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Supplying value to the consumer, thatis, goods and services, is the essence ofbusiness. A supply chain is a networkof organizations and their associatedactivities that work together, usuallyin a sequential manner, to producevalue for the consumer. Customer-facing firms at the retail level,

whether large department stores, automobile dealer-ships, or fast-food franchises, are

only the tip of the iceberg.Behind them exist entire net-

works of manufacturers anddistributors, transportation

and logistics firms, banks,insurance companies, bro-

kers, warehouses and freight-forwarders, all directly or indirectly

attempting to make sure the right goods and servicesare available at the right price, where and when thecustomers want them.

Having delivered the goods or services, the chaindoes not terminate. At the front end, through deliv-ery, installation, customer education, help desks,maintenance, and repair, the goods or services aremade useful to the customer. At the end of the prod-uct life, reverse logistics ensures that used and dis-carded products are disassembled, brought back, andwhere possible, recycled and sent back into the supplynetwork. The scope of the supply chain, thus, extendsfrom “dirt to dirt,” from the upstream sources of sup-ply, down to the point of consumption, and finallyretirement and recycling.

Conventional strategic thinking has focused onindividual firms as the competitive unit in any indus-try. For example, supermarkets compete againstsupermarkets, automobile dealers compete againstautomobile dealers, and buggy whip manufacturerscompete against other buggy whip manufacturers. In

these scenarios, enterprise-focused systems such asenterprise resource planning (ERP) systems, executiveinformation systems, and decision support systems,become key to achieving cost efficiencies and organi-zational effectiveness through intraorganizationalprocess integration [3]. Moreover, from an enterprise-centric perspective, applications such as customerrelationship management systems (CRM) and sup-plier management systems are considered extensionsof the enterprise systems, or parts of the extendedenterprise resource planning (EERP) systems.

While firms still continue to compete individually,the example of the buggy whip manufacturer clearlyshows that when an entire supply chain of buggies,buggy whips, stables, and roadside carriage-hostelriesloses its competitive battle against the supply chainarranged around the automobile, the buggy whipmanufacturer, however efficient in producing prod-ucts of fine quality, inevitably rides into oblivion.Consequently, the competitive success of a firm is nolonger a function of its individual efforts—it depends,to a great extent, on how well the entire supply chain,as compared to competing supply chains, is able todeliver value to the ultimate consumers [1].

Supply chains have existed ever since business hasbeen organized to bring products and services to cus-tomers. The silk route between China, India, andWest Asia; the flourishing sea-trade links betweenancient Indochina and South India; and the Englishand the Dutch East India companies are but a fewexamples of global supply chains. The notion ofcompetitive advantage of supply chains, however,and consequently supply chain management (SCM)is a relatively recent idea1 in management literature[1]. Three factors have contributed to the necessity

1It is not entirely accurate to say that management of supply chains is a recent phe-nomenon. Standard Oil’s ownership and organization of petroleum delivery from theoil wells to the gasoline stations is an example of an attempt to manage the entire sup-ply chain for petroleum for automobiles.

TECHNOLOGY FORSUPPORTING SUPPLY

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for managing the supply chain. On the demand side,an increasingly cost- and value-conscious customer isdemanding more, varied, often individualized valuefrom the supply chain. On the supply side, the avail-ability of modern information and communicationtechnologies (ICT) makes it possible to obtain anoverview of the entire supply chain and to redesignand manage it in order to meet this demand. Finally,on both the demand and supply side,the emergence of global markets andglobal sourcing have stretched thesesupply chains over intercontinental dis-tances. The accumulated demand vari-ety, uncertainty, costs, distances, andtime lags on a global scale make it evenmore imperative that these long chains be managedefficiently and effectively. Consequently the focusshifted from the competitive advantage of firms tocompetitive advantages of entire supply chains.

Competitive advantage arises from a combinationof cost advantage and value advantage [1]. Costadvantage is a function of the overall productivity ofthe supply chain. The supply chain that deliversproduct or service value at less cost compared to itscompeting chains will have a cost advantage. Thenotion of value-advantage and customer value hasevolved over time. While at one time Ford could getaway with delivering any car as long as it was blackand a GM customer had to wait for delivery of a car,now customers demand an individualized, well-designed and well-manufactured, reliable automo-bile, delivered at a location near them, almost rightafter they make their buying decision.2 Moreover,

customer tastes and demands shift regularly. Themodern supply chain has to respond to a greateruncertainty of demand and variety, higher productquality, and much shorter response times or cycletimes at the least possible cost. Innovative use ofICT can dramatically change the cost and valueequation for a supply chain.

Early efforts to support SCM through ICT havecentered around the management ofdemand uncertainty through inventorydemand forecasting and reduction ofinventory and transportation costsand/or cycle times through optimizationtechniques. Generally described underthe umbrella term “advanced planning

systems” (APS), these applications provide decisionsupport by using operational data to analyze andoptimize the flows through the supply chain. Tech-niques deployed in APS include forecasting and timeseries analysis, optimization techniques (linear pro-gramming, mixed integer programming, location-allocation techniques, and genetic and rule-basedalgorithms), and scenario planning (what-if analysisand simulations). Increased computing power hasenabled the use of these sophisticated optimizationalgorithms in complex real-life supply chain situa-tions. APS systems represent a quantitative model-driven perspective on the use of information andcommunication technology in supporting supplychain management.

Standard software packages based upon thesemodel-based algorithms began appearing in themarket at the beginning of the last decade. At pre-sent, APS packages such as i2, manugistics, CAPSlogistics, and SCM components of ERP systemssuch as SAP and Baan are making major marketinroads. A recent survey of APS packages [2]describes the current state of the art and futuredirections for APS systems; the figure appearing here

KULDEEP KUMAR,GUEST EDITOR

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2The notion of customer value and thus the automobile-buying behavior has evolvedover time and may also differ from culture to culture. For example, an average Euro-pean automobile buyer, having placed an order for an individualized automobile, iswilling to wait a few months for it to be built and delivered, an average North Amer-ican buyer not only insists of an automobile of his or her choice, he or she expectsdelivery within a day or two of the buying decision. Consequently, the current down-stream automobile supply chains in Europe and their associated information systemsare structured quite differently than their North American counterparts.

CHAIN MANAGEMENT

summarizes the functional scope of the current gen-eration of advanced planning systems.

Emerging Requirements for SupportingSupply Chains: Tales from the Field Advanced planning systems rely on historicaldemand data to forecast and manage future demand.However, in the currently emerging scenarios withconstant product innovations, short product cycles,highly volatile global demand, and product and ser-vice customization based on a variety of regularlychanging and evolving local customer preferences,there is minimal demand history to be utilized.

Moreover, typical supply chain optimization worksbest in a fairly static supply chain with either a rela-tively stable set of supply chain partners or a verti-cally integrated supply chain. First, a static supplychain has a stable chain structure that can be mod-eled and optimized. Next, implementing and/orenforcing optimization decisions requires a centralauthority that brings different members of the supplychain in line with the decision. In a stable or verti-cally integrated scenario, it is possible for a “lord ofthe chain” or supply chain coordinator to emerge.However, in the current environment of dynamicdemand-driven supply networks temporary supplychains regularly emerge, operate for the lifespan ofthe market opportunity, and then dissolve again. Insuch dynamic situations the coordination of partnersand the speed of execution is usually more importantthan the optimization of the supply chain.

Additionally, the organization and design of thesupply chain has traditionally been a product of his-torical accident, constrained by geographical prox-imity and availability of supply chain actors orpartners, existing relationships and power structures,limited information processing ability, and relativelylimited communication and coordination paths [1].

On the other hand, the advent of modern ICTmakes it possible to search for and contract withpartners worldwide, to switch partners according tothe needs defined by the market opportunity [4],and to develop and implement a variety of flexiblesupply chain design options that can create signifi-cant cost and value advantages [1]. Thus, in contrastto the model-based ICT support for SCM inherentin advanced planning systems, emerging businessphenomenon—experiences in the field—are likelyto drive the next generation of ICT-based supplychain applications.

This special section examines the emergingrole of ICT in the management of supply chains. Itdoes so by reporting upon some recent experiencesfrom the field—tales illustrating the changingrequirements of SCM and the need for a new levelof technology for support.

The first contribution to the section comes frommilitary logistics. This is not surprising. Often keywritings on business strategy refer back to classicworks on military strategy by Carl von Clausewitz[6] and Sun Tzu [5]. Therefore it is fitting a specialsection on ICT strategy for supply chains starts witha discussion of the art of military logistics. Simon, inhis article, identifies the war logistics supply chain asa dynamic3 supply chain where the customers’ (inthis case, the frontline or battlefield unit’s) needs andrequirements together with resources needed to sat-isfy these requirements continuously change andshift. In this case demand can be forecast, onlyimperfectly, and rapid deployment rather than opti-mization is a key objective. Therefore, ICT is neededto make consumption and demand patterns visiblein real time just as they occur in the operationsarena. Moreover, availability, execution, status,track, and trace capabilities are more important forrapid deployment than optimization.

Despite widely differing objectives, from deliver-ing massed firepower to delivering customer delight,all supply chains ultimately rely on collaborationbetween human beings. Collaboration, in turn, is afunction of articulating expectations, making mutualcommitments, delivering on the commitments, andtracking their delivery. Of such commitment-articu-lation and commitment-tracking processes, trust isborn. Welty and Becerra-Fernandez come to SCM

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3In my search for dynamic supply chains, I found two examples—one of war, anotherof disaster relief that characterize the ultimate level of dynamism. In disaster relief espe-cially, the location of disaster and the need for disaster relief supplies and personnel iscompletely unpredictable, the sources of the relief supplies and personnel vary andchange minute-by-minute, and the logistics paths shift with the availability of carriersand supplies. Based upon this insight, a major global logistics service provider is cur-rently developing plans for supply chain coordination in major international disasterrelief agencies.

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Functional domains of APSsystems (from [2]).

from a commitment and trust perspective. Basedupon the work of Winograd and Flores, they outlinea theory of commitment and trust-building, describean ICT-based tool for managing supply chain com-mitment, and illustrate its use in the context of agraphics and publishing supply chain.

Earlier in this introduction, I characterized thescope of SCM as extending from “dirt to dirt,” start-ing from the upstream sources of supply, down tothe point of consumption, and finally retirementand recycling. In an environmentally sensitiveworld, where we are constantly in the danger ofdrowning in our own discarded products, while, atthe same time, running out of upstream resources, itis imperative we collect, reuse, and recycle productsthat have outlived their useful lives.

The article by van Hillegersberg et al. extends thenotion of the SCM to include reverse logistics.Based on theory developed in the area of operationsresearch and management sciences, they first presentextensions to ERP systems and advanced planningsystems needed to accommodate reverse logistics.Next they examine opportunities e-business bringsto managing return flows and present a case studyillustrating the use of reverse logistics and the effectof return flows on ICT support for the supply chain.

Earlier this year I moderated a forum of seniorexecutives, with participants representing a globalairline; an airport cargo-handling company withpresence at airports in Europe, Asia, and NorthAmerica; a global freight forwarder; a global truck-ing and logistics service provider company; a leadingprovider of logistics and supply chain software com-pany; and a global IT consulting firm. As the partic-ipants presented their visions and plans fore-business related to the air cargo supply chain, itquickly became obvious that an overall ICT plat-form linking these separate efforts is needed. How-ever, none of the participants believed they were ableto initiate and develop such an integrating platformon their own. Both horizontal cooperation betweenvarious competing players in an industry (such asairlines or trucking), and vertical cooperation acrossthe various types of players would be needed tobring about and operate such an ICT-based cooper-ative platform. The article by Tiwari andRamachandran reports on the some of the earlyresults in this area.

Finally, while the concept of SCM originallyevolved in the developed world, it faces complexchallenges in the developing economies. Further-more, given the enormous scale and scope of largedeveloping economies such as India and China,ICT-based SCM has an even greater potential of

contributing to the cost-value equation in theseregions. The article by Krishan describes the uniquemarket and infrastructure challenges faced by con-sumer-product supply chains in India and outlinesICT-based solutions currently being developed toaddress these challenges.

There are several lessons to be gained from thesetales from the field. First, in the constantly evolving,complex world of local and global supply chainsappropriate use of ICT is absolutely vital to achiev-ing value and cost advantages in the supply chain.Early efforts in using ICT for competitive advantagehave focused on the use of model-driven, advancedplanning systems to reduce demand-uncertainty andoptimize flows. However, as these tales from thefield show, these efforts, while a step in the rightdirection, are not enough. Supply chain manage-ment in a dynamic, demand-driven environmentrequires ICT-enabled connectivity, cooperation, andcoordination between players within an industry(horizontal coordination) and across industry andfirms (vertical coordination). While the need forsuch coordination is becoming apparent, efforts tocreate ICT-based infrastructures to enact such coor-dination are currently in their beginning stages. Asthe concept of SCM evolves, systems that integratewhole dynamic supply chains on the fly and provideinstant visibility across the supply chain are likely toemerge. The supply chains successful in creating andusing such systems are more likely to achieve com-petitive advantage over the ones that do not.

References1. Christiaanse, E. and Kumar, K. ICT-enabled coordination of dynamic

supply webs. International Journal of Physical Distribution and LogisticsManagement 30, 3/4 (2000).

2. Diks, E., A. van Dongen, P. Tielemans, and M. Verhoeven. SupplyChain Management Software. Cap Gemini Ernst and Young, 2000.

3. Kumar, K. and van Hillegersberg, J. ERP experiences and evolution.Commun. ACM 43, 4 (Apr. 2000), 22–26.

4. Moshowitz, A. Virtual organization. Commun. ACM 40, 9 (Sept. 1997),30–37

5. Tzu, S. The Art of War. S. Griffith, Trans. Oxford University Press, 1988. 6. von Clausewitz, C. On War. M.C. Howard and P. Paret, Eds. Princeton

University Press, 1984.

Kuldeep Kumar (kumark@fiu.edu) is the Ryder Eminent Scholarand Professor of Information Systems at the College of Business,Florida International University and the part-time Chair in Information Management at the Rotterdam School of Management,Erasmus University, The Netherlands.

© 2001 ACM 0002-0782/01/0600 $5.00

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