Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain

with the purpose to satisfy customer requirements as efficiently as possible. It is the combination of art and science that goes into the way of a company finds the raw components it needs to make a product or service and deliver it to customers. Supply chain management spans all movement

and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. It is all about managing the flow of information, materials, services and money across any activity, in a way which maximizes the effectiveness of the process.
Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.

With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Like traditional, supply chain management, the underlying factors behind the trend are reducing the costs of procurement and decreasing the risks related to purchasing activities Global supply chain gives importance to the companys worldwide interest rather than concentrating on the local and national market place. Stage 1: International Purchasing: In this stage, when an organization first enters into the global purchasing, some of the main areas were organizations focuses are on the cheaper prices, controlling the inventory costs and leveraging volumes. Stage2: Global Sourcing: In this particular stage, the organization starts giving importance to the supplier capability, production strategies and also concentrates on customer markets. Stage 3: Global Supply Management: The supply chain networks are optimized with the help of logistics and productive capacity management. At this stage, the organizations will be able to effectively minimise the risk in the global sourcing and achieve competitive advantage. Purchasing/Outsourcing Decision: Managing the purchase decision making and the selection of suppliers is considered as a challenging tasks in the global supply chain. Purchasing has a good role to play in the new global business world; it is the most important strategic element in the supply chain. Many firms are engaging in the global purchasing activities, in order to achieve competitive advantage. Due to the strategic implications of the global purchasing, organisations are giving much more importance for outsourcing decisions (Ronan McIvor, 2000, Pg: 22). According to Yoon and Naadimuthu (1994) Outsourcing decision can contribute towards profitability, which helps in developing the financial position of the firm. According to Probert et al., (2000) the sourcing theories are of two different perspectives; the cost and strategic. John Dunning, a leading international business scholar, has provided an eclectic view of the factors affecting the internationalization decision, with particular reference to FDI, by combining some of the above ideas into a single theory. Dunnings eclectic paradigm, or the OLI paradigm as it also known, focuses on the ownership (O), location (L), and 19

internalization (I) advantages of FDI as opposed to exporting. These advantages may be summarized as follows:

Ownership advantages: firm-specific assets such as knowledge and skills, technology, intellectual property, management or marketing competences, and internal and external relationships (mainly intangible) Location advantages: a good geographical location with respect to production costs, market access, psychic (including cultural) distance, and the general political and economic environment Internalization advantages: reduced transaction costs and the ability to protect management know-how and intellectual property

According to Dunnings eclectic theory, FDI decisions can be explained by considering all of the above factors, rather than focusing on one particular factor. It therefore draws on ideas from the resourced-based, transaction cost, and other approaches to internationalization and implies that decisions to go international are affected both by organizational and environmental factors. Practical Insight 6 illustrates something of the complexity of internationalization decisions and the difficulty in applying a single explanation.