SCM technologies and their applicability in the SC operations

ANOOP M
School of Management Studies, CUSAT, Kochi- 22. E-mail: anoopm89@gmail.com
Abstract:. SCM is a large field in which there are lot to be exploited. New technologies are emerging in the field on a daily basis. In an academic study performed at Wal-Mart, RFID reduced Out of Stocks by 30 percent for products selling between 0.1 and 15 units a day. Several new technologies are creeping into SCM which are reshaping this crucial business function. This report aims to give us an insight into the various technologies in supply chain management and its applicability in various operations processes. The report mainly concerns with various new .technologies in labour management, inventory management, E auctions, supplying portal etc. Keywords: Inventory, IT, RFID,LMS, YMS,E auctions.

1.0 INTRODUCTION
Supply chain management is defined as the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996).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 (supply chain) Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally. Importance of Supply Chain Management - Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy. In Peter Drucker's (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies.

In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors were identified, complementing the earlier "Just-In-Time", "Lean Manufacturing" and "Agile Manufacturing" practices.Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination among the members of the supply chain network.

2.0 LABOUR MANAGEMENT SYSTEM IN DISTRIBUTION

A combination of software, engineering and mindset change to improve logistics productivity. Labor management systems are typically built on discrete, engineered standards for specific tasks in a distribution center, plus detailed reporting at the individual operator level against the resulting dynamic goal time calculations for the days work. Labor generally represents the largest cost component of a distribution centers operating budget. Yet relatively few distribution operations try to optimize this critical resource through a Labor Management System (LMS). Distribution centers that lack a comprehensive labor management system typically operate between 60 to 70 percent of their potential productivity. Implementing a comprehensive labor management program that includes engineered work standards and an LMS can allow a distribution facility to operate at or near 100 percent productivity.

3.0 E-AUCTIONS
E-auction refers to the use of technology tools to drive on-line contract bidding for a growing array of both indirect and indirect materials. E-auctions are relevant to the products or services of considerable market competition, a minimum of four suppliers is considered as a healthy level. The e-auction does not require any specialized computer equipment nor do they need any extra software to be downloaded onto their computer hardware. The only basic requirement is a reliable Internet connection with a recent Microsofts Internet Explorer Version. Moreover, the contract offer should also be large enough to attract the suppliers i.e. the predictive savings must exceed the cost of e-auctions. On the other hand, there are following areas, where e-auctions is not relevant and not advisable. First, if the suppliers have demonstrated the sign of not being able to cut the prices further than e-auction is not a correct option. Second, if most of the suppliers do not have internet availability to participate in the process. Third, if the buyer has to initiate the process only for short period and is not looking to initiate a strategic partnership with supplier(s). E-auction delivers innumerable benefits to both buyers and suppliers across the supply chain in terms of overall costs, strategic sourcing, supply chain efficiency and compatibility with other quality practices such as JIT and others. The benefits are the following.

elimination of paper and streamlined processes short negotiation cycle better value for money procurement increased transparency of the contract award process

Negotiation of contracts with your suppliers can be a lengthy process that is costly for both the buyer and the supplier. In addition, negotiating with suppliers individually will not always achieve the best deal. By conducting contract negotiations on-line, the process is much quicker than the normal negotiation process, and as a result the overall procurement cycle is significantly reduced. Vendors report up to 30% savings in time and therefore cost of process. Reverse auctions create an environment where suppliers bid against each other for a contract. This environment encourages competition with the result that goods and services are offered at their current market value. Vendors report price savings ranging between 5% and 20% on non-reverse auction derived pricing. Reduced paperwork, short procurement cycle and increased transparency of competing bids are clear benefits for suppliers.Reverse auctions tend to be used either as hosted services or in house applications. The main effort involved in carrying out each online reverse auction is usually focused on the set up activities. The key steps involved in using reverse auction technology are as follows:Prepare detailed electronic product specification. It is important to produce a clear requirements specification as it will help suppliers in bidding and also make the post-auction evaluation more straightforward.Recruit suppliers. Train suppliers to use the software/website reverse auction service providers can help with this as well.Train purchasing staff in using the software/website.Publish product specifications in advance of event and invite suppliers to the reverse auction event. Start reverse auction event. Buyer and suppliers access the event via the web. They can log in and out of the event to view and place bids. The event can last from two hours (most common in the UK) to a few days. Suppliers bid anonymously against each other. Suppliers are able to see the bids on their personal screens. There is no limit to the number of individual bids.Reverse auction closes. The bids are analysed using preset criteria. Some reverse auction systems provide bid evaluation tools and assessment engines, which automate the evaluation process. Award contract.In case of integrated reverse auction systems, the awarded contract automatically becomes a commitment in the accounting system.

4.0 SPEND MANAGEMENT VISIBILITY

Spend Management Visibility does a spend analysis and uncover their spend visibility which allows realization of savings through identifying specific opportunities for reducing costs. Not only does this optimize sourcing options and strategies as well as centralize control, it leads to organized contract compliance.

Spend Management Features:

Real-time spend visibility tracking of all online transactions and current spend analysis Ability to group spend by supplier, system and/or time segment Ability to specify date ranges Spend visibility drilled down to P.O. line item date Single spend management database for a complete spend analysis, capturing detailed data from required legacy systems and databases, including transaction systems, Purchase Card spend, time and expense systems, etc. Spend Categorization of both internal commodity categories and external category schemes (e.g. UNSPSC) and their tree structure Item content cleansing tools/services and reference controls User friendly tools or utilities for importing and exporting data - Excel, CSV, XML Data normalization tools to normalize spend by suppliers, categories, UNSPSC, due to seasonality, severe weather, un-planned vs. planned outages, etc. Dashboard View - ability to show enterprise spend information in summary views, by role and as customized by user, using filters and selection parameters with drill down ability Sourcing categorizations that are customizable by customer (e.g.: table based) Multiple concurrent product schemes / taxonomies with cross-referencing to each other and to external schemes, including features like aliasing Ability to identify sourceable vs. non-sourceable spend Opportunity reporting - generate by business unit/category/cost center/commodity/supplier and buyer.

5.0 DEMAND MANAGEMENT/S&OP

A process, generally supported by some level of technology tools, of aligning the sell side and the supply side of the company around a unified financial and operations plan. While many companies have nominal sales and operations planning processes in place, the consistent feedback is that most are far from optimally effective. In parallel with the growth of S&OP is the concept of demand management, in which sales, marketing, finance and the supply chain work together to drive demand and sales that maximize profitability, rather than simply reacting to forecast demand. With Demand Management's flexible, multi-level demand forecasting capabilities, companies can maintain properly-suited demand forecasting techniques and algorithm parameter settings, as well as increase supply chain visibility by providing a central view on sales forecasts for portfolio of products and locations. The key decision makers can work together to reduce operational costs and increase top-line revenues across the enterprise, all the way down to the store level. As companies such as Dell, Hershey Foods, Bacou-Dalloz and many others have shown, rigorous S&OP processes can dramatically change corporate effectiveness. To do S&OP right, and to move into a demand management mode, is a major corporate undertaking. Interestingly, we continue to hear examples of supply chain executives launching the initiative, but then insisting an exec from sales or marketing lead the process on a go-forward basis. If the CEO or COO isnt behind it, however, S&OP is unlikely to be successful.

Company alignment and execution across a consistent set of strategic goals, and a shared set of forecasts and objectives, is essential in todays hypercompetitive global markets. Companies that successfully implement S&OP react faster to opportunities, more consistently meet financial goals, and do so with less inventory and fewer outof-stocks.

6.0 SUPPLIER PORTALS

Highlights of Supplier Portal: Reduce the volume of supplier phone calls into AP asking about payment status by providing them with online status look-up Control what information vendors see and dont see in the porta.l Notify suppliers of purchase orders via e-mail that contain a link to the portal, where they can view the PO information Once a supplier has fulfilled an order, an invoice can be created with a mouse click based on the PO information and sent back to AP electronically. If a supplier receives an order without an associated PO, then the supplier can enter the invoice into a form within the Supplier Portal and submit it electronically. If an invoice is disputed, one use Supplier Portal to capture and keep a record of all of the e-mail communication between procurer and the supplier. The technology has existed for some time now to relatively easily integrate suppliers through increasingly functional web portals. The scope of activities is very broad, from purchase order management, to providing demand visibility, to advance ship notice and bar code label generation, to generating dynamic inbound shipment requirements. JC Penney and QVC, at the high end, and Stage Stores, in the midmarket, are examples of retailers who have profited enormously from such dynamic inbound programs. Its all about supply chain integration, and supplier portals today make it fairly easy to accomplish. Still, many companies have only taken baby steps, or none at all. Compared to EDI, this is a breeze. Yes, there is effort to train and get suppliers on board, but companies that take a disciplined approach, and invest in training, find its not nearly has difficult as many think. The benefits depend on the scope of the initiative and a companys specific situation. Significant reduction administrative costs can be achieved by going electronic in terms of purchase order management. Inbound receiving costs can be reduced by as much as 30% though receipt of advanced ship notices.

7.0 NETWORK OPTIMIZATION

Network & Inventory Optimization uses deterministic and stochastic optimization combined with flexible user-interface and analytical workbenches. The solution is intended to be used as part of day-in-the-life business process. Network & Inventory Optimization module provides strategic, end-to-end capabilities to evaluate, design and optimize supply chain networks, whether one is looking to expand production and distribution network, or optimize current network and inventory

policies. The optimal inventory policies can be published to drive supply and replenishment planning without requiring custom installation or integration. It involves the use of network optimization software to find the optimal balance between costs and service in the configuration of a companys supply chain network. Increasingly, these tools are being used more tactically than in the past, supporting global sourcing strategies, more short term inventory planning decisions, new product introductions, and even sales and operations planning.

8.0 TRANSPORTATION MANAGEMENT SYSTEMS

A Transportation Management System (TMS) is a software system designed to manage transportation operations. Software systems that enable shippers to automate planning and execution, connect electronically with carriers, and reduce freight costs though optimal mode selection, optimal carrier assignment, shipment consolidation, and use of continuous moves. TMS are one of the systems managing the supply chain. They belong to a sub-group called Supply chain execution (SCE). TMS, whether it is part of an Enterprise Level ERP System or from an integrated "Best of Breed" Independent Software Vendor(ISV) has become a critical part of any (SCE) Supply Chain Execution and Collaboration System in which real time exchange of information with other SCE modules has become mission critical. TMS usually "sits" between an ERP or legacy order processing and warehouse/distribution module. A typical scenario would include both inbound (procurement) and outbound (shipping) orders to be evaluated by the TMS Planning Module offering the user various suggested routing solutions. These solutions are evaluated by the user for reasonableness and are passed along to the transportation provider analysis module to select the best mode and least cost provider. Once the best provider is selected, the solution typically generates electronic load tendering and track/trace to execute the optimized shipment with the selected carrier, and later to support freight audit and payment (settlement process). Links back to ERP systems (after orders turned into optimal shipments), and sometimes secondarily to WMS programs also linked to ERP are also common. Most TMS systems help shipper directly work with asset-based carriers and support disintermediation (including avoiding use of non-asset based brokers and other intermediaries). Software systems that enable shippers to automate planning and execution, connect electronically with carriers, and reduce freight costs though optimal mode selection, optimal carrier assignment, shipment consolidation, and use of continuous moves. Despite a slight current reprieve, transportation costs have been rising dramatically, and capacity has been extremely tight. In addition, companies have become increasingly aware of the role of transportation in overall supply chain strategies. TMS improves transportation performance and generally delivers an outstanding financial payback. TMS implementations are similar to any major software project there is a decent effort in set up, configuration and integration. On-demand solutions offer the promised of reduce implementation scope, but sometimes at the cost of reduced capabilities. Change management can be a challenge, especially when going from decentralized to centralized operations, as many TMS initiatives support. The benefits of centralization are many and clear, and it is almost impossible to move to a

centralized transportation strategy without the support of a strong TMS. Heavy LTL shippers generally have large opportunities for consolidation, and many benefit simply from optimal mode and carrier selection.

9.0 STRATEGIC/GLOBAL SOURCING

Strategic sourcing is a process that helps companies take a fresh look at how they purchase products and services to lower costs, improve profits and improve supply chain management. Strategic sourcing is not solely about how much direct or indirect materials cost but how they might be re-specified to cost less along the entire supply chain. Use of a more integrated, consolidated approach to supplier selection and procurement, including evaluating total supply chain costs, and consolidating purchasing power. Strategic sourcing is also tightly tied to offshoring and global sourcing strategies. We probably could have moved this up on the list, but the opportunities vary dramatically company to company. Many companies have saved many millions through a more strategic approach to procurement. Global sourcing is becoming a nearly ubiquitous strategy, though for many the gains havent fully materialized. To succeed as a company today, when it comes to the global supply chain, you better be good. These are long, multi-year initiatives, which can involve a high degree of risk. Companies implementing global sourcing strategies are sometimes frustrated that the projected savings arent as substantial as estimated do to challenges in execution. That said, for some purchase categories, strategic and global sourcing can be relatively easy. Very dependent on company specifics, but the opportunities for reduce procurement costs can be huge for many companies.

10.0 WIRELESS
Converging data and voice onto an integrated piece of equipment (Now leading mobile phone carriers have certified rugged handheld computers for voice communication) can cut the number of devices system administrators need to support in half, which provides sustainable operating cost savings. Bluetooth is also frequently integrated with these devices to interface peripherals and further reduce total cost of ownership by eliminating the costs of repairing and replacing cables. Connectivity convergence continues with the integration of GPS communication into mobile computers. While use of radio frequency/wireless terminals in distribution centers is at one level a highly penetrated and mature market, we continue to be amazed at the number of even fairly large companies that are still using paper-based systems in their DCs. If a physical inventory count is right up alongside having teeth pulled on your list of least favorite things to do, then read on. The following article discusses how wireless communication can help improve the speed and accuracy of your inventory counts and cut costs.

Inventory counts are not only time-consuming, they are unreliable and expensive. Mistakes are made when counting quantities, and then more mistakes are made when keying in the information. Replacing pen and paper with bar codes and scanners can bring a more efficient warehouse. And if the scanners update your system live without needing to be put in a docking station, then you're well on your way toward high levels of accuracy and efficiency

11.0 YARD MANAGEMENT SYSTEM

YMS offers accurate management of the trailers and containers in your shipping yard and handles every yard and dock-door-related function, including appointment scheduling, trailer check-in and audit, age-analysis, and check-out functionality. The graphical yard viewing tool provides easy and complete visibility of your yard. YMS also gives complete visibility of in-transit trailers (inbound and outbound) for better planning. It is available as a stand alone module, or tightly integrated with warehouse management and transportation management modules. Software tools, implemented either stand-alone or in conjunction with a WMS or TMS, that provide visibility into yard inventory and optimize appointment scheduling and execution on inbound and outbound dock doors. The category has enjoyed substantial growth in the past two years. Too many companies are still fairly blind to inventories in their yards. Hours of service rules and detention charges make it more necessary to crisply execute at the dock, as do lean and JIT/synchronized supply chain strategies. Key features of the YMS module include: Graphical, real-time view of yard and trailers Flexible appointment scheduling/management Optimized dock door scheduling Prioritization of movement based on DC requirements Inbound/outbound in-transit visibility Trailer check-in & check-out Trailer audit Trailer movement Task management

12.0 RTLS
Real-time visibility into exact locations of containers and cargo has never been as important as today with increased movement of cargo from offshore, the need to move it quickly to final destinations and new security requirements. Todays wireless technology provides critical visibility into supply chain activities, delivering benefits to

carriers, shippers and customers. Real Time Locating Systems are fully automated systems that continually monitor the locations of assets and personnel. An RTLS solution typically utilizes battery-operated radio tags and a cellular locating system to detect the presence and location of the tags. The locating system is usually deployed as a matrix of locating devices that are installed at a spacing of anywhere from 50 to 1000 feet. These locating devices determine the locations of the radio tags. The systems continually update the database with current tag locations as frequently as every several seconds or as infrequently as every few hours for items that seldom move. The frequency of tag location updates may have implications for the number of tags that can be deployed and the battery life of the tag. In typical applications, systems can track thousands of tags simultaneously and the average tag battery life can be five or more years.Real time location systems (RTLS) allow you to expand your wireless local area network into an asset tracking system. An important market driver is the Wireless Location Appliance from Cisco Systems, which enables asset tracking through a Cisco wireless LAN. Any device connected to the wireless LAN can be tracked and located. One application is to track forklifts via their vehicle-mounted computers radio. The Wireless Location Appliance and supporting software can track the radios location in real time to support efficient dynamic storage, routing, monitor dwell time, and gather data for productivity and asset utilization analysis. Many other expensive products and assets can be equipped with an RTLS device for real-time monitoring.

14.0 CONCLUSION
Supply chain technologies are improving in a rapid manner.Change in information technology forms an important part in the change of the technology. The above report gave a brief idea of various important technologies and its applicability in SCM..

15.0 REFERENCES 1. John T Mentzer, 2001, Supply chain management , Saga Publications Inc., California. 2. Jeremy F. Shapiro, 2007, Modeling The Supply Chain, Thomson Learning Inc., Second Edition, India. 3. S. Jaya Krishna, 2005, RFID An Introduction, ICFAI University Press , First edition. 4. Tonya Boone, Ram Ganeshan, 2007, New directions in Supply Chain Management ,JAICO Books, First edition.
5. Present , past and future of SCM http://www.husdal.com/2011/06/26/pastpresent-and-future-of-scm/ downloaed on 05-09-11

6. ReyesPedro,2009,
http://www.ingentaconnect.com/content/ind/ijiim/2009/00000001/00000002/art00 004 , Downloaded on 01-09-11

7. Anonymous,2009, Master in Supply ChainManagement.

http://www.supplyinstitute.org/masterinsupplychainmanagemen.html?&L=1 , Downloaded on 01-09-11

8. Anonymous, 2006, Optimizing the Supply Chain: Competitive Advantage

through Information Technologyhttp://merc.mcmaster.ca/symposium/SCMSymposium2006.html , Downloaded 01-09-11 9. Caroline Emberson,2009, http://www.surveillanceproject.org/files/2009-06Emberson-ABIII.pdf , Downloaded on 01-09-11

10. Anish agarwal , Ravi Shankar , M K Tiwari - 2006 Modelling the matrices of
lean , agile and le agile supply chain- an ANP based approach - European Journal of Operation Research volume no : 173 Page No: 211 225

11. Mandeep Sani Aug 2007 Analysis of clothing supply chain integration and
marriage of lean and agile http://organisationalexcellence.wordpress.com/2008/03/25/analysis-of-clothingsupply-chain-integration-marriage/ - downloaded on 01- 08 -2011 12. Rachel mason jonesy , Ben Naylorz and Dennis R Towill 2000 Lean , agile or le agile matching your supply chain to the market place - INT. J. PROD. RES,, VOL. 38, NO. 17, 4061 4070 13. http://en.wikipedia.org/wiki/Lapin_Agile downloaded on 15-08-2011 14. http://engsci.aau.dk/kurser/F06/Lscm/Lscm/Lesson%203/supply%20chain %20migration.pdf downloaded on 15-08-2011

10