Critical success factors of supply chain management and operational performance

Supply Chain Management

Hypothesis defined

Concepts of SCM and the evolution to its present day form

Critical factors that affect SCM

Trust

Information sharing and Knowledge management

Culture and Belief -- impact on SCM

Global environment and Supply Chain management

"Social" and "soft" parameter required for SCM

Uncertainties

This chapter aims to give an outline and scope of the study that will be undertaken in this work. The study lays out the issues faced by manufacturing organizations when it comes to the management of supplies, inventory, operations and distribution. Any study that can help organizations understand the factors that impact the management of these resources in an organization is beneficial. This chapter also contains the purpose and the hypothesis of this study.

Purpose of this study organization, big or small, is driven by the need to generate profits for its stakeholders. As a result, these organizations are constantly looking for new ways to increase their profitability. While management concepts have been around for centuries, their progression and evolution have never been as rapid as that in the 19th and 20th century. E new management style introduced in recent times has been declared as the "best" and most effective. Companies that "created" these styles as a result of their companies' own internal factors defined many of the management styles, as we know them today.

The need to constantly generate profits for any organization if forcing management within the organization to evaluate and understand the internal and external factors that have the potential to create the most variance.

Management of organizations is a complex process. In turn, organizations constantly seek methods and use tools that will help them understand their operations and optimize their operating processes for higher profits. Attempts to run organization in a "lean" manner with awareness of the criticality of continuous improvement is growing among manufacturing-based organizations. Creating a constancy of purpose towards improvement and strategy planning based on long-term goals of the organization can help enlighten those involved with the organization to problems that they face or might face.

Supply chain management (SCM) has been used with varying effectiveness in organizations all over the world. This study initially hoped to identify the concepts and ideologies of SCM in two countries: the U.S. And Malaysia. In the proposal it was anticipated that extensive surveys and data collection would be undertaken to collect the necessary real data with respect to improved financial advantages in implementing SCM. Most of companies approached by this researcher however, were not forthcoming with their information as to their operating processes. Consequently they refused to divulge key, necessary information. Rather, they provided only generalized "verbal" information of the improvements or the losses experienced in the process of implementing SCM. (Details are provide in Chapter 3) The focus of the study therefore had to be changed. This study was revised and undertaken based on existing information available on SCM implementation and effects on companies in two locations only. Extensive reviews of printed material available of various companies that admitted to implementing SCM in the two countries over the past three years was studied. Suitable, verifiable and extensible conclusions were inferred. This study will undertake a critical evaluation of all the literature published in this field and the impact of SCM on different organization obtained as a result of the review of literature done in this field.

It is important to note that SCM is not entirely a new concept. It has been used in countries like Japan for years. SCM models used in Japan however, were conceptually and ethically implemented for different reasons. The Asia-Pacific region is strongly influenced by local cultures and values. These factors play an important role in the ability of any organization to conduct business in the region. In Japan for example, the Keiretsu play an important role in the manufacturing and production industry. By integrating the supply chain horizontally as well as vertically, the Japanese industry has been able to keep out foreign competition in the region. (Selig, 2004) In the horizontal system, cross-ownership and high coordination is encouraged within the alliance. Horizontal keiretsu was initially implemented when Japan first opened its market to foreign competitors in 1968. "Vertical" keiretsu represents a single company, which runs its suppliers, the suppliers of its suppliers, and its retailers. Vertical keiretsu are generally a part of a horizontal keiretsu. This tactic makes it difficult even today for foreign companies to operate in the Japanese market.

Hypothesis defined

Due to the failure (explicated above) to collect data in two attempts (over a range of industries in Malaysia and the United States) forced the change of the research strategy for this paper. As a consequence, three new hypotheses were identified. These were focused on the study of supply chains in organizations and the management needs for ensuring the optimization of these supply chains. The questions that the hypotheses hoped to raise are:

H1: Does trust help in the development of good supply chains? What are the best conditions for fostering trust between organizations?

H2: Does data and information collection aid in the SCM? Is the conversion of data and information into knowledge beneficial to all companies in the supply chain

H3: What are the effects of culture and belief on the success of SCM models in organizations?

H4: What effects do global conditions play on the supply chain? Are company transaction across geographical boundaries in the supply chain impacted by company's goals and mission?

H5: Do the soft issues of management such as worker motivation, team working, and leadership significantly impact the supply chain?

H6: What uncertainties does SCM face for the future? And what are the options available to companies for handling these uncertainties?

Importance of this study

Many American companies are increasingly outsourcing their lower level manufacturing operations to companies and countries not geographically close. In an effort to improve cash flow and working capital, companies have been in recent times relying more on Just-in-time (JIT) management principles and lower inventory levels. Quality improvement and performance are also becoming important factors by which organizations hope to differentiate their products in the market.

Technology innovation in the past years has changed the way business is conducted drastically. This change has impacted life in a manner similar to the effects of the invention of the steam engine and its impact on the Industrial Revolution. Well-established shipping and air transportation routes between the major countries of the world have also help to reduce the time of movement of goods. Communication mediums have matured. High levels of connectivity can be obtained at relatively low costs. In such an environment, a new concept of management arose. Organizations became more global. Some had multiple operations in different continents. Therefore, scheduling and planning for material flow became important. Instead of managing discrete and individual companies involved in the process, it was deemed better to control the flow of the product. This also affects an organization's relationship with other organizations. These associated organizations often are suppliers or buyers of the products manufactured by any organization. Many changes have occurred in the manufacturing industry in the past two centuries. Some of these were passing changes; others had the ability to strongly impact the way manufacturing was undertaken, all the while taking into account the competitive nature of the business.

This study, though purely theoretical, can help organizations understand the issues that they face in managing the supply chain. It is beyond the scope of any one study to completely investigate and study the impact of e variable on the supply chain. An effort has been made to investigate the most salient factors. With this in mind, this study aims to identify the relationship between a few variables and answer some of the questions that typically arise, associated with these variables. This study will also lend credence to the role that management might play in the enforcement of these variables.

Literature review

Concepts of SCM and the evolution to its present day form

Managers and decision makers are constantly searching for the best and most effective management tools that they can use to control their organization. (Drucker, 1997) These tools have ranged from inventory management tools such as EOQ (economic order quantity) to management philosophies such as Just-in-Time (JIT), Total Quality Management (TQM), TOC (Theory of Constraints), Optimized Production Technology (OPT), Supply Chain Management (SCM) and Enterprise Resource Planning (ERP). Over the years, it has become clear that any one philosophy does not work in isolation. Applying principles in conjunction to suit the problem at end is the optimal approach.

Supply chain in any organization is generally identified as a group of organizations or individual departments, either upstream (suppliers to the company) or downstream (moving the product produced by the company to the market or the next user), linked together to help move any product from the source to the supplier. (Richey and Bachrach, 2004) SCM is therefore a tool that requires a well-defined methodology in order to achieve the desired results. (Stevenson, 2002) The process involved in SCM is time-consuming. It requires the total dedication from organization within which it SCM implementation is being planned. SCM "expands the scope of the organization being managed beyond the enterprise level to include interorganizational relationships." (Strader et al., 1999)

Supply chain depends heavily on the relationships that organizations can develop and sustain through personal interactions and using the latest technology. Earlier studies in SCM focused on identifying the supply chain network (SCN) developed by organizations. Later, studies focused on supply chain demands, supply chain operation and information sharing. In the present organizational environment, competitive advantages are not just single company or organization-based. Rather, they are supply chain based. (Muralidharan et al., 2002)

There are many independent models within the SCM methodology. Each of these deserve discussion. Some of the frequently discussed factors are:

Supplier relationship management (SRM); where "companies transcend traditional supplier relationships to enable collaboration and profitability." (SEAL, 2004) "Supplier relationship management is a comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services it uses. The goal of SRM is to streamline and make more effective the processes between an enterprise and its suppliers.

Customer relation's management (CRM) is often focused on the external customer of the organization. CRM methodology attempts in "identifying, attracting and retaining the most valuable customers in order to sustain profitable growth." (Hamid and Kassim, 2004) Companies are striving to ensure that they satisfy the external customer of company but at the same time realizing that the external customer's demands might not always be the best for the company or the other stakeholders of the company. (Senior, 2004) Satisfying the external customer at the cost of the company's reputation and integrity might over the long-term do more harm than good.

Employee relationship management (ERM) While "consumers exchange economic resources for goods and services, employees exchange human resources for jobs that provide, among other things, economic resources." (Keller, 2002) It is therefore also important to satisfy this important component of the organization. The employee also is the most variable factor in the internal environment of the company.

Just-in-time manufacturing The American Production and Inventory Control Society (APICS) defines JIT as:... A philosophy of manufacturing based on planned elimination of all waste and continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to deli and including all stages of conversion from raw material onward. The primary elements include having only the required inventory when needed; to improve quality to zero defects; to reduce lead-time by reducing setup times, queue lengths and lot sizes; to incrementally revise the operations themselves; and to accomplish these things at minimum cost.

Just-In-Time (JIT) is a key element of time-based manufacturing strategy. Here raw materials, semi-finished products and completed products are provided close to the actual customer need and as such do not need to be held in inventory. For JIT to be effective, product- suppliers to be reliable and dependable and the products supplied have to be quality guaranteed, as there is no time buffer in case of defect of product. If a defective product is offered in JIT, the entire production line will suffer due to delay. If properly implemented, it can reduce waste and capital requirements for the organization. The main object of JIT is to improve overall productivity and quality of products manufactured in an organization. (Womack et al., 1991)

Kanban systems are fundamentally part movement systems: "that relies on cards, boxes, or containers to transport parts from one workstation to another on the production line. Kanban stands for Kan (card) and Ban (signal)." (Adams and Ruiz-Ulloa, 2003) This systems allows for efficient management of the internal or external supply chain system in a manner that is efficient, cheap and effective. Kanban systems do not depend on a lot of technology and computer systems. Rather, they depend on the ability of the worker to understand the needs of the next down-stream machine or company and produce or manufacture the relevant goods. In turn, once this production starts it also generates the need from an upstream manufacturers/machine, which is prompted to start work only after the receiving of the order. Kanban systems encourage a pull form of operation system, rather than a push form of manufacturing operation within the entire system.

Optimized Production Technology (OPT) is a management model proposed by the Dr. Goldratt. The OPT philosophy: "the sum of local optimums does not equal the global optimum." (Goldratt and Cox, 1986) Financial measures that can be used to determine if an organization is making money is determining the Net Profit (NP), Return on influence (ROI) and the Cash Flow (CF). The goal for any organization is to ensure that all these metrics rise at the same time in order for the company to make money.

Any operation has a set of processes and a pre-defined methodology for completion of any task. For SCM, the first step to be considered is to understand all the processes within the organization. It is also important to recognize the paths taken by the raw material before it enters the factory and after it leaves the factory where processing is undertaken. Often, this first step of understanding and defining the various processes is the most complex and time consuming. Critical analysis of e aspect of "value addition" to the product is needed along with non-value added activity that only increases the final cost of the product but does not provide enhancement or additional benefits to the product. SCM places great emphasis on the inventory levels of raw materials, semi-finished purchased products, work-in-progress (WIP) and finished products maintained by the company.

Also included in the study of SCM are the topics of "purchasing (or acquisitions), materials management, warehousing and inventory control, distribution, shipping, and transport logistics." (Hyland et al., 2003) In the past, many of these areas were not considered strategically important for the competitive advantage of the company but rather just supporting and passive entities of the entire system. Often, the process strategies of any organization only included R & D. And the manufacturing operations. It was in these realms that cost measures and process improvement strategies were employed. With the advent of cheap and affordable global transportation and fast and efficient communication, the distribution and logistics of an organization has suddenly also become important. For example, if two companies can manufacture the same product the company that can get the product faster to market has a definite competitive advantage over the company that cannot harness its distribution channels.

Inventory can be a liability as well as an asset. (Stewart, 2001) The trend in recent times was to maintain only the bare minimum of inventory needed to support the manufacturing process. In an increasing global marketplace, this strategy has advantages and disadvantages. The advantage is that companies tend to carry more inventory than they really need. In reality, finished (goods) inventory require larger warehouses; products can be shipped and distributed faster and as needed if material is stored. But it was not prudent to maintain too much of the product. For, with time life cycles of products have been becoming shorter. Demands for products also fluctuate. The disadvantage of maintaining low inventory levels is also a factor worth considering. There can be a lot of loss incurred from missed opportunities of sales if the company does not have the finished inventory in stock, or production and manufacturing processes can come to a stand still if there in not sufficient raw material to continue the operations, wasting valuable machine and labor time.

In the past, inventory was maintained by organizations for a number of reasons. (Simchi-Levi et al., 2000) It has been always difficult to predict and forecast the demands of the customer. Many products today also have a shorter life cycle in the market. Fierce market-competition and the need for many companies to capture and maintain market share. The uncertainty of the market and the risk associated with many companies' decisions had forced companies in the past to maintain some finished safety stock.

Low confidence in the suppliers had also forced the companies to maintain larger levels of inventory. In an increasing global market, with large geographical distances between many of the manufacturing plants, companies were forced to maintain a "safety stock" just in case of any uncertainties. Lead times offered by many suppliers were long and erratic. Economies of scales also played an important role in the purchasing cycle followed by many companies.

Deming believed that the management in organizations should move away from short-term thinking and concentrate their efforts on long-term thinking for the organization. Creating constancy of purpose towards improvement, strategy planning based on long-term goals of the organization can help enlighten the management to problems that they face. (Clauson, 2000)

In studies carried out by different researchers, it was identified that the quality of product, deli time adherence and price, all play an important role in the selection of the supplier. In most cases, suppliers have to achieve some minimum quality and performance level. This is measured by defined industry metrics in order to be even considered in the running for supplier status in a company. Deli time and price of product are easier to compare. Quality however, is the most difficult to compare as variances can exist to a great extent in the products being bought that might have the ability to greatly influence the performance of the product. The meanings of "Quality" change based on need. This need in turn is based on product performance or product perception.

The core activity of manufacturing is no longer confined to making things, but lies in the systematic processing of knowledge to create value for customers." (Choy and Lee, 2002) A new form of manufacturing trend is also being identified in the industry overall, the use of artificial intelligence technology to determine the best supplier for the task at hand. This tool becoming increasingly relevant in a project or case-by-case ordering situation where the buyer has to be able to evaluate the performance of the supplier not based always on in-house records or past performance. Organizations have to constantly define new metrics that can be used for evaluation of individual supplier of a specific product. This task becomes increasing complex if the supplier serves many competitors in the same industry but the needs of each competitor is different for e project or if the supplier is a competitor of the company in some markets. In this environment, developing a trust relationship is critical and so is ensuring the integrity of the intelligence supplied or possessed.

Despite efforts in maintaining the quality of the products, there have been instances where the quality of a product was below par. The importance of continuous improvement in the quality of the product can help organizations ensure that they will retain their market position and customer loyalty. Quality involves building and sustaining evolving relationships. Assessing, anticipating, and fulfilling stated and implied needs can accomplish this. Deming was of the opinion that quality was an ongoing process. Quality had to be constantly evaluated with reference to both internal and external environments affecting the organization. (DeVor et al., 1992) Continuous improvements are necessary; after some time has elapsed however, the cost of improvement will have to be weighed against the return on investment. Creating constancy of purpose towards improvement, strategy planning based on long-term goals of the organization can help enlighten the management to problems that they face.

SCM has changed many of these thoughts and drivers of inventory management. SCM requires critical thinking and strategizing at e level in the organization. E worker and decision maker has to truly comprehend the concept and idea behind "purchasing and material releasing, inbound and outbound transportation, receiving, materials handling, warehousing and distribution, inventory control and management, demand and supply planning, order processing, production planning and scheduling, shipping, processing, and customer service." (Trent, 2004)

SRM, CRM, ERM, JIT are important components of supply chain management (SCM). In turn, SCM is an integral part of the total quality management (TQM). An organization can implement these tools, independently or in concert, to improve the quality of the products and services that they sell. At a more fundamental level however, any of these tools are basically management styles that organizations can use to increase their competitiveness in the market. Individuals such as Deming, Juran and Cosby attempted to introduce new thought of productivity improvements in the organization -- quality of the products and worker involvement. Total Quality Management (TQM) has been defined by Juran as "a structured process for establishing long-range goals, at the highest levels of organization, and defining the means to be used to reach those goals" (Shores, 1990)

It is important to note that Total Quality Management (TQM) is a philosophy that encompasses all aspects and factors that have the ability to influence the organization. TQM mandated that the management focus on the quality of the organization's product to ensure that it would meet customer-satisfaction. (Cannon, 2002) The importance of continuous improvement in the quality of the product can help organizations ensure that they will retain their market position and customer loyalty. Create constancy of purpose towards improvement, strategy planning based on long-term goals of the organization can help enlighten the management to problems that they face.

The importance of employee empowerment cannot be stressed enough in the TQM method of management. Workers should also realize however, that along with empowerment come certain responsibilities and guidelines. The downside of worker empowerment is the failure of the worker to understand the implications (and consequences) if the system fails during operation. System-misuse is also a statistical reality. This is especially true if workers decide to stop the production line for unjustifiable reasons. (ShingAo and Dillon, 1989) This aspect of TQM also therefore brings to light the issues of culture, norms and the values that workers in an organization might espouse. In the bargain, globalization has also added its own set of issues and concerns. Many organizations that implemented TQM failed to realize the difference in culture between Japan and America for instance. Factors such as life-long employment and worker participation in organization's stock also allowed Japan's workers to feel greater involvement in the organization. These conditions do not exist in the U.S. market and workers consequently are fearful of trying new ideas for fear of failing and losing their livelihood.

TQM also advocates constant training and education of the workforce. By offering adequate training to the employees, organizations are able to increase retention rates and employee confidence. (Zbaracki, 1998)

Over the years, it has become clear that any one philosophy does not work in isolation. Applying principles in conjunction to suit the problem-solution at end is the optimal approach. It is also important to note that mistakes when they occur might be a result of the actions of the individual. More often however, they are the result of poorly designed processes or systems. (Cruz, 2003)

Critical factors that affect SCM

The factors that affect SCM are numerous. A few salient factors however, are critical to the success of SCM in organizations. Some of these factors are discussed below:

Trust

Trust is stated to be the single most important factor that can help promote loyalty and dedication to the common purpose of streamlining operations in the supply chain. It is observed that higher levels of trust can improve "measurably the chance of successful supply chain performance." (Kwon and Suh, 2004) Lack of trust consequently can defeat the basic concept of SCM. Kwon and Suh indicated that a "firm's trust in its supply chain partner is highly associated with both sides' specific asset investments (positively) and behavioral uncertainty (negatively)." Information sharing and the ability by all involved in the SCM to trust that sensitive information will not be shared with others is cited as important for any SCM. The level of commitment displayed by all the parties and the reputation of the companies involved in the dealing is also significant for trust development.

A study undertaken by McKinsey in 1992 asserted that approximately 1/3 of all alliances between companies failed due to issues related to trust. A significant factor is the "long-term perspective" and the willingness "to invest an enormous amount of energy to make a partnership work." (Sherman, 1992) The fear that a supplier might eventually become a competitor prevents many companies from sharing strategic information with the other. An unbalanced relationship between suppliers and buyers in any alliance can also create high levels of distrust and resentment. A balanced relationship between companies however, does not necessarily provide a fertile medium for trust development. Trust, one should note, is a fundamental human trait. This quality is woven into the fabric of an organization through the inputs of the individuals working for the organization.

Organizations are faced with two types of uncertainties when undertaking collaborations -- the uncertainties of the future contingencies and the reaction of the business partner to the future contingencies that may occur. Child identifies two types of trust: Traditional trust (trust of family and close society) and institutional trust (trust of ISO standards for example). (Child, 2001) Organizational trust must first be built on a few basic expectations that both parties can define and state in clear terms at the onset of the collaboration. Mutual understanding and respect for the individual and the organization should also exist for a second level of trust to develop in an organization. The final level of any trust development between organizations is the creation and enforcement of a psychological bonding between the partners at different levels of the interaction.

Societies and countries, and the laws that govern these countries also often determine trust in work situations. Oriental countries, for example, take longer to trust somebody. And if that trust is betrayed, culture dictates that they react strongly. Laws and regulations of the country may also harm the organizations ability to develop trust. China is considered a low-trust state; that nation's laws do not encourage openness and honesty from its citizens. While trust is fundamentally a human trait, history and culture play an important role in the formulation and definition of the levels of trust between organizations.

The challenge of trust development is often due to the convergence of melting two different cultures that an organizations display and arriving at a common, mutually acceptable culture for both organizations. Any strategic alliance should ensure that all parties understand and can predict within reasonable limits the "outcome of the events in the future and make sure non-of the outcomes will be unintended or unanticipated." (Day, 2000)

In an environment in which trust is lacking, the individuals involved in the value-added operations often might spend too much time evaluating the authenticity of the documents and information and less on actual work operations. "Commitment is a key success factor in achieving supply chain integration and trust is a root in fostering such commitment." (Kwon and Suh, 2004) Trust is also based on the willingness to undertake risk and the confidence that all the parties involved are reliable and dependable. Companies and individuals in high trust situations are more likely to create better and more efficient communication channels with their partners. Trust also requires commitment. Commitment is often defined as an exchange between two people who believe that their relationship is important and worthy of devoting time and energy to ensure the success of the relationship.

Organizations strives to use "Relationship Intelligence (RI)" in order to divulge the intricate and "complex connections between people, companies, relationships, experience, and expertise" that exist within the company. (Lipsey, 2002) Overtime, this relationship-management can help an organization develop a varied range of expertise in its core competencies. Such a structured approach also helps in identifying shortcomings. The emergence of the technology-based organization in the latter part of the 20th century has encouraged organizations to investigate and explore the potential for creating wealth that exists as a result of the company's relationship with its stakeholders. (Sawhney and Zabin, 2002) Stakeholders in this modern environment encompasses the workers within the organization, the suppliers for spare parts and services, the distributors of the company's products, the shareholders and the customer of the company's products.

The ability to coordinate any effort between these main constituents of the organization and understand the incentives and motivational needs of each segment can help the company grow and prosper. It is becoming clear that Wall Street also places great emphasis on the non-tangible assets in the form of the relationships that the organization has when evaluating the profitability and stability of any organization. "Even asset-intensive firms are coming to realize that their "real assets" lie not in their plants and machinery but in their relationships." (Doran, 2001)

There is a dilemma however. Most organizations go through it their attempts to identify the best possible model that can be used to link the relationship and foster the development of trust between the various entities. SCM success hinges on the ability of the model used to develop the trust being effective and operational. While many "discrete" models such as Customer Relationship Management (CRM), Employee Relationship Management (ERM) Supplier Relationship Management (SRM) and Distributor Relationship Management (DRM) are increasingly used by organizations, the failure to integrate the different models within the main framework of the SCM model often results in none of the discrete models being used to their full potential. In trust-development, relationship management is paramount. Other factors such as the organizational culture, the dissemination of information, communication channels and the use of technology also impact SCM.

Information sharing and Knowledge management

Information sharing and Knowledge management is the next in importance for the success of any SCM venture. By sharing information, companies involved in the collaborative efforts can help avoid overestimation of demand and investment needs. (Porter, 1998) The premise behind this concept was that the goal of any organization was to create value that far surpassed the cost of production of a part or component. The aim of this step was to generate tremendous profits for the company. Porter identified the value chain activity as a composite of five stages Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales and Service. In addition to the basic activities, factors such as technology development, human resource management and the firm's internal infrastructure all had the potential of impacting the value chain in the organization. These activities are generally considered overheads. But they are critical to the organization.

Factors such as the decreasing cost of manufacturing of the product at a supplier by virtue of the supplier constantly improving and modifying their processes can cause the buyer to demand lower prices and/or higher quality. Sharing of this sensitive information might force the supplier to offer lower prices for the product or provide the buyer with competitive strategies that have helped the company gain the advantage.

An increasing trend of outsourcing for many of the manufacturing industries has also created a chasm where the demands of the market are not effectively communicated to the production operations and consequently this realistic demand is not transmitted through to the supply chain as desired. The forecasting methods used for the company at the top of the supply chain pyramid is also important. (Gallagher, 2001) This company is often the one selling the completed products to the customer and the forecasting model used by this company can determine the production demands and operational capacity needs at different levels in the organization.

Information should be available to e-company in the supply chain. In addition, this information should be accurate and realistically founded in sound forecasting models. Information should also say consistent and precise through the communication channel used in SCM. Information in which unverified or uncorroborated additions or subtractions are made, and whose credibility becomes suspect, can do more harm to the supply chain when compared to poor original information. It is believed that sharing information openly can reduce opportunistic behaviors. If trust is established between the supply chain members, then assurance at e instance is not required, as to the accuracy and dependability of the product transfer across the supply chain. This can substantially reduce the time between transactions. Consequently, it can boost productivity of the worker in the entire supply chain. While checks and balances are essential, implementing too many of them can slow down the information flow and make the entire process sluggish and inflexible to the changes that might be experienced.

Before any information sharing can take place, information has to be gathered. There are important distinctions between data, information and knowledge that any company posses. Data is the raw facts collected through observations or monitoring. When data is filtered out to identify trends and then organized, it converts to information. And, when this information is used in the operation, planning and strategy, it is converted to knowledge. (Yahya and Goh, 2002) Information and knowledge get transmitted through an organization through networks. The importance of these networks will be discussed in another section of this study. Drucker defines information as "data endowed with relevance and purpose." Bateson, alternatively, identifies knowledge as "the differences that make a difference." (Huseman and Goodman, 1999)

The data gathered has to be converted to knowledge. This is so that the worker can use the knowledge. The main purpose of any knowledge management strategy is to "reduce errors, create less work, provides more independence in time and space for knowledge workers, generates fewer questions, produces better decisions, reinvents fewer wheels, advances customer relations, improves service, and develops profitability." (Karlsen and Gottschalk, 2004) Information and knowledge also has to updated regularly. This ensures that the users of the information are doing so in a manner that is appropriate for the period of time. (Gallagher, 2001) Supply chains managed with outdated information are not ideal. Also not ideal, is the information provided to the wrong people at the wrong time. In addition, the information should have appropriate security measures built into the system to ensure that data tampering does not occur. (Kolluru and Meredith, 2001)

It is clear that "the information system, based on information and communication technologies, constitutes the organizational memory and processes data and information to support operations (value chain, data bases), management and decision-making (management system, model and knowledge bases), as well as the relations between the organization and its environment." (Jaworski et al., 2002)

This understanding can then be used to improve the effectiveness of the knowledge and intelligence gathering process. Implementing a business intelligence strategy is not costly or technically difficult in the initial stages. (Mills, 2002) Conceptualization, stemming from need, should be the driving factor for any knowledge management process.

Information is key to maintaining high quality standards in the supply chain. (Barton, 2003) Organizations do not "learn" by themselves; rather; people learn and build this knowledge into the organization in order for it to learn and adapt to new situations and market conditions. Faster knowledge transfer can help these companies get a product or service to the market faster than its other competitors.

Knowledge documentation is also required for any subsequent use of the knowledge acquired. In reality, any acquired knowledge gets "embedded not only in documents or repositories, but also in organizational routines, processes, practices and norms." (Yahya and Goh, 2002)

Documentation is a managerial tool. It is used to harness information and sift through data to identify the trends and factors impacting KM. Studies have been conducted to identify the role of IT on the supply chain and the importance of information sharing in supply chains. (Strader et al., 1999)

Organizations rely on a combination of different information exchange protocols such as TCP/IP, HTML, and XML to transmit their knowledge to the various parties of the supply chain. Organizations that use systems such as electronic data interchange (EDI) by hub-firms (driving companies such as Wal-Mart, Home Depot who initiate the supply chain process) are increasingly looking for suppliers who are willing to improve and change their systems to facilitate the information exchange. (Marabotti, 2003)

Knowledge generates the basic breakthroughs in technology that create the disequilibrium conditions in which high returns and high growth rates are possible. Knowledge allows new things suddenly to be done in new ways." (Clardy, 2004)

Organizational knowledge is classified into two categories: explicit and tacit knowledge. Explicit knowledge is visible, as it is easy to code and build into the knowledge base of the system. It is "structured, fixed content, externalized, and conscious." It can be easily shared through IT infrastructures. (Kremp and Mairesse, 2004)

According to Deming, profound knowledge "involves the acquisition of new knowledge and competence, as well as the ability to transfer that understanding to others so that they come to have the same level of knowledge together with the ability to pass it on to others." (Thompson, 1995) Simply put, any organizational learning has to be able to collect information, analyze this information and incorporate the information into the fabric of the organization. Only if the information attained in the learning process is deemed as true and accurate will it benefit the organization as knowledge.

As new technologies are introduced, the success or failure of a technology-intensive firm may depend to a large extent upon how well it learns and adapts. Learning enables an organization to expand its "capacity to create its future" continually. Organizational learning is achieved through a process that involves the acquisition of knowledge, the transfer of knowledge, and the application of knowledge." (Karlsen and Gottschalk, 2004)

Knowledge transfer in organizations can happen at different levels of the organization. The effectiveness of the transfer between departments or business units, teams working on different projects, and across different hierarchal levels of the organization also determine the effective utilization of the knowledge that might be acquired at any level of the organization. Any knowledge transfer process should be able to facilitate "knowledgeable action" from the individual transferring the knowledge and the individual receiving the knowledge. (Walsham, 2002)

In the past, KM stressed the importance of "information and communication technologies and procedures." In recent times however, the emphasis is being placed more on "social structures and cultures in promoting or inhibiting knowledge transfer." (Karlsen and Gottschalk, 2004)

Standardization of information platforms through all the levels of the SCM therefore is important. Updating one unit in isolation from another and use of legacy systems can often create technical hurdles for the information transfer. Methodologies used for transfer and the verbal mode of communication is also important. Enforcing the use of Standard English, for example, can help avoid confusion over a supply chain that spans continents. In addition, using a common time reference (Eastern Standard Time of the U.S. EST or Greenwich Mean Time GMT) for global communication can ensure that transportation and schedule logistic metrics are the same through all the nodes of the supply chain. As the supply chain matures and develops many of the metrics get incorporated into the knowledge of the chain. This consequently, reduces the need for standardization and code enforcement. The gap between what is needed to ensure smooth transfer of information and what exists to facilitate the transfer also decreases as the entire unit matures.

Culture and Belief -- impact on SCM

Schein classifies organizational culture into three distinct and different levels: 1) The most easy to observe and notice are the "artifacts"; the aspects like the dress and language used which are easy to discern but have their own symbolism; 2) beneath artifacts are the "espoused values" which are consciously made strategies, goals and philosophies by the organization; 3) "the core, or essence, of culture is represented by the basic underlying assumptions and values, which are difficult to discern because they exist at a largely unconscious level, yet provide the key to understanding why things happen the way they do." (Schein, 1992)

Culture arises from both.".. interaction and practices of bodies and the shared symbols of the mind." (McManus, 2003) Culture and beliefs are displayed in daily interactions and behaviors but they might always not be true to the complete thinking and feelings of individuals. To change any organizational culture of belief, the need to understand the driving factors behind the culture observed in the organization is critical. Consequently, the culturally varied organizations in the supply chain have the potential of affecting the entire supply chain.

The need to be able to add value and ensure that this value exceeds that of the competitor is important for ant organization. Organizations strive to be different and achieve a position of uniqueness. This is called having a niche. Organizational culture be it high-content culture or low-content culture has the ability to provide different competitive advantages for an organization. (Blevins, 2003) SCM might produce many success stories and advantages but the organizational culture has to align to ensure that the full impact of the SCM tools is realized and then put to use. (Roche, 2002)

Often, organizations espouse one culture. In reality however, they may practice another. The culture of an organization includes the language, dress codes, and habits of the operations, value systems, an ethics' code, attitude and interactions between various strata of the organization and work principles. Cultures in an organization do change over a period of time and it is important to understand the existing culture at any point for any employee within the organization. (Hagberg and Heifetz, 2000) It is often observed that culture exists at a conscious as well as unconscious level in organizations. The degree of agreement between the values, cultural norms, and attitudes that are required for smooth operations of the organization is great. The success of the organization often rests on the ability of the organization to understand the internal strengths and weakness of the culture that exist within the organization and use it to obtain the best performance from the workers in the organization.

An organization might state that it values the level of quality that it can ensure in the parts manufactured, but does not believe in continuous training. Disconnect between quality that they perceive and worker-training requirement might, over time, lower the overall quality of the products manufactured. The longer any organization has been in business, the more defined the culture within the organization becomes. It is difficult to change any culture within an organization immediately. The need for change should originate from the top management. This entity is charged with providing support to the fulfillment of the changes. Anchor-draggers exist in e organization and at e level. The ability of the management to get these individuals to conform to new styles of operation is important (Evans, 2001) The end goal is critical in teleological processes.

Global environment and Supply Chain management

Manufacturing organizations are increasingly depending on inventory from places geographically distant. At the same time, organizations are also selling their products in markets that are far away from their production points. The ability of companies in various locations around the world to synchronize their production and manufacturing operations based on forecasted demand of a product in one specific market testifies to the fact that SCM models are being used exceeding well in the present manufacturing industry. Organizations are depending on many multi-site locations. With multi-site locations, production can be undertaken closer to the source of the raw materials. This raw material can then be shipped in the desired form to the next stage of the value chain upstream, at a different location.

E-Business has emerged as the result of the Internet. Hence, there is an increased dependence on the World Wide Web by both organizations and customers of organization's products. E-business has been defined basically as "the transaction of business over an electronic medium such as the Internet" and can "involving the buying and selling of goods and services, customers relations management, and working jointly with business partners" for a wide variety of operations and services. (Google, 2004) Value chain analysis is just as relevant for e-business as it is for any traditional business model. In fact, e-business models often arise from an attempt to manage the value chain of the business. Value chains in the e-business model are more dispersed with respect to geographical locations.

E-business models require a great deal of trust and interdependences across various elements of the value chain. (Poirier and Bauer, 2000) The strategic alliances and partnerships are critical to the success of a business that is operated on the e-business model. The familiarity and personal trust that had traditionally existed in the past is not present in this model leaving personal physical interactions out of the business environment. Most e-business interaction that exist today are as a result of a traditional form of business partnership; but this is likely to change as more businesses are looking for suppliers and dealers through non-traditional methods of selection.

In the case of an e-business value-chain analysis, transparency in operation is required. A clear and detailed map of the flow of information and the workflow has to be defined initially. Legacy systems play an important role in the development of any e-business strategy. These systems can be either a combination of software utilized in the past by the organization or processes and standard operating procedures mandated by the company. Often, organizations embracing e-business have to identify the legacy systems used within the organization. Many legacy systems get so well incorporated within processes and tasks that they become one with the task. E-business systems tend to demand attitude and mindset changes. The old ways of doing things do not apply any more. They also require higher level of computer expertise and understanding by the worker. E-business models also demand consistency of operations and processes. Personal instincts and preferences can seriously impact e-business models.

Social" and "soft" parameter required for SCM

Soft parameters of management have the potential to impact the supply chain. Organizations are reducing the number of control levels in the organization to avoid movement of information and decision-making through various stages. Many mid-level positions are becoming redundant and workers are often organized around project rather than pure functional departments. The rise of quality circles, kaizen team and self-managed work teams require that workers have to be trained and educated in the new methods of organizational management.

Team working-quality circles team is defined as a group of people that have complimentary skills and a higher commitment to common goals. This group of people also possesses a higher degree of interdependency and interaction. (Olson and Branch, n.d.) A few of these definitions follow: "Mankin et al. define a team as a group of people who are task interdependent and share a goal or purpose. Katzenbach and Smith define a team as "a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable. Sandstrom and Associates define a work team as consisting of "interdependent individuals who share responsibility for specific outcomes for their organization."

Teams without a definite goal and aim, will drift and fail, since a goal or objective is not set, nor is a final objective identified. The size of the team, the task for which the team is set up and the roles and duties of individual member of the team all play an important role in ensuring the success of the team. Building an effective team starts by selecting diverse members with a variety of complementary skills. It is important to ensure that for any specific task the team comprises members who are knowledgeable and posses the required skills needed to carry out the task. Teams should also try to work across organizational boundaries/levels and break down internal barriers and deal with people and issues directly and avoid hidden agendas from both within the group and from external sources. (Harmon-Jones and Mills, 1999)

Building teams is difficult. It takes experience, knowledge of human behavior and motivation, social and organizational dynamics and the type of industry in which the organizations operates to be able to put together a team that can be truly effective and productive. Team training and conflict management are important factors that have to be considered prior to making a decision to build a team. Teams based on their purpose and structure might require varying degrees of mentoring and guidance as well.

Continuous Learning for the organization

All organizations that are leaders in their fields generally have a propensity for encouraging continuous learning in the organization. Companies have to constantly use more sophisticated and complex equipment, machinery and software systems to be competitive and maintain their market share. Training is critical for efficient, continuous productivity. Training helps improve and constantly updates the workers' skills and output. As stated earlier organizations learn through their workers and for continuous improvements to be successful in the organization the worker has to constantly be learning new concepts and ideas.

The job scope for many organizations goes through stages of evolution and changes. While training is important, the methods used for training differ significantly between organizations and the resulting output might also be different. Some organizations might use a structured training program using the assistance of local universities and schools, others might assign a mentor or guide for new recruits into the organization and some might directly introduce a trainee to the task and use hands-on work experience to get the message across. Knowledge management and labor management are one of the defining assets for any modern organizations. Knowledge management is especially gaining importance due to the fact that many midlevel management jobs have become redundant. Consequently, the worker is being made more responsible.

Integrating the human factor, technology and facility available to achieve near perfection in the work process is important to the successful implementation of any new process. Often, organizations spend resources on understanding and implementing the process. They however, fail in the most important variable affecting the process -- the human element. Training and education of the workforce is required to ensure that the worker understands the difference of the piece or flow manufacturing. Workers who are not willing to make the transfer from traditional knowledgeable to the new process might become obsolete and lose their job in the company as a result. The learning curve for the worker also becomes an important factor in the change process. Supervisors should be constantly available to explain and reinforce the process.

In the past, most organizational performance measures were generally only financial in nature. While this information is important, it only provides the past information of the company. Continuous improvement requires that the company evaluate the other performance measures such as customer satisfaction, worker satisfaction and quality of the product. If these basic measures are evaluated and optimized, then, as a consequence, the financial measures will be improved as well.

Education and training are both important for the development of a good worker. Education is generally considered a long-term investment, which helps develop the worker by providing them with tools and techniques that they can use in a work environment. Training is often considered a short-term investment. Here a specific task is taught to an individual with an expectation that the task will be performed as required by the individual at a later date towards the creation of a product for the organization. Training is required not just during the initial phase of setup for any organization or only for new equipment that is procured by the company. Training is required on equipment that is both old and currently in use. Refresher courses are critical. They give people the opportunity to brush-up on their skills and update their abilities gaining experience in areas that they might not regularly use in the line of work.

A better-trained workforce is also a more productive and flexible workforce. In an age where multi-tasking is the norm, efficient training can help workers cope with the variability that a job can some times demand. Learning processes in an organization should be both improvement-oriented (where the worker is trained because he or she has not done the task before or the task was not performed in a satisfactory manner) and innovation-oriented (the need to learn new ideas, techniques and technologies) to be effective in an organization. (Morikawa, 1995)

Worker Motivation

In the past, the customer was often perceived as just external to the company. Berry, through his article, "The employee as customer," introduced a new dimension to the image of a company's customer. (Berry and Parasuraman, 1991)

IM (Internal Marketing) is based on the understanding that no single management function is effective if it operates in isolation" (Rafiq and Ahmed, 2000) The first is Employee motivation and satisfaction, the second Customer orientation and the third Broadening the internal marketing concept - strategy implementation and change management"

Any motivational management theory was established with the concept that a satisfied and happy worker was also a productive worker. Frederick W. Taylor, in 1911, with the help of the publication "The Principles of Scientific Management" introduced the concept of scientific management and data monitoring. (Taylor, 1998) Scientific Management Theory proposed by Taylor was instrumental in launching the era of mass production in the U.S. (Onepine, 2004) According to Taylor, any task in manufacturing and production could be broken down into a number of discrete and unique individual tasks. These individual tasks could then be analyzed and studied to identify the best way of performing them. The independent functions could then be taught to a worker and the worker could perform this task repeatedly. Repetitive motions of this task would ensure high throughput productivity. Taylor's model introduced a new element into the work process -- the manager or supervisor. Where in the past the individual worker was responsible for ensuring the quality of the completed task and workmanship and pride of skill were the governing needs of the workplace, Taylor's concepts "simplified" the process. Workers often did not know to do any of the preceding or following tasks. For example, a painter on a Ford production line would know nothing of pressing the door panels or roof of the part that he was painting.

There is no doubt that Taylor's concepts played a significant role in the manufacturing and production industry at the onset of industrial revolution. Many of the concepts in more modified forms are still used today. "Standard times" for task completion are used in many factories to evaluate production schedules and consequently labor requirements are often made. Scientific management required a large support staff, which was not available in the past. The increase in the number of mid-level managers, record keepers and office staff was observed in companies that employed Taylor's ideas. Management functions of control, planning and strategizing became more defined and were separated from the other tasks of production and manufacturing.

The concept of Scientific Management was however, not without its flaws. Throughout the process, worker involvement was reduced. Skill set requirement were also equalized. The constant repetitive nature of the task also introduced boredom and resentment towards the work process. As worker time, and not skill, became the driving factor for compensation, highly skilled workers were not happy with this method of management. Little or no worker input made workers resent the people who forced or expected them to behave or perform in a certain manner. While incentives were also built into Taylor's system, quality and performance of employee were not always perfect. In this environment, higher performance workers were not always the creators of high quality products and vice versa.

Taylor's management models stress the task and not the worker as the main driving factor of the organizational process. In the twenties and thirties, individuals such as Max Weber, Elton Mayo and Frank and Lillian Gilbreth addressed the importance of the human element in the organization. Mayo, after considerable research, inferred that e individual felt the need for recognition, security and sense of belonging. (Mayo, 1977) Social scientist like Maslow and McGregor later identified and postulates the motivational theories for individuals. These theories believed that five basic needs drive human motivation and identified than as physiological needs, security needs, the need for affiliation, the need to feel self-esteem and the need for self-actualization. (Maslow, 1954)

Human needs apply not only to personal life but also to employer-employee relationships in the work place. (Stum, 2001) Many of these factors of motivations change over the period of employment.

Five different workforce needs for the workplace corresponding to Maslow's needs are: Safety/security (safe environment for the worker to work in physically and psychologically), Rewards (Compensation and benefits -- an extrinsic factor), Affiliation (a sense of belonging to the organization), Growth (the growth of both the individual and the organization) and Work/life harmony (balancing of personal life and work responsibility.) It is true that as workers move up the hierarchical ladder of the organization the needs they expect also tend to change and move for the next level. Balancing the need to provide these services to meet the organization's needs can be difficult. While it is almost impossible to identify the exact stage that e employee in the organization is at and design a plan of action for e worker, understanding the factors that drive motivation can help organization plan and strategize better for their human element.

By the mid 20th century, it was clear that the management theories and practices around the world were beginning to place greater emphasis on the quality of work life for the worker. They also engendered ways to improve workers' satisfaction. This satisfaction included a feeling of participation and commitment, in complete contrast to Taylor's management model. Management efforts became concentrated on areas of work place improvement areas with better-organized methods of performing the task. Understanding that the worker was an important part of the organization's success was slowly taking root.

Total quality Management (TQM) became the next most used management style in the 20th century. (Foster, 2003) TQM used many of the good features of Taylor's management model but also introduced new roles and job scopes. For example, the manager still played a vital role in TQM, but not as an absolute authority and decision maker but rather as a coach and mentor for the workers supervised. TQM management theories identified the worker as an integral part of the management process and the success of the company. E employee of the organization, from CEO, manager and worker is needed to improve the organization's "quality." Quality was not just referred to the product; rather, quality was more holistic -- for the entire organization.

Job-enrichment is referred to the latitude and personal responsibility that is conferred on w worker to allow him or her to perform their task in a manner that they perceive as comfortable and the best option while still producing the desired outcomes in manner specified and with the quality desired. This drastically differs from the concept of job-enlargement where the worker is forced to perform and undertaken more than his share of work in an attempt by the management to reorganize or restructure the job scope of the individual in any given position. The human-asset cost is currently a major portion of the expenses that organizations face and great attempts are made to reduce or at least control the costs.

Organizations use various methods to motivate their employees. There are basically three major categories of motivation that are commonly observed (Handy, 1993)

Satisfaction theory: the worker derives some form of pleasure or satisfaction during the process of completion of the tasks. For example, a researcher may derive satisfaction from the fact that the ideas and concepts developed by him or her are being used to better the quality of life of society.

Incentive theory: in this method of motivation a reward of some form may be offered to the workers to encourage them to perform better. For example, the sales and marketing staff are often provided with benefits and compensations that are above and beyond their basic salary in the hope that the workers will perform better

Intrinsic theory: this method of motivation targets the personal and human nature that exist in each individual -- the goal to excel, to better oneself and to attain satisfaction about the quality of life lived. Workers who require this type of motivation are more focused on betterment of themselves, learning new tasks and attempting to achieve new goals. These goals can however be attained only if the basic goals are achieved

Frank Mulhern, an Associate Professor at Northwestern University states, "A lot of incentive programs are not integrated into [corporate] strategy, marketing strategy or employee relations strategy at all." often, this is the main reason why reward programs fail to increase the performance of the employees. (Jakobson, 2003)

Uncertainties

Prior to September 11, 2001, many manufacturers in the U.S. were consistently lowering their inventory levels and utilizing JIT principles in their manufacturing operations. The shut down of many seaports and airports following the aftermath of the attacks showed just how vulnerable organizations all over the world could become in case of a transportation shut down. (Konicki, 2001) Gene Tyndall is of the belief that the SCM model can still be used in the new environment by developing better information channels and optimized use of IT infrastructure in the organization.

In addition to the new needs of transportation security, there are other random factors that have the potential to impact the supply chain of any organization. Some of the more salient factors (Gavirneni and Tayur, 2001) identified are:

Changes in economic conditions in the region, country or the industry

Seasonal impacts or cyclic demands

Bayesian updates of demand distribution

Information flow

Exchange rate fluctuation

The state of the safety stock in the period being evaluated

Sub-optimization of the supply chain (Kwon and Suh, 2004)

While many of the management functions have provided organizations with many advantages using them in isolation is often observed in organizations. Some of the advantages and disadvantages of the various management philosophies over the years as identified by Green, Jr., and Inman are shown below. (Green_Jr. And Inman, 2000)

Philosophy

Time line

Advantage

Disadvantage

EOQ

Minimization of inventory costs for independent demand

Not suited for dependent demand

MRP

Minimization of inventory costs for dependent demand

Required precise information. difficult to implement

Integrated financial and marketing planning with production planning.

Required extensive hardware, software and computer expertise

JIT

Elimination of waste by reducing inventory levels and improving process.

Primarily cost reduction strategy and a within factory focus; heavy dependence on timely supplier

TQM

Focus on quality and continuous improvement of process.

Within factory focus. Lack of focus on process improvement

TOC

Focus on constraints to improve throughput.

Limited focus within the factory on constraints.

TBC

Efforts to shorten supply chain. Focus on time as competitive advantage variable

Limit to how much chain can be shortened. Competitors rapidly adopt similar strategy.

SCM

Expansion of focus to include suppliers and customers.

Based on another study the most modern management tools have been identified as follows. (Weidema, n.d.)

There were, however, some drawbacks observed within the JIT system: Although the amount of inventory at the end-user level dropped, the total inventory in the supply chain does not. Often, suppliers to the end users were in effect shouldering the responsibility of stocking and warehousing the excess inventory, causing enormous financial burdens on their internal system. This pushing downward of responsibility down the supply chain generally ended up causing many of the suppliers at the lower end to become financially crippled. (Christensen, 2002) The Supply chain in this situation at the lower end often became financially unstable and suppliers downstream were often carrying products in anticipation of demands of the buyer up the value chain.

Methodology

Based on the literature review conducted at the initial (proposal definition stages) ten hypothesis were developed and identified for empirical testing.

Two hundred industries from Malaysia and the U.S. were selected for the survey -- 100 from each country. In Malaysia, the 100 companies selected were chosen randomly from the Federation of Malaysian manufacturers obtained from the website www.fmm.org.my/Members/directory.asp?SearchString=C&SearchType=alphalist&Action=Go!&nav=N&Page=1In the U.S. A similar process was undertaken. Magazines such as Forbes, Business Week, Information Week and The U.S. News for the past one-year were reviewed to identify different manufacturing companies. After the companies were selected, the websites of selected companies were reviewed to ensure that they were still in business. Wherever possible, an email was also sent with the request for asking support for this study. In addition to the magazines, Google searches were also done to identify manufacturing companies in the region. The web site: http://search.looksmart.com/p/browse/us1/us317829/us317862/us328059/provides a number of companies as well.

It was also ensured that the U.S. companies selected had manufacturing relationships with companies in the Far East and Southeast Asia. This was done in order to ascertain that the companies and the individuals filling out the survey would have some prior experience with companies in Asia. In this day and age, it was assumed that many companies would have some manufacturing operations that were outsourced to these regions and that the workers in the U.S. would have some interaction as well. Companies in Malaysia closely track the progress of new technology and management methodology of the West (U.S. And Europe) and from other countries in Asia (Japan and China.)

As a result it was felt that most companies would have some prior knowledge of the methods of SCM that are used by American companies. In addition, a majority of the workforce is able to read and write English fluently and the language barrier was not seen as a major problem for the average manager in Malaysia.

The random selection for both Malaysia and the U.S. ensured that a sampling from large, medium as well as small manufacturers were selected. This conclusion was arrived at evaluating the number of employees in the company; with an assumption being made that small companies would have fewer employees. Senior managers were identified through company literature and where this information was unavailable the letter was addressed to the 'Senior Manager' in the manufacturing division.

A detailed questionnaire with a cover letter stating the objectives of this study was mailed to the 200 companies selected. In addition, the cover letter also contained the researcher's affiliation with the educational institution and the discipline of study being undertaken for the Doctorate of Philosophy (PhD) along with the hypotheses that would be evaluated as a result of the study. The following hypotheses were assumed in the proposal and these were included in the letter:

Hypothesis 1: Malaysia has different critical success factors compare to America in the implementation of SCM.

Hypothesis 2: Malaysia has different problems compare to America in the implementation of SCM.

Hypothesis 3: The user of SCM in Malaysia and America share common characteristics in terms of size.

Hypothesis 4: Malaysia has different motivations in the implementation of SCM. when compared to those in America

Hypothesis 5: Malaysia has different managerial strategies in the implementation of SCM when compared to those in America.

Hypothesis 6: SCM has positive impact on the operational performance in Malaysia.

Hypothesis 7: SCM has positive impact on the operational performance in America.

Hypothesis 8: SCM leads to better quality management in Malaysian and American firms. The true value of SCM lies in providing quality products or services to customers.

Hypothesis 9: SCM leads to significant reduction in cost of operations in Malaysia and America. The investment in SCM and committing resources and manpower would be justified only if the supply processes are achieved efficiently at lower costs. Hence, analysis of this hypothesis is useful.

Hypothesis 10: SCM leads to greater customer satisfaction in Malaysia and America. The ultimate objective of SCM is to enhance customer satisfaction, which will translate into improving the profitability of the company. Satisfaction is derived from flawless customer service. This was a verbatim list send to prospective companies.

The cover letter and a list of assumptions were approximately two pages and the questionnaire was approximately three pages. The questionnaire consisted of thirty questions. There were approximately three questions designed for each of the hypothesis stated above. A check box option was offered for the different choices of answers provided for each question. Questions were designed to obtain specific information of SCM issues that were faced by companies in both locations. A self-addressed and stamped envelope was also provided in each envelope to encourage return of the questionnaire. This first survey was mailed to e-company at the same time. This was to ensure that the data collected was within the same period. Primary data collection (surveys) can reveal facts and features of any one market more clearly and comprehensively; however, they have to be gathered between the same periods of time. (Hutt and Speh, 1985) The random sampling of both markets it was hoped would help provide an unbiased opinion of the conditions of SCM, as they existed.

Sufficient time (three months) was allowed for the return of the survey. None of the surveys sent out at the first attempt however, were retuned back resulting in forcing a change in strategy for this study. Further attempts to contact and discuss the SCM models that are used by the companies also proved futile. Many companies that were contacted by phone in the U.S. cited that they needed approval from various managers and department heads to provide vital statistics of inventory level, production and operational cost and partnership details. With the unwillingness from the contact person, this researcher realized that any attempts to remotely work a way up using phone conversations would be daunting and leave no time for a definitive and comprehensive analysis of the SCM processes as they are carried out in Malaysia and the United States. The persons contacted by phone were also not cooperative. This meant that they were not interested themselves or they were unsure as to the intent of the researcher. Processes in most companies are closely guarded secrets. It also suggested that they were not comfortable in the process of divulging their financial information in detail. Poor response to the initial survey and the fact that the organizations contacted were unwilling to discuss their competitive strategies and partnership arrangements with their suppliers resulted in the need to try another approach to collect data.

The approach of selecting companies was identical to the one undertaken to identify companies to survey. It was ensured that the companies selected the first time were not in the second survey list. This was the second attempt in collecting data for this survey. The strategy for collecting data was also changed. Instead of the specific questions that was queried in the first survey, the second survey consisting of three open-ended questions. In the latter, respondents could give their perspective of SCM. The three questions asked were:

How does your company define supply chain management?

What is your perception of supply chain management? And,

How has supply chain management benefited your company?

One of the main reasons for using open-ended questions and not insisting on specific details was to encourage a greater response to the survey and consequently, larger amounts of data to be analyzed. The open-ended questions were put at the top of a page. An entire page was dedicated to answers for each question. This allowed for as much detail as possible. No restrictions or limitations were put on the number of words that could be used. Respondents were informed that they could attach additional pages if the need arose. Again, self addressed and stamped envelopes were also provided and the surveys mailed out.

Of the 200 surveys sent out the second time (100 to U.S. companies and 100 to Malaysian companies) only one was returned completed; eight were returned with partially completed information. The reply rate to the survey was 4.5% (9 out of a total of 200 surveys.) While a low rate of return is not unusual, the inability to use eight of the retuned survey made the task of analysis difficult. Any statistics obtained would be skewed and would confound the results which would be unusually biased towards companies only because they sought to reply. Such a study would not be apt for extensibility such as application of SCM to the manufacturing processes for two entire nations.

The one completed survey was deemed too small to draw an accurate statistical summary of the issues of SCM in organizations. The completed survey was from a U.S. company. Of the other eight surveys returned, four were from U.S. companies and four were from Malaysia. In all cases the respondents failed to answer one question or stated, "As discussed in question above" or stated "Not applicable."

Individuals in the production, manufacturing or supplies departments completed the nine surveys. As such, even the ability to identify a consistent trend in a specific department was not possible. The nine surveys were however reviewed to determine any common thread for the companies that were observed in the questions that were answered. The following phrases appeared in all the survey reviewed:

Reduced inventory levels

Reduced the number of suppliers used

Updated the IT infrastructure or "put in a new software program"

Improved the business unit's profits (although none explained how or the amounts by which the profits improved)

Integrated the process (again the processes integrated were not identified and the interaction or complementary process improvement by the supplier was not identified)

Restructured the manufacturing operations

The nine surveys however, did not provide (as mentioned previously in this chapter) a clear understanding of the companies' overall SCM strategy. They provided information with respect to only one division or business unit. Surveys generally stated that that the SCM was done to "improve the numbers" of the company. One respondent did state that the company insisted that the company's suppliers provide them access to all their data and the managers constantly used the information to negotiate "current cost" of parts purchased.

Many of the answers were vague. They provided superficial information that could not be translated into any valid information. Therefore, the entire data collection process was deemed unsuccessful. Further attempts to contact the other 191 companies to encourage survey completion also proved unsuccessful. It was felt that too much time and money was already spend on the process; this researcher recognized that there was no reason why a third attempt would succeed where the previous two attempts had failed. Garnering data through this method appeared within the present resources available to be impossible.

While researching the topic however, a lot of valuable information was gained by reviewing company information that was available in public domain. This information was available in the form of company press releases. Consequently, this study focused on understanding SCM needs as they appeared in published form for both U.S. And Malaysian manufacturers. The current methodology is based on secondary research. In this study, information from a variety of sources was reviewed and analyzed. These sources include journal articles, newspapers, books, magazines, periodicals and the current information available on the Internet. Typically, it is assumed that personal opinions and viewpoints are an integral part of any printed and published opinions from any of the secondary research sources. Sufficient collaborative information will be verified for any given point-of-view prior to introducing the concept or idea in the study. This information pertains to a wide variety of situations. There is an advantage to conducting secondary research when compared to primary research. Secondary research methods are cheaper. The time element is not as critical as primary research methods. (Groves, 1989) There are however, some limitations in using secondary data. Correlation factors established in the material reviewed, biases and faulty assumptions made by authors and researchers of articles reviewed can impact the new study.

Conclusion

Discussion study by Pittiglio Rabin Todd & McGrath, a Weston, Massachusetts consulting firm indicated that an efficiently integrated supply chain could save a company valued at $600 million, approximately $42 million each year. (Marabotti, 2003)

The literature reviewed deems SCM is to be significant in ensuring cost reductions and in improving the quality and reliability of the products being manufactured by an organization. Most of the companies implementing some form of SCM employ managers and decision makers who are willing to look ahead and identify e strategic tool that they can use to ensure profits for their organization. The goal for any organization should be the generation of profits. SCM appears to be a methodology rooted in sound principles to support the attainment of this goal.

No tool -- SCM, CRM, JIT, TQM, can be used in isolation. Nor is any strategy perfect the first time. Rather, organizations that display positive effects of supply chain integration are those who have tweaked and modified the theoretical concepts to suit the internal variances of their industry. Trial and error methods are often utilized to ensure that the objectives and missions of the organization are met. Companies that have failed in using SCM effectively are generally identified as those who have attempted to implement the SCM in a few functional areas of the organization such as manufacturing and production but have not integrated other aspects of the organization such as the marketing and sales function of the organization. By approaching the supply chain as a whole rather than targeting each organization e participant in the supply chain is more aware of their role in the entire process. When viewed in its entirety, integration of changes at one point can affect the entire chain.

SCM models also differ based on the value chain that is being served. For example internal supply chains in the organization have different requirements for success when compared to the supply chains between organizations. Requirements also change depending on the product that is being supplied. Critical components, for example, require more checks and balances when compared to non-critical components being moved through the chain

Any SCM model has to also define important components for the end user or the final customer in addition to defining the needs of e-customer of the supply chain. In this manner, the needs are more congruent to the individual needs of e supplier rather that having each buyer define their own needs in the supply chain. Value mapping of the supply chain in this environment will be more realistic and true when compared to the supply chain definition for individual components in the value stream. Customer demands are constantly changing based on the products being manufactured and the utility of the products by the customer. Any changes needed from the end customer should be able to flow backwards through the supply chain in a short time. The ability of the relevant company on this supply chain to seize this change information and capitalize on it in a short period of time determines the flexibility of the entire supply chain.

The need for continuous improvement is essential for any SCM model to be successful. It is important to note that any manufacturing operation will have its own bottlenecks and constraints. Complete elimination of bottlenecks will build in too much capacity in the manufacturing operation. This excess capacity often will require resources (financial and labor) to maintain the system. In short, over investing in capacity could be detrimental to the profitability of the organization. Balancing the plant should not be a priority for the organization, rather balancing the flow of goods within the supply chain should be considered more critical.

Even within an organization the various departments play an important role in the streamlining of the supply chain. E department: inventory and warehousing, manufacturing and production, logistics and transportation and marketing and sales cannot work in isolation from each other. Preferably these functional departments have to share information as it becomes available in an accurate and relevant fashion. Inter-departmental integration within an organization is as significant as the external integration between organizations.

SCM requires long-term commitment to the process. In turn, it also requires that e organization will willingly undertake the task of continuous improvement of quality and performance. This task while appearing simple may cause problems unique to an organization. The definition of quality often makes the criteria for evaluation and assessment of the organizations using any of the models discussed difficult. (Leonard and McAdam, 2002) Even quality award programs have trouble defining quality for evaluation. EFQM, Baldrige and the Deming awards do not have clear and concise definitions of quality. A common understanding of the term "quality" has been difficult to obtain from the academic and the business community as well over the years. The differences in the powers of cognition of the various elements such as organizational learning, training and worker empowerment among the implementers of these features in the organization and the assessors of the various quality models is often observed.

A quality models used to evaluate organizations in the modern world place equal emphasis on the performance of the company as well as the care and attention paid by the company to the soft issues of organizational management such as the worker motivation and job satisfaction. These soft issues of management however do not have standardized metrics for measurement resulting with different result using same guideline. The issues of quality and performance also get more complicated when reviewing issues in the global environment with multi-national corporations working on more than one continent with different external variables. It is however, observed that "ethics and social responsibility are not incorporated in the excellence models which have been developed for the Malcolm Baldrige National Quality Award (MBNQA) and the European Quality Award (EQA)." (Kok et al., 2001)

SCM often needs the incorporation of trust, ethics and social responsibility for any models or adaptation of the SCM to be effective at all times. Implementing correct representations of these ideologies in the organization can be difficult, but if implemented they have the ability to greatly increase the benefits obtained by the company. A mutual dependency between suppliers and buyers can help both develop relationships that can be advantageous in ensuring that both parties work towards a common purpose at all times. SCM assumes a certain level of cooperation and mutual respect between parties and the effort of all parties involved in transaction to at least meet these initial expectations is important.

The issues of supply chain interaction and leadership takes on special significance in view of the fact that many organizations have suppliers and buyers in different continents. The role of leadership in changing the organizations performance is critical. Trust, honor are an important tool for managers to use. Drastic changes are difficult to undertake and managers should be careful if undertaking radical changes. Evaluate solutions based on the situation. Identify long-term and short-term benefits of the decisions made. Some tools used by good managers: interacting with workers by walking around and talking in order to develop a comfort level in communication, encouraging teamwork and group participation, avoid generalization, encourage worker participation and involvement. It is also important to use techniques that have worked well for the organization in the past rather than just selecting new techniques for the sake of doing so. Good leadership is basically a relationship that a leader has with the people around him or her. (Maria and Morgan, 1996) Good managements skills can be learnt and developed by individuals but personal styles and ability to interact is also important. One individual making major decisions that can impact the lives of all the workers always calls for good judgment and personal responsibility.

Global leadership is also gaining significant importance. Organizations are more willing to move human expertise to different locations around the world if the need arises. (Vires and Florent-Treacy, 2002) In many cases, interactions both within the company's supply chain and with the external supply chain are impacted by local customs and beliefs. This factor is becoming more pronounced as organizations are dispersing their operations based on the need for skilled labor, availability of raw materials or better operating conditions. Leadership skills are therefore relevant to the region for which they are used. The sense of trust and community that people identify with; pleasure associated with the pride of workmanship and of a task well accomplished; and, meaning is related to the quality of life for the individual and the others around him/her.

Leadership issues and ethical responsibilities amongst the CEO's of organizations and their dealings with many of the internal issues of the organizations are also becoming questionable. Multiple and open interpretation of many of the criteria's of the quality awards can give rise to ethical and moral dilemmas for the organization as well. (Martin-Castilla, 2002) In a free market economy, many leaders of organizations are torn between the task of balancing the internal needs of the organization with the profitability and financial performance of the organization.

The critical success indicators that affect the organization differ significantly between different locations around the world. Managers and personnel at different locations might also interpret the information using different measures if they are not offered a standardized methodology for evaluating information and data. Knowledge management can become increasingly problematic if individuals at different point perceive radically different outcomes from the same data for the same situation.

Often problems in supply chains arise as a result of poor communication between the different organizations or between the functional departments within the same organization. It is often helpful for key individuals to routinely contact by electronic, telephonic or written communication the express needs of the organization at different periods of time to ensure that all are aware of any changes and modifications. As material movement through the system matures, often the basic issues are already resolved and only fluctuating variables might impact the change. Care should however be taken at the initial stages where companies are still working out the "bugs" in the IT systems and the constraints and bottlenecks in the manufacturing system. When implementing any new system or management style the old and legacy model should be first scrutinized.

Developing IT systems and technology infrastructure is especially important. The development of e-supply chains and the effect of a global buyer-supplier relationship where business partners might be geographically miles apart necessitate the effectiveness of any communication channels between organizations. When compared to the challenges of the human element, the IT needs appear easier and more manageable for the organization. IT systems and technology however, can become obsolete fast. Moving one entity in the supply chain to update its infrastructure can force the changes and improvements throughout the chain. Smaller companies at the supplier end of the chain with fewer financial resources might face excessive burdens e time one part in the supply chain decides to upgrade.

The total cost of upgrading (software cost, training of employee cost and service cost) and the ROI on this upgrade is often difficult to quantify for small organizations, which might not support in-house IT specialist. The metrics for measuring the ROI on the products also can differ significantly between organizations in the supply chain. For example, suppliers who are dedicated to providing the needs of on company only might be more willing to make the necessary changes to the technology in the organization when compared to suppliers who might have more than one buyer and the needs of each buyer differ drastically. In this situation, when suppliers provide to more than one company resolving the requirements for each company is paramount.

In the real world, a single supplier-buyer chain might not always exist and the supplier might have more than one buyer and a buyer might patronize more than one supplier. In this environment, the supply chain in not linear. It can become increasingly interlinked and connected. Determining IT changes can be a major issue for the company if the buyers insist on the technology that they support. Many of these issues could damage relationships between organizations and cause irreparable damages in the supply chain. Arriving at amicable compromises requires fair and just interactions between the managers and personnel at different levels of the two organizations. Leadership, plays a significant role in managing technical issues across the supply chain in addition to the "soft" management issues that might exist.

SCM is also dependent on software packages and computer technology. Software and hardware become obsolete fast. The total cost of ownership of this IT infrastructure is costly. Often, commercial, off-the-shelf packages have to be modified to suit the needs of the organization and organizations have the expectations of using this software for some period of time. In reality however, the constant upgrades and computer cost can be prohibitive, making SCM methodology expensive and labor intensive for setup and maintenance. In an increasing global market environment, the comfort level of managers and workers with the CM software requirements also differ. Talented and experienced workers might have problems with understanding software requirements and the new "standard operating procedures" that need to be followed so that the data and information can be accurately recorded.

Organizations in a haste to adopt a new model are quick to categorize old management styles as inappropriate. In many cases however, especially if the organization has been the leader in the industry for a long time, it is possible that the organization stumbled on a management style that was best suited to the conditions that existed within the organization. Management styles and communication styles are personal to individuals and organization. The ability of both to convey the desired message at all times to all the people involved is important. Organizations, like individuals, also undergo changes. Organizations also tend to absorb features that they feel will be best suited to the internal circumstances. This process is often better than forcing a communication or management style that is not technically, socially or culturally compatible with the organization. The equipment used: especially software and hardware systems constantly get more sophisticated and intricate. All businesses benefit from the regular and periodic addition of up-to-date equipment to help advance and keep their business competitive. The ability of the employee to make maximum use of the equipments lies in the fact that the employees can identify and target the specific, available tools. In addition, the needs of new systems will require that workers be offered training and development

When changes are implemented, related systems such as the worker incentive program, training and development and planning and scheduling might also require drastic changes. For example, incentive programs should be consistent with the philosophy of management within the organization. Companies linked through supply chains are also more aware of the conditions existing in the other facilities through personal interaction. This knowledge can propel them to demand and insist on similar working conditions or incentives from their employers, without identifying the driving factors for each organization.

Communication plays an important role in the successful implementation of any SCM endeavor by a company. While often, the processes and the value addition process play an important role in SCM, poor or lack of communication between the various departments of an organization are partly to be blamed for some of the waste that is incurred in the organization. Repetition of tasks, process that are not needed or those that are not valued by the customer are often the areas where improvements can be made.

Major changes are generally better accepted if they are linked to the success of the organization and the workers in the organization. In recent times, business reengineering and organizational restructuring has increased the number of layoffs that are undertaken. Employees left behind are trained to handle multiple tasks and responsibility and this in turn increases the productivity per worker numbers as fewer people are undertaking more responsibilities in the organization. In this environment, workers feel that if they help improve the system too much, their jobs might become obsolete and redundant and consequently they might lose their only means of earning potential.

Finding the right means to motivate and nurture employees during the changes in the organization is important. Identifying the best forms of motivation is important for the supply chain to work effectively. Motivational management can change drastically over geographical distances and might be also impacted by the external environment within which the worker operates. For example, in locations with high unemployment levels the fear of job loss and long periods of unemployment might encourage the worker to become more dedicated to the task and the changes being undertaken in the organization. During a booming economy where skilled and talented workers might be in high demand, the fear of job loss might not be a sufficient motivator; rather, salaries, wages and benefits offered might be the primary draw. Workers also prefer companies that offer them training and education with respect to the tasks that have to be undertaken by them.

Organizational culture is also an important factor in SCM. The ability of management to encourage worker involvement and growth along with the company growth is needed. Technological changes should also keep pace with other human resource and process modifications made within the organization. Managing time and resources efficiently during the change is important. The tasks to be performed should be manageable using the existing resources and skills possessed. Personal needs of the employees and the managers such as physiological needs, security needs, the need for affiliation, the need to feel self-esteem and the need for self-actualization get infused into an organization's culture through its individuals. Large organizations may have trouble understanding e subculture within the organization.

Motivation and guidance are important requirements for the organization while it is undertaking any changes in its processes or systems. Often, people do not clearly understand what the motivating factors are that drive their ambition and need to achieve a task or goal in their lives. E-society has its own standards and rules for what constitutes a good challenge. Indeed, e individual is different. He or she reacts to situations differently. Franken defined motivation as a multifaceted phenomenon. (Franken, 1997) He associated motivation as an internal state of need, desire or want that serves to activate or energize behavior as well as to give direction to behavior. Motivation is also defined as a factor that helps people get energized and attain a goal that they set for themselves. Need and desires act as motivators for human beings.

Information integration is also important during the change process. For SCM, all involved in the change: the suppliers, the organization and the consumers should ideally all be working of the same database. (Londe, 2003) In reality, however, fear of disclosure of all information and stiff competition between suppliers and organizations do not allow for the required level of transparency. Trust becomes an important issue when all information is disclosed. The fear of betrayal and of information theft has to be overcome if any SCM strategy has to be adapted for any supply chain. Profit margins and cost of manufacturing and production of products and services become more transparent making bargaining for higher margins and profits difficult.

Understanding risks and determining the threshold the company has for any risk either real or hypothetical is important. Risk management and decision-making require evaluation of more than the factors that exist within the organization. If the risk is tangible and has the potential to occur, the methods used for mitigating the risks have to be defined. Then e entity involved in the process is made aware of the procedures and plans that need to be put in place. If the risk is not immediate or if it is based on a chain of events that might occur, it is equally important that e option and effect on this chain of events is solutions and plans of action are identified. Contingency planning is an important aspect of SCM. Eone in the organization has to be made aware of this.

Operations have also shifted from a predominantly push-system of manufacturing to a pull system. In the push system, products were manufactured even if there was no directly market demand for the product. In the pull system however, products were manufactured only if a demand for the product or service already exist. Scheduling and logistics play an important role in the operation of a plant that is run on a pull-system. Good scheduling can control both the direct and to some extent the indirect activities that may be required for successful completion of the production. A good and detailed scheduling plan can help determine the exact quantity of raw materials required to start the process. Work-in-progress items that may have to be incorporated have to be also scheduled to arrive at the plant in the required sequence. Efficient methods used to deliver the finished product to the consumer should also be in place.

Plant operations get more complicated by issues such as manufacturing and operational lead times, replenishment cycles, unexpected surges in demand of a product, safety stock requirements for critical part, review frequency and the failure of establishing realistic target service levels. Establishments do not like a stock out option; they also do not want to hold inventory that may eventually be obsolete or have no resale value. While business would prefer to have a safety factor for their inventory level, the key is to maintain a realistic safety factor within the system. Safety stock levels can be reduced by have shorter lead times or ensuring that the supplier can provide additional requirements in the shortest possible time. In order to evaluate the just in time process, aggregate cycle times can help the purchasing officer determine the usage requirements.

Therefore, SCM is a tool that requires a well-defined methodology to achieve the desired results. (Stevenson, 2002) The processes involved in SCM are time consuming. As mentioned before, they require the dedication. It is important to select individuals who have the either the expert knowledge of the process being reviewed or individuals who have been battling the problem in the organization. It is also beneficial for the success of the project to ensure that the individuals involved are intimately knowledgeable about the process being reviewed or at least affected by the process being reviewed. SCM has the ability to affect the short-term and the long-term operation of the organization. The problem of SCM only gets compounded as the number of products manufactured by the company increases and the variance between any one-product line increases.

Organizational structure plays an important role in the success or failure of the supply chain instituted in the organization. Working in teams created from various departments and areas of the organization such as the production, manufacturing, sales and finance can help workers and employees within an organization understand the impact both directly and as a consequence of any related changes made in one area of the business. While supply chain management generally results from an executive decision, the success of this tool is observed only when workers understand the extent of the change and the role they have to play in making this change work. (Collyer, 2000) Information transfer and access are important and all any information should be available to the worker who needs it to perform the task correctly and efficiently. IT experts, with knowledge of the market, will have to ensure that all information is current and provided to the user in real time. With increasing use of multiple global manufacturing and sales locations, real time information is of great essence.

The role of customers and their needs in the supply chain is also important. Identifying customers as external or internal to the company is important. SCM helps integrate the needs of the customer in a manner that can be easily understood and appreciated by both the customer and the company. In the modern marketplace, return on any investment made by the organization is important. Slow growth and stagnating markets are forcing companies to look within their operations to identify areas that need improvement and changes.

For SCM process to be successful upper level managers have to be actively involved with the shop floor workers in determining the critical path that is followed by the material from the time it enters the system to the time it is utilized by the customer. This path is not just related to the path within the company but rather from the origin of the material. This implies that for an automobile company, involved with understanding the impact of the steel and aluminum used in the manufacturing process, tracking the path from the mining and processing of the ore is also as important in understanding the cost of the sheets of steel that are delivered to the manufacturing plant.

Critical paths will change constantly. These paths evolve with e change that is made to the flow of material in the plant. The workers actually operating the machines on the shop floor are generally more knowledgeable about the machine and changes that can be done to decrease the set up time and the ability to reduce the length of the runs. Innovations like this can help decrease the labor and machine time required.

Customer relationship and need identification are also important to SCM. Identifying and anticipating the changing needs of the customer can help companies strategize and plan for the products in a manner that is less costly and time consuming. (Forrester, 2002)

SCM is also gets more complicated as the number of supplier, customers and distributors increase. Organizations that operate on more than one continent are also faced with material procurement and distribution laws and regulations that might differ considerably. The paperwork required for procurement of chemical by a company in the U.S. might differ considerably from that of a company in China or France. To compound matters, if the chemical company has operations in more than one country ensuring that the legal needs for e location are meet is also important. The ability to track and maintain records of different rules and regulation of countries where the company operates or sells its products is needed. The power of suppliers and buyers for different markets might also determine the SCM tools that can be used. A market with many suppliers for one product might have different powers when compared to the market where only one supplier is present and has exclusive right to sell or market the product.

Supply chains are often not linear entities that are isolated from other supply chains. Rather, they are often intertwined with many organizations being suppliers and buyers for their partners. This interlinking relationship is often observed in value chains that travel through hundreds of organization and across various countries. Companies that share honestly and completely all the information between the different parties are often able to react to market changes and demands faster. Identifying the core competencies of each organization in the system is important. Benchmarking is the next stage and as the SCM process progresses the effects of the improvements should be noticed in the system. If no changes are observed, then the SCM paths taken were not appropriate. Management will have to refocus their efforts until the right set of plans are put in place. Improving product-availability and reducing overall working capital investments, without jeopardizing the company performance is a tightrope that most managers have to walk. (Gopal, 2003) The key to effective control is to measure actual progress and compare it to the planned progress on a timely and regular basis and to take the necessary corrective action immediately.

The JIT systems implemented in the organizations have their own 'maintenance' issues. In this type of inventory control system, the inventory levels are kept in check by coordinating demand and supply to the point where the correct amount of the desired goods are delivered just in time for use. A system like this requires constant review at periodic intervals. There are, however, some drawbacks observed within the JIT system: Although the amount of inventory at the end-user level dropped, the total inventory in the supply chain does not. Often, suppliers to the end users were in effect shouldering the responsibility of stocking and warehousing the excess inventory, causing enormous financial burdens on their internal system. This pushing downward of responsibility down the supply chain generally ended up causing many of the suppliers at the lower end to become financially crippled. (Christensen, 2002)

Attempting to understand the needs of SCM in isolation from the other aspects of the company are not advisable. Enterprise-wide resource planning (ERP) software is being increasingly used by large organizations to optimize their operations. As these portals become more sophisticated, the interaction that they offer between different modules of the relationship software (CRM, SRM) and operation software (OPT, MRP and JIT) also get more efficient and reliable. Duplication of process and redundancy of task can be eliminated when all the systems are tied together through a common IT platform. The ability of the relevant worker in the system to review in real time the information from any of the necessary systems and uses this information knowledgeably in the execution of their task can help any organization improve its overall efficiency and productivity.

It is important to understand that any SCM tool is designed to help a company work efficiently. It will not eliminate structural and operational fallacies, rather implementation of any of the SCM methods in the organizations, force divisions and business units to appraise their current systems and identify the shortcoming and the advantages of the system as well. Real time information will only be useful if the systems that are use for any of the processes are sound and reliable over a long period of time. Supply chains are not static and continue to evolve and change the ability to maintain track of the changes within the system is important and critical.

SCM is a relatively new tool when compared to other management tools such as JIT, OPT and MRP and it requires knowledge acquisition from other services such as sales and marketing, distribution and logistics and inventory and warehousing. Integrating this wide scope of knowledge through one system can be difficult. The creativity and novelty of any operation might be lost if it is forced to conform to a fixed predefined standard by virtue of being on the supply chain. Too much conformity could also reduce the basic competitive edge that any organization might posses when compared to other industries in the market.

Conceptually, a SCM methodology will help companies save time and money and will also help consolidate the purchasing and production operations in a manner that is beneficial to all involved in the process. Prolonged use of SCM in organizations however, is still to be determined. At this stage of SCM implementation, three popular metrics are utilized to evaluate suppliers performance. They are: categorical, weighted-point and cost-ratio. (Humphreys et al., 1998) It is unclear if these evaluation techniques will be effective as SCM models in organizations mature and stabilize. Initial improvements are achieved at a much faster rate for a relative small cost of investments. As the processes and operations get more perfect however, the ability to get the same percentage of improvements by inputting capital and time investments is not the same. In this environment, organizations have to pursue other options for improving the productivity.

As SCM reduces redundancy of task and offers better planning and scheduling options, the working capital that is needed gets reduced. This, in turn, increases the cash flow through the organization. Often, in the past, an organization's financial and accounting departments worked in isolation from the operation and purchasing department. These entities were considered necessary evils for any operation process. Managers in production, purchasing and manufacturing had a love-hate relationship with the policies of the finance departments. SCM, however, forces production and manufacturing managers to understand the ripple effects of their decision on the cash reserves and the capital of the organization. Individuals can often see in the effect of their decision on the entire operations much faster. If needed, the ability to correct these decisions can also help organizations to prevent faulty and error prone orders from reaching the supplier.

Many SCM also help managers model the company's past trends in a manner that is much easier when compared to the past methods of data evaluation. Often, in the past, trends were difficult to create from data that was distributed through various departments of the organization and a centralized archive was not present. By studying past trends, managers and decision makers can forecast with reliable and dependable information rather than making decisions through speculations. Tracking the progress of a product's manufacturing life cycle through the entire system is also possible with the identification of constraints and bottlenecks that might be unique to that particular product. Anticipating potential problems can also offer managers with knowledge that they can share with their workforce to encourage idea generations to prevent the occurrence of the problems.