Supply chain management / SCM can be defined as the activities that include the procurement, storage, production and assembly of raw materials, stock control, distribution, order management and the delivery of the product to the end user and the information systems required for the monitoring and control of these activities.
Supply chain management / SCM
SCM is the integrated management of material, information and money flow that enables the customer to reach the right product at the right time, at the right place, at the right price, at the lowest possible cost for the entire supply chain. In other words, it is the creation of strategies and business models that will increase customer satisfaction by integrating the basic business processes within the chain.
In the literature, the SCM concept is defined by the APICS glossary as follows: The processes between the supplier and the company, which are among the first raw materials and the final consumption of the finished products are the internal and external functions of the value chain for the delivery of products and services to the customers.
The concept of SCM is the management approach that integrates each of the production and procurement processes from the raw material stage to the customer. SCM focuses on how companies achieve their processes, how they benefit from technology, increase their competitive advantage, and coordinate their production, logistics and material management functions.
When all elements in the value chain are integrated and work as a single unit, SCM improves the performance of companies. All these definitions constitute the following in the SCM Concept:
Effective purchasing and distribution functions,
More stringent monitoring and management of the chain,
Reduction of labor costs and reduction of waste rates,
Improving customer service quality and better monitoring of customer behavior,
Real-time stock and logistics information by the manufacturer, distributor and retailer at every stage of the chain to be shared,
Focus on long-term relationships between business partners,
Operational optimization processes in commercial organizations.
Supply Chain And Information Technologies In Logistics
Information Systems Technology has a great impact on the functioning of all services. The high storage capacity, speed and reliability of this technology have made it a different point. In addition to information and communication technologies in logistics and supply chain management, some new high technology products are also implemented. These are:
Barcode and RFID (Automatic Identification)
GPS (Global Positioning Systems) is (Location Finding)
WLAN, GSM, Bluetooth, (Wireless Communication)
Products based on all these new technologies are combined with classical systems to create effective use in supply chain management. Table 2.2 also shows a summary of these applications.
Table 2. Effective Technology and Applications in Supply Chain Management
|Customer Service Level-Stock Optimization|
|Automatic Identification and Locating (RFID, GPS)|
|Warehouse Management System (WMS)|
|Transportation Management System (TMS)|
|Enterprise Resource Planning (ERP)|
|Enterprise Database (DBMS)|
|Data Exchange (EDI, XML)|
|Travel Agent (Mobile Agent)|
These technologies in general:
Synchronization and traceability of all business plans,
Sensitive and fast decision-making throughout the chain to changing customer needs,
Keeping the stocks along the chain to a minimum, Shortening the conversion process,
To be able to perform effective cause-effect analysis,
They ensure continuous performance measurement and development.
Wireless technology, in its simplest sense, means that one or more devices communicate without physical connection. Wireless networks, as an alternative to wired communication, are a flexible communication system that exchanges information over the air using RF (Radio Frequency) technology.
Wireless networks serve as a carrier mechanism between devices and between conventional wired networks. Wireless networks are very diverse, but are usually divided into 4 groups according to the areas they cover:
Wireless Wide Area Networks – WWAN
Wireless Metropolitan Area Networks – WMAN
Wireless Local Area Networks – WLAN
Wireless Personal Area Networs – WPAN
Wireless communication offers users many benefits, such as portability, flexibility, increased productivity and reduced installation costs. Wireless local area networks enable users to move their laptops in offices without cables and without disconnecting the network. Less cable means more flexibility, increased productivity and reduced cabling fees.
However, risks are an integral part of wireless networks. Some of these risks are the same as those in wired networks, some of which are new. In wireless networks, the source of the risk is that the transmission medium is air. The entry of unauthorized users into the system and information causes system information to be corrupted, network bandwidth is reduced, and network performance is reduced.
Global Positioning Systems(GPS)
Around the world there are 24 GPS (Global Positioning Systems) satellites. There are receivers to collect microwave signals from these satellites. The Vehicle Tracking System is a high-tech product developed to track all kinds of mobile transport vehicles, objects and even people in real time via GPS satellites and GSM networks.
The system can provide the user with information on the position of the vehicle being tracked, as well as speed, route violation tracking, fuel quantity, door and alarm location, vehicle interior temperature, as well as many other information that may be needed on the vehicle or on the load or live. The vehicle to be monitored is equipped with a mobile data terminal arranged according to the need.
Users can follow information about the vehicle via internet or modem and telephone lines via computer or directly via mobile phones after the commissioning of the system, receive emergency warning messages, program the system on the vehicle, in case of emergencies or when necessary, immediately with vehicle driver or in the system can communicate with other related points by voice or short message.
Automatic Identification Systems(AIS)
Automatic identification systems (AIS) is the name given to various technologies that allow machines to recognize objects. Automatic identification can be matched with automatic data retention techniques, enabling the recognition of objects in logistic activities and transferring the acquired information about the recognized objects to the computer without the need for labor. The purpose of automatic identification systems is to increase efficiency, reduce data entry errors, and to ensure that existing workforce works for more value-added processes. Automatic identification systems used in logistics activities are barcode systems and RFID technology.
Electronic Data Interchange(EDI)
Effective knowledge sharing and standardization among logistics companies is essential. EDI (Electronic Data Interchange) is a system in which information is exchanged electronically between one computer and another using a communication package that has the ability to exchange and exchange information between organizations.
In EDI applications, data is transferred in a structured format.
Enterprise Resource Planning(ERP)
Enterprise Resource Planning (ERP) is the general name given to integrated management systems that enable the efficient use of resources such as labor, machinery and materials required for the production of goods and services in enterprises. In the 1960s, as computers became widespread in commercial enterprises, the first enterprise production management system and material requirement planning (MRP) software were introduced.
The first MRP software was developed by IBM. In the first stage, the system including material trees and stocks developed and developed in 1980s to include production activities directly related to production (purchasing, production planning and control, accounting, stock management, etc.) and production resource planning named MRP II (Manufacturing Resource Planning). In the 1990s, management systems became not only the production sector but also all the operating units of all sectors (telecommunications, retail, media, health, public, etc.) (after-sales service, maintenance, human resources, asset management, etc.) and corporate resource planning was named ERP.
At the beginning of the 2000s, ERP systems, which integrate with non-business elements using the internet and call center channels, expanded to the ERP II concept by including the concepts of customer relationship management (CRM), supply chain management (SCM) and business intelligence (BI). Reliable, healthy and fast information sharing with the integration of a large number of departments with a single platform and database in an integrated structure is very important for the success of your operations within the organization. This system integrity will increase the quality of services and products by helping to ensure the efficiency of the enterprise, improving the business performance, and making decisions quickly and accurately with the healthy data exchange between departments.
Database Management Systems
Database Management System (DBMS) is a software system consisting of multiple programs that perform various complex operations such as creating a new database, editing, developing and maintaining the database.
DBMS is software that allows data centering, efficient use, and access by application programs. DBMS acts as an interface between application programs and physical data. When an application program wants to access data; DBMS finds and presents this data. But in the traditional file system, the programmer would first locate the data and then have to tell the computer that information. DBMS eliminates many data definition statements in conventional programs.
Warehouse Management Systems
Warehouse Management System (WMS) software focuses on operational requirements, where a product is purchased at the plant, grouping with other products following the same route, when it can be transported early without long-term storage, order management and consolidation. Many researchers view inventory management from an operational perspective; Whether it is to follow a withdrawal strategy or push strategy in the supply chain, the determination of optimal order levels for the ordering process, as a follow-up of the safety stock levels in each stock location, are important because they are the primary determinants of customer service levels (Napolitano, 2001). Knowing the product characteristics (size, location, target) according to WMS’s point of view is to make profit by reducing the number of loads. (Scott, 2003).
Efficient inventory management is not the only way for businesses to reduce their supply chain costs and reduce their customer service levels, but the Transport Management System (TMS) allows the physical flow of products to monitor the elements in the supply chain.
In Warehouse Management Systems, planning and scheduling, keeping working hours are critical in processes such as production, logistics, distribution, because human resource requirement is an important and indispensable element for an enterprise. Labor is the largest component of the operational costs of a distribution center. To reduce operational costs in distribution operations, some businesses focus on optimizing this critical resource with Labor Management Systems (LMS).Realistic performance standards are established with the LMS to optimize the distribution of labor resources in the enterprise and to compare the planned activities with an optimal scheduling process.
With an effective LMS implementation, a distribution center can exploit the full potential of its workforce. Even a small improvement in the workforce efficiency in the warehouse brings good results in the profitability of the enterprise. An LMS software provides the measurement and evaluation of labor productivity in a distribution center mainly with the following elements:
Reporting of direct and indirect labor activities by comparing with historical data.
Comparison of standard labor force requirements and labor force activities in the enterprise.
Supporting award-winning remuneration systems by monitoring individual and team performance.
Determination of critical factors in workforce planning processes. Eliminate manual calculation of working times by eliminating time cards.
Moving personnel to the required locations according to sudden changes in demand.
To be able to make meaningful reporting of the value added workforce to the management, to analyze and to conduct audits for the monitoring of critical information.
Establishing healthy payroll systems by monitoring the working time of the personnel directly.
With the development of LMS technologies, the distribution of labor in distribution centers can be realized in a healthy way. Managers should take tactical (cost-reducing) and strategic (increasing the number of customers) decisions in order to obtain optimal benefit from the labor force, errors arising in the calculation of labor costs and customer relations caused by the excess costs indirectly deducted from the customers problems should be cautious.
Transport Management Systems
Transport Management Systems are used as decision support tools in two areas: planning and optimization, carrying out transport activities. During the planning and optimization studies, transportation mode selection, transportation consolidation operations and coordination of loading processes are provided with these systems. When used in execution and operation modes, routing, scheduling, freight tracking operations are followed from these systems. With the implementation of TMS, it has been measured that transportation costs, which constitute 30% -60% of all logistics costs of the enterprise are reduced by 10% -40%.
Today’s logistics software needs not only to provide real-time data, but also to support real-time decision-making in order to integrate data in the supply chain and respond under changing conditions. It is better to use both WMS and TMS software in the execution of Supply Chain processes and to monitor product flows in supply chain through integrated operation of systems. Observation of inventories through information exchange, decision support systems being more data based, operational costs were reduced by keeping current customer satisfaction levels.
In order for a supplier to provide good service to the end customer at low costs, the supplier must be able to manage their supply chains with small cost tolerances, otherwise the service cost to the end customer will be high. Suppliers and customers are required to be able to order and carry appropriate quantities of products at acceptable prices. The integration of WMS and TMS software should enable suppliers to reduce operational costs and provide lower costs for the end customer. The use of Internet technologies and the benefits of information technologies, the fact that customers place orders more frequently and in smaller batches, reinforces the need for integration between WMS and TMS software.
Container Management Systems
With the increasing globalization and development of commercial relations, CMS software has become inevitable especially for large enterprises. These softwares focus on the monitoring and monitoring process that supply chain ERP systems ignore. It is integrated with automatic identification systems and sensor technologies to ensure the tracking of idle containers, the inventories in ports and terminals are monitored and the location and status of the containers are known.
CMS are software that provides fast and effective tracking and content of containers in all locations in supply chain processes. Enables manufacturers, third-party logistics providers, agents, carriers to control containers, container movements and contents. CMS should be integrated with other applications as shown below. The following figure shows this integration:
When the follow-up and tracking feature is ignored, the weight information of the containers to be transported, the properties of the products to be transported (dangerous cargo, flammable cargo, valuable inventory, etc.) and the route information are processed in the CMS system in accordance with customer demands with the most basic usage.
Containers scheduled to be integrated with a TMS are assigned appropriate tools by planners. This enables efficient scheduling of both containers and vehicles. To summarize, Container Management Systems do the following:
Web-based monitoring of containers in ports and terminals.
Monitoring the status of both the site and the container when containers are placed at the terminal and taken for transport from the terminal.
It ensures the assignment of tasks to the relevant personnel and equipment when the transportation process starts by observing the containers and inventories at the container site.
By monitoring the idle containers, the number of transportations is increased, and the loaded outgoing container to the customer is loaded and transported full.
It is integrated with labor management systems (LMS) to ensure efficient scheduling of the driver workforce.
Provides input for the placement of inventories in the warehouse by integrating with WMS of customers or third-party businesses.
Documents such as invoices and waybills are created automatically by real-time integration with third party enterprises. Profitability increases as payment periods are shortened.
Route, customer, container type, vehicle and so on. In terms of criteria, profitability analyzes are performed with the help of reporting tools in CMS systems and optimization studies on these criteria are performed more effectively.