Page 367 -

Chapter 11 • Supply Chain Management 325

able to develop good B2B operations with their business partners without a good SCM
platform. Even companies that do not have online stores need an efficient e-SCM for their
B2B operations, as well as for their intranet applications (e.g., warehouse management
systems) that work hand-in-hand with the e-SCM system.
Integrating is the key issue to the successfulness of the supply chain. Integration must
occur at multiple levels, and not just at the network or hardware platform level. An important
aspect of integration is sharing and access. For integration to be successful, organizations
must become comfortable with the idea of sharing critical information with their partners,
and they must be willing to provide proper access to sensitive information. This can be a
double-edged sword because sharing could potentially make the organization less competi-
tive, and more access also means less security for the organization’s information. Each
organization will have its comfort level, depending on the industry, culture, and other
environmental factors. Management will need to find a “sweet-spot” for their company.
Finally, instead of just thinking about integrating ERP and SCM, management needs to think
of enterprise application integration.

Summary

•Supply chain management (SCM) is a cen- distributed or procured with the external
tral piece of technology in today’s enter- partners); transportation, which moves the
prise system. They are interorganizational product or service between two points of the
systems that provide an efficient and flexi- supply chain; and information, which stores
ble operational environment between the data and analysis of the other three drivers.
company, its external partners, and suppli- Information is the most powerful driver for
ers, thereby saving millions of dollars in SCM performance.
manufacturing and distribution costs. •SCM involves the operation or manage-
•SCM provides a link for services, materials, ment of many organizations’ processes
and information across the value chain of the and procedures. They include procure-
organization. It plays a major role in logistics ment, outsourcing, manufacturing flow
management, procurement, and collabora- management, order fulfillment, customer
tion activities among others in the organi- service, and forecasting. The scope
zation. The SCM strategy of the organization depends on the implementation of SCM in
must be aligned with the corporate strategy the organization.
of the organization; otherwise, the conse- •SCM plays a major role in the success of
quences will not be good for the company. e-Business and e-commerce. Without a
•ERP vendors have started including SCM good SCM, an organization will not be able
as a component or module of the software. to build B2B partnerships with its trading
SCM was traditionally not part of ERP partners, work on e-procurement from sup-
because the domain of SCM was to link the pliers, and have proper e-fulfillment of
company with external partners, whereas client orders. A strong SCM implementa-
the focus of ERP was mainly on the internal tion is necessary for e-Business.
functions of the company. •A good SCM is designed in collaboration
•There are four main drivers for the SCM with the organizations’ partners rather than
system performance: facilities, from which stand alone. SCM development should
the product or service is delivered; inventory focus on standardized technology rather
(i.e., the product or service that need to be than sophisticated technology. Success is