B Com Exam  >  B Com Notes  >  E-Commerce  >  Managing Supply Chain & Measuring Performance - Supply Chain Management, E-Commerce

Managing Supply Chain & Measuring Performance - Supply Chain Management, E-Commerce | E-Commerce - B Com PDF Download

MANAGING SUPPLY CHAIN

Traditional Supply Chain : The traditional supply chain often includes more than one company in a series of supplier-customer relationships. It is often defined as the series of links and shared processes that involve all activities from the acquisition of raw materials to the delivery of finished goods to the end consumer. Raw materials enter into a manufacturing organization via a supply system and are transformed into finished goods. The finished goods are then supplied to customers through a distribution system. Generally several companies are linked together in this process, each adding value to the product as it moves through the supply chain. Effective supply chain management is the act of optimizing all activities throughout the supply chain, and it is the key to a competitive business advantage. Consequently, an organization’s ability to gain a competitive advantage is heavily dependent on coordination and collaboration with its supply chain partners. Yet, even today, a typical supply chain is too often a sequence of disconnected activities, both within and outside of the organization. To remedy this situation, it is important that an organization and its suppliers, manufacturers, customers, and other third-party providers engage in joint strategic planning and operational execution with an eye to minimizing cost and maximizing value across the entire supply chain.

 

Exchanging Data is Critical : The underlying enabler of supply chain integration is the fast and timely exchange of information between supply chain partners. This information may take the form of transactional documents such as purchase orders, ship notices, and invoices, as well as planning-related documents like demand forecasts, production plans and inventory reports. It is this sharing and coordination of information and planning activities that can enable cost reduction, value enhancement, and the execution of advanced collaborative planning activities. In the past, the cost and complexity of executing electronic data interchange (EDI) transactions made this type of information exchange suitable for only the largest corporations. The ubiquity of Internet-based communication tools now makes it possible for organizations of all sizes to exchange information. However, challenges still exist and being able to successfully deal with all the new technologies is one of these challenges. The good news is that this data exchange challenge can be overcome; and the opportunities become endless once companies are able to exchange information efficiently with their suppliers, customers, and partners. Applications like vendormanaged inventory (VMI), collaborative planning, e-procurement, shipment tracking and tracing, electronic order management, and bill presentment and payment can be built  upon a core data exchange platform, enabling companies to reap true cost reduction and service improvement within their organization.

A supply-chain encompasses all activities and information flows necessary for the transformation of goods from the origin of the raw material to when the product is finally consumed or discarded. This typically involves distribution of product from the supplier to the manufacturer to the wholesaler to the retailer and to the final consumer, otherwise known as nodes in the supply-chain.      The transformation of product from node to node includes activities such as production planning, purchasing, materials management, distribution, customer service and forecasting.

While each firm can be competitive through improvements to its internal practices, ultimately the ability to do business effectively depends on the efficient functioning of  the entire supply-chain. For example, a wholesaler’s inability to adequately maintain inventory control or respond to sudden changes in demand for stock may mean that a retailer cannot meet final consumer demand. Conversely, poor sales data from retailers may result in inadequate forecasting of manufacturing requirements.

However, it is not simply about passing information from one node in the supply-chain to the next. The dispatch and distribution functions need to work effectively as well, so movement of product from one node to another happens in a timely manner and meets production scheduling.

All that said, there can be little point trying to improve your bottom line through transforming your own business without similar changes to the way your supply chain as a whole is functioning. That is, there needs to be consistency between individual  business objectives and the objectives of the supply-chain, and access to information in order to provide visibility of data flows.

 

Collaboration : Technology solutions can support greater data visibility and integration of dispatch and distribution with production scheduling. However, one element that underpins management of the supply-chain is collaboration.

Collaboration means firms share information in an accurate and timely manner so all businesses in the supply-chain can adequately plan forward inputs and outputs, dispatch product, manage risk and maximize return on investment. This improves the overall functioning of the supply-chain and ultimately the individual firm’s bottom line.  The key to collaboration is communication and the key to better communication is electronic transfer of information.

 

MEASURING A SUPPLY CHAIN’S PERFORMANCE

The performance of a supply chain is evaluated by how it reduces cost or increases value. SCM performance monitoring is important; in many industries, the supply chain represents roughly 75 percent of the operating budget expense. Three common measures of performance are used when evaluating SCM performance:

  •  Efficiency focuses on minimizing cost by decreasing the inventory investment or value relative to the cost of goods sold. An efficient firm is therefore one with a higher inventory turnover or fewer weeks’ worth of inventory on hand.
  • Responsiveness focuses on reduction in both inventory costs and missed sales that comes with a faster, more flexible supply chain. A responsive firm is proficient in an uncertain market environment, because it can quickly adjust production to  meet demand.
  • Effectiveness of the supply chain relates to the degree to which the supply chain creates value for the customer. Effectiveness-focused supply chains are called “value chains” because they focus more on creating customer value than reducing costs and improving productivity.

To examine the effect of the Internet and electronic commerce on the supply chain is to examine the impact the Internet has on the efficiency, responsiveness, effectiveness, and overall performance of the supply chain.

 

The document Managing Supply Chain & Measuring Performance - Supply Chain Management, E-Commerce | E-Commerce - B Com is a part of the B Com Course E-Commerce.
All you need of B Com at this link: B Com
100 videos|55 docs|19 tests

FAQs on Managing Supply Chain & Measuring Performance - Supply Chain Management, E-Commerce - E-Commerce - B Com

1. What is supply chain management and why is it important?
Ans. Supply chain management refers to the coordination and optimization of activities involved in the production, procurement, and distribution of goods and services. It includes the management of all activities from the sourcing of raw materials to the delivery of the final product to the customer. Supply chain management is important because it helps organizations improve efficiency, reduce costs, minimize risks, and enhance customer satisfaction.
2. What are the key components of a supply chain?
Ans. The key components of a supply chain include: 1. Suppliers: These are the organizations or individuals that provide the raw materials, components, or services required for production. 2. Manufacturers: These are the organizations that transform raw materials into finished goods. 3. Distributors: These are the organizations that deliver the finished goods to retailers or customers. 4. Retailers: These are the organizations that sell the products to end consumers. 5. Customers: These are the individuals or organizations that purchase and use the products or services.
3. How can supply chain performance be measured?
Ans. Supply chain performance can be measured using various key performance indicators (KPIs) such as: 1. On-time delivery: Measures the percentage of orders delivered to customers on or before the promised delivery date. 2. Order fulfillment cycle time: Measures the time taken from receiving an order to delivering the product to the customer. 3. Inventory turnover: Measures how quickly inventory is sold and replaced within a given time period. 4. Perfect order rate: Measures the percentage of orders that are delivered without any errors or defects. 5. Supply chain cost: Measures the total cost incurred in managing and operating the supply chain.
4. How can e-commerce impact supply chain management?
Ans. E-commerce has a significant impact on supply chain management in several ways: 1. Increased visibility: E-commerce platforms provide real-time visibility into inventory levels, sales data, and customer demand, enabling better inventory management and demand forecasting. 2. Faster order processing: E-commerce allows customers to place orders directly, reducing the need for manual order processing and speeding up the fulfillment process. 3. Global reach: E-commerce enables companies to reach customers worldwide, expanding their market reach and increasing the complexity of supply chain operations. 4. Reverse logistics: E-commerce often involves return and exchange processes, requiring efficient management of reverse logistics, including product returns and refunds. 5. Collaboration and integration: E-commerce facilitates collaboration and integration among supply chain partners, allowing for seamless coordination and communication between suppliers, manufacturers, distributors, and retailers.
5. How can supply chain disruptions be managed effectively?
Ans. Supply chain disruptions can be managed effectively by taking the following measures: 1. Risk assessment and mitigation: Identify potential risks and develop strategies to mitigate them, such as diversifying suppliers, implementing contingency plans, and securing alternative transportation routes. 2. Enhanced visibility and communication: Implement systems and technologies that provide real-time visibility into the supply chain, allowing for quick identification and resolution of disruptions. Maintain open and transparent communication with supply chain partners. 3. Redundancy and flexibility: Build redundancy and flexibility into the supply chain by maintaining safety stock, establishing backup suppliers, and adopting agile manufacturing and distribution processes. 4. Continuous improvement: Regularly evaluate and improve supply chain processes, including monitoring and analyzing performance metrics, conducting post-disruption evaluations, and implementing lessons learned. 5. Collaboration and partnerships: Foster strong relationships with supply chain partners, collaborating on risk management strategies, sharing information, and supporting each other during disruptions.
100 videos|55 docs|19 tests
Download as PDF
Explore Courses for B Com exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

MCQs

,

video lectures

,

Summary

,

Semester Notes

,

Important questions

,

study material

,

pdf

,

shortcuts and tricks

,

E-Commerce | E-Commerce - B Com

,

Exam

,

past year papers

,

Managing Supply Chain & Measuring Performance - Supply Chain Management

,

E-Commerce | E-Commerce - B Com

,

Extra Questions

,

ppt

,

practice quizzes

,

Managing Supply Chain & Measuring Performance - Supply Chain Management

,

mock tests for examination

,

Objective type Questions

,

Previous Year Questions with Solutions

,

Managing Supply Chain & Measuring Performance - Supply Chain Management

,

Viva Questions

,

Sample Paper

,

Free

,

E-Commerce | E-Commerce - B Com

;