Organizations are much involved today with their suppliers and customers to compete more effectively in the business world. Since the competition is raising and as well as global markets, businesses, to make products, are paying huge attention to the raw materials used in their products. They are putting their efforts to know where these materials come from, how the products of their suppliers are procured, transported and produced, how their own products are produced, transported and delivered to the customers, and the end product consumers aspire for.
Over the past few years, large organizations have recognized that working as a vertical integrated firm, a firm which operates all functions in-house till the product is delivered to the customers, is much difficult. Today, the firms are more focusing on their core competencies and capabilities rather than paying attention to the other business units. They are making alliances with the suppliers and companies which provide transportation, warehousing and distribution services. Such a collaborative process is becoming more efficient and effective for the organizations to compete in the market and is central to the process of supply chain.
There are many factors that influence the firms to work together effectively and efficiently than ever. It has been necessary for the firms to compete in the global markets by using enterprise resource planning system through computer networks and internet for exchanging communication and information. Competition is increasing day by day in every industry and in the world. Technology in communication is also changing very fast. Customers are more conscious for the cost and desiring the best quality and service at a same time.
Supply chain management can be best understood with the concept of chain of supply. This chain starts with the firms which extract raw materials from the earth and sell them to their suppliers (e.g. oil and wood). The suppliers...