E-Supply Chain Management (E-SCM) | Explanation | Issues | Advantages

What is E-Supply chain management (E-SCM)?

E-Supply chain management is practiced in manufacturing industries. E-SCM involves using internet to carry out value added activities so that the products produced by the manufacturer meets customers’ and result in good return on investment.

E-Supply Chain Management - Explanation, Activities, Players, Issues, Advantages

E-Supply Chain Management – Explanation, Activities, Players, Issues, Advantages

E-SCM is the effective utilization of internet and business processes that help in delivering goods, services and information from the supplier to the consumer in an organized and efficient way.

Players of E-Supply Chain Management

ESCM chain consists of the following players — manufacturer, logistics companies, distributors, suppliers, retailers and customers. E-Supply Chain Management concentrates on the coordination between the various players in the chain. Coordination is very essential for the success of the organization. E-SCM focuses on reducing the inventory cost.

Supply Chain Management flow

SCM flows can be divided into three main activities

  1. Product flow,
  2. Information flow and
  3. Financial flow.

1. Product Flow: The product flow includes the movement of goods from a supplier to a customer, and also any goods returned by customers.

2. Information flow: The information flow involves transmitting orders and updating the status of delivery.

3. Financial flow: The financial flow consists of credit terms, payment schedules, consignment and title ownership arrangements.

Issues dealt by Supply Chain Management

Supply chain management deals with three issues:

1. Coordinating all the order processing activities that originate at the customer level, such as the process of order generation, order acceptance, entry into order processing system, prioritization, production, and material forecast.

2. Material related activities such as scheduling, production, distribution, fulfillment and delivery and

3. Financial activities such as invoicing, billing, fund transfer and accounting.

SCM involves counter checks of materials, information and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. It involves coordinating and integrating these flows both within and among companies.

Extranet, intranet, Internet are used in e-supply chain. Extranet helps to connect the participating companies. It may be the supplier or the customer. A customer can check the order status. Likewise, a supplier can collect data about inventory to know about the replenishment of the inventory.

With the help of internet, a company can advertise about the product and accept online orders. With the help of intranet, an organization can maintain communication within the boundaries of the company. It is said that the ultimate goal of any effective SCM is to reduce inventory.

E-supply chain enables to link the supplier with the customer by exchanging information instantaneously. The organization has sufficient inventory when required. There will not be any shortage or surplus of inventory. Shortage of inventory brings down the reputation of the firm. Likewise, excess inventory blocks the funds of the firm unnecessarily.

Advantages of e-supply chain management

Companies implementing E-SCM can enjoy the following advantages:

1. It improves efficiency

2. It reduces inventory

3. It reduces cost

4. It helps to take competitive advantage over competitors.

5. It increases ability to implement just-in-time delivery, increases on-time deliveries, which enhances customer satisfaction.

6. It reduces cycle time, increases revenue, by providing improved customer service.

7. It improves order fulfillment, order management, decision making, forecasting, demand planning, and warehouse/distribution activities.

8. It reduces paperwork, administrative overheads, inventory build-up, and the number of hands that handle goods on their way to the end-user i.e., the customer.