What Is Supply Chain Management (SCM)?

Supply chain management is the management of the flow of goods and services and includes
all processes that transform raw materials into final products. It involves the active streamlining
of a business's supply-side activities to maximize customer value and gain a competitive
advantage in the marketplace.

SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to product
development to the information systems needed to direct these undertakings.

Why is Supply Chain Management So Important?

IMPROVE CUSTOMER SERVICES
 Customers expect to receive the correct product mix and quantity to be delivered on time. For
example, if you buy five books from Amazon and only two of the actual titles arrive, one is an entirely
different book and two are missing, the customer will lose faith in Amazon, prompting them to leave a
bad review and hinder them from returning to the platform.
 Products need to be on hand in the right location. Customer satisfaction is tarnished if your car’s
brake pads fail and the auto repair shop is delayed in making the repairs because parts are not
available in-house.

 Follow up support after a sale must be done quickly. When an appliance store sells a furnace with
a warranty and it breaks down when temperatures are below freezing, it is a great possibility the
customer will be irate if the heating unit cannot be fixed immediately.
REDUCE OPERATING COSTS
 Decreases Purchasing Cost - Retailors depend on supply chains to quickly distribute costly products
to avoid sitting on expensive inventories.
 Decrease Production Cost - Any delay in production can cost a company tens of thousands of
dollars. This factor makes supply chain management ever more important. Reliable delivery of
materials to assembly plants avoids any costly delays in manufacturing.

 Decrease Total Supply Chain Cost - Wholesale manufacturers and retailer suppliers depend on
proficient supply chain management to design a network that meets customer service goals. This gives
businesses a competitive edge in the marketplace.

IMPROVE FINANCIAL POSITION

 Insert Profit Leverage - Businesses value supply chain managers because they help control and
decrease supply chain expenditures.
 Decrease Fixed Assets - Supply chain managers decrease the use of large fixed assets such as
plants, warehouses and transportation vehicles, essentially diminishing cost.

 Increases Cash Flow - Firms appreciate the added value supply chain management contributes to
the speed of product flows to customers.

Supply Chain Management - Decision Phases

Supply Chain Strategy
In this phase, decision is taken by the management mostly. The decision to be made considers the
sections like long term prediction and involves price of goods that are very expensive if it goes wrong. It
is very important to study the market conditions at this stage.
These decisions consider the prevailing and future conditions of the market. They comprise the
structural layout of supply chain. After the layout is prepared, the tasks and duties of each is laid out.
All the strategic decisions are taken by the higher authority or the senior management. These decisions
include deciding manufacturing the material, factory location, which should be easy for transporters to
load material and to dispatch at their mentioned location, location of warehouses for storage of
completed product or goods and many more.
Supply Chain Planning
Supply chain planning should be done according to the demand and supply view. In order to understand
customers’ demands, a market research should be done. The second thing to consider is awareness
and updated information about the competitors and strategies used by them to satisfy their customer
demands and requirements. As we know, different markets have different demands and should be dealt
with a different approach.
This phase includes it all, starting from predicting the market demand to which market will be provided
the finished goods to which plant is planned in this stage. All the participants or employees involved with
the company should make efforts to make the entire process as flexible as they can. A supply chain
design phase is considered successful if it performs well in short-term planning.

Supply Chain Operations

The third and last decision phase consists of the various functional decisions that are to be made
instantly within minutes, hours or days. The objective behind this decisional phase is minimizing
uncertainty and performance optimization. Starting from handling the customer order to supplying the
customer with that product, everything is included in this phase.
For example, imagine a customer demanding an item manufactured by your company. Initially, the
marketing department is responsible for taking the order and forwarding it to production department and
inventory department. The production department then responds to the customer demand by sending
the demanded item to the warehouse through a proper medium and the distributor sends it to the
customer within a time frame. All the departments engaged in this process need to work with an aim of
improving the performance and minimizing uncertainty.

Drivers of Supply chain

PRODUCTION – This driver can be made very responsive by building factories that have a
lot of excess capacity and use flexible manufacturing techniques to produce a wide range of
items. To be even more responsive, a company could do their production in many smaller
plants that are close to major groups of customers so delivery times would be shorter. If
efficiency is desirable, then a company can build factories with very little excess capacity
and have those factories optimized for producing a limited range of items. Further
efficiency can also be gained by centralizing production in large central plants to get better
economies of scale, even though delivery times might be longer.

INVENTORY – Responsiveness can be had by stocking high levels of inventory for a wide
range of products. Additional responsiveness can be gained by stocking products at many
locations so as to have the inventory close to customers and available to them
immediately. Efficiency in inventory management would call for reducing inventory levels
of all items and especially of items that do not sell as frequently. Also, economies of scale
and cost savings can be gotten by stocking inventory in only a few central locations such as
regional distribution centers (DCs).

LOCATION – A location decision that emphasizes responsiveness would be one where a

company establishes many locations that are close to its customer base. For example, fast-
food chains use location to be very responsive to their customers by opening up lots of
stores in high volume markets. Efficiency can be achieved by operating from only a few
locations and centralizing activities in common locations. An example of this is the way e-
commerce retailers serve large geographical markets from only a few central locations that
perform a wide range of activities.

TRANSPORTATION – Responsiveness can be achieved by a transportation mode that is fast

and flexible such as trucks and airplanes. Many companies that sell products through
catalogs or on the Internet are able to provide high levels of responsiveness by using
transportation to deliver their products often within 48 hours or less. FedEx and UPS are
two companies that can provide very responsive transportation services. And now Amazon
is expanding and operating its own transportation services in high volume markets to be
more responsive to customer desires. Efficiency can be emphasized by transporting
products in larger batches and doing it less often. The use of transportation modes such as
ship, railroad, and pipelines can be very efficient. Transportation can also be made more
efficient if it is originated out of a central hub facility or distribution center (DC) instead of
from many separate branch locations.
INFORMATION – The power of this driver grows stronger every year as the technology for
collecting and sharing information becomes more wide spread, easier to use, and less
expensive. Information, much like money, is a very useful commodity because it can be
applied directly to enhance the performance of the other four supply chain drivers. High
levels of responsiveness can be achieved when companies collect and share accurate and
timely data generated by the operations of the other four drivers. An example of this is the
supply chains that serve the electronics market; they are some of the most responsive in
the world. Companies in these supply chains, the manufacturers, distributors, and the big
retailers all collect and share data about customer demand, production schedules, and
inventory levels. This enables companies in these supply chains to respond quickly to
situations and new market demands in the high-change and unpredictable world of
electronic devices (smartphones, sensors, home entertainment and video game equipment,
etc.).
 Distribution Network Design

Distribution refers to the steps taken to move and store a product from the supplier stage to a
customer stage in the supply chain. Distribution is a key driver of the overall profitability of a
firm because it directly impacts both the supply chain cost and the customer experience. Good
distribution can be used to achieve a variety of supply chain objectives ranging from low cost to
high responsiveness. As a result, companies in the same industry often select very different
distribution networks.

Dell distributes its PCs directly to end consumers, while companies like Hewlett Packard and
Compaq distribute through resellers [3]. Dell customers wait several days to get a PC while
customers can walk away with an HP or Compaq PC from a reseller. Gateway opened Gateway
Country stores where customers could check out the products and have sales people help them
configure a PC that suited their needs.

Factors Influencing Distribution Network Design

At the highest level, performance of a distribution network should be evaluated along two
dimensions: 1. Customer needs that are met

2. Cost of meeting customer needs

The customer needs that are met influence the company's revenues, which along
with cost decide the profitability of the delivery network.

While customer service consists of many components, we will focus on those

measures that are influenced by the structure of the distribution network. These
include:

• Response time

• Product variety

• Product availability
• Customer experience

• Order visibility

• Returnability

Response time (Time it takes for a

customer to receive an order)
• Product variety (Number of different
products that are offered)
• Product availability (Probability of
having a product in stock)
• Customer experience (Ease of placing
and receiving orders)
• Order visibility (Ability of customers to
track their orders)
• Returnability (Ease of returning
unsatisfactory merchandise)
Response time (Time it takes for a
customer to receive an order)
• Product variety (Number of different
products that are offered)
• Product availability (Probability of
having a product in stock)
• Customer experience (Ease of placing
and receiving orders)
• Order visibility (Ability of customers to
track their orders)
• Returnability (Ease of returning
unsatisfactory merchandise)
 Response time is the time between when a customer places an order and receives
delivery.

 Product variety is the number of different products / configurations that a customer

desires from the distribution network.

 Availability is the probability of having a product in stock when a customer order arrives.

 Customer experience includes the ease with which the customer can place and receive
their order.

 Order visibility is the ability of the customer to track their order from placement to
delivery.

 Returnability is the ease with which a customer can return unsatisfactory merchandise
and the ability of the network to handle such returns.

Firms that target customers who can tolerate a large response time require few
locations that may be far from the customer and can focus on increasing the capacity of
 each location. On the other hand, firms that target customers who value short response
times need to locate close to them. These firms must have many facilities, with each
location having a low capacity. Thus, a decrease in the response time customers desire
increases the number of facilities required in the network, as shown in Figure 4.1. For
example, Borders provides its customers with books on the same day but requires about
400 stores to achieve this goal for most of the United States. Amazon, on the other
hand, takes about a week to deliver a book to its customers, but only uses about 5
locations to store its books.

increasing the number of facilities decreases total transportation cost, as shown

in Figure 4.2. If the number of facilities is increased to a point where there is a
significant loss of economies of scale in inbound transportation, increasing the
number of facilities increases total transportation cost. Facility costs decrease as
the number of facilities is reduced as shown in Figure 4.2, because a consolidation
of facilities allows a firm to exploit economies of scale.
Total logistics costs are the sum of inventory, transportation, and facility costs for a supply
chain network. As the number of facilities is increased, total logistics costs first decrease and
then increase as shown in Figure 4.3. Each firm should have at least the number of facilities that
minimize total logistics costs. As a firm wants to further reduce the response time to its
customers, it may have to increase the number of facilities beyond the point that minimizes
logistics costs. A firm should add facilities beyond the cost- minimizing point only if managers
are confident that the increase in revenues because of better responsiveness is greater than the
increase in costs because of the additional facilities.
Design Options for a Distribution Network

We will discuss distribution network choices in the context of distribution from the
manufacturer to the end consumer. When considering distribution between any other pair
of stages, such as supplier to manufacturer, many of the same options still applies. There
are two key decisions when designing a distribution network:

1. Will product be delivered to the customer location or picked up from a preordained site?

2. Will product flow through an intermediary (or intermediate location)?

Based on the choices for the two decisions, there are six distinct distribution network
designs that are classified as follows:

1. Manufacturer storage with direct shipping

2. Manufacturer storage with direct shipping and in-transit merge

3. Distributor storage with package carrier delivery

4. Distributor storage with last mile delivery

5. Manufacturer / distributor storage with costumer pickup

6. Retail storage with customer pickup

We now describe each distribution option and discuss its strengths and weaknesses.

1. Manufacturer Storage with Direct Shipping

In this option, product is shipped directly from the manufacturer to the end customer,
bypassing the retailer (who takes the order and initiates the delivery request). This option is
also referred to as drop shipping. All inventories are stored at the manufacturer. Information
flows from the customer, via the retailer, to the manufacturer, while product is shipped directly
from the manufacturer to customers as shown in Figure 4.4. In some instances like Dell, the
manufacturer sells directly to the customer. Online retailers such as eBags and Nordstrom.com
use drop shipping to deliver goods to the end consumer.
The biggest advantage of drop shipping is the ability to centralize inventories at the manufacturer. A
manufacturer can aggregate demand and provide a high level of product availability with lower levels of
inventory than individual retailers. The benefits from centralization are highest for high value, low
volume items with unpredictable demand. The inventory benefits of aggregation are small for items
with predictable demand and low value [1]. Thus, drop shipping would not offer a significant inventory
advantage to an online grocer selling a staple item like detergent.

Drop shipping also offers the manufacturer the opportunity to further lower inventories by postponing
customization until after the customer order has been placed. Build-to-order companies such as Dell
hold inventories as common components and postpone product customization, thus lowering the level
of inventories carried.

Transportation costs are high with drop shipping because the average outbound distance to the end
consumer is large and package carriers must be used to ship the product. Package carriers have high
shipping costs per unit compared to truckload(TL) or less-than-truckload (LTL) carriers.

Handling costs can be significantly reduced if the manufacturer has the capability to ship orders directly
from the production line.
A good information infrastructure is needed so that the retailer can provide product availability
information to the customer even though the inventory is located at the manufacturer. The customer
should also have visibility into order processing at the manufacturer even though the order is placed
with the retailer. Drop shipping will generally require significant investment in the information
infrastructure. The information infrastructure requirement is somewhat simpler for direct sellers like
Dell because two stages (retailer and manufacturer) do not need to be integrated.

Response times tend to be large when drop shipping is used because the order has to be transmitted
from the retailer to the manufacturer and shipping distances are on average longer from the
manufacturer's centralized site.

Manufacturer storage with drop shipping allows a high level of product variety to be made available to
the customer.

Order visibility is very important in the context of manufacturer storage because two stages in the
supply chain are involved in every customer order.

A manufacturer storage network is likely to have difficulty handling returns, hurting customer
satisfaction. The handling of returns is more expensive under drop shipping because each order may
involve shipments from more than one manufacturer. There are two ways that returns can be handled.
One is for the customer to return the product directly to the manufacturer. The second approach is for
the retailer to set up a separate facility (across all manufacturers) to handle returns. The first approach
incurs high transportation and coordination cost while the second approach requires investment in a
facility to handle returns.
 2. Manufacturer Storage With Direct Shipping and In-Transit Merge

Unlike pure drop shipping where each product in the order is sent directly from each
manufacturer to the end customer, in-transit merge combines pieces of the order coming from
different locations so that the customer gets a single delivery. When a customer orders a PC
from Dell along with a Sony monitor, the package carrier picks up the PC at the Dell factory, the
monitor at the Sony factory and merges the two together at a hub before making a single
delivery to the customer.

In most cases, transportation costs are lower than drop shipping because of the merge that
takes place at the carrier hub prior to delivery to the customer. An order with products from
three manufacturers thus requires only one delivery to the customer compared to three that
would be required with drop shipping. Fewer deliveries save transportation cost and simplify
receiving.

The party performing the in-transit merge has higher facility costs because of the merge
capability required. Receiving costs at the customer are lower because a single delivery is
received. Overall supply chain facility and handling costs are somewhat higher than drop
shipping.

A very sophisticated information infrastructure is needed to allow the in-transit merge. Besides
information, operations at the retailer, manufacturers, and the carrier must be coordinated.
The investment in information infrastructure will be higher than for drop shipping.

Response times, product variety, and availability are similar to drop shipping. Response times
may be marginally higher because of the need to perform the merge. Customer experience is
likely to be better than drop shipping because the customer receives only one delivery for their
order instead of many partial shipments. Order visibility is a very important requirement. While
the initial setup is difficult because it requires integration of manufacturer, carrier, and retailer,
tracking itself becomes easier given the merge that occurs at the carrier hub.
The main advantage of in-transit merge over drop shipping is the somewhat lower
transportation cost and improved customer experience. The major disadvantage is the
additional effort during the merge itself.

3. Distributor Storage with Carrier Delivery

Under this option, inventory is not held by manufacturers at the factories but is held by
distributors / retailers in intermediate warehouses and package carriers are used to transport
products from the intermediate location to the final customer. Amazon.com use this approach
combined with drop shipping from a manufacturer. Information and product flows when using
distributor storage with delivery by a package carrier are shown in Figure
 Relative to manufacturer storage, distributor storage will require a higher level of inventory
because the distributor / retailer warehouse aggregates demand uncertainty to a lower level than the
Manufacturer

Transportation costs are somewhat lower for distributor storage compared to manufacturer storage
because an economic mode of transportation

Unlike manufacturer storage where multiple shipments may need to go out for a single customer order
with multiple items, distributor storage allows outbound orders to the customer to be bundled into a single
shipment further reducing transportation cost. Transportation savings from distributor storage relative to
manufacturer storage increase for faster moving items.
Compared to manufacturer storage, facility costs are somewhat higher with distributor storage because
of a loss of aggregation.
The information infrastructure needed with distributor storage is significantly less complex than that
needed with manufacturer storage.
Response time with distributor storage is better than with manufacturer storage because distributor
warehouses are, on average, closer to customers and the entire order is aggregated at the warehouse
when shipped.

Customer convenience is high with distributor storage because a single shipment reaches the customer in
response to an order. Order visibility becomes easier than with manufacturer storage because there is a
single shipment from the warehouse to the customer and only one stage of the supply chain is directly
involved in filling the customer order.
 Returnability is better than with manufacturer storage because all returns can be processed at the
warehouse itself. The customer also has to return only one package even if the items are from several
manufacturers.

The performance of distributor storage with carrier delivery is summarized in Table

2.4 Distributor Storage with Last Mile Delivery

Last mile delivery refers to the distributor / retailer delivering the product to the customer's home
instead of using a package carrier Unlike package carrier delivery, last mile delivery requires the
distributor warehouse to be much closer to the customer, increasing the number of warehouses
required. The warehouse storage with last mile delivery network is as shown in Figure

Distributor storage with last mile delivery requires higher levels of inventory than all options other
than retail stores, because it has a lower level of aggregation. From an inventory perspective,
warehouse storage with last mile delivery is suitable for relatively fast moving items.

Transportation costs are highest using last mile delivery. This is because package carriers aggregate
delivery across many retailers and are able to obtain better economies of scale than available to a
distributor / retailer attempting last mile delivery. Delivery costs (including picking and transportation)
can be as high. Last mile delivery may be
somewhat cheaper in dense cities. Transportation costs may also be justifiable for bulky products
where the customer is willing to pay for home delivery. Home delivery for water and large bags of rice
has proved quite successful in China, where the high population density has helped decrease delivery
costs.

Facility and processing costs are very high using this option given the large number of facilities
required. Facility costs are somewhat lower than a network with retail stores but much higher than
either manufacturer storage or distributor storage with package carrier delivery. Processing costs,
however, are much higher than a network of retail stores because all customer participation is
eliminated.

Response times are faster than the use of package carriers. Product variety is generally lower than
distributor storage with carrier delivery. The cost of providing product availability is higher than every
option other than retail stores. The customer experience is very good using this option, particularly for
bulky, hard to carry items.

The performance characteristics of distributor storage with last mile delivery are summarized in Table
2.5 Manufacturer or Distributor Storage with Consumer Pickup

In this approach, inventory is stored at the manufacturer or distributor warehouse but

customers place their orders online or on the phone and then come to designate pickup
points to collect their orders.
Orders are shipped from the storage site to the pickup points as needed.

Inventory costs using this approach can be kept low with either manufacturer or
distributor storage to exploit aggregation.

Transportation cost is lower than any solution using package carriers because significant
aggregation is possible when delivering orders to a pickup site.

Facility costs are high if new pickup sites have to be built. A solution using existing sites
will lower the additional facility costs.
The main advantage of a network with consumer pickup sites is that it can lower delivery
cost, thus expanding the set of products sold as well as customers served online. The
major hurdle is the increased handling cost at the pickup site.

2.6 Retail Storage with Customer Pickup

In this option, inventory is stored locally at retail stores. Customers either walk into the
retail store or place an order online or on the phone, and pick it up at the retail store.
Transportation cost is much lower than other solutions because inexpensive modes of
transport can be used to replenish product at the retail store.
 The main advantage of a network with local storage is that it can lower the
delivery cost and provide a faster response than other networks. The major disadvantage
is the increased inventory and facility costs. Such a network is best suited for fast moving
items or items where customers value the rapid response.

Supply chain management is coordination of all supply activities of an organization from

its suppliers and partners to its customers efficiently and effectively. Electronic supply
chain management (e-SCM) is collaborative use of technology to improve the operations
of supply chain activities as well as the management of supply chains.

The main factors that contributed to the transition from SCM to e-SCM are as follows:
The need for additional reduction in the costs as well as improvements in the processes through
the expansion of the tools for modern management in the organizations from the supplier
channels to the customer channels.

 The introduction of computerization and digitalization of the internal functions of

the organizations with new techniques, tools, and management methods.

 The need for efficiency and agility of the organizations in order that they can
respond to the higher demands of the customers whose growing demands and
bargaining power continually increases.

 The effort to optimize the organization by having lower inventory levels both in
manufacture and distribution by, in parallel, offering supreme quality and service.

 The deserting of vertical integration and functional oriented organizations.

 The tendency for outsourcing of some operational functions that are not the core of
the business to other organizations specialized in that field.

 The explosive expansion of global commerce and the opening of new markets that
only few years ago were closed.

 The e-business technologies, particularly internet, have enabled organizations of all

sizes to have a network and be closely connected with their partners and conquer and
compete for market share which was only possible before for the large corporations.

The success of an e-SCM depends on ability of all supply chain

partners to view partner collaboration as a strategic asset; a
well-defined supply chain strategy; information visibility along
the entire supply chain; speed, cost, quality, and customer
service; integrating the supply chain more tightly. Application of
e-SCM can reduce some problems in SCM through sharing of
demand by customers with suppliers as part of efficient
consumer response (ECR), suppliers become responsible for item
availability through vendor-managed inventory, human error
reduced (checks and balances can be built into system),
inventory reduced throughout the supply chain through better
demand forecasting and more rapid replenishment of inventory,
improved availability of information about potential suppliers and
components (for example through online marketplaces). The
activities of E-SCM include the following:

 Supply Chain Replenishment. Supply chain replenishment encompasses the

integrated production and distribution processes. Companies can use
replenishment information to reduce inventories, eliminate stocking points, and
increase the velocity of replenishment by synchronizing supply and demand
information across the extended enterprise.

 E-Procurement. It is the use of web-based technology to support the key

procurement processes, including requisitioning, sourcing, contracting, ordering,
and payment. E-procurement supports the purchase of both direct and indirect
materials and employs several web-based functions, such as online catalogs,
contracts, purchase orders, and shipping notices.

 Supply Chain Monitoring and Control Using RFID. This is one of the most
promising applications of RFID (Radio-Frequency Identification).

 Inventory Management Using Wireless Devices. Many organizations are now

achieving improvements in inventory management by using combinations of
bar-coding technologies (or RFID) and wireless devices.

 Collaborative Planning. It is a business practice that combines the business

knowledge and forecasts of multiple players along a supply chain to improve the
planning and fulfillment of customer demand. Collaborative planning requires
 buyers and sellers to develop shared demand forecasts and supply plans for how
to support demand.

 Collaborative Design and Product Development. It involves the use of product

design and development techniques across multiple companies to improve
product launch success and reduce time to market. During product development,
engineering and design drawings can be shared over a secure network among the
contract firm, testing facility, marketing firm, and downstream manufacturing
and service companies.

 E-Logistics. It is the use of web-based technologies to support the material

acquisition, warehousing, and transportation processes. E-logistics enables
distribution to couple routing optimization with inventory-tracking information.
For example, Internet-based freight auctions enable spot buying of trucking
capacity.

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.
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.

TRANSPORTATION

• Transportation refers to the movement of product from one location

to another as it makes its way from the beginning of supply chain to

the customer.

• Transportation is an important supply chain driver because products

are rarely produced and consumed in the same location.

ROLE OF TRANSPORTATION IN SUPPLY CHAIN

• Transportation refers to the movement

of product from one location to another.

• Transportation plays a major role in

increasing gross domestic product (GDP).

• Seven-Eleven Japan used transportation to achieve its strategic goals.

FACTORS AFFECTING TRANSPORTATION DECISIONS

 Shipper (party that requires the movement of the product between two points
in the SC)

• Transportation cost
 • Inventory cost

• Facility cost

 Carrier (party that moves or transports the product)

• Vehicle-related cost

• Fixed operating cost

• Trip-related cost

• For example: DHL, FedEx etc.

AIR
• Air freighting is commonly used by companies who work with short lead times, or advanced
service levels.

• Air transportation is best suited for small, high- value items or time sensitive emergency
shipments that have to travel a long distance.

• Air carriers normally move shipments that have high value but light weight .

Advantages:

o It is the fastest mode of transport.

o It is very useful in transporting goods to the area, which are not accessible by any other
means.

o Reduces lead time.

o Improved service levels

Disadvantages:

o It is relatively more expensive mode of transport.

o It is not suitable for transporting heavy and bulky goods.

o It is not suitable for short distance travel.

PACKAGE CARRIER
Package carriers are transportation companies which carry small packages.
Examples: FedEx,UPS, DHL. etc.

• Package carrier use air, truck and rail to transport the goods. Packages carriers also provide

other value added services that allow shippers to inventory flow and track order status, shipper

can proactively inform the customer about their packages.

• Package carrier is suited for e- business.

Advantages:

• Rapid and reliable delivery

• Preferred mode for e-businesses (e.g., Amazon, Dell, McMaster-Carr)

• Consolidation of shipments (especially important for package carriers that use air as a primary

method of transport)

Disadvantages:

• Expensive.

• Small and time-sensitive shipments

ROAD TRANSPORTATION

• Road transport offers a complete freedom to road users to transfer the vehicle from one lane
to the other and from one road to another according to the need and convenience.

• The flexibility of changes in location, direction, speed, and timings of travel is not available to
other modes of transport.

Advantages:

o It is a relatively cheaper mode of transport as compared to other modes.

o It is a flexible mode of transport as loading and unloading is possible at any destination. It

provides door-to-door service.

o It helps to carry goods from one place to another, in places which are not connected by other

means of transport like hilly areas.

Disadvantages:
o Due to limited carrying capacity road transport is not economical for long distance
transportation

of goods.

o Transportation of heavy goods or goods in bulk by road involves high cost.

RAIL
Rail transport uses freight trains for the delivery of merchandise. Freight trains are usually
powered by

diesel, electricity and steam.

• Rail is suited for bulk shipment of products like fertilizer, cement, food grains and coal etc.
from the

production plant to the warehouses.

Advantages:

o It is relatively faster than road transport.

o It is suitable for carrying heavy goods in large quantities over long distances

o Cost effective.

Limitations:

o It is relatively expensive for carrying goods over short distances.

o It is not available in remote parts of the country.

o It provides service according to fixed time schedule and is not flexible for loading or unloading
of

goods at any place.

PIPELINE
Pipeline is used primarily for the transport of crude petroleum, refined petroleum products and
natural gas.

o It include a significant initial fixed cost in setting up the pipeline and related infrastructure.

o Pipelines are not flexible and this scope is limited with respect to commodities.
o Unable to transport a variety of materials

Advantages:

o Supply through pipelines is very reliable.

o Reduction in cost of transportation

o In case of underground pipelines, the land in which pipeline is laid can still be used for
agricultural use

Disadvantages:

o Illegal pilferage and wastage due to leak is a problem in pipelines

o In case of chemicals and petroleum pipelines any leak can cause a accident.

o Like other big linear structures patrolling and maintenance of pipelines is a huge task

WATER

Water transport uses ships and large commercial vessels that carry billions of tons of cargo.

o Water transport is used primarily for the movement of large bulk commodity shipments and it
is the

cheapest mode for carrying such load.

o Water transport is particularly effective for significantly large quantities of goods that are
nonperishable in nature and for cities or states that have water access.

• Inland Waterways: Refer to using inland water bodies like rivers, canals, backwaters, creeks
and etc.

• Ocean Waterways: Navigation along the coastal places and foreign countries take places with
the help of ships.

Advantages:

o It is a relatively economical mode of transport for bulky and heavy goods.

o The cost of maintaining and constructing routes is very low most of them are naturally made.

o It promotes international trade.

Disadvantages:
o The depth and navigability of rivers and canals vary and thus, affect operations of different
transport vessels.

o It is a slow moving mode of transport and therefore not suitable for transport of perishable
goods.

o It is adversely affected by weather conditions.

o Sea transport requires large investment on ships and their maintenance.

INTERMODAL TRANSPORTATION

Intermodal Transportation is use of more than one mode of transport for the

movement of shipment from origin to its destination.

• Intermodal operation is used two or more mode of transport to take the advantage of

inherent economies of each and thus provide the integrated service at lower cost.

• For example: truck/water/rail.

Advantages:

o Increased global trade has also increased use of intermodal transportation

o Grown considerably with increased use of containers

o More convenient for shippers (one entity provides the complete service)

Disadvantages:

o Lack of Reliability, i.e. exchange of information to facilitate transfer between different

transport modes.

o High Infrastructure Costs

What is warehouse management?
Warehouse management is the act of organising and controlling everything within your
warehouse – and making sure it all runs in the most optimal way possible.

This includes:

 Arranging the warehouse and its inventory.

 Having and maintaining the appropriate equipment.
 Managing new stock coming into the facility.
 Picking, packing and shipping orders.
 Tracking and improving overall warehouse performance.

Most high growth retailers would use automation tools (like some form of Warehouse
Management System) to control this part of their supply chain.

What is Reverse Logistics?

Reverse logistics stands for all operations related to the reuse of products and materials. It is “the
process of planning, implementing, and controlling the efficient, cost effective flow of raw
materials, in-process inventory, finished goods and related information from the point of
consumption to the point of origin for the purpose of recapturing value or proper disposal. More
precisely, reverse logistics is the process of moving goods from their typical final destination for
the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities
also may be included in the definition of reverse logistics.”

The reverse logistics process includes the management and the sale of surplus as well as returned
equipment and machines from the hardware leasing business. Normally, logistics deal with
events that bring the product towards the customer. In the case of reverse logistics, the resource
goes at least one step back in the supply chain. For instance, goods move from the customer to
the distributor or to the manufacturer.
When a manufacturer’s product normally moves through the supply chain network, it is to reach
the distributor or customer. Any process or management after the sale of the product involves
reverse logistics. If the product is defective, the customer would return the product. The
manufacturing firm would then have to organise shipping of the defective product, testing the
product, dismantling, repairing, recycling or disposing the product. The product would travel in
reverse through the supply chain network in order to retain any use from the defective product.
The logistics for such matters is reverse logistics.

When a return occurs, the returned product will be collected (in many different ways) and sent to
the
distribution center. At the same time the relevant information about the return item description,
condition at return, customer information etc., will be transferred to the return processing center,
but unfortunately, given the current state of the reverse logistics status quo, this
information capture process rarely occurs, or occurs with less accuracy.

Reverse logistics is the set of activities that is conducted after the sale of a product to recapture
value and end the product's lifecycle. It typically involves returning a product to the
manufacturer or distributor or forwarding it on for servicing, refurbishment or recycling. Reverse
logistics is sometimes called aftermarket supply chain, aftermarket logistics or retrogistics.

The aftermarket processes that a product can undergo in reverse logistics are numerous and
include:

Remanufacturing - rebuilding the product with reused, repaired or new parts

Refurbishment - resale of a returned product that has been repaired or verified to be in good
condition

Servicing - a broad category that includes customer service, field service and product returns,
such as issuance of return merchandise authorizations

Returns management
Recycling and waste management

Warranty management

Warehouse management

REVERSE LOGISTICS
In simplest words it is the
management of the path of the
products from its end users back
to the manufacturers.
The definition for Logistics
given by The Council of
Logistics Management is:
“the process of planning,
implementing, and controlling
the efficient, cost effective flow
of raw materials, in-
process inventory, finished
goods and related information
from the point of origin to the
point of consumption
for the purpose of conforming
to customer requirements.
REVERSE LOGISTICS
In simplest words it is the
management of the path of the
products from its end users back to
the manufacturers.
The definition for Logistics given
by The Council of Logistics
Management is:
“the process of planning,
implementing, and controlling the
efficient, cost effective flow of raw
materials, in-
process inventory, finished goods
and related information from the
point of origin to the point of
consumption
for the purpose of conforming to
customer requirements.
REVERSE LOGISTICS
In simplest words it is the
management of the path of the
products from its end users back to
the manufacturers.
The definition for Logistics given
by The Council of Logistics
Management is:
“the process of planning,
implementing, and controlling the
efficient, cost effective flow of raw
materials, in-
process inventory, finished goods
and related information from the
point of origin to the point of
consumption
for the purpose of conforming to
customer requirements.
REVERSE LOGISTICS
In simplest words it is the
management of the path of the
products from its end users back to
the manufacturers.
The definition for Logistics given
by The Council of Logistics
Management is:
“the process of planning,
implementing, and controlling the
efficient, cost effective flow of raw
materials, in-
process inventory, finished goods
and related information from the
point of origin to the point of
consumption
for the purpose of conforming to
customer requirements.
REVERSE LOGISTICS
In simplest words it is the
management of the path of the
products from its end users back to
the manufacturers.
The definition for Logistics given
by The Council of Logistics
Management is:
“the process of planning,
implementing, and controlling the
efficient, cost effective flow of raw
materials, in-
process inventory, finished goods
and related information from the
point of origin to the point of
consumption
for the purpose of conforming to
customer requirements.
REVERSE LOGISTICS
In simplest words it is the
management of the path of the
products from its end users back to
the manufacturers.
The definition for Logistics given
by The Council of Logistics
Management is:
“the process of planning,
implementing, and controlling the
efficient, cost effective flow of raw
materials, in-
process inventory, finished goods
and related information from the
point of origin to the point of
consumption
for the purpose of conforming to
customer requirements.
REVERSE LOGISTICS MAY BE DEFINED AS A PROCESS OF MOVING GOODS FROM THEIR PLACE
OF USE, BACK TO THEIR PLACE OF MANUFACTURE FOR RE-PROCESSING, RE-FILLING, REPAIRS
OR RECYCLING / WASTE DISPOSAL.

IT IS A PLANNED PROCESS OF MOVEMENT OF GOODS IN REVERSE DIRECTION IN AN EFFECTIVE

AND COST EFFICIENT MANNER, THROUGH AN ORGANISED NETWORK.

IT IS AN INTEGRATED SYSTEM IN AN ORGANISATION’S SUPPLY CHAIN MANAGEMENT

REVERSE LOGISTICS REFERS TO THE SKILLS OF LOGISTICS MANAGEMENT TO REDUCE, MANAGE

& DISPOSE-OFF WASTE ARISING FROM PRODUCTS & INPUTS

REASONS FOR REVERSE LOGISTICS

• RETURN OF GOODS FROM CUSTOMER FOR NON PERFORMANCE

• SHORT TERM RENTAL RETURNS

• RETURNS SENT TO MANUFACTURER FOR REPAIRS / RE-FILLING

• REUSABLE CONTAINERS / PACKAGES

• RETURN OF INPUTS NOT USED BY MANUFACTURER / GOODS NOT

SOLD BY DISTRIBUTORS

• EXCHANGE OF NEW PRODUCT FOR THE OLD ONES

• GOODS SENT FOR UP- GRADATION / MODIFICATION

• RECYCLING OF PRODUCT

 REPAIRS AND REFURBISHING REPAIR IS A REGULAR FEATURE IN SERVICE BASED

PRODUCTS UNDER A WARRANTY PERIOD AND ALMOST ALL CONSUMER DURABLES
NEED REPAIRS ON A REGULAR BASIS.

 REFURBISHING IS DONE TO GOODS RETURNED BY DAMAGE, DEFECTS OR BELOW PAR

PERFORMANCE DURING THE WARRANTY PERIOD.

 MANUFACTURER ESTABLISH THE REVERSE LOGISTICS SYSTEM, NOT ONLY FOR OFFERING
FREE SERVICE DURING THE WARRANTY PERIOD BUT ALSO FOR EXTENDING THE
SERVICES BEYOND THE WARRANTY PERIOD ON A CHARGEABLE BASIS.
  THE SYSTEM OPERATES THROUGH THE COMPANY’S SERVICE CENTERS WHERE REPAIR
AND REFURBISHING TAKES PLACE.

 COLLECTION OF DEFECTIVE PRODUCTS IS DONE, THROUGH THE DEALERS’ NETWORK.

THESE COLLECTED PRODUCTS ARE SENT TO THE NEAREST SERVICE CENTRE FOR
OVERHAUL, REPAIRS OR REFURBISHING.

2. RE-FILLING REVERSE LOGISTICS IS INTEGRATED TO THEIR CHAIN BECAUSE OF THE REUSABLE

NATURE OF PACKAGES SUCH AS GLASS BOTTLES, TIN / PLASTIC CONTAINERS & METAL CYLINDERS ETC.

IN CASE OF SOFT DRINKS, THE DELIVERY VAN DELIVERS FILLED BOTTLES TO RETAILERS (A, B, C )
ENROUTÈ AND COLLECTS THE SAME NUMBER OF EMPTY BOTTLES FROM THEM FOR DELIVERY TO THE
FACTORY.

NO EXTRA TRANSPORTATION COSTS ARE INVOLVED IN THE PROCESS AS THE SAME DELIVERY VAN
ORIGINATES AND TERMINATES ITS JOURNEY AT THE FACTORY WHERE THESE REUSABLE BOTTLES ARE
REFILLED FOR RE-DELIVERY TO CUSTOMERS.

THE ARRANGEMENT IS DONE THROUGH A HUB AND SPOKE DISTRIBUTION SYSTEM.

 3. PRODUCTS RECALL THIS IS AN EMERGENCY SITUATION WHEREIN THE PRODUCTS
DISTRIBUTED IN THE MARKET ARE CALLED BACK TO THE FACTORY BECAUSE OF ANY OF THE FOLLOWING
REASONS:

6. PRODUCT NOT GIVING THE GUARANTEED PERFORMANCE

7. QUALITY COMPLAINTS FROM MANY CUSTOMERS

8. DEFECTIVE PRODUCTS CAUSING HARM TO HUMAN LIFE

9. PRODUCTS BEYOND EXPIRY DATE

10. PRODUCTS WITH DEFECTIVE DESIGN

11. INCOMPLETE PRODUCT

12. VIOLATION OF GOVERNMENT REGULATIONS

13. ETHICAL CONSIDERATIONS

14. SAVE THE COMPANY IMAGE

PRODUCT RECALL PUTS A HUGE FINANCIAL BURDEN ON THE COMPANY BUT IN THE COMPETITIVE
SCENARIO THE COMPANIES CONSIDER “RE-CALL” AS AN OPPORTUNITY TO INCREASE CUSTOMER
SATISFACTION.

4. RECYCLING AND WASTE DISPOSAL

LEFTOVER MATERIALS, USED PRODUCTS AND WRAPPER / PACKAGES WASTES ARE CAUSING
ENVIRONMENTAL POLLUTION & CREATING PROBLEMS FOR DISPOSAL.
 IN MANY COUNTRIES,GOVERNMENTS ARE DEVISING REGULATIONS TO MAKE
MANUFACTURERS RESPONSIBLE FOR MINIMISING WASTE BY WAY OF RECYCLING PRODUCTS.

RECYCLING PROCESS

• COLLECTING WASTE MATERIAL & DELIVERING THEM TO ENTITY RESPONSIBLE FOR RECYCLING

• PROCESSING RECYCLABLES TO CREATE SECONDARY INPUTS

• USING SECONDARY MATERIALS FOR MANUFACTURING NEW PRODUCTS

• RETURNING THE PRODUCTS TO THE MANUFACTURER FOR RECOVERING THE INPUTS FOR RE-
USE

5. RE-MANUTACTURING
MANUFACTURERS IN DEVELOPED COUNTRIES ARE PUTTING IN PRACTICE A NEW CONCEPT OF
RE-MANUFACTURING.

DURING THE USAGE OF THE PRODUCT IT UNDERGOES WEAR & TEAR.

WORN OUT PARTS ARE REPLACED WITH NEW ONES AND THE PERFORMANCE OF THE PRODUCT
IS UPGRADED TO THE LEVEL OF A NEW ONE.

SIMILARLY, EQUIPMENT SOLD CAN BE CHECKED AFTER USE TO THE REMANUFACTURING

PROCESS AND BE BROUGHT BACK TO THE REMANUFACTURING UNIT.

THE INVESTMENT IN REMANUFACTURING & RELATED REVERSE LOGISTICS SUPPLY CHAIN CAN
BE JUSTIFIED ON THE BASIS OF ECONOMIES OF SCALE.

Steps Involved in Purchasing Cycle of Materials

Step # 1. Receiving and analysing purchasing requisition:
Purchase requisitions start with the department or person who will be the ultimate user. In the
material requirements planning environment, the planner releases a planned order authorising the
purchasing department to go ahead and process a purchase order.

The purchase requisition contains, at least, the following information:

a. Identity of originator, signed approval, and account to which cost is assigned.

b. Material specification.
c. Quantity and unit of measure.

d. Required delivery date and place.

e. Any other supplementary information required.

Step # 2. Selecting suppliers:

Identifying and selecting suppliers are important responsibilities of the purchasing department.
For routine items or those that have not been purchased in the past, a list of approved suppliers is
kept. If the item has not been purchased before or there is no acceptable supplier on file, a search
must be made.

If the order is of small value or for standard items, a supplier can probably be found in a
catalogue, trade journal, or directory.

Step # 3. Requesting quotations:

For major items, it is usually desirable to issue a request for quotation. This is a written inquiry
that is sent to many suppliers to ensure that competitive and reliable quotations are received. It is
not a sales order. After the suppliers have completed the quotations and returned it to the buyer,
the quotations are analysed for price, compliance to specification, terms and conditions of sale,
delivery, and payment terms.

For items where specifications can be accurately written, the choice is probably made on price,
delivery, and terms of sale. For items where specifications cannot be accurately written, the
items quoted will vary. The quotations must be evaluated for technical factors and price. Usually
both the issuing and purchasing departments are involved in the decision.

Step # 4. Determining the right price:

This is the responsibility of the purchasing department and is closely tied to the selection of
suppliers. The purchasing department is also responsible for price negotiation and will try to
obtain the best price from the supplier.
Step # 5. Issuing a purchasing order:
A purchase order is a legal offer to purchase. Once accepted by the supplier, it becomes legal
contract for delivery of the goods according to the terms and conditions specified in the purchase
agreement. The purchase order is prepared from the purchase requisition or the quotations and
from any other additional information needed.

A copy is sent to the supplier; copies are retained by purchasing and are also sent to other
departments such as accounting, the originating department, and receiving.

Step # 6. Following-up and delivery:

The supplier is responsible for delivering the items ordered on time. The purchasing department
is responsible for ensuring that suppliers do deliver on time. If there is doubt that delivery dates
can be met, purchasing must find out the problem in time and take corrective action.

This might involve expediting transportation, alternate sources of supply, working with the
supplier to solve its problems, or rescheduling production.

The purchasing department is also responsible for working with the supplier on any changes in
delivery requirements. Demand for items changes with time, and it may be necessary to expedite
certain items or push delivery back on some others. The buyer must keep the supplier informed
of the true requirements so that the supplier is able to provide what is wanted and when.

Step # 7. Receiving and accepting goods:

When the goods are received, the receiving department inspects the goods to ensure that correct
ones have been sent, are in the right quantity, and the bill of lading supplied by the carrier. The
receiving department then accepts the goods and writes up a receiving report noting any
variance. If further inspection is required, such as by quality control, the goods are sent to quality
control or held there for inspection.

If the goods are received damaged, the receiving department will advise the purchasing
department and hold the goods for further action. Provided the goods are in order and require no
further inspection, they will be sent to the originating department or to inventory.
A copy of the receiving report is then sent to the purchasing department noting any variance or
discrepancy from the purchase order. If the order is considered complete in all respects, the
receiving department closes out its copy of the purchase order and advises the purchasing
department accordingly.

If it is not, the purchase order is held open awaiting completion. If the goods have also been
inspected by the quality control department, they, too, will advise the purchasing department
whether the goods have been accepted or not.

8. Approving supplier’s invoice for payment:

When the supplier’s invoice is received, there are three pieces of information that should agree –
the purchase order, the receiving report, and the invoice. The items and the quantities should be
the same on all; the prices, and extensions to prices, should be the same on the purchase order
and the invoice.

All discounts and terms of the original purchase order must be checked against the invoice. It is
the job of the purchasing department to verify these and to resolve any difference. Once
approved, the invoice is sent to accounts payable for payment.

WHAT IS SUPPLIER RELATIONSHIP MANAGEMENT?

SRM is infact a type of relationship management, which affects all areas of the supply chain and
has a dramatic impact on supply chain performance. One of the most fundamental yet more
challenging requirements for supply chain integration is changing the nature of traditional
relationships between suppliers and customers in the supply chain. Below video explain supply
chain relationships and supplier relationship management in more details:

Supplier relationship management, also known as SRM, is a systematic approach to

assess suppliers’ contributions to your business. It helps you determine which suppliers are
providing the best influence on your success and ensures they are performing well. Supply chain
management uses SRM in procurement, operations, and project management.
SRM helps to foster positive relationships with your suppliers and helps guide the activities you
should engage in with each supplier. It works much the same way as customer relationship
management, or CRM, does on the front-end, dealing directly with customers.

The main goal of SRM is to improve business processes between you and your suppliers. By
creating a streamlined approach, you improve efficiency for both your business and your
suppliers. Though the approach to SRM can vary from one organization to the next, the main
focus is on developing a mutually beneficial relationship with all of your suppliers, especially
those that are considered strategic partnerships for your brand.

supplier segmentation

The aim of segmentation, the fourth facet of Supplier Relationship Management (SRM), is to
divide your supply base into discrete groups according to their importance. This is done through
the application of segmentation criteria, applied on a supplier-by-supplier basis.

To do this you ideally need a cross-functional workshop which involves carefully selected
participants, ideally between five and seven, who take part in facilitated discussions and debates.

Once the segmentation process is complete you then need to determine the interventions required
for each group. It may sound straightforward but one size definitely does not fit all and
interventions can take many forms.

While the segmentation process determines who is important, it’s the outputs from segmentation,
and specifically the basis upon which a supplier has been deemed important, that determine the
degree and nature of intervention required.

The SCOR Model for Supply Chain Strategic Decisions

The supply chain operations reference model (SCOR) is a management tool used to address,
improve, and communicate supply chain management decisions within a company and with
suppliers and customers of a company (1). The model describes the business processes required
to satisfy a customer’s demands. It also helps to explain the processes along the entire supply
chain and provides a basis for how to improve those processes.

The SCOR model was developed by the supply chain council with the assistance of 70 of the
world’s leading manufacturing companies. It has been described as the “most promising model
for supply chain strategic decision making (2).” The model integrates business concepts of
process re-engineering, benchmarking, and measurement into its framework (2). This framework
focuses on five areas of the supply chain: plan, source, make, deliver, and return. These areas
repeat again and again along the supply chain. The supply chain council says this process spans
from “the supplier’s supplier to the customer’s customer (3).”

Plan
Demand and supply planning and management are included in this first step. Elements include
balancing resources with requirements and determining communication along the entire chain.
The plan also includes determining business rules to improve and measure supply chain
efficiency. These business rules span inventory, transportation, assets, and regulatory
compliance, among others. The plan also aligns the supply chain plan with the financial plan of
the company (3).

Source
This step describes sourcing infrastructure and material acquisition. It describes how to manage
inventory, the supplier network, supplier agreements, and supplier performance. It discusses how
to handle supplier payments and when to receive, verify, and transfer product (3).

Make
Manufacturing and production are the emphasis of this step. Is the manufacturing process make-
to-order, make-to-stock, or engineer-to-order? The make step includes, production activities,
packaging, staging product, and releasing. It also includes managing the production network,
equipment and facilities, and transportation (3).

Deliver
Delivery includes order management, warehousing, and transportation. It also includes receiving
orders from customers and invoicing them once product has been received. This step involves
management of finished inventories, assets, transportation, product life cycles, and importing and
exporting requirements (3).

Return
Companies must be prepared to handle the return of containers, packaging, or defective product.
The return involves the management of business rules, return inventory, assets, transportation,
and regulatory requirements (3).