What is E-supply Chain Management (E-SCM)? Components, Advantages, Functions

What is E-supply Chain Management (E-SCM)?

E-Supply Chain Management (E-SCM) is the use of digital technologies to optimize and manage the various activities involved in a supply chain. This includes everything from sourcing raw materials to delivering finished products to customers.

E-SCM utilizes electronic communication and data sharing between different supply chain partners, such as suppliers, manufacturers, distributors, and retailers. By leveraging digital technologies such as cloud computing, big data analytics, and the internet of things (IoT), E-SCM enables real-time visibility and collaboration across the supply chain, improving efficiency, reducing costs, and increasing customer satisfaction.

Technological advancements have elevated the need for the effective management of the supply chain. Businesses constantly experience the need for a fast, flexible, and continuous supply chain model to stay ahead of the competition.

Therefore, traditional business paradigms are rapidly being replaced by new business processes based on the latest technologies. e-supply chain management (e-SCM) is the result of advancements in technology in the field of supply chain.

e-SCM is an integrated business application that automates the supply chain activities of organizations. It is developed by combining an e-procurement system, an e-billing system, and other e-business tools.

According to David Frederick Ross, e-SCM is a tactical and strategic management philosophy that seeks to network the collective productive capabilities and resources of intersecting supply channel systems through the application of Internet technologies in the search for innovative solutions and synchronization of channel capabilities dedicated to the creation of unique individualized sources of customer value.

e-SCM enables supply chain personnel to manage specifications, quantity, costs, and delivery time of materials and products. This results in an increase in the effectiveness of logistics, production, distribution, and other supply chain activities. It integrates various steps in the business cycle of the organizations from product design to procurement of raw materials, shipping, distribution, and warehousing of the final product to the delivery of products to end-users.

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Components of E-SCM

e-SCM integrates and manages business processes through its various components. Let us now study these components in detail.

• Advanced Scheduling and Manufacturing Planning
  
• Demand Forecasting
  
• Transportation Planning
  
• Distribution Planning
  
• Order Commitment

Advanced Scheduling and Manufacturing Planning

e-SCM provides the details of manufacturing and supply processes based on individual customer orders. An organization can use this information to analyze constraints throughout a process, such as equipment malfunction and supply interruptions. The organization can then use this analysis of constraints to plan advanced scheduling of various processes. Scheduling helps in managing the manufacturing process as well as logistics.

Demand Forecasting

e-SCM includes a wide variety of statistical tools and business forecasting techniques. Organizations can use these tools and techniques to forecast raw materials, labor, capital, and logistics that will be required to meet any sudden increase in product demand.

Transportation Planning

e-SCM facilitates the allocation of resources to ensure that raw materials and finished goods are delivered to the right people at the right time and in the right place. It ensures that processes are in line with the planning schedule. It also helps in comparing various transportation modes available, such as railways, trucks, and airlines along with their availability. This will help the organizations in finding the most appropriate mode of transport for delivering raw materials and products.

Distribution Planning

An organization needs to distribute finished products in inventories to retailers, wholesalers, and customers as per the requested orders. e-SCM helps in distribution planning by integrating various distribution channels, product inventory, and logistics with demand forecasting, production scheduling, and transportation planning. This will enable the organization to distribute the right products through the right distribution channels on time.

Order Commitment

e-SCM enables organizations to precisely estimate the delivery dates of suppliers through a comprehensive demand fulfillment cycle. The organizations can interconnect order commitment with the rest of the supply chain departments to ensure accurate delivery of goods and services.

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Advantages of E-SCM

e-SCM integrates SCM practices with Web technology to optimize production and information flow among business processes. There are various benefits of implementing e-SCM in organizations, which are as follows:

• It reduces the costs of logistics, production, procurement, and distribution channels.
  
  
• It improves the control of processes and SCM in an organization.
  
  
• It increases the organization’s ability to assess cost-effective suppliers for raw materials.
  
  
• It enhances access to information, which allows quick response time.
  
  
• It controls inventory, as suppliers and distributors are connected through the Internet for the related information and can replenish it at the most appropriate levels.
  
  
• It improves back-office management as data is consistently available.

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Functions of E-SCM

e-SCM does much more than purchase, warehousing, and distribution of raw materials and products in an organization. It fulfills the needs and demands of the customers. It covers all the aspects of a business right from the procurement of raw materials to the delivery of goods and services. It supports value addition and the optimization of resource use, materials, labor, technology, and information to the advantage of end-users.

Let us now discuss the functions of e-SCM in detail.

• Supplier Management
  
• Inventory Management
  
• Real-time Processing and Resource Management
  
• Channel Management
  
• Payment Management
  
• Financial Management
  
• Sales Force Productivity

Supplier Management

e-SCM enables organizations to reduce the number of suppliers by partnering with them and integrating them with the system. Thus, supplier management by e-SCM provides the following benefits:

• Lower purchase order processing costs
  
• More purchase orders, which can be processed by fewer employees
  
• Less order processing cycle time

Inventory Management

e-SCM enables organizations to shorten the supply chain cycle, including the order, shipment, and billing processes. Since it links an organization and its partners through the Web, it enables the instantaneous exchange of information unlike the older SCM system, which relied on mail and faxes to access the information.

Now, organizations can electronically exchange documents, including orders and invoices, with their trading partners and instantly acknowledge their receipt. e-SCM also interlinks an organization’s inventory with other supply chain departments to reduce inventory levels, improve inventory turnovers and address out-of-stock situations.

Real-time Processing and Resource Management

e-SCM enables organizations to integrate systems that address complicated e-business and SCM requirements. It is done by exchanging real-time information between employees and customers on various aspects, such as:

• Product
  
• Order Status
  
• Pricing
  
• Inventory
  
• Delivery

e-SCM exchanges information quickly to improve business accuracy. It also improves resource management by reducing wastage on inventory, buffer stocks, or holding periods.

Channel Management

e-SCM enables organizations to disseminate information about changes in operational efficiency to their trading partners. It has linked the organizations with the network of their distributors and resellers electronically, thereby reducing the time and effort in the process.

Previously, trading partners would remain on phone calls for hours to process and disseminate such technical, product-related, and pricing information. Now, this information can easily be posted through electronic media, thus enabling instant access.

Payment Management

e-SCM enables organizations to connect with their suppliers and distributors for enabling electronic payment (e-payment) systems. It enables organizations to quickly calculate invoices with fewer errors. Increasing the number of invoices processed at a time reduces the transaction fees and costs for processing the invoices.

Financial Management

e-SCM enables global organizations, which deal in several countries with different currencies, to manage their finance in various foreign exchange accounts. It provides immediate access to global information to organizations so that they can easily and quickly deal in global financial markets with fewer risks.

Sales Force Productivity

e-SCM enables organizations to improve communication and flow of information among sales, manufacturing, and customer service functions. It enables organizations to collect and analyze market intelligence effectively.

To create better access to market intelligence and competitor information, the organizations can link the sales force with regional and corporate offices. The organizations can then channel this information into improving the customer service quality.