delivery).
Learn about delays after Tracking systems, anticipate
they occur, or learn too late. delays, trend analysis, early
detection (intelligent
systems).
Excessive administrative Parallel approvals
controls such as approvals (workflow), electronic
(signatures). Approvers are approval system. Analysis of
in different locations. need.
Lack of information, or too Internet/intranet, software
slow flow. agents for monitoring and
alert. Bar codes, direct flow
from POS terminals.
Lack of synchronization of Workflow and tracking
moving materials. systems. Synchronization by
software agents.
Poor coordination, Groupware products,
cooperation and constant monitoring, alerts,
communication. collaboration tools.
Delays in shipments from Use robots in warehouses,
warehouses. use warehouse
management software
(Internet exercise #8).
Redundancies in the supply Information sharing via the
chain. To many purchasing Web creating teams of
orders, too many handling collaborative partners
and packaging. supported by IT (see Epner
[1999]).
Obsolescence of parts and Reducing inventory levels
components that stay too by information sharing
long in storage. internally and externally,
using intranets and
groupware.

IT solutions to supply chain problems

One of the most important topics related to IT and SCM is

information sharing along the supply chain.
INFORMATION SHARING AND THE BULLWHIP EFFECT

Information sharing among business partners, as well as

among the various units inside each organization, is necessary for
the success of SCM. Information system must be designed so that
sharing becomes easy. One of the most notable examples of
information sharing is between Procter and Gamble (P&G) and
Wal-Mart. Wal-Mart provides P&G access to sale information of
every item P&G makes for Wal-Mart. The information is collected
by P&G on a daily basis, from every Wal-Mart store. Then, P&G is
able to manage the inventory replenishment for Wal-Mart. By
monitoring the inventory level of each P&G item in every store,
P&G knows when the inventories fall below the threshold that
triggers a shipment. All this is done automatically. The benefit for
P&G is accurate demand information. P&G has similar agreements
with other major retailers. Thus, P&G can plan production more
accurately, avoiding the bullwhip effect.
The bullwhip effect refers to erratic shifts in orders up and
down the supply chain (See Lee et al, 1997). This effect was
initially observed by P&G in their disposable diapers product
(Pampers). While actual sales in stores were fairly stable and
predictable, orders from distributors had wild swings, creating
production and inventory problems for P&G. An investigation
revealed that distributors' orders were fluctuating because of poor
demand forecast, price fluctuation, order batching and rationing
within the supply chain. All this resulted in unnecessary
inventories in various area along the supply chain, fluctuations of
P&G orders to their suppliers, and flow of inaccurate information.
Distorted information can lead to tremendous inefficiencies,
excessive inventories, poor customer service, lost revenues,
ineffective shipments and missed production schedules (Lee et
al., [1997]).
According to Handfield and Nichols [1999] the bullwhip effect
is not unique to P&G. Firms from Hewlett-Packard in the computer
industry to Bristol-Myers Squibb in the pharmaceutical field, have
experienced a similar phenomenon. Basically, even slight demand
uncertainties and variabilities become magnified when viewed
through the eyes of managers at each link in the supply chain. If
each distinct entity makes ordering and inventory decisions with
an eye to its own interest above those of the chain, stockpiling
may be simultaneously occurring at as many as seven or eight
places across the supply chain, leading in some cases to, as many
as 100 days of inventory waiting just in case. A 1998 industry
study projected that $30 billion in savings could materialize, in
the grocery industry supply chains alone, by sharing information.
Thus, companies may avoid the sting of the bullwhip. Such
sharing is facilitated by EDI, extranets and groupware
technologies and it is part of inter-organizational EC .
A MORE BETTER SOLUTION:
The most and the only better solution in order to mitigate the

Bull-Whip effect would be to use the latest cutting edge tool E-

COMMERCE.

e-commerce would provide

Better Information sharing

Proper Channel (Chain) Alignment
Increase Operational efficiency
Transaction Processing, thus decreasing Ordering and Supply
Process lead times and costs.
Monetary transactions

The Power of these benefits of using e-commerce is clearly

detailed in the following section which comprises of the details

obtained from Tradematrix.com( www.tradematix.com) &

Hightechmatix.com (www.hightechmatrix.com) , an e-Commerce

based Supply Chain Management system from i2 Technologies

(ITWO) (www.i2.com) [1].

As we know that efficient SCM requires efficient Sourcing and

Procurement as shown
Let us take an Example and analyze the uses of e-commerce in

SCM.

Consider a Buyer named Bud Buyer who is a Procurement

Manager at Velocity Computers, which has its facilities at San

Jose, Dallas and New York. He has four suppliers Cyber, Raven,

Valykrie and Proton who supply different products he need for

manufacturing his computers.

As soon as he logs onto his computer with the tradematrix.com
web based software,
He sees that the Procurement department Specialist Mr. Leon
Tucker has requested him to buy certain products. The GUI of the
process is as above. Then he moves onto find how his suppliers
respond to it. He is able to immediately access as to how many
products of requirement can Cyber, Raven, Valkyrie, Proton supply
at present based upon their factory position which is
automatically updated every minute as tradematrix.com is a
website which connects all entities of the supply chain.
Then He is able to find as to which how much of Supply Demand
Mismatch is there between his suppliers and himself as

Then he finds his procurement requirements given by the

procurement department and also the no. of products Suppliers
have committed to supply. Mainly he notes how much is the
demand from End Consumer. So The delta or the mismatch of his
orders with the demand from the consumer is got. So from all
these data, he will be able to order the correct amount of
products from the supplier, so that he will be able to optimize his
process of supply, i.e. he will meet the demand of the consumer
and also will have optimal inventories.
Then he places the order to the supplier now based upon cost and
time required for the supplier to satisfy his order. So he chooses
the appropriate supplier from his approved vendor list. Finally he
places an order which is processed immediately and will reflect
onto the suppliers system to whom he has ordered.

Then on the Suppliers side a screen pops up to indicate the order

and give his an option of accepting the order. Then after
accepting his order, he will have to make arrangements for
delivery of the products. So with this he goes to a screen where
he could give orders to his transporter for transportation of the
products in order to meet the demand from Bud Buyer. So from
this he provides the necessary information for the logistics
company to transport his products to Velocity computers. On
acceptance by the transporter, all entities of the supply chain get
an information of completion of the bid which was optimized by
means of intelligent agents in the software which mitigates Bull-
Whip effect through effective and real time communication
between supply chain entities through e-commerce.
Thus this process effectively explains as to what can be done with
the help of e-commerce. Now let us see the means by which e-
commerce is useful in SCM by having the clear understanding of
the previous example.

PROCESS OF COMMERCE:

The general process of commerce is explained by the following

sequential points,

Buyer and Sellers find each other through

- Communication - Advertising and Marketing
- Intermediaries (Dealers, Distributors, Representatives)
Negotiation between Buyer and Seller to sign Supply contracts
- Through Agents (buyers , lawyers)
Transaction of
- Contracts
- Payment (or through many payments)
Order Fulfillment
- Manufacture
- Delivery
Post- Sale Events
- Customer Service
- Reorder, Restock
Accounting
- Analyze are we really making profit?
Data Analysis
- To analyze who is really buying the stuff in order to
improve our business
process in future.

THE e-COMMERCE PROCESS:

 The e-commerce process is as follows,

Transaction by means of
Transaction processing, Databases
Electronic Payment Systems,
Computer Security,
System Reliability
Order fulfillment through
Manufacture (manufacturing systems)
Delivery (tracking systems)

Through the usage of the following,

- Networks - Security
- Internet - Electronic
payment

- Programming - Search
engines

- Multimedia - Intelligent agents

- Databases - Data mining

- Transaction
processing

in the areas of Process of commerce as follows,

Buyers and sellers find each other through

 Communication (via Networks, the Internet, Programming
and Information Retrieval)
Human-Computer Interaction, Multimedia
Intermediaries
Disintermediation
Negotiation though the use of Electronic Negotiation,
Intelligent agents
Post-sale events like
Customer Service and Help Facilities
Reorder, restock
Accounting through
Transaction processing
Interoperability between online and legacy systems
Data analysis by means of
Data Mining

So through this we see that the Internet and Web based systems
and Intelligent agents in the e-commerce process can be used to
improve the speed and efficiency of the traditional process of
commerce.

My Own Suggestions for an ideal e-commerce system for

Supply Chain Management would be a system with its backbone
as the Internet and WWW (World Wide Web). It would have two
ends a front end and a back end

The Front end and back end components consist of the following,

Front End
- Portal

- Communication Systems - Interface with Mobile Devices & GPS

- for access

to real time info.

- Money Transaction Systems

 - Customer Management Systems

Back End
- Optimization Agents

- Decision Support Systems & Intelligent Agents

- Transaction Processing System

- Prioritizing Systems - Shows Contradictions

- Forecasting System with Responder- Capability to match

Supply chain

System Dynamics

This kind of system would be able to deal with the Supply Chain
problems in a better way than existing e-commerce systems.
Companies which already have e-commerce systems could re-
engineer their system in order to facilitate its usage in Supply
Chain Management. The Re-Engineering process would be to just
add the back-end components. A similar kind of system could be
added to e-commerce systems to aid in providing Manufacturing
services too as follows,

Front End System Functions

- Product Design & Quality Specification

- Customer Management & Communication System

- Money Transactions

Back End System Functions

- Standard time & Least Cost

- Supply Time

- Optimization Agents

- CNC Machine Code Conversion agents

 - Routers to route data to CNC Machine

While the front-end performs the above said functions, the back-
end system could provide the customer who comes to order on
the web with details as to what would be the least cost and time
in which the products can be supplied by the manufacturer by the
usage of Optimization systems. With this feedback the Customer
orders on the web and also provides the design data of the
product he wants. The part may be an assembly of different
components, so an intelligent agent could generate the design
details of individual components needed to manufacture the
products. Then this data could be converted into CNC (Computer
Numerically Controlled) Machine codes which are directly routed
to individual machines by means of routers networks. Thus each
machine with the help of automated material handling system
can automatically produce the product in real-time thus reducing
manufacturing lead - time. But this system is useful for a Direct
business model. For a Chain where there are intermediaries,
components from the previously explained e-commerce system
will have to be integrated.

CONCLUSION:

Thus through the usage of e-Commerce, a company can mitigate

the effect of the Bull-Whip effect in its Supply Chain and also
achieve all the benefits of efficient Supply Chain Management as
explained in this report earlier. The firm could end up on a
positive note with more satisfied customers and optimal inventory
costs and better dollar profits. Though the world has become a
global village with the advent of the Internet, Supply Chain
Management through e-Commerce is yet to catch its speed. More
and more companies are starting to use these efficient techniques
and a majority of others are to follow suit. The age we order
products and immediately get it the next minute is not far off due
to Supply Chain Management and E-Commerce.

REFERENCES:

[1] Intelligent e-businesses - A White Paper (1999) by i2

Technologies available at URL

www.i2.com.

[2] Various Search Engines results on the topic of "Supply Chain

Management and e-

commerce" from

www.google.com

www.yahoo.com

www.metacrawler.com

www.askjeeves.com

www.altavista.com

[3] "The Paralyzing curse of Bullwhip Effect in a Supply Chain" by

Hau L.Lee, Paddy

Padmananbhan and Seungjin Whang, Stanford University,

March 17th, 1995.

[4] "Designing and managing the Supply Chain" - by Authors:

David Simchi-Levi

(Northwestern University), Philip Kaminsky (University of

California, Berkeley) and

Edith Simchi-Levi (LogicTools), Publisher: McGraw-Hill, 1999

[5] "Information Distortion in a Supply Chain: The Bull Whip

Effect" Working paper by
 H.L.Lee, P. Padmanabhan and S.Whang, Stanford University,
1994.

[6] The Beer Game: Demonstrating the value of Integrated Supply

Chain Management -

Lecture notes by Philip Kaminsky and David Simchi-Levi

http://users.iems.nwu.edu/~levi and Software is available with

his book [4].

(7) http://www.ashgate.com/pdf/samplepages/ghsupplych4.pdf