Converter
Supplier Retailer
Distributor
Source
Converter Consumers
Distributor End-User
Supplier
Value-Added Services
Funds/Demand Flow
Information Flow
Electronic
SCM(ESCM)
SCM
Formation/
Extensions
Inventory Management/Cost
Optimization
Advantages
•Cost Saving
•Reduction in inventory levels
•Reduction in procurement costs
•Reduction in cycle time
•Security issues
•Changes to existing business processes
Steps for Implementation of ESCM
1) Understand and evaluate the level of integration within the organization
2) Determine the number of suppliers who have a direct influence over the
products or services that are delivered to the customers , across the entire
supply chain
3) Divide suppliers into different categories : first tier, second tier , and so on
4) Define the customer base in term of sales , profitability, size etc.
5) Improve the information infrastructure within the organization to
accommodate ESCM requirements
6) Constitute a team with representation from various functions within the
organization and representatives from suppliers and customers to plan and
carry out the implementation
7) Identify leaders which are capable of guiding the implementation process
competently
Complexity: The Magnitude
• Indian companies spend more than 1 trillion INR in supply-
related activities (10-15% of Gross Domestic Product)
– Transportation 58%
– Inventory 38%
– Management 4%
• The grocery industry could save 30 billion INR(10% of
operating cost) by using effective logistics strategies
• A typical box of cereal spends 104 days getting from
factory to supermarket.
• A typical new car spends 15 days traveling from the
factory to the dealership.