Supply Chain Bad Practices?

In class we have been discussing about Supply Chain Best Practices from Toyota, Apple, Zappos, and other leading companies. Here I will try to give some advice on how to think more critically about improving supply chain, because best practices simply don't apply to all companies' problems.

Best Practices: method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark. In addition, it can evolve to become better as improvements are discovered.

Gathering of best practices is routine for businesses today.

But in today's global, complex and risk-laden business climate, can one company's supply-chain best practices actually help another business succeed with theirs?

The answer is: probably not.

We have to be really clear that everyone has a different perception. Trying to define supply chain best practices is like trying to select the best product. It is not so much how good the product is, but how well the product works for you. The best product will vary with the context.

Having said that, best practices will vary with the context. Best practices in one context can become just “good” or even “bad” in other situations.

This point may seem obvious, but the meaning is crucial.

Why is our supply chain not as good as Toyota's?

As we discussed in class, the Toyota Production System has been taking more than 100 years of development to the company. Furthermore, the culture of the company has a specific organizational mindset. Every company is unique, even Toyota. Trying to replicate Toyota’s context can become a nightmare.

No doubt, industry-specific supply-chain best practices can be a fantastic source of ideas and inspiration. But there is a huge difference between learning from the leaders and blindly pushing staff so that you can be more like Toyota.

The popular best practices are a good place to start, but simply installing them without adapting them to the business is an exercise in futility.

References

http://en.wikipedia.org/wiki/Best_practice

http://www.cio.com/article/628635/The_Trouble_with_Supply_Chain_Best_Practices

http://www.reliableplant.com/Read/8257/supply-chain

Amazon

Immediately, when we began talking about Walmart and their distribution network, I similarly wondered what Amazon was doing. As I order most everything from Amazon when I'm in the U.S. (camera, computer, TV, clothes, food, books, etc.), I was thinking if it would make economic sense for the company to invest in its own distribution network in order to cut down what must certainly be high costs with UPS (which usually ships their products).

I found a few interesting articles detailing Amazon and its distribution network. The first one (http://www.forbes.com/2001/06/07/0607amazon.html), while dated, was good because it talked about "drop shipping", which we went over in class today. Jeff Bezos began pushing the idea of drop shipping, which was somewhat embarrassing as the company had spent such a great deal in building distribution facilities. While certainly not an empirical study, I have noticed in the last few years that most items on Amazon are "fulfilled by ...". The article mentions that Amazon saves roughly 50% of its fulfillment cost when using drop shipping, which is an obvious benefit.

More recently, Amazon has also continued expanding its distribution space, somewhat contrary to the idea of more drop shipping. Specifically, the article mentions six more distribution centers that were planned for 2011, of which three were overseas (two in Japan, one in Scotland). I found it interesting that Amazon actually has more distribution centers overseas than in the US (25 to 22) and that they are targeting China very aggressively.

I also found an interesting article from the Northwestern's Kellogg School of Management. In it, they mention Amazon and its book sales as being superior to a company like Borders. Amazon has 4 distribution centers for books (or did at the time of the article), while Borders has/had over 400 retail locations. The article talks about customers willing to wait longer for books, and that Amazon has a distinct advantage and a much great inventory turnover time than Borders. http://www.kellogg.northwestern.edu/faculty/chopra/htm/research/deliverynetwork.pdf

Key Trends Changing Supply Chain Today and Role of Technology in Supporting these Trends

Hitachi Consulting issued an interesting white paper in 2009 on key trends that are going to be affecting the supply chain in the coming future.

These trends are

1. Demand Planning:

Companies have shifted their focus from plant level production to demand level production. They now have a more customer focused mindset. This is also includes having all stakeholders on board such as marketing, sales and finance and develop a consensus towards a single Demand plan. Demand planning also has a positive impact on new product introductions, inventory planning and management, customer service, supply chain efficiency and sourcing strategies. Dell's just in time model is purely demand focused and creates supply chain efficiency in terms of zero inventory for them.

2. Globalization

Some of the questions answered nowadays by companies designing a globalized supply chain network are

- Where should facilities be located?
Many companies such as Apple have manufacturing facilities in China to exploit the cost efficiencies in that region. Companies want to locate their manufacturing facilities in places that gives them a cost advantage over their competitors.

- How many facilities should I have and what capabilities should they have?


- What kind of capacity should they have?

- What product and services should they handle?
- Which contract packers or manufacturers should I use?


3. Increased Competition and Price Pressures

With continued commoditization of products companies, are looking for better ways to distinguish themselves in the market. Through supply chain redesign and use of technology, companies are benefiting from significant cost improvements. They not only want to remain cost competitive, but also provide significant value added services to their high end sophisticated customers.
Cost improvements around inventory management, logistics operations, material management and manufacturing costs, including raw material and component acquisition can be found with:
- Sales and operations planning
- Transportation/distribution management
- Improved product lifecycle management
- Improved strategic sourcing and procurement


Suppliers differentiate themselves by providing value added services and capabilities to their customers. These include

- Vendor Managed Inventory
- RFID
- Labeling and packaging
- Drop shipping
- Collaboration


4. Outsourcing

Companies have realized that outsourcing parts of supply chain to other countries can give them a competitive edge. However in recent times, as labour costs in developing countries have increased consistently, the increase in transport costs are eroding that competitive advantage. There could be a trend to relocate manufacturing facilities back onshore to reduce transportation costs and incur significant productivity gains. Most of Apple's IPhone manufacturing is handled in Foxconn facilities in China. As labour unions are getting stronger there, workers are demanding better living conditions and salary. This is driving up the labour costs and puts significant pressures on the margins of Apple. Its same for other companies also that have their suppliers and manufacturers in China.

The optimally outsourced supply chain, either in its entirety or just a component,
relies heavily on:
- Superior supply chain network design
- Inclusion of that outsource partner in the information chain.
- Establishment of control mechanisms to proactively monitor the various
components of the supply chain
- Information systems to connect and coordinate the supply chain as seamlessly
as possible



5. Shortened and More Complex Product Life Cycles

In today's world, the product lifecycles has decreased. Companies are bringing new products at a faster rate into the market. There is pressure to develop innovative products and bring them to market more rapidly with minimizing cannibalization of existing products, which are still in high demand. In order to meet the needs of both customers and consumers, companies need more efficient product lifecycle management processes. This includes heavy emphasis on managing new product introduction, product discontinuation, design for manufacturability and leveraging across their entire product and infrastructure characteristics.

Technology helps companies design products that can share common operations, components or materials with other products, thereby reducing risks of obsolescence write offs, increasing cost leverage on the purchase of new materials and ensuring that infrastructure investments are optimally utilized. Additionally, getting this right would significantly improve their time to market.

6. Collaboration between Stakeholders in the Extended Supply Chain

The ultimate goal of collaboration is to increase visibility throughout the value chain in an effort to make better management decisions and to ultimately decrease value chain costs. Companies that expand the usage of Sales and Operations Planning have greater visibility across their own enteprise and respective value chain, gain the agility necessary to improve Product Lifecycle Management (PLM) process.
Another example of collaboration is the use of RFID Tags. RFID helps chain members to gain visibility into critical information as products flow through the value chain.
The main intention is to reduce overall logistics costs as products move through the supply chain to fulfill safe stock levels and ultimately consumer demand.

Enterprise Resource Planning Tools and SCM solutions have addressed the needs of manufacturing and distribution companies in areas such as
- Network and Inventory Optimization
- Product Lifecycle Management
- Sales and Operations Planning
- Manufacturing Optimization
- Logistics Optimization
- RFID
- Procurement
- Business Intelligence

These technologies have helped enable the supply chain members to innovate, drive cost reductions improve service and meet customer expectations better than ever.


REFERENCE
www.hitachiconsulting.com/files/pdfRepository/WP_SCMTrends.pdf

Changing the delivery system: Amazon's new locker delivery system

This week we talked about how logistic strategies will influence the supply chain management. In the case of Zappos.com, we get the core idea of delivery in supply chain –you should always put customer in the centre and emphasis on improving customer’s experience. Later, in the article of “The Threat of Global Gridlock”, it lists a few of the traditional delivery ways: by truck, train, ship, and air. No matter what way you are choosing for your delivery system, the key point as the article points out, is to leverage the time and cost.

We already discussed several ways to lower down time and cost referring to manufacture, design, and transporting between suppliers. However, how can we improve the way final goods are delivered to customer, especially, for on-line shopping, or daily grocery buying?

As Brick-and-mortar retailers like Wal-Mart and Best Buy already allow customers to pick up online purchases at physical stores, Amazon.com is reportedly giving that concept a shot through a partnership with 7-Eleven by promoting the new delivery locker system since the end of last year.

Let’s first watch the video below and see how it works:

The working procedure is like this:

When the package is actually delivered, the customer receives an email notification along with a bar code to his smart phone and heads to the 7-Eleven. There he’ll stand in front of the locker system, which looks like the offspring between an ATM machine and a safety deposit box. The machine will scan the bar code on his handset to receive a PIN number. He’ll punch that PIN number and retrieve the package.

Years from now, it might seem quaint to have a package delivered to your apartment door -- why risk it when you can have it electronically dispensed at your local convenience store? Some people may think this practice is a reverse of the modern technology.

 However, a lot people like me really appreciated this idea. And I think Amazon is really smart to use this strategy to satisfy their customer and cut down the cost of delivery home to home even though they need to spend extra money build up the lockers and maintain it to be safe. My reasons are as follow:

First is that it makes Amazon ordering easy. You only need to place an order with Prime and pick it up on the way home from work the next day. Presumably a delivery confirmation will let you know that it is waiting for you, but if you chose a store in your neighborhood for delivery, it’s not really very inconvenient just to go check.

Second is the environmental and practical advantage. The delivery guy needs to visit one destination, not many. This allows the delivery to uses less gas and puts the van on the road for less time. What is more, it even reduce shipping costs to customer, which makes them even more satisfied.

According the recent news, this kind of service is already available in New York and some other American cities, as well as some in UK, besides the first initial in Seattle. It’s conceivable that Amazon could leverage its own Amazon Fresh vehicles to deliver to the Amazon Locker system at some point in the future, creating essentially a complete delivery infrastructure of its own.

For more information, please visit:

http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=200742950

The Internet-Enabled Supply Chain: From Your First Click -->To Your Doorstep

I was looking for technology-related articles on supply-chain and I came upon this whitepaper on how technology, particularly the internet, is bringing supply chain towards new horizons.  The article "The Internet-Enabled Supply Chain: From the “First Click” to the “Last Mile” goes on to touch on different topics on technology and supply chain, but the primary focus was on the criticality that a business look at internet with newer eyes -- that the internet fuels the ever-increasing demand of customer needs with its potential to reach a bigger market, thus making ever more critical the need for synchronization.  

With anyone having access to the internet becoming a potential customer for a company that goes online, who are bound to emerge as the winners?  and with what tools and guiding principles?

The below shows how synchronization across your supply chain increases one's capabilities as well as benefits that go with it.  (See Figure 1) At the heart of the matter is reaching your customers in the way   that's most convenient for them while being most cost-effective for you. 

Edesign, or the concept of designing principles with having product innovations done on the web, is an emerging concept among companies with the rise of the internet's influence. (see Figure 2)  Hewlett Packard, for example, is an early example of a company that began using eDesign principles. In the design and production of laser printers, they abandoned the traditional design approach of dedicated teams focused on launch dates, features and functionality. Internal and external design teams collaborated to develop a supply chain friendly product, with modular parts and differentiating components that could be assembled at regional distribution centers rather than multiple dedicated production facilities.1

We see in the figure below the results of a study on online retailer on gaps in supply chain infrastructure that led to disappointment of customers and poor performance.  Not suprisingly, the timing of the delivery comprised much of the causes for disappointment.  Also a cause for concern would be the availability of stock and the exactness of the delivery date as promised.  It is surprising that only 25% of online retailers actually met delivery commitment and another 25% out of 480 product orders in a week could not be completed online.  This illustrates how failure to satisfy customers can be traced to a lack of a smooth collaboration somewhere along one's supply chain.

The big question now is what are the steps to be done to achieve the ideal 100% customer satisfaction from their first click to their last.  Enhacing user online experience is just the start of it.  His first click must trigger a supply chain movement that will go all the way until it all ends at his doorstep with the delivered product.  So my guess is companies should start thinking of revolutionizing one's supply chain from web and back.

Excerpts from the article: 

How is the supply chain changing amidst the evolution of the information age – or, rather, the revolution in the new economy? The Web offers the supply chain enormous potential and entirely new methods for streamlined coordination between business partners, including third- and fourth-party providers. Companies that want to succeed in the new economy need to enhance communications with their partners and providers. The coming years will see an explosion in e-commerce – with a concomitant need for solutions to satisfy ever more demanding customers.

Supply chains in practically every industry are at the beginning of a startling reinvention triggered by the rise of the Internet. The revolution extends beyond performance improvements and efficiencies gained from automation and communication to include entirely new opportunitiesto create value. This new value is derived from synchronized supply chains that can reach out to a bigger market, perform mass customization to tailor product and services to meet the individual customers' needs and develop new products and services that adapt to the competitive and environmental needs. The Internet changes the way in which supply chains are managed, planned and controlled. The information, decisions and processes that form supply chain management are moving to the Web, breaking old paradigms of inter-company boundaries.This common ground will be where entire supply chains truly can be synchronized. New upstart specialist providers of both virtual and physical activities will carve out their own unique roles in the new infrastructure. In this churning environment, supply chain capabilities will be crucial. But gaining those vital competitive capabilities will not be through the typical supply chain initiatives of today. 

Put simply, the Internet enhances supply chain performance and supply chain is crucial to e-commerce. As the supply chain evolves in the information age, the Web’s capability to support tight coordination between business partners means that all the information, transactions, and decisions that are the essence of synchronized supply chains will flow through the Web. Using the Internet to connect the systems of supply chain partners will become the medium through which the essential processes of managing and synchronizing supply chains are carried out. As it does so, it will change the nature of supply chain businesses completely. A company that misses this distinction is in grave danger. It may find itself celebrating the squeezing of supplier margins at auction or the reduction in inbound inventory by sharing forecasts while its competitor builds a tightly linked alliance that shuts it out of the channel to the market completely. Why is this radical change so  certain? It is not that the technology is “cool,” nor even that there are efficiencies to be gained. At the heart of the matter are customers’ ever increasing demands. Customers – whether they are business customers or individual consumers – are looking beyond cost as the sole arbiter of value. They are demanding innovation and personalization of not only the products but of the associated service and delivery.The increased variety and velocity of business increases the complexity of the supply chain issues exponentially and yet at the same time requires even greater flexibility. The competitive power in this environment will lie with a network of business partners who each bring the specific capabilities to bear. But the supply chain activities of these partners must be tightly synchronized with the demands of the market place.That level of coordination requires not only the ability to communicate but also the capability to manage the complexity and immediacy of synchronization.

 Full Article: 

1 -  http://community.mis.temple.edu/mis3537sec001f10/files/2009/09/R08-The-Internet-Enabled-Supply-Chain-from-the-first-click-to-the-last-mile.pdf

Why does SAP so many successful ERP Implementations?

Changing People’s habits in Supply Chain

Any SAP implementation brings change to organizations and more importantly to the people who work in these organizations. While SAP projects represent a positive change, the perceptions of the people affected can be quite different (See image 1). Thus, a SAP implementation requires active management of the change process throughout the project and beyond to ensure that the new solution is fully accepted and adopted by the people using it.

Image 1: The process of change and adjustment.

For enabling and supporting Organization Change, the first step is to align the structure of the organization.

What are some strategies to manage the Change?

Role of Top Management

• Top Management actively supporting the initiative
• Top Management provides the right people to do the right job
• Clear Company Policy
• Communicate the needs of the organization
• Success of the implementation to be assigned as a Key Performance Indicators of the staff
• HR must support with employee development master plan and career path for employees
• Good budget support

Role of Project Team

• Effective communication with employees
• Project team provides continuous feedback to top management on the status, progress and areas of concern of the implementation
• Effective training on role and skill
• Providing detailed manuals to staff
• Conducting reviews post the implementation
• Involvement of employees in the change process

Once these roles are clear and implemented, Change Management efforts should be align to all phases of the ERP project:

Image 2: SAP Change Management Approach.

The SAP Change Management Approach is based on 6 SAP Change Management success factors.

1. Creating a common orientation

Employees usually have different information about the project and have different interests and goals. Increasing their information and alignment to the objectives of the change facilitate common orientation. This phase is best addressed by an effective communication strategy.

2. Creating conviction

People believe in a system that they create and design therefore involving people in the design of the process facilitates their belief in the new process design.

3. Ensuring ability

Change works best if it is drive internally.  To ensure lasting change it is important to ensure ability for the users in terms of understanding the new processes and the revised roles and having the skills to run the new transactions proficiently. The Change Impact Analysis helps ensure that this is achieved.

4. Ensuring uniform perception

Efficiency of the change process is driven by uniform perception of goals and objectives of the project. The integration workshops helps in creating the alignment to the common benefit and the effort needed to drive the benefit that is expected.

Business benefit workshops help the business owners focus on the business results that they are seeking to achieve and the SAP tools they can leverage to achieve them.

5. Making results felt

One of the biggest individual apprehensions is the fear of failure. This leads them to reject new solutions/ processes offered. Therefore it is necessary that employees should be able visualize and feel the results as soon as possible. As a part of the Change Strategy the quick wins are identified and study missions to these internal site will need to be organized.

6. Ensuring lastingness of change

Change processes are only successful in the long term when the organizational situation also changes and the new way of thinking and acting are positively reinforced. Creating permanent structures and the right reward mechanisms will help ensure the lastingness of the Change.

The Post-Go live issue resolution ensures that we factor in issues not envisaged during the implementation and undertake the root cause analysis.

Conclusions

Change is the only constant in business environments. However, uncontrolled changes and insufficient change management processes will increase the probability of project failure. A formal and structured change management process is necessary to ensure effects of any changed requirements are properly analyzed, prioritized, and balanced according to the project's budget, schedule, and scope.

IT projects almost never fail because of technical causes. A lot of large and complex projects fail because of people and process risks. As we discussed in class, a big mistake that companies make is to assume that changing the software is easier than changing people’s habits. For these reasons, enterprises are increasingly recognizing that good Governance is a requirement for ensuring the alignment of major program initiatives with business strategy and direction. Effective Governance is the foundation of project success.

References:

Managing Organizational Change During SAP® Implementations, Luc Galoppin, Galileo Press

http://www.sap.com/services/education/consultingservices/changemanagement.epx
http://www.cio.com/article/102902/Change_Management_Definition_and_Solutions

JC Penny Failed in F-Commerce

JC Penny Failed in F-Commerce

We all know that JC Penny used E-Commerce to turn its sale around.[1] With Facebook ‘s penetration growing bigger and bigger, E-Commerce consultants were predicting social media storefronts would be selling $30 billion worth of products by 2015, with Facebook driving the majority of this business. There was talk in some circles that Facebook might even have the legs to threaten Amazon’s domination as an online retailer. This expected explosion in Facebook driven e-commerce even spawned its own term: F-commerce.[2]

This lead us to late 2010, when JC Penny tried get ahead of the social Networking / ecommerce game by announcing that its full catalog will be now available on Facebook. It sounded like a good idea, Facebook shoppers would have a full range of shopping options with the new service, including the ability add and/or remove items from a shopping cart, as well as checkout, pay with credit cards, and tailor their shipping addresses and information. [3]

Fast forward to a year later, Business Week is reporting that F-commerce appears to have failed. Retailers GameStop, J.C. Penney, Gap Inc. and Nordstrom have all shuttered their Facebook stores.

Why did F-Commerce fail? As it turns out, Facebook is a place where people hang out online with their friends. They may peruse ads and take advantage of deals, but they don’t log onto Facebook to go shopping. When retailers already have their own retail websites, there’s little incentive for customers to shop on Facebook instead. For the retailers, building and maintaining the second online storefront on Facebook meant additional costs with no apparent gain in customers. As Forrester Research analyst Sucharita Mulpru points out in a Bloomberg interview, “it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

For retailers, the lesson seems to be that social media sites, including Facebook, remain valuable advertising and promotional tools. But Facebook is not at the stage of being a virtual mall. As its IPO approaches and potential investors wonder how Mark Zuckerberg plans to monetize his customers to help justify a potential $100 billion valuation, strike F-commerce off the revenue list. At least for now.[1]

As F-Commerce has failed, I couldn’t help but wonder, what would be their next step in winning in the e-commerce game?

Reference

[1] "When Big Retailers Don Like Facebook." InvestorPlace. Web. 28 Feb. 2012. .

[2] "JCPenney Turns Its Sales Around through E-Commerce." - MarketingVOX. Web. 28 Feb. 2012. .

[3] "E-commerce News." E-commerce News. Web. 28 Feb. 2012. .

IT and Supply Chains

Supply chain management (SCM) is concerned with the flow of products and information between supply chain members' organizations. Recent developments in technology enable the organizations to avail information easily in their premises. These technologies are helpful to coordinate the activities required to manage the supply chain. The cost of information transmission has decreased due to the increase in available technologies. In the below integrated supply chain model (Fig.1) the bi-directional arrows represent the flow of materials and information (feedback). The thing that we need to understand most is that information technology is more than just computers. It includes data recognition equipment, communication technologies, factory automation and other hardware and services are included to interface between the various facets of a supply chain.

 

(Fig 1)

Integrated supply chain model 

The importance of information in an integrated supply chain management environment:

Prior to the 1980s the information flow between functional areas within an organization and between supply chain member organizations was paper based. The paper based transactions and communication was time consuming and prone to more errors. During this period, information was often over looked at as a critical competitive resource because its value to supply chain members was not clearly understood. IT infrastructure capabilities provided a competitive positioning of business initiatives like cycle time reduction, implementation, implementing redesigned cross-functional processes etc. Three factors that strongly impacted this change in the importance of information include: - First, satisfying in fact pleasing customer has become something of a corporate obsession. Serving the customer in the best, most efficient and effective manner has become critical. Second information is a crucial factor in the managers' abilities to reduce inventory and human resource requirement to a competitive level. Information flows plays a crucial role in this form of strategic planning.

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 outlets directly with P&G and other major suppliers.

The fast fashion brand Zara uses IT for immediate sharing of user needs and trend changes to its headquarters with the help of the internet and mailing servers and other ERP tools. They also use computers RFID tags and software for tracking their inventory like most stores and super markets.

Information and Technology Applications in Supply Chains:

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 programme used for processing transactions management control, decision-making and strategic planning.

E-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, 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 processing of 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.

Though the use of EDI supply chain partners can overcome the distortions and exaggerations 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 at the checkout counters of super markets.  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 etc.

Data warehousing and Data Mining:

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. This information can then be mined to generate information about patterns, trends etc. These help to streamline the supply chain and related processes.

Enterprise Resource planning (ERP) & Customer Relationship Management (CRM) tools:

Many companies now view ERP systems (eg. Baan, SAP, People soft, etc.) as the core of their IT infrastructure. ERP systems have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and tasks associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data. Other CRM tools help to keep track of customers and their interactions with the organization. This helps with trend analysis and collecting data about the customers’ needs and demands.

The world is shrinking day by day with advancement of technology. Customers' expectations are also increasing and companies are prone to more and more uncertain environments. 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 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 does 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 applications, the Internet and other networking links to observe past performance and historical trends to determine how much product should be made as well as the best and most cost effective method for warehousing it or shipping it to retailer.

In a previous blog I had talked about how the Dabbawalas on Mumbai have also started using IT in their supply chains, for expanding their business (http://cmuscm.blogspot.com.au/2012/02/mumbais-dabbawalas-go-hi-tech.html). They are already using Mobile phones and the internet to publicise and register more customers. The main hindrance to their adopting more sophisticated forms of technologies is due to their lack of literacy and computer knowledge and skills. Are there some more ways that they can harness the power of IT to improve and expand their supply chain further without having to force them to become computer literate? 

Source: http://www.indianmba.com/Faculty_Column/FC461/fc461.html