IT WOES IN SUPPLY CHAIN MANAGEMENT

What is supply chain management? Most of us have come across the following two words very frequently – Supply chain management (SCM) & Operations management (OM). Do they mean the same thing or are they totally different from one another. These are some of the questions that need to be answered before we find out the ‘IT Woes in Supply chain management’. While there are many definitions of Supply chain management, my favourite definition is that of Cooper & Ellram - “SCM is an integrative philosophy to manage the total flow in the distribution channel from the supplier to the ultimate user”. Operations Management is responsible for supplying the products or services of the organization and managing the transformation process that converts inputs into outputs. On the other hand, SCM is a melting pot of broad based functions which encompass all of the business and operational processes involved in Logistics (transportation), Operations Management, Materials distribution management, marketing, as well as purchasing and information technology (IT). Thus, OM encapsulates SCM.

Over the years, SCM as a concept has evolved at a rapid pace simply because it plays such a significant role in the firm's performance. Earlier it was the manufacturer who decided the pace at which products were manufactured and distributed. Now, the customers demand various styles, designs, features in their products within a shorter time period and with better quality. Earlier quality of the products used to be a critical factor but now meeting customer’s specific demands for product delivery has also emerged as the critical opportunity for competitive advantage. Overall demands for increasing transparency of corporate activities, sustainability of business, corporate social responsibility and corporate governance has led to large number of researches on topics - ‘Sustainable Supply Chain Management’ and ‘Green Supply Chain’. 

In the current competitive scenario SCM assumes a significant importance as companies are challenged with finding ways to meet ever-rising customer expectations at a manageable cost. To do so, businesses must search out which parts of their supply-chain process are not so competitive, understand customer needs which are not being met, establish improvement of goals, and rapidly implement these necessary improvements.

Reverse Logistics in Indian Automobile Industry

Reverse Logistics is a process in which a product moves in reverse through the supply chain network. It may be used for the purpose of recapturing value of a final product or for even proper disposal. It may also be termed – service, as the process of planning, implementing and controlling the efficient and cost effective transfer of raw materials, in-process inventory, finished products and related information, from consumption to the point of origin, for the purpose of recapturing value of proper disposal.

While the primary sectors involved in making use of this process may be classified as the Pharmaceutical Sector, Retail sector, Automobile sector and the Electronics sector, we are mainly about to focus all our attention to the practices of ‘Reverse Logistics’ in the Indian Automobile Industry.

To truly know why the whole idea of ‘Reverse Logistics’ assumes significance when considered in terms of the Automobile Industry, first we need to think of the nature of the final product i.e. Automobiles or Vehicles as we call them. The parameter one needs to look at is the life cycle of the product and what happens to the final product once it reaches the end of its useful life. By its very nature, it’s difficult to predict the life cycle of the final product. This is because; it is highly susceptible to the nuances of the human subjectivities. But even if we are unable to predict the duration of the life cycle, we have definitely something figured out for us. What I am referring to is a common observation that even if the vehicle (Here we will be primarily focusing on the flagship product, an automobile) becomes defunct and is no more suitable for use, the same rule doesn’t apply to the metal (that is primarily Iron) that it has been made from. The Iron that has been used in the manufacturing of a vehicle stays in pretty much the same and reusable condition through a considerable amount of time unless exposed to exceptional climactic conditions.