Supply Chain Management (SCM)–is a process-oriented system of purchasing, producing, and delivering product to customers. Its scope includes both internal enterprise processes and external business contributions from suppliers, transporters, channels and end-users. Supply Chain Management systems are often extensions of existing ERP systems, interfaced to encompass all areas of the complete supply chain. These areas include demand, supply, manufacturing, transportation and distribution, and sometimes even more.

Supply Chain Management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm and those where each channel member operates independently. Therefore coordination between the various players in the chain is the key in its effective management. For example on the similar platform, Cooper and Ellram[1] [1993] compare Supply Chain Management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.

Here are five basic components for Supply Chain Management:

·       Plan-This is the strategic portion of Supply Chain Management. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

·       Source-Choose the suppliers that will deliver the goods and services you need to create your product or service. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments.

·       Make-This is the manufacturing step in Supply Chain Management. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity.

·       Deliver-This is the part that many insiders refer to as "logistics." Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

·       Return-The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

Supply Chain

Supply Chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply Chain exists in both service and manufacturing organizations, although the complexity of the Supply Chain may vary greatly from industry to industry and firm to firm.

The Internet is proving an effective tool in transforming Supply Chain across all industries. Suppliers, distributors, manufacturers, and resellers now work together more closely and effectively than ever. Today’s technology-driven Supply Chain enables customers to manage their own buying experiences, increases coordination and connectivity among supply partners, and helps reduce operating costs for every company in the chain.

The evolution of a networked Supply Chain involves the following steps:

• Sharing static or dynamic information, including inventory levels, schedules, forecasts, and design documents, among companies and partners by integrating the Web with back-end systems such as enterprise resource planning (ERP)
• Conducting transactions, including exchanging purchase orders, invoices, shipping information, and so on, through a network such as the Internet or a virtual private network (VPN)
• Establishing business communities, such as portals, Web marketplaces, and auctions and bidding communities, to let business processes evolve and to further integrate companies

Through these changes, companies and their partners can see themselves as a single virtual organization. Shipping becomes on-demand and just-in-time, and the payment cycle is streamlined. As a result, companies change both how they conduct business and how quickly customers receive products from suppliers.

Here are the five keys to Supply Chain success:

Make the Sale to Suppliers: First comes the hard part. Supply chain automation is uniquely difficult because its complexity extends beyond your company's walls. Your people will need to change the way they work and so will the people from each supplier that you add to your network.

Wean Your Employees off the Phone and Fax: If selling Supply Chain systems is difficult on the outside, it isn't much easier inside. Operations people are accustomed to dealing with phone calls, faxes and hunches scrawled on paper and will most likely want to keep it that way. If you can't convince people that using the software will be worth their time, they will easily find ways to work around it. ERP at least erases the old ways of working by blotting out legacy software systems. Supply Chain software is less militant. You cannot disconnect the telephones and fax machines just because you have Supply Chain software in place.

Prepare for Bad Information—At First: There is a diabolical twist to the quest for Supply Chain software acceptance among your employees. New Supply Chain systems process data as they are programmed to do, but the technology cannot absorb a company's history and processes in the first few months after an implementation. Forecasters and planners need to understand that the first bits of information they get from a system might need some tweaking. If they are not warned about the system's initial naiveté, they will think it is useless.

Fix the Supply Chain Connection to ERP: You have probably heard that installing supply chain software is the natural next step after finishing your ERP project. Indeed, the two serve each other well. ERP captures all the product, sales, finance and inventory information that supply chain applications need to predict demand and optimize the flow of material through the chain.

Unfortunately, that symbiotic relationship does not translate into an easy integration between the two different systems. In all likelihood, your new supply chain implementation will not interface cleanly with your current ERP system.

Defuse Functional Warfare: Supply Chain software projects bring CIOs into direct conflict with the people who run the supply chain day to day—a contentious group with a lingering chip on their shoulders. Derided as a second-class function for years—logistics or procurement or however it is known in your company—has always been considered mundane, back-office territory everywhere but perhaps in retail.

Supply Chain Management Software

There are many Supply Chain Management Softwares which are available in the market and it is very much difficult to select one of them. Because they differ in cost, functionality and complexities involved, the idea is to choose best one that meet your need exactly in the way you want. Here are few critical factors to consider when estimating new Supply Chain Management Software. The selected Supply Chain Management Software solution should be one that ensures the fastest, easiest and most effective implementation.

• Supply Chain Management Software should be match to your current business practice. It should be allow for unique business practices. It should be flexible where required or it can be customized.

• Integrated verses interfaced – if different packages are required, can they be interfaced? What effect will this have on overall performance? This is one of the most important questions.

• Implementation – what is the process and how long will it take? Does it provide for user acceptance and adequate training etc.?

• Technology needs – with respect to new and/or utilization of existing hardware? Client/ server capacity, scalability, software upgrades and support?

• Price – does the selected solution meet budget requirements? Implementation of new software should increase company functionality with a minimum of disruption to ongoing business – and is an achievable goal with an appropriate evaluation program.

There are two main types of Supply Chain Management Software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties.

Some Supply Chain Management Software applications are based on open data models that support the sharing of data both inside and outside the enterprise; this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company. This shared data may reside in diverse database systems, or data warehouses, at several different sites and companies.

By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's clients), Supply Chain Management Software applications have the potential to improve the time-to-market of products, reduce costs, and allow all parties in the supply chain to better manage current resources and plan for future needs.

Supply Chain Management Software in education, in each of the experiments, students learn supply chain concepts in an environment that resembles one that they may encounter when they finish their education and go on into industry. The use of Supply Chain Management Software makes teaching supply chain management more flexible and more extensive, and provides students with more elaborate problem situations that better represent reality. Most Supply Chain Management Software has well-developed graphical interfaces to represent the elements of the supply chain being studied. Visual representations help students connect better with the data and the solution methods.