Table of Contents

CHAPTER 1 ................................................................................................................................................. 2 1.0: INTRODUCTION ............................................................................................................................. 2 1.1: ABSTRACT....................................................................................................................................... 2 1.2: Research Aim:.................................................................................................................................... 3 1.3: Research Question: ............................................................................................................................ 3 1.4: Research Objective: ........................................................................................................................... 3 1.4: Limitations: ........................................................................................................................................ 3 CHAPTER 2 ................................................................................................................................................. 4 2.0: Literature Review: ............................................................................................................................. 4 2.1: Supply chain organizational dynamics: ............................................................................................. 4 2.2: Information and Technology: Application of SCM: .......................................................................... 5 2.3: MODELS FOR SUPPLY CHAIN DESECION-MAKING: ............................................................. 7 2.4: INVENTORY MANAGEMENT SOFTWERE - TOOLS: ............................................................... 8 2.5: ECONOMIC ORDER QUENTITY MODEL (EOQ): ...................................................................... 9 2.6: REORDER POINT MODELS:........................................................................................................ 11 2.7: SUPPLY CHAIN PLANNING: ...................................................................................................... 12 2.8: CAPACITY PLANNING: ............................................................................................................... 13 CHAPTER 3 ............................................................................................................................................... 15 3. Research Methodology and Findings .................................................................................................. 15 3.1. Research Design............................................................................................................................... 15 3.1.1. Types of IT use in SCM ............................................................................................................ 15 3.1.2. Drivers for IT use in SCM ........................................................................................................ 16 3.2. Data collection ................................................................................................................................. 16 3.3. Data analysis .................................................................................................................................... 17 3.4. Results .............................................................................................................................................. 17 3.5. Findings............................................................................................................................................ 17 CHAPTER 4 ............................................................................................................................................... 19 4.1: CONCLUSION:............................................................................................................................... 19

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CHAPTER 1

1.0: INTRODUCTION
Supply chain management (SCM) is concerned with the flow of products and information between supply chain members' organizations. Recent development in technologies enables the organization to avail information easily in their premises. These technologies are helpful to coordinates the activities to manage the supply chain.

A supply chain is a network of supplier, manufacturing, assembly, distribution, and logistics facilities that perform the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these products to customers. Supply chains arise in both manufacturing and service organizations. Supply Chain Management (SCM) is a systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer. SCM is different from Supply Management which emphasizes only the buyer-supplier relationship. Supply chain management has emerged as the new key to productivity and competitiveness of manufacturing and service enterprises. The importance of this area is shown by a significant spurt in research in the last five years and also proliferation of supply chain solutions and supply chain companies. All major ERP companies are now offering supply chain solutions as a major extended feature of their ERP packages.

1.1: ABSTRACT
This paper focuses the role of Information technology (IT) in supply chain management. It also highlights the contribution of IT in helping to restructure the entire distribution set up to achieve higher service levels and lower inventory and lower supply chain costs. The broad strategic directions which need to be supported by the IT strategy are increasing of frequency of receipts/dispatch, holding materials further up the supply chain and crashing the various lead times. Critical IT contributions and implementations are discussed. Fundamental changes have occurred in today's economy. These changes alter the relationship we have with our customers, our suppliers, our business partners and our colleagues. It also describes how IT developments
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have presented companies with unprecedented opportunities to gain competitive advantage. So IT investment is the pre-requisite thing for each firm in order to sustain in the market.

1.2: Research Aim:

To establish the importance of IT based Supply Chain Management in the IT oriented manufacturing organization and to create relationship between IT and Supply Chain Management in order to cope up with dynamic and hostile market.

1.3: Research Question:

How can we create relationship between IT and Supply Chain Management and use it in the real world effectively and efficiently?

1.4: Research Objective:

Supply chain management is a major application area for Internet Technologies and Electronic Commerce (ITEC). In fact, advances in ITEC have contributed to growing importance of supply chain management and SCM in turn has contributed to many advances in ITEC. This short course is firmly grounded in Information Technology. Therefore, objectives of this research include analyzing-

How to understand the Information Technology based Supply Chan? How to develop models for Supply Chain Decision-Making? How to establish automated Inventory management? How to implement Economic Order Quantity Models? How to develop Supply Chain Planning? How to establish capacity Planning? How to create relation to ERP?

1.4: Limitations:
Time deficiency is a fact considering the nature of the research which requires coverage of a wide range of literature and evaluation and analysis of a very complex contemporary problem. Access to some particular data requires money so does conducting a survey. Therefore, cost has to be addressed as one of the major limitations. Due to the differences in culture, norms and language several challenges are obvious in the data collection procedure.

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CHAPTER 2 2.0: Literature Review:

2.1: Supply chain organizational dynamics:
All enterprises participating in supply chain management initiatives accept a specific role to perform. They also share the joint belief that they and all other supply chain participants will be better off because of this collaborative effort. Power with in the supply chain is a central issue. There has been a general shift of power from manufacturers to retailers over the last two decade. Retailers sit in a very important position in term of information access for the supply chain. Retailers have risen to the position of prominence through technologies. The Wal-Mart & P&G experiences demonstrate how information sharing can be utilized for mutual advantage. Through sound information technologies Wal-Mart shares point of sale information from its many retail outlet directly with P&G and other major suppliers. The development of Inter organizational information system for the supply chain has three distinct advantages like cost reduction, productivity, improvement and product/market strategies.

Barrett and Konsynsik have identified five basic levels of participation of individual firms within the organizational system. 1. Remote Input/Output mode: In this case the member participates from a remote location with in the application system supported by one or more higher-level participants. 2. Application processing node: In this case a member develops and shares a single application such as an inventory query or order processing system. 3. Multi participant exchange node : In this case the member develops and shares a network interlinking itself and any number of lower level participants with whom it has an established business relationship. 4. Network control node: In this case the member develops and shares a network with diverse application that may be used by many different types of lower level participants.

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5. Integrating network node: In this case the member literally becomes a data communications/data processing utility that integrates any number of lower level participants and applications in real times. Four fundamental mistakes made when determining information requirements are as follows: 1. Viewing system as functional instead of cross-functional. 2. Interviewing managers individually instead of jointly. 3. Not allowing for trial and error in detail design process. 4. Asking the wrong question during the interview

2.2: Information and Technology: Application of SCM:

In the development and maintenance of Supply chain's information systems both software and hardware must be addressed. Hardware includes computer's input/output devices and storage media. Software includes the entire system and application program used for processing transactions management control, decision-making and strategic planning. Recent development in Supply chain management software is:

1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution Sciences Inc. which is useful for computing freight costs, compares transportation mode rates, analyze cost and service effectiveness of carrier. 2. A new software program developed by Ross systems Inc. called Supply Chain planning which is used for demand forecasting, replenishment & manufacturing tools for accurate planning and scheduling of activities. 3. P&G distributing company and Saber decision Technologies resulted in a software system called Transportation Network optimization for streamlining the bidding and award process. 4. Logitility planning solution was recently introduced to provide a program capable managing the entire supply chain.

Electronic Commerce:
It is the term used to describe the wide range of tools and techniques utilized to conduct business in a paperless environment. Electronic commerce therefore includes electronic data interchange,
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e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic/optical data capture. Companies are able to automate the process of moving documents electronically between suppliers and customers.

Electronic Data Interchange:

Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business documents in a standard format. EDI describe both the capability and practice of communicating information between two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI are: 1. Quick process to information. 2. Better customer service. 3. Reduced paper work. 4. Increased productivity. 5. Improved tracing and expediting. 6. Cost efficiency. 7. Competitive advantage. 8. Improved billing. The use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information.

Bar coding and Scanner:

Bar code scanners are most visible in the check out counter of super market. This code specifies name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants.

Data warehouse:
Data warehouse is a consolidated database maintained separately from an organization's production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated.

Enterprise Resource planning (ERP) tools:

Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by
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utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data.

2.3: MODELS FOR SUPPLY CHAIN DESECION-MAKING:

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2.4: INVENTORY MANAGEMENT SOFTWERE - TOOLS:

Enterprise is less than its goal was not appropriate and effective inventory. Business items for sale, items sold, and all other elements active in a variety of ways. Approach to inventory management and keep track of all these factors. The list of small businesses is hand-made, but as a business growth and an increasing number of customers, projects and transactions, through this manual inventory is almost unworkable. In order to work, inventory software asset management should be put into action. The use of software asset inventory management has become increasingly popular most of all the different types of enterprises. More traditional methods, on the other hand, taking into account the records, inventory and sale of goods, inventory asset management software is a thousand miles away in speed, accuracy and reliability. Under normal circumstances, project delivery on stock transactions are recorded in the database used in inventory management software assets. Because it is a software based on the large amount of data, according to preferences of the manager or user interface. The software is often linked to sales of systems and point-of-sale, but a reflection of data, and automatic updates. Through the use of software, people can know exactly the existing inventory, which has no details of the stock and every transaction to sell the stock. The world is spinning faster pace with the transaction took place faster than ever before due to new technologies. "This is not to stay in the cave. If you have a business need to the list of assets, the purchase

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of inventory asset management software, available from different manufacturers. Is a competitive advantage and to make use of management tools, you can run a profitable and efficient.

2.5: ECONOMIC ORDER QUENTITY MODEL (EOQ):

Economic order quantity (also known as the Wilson EOQ Model or simply the EOQ Model) is a model that defines the optimal quantity to order that minimizes total variable costs required to order and hold inventory. The model was originally developed by F. W. Harris in 1913, though R. H. Wilson is credited for his early in depth analysis of the model.

Underlying assumptions
1. the monthly (annual) demand for the item is known, deterministic and constant 2. the lead time is known and constant 3. the receipt of the order occurs in a single instant and immediately after ordering it 4. quantity discounts are not calculated as part of the model 5. the ordering cost is constant

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Variables
Q = optimal order quantity C = cost per order event ( not per unit) R = monthly (annual) demand of the product P = purchase cost per unit F = holding cost factor; the factor of the purchase cost that is used as the holding cost (this is usually set at 10-15%, though circumstances can require any setting from 0 to 1) H = holding cost per unit per month (per year) ( H = PF)

Formula

The cost of carrying stocks

The cost of carrying stocks there are three elements in the costs of carrying costs: Administrative and financial costs: I. Costs of placing, processing orders II. Handling costs III. Cost of forgoing bulk purchase discounts IV. Cost of failing to anticipate price increases Holding costs I. rent for the required space; II. equipment, materials, III. labour to operate the space; IV. insurance; V. security; VI. Interest on money invested in the inventory and space, and other direct expenses. VII. Some stored goods become obsolete before they are sold, reducing their contribution to revenue while having no effect on their holding cost. VIII. Some goods are damaged by handling, weather, or other mechanisms.
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IX. Some goods are lost through mishandling, poor record keeping, or theft, a category euphemistically called shrinkage.

Stock out costs I. lost revenue from being out of stock II. lost future sales because of damaged goodwill III. Spoilage, damage caused by hold ups in production.

2.6: REORDER POINT MODELS:

At the very basic level any firm faces two main decisions concerning the management of inventory: When should new stock be ordered and in what quantities? With regard to the order quantity, which minimises inventory related costs, we are familiar with the classical EOQ (economic order quantity) model. This remains the basic inventory model even when it is not applicable in real life business situations in most cases. In inventory related literature, the answer to the question of when to order is given with reference to the ROP (reorder point), and the point at which the replenishment order should be initiated so that the facility receives the inventory in time to maintain its target level of service. The ROP can be defined in terms of units of days or in units of inventory. In the static and deterministic model, the ROP is the simple multiplication of the number of lead days and the daily demand. It means that every time the inventory falls to the ROP level, an order must be initiated. And the order quantity is given by the EOQ model which is based on cost minimization.

A simple deterministic inventory model based on fixed demand and fixed lead time

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The formula for EOQ or economic order quantity is well known:

Q is the order quantity per order. K is the fixed set up cost which the warehouse incurs every time it places an order. D is the demand per day. h is the inventory carrying or holding cost per unit per day. We will notice that the text highlighted two important insights regarding the EOQ model. These are: Optimum order size is a good balance between the holding cost and the fixed order cost. Total inventory cost is related with order size, but the relationship is not very significant. A discussion of the EOQ model would remain incomplete if the inherent assumptions on which the model is based are ignored. Bowersox (2001) explains that these major assumptions are: All demand is satisfied. The rate of demand is continuous, constant and known. Replenishment lead time is constant and known. There is a constant price of product that is independent of order quantity or time. There is an infinite planning horizon. There is no interaction between multiple items of inventory. There is no inventory in transit. There are no limits on capital availability.

2.7: SUPPLY CHAIN PLANNING:

In order to synchronize volatile supply and demand factors throughout the extended supply chain, you need to have a planning environment that considers the cause and effect relationships between millions of data points in the blink of an eye. MRP systems can provide some of the data, but they can't respond quickly to changing demand patterns, minimize overtime, optimize plant utilization, manage materials deliveries, and streamline production lines. This synchronization can be achieved at multiple locations along the supply chain. Adexa Supply Chain Planning supports constraint-based planning with a comprehensive, inter-enterprisewide model to synchronize supply with demand across the entire resources of multi-site, multitier supply chain. Organizations can reduce inventories by optimizing all supply chain activities and increase your responsiveness through shorter planning cycles. For example, one can synchronize distribution centers and plants to accommodate variances in transportation and shipping timeframes. Capacity and inventory are used to their fullest extent so orders can be filled when they are truly required.

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Benefits of Supply Chain Planning:

Create accurate constraint-based plans quickly Reduce excess inventory, overtime, and open work orders Shorten lead times Gain new visibility into production capacity Accommodate customer-demand changes Simplify allocation planning for equitable inventory distribution Choose the right alternate suppliers

2.8: CAPACITY PLANNING:

This module is designed to help your business gain complete control over Production Capacity in order to ensure the most efficient use of available resources. As the system is specific to the Apparel Industry, Work Study is defined for color length (fit) and size for each finished product. Customer Service and Quick Response are increasingly seen as key factors in a successful modern Apparel Manufacturer. The Capacity Planning module will enable your business to plan effectively and ensure you meet your customers delivery requirements. Using Terminology and methods familiar to Apparel Manufacturers, the CRP module will enable you to plan production for a week, a season or a year, monitoring actual results and highlighting problem areas. 13 | P a g e Supply Chain Management

Company benefits from capacity planning: Reduced Administration Costs Reduced Clerical Errors Reduced Paperwork Increased Flexibility

Besides these benefits there are other important benefits. Those are underlying: Faster Access to Information Immediate on screen access to planned production. Immediate on screen access to related production and customer orders. Reduced WIP Stock Levels Faster Throughput Reduced Overtime Costs Accurate planning to balance demand over time Improved Customer Service Quote reliable delivery dates Reduce Excess Capacity Balance workload over time Improved Cash Flow Quick Response

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CHAPTER 3
3. Research Methodology and Findings
3.1. Research Design For the purposes of examining the use of IT in SCM, two a priori constructs were developed: 1) The types of IT use in SCM and 2) the drivers for using IT in SCM. TYPES OF IT USE IN SCM Transaction processing Supply chain planning and collaboration Order tracking and delivery coordination

DRIVERS FOR USING IT IN SCM Elimination of human errors Reduction of costs Speeding up information transfer Volume of transactions Unpredictable and logistically demanding environment Project-orientation of the business In-transit delivery consolidation

3.1.1. Types of IT use in SCM The first construct, types of IT use in SCM, refers to the ways in which companies employ IT for the purposes of SCM. Based on prior research discussed above, three different types of IT use in SCM transaction processing, supply chain planning and collaboration, and order tracking and delivery coordination were identified and chosen to represent the first construct. The first type of IT use, transaction processing stands for the use of IT for increasing the efficiency of repetitive information exchanges between supply chain partners. In this type of IT use the exchanged information is typically related to such tasks as order processing, billing, delivery verification, generating and sending dispatch advices, and producing order quotes. The second type of IT use, supply chain planning and collaboration, represents the use of IT for sharing planning-related information such as demand forecasts and other demand information, inventory information, and production capacity information, with the intention of increasing the effectiveness of the supply chain. Finally, the third type of IT use in SCM, order tracking and
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delivery coordination, refers to the monitoring of individual orders or shipments, which may consist of components or final products, with the aim of coordinating their delivery or conveying timely information of their location. 3.1.2. Drivers for IT use in SCM The second construct, drivers for using IT in SCM refers here to the reasons why IT is used in a certain manner in SCM. Based on our literature review, we expected that following drivers for the use IT in transaction processing can be found in the case companies: reduction of the costs of operational processes (manual work), improvement of information quality by eliminating human errors, and speeding up the transfer of information between organizations. We further hypothesized that the volume of transactions acts as a driver for using IT for transaction processing. It was also assumed that supply chain coordination information is shared especially in volatile, unpredictable, and logistically demanding business environments. Finally, we expected that tracking and coordination activities are performed in project oriented businesses and in cases with in-transit delivery consolidation.

3.2. Data collection We collected data from information acquired from secondary information sources, such as annual reports and company web-pages. Total of sixteen companies were selected using the approach of purposive sampling. Our objective was to include companies employing a variety of inter-organizational IT integration mechanisms and representing different business environments in the sample. The characteristics of companies in the research sample are exhibited. All the data collected concerning the case companies was compiled into a case study database which then was used as the basis for the analysis. Furthermore, additional information needs that rose up during the analysis phase were filled by contacting the informants by telephone. The data describing the drivers for the different types of IT use was also gathered. The drivers are largely determined based on the answers to the questions inquiring the reasons for the implementation of each system and the characteristics of the partners whom the system is used with. In addition, the volatility of the companys business environment was inquired by checking the respondents to describe the level of demand uncertainty, and the characteristics of their product offering such as the length of product lifecycles and the frequency of new product introductions. Finally, to describe the business environment of the case companies, data on order penetration points, roles in the supply chain, the number and concentration of supply chain partners (suppliers and customers), the amount of product customization, number of products, and the level of internal IT integration was gathered.
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3.3. Data analysis The data was analyzed in two successive phases. First within case analyses were performed to assess how and with what kind of partners each of the case companies utilizes IT in its SCM processes, and to understand why they use the technology in that specific way. Hence, for each company, the types of IT use as well as the drivers for the identified ways of IT use were identified based on the survey data. After analyzing each of the cases separately, the cases were compared with each other in order to identify potential patterns within and between companies utilizing IT in a specific manner. In this cross-case analysis the companies using IT in a specific way with up- or downstream partners (for example companies utilizing IT for transaction processing with their customers) were first compared with each other to identify commonalities between them regarding the drivers for using IT and the business environment. After this, these cases were compared with the companies not using IT in that specific manner to chart the potential differences in the business environments between the users and non-users. This kind of grouping and cross-case analysis were performed for the different uses of IT that are transaction processing with customers / suppliers, supply chain planning and collaboration with customers / suppliers, and order tracking and delivery coordination with customers / and suppliers. 3.4. Results In the within-case analyses, the relationship between the two constructs the types of IT use in SCM and the drivers for the use of IT in SCM, was examined. After looking at each of the cases separately, the cases were compared with each other in order to identify potential patterns between them. This cross-case analysis revealed commonalities between the companies utilizing IT in a specific way regarding the drivers of IT use. As for the business environment characteristics, the number and concentration of supply chain partners as well as the role of the company in the supply chain seemed, in some occasions, to segregate companies utilizing IT in a specific way from the non-users. However, order penetration point, the level of product customization, number of products, and the level of internal IT integration did not, to our surprise, distinctly differ between the users and the non-users in any type of IT use. Next, the findings of the cross-case analysis are presented in more detail.

3.5. Findings The findings of this study give support to the proposed relationships between the drivers and the use of IT for transaction processing. Support was also found to the expected drivers for the use of IT for order tracking and delivery coordination. The analysis of the drivers for the use of IT for supply chain planning and collaboration, however, brought about some interesting new findings.
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Namely, in the companies examined in this study, the sharing of planning information via information systems is tightly linked to the development of respective cross-organizational processes. We suggest three possible reasons for this finding: 1) Uni-directional benefits of information sharing, 2) The scope of this study on information shared with IT systems, and 3) The complexity of actually achieving benefits with the shared information. Several authors have pointed that normally it is the suppliers that gain the most benefits from information sharing. In fact, Lee et al suggest that suppliers should offer specific monetary or process-related incentives to their customers to engage them in information sharing. A good example of possible process-related incentive is the vendor managed inventory (VMI) system, as it enables the customer to increase the efficiency of its purchasing process besides providing the supplier timely demand and inventory information. This study focused on formal inter-organizational information sharing via IT systems. Thus, it may oversee the sharing of information that is not utilized by any of the formal supply chain processes. This is supported by the answers given by Case companies B and E, which indicate that customers share some demand and forecast information with them but that they prefer to receive and analyze it manually. This is aligned with the findings of Kauremaa et al. who reported that manual sharing of planning information is more common than automated information sharing among the analyzed sixteen companies. The third possibility for the lack of information sharing without process re-design is that the companies fail to see and/or realize the expected benefits of information sharing. The research promoting the benefits of information sharing is usually based on analytical modeling or computational experiments, and relies on simplified representations of the supply chain (most often a linear supply chain with two to four echelons and one or a few products). However, in practice the situation is much more complex. For example, the supply chains are not linear, and thus the information available from any partner would only be a subset of all relevant information from that supply chain stage, there are usually thousands of products to be considered and managed in the supply chain, and products often have complex product structures (BOMs) making information sharing more difficult. Therefore companies cannot use significant resources in analyzing the information collected on each product, and furthermore should always consider whether the information is a sufficient and representative sample of information from that supply chain echelon.

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CHAPTER 4
4.1: CONCLUSION:
World is shrinking day by day with advancement of technology. Customers' expectations are also increasing and companies are prone to more and more uncertain environment. Companies will find that their conventional supply chain integration will have to be expanded beyond their peripheries. The strategic and technological innovations in supply chain will impact on how organizations buy and sell in the future. However clear vision, strong planning and technical insight into the Internet's capabilities would be necessary to ensure that companies maximize the Internet's potential for better supply chain management and ultimately improved competitiveness. Internet technology, World Wide Web, electronic commerce etc. will change the way a company is required to do business. These companies must realize that they must harness the power of technology to collaborate with their business partners. That means using a new breed of SCM application, the Internet and other networking links to observe past performance and historical trends.

REFERENCES:
1. Anderson, David L., Britt. Frank E., and Favre. Donavon J. (1997), The seven principle of Supply Chain Management, Logistics Management. 2. Bearnon, B.M (1998), "Supply Chain design & analysis: Models & Methods," International Journal of Production Economics, Vol. 55 pp. 281-294. 3. Chandra P., Saastry, T.(1998), "Competitiveness of Indian Manufacturing", Vikalpa, Vol. 23. No. 3. 4. Cock, M(2000), "The Complexity of Managing Complexity" Transportation and Distribution Magazine. 5. Drew, S. & Coulson. Thomas, C., (1997) "Transformation through team work" The path to the new organization, Team performance Management, 3., 162-178 6. King, J. (2000), "B2B exchanges Tighten Buyer seller Data Links", Computer world, Vol. 34 (10), pp. 42 March 2000. 7. Kraker, J. (2000), "Buyers Expect systems soon will deliver them", Engineering News Record, 11 Dec 2000, 2 May 2001, http://www.enr.com/new/c12111 a. asp, 2000. 8. Lietka, J., (1996) "Collaborating across lines of business for competitive advantage", Academy of Marketing Excellence, 10, 20-37. 9. Wynstar, F., Axeleson, B. and Van Weele, A., (2000). "Driving & enabling factors for purchasing involvement in new product development, European Journal of Purchasing & Supply Management, 6, 4957.

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