In way it can be said that supply chain facilitates the entire operation of the business organisations like Emerson. A view of supply chain is displayed in below diagram.
Figure 1: Various elements of supply chain management.
Based on case study of Emerson, it can be clearly understood that there are multiple business processes which are supported by supply chain management. These business processes are:
In example of Emerson, it is clearly mentioned that how complex is its overall SCM environment. Irrespective of the fact that every organisation wants to have a sorted out supply chain structure, it is however extremely difficult to achieve this in case like Emerson, where its operations is spread across various countries. In such scenarios, the over view of SCM is somewhat like what has been displayed in below diagram
Figure 2: Perception of supply chain
Above displayed diagram represents the fact that every organisation wants to have a well sorted out linear SCM, however in reality, majority of the organisations have to deal with a highly complex environment of supply chain (Kovács & Paganelli, 2003, pp.165-183). With emergence of SCM information system there has been rapid advancement in the way supply chain is being managed. Entities present in supply chain are managed properly, and there is better visibility related to flow of information. In context to Emerson case, following are the potential advantages and disadvantages of SCM information system:
Implementation of SCM information system for Emerson will be huge, especially in a situation where there are different divisions coordinating with different suppliers. SCM information system will provide a single platform on which data between divisions and suppliers can be exchanged through a common protocol such as EDI (Electronic data interchange). A common platform like SCM information system will help suppliers as well Emerson to consolidate all the supply chain processes through a common gateway, which will reduce inefficiency in the supply chain, and will help both supplier as well as Emerson management to save capital on various activities related to SCM (Williamson et al, 2004, pp.375-385).
(2) SCM information system has been playing a major role in improving the existing methods of supply chain management. Today there are several technologies and devices which are used with SCM information systems to facilitate the management of supply chain. Some of the technologies in this regard are as follows:
(3) SCM information systems are cost intensive, and high level of planning is required before the actual implementation of the system takes place. The implementation approach at times decides the success or failure of the system (Li & Lin, 2006, pp. 1641-1656). There are three different approaches which can be used:
Enterprise-wide full installation: Under this approach, the SCM information system is implemented across the enterprise in one go. Which means there are no phases of roll-out. This approach can be beneficial for an organisation which is small in size and has very restricted presence geographically.
Advantages of this approach are:
Disadvantages of this approach are:
Key-process installation: As the name suggest, this implementation approach for the SCM information system focused on rolling out the system for key processes only. Hence, under this strategy, organisation first identifies the key processes of its supply chain which it wants to deal with first. Once the processes are identified, they are then mapped with the system. Based on initial implementation, the overall outcome is analysed and based on the positive or negative outcome, future strategy for implementation is decided (Yu et al, 2010).
Advantages of this approach are:
Disadvantages of this approach are:
Based on above two approaches, it can be said that for Emerson, Key process approach will be suitable. It should first identify the key processes such as purchasing, logistics etc. and should accordingly implement the SCM information system to manage these key processes. Based on the outcomes, Emerson can accordingly include new processes in future implementation.
It is important to understand that there are multiple entities involved in a supply chain. For example, a supplier has to supply the material which is required by the buyer. Once the purchase order is generated, it has to be then fulfilled by the supplier. In order to fulfil the order, supplier has to ship his the material to the buyer’s premise. There can be multiple ways through which materials can be shipped, however whatever mode is used, and each mode of shipping runs on fossil fuel, which means its consumption will result into carbon emission (Holmqvist & Stefansson, 2006).
For companies like Emerson or any other global organisation which has to handle with thousands of suppliers day in and day out, in such cases, at times it might happen that same supplier might have to fulfil the order for two different purchase orders for same company. In traditional scenario when there was no SCM information system, such orders has to be fulfilled individually, which meant, that even if the material being sourced was coming from same supplier, organisations didn’t have view to control and consolidate such supplies into a single one, which resulted into increase of shipping procedure, further increasing the carbon emission.
SCM Information system has played significant role in reduction of the carbon emission. This can be understood by example of Emerson itself. Through its SCM information system it has been able to consolidate all its orders for a common supplier. Hence for whichever supplier the order is raised, it automatically get directed towards the supplier and accordingly supplier combines multiple orders received from the SCM information system into a single order and ships it backs to the organisation. Similarly, SCM information system has ensured that an optimum level of inventory is maintained, without increasing the inventory just because of anticipation. SCM information provides accurate level of information related to inventory due to which companies like Emerson raises orders only when it is required, further helping in the reduction of operational cost for the business as well as the suppliers.
Decision making is also an important aspect of the SCM information system. There are multiple situations where decision making is done. For example, decision related to replenishment of inventory can be taken only when there is clear view of current inventory. SCM information systems provide an accurate view of inventory based on which decision are made.
However, at times, solely depending decision making on the information system can backfire as well. For example, an SCM information system might be programmed to raise a purchase order if the level of inventor goes beyond a specific level. At times, supply and demand might impact the production, resulting into high or less consumption of inventory. In such case, organisation might have to make manual intervention to track the inventory and raise the purchase order as per the situation.
Bose, I., Pal, R., & Ye, A. 2008. ERP and SCM systems integration: The case of a valve manufacturer in China. Information & Management, 45(4), 233-241.
EDI, L. D. I. 2005. Integrating EDI with an E-SCM system using EAI technology.
Holmqvist, M., & Stefansson, G. 2006. Mobile RFID—a case from volvo on innovation in SCM. In System Sciences, 2006. HICSS'06. Proceedings of the 39th Annual Hawaii International Conference on (Vol. 6, pp. 141a-141a). IEEE.
Hsu, L. L. 2005. SCM system effects on performance for interaction between suppliers and buyers. Industrial Management & Data Systems, 105(7), 857-875.
Kovács, G. L., & Paganelli, P. 2003. A planning and management infrastructure for large, complex, distributed projects—beyond ERP and SCM. Computers in Industry, 51(2), 165-183.
Lee, T. W., Park, N. K., & Lee, D. W. 2003. A simulation study for the logistics planning of a container terminal in view of SCM. Maritime Policy & Management, 30(3), 243-254.
Li, S., & Lin, B. 2006. Accessing information sharing and information quality in supply chain management. Decision support systems, 42(3), 1641-1656.
Tarokh, M. J., & Soroor, J. 2006. Supply chain management information systems critical failure factors. In Service Operations and Logistics, and Informatics, 2006. SOLI'06. IEEE International Conference on (pp. 425-431). IEEE.
Williamson, E. A., Harrison, D. K., & Jordan, M. 2004. Information systems development within supply chain management. International Journal of Information Management, 24(5), 375-385.
Yu, M. M., Ting, S. C., & Chen, M. C. 2010. Evaluating the cross-efficiency of information sharing in supply chains. Expert Systems with Applications, 37(4), 2891-2897.
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