Internet Technology has impacted our day to day life beyond imagination.

It has changed the way we

make purchase decisions, the process by which we compare products and finally buy the product. All this
has been enabled instantly by the click of a mouse, sitting in the comfortable environs of your home.
Lets take the case of e commerce on a B 2 C model. You have just logged into the DELL website,
compared the products and configurations. You go on to construct and build your own configuration
laptop, get the pricing and click to make online payment through your credit card and have completed a
purchase online.
Was this imaginable a few decades ago? No. Internet and E commerce have helped markets get closer to
the customer. Customer Decision making and sales process has been shortened. Financial payment and
delivery mechanism has been instantaneous in this case involving third party gateways making the
transaction possible with collaborative networking.
How does the above transaction impact Supply Chain? At the back end, the customer order has been
logged and a corresponding order has been placed on the nearest plant to assemble the required laptop
as per order. This in turn will trigger a bill of material to be triggered to the vendor managed inventory
warehouse to supply required parts.
Looking into the forward transaction, the laptop gets assembled, is dispatched to the forward stocking
warehouse of the freight forwarder or logistics partner from where it is customs cleared and exported to
the country of customer location or transported to the customer location if it is within the same country. In
case of import into another country, the freight forwarder completes import customs clearance, takes it to
his hub or warehouse to complete further leg of domestic transportation and delivery to the customer.
The entire exercise is completed within 7 days involving multiple vendors, plant, 3PL service Providers
with integrated logistics flow through activities (warehousing, shipment consolidation, labeling, packing &
transportation at various stages )besides involving airlines and customs agencies etc. The shipment is
continuously tracked and shipment status is visible to all over the internet. This has been made possible
with the various intern organizational systems operating Internet as platform, extranet, ERP, EDI, Emails
besides online web tools.
Internet enabled technologies have impacted supply chain in major way. Earlier on ERP systems
revolutionized business models and processes. These have further been impact with Internet
enabling of ERP applications coupled with other technologies and applications.
On procurement front, e commerce has give birth to E Auction, Online Bidding and Global RFQs being
floated with vendor evaluations being conducted through video conferring etc.
Further on, it has also enabled buyer and supplier to collaborate and implement lean inventory
management concepts and auto replenishments using models like VMI, JIT, Kanban, etc.
In a typical supply chain involving supply of raw materials and components to a manufacturing location,
three different systems of buyer, sellers and the 3PL service agency managing inventory talking to each
other on real time basis exchanging information, data and managing transactions. Buyer is able to initiate
an order, the 3PL is able to process the order, manage inventory and ship out and the supplier is able to

replenish the inventory in very short time. Visibility of transactions and inventory is available to all the
three parties involved.
In the case of Logistics, the freight forwarders system at the distribution center holding inventory is able to
interface with buyer system and initiate processes for documentation from buyer, shipment label
generation. The freight management department picks up details from warehousing system to further
process and generates shipping documents and file with customs to custom clear export shipment and
airlines to book the freight.
All documents are then uploaded on to a website from where the status of shipment can be tracked by the
buyer, seller and others. Advance shipments are downloaded at the point of destination by the freight
forwarding agent from the internet before shipment lands at destination. He files documents with customs
for inbound clearance on EDI. After clearance, the shipment is delivered to the customer via domestic
distribution network and delivery confirmation is uploaded into the website from where information is
picked up by buyer and the sales process is completed.
Internet has shortened the supply chain transaction time, exploded boundaries of operation across,
increased the amount of volume that the supply chain network can manage and finally has resulted in
bringing down cost of logistics as well as procurement and inventory holding costs besides reducing
manSupply Chain Management is a broad-based function that encompasses all business and operational
processes involved in but not limited to Procurement, Manufacturing, and Finished Goods Transportation,
warehousing & Distribution and Inventory Management.
In a globalized business scenario characterized by Geographically spread markets, raw material
procurement sources across the world and cheaper manufacturing and labor markets being available in
developing world, the business of meeting demand with supply is constantly changing and evolving.
Global business has been fuelled and enabled by the IT Technology which has redefined all
aspects of business today. All businesses today are run on ERP - Enterprise Resource Planning which
provides the organizations with tools to manage all the functions including procurement, production,
sales, and finance management in seamless and integrated manner.
These software systems like SAP, Oracle, People soft, etc., have taken over and enhanced the business
processes that were traditionally being managed manually.
Demand planning, Forecasting, Global procurement management are some of the enabling tools on
which the Global procurement strategies are built and managed. The availability of these sophisticated
systems has further enabled companies to implement good and cost effective manufacturing practices
like JIT, Kanban, VMI, etc.
Finished goods distribution, transportation, and inventory management, besides sales process is again
driven by the various ERP modules combined with additional specific applications as required.
ERP has enabled companies to manage their business processes in different markets and countries
under one common business process thus providing standardization and control.
The complex network of various processes, software platforms and applications and different software
tools used by various vendors and agents in the entire chain drive the supply chain of the companies.

E commerce has further redefined the way business is carried on. Online purchase has impacted the way
supply chains are organized and markets are driven. Customer behavior and preferences are changing
as online marketing is establishing a one to one contact with the customer and can offer a personalized
experience. The instant delivery of the information through internet elicits immediate response and action
from the customer. The sales lead time is rapidly decreasing. The demanding customer, therefore, needs
to be serviced immediately at the same speed.
The internet technology has further opened up the geographical boundaries for the companies. Any
person sitting in any corner of the globe can purchase a product online at the click of a button. The
companies have to be well equipped with the logistics and supply chain network to be able to service the
customer.
When in a global scenario, goods and services move through multiple chains involving very many agents
including transporters, forwarders, customs, distribution centers, distributors and lastly the retail outlets,
availability of data, documentation and information becomes the lifeline for the organization to be able to
take decisions and ensure seamless processes and control the supply chain.
IT is one of the most important enabler of the Supply chain in complex modern world of Global
Businesses.
power costs.

LOG OPERATIONS IN SCM

Logistics has aided and contributed to enabling global trade. Third Party Logistics Service Providers
both at global levels and local levels form major partners to manage and offer Supply Chain
services and the second major factor being the Internet and IT technology that helps manage
information and data ahead of or along with flow of materials and goods.
Supply Chain Consultants and professionals find it very essential to have knowledge of the operational
field and how things work on the ground. Theoretical models can be effectively deployed only when
realities on the ground are understood and adapted to.
Take an example of DELL which has successfully implemented its Supply Chain strategy built around the
concept of JIT manufacturing and Direct Marketing.
Dell has manufacturing facilities located in Austin-Texas, North Carolina, Miami, Florida that service US
Markets. European Markets are serviced from its plants in Ireland and Poland. Asia and other subcontinents are supported by its manufacturing facilities in Penang in Malaysia and Xiamen in China along
with the latest factory set up in Chennai in India. South America is serviced from its Eldora do plant while
the new plan in Brazil supports the African continent.
One can imagine the complexities involved in designing procurement systems. Dell does not buy raw
materials and components and maintains inventory. Dells vendors use third party service providers to set
up logistics parks and distribution warehouses close to Dells plants and deliver materials just in time to

the plant against an order for production that is triggers based on an order confirmed by the customer on
the internet.
Under procurement logistics, in this case, some logistics service providers play a major part in ensuring
smooth operations. Vendors are based out of Europe, Taiwan, China, Singapore, Hong Kong, Korea, and
Japan, etc.
Though the raw materials belong to the vendors until the time they are supplied to production shop floor,
the design, planning and selection of logistics service provider are initiated and managed by Dell. Dell has
appointed freight forwarders such as DHL, CEVA, Panalpina, UPS etc sector wise to pick up shipments
from vendor locations, transport the collected shipments by road and consolidate inventories of all
providers in the freight forwarders consolidation warehouses situated at the gateways in each country and
ship out cargo by ships to the port of destination or airfreight shipments to the plant locations after
completing exports and customs clearance formalities on behalf of vendors.
While the shipments are in transit, the freight forwarders electronically transfer shipment information and
documentations to their overseas offices or agents at the destination and keep Dell and vendors informed
of the status of shipments.
Freight forwarders at the destination ports file advance shipment documents with customs and on arrival
of cargo, complete customs formalities and custom cleared cargo is then transported to freight forwarders
warehouse or customs bonded warehouse or to another designated third party warehouse that houses all
inventories meant for Dell.
The third party service provider who manages the inventories in his warehouse receives the cargo,
unpacks the shipments from bulk skids to individual carton level and completes inbound formalities
including updating of inventories in its system and stocks the materials in designated rack locations. Both
vendors and Dell are continuously kept informed of the data regarding shipments and stocks. The
warehouse stocks inventory in the name of various vendors at SKU level. Most of the times these
warehouses are situated adjacent to the plant or at proximity. Upon receiving a production order from
Dell, as per Bill of Material received through DELL ERP system, items are picked up, loaded into the
supply cages and trays as per predetermined design and delivered to the plant after completing
documentation and system entries to remove inventory from its system held in vendors name, invoice
raised and physical delivery accompanied with documents completes the supply chain cycle of Raw
material supply.
The revenue recognition happens when the material is transferred out of the warehouse and its system
and invoiced to Dell.

REVERSE LOG
As Supply Chain Activities are evolving and partnering changes in business models, the focus and
activities are not restricted to the management of raw materials and finished goods from point of origin
from the vendors to plants and further on to the end customers. There is another extension to Supply
Chain Process called as Reverse Logistics.
Reverse Logistics as the name denotes, deals with the planning, process and flow of finished
goods inventory, packaging materials and parts of finished product back from end customer to

the product company as sales return or warranty return or unsold inventory with trading partners.
Reverse Logistics planning further re-captures value from these materials as much as possible by way of
re salvaging, repair, refurbishing, recycling etc.
Globally awareness about Hazardous waste generation and disposal is increasing and leading to
legislations being passed by the various countries. Europe has been the leader to implement legislation
about ensuring that the product companies take responsibility for reverse logistics of all product wastage
arising out of any supply chain activity. The European Union has passed bills on Waste Electrical and
Electronic Equipment and Restriction of Hazardous Substances. Green Logistics initiative has outlined
a detailed process for the suppliers and manufacturers to adapt color coding systems to identify
different kinds of waste reusable, recyclable, green waste, etc.. Packaging retrieval, salvaging and
scrapping process have been well developed with the entry of many small and medium sector companies
investing in setting up scrap salvaging activity as commercial ventures.
Awareness has further pushed companies to adopt standards and measures in ensuring recycling and ewaste in a bid to take responsibility towards minimizing environmental impacts and reducing scrap
besides ensuring complete recovery of waste materials.
Automotive After Market and Electronic Equipment and Computer Hardware industries have developed
successful Reverse logistics practices and have managed to integrate reverse logistics as a important
marketing strategy to project the companys social responsibility in the area of waste management as well
as to contribute to the developmental activities in society by donating funds arising out of scrap disposal
and recycling.
While many developing countries are yet to pass legislation concerning environmental safeguards,
recycling, e-waste disposal processes, the Multinational Organizations have already adapted processes
of reverse logistics and implemented them in all countries wherever they have operations.
Automotive after Market industry has developed the successful practice of producing refurbished parts
and recycled components that are sold through the spares markets. A lot of value has been unlocked from
the reusable parts of vehicles especially starters and alternators.
Re-engineering products with re-used material has yielded in the saving of tons of raw materials, besides
providing and generating employment to hundreds of people involved in setting up small outfits to
dismantle the parts. As per industry estimates, this activity has employed over 12000 in the US alone and
the reused auto parts make up for over 36 billion dollars as estimated by Auto Parts Re-Manufacturers
Association.
In the computer hardware and peripherals industry case study, HP makes for a good example. HP has
developed supply chain model of collecting the used cartridges and other consumables through e-bins
prominently displayed with the retailer outlets. The reverse logistics for this particular process is designed
to collect the waste locally from all e-bins, consolidate and ship out to regional centers that are located at
gateway ports in the country. Such consolidated waste is further forwarded to recycling plants identified
within the country to another nearby location overseas. Recycling plants manage to salvage metals and
other materials before using the plastic raw material as the raw material to manufacture some other items
such as bottles etc. It is reported that HP has allocated the funds generated out of such activity to sponsor
events directed at fulfillment of its social responsibility and community development projects.

Today taking responsibility to take back the packaging and products has been found not only to yield
scrap and salvage value but is increasingly being looked upon as corporate responsibility and part of
corporate governance and good practice adopted by responsible companies. No doubt this provides
value to marketing strategy too and improves stature business.