In the simplest sense, the supply chain is a series of processes starting from one’s suppliers up to the stage when the final product reaches the hands of the customer. These processes are defined as a part of the relationship between the various business partners. Changing market realities are forcing companies to restructure their businesses in dramatic ways.
This need to change has come from such forces as competitive threats, stockholder expectations, or internal business requirements. For this the firms are re-evaluating their relationships with their business partners so that they may be converted to value adding relationships. And as a part of this exercise the companies are trying reduce the total cost of acquisition, possession, and disposal of goods and at the same time adding more value to each of the processes.
For this reason the supply chain today has come to be termed as value chain. One of the prime movers for bringing supply chain management from a conceptual stage to a real time application stage has been information technology.
Electronic Supply Chain Management
The Electronic Supply Chain Management is a business framework consisting of many applications such as EDI, EFT etc. These applications have been divided into two categories:
a. Applications concerning planning.
b. Applications concerning execution.
The planning application focuses on demand forecasting, inventory simulation, distribution, transportation, and manufacturing planning and scheduling. Planning software is designed to improve forecast accuracy, optimize production scheduling, reduce inventory costs, decrease order cycle times, reduce transportation costs, and improve customer costs, decrease order cycle times, reduce transportation costs, and improve customer service.
The execution process addresses procuring, manufacturing and distributing products throughout the value chain. Supply chain execution applications are designed to manage the flow of products through distribution centers and warehouses and help ensure that products are delivered to the right location using the best transportation alternative available.