The new vision of IT.
Today, business competition is no longer company vs. company but supply chain vs. supply chain. A supply chain is a network of suppliers, factories, warehouses, distribution centers and retailers, through which raw materials are acquired, transformed, produced and delivered to the customer. A supply chain is a dynamic process and involves the constant flow of information, materials, and funds across multiple functional areas both within and between chain members. Member enterprises in the chain need to cooperate with their business partners in order to meet customers’ needs and to maximize their profit. Managing multiparty collaboration in a supply chain, however, is a very difficult task because there are so many parties involved in the supply chain operation, each with its own resources and objectives. There is no single authority over all the chain members. Cooperation is through negotiation rather than central management and control. The interdependence of multistage processes also requires real-time cooperation in operation and decision-making across different tasks, functional areas, and organizational boundaries in order to deal with problems and uncertainties. The strategic shift of focus for mass customization, quick response, and high quality service cannot be achieved without more sophisticated cooperation and dynamic formation of supply chains.
The Supply Chain Management (SCM) problem can be defined as the management of relationships across a supply chain to capture the synergy of intra- and inter-company business processes with the aim of optimizing the overall business process of the enterprise (e.g. on-time delivery, quality assurance, and cost minimization). An integrated distributed production-planning system for this supply chain (SC) coordinated and controlled centrally would cause a lot of different problems:
· Centers of control are bottlenecks.
· Centers must have complete knowledge for decision-making.
· Confidential internal information must be provided to the center.
· Difficult reorganization of the chains.
· Planning in the complete supply chain can be very complex.
· Data consistency is not guaranteed in decentralized structures.
The new trend in supply chain management
A few years ago, supply chain management was understood as “logistics” management. But logistics is just one important function in the development of an effective supply chain management program. Supply chain management emphasizes the important linkages between the manufacturer and the distributors as well as the customers. Supply chain management encompasses the management of material, information, and funds from the initial raw material supplier to the ultimate end user. The key to genuine business growth is to emphasize the creation of an effective supply chain with trading partners, while at the same time maintaining a focus on the consumer. Today, instead of simply focusing on reducing cost and improving operational efficiency, more efforts are put on customer satisfaction and the enhancement of relationships between supply chain partners. This trend is discussed in detail in the following sections.
The evolution of information technology for supply chain management
Information is the key to the success of a supply chain because it enables management to make decisions over a broad scope that crosses both functions and companies (Chopra and Meindl 2001).