SJC Institute Of Technology

Supply Chain Management

Module 5 Question and answers

1 Explain supply chain Integration.

In well-managed chains, material, information and finance flow seamlessly across departmental and
organizational boundaries and it is the end customer pull and not internal compulsions that govern these

In stage 1, the firm is structured on a functional basis and each function or department operates as a
silo. In other words, each function is myopic in nature, focusing attention on the narrowly defined local
performance measures. Even within manufacturing, there are a number of departments with their respective
buffers of inventory.

In stage 2, the internal operations are integrated at the organizational level and there is seamless flow of
material and information across all departments and the firm functions as one integrated entity. However, wastage
still exists at firm boundaries where it interacts with the external members of the chain. These firms have many
buffers and the wastage at organizational boundaries result in information and material flow distortions across the
chain

In stage 3, the firm manages to integrate itself with suppliers as well as customers and works as an
integrated chain. Supply chain integration involves a conscious effort on the part of the firm to move from
stage 1 to stage 2 and subsequently to stage 3. . To make this possible, organizations have to make corresponding
changes in the structure, processes and performance measures. Most firms have by and large understood the need
for internal integration while very few have realized the need for external integration. Payoffs through internal
integration can be likened to the tip of an iceberg. The benefits of external integration though not immediately
visible, are immense.
 2 Explain Internal Integration
Internal Integration:
A typical firm is functionally organized, and material and information have to go through multiple
departments across the internal supply chain. As each function is myopic in nature and is focusing on a narrowly
defined local performance, there are many inefficiencies and buffers at departmental boundaries
Each department focuses on local performance measurers and takes independent decisions leading to
inefficiencies at the organizational level. Firms therefore have to find ways of coordinating the planning and
decision making across the organization.
Firms can achieve this either by centralizing all planning activities or by decentralizing all activities
and creating customer supplier links among all members of the internal chain.
Examples:
An electric machinery firm, which has a manufacturing plant in Mumbai, serves the southern
market through a stock point in Chennai. The Mumbai plant ships goods to the Chennai stock point once
a month because monthly demand amounts to approximately a full truckload.

A split pump manufacturer used to offer about 30-odd varieties of pumps in the market place. As
per the product design, the pump housing consisted of a top housing and bottom housing and the exact
size of the pump housing varied with each model.
Centralize System:
It is obvious that centralizing planning operations eliminate some of the problems arising from
decisions based on local myopic performance measures. Thus, centralized planning can ensure that
decisions are made from firms’ performance point of view and not based on individual department’s
local performance measures. Clearly, in the centralized scenario optimizing performance at the firm level
results in better performance as compared to the decentralization scenario where each entity optimizes its
own performance. Although centralized planning has been an appealing concept, necessary
technologies hitherto are not in place for most firms. Today, with advances in computing and
communication technologies, it is possible to make large complex decisions on a real-time basis.
However, centralized systems have their own problems.
Decentralized Systems:
Internal supply chains can be divided into large number of customer supplier linkages.
Unlike the stage 1 system where local efficiency gets priority over customer service, the stage 2
decentralized systems works the other way round. This ensures that an assured level of service is
provided to internal customers in supplier–customer linkages. One may actually design a system where
every customer–supplier link in the firm will have formal service contracts. An example will be an
assurance that any order placed by the regional ware- house will be served by the central warehouse
within seven days, so that regional markets can make a commitment to a customer without worrying
about the detailed plans of the other parts of the system. Each system can manage its operations
independently, ensuring that it meets its service agreements. By ensuring that performance measures are
aligned, one can coordinate decentralized systems in the internal supply chain. The key issue will be to
design these service agreements and to ensure that monitoring and control mechanisms are in place to
facilitate smooth functioning of the system. A decentralized system will result in higher innovations in
problem-solving situations and more effective use of local knowledge, but this has its inherent
disadvantages.
 Hybrid systems:

A firm may also consider a hybrid approach where it can centralize a few key activities and
leave other activities and decisions, which are coordinated using supplier–customer linkages, decentralized.
This is similar to the concept of synchronous manufacturing. In this approach, schedules/decisions for
bottleneck resources are decided centrally while detailed schedules for non-bottleneck resources are left to
local decision makers. Buffer inventory is maintained at critical junctures such as bottleneck points and
customer serving points.
The hybrid approach may be difficult to apply in cases where the supply chain has multiple products
and the product mix keeps varying from time to time. In such a situation, the firm will not have a clearly
defined bottleneck; that is, the bottleneck will keep shifting from time to time.

3 Explain building partnership and trust in supply chain value of information.

supply chain relationships have been based either on power or on trust. There seems to be differences
in approach across cultures: Japanese firms have traditionally focused on trust-based relationships
while American firms have focused on contract-based relationships.

In power-based relationships, the stronger party usually exploits the weaker one. In the short run, the
stronger party is able to benefit at the expense of weaker one but since this is not sustainable, in the long
run either the relationship breaks down or the overall chain performance starts deteriorating.

There have been extensive research studies that have the shown long-term benefits of trust-based
relationships.
Steps in building Successful relationships
Though importance of trust in the supply chain context is understood, it is very hard to build and sustain a
trust-based relationship. Most supply chain relationships have historical baggage so one cannot switch to a
trust-based relationship overnight. Even in a new relationship, both

sides will look at each other with apprehension, so a process is needed through which trust- based
relationships can be built over time. Such relationships are built as a result of a series of interactions
between the parties involved.

It has been found that successful relationship building involves the following three elements:

 Design relationship with cooperation and trust: At the design stage, one has to ensure that
the relationship is win-win in nature and assess the value of the relationship for both partners. There
will exist certain grey areas and an attempt should be made to clarify operational roles and decision
rights for all parties involved. In the initial stages of the relationship both parties may worry that the
other may take advantage of the relationship, so formal contracts must be signed specifying
performance measures and design conflict resolution mechanisms. This helps in establishing ground
rules for the relationship.
 Manage and nurture relationships: Once the relationship is designed, during the operations
phase both partners begin to understand the finer details about the environment and the tasks involved.
It is possible however that actual payoffs may not be on the lines of what one had expected at the
design stage. Similarly, one party may end up committing more resources than planned for. At this
stage, both sides are in a better position to evaluate the costs and benefits of the relationship. This helps
parties to revise the conditions of partnership so that it is a fair partnership. It is important that the
initial contract be designed with sufficient flexibility to facilitate such changes. If both parties work
within the spirit of partnership, trust gets built over a period of time and the relationship moves on an
upward spiral where each interaction helps in carrying the partnership further. A supply chain
partnership moves in a downward spiral if the perceived benefits from the relationship diminishes, or if
one party is seen as behaving in an opportunistic manner.
 Redesign relationship with change in environment: It should be realized that any
relationship operates in a larger economical environment. One cannot expect the environment to
remain stable, and with changes in environment, technology and competition, one has to redesign the
relationship.

Effect of Interdependence on Relationships:

Trust-based relationships are likely to work very well in a situation where both parties are mutually
interdependent. For example, take the case of a relationship between a company like HUL and its dealers:
HUL’s dependence on the dealer is low because it has a large number of dealers, whereas the dealer’s
dependence on HUL is high. Similarly, look at the relationship between Foodworld and the supplier of an
unbranded item, the dependence of the supplier on Foodworld is high whereas the inverse is not true.
But in a relationship between Foodworld and HUL, both are equally dependent on each other. In general,
one can classify relationships using the schema shown in Figure 9.4. Relationships that are in the upper
most quadrant are more likely to succeed.
In the right lower corner, where the organization is powerful compared to the supplier, it can build
a trust-based relationship if it works with long-term interest in mind. The Toyota model is a clear example
where a powerful partner plays the role of a hub and ensures that there exists a fair relationship
through which it develops a network of suppliers.

Classification of Relationships

4 Explain Bullwhip Effect

So far we have looked at the causes of demand volatility and information distortions across the
buyer–supplier link. The same logic is also valid when multiple stages are involved in the supply
chain. Predictably, as you move away from the end customer, demand volatility keeps increasing. An
increase in demand variability as one moves up in the chain is referred to as the bullwhip effect. In a
typical supply chain, as we move up in the chain from retailers to wholesalers and to manufacturers, each
stage in the chain distorts demand and the variability in demand keeps increasing. Thus, though
variability is quite low at the final customer end, a manufacturer usually sees a high demand variability at
his end. We therefore see the behavior known as the bullwhip effect or the whiplash effect in supply
chain literature.

Therefore, it is not uncommon to find 3–6 months of inventory being stuck in distribution. According to
one estimate, in the United States of America the total inventory exceeds about 100 days of supply. In
India, it is estimated that about 20 weeks of inventory is stuck in the distribution channel in the FMCG
industry. In general, this results in higher inventory and lower responsiveness on the part of the FMCG
industry. If firms have 20 weeks of inventory in the channel they will never be in a position to plan and
coordinate marketing and logistics activities.
On the basis of this discussion, we identify five prominent causes for the bullwhip effect:
 Forecast updating. Multiple forecast updates by each entity in the chain leads to significant distortions.
Each member of the chain updates forecast based on orders received at his end and not based on the
demand raised by the end customer.
 Order batching. Each member of the chain has his own economies of scale in production and
transportation resulting in planning practices leading to order batching. Sometimes order bunching also
takes place because of the planning practices of the firm. For example, if a firm runs MRP software once a
fortnight, obviously all the orders for the fortnight will get bunched.
 Price fluctuations. Discounts or price promotions result in forward buying, causing much distortion.
Further, frequent price changes affect the ordering pattern of the buyer.
 Shortage gaming. In a situation of shortages the supplier usually resorts to rationing, which in turn
provides incentives to buyers to inflate orders.
 Long lead time. Long lead times increase the planning horizon of other partners in the chain.
Further, each partner is forced to keep large amounts of safety stock, resulting in an overall distortion
increase in the chain.
 5 Explain supply chain Restructuring

dimensions of the supply chain in the direction as shown below:

 Postpone the point of differentiation. By moving the point of differentiation as much as possi- ble, a bulk
of the activities can be carried out using the aggregate-level forecast rather than the variant-level forecast.
 Alter the shape of the value-addition curve. Shift the bulk of the cost addition as late as possi- ble. This will
reduce the inventory in the chain and also help the firm in having some flexibility. If the bulk of the cost
addition takes place at a later point in time in the chain, one will be in a position to respond to unforeseen
changes with the least cost.
 Advance the customer ordering point. Move from an MTS to a CTO supply chain. By moving the
customer ordering point as early as possible, one can carry out the bulk of the activities

Against an order, which reduces the importance of forecasting. If one were also able to
postpone the point of differentiation, one will be able to move from an MTS to a CTO supply
chain. In a CTO supply chain, since the point of differentiation takes place after customer order,
one does not have to prepare a variant-level forecast.

Delaying an operational process that results in variety explosion or customization to a later

point in the supply chain postpones the point of product differentiation. Delaying the
differentiating operations, apart from reducing inventories, also reduces the time period for which
one has to carry out forecasting at the variant level and thereby reduces inventory and improves
customer service and reduces product obsolescence.

Changing the Shape of the Value-addition Curve

Ideally one will like to alter the shape of the value-addition curve so that the bulk of
the cost gets added as late as possible (as shown in Figure 10.3). To understand the difference
between the existing value-addition curve and the proposed value-addition curve, we need to
classify activities as cost intensive or time intensive. Activities that consume much cost but very
little time will be identified as cost-intensive activities, whereas activities that require a long time
but incur very little costs will be termed as time-intensive activities This will require us to
sequence processes in a way that time-intensive processes are scheduled first and cost-intensive
processes are scheduled at a later stage. In other words, one can take cost per unit time as an
attribute of activities in the supply chain and arrange activities in ascending order of the same. In
general, one works with a belief that technology dictates the sequence of processes within a
supply chain. As a result, one assumes that the shape of the value-addition curve cannot be
altered, as one cannot change the sequence of operations

Advance the Customer Ordering Point: Move from MTS to CTO Supply Chain

Moving from the MTS to the CTO supply chain is very attractive to firms because the firm
no longer has to forecast at the variant level. As discussed earlier, forecasting at the variant level is quite
difficult compared to forecasting at the aggregate level. In a CTO supply chain, variant-level decisions
are made based on order rather than forecast. This is appealing to firms because significant inaccuracy
in forecast creeps in when firms try to forecast at the variant level.

If the firm wants to move from the MTS to the CTO model, it will have to get the customer to
 advance his order so that customer ordering comes before the point of differentiation. How does one
get the customer to order early? Customer offering by a firm consists of a bundle of product and
services and can be characterized by five attributes, delivery time being one of them. Moving from the
MTS model to the CTO model requires altering customer offering in a way that the longer delivery
time is compensated by an extra offering on any of the four remain attributes: cost, variety, quality
and supplementary services. Of course, if a firm wants the customer to accept a longer delivery time,
it must compensate the customer by offering something more on the other four dimensions.
Essentially, one has to ensure that the revised bundle of offering results in a similar level of value or
utility to the customer if not higher than the value offered by the current customer offering. Of course,
there is no point in offering a bundle that will increase costs to the firm compared to the existing
bundle. Innovative firms have played with customer offering by understanding their own cost
structures and customer utility functions. Understanding how different attributes of customer offering
affects the value and utility of the customer segment is of crucial importance in this exercise.

6 Explain Supply chain Mapping

Before a firm sets out to restructure its supply chain, it has to find a method to successfully
capture and evaluate the existing supply chain processes. The method used to capture current supply
chain processes is termed supply chain mapping.
As can be seen in Figure 10.1, existing supply chain processes can be characterized on the basis
of the following dimensions:
 Shape of the value-addition curve
 Point of differentiation
 Customer entry point in the supply chain

Order placed
Point of differentiation by customer

Figure 10.1
Cost

Supply
chain
mappin
g: Shape of value-addition curve
existing
positio
n.

Time

Restructuring of the supply chain process involves altering the supply chain on at least one the three
dimensions. It may also involve altering more than one dimension of the supply chain process. We initially
take one dimension at a time and later on discuss a specific innovation, which involves altering two
dimensions in the process.

Value-addition Curve
The supply chain encompasses all the activities/processes associated with the transformation of goods from
the raw material stage to the final stage when the goods and services reach the end customer. A typical
supply chain starts with some input material and information, which are transformed into the end product
and delivered to the customer. This transformation involves a number of activities, with each activity
taking time, incurring cost and adding value. One can debate on whether all activities add value or if
there some activities that are non-value-added activities. At this stage, we assume that the firm has
removed all non-value- added activities from the supply chain processes. On the x-axis we have the
total time in a chain or the average flow time in the chain and on the y-axis we have the total cost
(cumula- tive) in the chain.
To map this value-addition curve, we work backward from the time at which goods and services are
delivered to the end customer and trace back all activities that were carried out to make the finished
goods and service available. We map all the activities on two dimensions: time and cost. So the value-
addition curve essentially captures the way we add cost over a period of time in supply chain
processes. For example, a truck manufacturer receives engine castings from a casting supplier, which
then wait till the machining operation is scheduled in the machine shop. After that operation the
machined castings go to the intermediate store and later on are taken to the engine assembly stage.
Then, the engine is mounted on a chassis in the truck assembly line and the finished truck is
dispatched to the dealer. The finished truck will be available at dealer’s warehouse till the end customer
picks it up. In this simplified version of the process, apart from the conversion and transportation
activities, the material in different forms waits at several stages: raw material store, intermediate store,
finished good store and dealer warehouse. If we map all the operations (value-added and non-value-
added activities), we will get a curve as shown in Figure 10.1. Obviously, since the y axis is
capturing cumulative costs, the value-addition curve is increasing with time.

customer Entry Point in the Supply Chain

The point at which a customer places an order is shown as a dotted line in Figure 10.1. In several
industries customers expect material off the shelf in the neighborhood retail store. In such a case, the
customer entry point is at the end of chain and is the same as the delivery time. But in several
industries it is not uncommon for customers to give some amount of delivery lead time and in such a
case obviously the customer entry point will be ahead of the delivery time. This is similar to build-to-
order or configure-to-order supply chain situations. Essentially, the customer entry point captures the
order to delivery lead time. This dimension is important because all the operations before the customer
order has to be done based on forecast, whereas after the customer order one will be working with
actual orders. In other words, before the customer entry point all the activities are carried out based
on forecast while subsequent activities are done based on order. As discussed in the chapter on demand
forecasting, however good the forecasting process, as per the first law of forecasting, a fore- cast is
always wrong. So if bulk of the activities can be carried out based on order rather than forecast one
does not have to worry about the likely forecast error that is inherent in any forecasting exercise.

Point of Differentiation
The concept of the point of differentiation is valid for any organization that is offering a
variety of end products to customers. Products are made in a supply chain consisting of multiple
stages. As the product moves in the chain, progressively, the product assumes an identity that is closer
to the end product. The point of differentiation is a stage where the product gets identified as a
specific variant of the end product. We will illustrate the concept using a toothpaste manufacturing firm.
Let us assume that the firm offers variety only in pack sizes. In such a firm, the packing stage is a
point of differentiation. At a packing station the same basic material, that is, toothpaste, is packed in
sizes of varying dimensions. So till the packing station one has been working with the generic
material, but at the packing station the firm has to make an irreversible decision in terms of committing
the generic material to a specific product variant. Similarly, at a garment manufacturing firm, at the
stitching stage the firm is committing the fabric to different sizes and styles of garment. In automobile
manufacturing firms like Tata, where usually large variety is offered in terms of colours, the painting
stage becomes the point of differentiation because at that stage the firm makes an irreversible decision
about the colour of the car.
In reality, a firm may have multiple points of differentiation. For example, in the case of the
 garment manufacturer, the fabric dyeing and stitching stages represent two main points of differentiation.
At the fabric dyeing stage, the garment firm makes an irreversible decision about colour, and at stitching
stage the firm makes an irreversible decision about the style of the garment. Though it is not uncommon to
have multiple points of differentiation in a firm, in our conceptual discussion we will focus on the main point
of differentiation where significant variety explosion takes place in the firm.

Forecasting at the variant level is quite difficult compared to forecasting at the aggregate level. So it is
easier to forecast in terms of tons of toothpastes or number of cars or number of garments. But trying to
forecast at specific pack size level for toothpastes, specific colour level for automobiles and specific style
level for a garment is significantly more difficult.

Before the point of differentiation, one has to forecast at the aggregate level, whereas after the point
of differentiation one has to work at the variant level. So the point of differentiation determines the point
at which a firm is forced to forecast at the variant level. Further, the longer the time period for which
you have to forecast, the higher the forecast error. So if the stage of supply chain at which the point of
differentiation takes place is in the early stage of the supply chain one will have to forecast for a
longer horizon at the variant level.

7 Explain the post pone the point of differentiation

Postpone the Point of Differentiation

Delaying an operational process that results in variety explosion or customization to a later point
in the supply chain postpones the point of product differentiation.

Delaying the differentiating operations, apart from reducing inventories, also reduces the time
period for which one has to carry out forecasting at the variant level and thereby reduces inventory and
improves customer service and reduces product obsolescence.

• Hewlett-Packard: Postponement of Product Differentiation

• Within Europe each country has its own specifications in terms of voltage, plug size and manual
requirements. Earlier, under the old design the product differentiation in terms of customization
for a given country used to take place within the plant.

• A product had a dedicated power supply of 110 V or 220 V, which immediately differentiated
the product by end customer market as soon as production began.

• Under the improved design, a universal power supply that works in all countries is built into the
product.

• The product is not differentiated until it is shipped against customer order from DC close to
customer destination.

• Asian Paints: Postponement for Managing Product Variety in the Chain

• Asian Paints is an Indian paint manufacturing firm that has employed the postponement strategy
successfully in its emulsions product category.

• Asian Paints offers four emulsion brands. In turn, each brand offers 150–250 shades.
• An emulsion comprises of a “base” and a combination of “stainers”.

• The base provides the functional aspects while the strainers provide the required shade.

• The base accounts for 99 per cent of the final emulsion volume. A wide range of shades is
developed using just 10 stainers.

• At Asian Paints, the mixing of the base and the stainers, also known as “tinting”, is carried out at
the various sales points (SPs) distributed across the country.

8 Explain the role of IT in a supply chain

Information is a key supply chain driver because it serves as the glue that allows the other
supply chain drivers to work together with the goal of creating an integrated, coordinated supply
chain. Information is crucial to supply chain performance because it provides the foundation on
which supply chain process executes transactions and make decisions. Without information a manger
cannot know what customer want, how much inventory is in stock, and when more product should be
produced or shipped. Information provides supply chain visibility, allowing managers to make
decisions to improve the supply chain performance.

IT consists of the hardware, software and people thought a supply chain that gather, analyze,
and execute upon information. IT serves as the eyes and ears of management in a supply chain,
capturing and analyzing the information necessary to make a good decision.

Using IT systems to capture and analyze information can have a significant impact on a
firm’s performance. Availability and analysis of information to drive decision making is a key to the
success of a supply chain. companies have built their success on the availability and analysis of
information.

To support effective supply chain decisions, information must have the following characteristics.

1. Information must be accurate

2. Information must be accessible in a timely manner
3. Information must be of the right kind
4. Information must be shared

Information is used when making a wide variety of decisions about each supply chain driver.

1. Facility: determining the location, capacity and schedule of a facility requires Information on
the trade-off among efficiency and flexibility, demand, exchange rates, taxes, and so on
2. Inventory: setting optimal inventory policies requires information that includes demand
patterns, cost of caring inventory, cost of stocking out, and cost of ordering.
3. Transportation: deciding on transportation networks, routings, modes, shipments, and
vendors requires information about costs, customer’s locations and shipment sizes to make
good decisions.
4. Sourcing: Information on product margins, prices, quality, delivery lead times are all
important in making sourcing decisions. Given sourcing deals with inter-enterprise
transitions, a wide range of transitional information must be recorded in order to execute
operations.
 5. Pricing and revenue management: to set pricing policies, one needs information on demand,
both its volume and various customer segments willingness to pay and on many supply
issues, such as the product margin, lead time and availability. Using this information, firms
can make intelligent pricing decisions to improve their supply chain profitability.

Information is crucial to making good supply chain decisions at all levels of decision making and
in each of the other supply chain drivers. IT enables not only the gathering of these data to create
supply chain visibility, but also the analysis of these data so that the supply chain decisions made
will maximize profitability.

9 Explain Agile supply chains

Operating in a global environment has resulted in an increased velocity of change on all parts of
business. On the one hand, customers are demanding lower cost and higher service while on the other
hand firms have to grapple with higher velocity of change on both demand and supply fronts. Progressive
firms ensure that their supply chain design and operations reflect the three factors identified in Figure
12.1. For attaining a high level of supply chain performance, a firm not only has to ensure that the supply
chain configuration is aligned with the business strategy but also that its supply chain is robust enough to
handle demand as well as supply uncertainty. In this chapter, we focus on the robustness of a chain, and
those supply chains that can handle a high level of demand uncertainty and supply uncertainty are termed
agile chains.

Firms that have configured their supply chain design and operations to handle high-level demand
uncertainty effectively are known as responsive supply chains. Firms that have configured their supply
chain design and operations to handle high levels of demand uncertainty and supply chain disruptions
effectively are known as agile supply chains.
Agile supply chains combine practices of responsive chains and will have practices in place that can
handle supply chain irregularities.

10 explain reverse supply chains

A Reverse supply chain deals with the reverse flow of material, where the product moves back from
the end customer to the manufacturer. It can deal with either the entire product or a part of product. A firm
has to manage this process during different phases of the product life cycle. The most common instances of
reverse supply chain are as follows.
 New product return: in developed markets firms have been offering liberal return policies where
customers may return offerings liberal return policies where customer may return the product for any
reason within a few months of purchase. Approximately 6 percent of retail purchase in United States is
returned by customers. In India product returns of this kind are offered by catalogue companies and e-
retailers. This category of products is usually re-packaged or re-branded for existing or new markets after
minor repair operations.

End-of-life product return: because of tough environmental regulations, firms in the developed
markets have to responsibility for their products at the end of the product life and must provide for
collection and product re-manufacturing or proper disposal. Many progressive firms have been promoting
the idea of green supply chain by ensuring that they re-use most of the components of the returned product
and consequently chive their goal of sustainable development. BMW has been working on the idea of “total
reclaimable” automobile.

There can also arise situation of product return at an intermediate stage of the product life cycle
where the company recalls its product because of unforeseen problems related to safety.

Reverse supply chain are most difficult to manage because of uncertainties in quantity and timing.
Further one may not have the necessary economies of scale in collection and transportation. Most firms
have not been able to integrate their forward and return supply chains.

11 Explain future of IT in supply chain

At the macro level SCM is driven by supplier Relationship management (SRM), Internal supply chain
management (ISCM) and customer relationship management (CRM)

The relative focus on improved analysis to support decision making will continue to grow. The
following important trends will impact IT the supply chain.

1. The growth in software as a service (Saas)

2. Increased availability of real-time data
3. Increased use of mobile technology
 Software as a service as software that is owned, delivered, and managed remotely. Salesforce.com is
one of the best-known pure SaaS Supply chain software providers. Traditional enterprise software vendors
such as SAP, Oracle, and Microsoft are increasing he availability of their software using the SaaS model.

The availability of real-time information has explored in most supply chains the opportunity is to
design systems that enable rapid insight bases on real-time data. Significant opportunity exists to devise
software that will use real-time information to help frontline supply chain staff makes smart and faster
decisions that are revisited frequently.

The increased use of mobile technology coupled with real-time information offers some supply
chains an opportunity to better match demand to supply using differential pricing. Businesses can improve
profitability by offering deals when business is slow at specific locations. Consumers benefit from getting a
deal when and where they want it. Such an approach is likely to be applicable in many supply chain settings.

12 Explain E-business in Supply Chain