Supply Chain Management:

The best companies around the world are discovering a powerful new source of
competitive advantage. It's called supply-chain management and it encompasses
all of those integrated activities that bring product to market and create satisfied
customers. The Supply Chain Management Program integrates topics from
manufacturing, operations, purchasing, transportation, and physical distribution
into a unified program. Successful supply chain management, then, coordinates
and integrates all of these activities into a seamless process. It embraces and
links all of the partners in the chain. In addition to the departments within the
organization, these partners include vendors, carriers, third-party companies,
and information systems providers.
Within the organisation, the supply chain refers to a wide range of functional
areas. These include Supply Chain Management-related activities such as
inbound and outbound transportation, warehousing, and inventory control.
Sourcing, procurement, and supply management fall under the supply-chain
umbrella, too. Forecasting, production planning and scheduling, order processing,
and customer service all are part of the process as well. Importantly, it also
embodies the information systems so necessary to monitor all of these activities.
Importance of Supply chain Management:
Managers these days recognise that getting products to customers faster than
the competitor will improve a company's competitive position. To remain
competitive, companies must seek new solutions to improve Supply Chain
Management issues such as modal analysis, supply chain management, load
planning, route planning and distribution network design. Companies must face
corporate challenges that impact Supply Chain Management such as
reengineering globalisation and outsourcing. Faster product availability is key to
increasing sales, says R. Michael Donovan of Natick, Mass., a management
consultant specialising in manufacturing and information systems. "There's a
substantial profit advantage for the extra time that you are in the market and
your competitor is not," he says. "If you can be there first, you are likely to get
more orders and more market share." The ability to deliver a product faster also
can make or break a sale. "If two alternative [products] appear to be equal and
one is immediately available and the other will be available in a week, which
would you choose? Clearly, "Supply Chain Management has an important role to
play in moving goods more quickly to their destination.
Today's business climate has rapidly changed and has become more competitive
as ever in nature. Businesses now not only need to operate at a lower cost to
compete, it must also develop its own core competencies to distinguish itself
from competitors and stand out in the market. In creating the competitive edge,
companies need to divert its resources to focus on what they do best and
outsource the process and task that is not important to the overall objective of
the company. SCM has allowed company to rethink their entire operation and

restructure it so that they can focus on its core competencies and outsource
processes that are not within the core competencies of the company. Due to the
current competitive market, it is the only way for a company to survive. The
strategy on applying SCM will not only impact their market positioning but also
strategic decision on choosing the right partners, resources and manpower. By
focusing on core competencies also will allow the company to create niches and
specialization of core areas. As stated in the Blue Ocean Strategy outlined by
Chan Kim, in order to create a niche for competitive advantage, companies must
look at the big picture of the whole process, and figuring out which process can
be reduce, eliminate, raise and create.
As an example stated by Chan Kim, the Japanese automotive industries
capitalise on its resources to build small and efficient cars. The Japanese
automotive industries gain competitive edge by utilising their supply chain to
maximise their core competencies and position itself in a niche market. The
strategy works and now Toyota Motor Corporation, a Japanese company, is
considered to be the number one auto car maker in the world beating Ford and
General Motors of the United States.
SCM has allowed business nowadays to not just have productivity advantage
alone but also on value advantage. As Martin Christopher in his book, Logistics
and Supply Chain Management: Strategies for Reducing Cost and Improving
Service' states, 'Productivity advantage gives a lower cost profile and the value
advantage gives the product or offering a differential 'plus' over competitive
offerings.' Through maximizing added value and also reduce the cost in the same
time, more innovation can be added to the product and process. Mass
manufacturing offers productivity advantage but through effective supply chain
management, mass customization can be achieved. With mass customization,
customers are given the value advantage through flexible manufacturing and
customized adaptation. Product life cycles also can be improved through
effective use of SCM. Value advantage also changes the norm of traditional
offerings that is 'one-size-fits-all.' Through SCM, the more accepted offerings by
the industry to the consumers would be a variety of products catered to different
market segments and customers preferences.
As an example, the Toyota Production System practiced in Toyota, evaluates its
supply chain and determines what is value added activities and what is not value
added activities. Non added value activities are considered to be 'Muda' or waste
and therefore must be eliminated. Such non added value activities are
overproduction, waiting, unnecessary transport, over processing, excess
inventory, unnecessary movement, defects and unused employee creativity. The
steps taken to eliminate waste are through Kaizen, Kanban, Just-in-time and also
push-pull production to meet actual customer's demands. The Toyota Production
System revolutionise the Supply Chain Management towards becoming a leaner
supply chain system that is more agile and flexible towards meeting the end
users demands.

1.2 explain the link between supply chain management and business functions in
an organisation
Supply chain management integrates business functions concerned with the
movement of goods, services, and information along the value chain with the
goal of creating value for the ultimate customer. The field of supply chain
management is a cross-functional discipline involving many components of
business, including product development, marketing, demand/supply planning,
procurement/sourcing, production, inventory management,
transportation/logistics, customer service, and the management of relationships
between business organizations and their channels of distribution.
In today's complex business environment there is a need to coordinate these
supply chain functions, not only within the firm, but also with business partners
and customers. Firms are recognizing the need for a "total cost" or "systems"
approach to supply chain management. As a result, decision-making cuts across
many functional areas and is an increasingly critical strategic component of
successful businesses, large and small. Supply chain leaders must be skilled
problem solvers, be able to successfully manage relationships both inside and
outside the organization, and be able to manage projects within cross-functional
teams.
Since supply chain management has become a primary source of competitive
advantage and cost savings across industries, from high tech to health care,
supply chain talent is not only needed, but in high demand. The world's most
successful and highly respected companies, including the likes of Apple,
McDonalds, Amazon, Procter & Gamble, Cisco Systems, Coca-Cola, Nike,
Starbucks and Dell, are all recognized for their world-class supply chains.
As mentioned above SCM is a process that connects all the business functions.
like any other company if Hyka has to pursue its objectives, it will have to have a
very well defined business function and effective supply chain to manage the
business functions. Supply chain is the link which assists any organization in its
core business operation which is rendering goods or services to its end
customers. SCM and its role played to integrate the business functions of Hyka
are explained below.
The Sales and Marketing department have to prepare sales forecasts. These
forecasts are done based on past buying trends, anticipated demand and
consumer feedback. Based on these forecasts sales and marketing budgets are
prepared by respective departments which is presented to the management and
allocation of resources is sought. Once approved by the top level management
the forecasts for the year are presented to SCM who has to calculate and
estimate in coordination with operations if available fleet would be enough to
meet the estimated demand by sales or would there be additional capital
investment required. They in turn put up a capital budget in coordination with
Finance. Managers must have a through knowledge on the departmental goals of

each department. For example, the sales department may have aimed at higher
sales in the next fiscal and the marketing team might have agreed for a cut in
marketing activities in order to reduce costs. Therefore its necessary for
managers to come together and align their goals in the best possible way so as
to facilitate easy movement and delivery of goods at the right time.

The Finance and SCM needs to have a deeper co-ordination so as to have enough
resources to fund the supply chain process. Supply managers along with Finance
managers prepares the Capital Budget and approaches the management for
approval. Supply managers will have to coordinate with Finance to finalise the
payment terms for various suppliers if the supply chain process has to be run
uninterrupted. Supply chain managers need to have good skills to deal with
supplier power and also need to clinch best deals for the company which is
economical. A supply manager should have a finance perspective so as to
bargain the best deals with prospective suppliers.
No plan can work out if there is no adequate human power to carry out the
necessary work. Operations SCM on receipt of the sales forecast coordinates with
Operations to check if the existing labour force would suffice the manpower
requirement to meet the sales budget and checks if additional hiring is required.
If so, managers in the supply wing estimate the additional requirements of
human labour and forward it to the HR department. SCM also coordinates with
operations to estimate the fleet requirements and initiates any additional
purchase if needed. Any repair and maintenance works are carried out on the
fleet so as to ensure smooth running. SCM also ensures that in coordination with
operations right equipment, reaches right place at right time.
Human Resource On estimation of additional manpower requirement for SCM
coordinates for recruitment and also in the training needs of the new employees.
SCM also coordinates with HR in relation to various requirements at various
customer sites. I the case of Hyka, new employees in the stiching facility will
have to undergo some training so as to be efficient in their work; Supply Chain
Management has integrated all the above business functions of Hyka in its ERP
system. SCM has also worked in close coordination with its ERP providers like
Tally & its major suppliers to integrate ERP with the platform they are using. This
enables them to understand the stock position of the suppliers immediately and
accordingly can arrange for order placement. SCM plays a key role in integration
of the business functions of Hyka and as explained above every activity has
some chain linked to supply chain where either initiation is done by SCM or SCM
is involved at a later part or at the end.
1.3 discuss the key drivers for achieving an integrated supply chain strategy in
an organisation
The supply chain strategic fit concept requires that a company achieve the
desired responsiveness and efficiency in its supply chain that best meets the
needs of the company's competitive strategy. The performance of a supply chain

(responsiveness and efficiency) is determined by decisions in the areas of

inventory, transportation, facilities and information. Hence these four areas are
identified as drivers of supply chain performance.
Supply chain managers have to take research and development efforts to
improve both responsiveness and efficiency of their supply chains on a
continuous basis. In the past there were technological and managerial
breakthroughs which improve one of them without any deterioration in the other
and also improvement in both dimensions simultaneously. Actual economic
theory tells, new technologies (capital investments) are adopted for capital
productivity. Capital productivity in the context of supply chains comes through
improvement in responsiveness and efficiency.
But at a certain point in time, there can be tradeoffs between responsiveness
and efficiency. Hence supply chain designers come with supply chains with that
give various combinations of responsiveness and efficiency (responsiveness efficiency frontier) and the optimal combination is chosen based on the
competitive strategy considerations.

Sunil Chopra and Meindl (2007) mentioned in their book about six drivers of
supply chain performance. A company can enhance its responsiveness and
efficiency by the good management of six drivers of supply chain performance.
They elaborated following six drivers of supply chain performance as facilities,
inventory, transportation, information, sourcing and pricing. (a) Facilities mean
the actual physical placement of raw material, work in process material and
finished goods. For example, warehouses and storerooms are the facilities in
supply chain management. (b) Inventory means flow of all material in supply
chain activities such as from raw material to finished goods. (c) Transportation
means by which medium and route the inventory flow from one place to another
place. (d) Information refers to data flow and analysis of data and distribution of
this final information among supply chain personnels. (e) Sourcing means how
and by whom different activities of supply chain management to be performed
such as manufacturing, storing and transportation. (f) Pricing refers to price
setting that how much the company can demand for its products.
First we define each driver and discuss its impact on the performance of the
supply chain.
1.Facilities are the actual physical locations in the supply chain network where
product is stored, assembled, or fabricated. The two major types of facilities are
production sites and storage sites. Decisions regarding the role, location,
capacity, and flexibility of facilities have a significant impact on the supply
chain's performance. For instance, an auto parts distributor striving for
responsiveness could have many warehousing facilities located close to
customers even though this practice reduces efficiency. Alternatively, a highefficiency distributor would have fewer warehouses to increase efficiency despite
the fact that this practice will reduce responsiveness.

If we think of inventory as what is being passed along the supply chain and
transportation as how it is passed along, then facilities are the where of the
supply chain. They are the locations to or from which the inventory is
transported. Within a facility, inventory is either transformed into another state
(manufacturing) or it is stored (warehousing).
Facilities are a key driver of supply chain performance in terms of responsiveness
and efficiency. For example, companies can gain economies of scale when a
product is manufactured or stored in only one location; this centralization
increases efficiency. The cost reduction, however, comes at the expense of
responsiveness, as many of a company's customers may be located far from the
production facility. The opposite is also true. Locating facilities close to customers
increases the number of facilities needed and consequently reduces efficiency. If
the customer demands and is willing to pay for the responsiveness that having
numerous facilities adds, however, then this facilities decision helps meet the
company's competitive strategy goals.
2.Inventory encompasses all raw materials, work in process, and finished goods
within a supply chain. Changing inventory policies can dramatically alter the
supply chain's efficiency and responsiveness. For example, Chains a clothing
retailer can make itself more responsive by stocking large amounts of inventory
and satisfying customer demand from stock. A large inventory, however,
increases the retailer's cost, thereby making it less efficient. Spanish apparel
retailer Zara has worked hard to shorten new product and replenishment lead
times. As a result, the company is very responsive but carries low levels of
inventory. Zara thus provides responsiveness at low cost.
Inventory exists in the supply chain because of a mismatch between supply and
demand. This mismatch is intentional at a steel manufacturer, where it is
economical to manufacture in large lots that are then stored for future sales. The
mismatch is also intentional at a retail store where inventory is held in
anticipation of future demand. An important role that inventory plays in the
supply chain is to increase the amount of demand that can be satisfied by having
the product ready and available when the customer wants it. Another significant
role that inventory plays is to reduce cost by exploiting economies of scale that
may exist during production and distribution.
Inventory plays a significant role in a supply chain's ability to support a firm's
competitive strategy. If a firm's competitive strategy requires a very high level of
responsiveness, a company can achieve this responsiveness by locating large
amounts of inventory close to the customer. Conversely, a company can also use
inventory to become more efficient by reducing inventory through centralized
stocking. The latter strategy would support a competitive strategy of being a
low-cost producer. The trade-off implicit in the inventory driver is between the
responsiveness that results from more inventory and the efficiency that results
from less inventory.

3.Transportation entails moving inventory from point to point in the supply chain.
Transportation can take the form of many combinations of modes and routes,
each with its own performance characteristics. Transportation choices have a
large impact on supply chain responsiveness and efficiency. For example, a mailorder catalogue company can use a faster mode of transportation such as FedEx
to ship products, thus making its supply chain more responsive, but also less
efficient given the high costs associated with using FedEx. McMaster-Carr and
W.W. Grainger, however, have structured their supply chain to provide next-day
service to most of their customers using ground transportation. They are
providing a high level of responsiveness at lower cost.
Transportation moves product between different stages in a supply chain. Like
the other
supply chain drivers, transportation has a large impact on both responsiveness
and efficiency. Faster transportation allows a supply chain to be more responsive
but reduces its efficiency. The type of transportation a company uses also affects
the inventory and facility locations in the supply chain. Dell, for example, flies
some components from Asia because doing so allows the company to lower the
level of inventory it holds. Clearly, such a practice also increases responsiveness
but decreases transportation efficiency because it is more costly than
transporting parts by ship.
The role of transportation in a company's competitive strategy figures
prominently in the company's consideration of the target customer's needs. If a
firm's competitive strategy targets a customer who demands a very high level of
responsiveness, and that customer is willing to pay for this responsiveness, then
a firm can use transportation as one driver for making the supply chain more
responsive. The opposite holds true as well. If a company's competitive strategy
targets customers whose main decision criterion is price, then the company can
use transportation to lower the cost of the product at the expense of
responsiveness. Because a company may use both inventory and transportation
to increase responsiveness or efficiency, the optimal decision for the company
often means finding the right balance between the two.
4.Information consists of data and analysis concerning facilities, inventory,
transportation, costs, prices, and customers throughout the supply chain.
Information is potentially the biggest driver of performance in the supply chain
because it directly affects each of the other drivers. Information presents
management with the opportunity to make supply chains more responsive and
more efficient. For example, with information on customer demand patterns, a
pharmaceutical company can produce and stock drugs in anticipation of
customer demand, which makes the supply chain very responsive because
customers will find the drugs they need when they need them. This demand
information can also make the supply chain more efficient because the
pharmaceutical firm is better able to forecast demand and produce only the
required amount.

Information deeply affects every part of the supply chain and impacts every
other driver. Good information on supply and demand can help improve the
utilization and responsiveness of a facility. Seven-Eleven Japan uses information
to improve product availability while decreasing inventories. Wal-Mart uses
information on shipments from suppliers to facilitate cross-docking and lower
inventory and transportation expense. Li and Fung uses information on its third
party manufacturers to source each order from the most appropriate supplier.
Airlines routinely use information to offer the right number of seats at a discount
price, leaving sufficient seats for business customers needing seats at the last
minute but willing to pay a high price. Each of the above examples illustrates the
importance of information as a key driver that can be used to provide higher
responsiveness while simultaneously improving efficiency.
Information is an important driver that companies have used to become both
more efficient and more responsive. The tremendous growth of the information
technology industry is a testimony to the impact that information can have on
improving a company. Like all the other drivers, however, even with information,
companies reach a point when they must make the trade-off between efficiency
and responsiveness. This is so because, beyond a certain point, the marginal
cost of handling additional information increases, whereas the marginal benefit
from the additional information decreases.
Another key decision involves what information is most valuable in reducing cost
and
Improving responsiveness within a supply chain. This decision will vary
depending on the
supply chain structure and the market segments served. Some companies, for
example, target customers who require customized products that carry a
premium price tag. These companies might find that investments in information
allow them to respond more quickly to their customers.
5.Sourcing is the choice of who will perform a particular supply chain activity
such as production, storage, transportation, or the management of information.
At the strategic level, these decisions determine what functions a firm performs
and what functions the firm outsources. Sourcing decisions affect both the
responsiveness and efficiency of a supply chain. After Motorola outsourced much
of its production to contract manufacturers in China, it saw its efficiency improve
but its responsiveness suffer because of the long distances. To make up for the
drop in responsiveness, Motorola started flying in some of its cell phones from
China even though this choice increased transportation cost. Flextronics, an
electronics contract manufacturer, is hoping to offer both responsive and
efficient sourcing options to its customers. It is trying to make its production
facilities in the United States very responsive while keeping its facilities in lowcost countries efficient. Flextronics hopes to become an effective source for all
customers using this combination of facilities.
Sourcing is the set of business processes required to purchase goods and
services. Managers must first decide which tasks will be outsourced and those

that will be performed within the firm. For each outsourced task, the manager
must decide whether to source from a single supplier or a portfolio of suppliers. If
a portfolio of multiple suppliers is to be carried, then the role of each supplier in
the portfolio must be clarified. The next step is to identify the set of criteria that
will be used to select suppliers and measure their performance. Managers then
select suppliers and negotiate contracts with them. Contracts define the role of
each supply source and should be structured to improve supply chain
performance and minimize information distortion from one stage to the next.
Once suppliers and contracts are in place, procurement processes should be
structured to improve efficiency and coordination.
Sourcing decisions are crucial because they affect the level of efficiency and
responsiveness the supply chain can achieve. In some instance, firms outsource
to responsive third parties if it is too expensive for them to develop this
responsiveness on their own. An example is the outsourcing of next-day package
delivery by all firms to a few package carriers because it is too expensive for a
firm to develop next-day delivery capability on its own. In other instances firms
have kept the responsive process in-house, to maintain control. An example of
this is Zara, which keeps responsive capacity in-house so it can respond quickly
to orders as they arrive. Firms also outsource for efficiency if the third party can
achieve significant economies of scale or has a lower underlying cost structure
for other reasons. Outsourcing decisions should be driven by the desire for
growth in total supply chain surplus.
6. Pricing determines how much a firm will charge for goods and services that it
makes
available in the supply chain. Pricing affects the behaviour of the buyer of the
good or service, thus affecting supply chain performance. For example, if a
transportation company varies its charges based on the lead time provided by
the customers, it is very likely that customers who value efficiency will order
early and customers who value responsiveness will be willing to wait and order
just before they need a product transported. Differential pricing provides
responsiveness to customers that value it and low cost to customers that do nor
value responsiveness as much.
Pricing is the process by which a firm decides how much to charge customers for
its goods and services. Pricing affects the customer segments that choose to buy
the product, as well as the customer's expectations. This directly affects the
supply chain in terms of the level of responsiveness required as well as the
demand profile that the supply chain attempts to serve. Pricing is also a lever
that can be used to match supply and demand. Short-term discounts can be
used to eliminate supply surpluses or decrease seasonal demand spikes by
moving some of the demand forward. In short, pricing is one of the most
significant factors that affect the level and type of
demand that the supply chain will face.
Pricing is a significant attribute through which a firm executes its competitive
strategy. For example, Costco, a membership-based wholesaler in the United

States, has a policy that prices are kept steady but low. Customers expect low
prices but are comfortable with a lower level of product availability. The steady
prices also ensure that demand stays relatively stable. Costco serves a welldefined segment, and it can thus design an appropriate supply chain. The Costco
supply chain aims to be very efficient, at the expense of some responsiveness. In
contrast, some manufacturing and transportation firms use pricing that varies
with the response time desired by the customer. Through their pricing, these
firms are targeting a broader set of customers, some of whom need
responsiveness while others need efficiency. In this case it becomes important
for these firms to structure a supply chain that can meet the two divergent
needs.
2.1 evaluate the effectiveness of strategies used by an organisation to maintain
supplier relationships
A strategic alliance is an agreement between firms to do business together in
ways that go beyond normal company-to-company dealings, but fall short of a
merger or a full partnership (Wheelen and Hungar,2000,p.125)
For Hyka, having strong, long-term relationships with their most strategic
suppliers is a critical step in improving performance and generating greater cost
efficiencies that can help the business grow. This has become even more
important given the prospects of a looming economic recessionthis reality has
forced many enterprises to take a closer look at their operating costs. When it
comes to analyzing strategic suppliers, looking at the people who are involved in
those working relationships provides an excellent way to measure overall
performance (as well as using more traditional metrics such as component
pricing or on-time availability). Since any strategic business relationship
ultimately depends on how well both client and supplier personnel work
together, analyzing and managing the people component in these relationships
is one way that businesses can generate supplier and cost efficiencies and, can
ultimately, gain a greater and more profitable competitive advantage.
Hyka has a very good history of good supplier relationship. Supplier relationship
management is integral for any business to stay afloat and profitable in the
business. A relation with supplier should be always based on mutual respect and
trust as both the parties are integral to each others existence.
Being a manufacturer, it is necessary that Hyka has a good relation so as to
ensure smooth flow of production. Hiccups with suppliers can dismantle
production plans and can affect profitability and reputation.
Maintaining good relations with a supplier should be as important to a contract
administrator/end user as getting the best price. A good buyer-seller relationship
is a partnership, a win-win situation over the long run. A supplier who is treated
with courtesy, honesty, and fairness will deliver a quality product at the best
price, will provide good service, and will be responsive to emergency situations
and special requests. A responsive supplier is an asset for Hyka.
Hyka aims to create partnerships with their suppliers and one way of doing this is
to work with supplier development. The partnerships are about identifying
potential and executing business improvements together. This is done in a
structured and fact based way to reach a consistent, professional and common

approach. This enhances collaboration and increases the performance of Hyka

as well as that of our partnered suppliers.
Hyka works with our suppliers in two phases: identification and execution. The
identification phase produces a set of outcomes.
These help Hyka, then design an action plan which contains specific business
improvements. In the next phase these improvements are then executed using
resources from both Hyka and the suppliers. Experience shows that together
Hyka and its suppliers can reach growth and lower prices for their customers in
a much better way.
2.2 use information technology to create strategies to develop an organisations
relationship with its suppliers
2.3 develop systems to maintain an organisations relationship with its suppliers
Information Technology (IT) and its use in organizations and across the supply
chain has become a determinant of competitive advantage for many
corporations. Recent development in technologies enables the organization to
avail information easily in their premises. These technologies are helpful to
coordinates the activities to manage the supply chain. The cost of information is
decreased due to the increasing rate of technologies.
Prior to 1980s the information flow between functional areas within an
organization and between supply chain member partners were paper-based. The
paper-based transaction and communication is slow. During this period,
information was often overlooked as a critical competitive resource because its
value to supply chain members was not clearly understood. IT infrastructure
capabilities provide a competitive positioning of business initiatives like cycle
time reduction, implementation, implementing redesigned cross-functional
processes.
The objectives of IT in SCM are (Simchi-Levi, 2003):
providing information availability and visibility;
enabling a single point of contact for data;
allowing decisions based on total supply chain information; and
enabling collaboration with partners
IT in SCM enables great opportunities, ranging from direct operational benefits to
the creation of strategic advantage. It changes industry structures and even the
rules of competition. IT is key in supporting companies creating strategic
advantage by enabling centralized strategic planning with day-to-day centralized
operations. In fact supply chain become more market-oriented because of IT
usage. Cisco reported savings of $500 million by restructuring its internal
operations and integrating processes with suppliers and customers with the help
of web-based tools (Berger, 2000). The Wal-Mart & P&G experiences
demonstrate how information sharing can be utilized for mutual advantage.
Through sound information technologies, WalMart shares point of sale
information from its many retail outlet directly with P&G and other major
suppliers Anderson et al (1996).
Hyka can use a number of IT enabled services to facilitate Supplier relations. One
such system is the use of EDI. Electronic Data Interchange (EDI) technology can
be widely used by Hyka in supply chains to facilitate transactions and
information exchanges. EDI is defined as computer to computer exchange of

structured data for automatic processing. EDI is used by supply chain partners to
exchange essential information necessary for the effective running of their
businesses. These structural links are usually set up between organizations that
have a long term trading relationship.
Hyka, should supply electronic point of sale (EPOS) data directly to suppliers,
which in turn triggers replenishment of the item sold. Therefore, the
consequence of this type of strong link those suppliers will be able to build a
historical sales pattern that will assist their own demand forecasting activities.
Because there is no need for employees to collate the information manually, EDI
has many benefits, for examples, it is providing timely information about its
customers sales as well as highly accurate and very efficient. Moreover, it is
utilized for sending invoices, bills of lading, confirmation of dispatch, shipping
details and any information that the linked organizations choose to exchange
(Rushton et al., 2000). This will enable Hyka to maintain relations with its
suppliers.
The main advantages of using EDI are to enter only informative needs on the
computer system once, and then it is able to speed of transaction and to reduce
cost and error rates. Other benefits of EDI are Quick process to information,
Better customer service, reduced paper work, increased productivity, improved
tracing and expediting, Cost efficiency and improved billing. Through the use of
EDI supply chain partners can overcome the distortions and exaggeration in
supply and demand information by improving technologies to facilitate real time
sharing of actual demand and supply information.
Another tool that Hyka can use to further deepen supplier relations is to use
tracking systems so as to have a real outlook on the supply chain network.
Tracking systems enable Hyka to track the goods in transit. In order to track
suppliers Hyka can use Bar Codes.
Bar Codes are the representation of a number or code in a form suitable for
reading by machines (Rushton et al., 2000). Bar codes are widely used
throughout the supply chain to identify and track goods at all stages in the
process. Bar codes are a series of different width lines that may be presented in
a horizontal order, called ladder orientation, or a vertical order, called picket
fence orientation. For example, goods received in a warehouse may be identified
by the warehouse management system and added to stock held in the
warehouse. When put away, the bar code is used to associate the storage
location with the bar-coded stock, and on dispatch the stock record is amended.
The use of bar codes can speed up operations significantly. On the other hand,
the problems can occur if bar codes are defaced or the labels fall off in transit.
The maintenance management must be applied for extending the long-life period
of this equipment. Using barcode to track materials and commodities will help
Hyka in ensuring correct supply management. Hyka can alert its suppliers as and
when they need additional materials or new materials by tracking through their
warehouses thus enabling a better cordial relation with suppliers.
3.1assess how information technology could assist integration of different parts
of the supply chain of an organisation
Today, information and technology must be conceived of broadly to encompass
the information that businesses create and use as well as a wide spectrum of
increasingly convergent and linked technologies that process the information
with the emergence of the personal computer, optical fiber networks, the

explosion of the Internet and the World Wide Web. The cost and availability of
information resources allow easy linkages and eliminate information-related time
delays in any supply chain network. This means that Hyka is moving towards a
concept known as Electronic Commerce, where transactions are completed via a
variety of electronic media, including electronic data interchange (EDI),
electronic funds transfer (EFT), bar codes, fax, automated voice mail, CD-ROM
catalogs, and a variety of others. The old paper type transactions are
becoming increasingly obsolete. Leading-edge organizations no longer require
paper purchase requisitions; purchase orders, invoices, receiving forms, and
manual accounts payable matching process. All required information is
recorded electronically, and associated transactions are performed with the
minimum amount of human intervention. Recent developments in database
structures allowed part numbers to be accumulated, coded, and stored in
databases, and electronically ordered. With the application of the appropriate
information systems, the need to constantly monitor inventory levels, place
orders, and expedite orders will soon become a thing of the past.
In supply chain-management, the suppliers, producers, customers are the
members and are linked through the ultimate level of integration. These
members are continuously supplied with information in real time. The foundation
of the ability to share information is the effective use of Information Technology
within the supply chain. Appropriate application of these technologies provides
decision makers with timely access to all required information from any location
within the supply chain.
and risk. And who can blame them? Transport is by far the largest component of
the cost structure of a business logistics. According to sector research (Chang,
1998), transport accounts for as much as 30% of the total cost of logistics
operations almost as much as Warehousing and Inventory together!