Application of Information Technology Supply Chain Management to Small Medium Enterprises - Research Paper Example

Introduction Small Medium Enterprises (SMEs) plays a vital role in a countries economy. SMEs are established in large numbers due to less capital required, ease of establishment and support from the government. Even though the countries have formed policies to promote SMEs, they face stiff competition from the large scale companies and due to globalization. To sustain and grow in today’s competitive market scenario, SMEs should improve product quality, reduce operation costs, optimize resources and popularize their products. To accomplish these goals, the companies need to be aware of the latest trends in the global market, identify improvement areas and work on them. The rapid development of Information Technology has helped businesses flourish throughout the globe, irrespective of the location. When IT is properly utilized to develop business, it helps in the overall betterment of the SMEs performance. Topic / Background Research Topic: Analysis of the Application of Information Technology Supply Chain Management to Small Medium Enterprises (SMEs). During turbulence competition globally, Small and Medium Enterprises are to encounter some restricts such as sustained customer services enhancement, smooth operation requirements and inevitable cost reduction. (Add Reference Here) In order to overcome these challenges ahead, Small and Medium Enterprises must to contemplate the strategies adopted and to reconsider their business operations. Therefore, sustainable development and Information Technology applications adapted to SMEs and their business partners are critical to success. (Add Reference Here) The focus of this research is to investigate and identify the applications of Information Technology Supply Chain Management to Small Medium Enterprises (SMEs). In addition, it is to identify the opportunities for SMEs to build the Information technology supply chain applications and how to improve better performance through using Information technology supply chain applications. Main Research Aim & Research Objectives Main Research Aim Owing to the structural shifts of economy after the financial crisis of 2008, Small Medium Enterprises (SMEs) should consider crucial elements to overcome the fierce competition in the business environment. (Add Reference Here) So, the aim of this research is going to investigates and identify the applications of information technology supply chain management and its benefits to Small Medium Enterprises (SMEs). Research Objectives The Objective of the researches is to find out the contribution of e–business applications for SMEs to new economy business and the objectives are as below: Objective 1. To define and analyze the information technology in supply chain management. To indentify the relationship between supply chain management and SMEs Assess the differences whether SMEs utilize the operation with using the Information technology. Objective 2. To evaluate the contribution of information technology application for SMEs in total supply chain management. Objective 3. Recommend measures for the future development of information technology supply chains and its impact on manufacturers, logistics services provider and trading firms. Methodology This project requires an analysis of the previous studies and the current trends in the SME segment. The major source of data will be collected by internet research from the valid and reliable sources. Also, information from various research papers on SMEs, supply chain and internet business are utilized. Research Strategy A wide range of literatures will be used in this research project, so an exploratory approach to research will be conducted by employing multi–methods to obtain a range of secondary data, enabling the reinforcement of conclusion drawn. Secondary Research As a purpose to obtain a comprehensive and common understanding of the study area, so an extensive review of secondary literature will be taken. The findings of secondary research will initially concentrate on supply chain management theories, contribution of information technology to business and how it is applied to Small and Medium enterprise (SMEs). Findings Objective 1a (To indentify the relationship between supply chains and SMEs) Importance of Supply Chains in Business Whatever the nature and size of the business is, Supply Chains plays a vital role in the business performance. An effectively managed supply chain helps to reduce overall production cost, provides a time effective production cycle and facilitates optimal utilization of resources. Effective Supply Chain Management systems align the various functionalities of the organization, help them interact with each other and hence prove effective for the organization. SME Supply Chains When compared to large scale organizations, SMEs with its limited resources and capabilities are very sensitive to any unprecedented fluctuation in its process cycle. The success of a SME lies on the effectiveness and efficiency of its supply chain. For an SME, even a small cost saving or cycle time reduction will greatly help in the betterment of its overall results. Benefits of a good Supply Chain: Sourcing / Procurement: Choosing Vendors and other supply sources by properly analyzing the available data based on the proximity, material cost, transportation cost and shipping time is a must. A good supply chain also helps in managing the existing vendors and keeping track of the operations. Optimal inventory Inventory optimization is very important in SMEs since they cannot afford either a huge inventory or a raw material going out of stock. Maintaining an optimal inventory is only possible with the help of a reliable supply chain. Only if the lead time between the order of the raw material and the time it reaches the factory is managed minimum and also if that is reliable, the management will be confident on reducing the inventory, thus saving the precious working capital of the SMEs. Production / Manufacturing The production planning should be in line with the product demand in the market and production capacity. For the SMEs to maintain stability in the market, care should be taken to maintain continuous availability of the product in the market. Again, only a reliable and efficient supply chain makes it possible. In case, the manufacturing process is carried out in multiple locations, supply chain plays a critical role in this process in carrying out a coordinated process. Distribution Finished goods should reach the end users with minimum time delay. SMEs utilize the supply chain to optimize finished goods inventory. A vital element of supply chain management is the management and monitoring of the distribution channels (Management of Distribution Channels). SMEs should have control over the distribution channel and maintain goods flow and inventory at every level. Product Development Consider any product or service, the market is highly dynamic. Even though SMEs contributes considerably in the countries GDP, they have to compete with the large scale industries for their survival and developing products according to the market needs is the only way. According to Lambert and Cooper (2000), managers of the product development and commercialization process must: 1. coordinate with customer relationship management to identify customer-articulated needs; 2. select materials and suppliers in conjunction with procurement, and 3. develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination. (Supply Chain Management) Integrated Supply Chain A supply chain provides more beneficial when the individual process in the chain are integrated. “Successful supply chain management requires cross-functional integration…” Lambert and Cooper (2000) “…supply chain management is too important to be just a function. Instead its everybodys job.” Tom Blackstock Vice President, Supply Chain Operations, Coca-Cola North America (http://www.scm-institute.org) Companies have better control over their supply chain when it is integrated end-to-end and also can achieve reduction in cost, time and resources resulting in better profitability. Naylor et al., (1999) stated that the goal of an integrated supply chain is to remove all boundaries to ease the flow of material, cash, resources, and information. The performance of SMEs relies highly on their Supply chains. By adopting a good supply chain management system SMEs can form the best suited supply chain and manage them effectively by integration. Objective 1b (Assess the differences whether SMEs utilize the operation with using the Information technology) The rapid developments in Information Technology in the last few decades have enabled development of various tools that enable better performance of businesses. For the better management of the supply chain, SMEs utilize information technology in their businesses at various levels from basic utilities like email to full-fledged business solution like Enterprise Resource Planning (ERP) tools. Today, even traditional small scale businesses are forced to utilize some form of IT to survive the growing competition. For a better understanding on how the SMEs benefit by utilizing IT, let us analyze and compare the advantages and limitations of the various types of IT utilities and applications used in the supply chains of SMEs. Basic IT Tools & Applications Even the small scale enterprises have started using these basic IT applications like email, internet, office tools like excel, etc., For utilizing these, the organizations incur a very low investment like desk top computers and a internet connection. The benefit depends on the product and the market. The companies are able to update and enhance their knowledge on their product Know about the availability of raw materials throughout the world and thus get the opportunity to get the better quality goods at competitive rates. Understand the latest trend in the market and modify or develop products accordingly. These applications often do not require separate resources to manage, but with these tools the companies does not have the opportunity to advertize and popularize their product. Intermediate IT Tools & Applications When the SMEs afford to invest more money, the next level is purchasing software that assists various business functions like accounting & inventory management, having a webpage, etc. These applications need specialized personnel to operate and help in simplifying the day-to-day operation procedures. Having a website popularizes the products world wide. To make the websites popular, there are a large number of consultancies which offer services like search engine optimization, key word optimization, etc. Advances IT Tools & Applications Supply Chain Management (SCM) applications were initially developed targeting the large scale industries. But nowadays, a range of SCM applications and Enterprise Resource Planning (ERP) tools are available for the SME sector. Even though it requires a huge investment for implementation of these applications, once implemented, these aids in the end-to-end business processes. Many IT tools are available to today for the SMEs to analyze and improve their supply chain. The work by researchers at the National Institute of Standards and Technology (NIST) and colleagues at Pittsburghs Doyle Center for Manufacturing Technology, demonstrates the capabilities of simulation and visualization technologies for improving SME supply chain expertise (Helping Small Firms Run Large Supply Chains). Objective 2 (To evaluate the contribution of information technology application for SMEs in total supply chain management.) Overview of Information technology Supply Chain Management The Information technology supply chain will be very common in business future. The supply chain management has already proved that there are many benefits from an effective network between Suppliers. There are so much implied benefits such as improved quality, cost reduction and improved customers services from this effective supply chain. Of course, the benefits are based on an effectively employing the right processes and supporting information technology. Providing the right amount of relevant information to those needs to know it and when they need know it. In fact, the effective supply chain management is definitely from an information point of view. (Add Reference Here) The information technology supply chain will get a linkage to customers and suppliers together through exchanging information simultaneously. The velocity of relevant information flow will be very quick. Therefore, responding to the changes in expectation with the actual customer demand will mandate demand-driven manufacturing and provide for the faster changes in the actual material flow to match demand. (Add Reference Here) Quicker access to relevant supply chain information can acquire a relatively lower cost, lee inventory, higher qualified decision-making, shorter lead time and of course a better customer services. Moreover, one of the biggest cost savings is the overhead activity associated with lots of paperwork and inherent redundancies. The non – value added time of manual transactions processing can be replaced by evolutionary a higher profitable and inspirable business activities without any additional expenses. The result in cycle time reduction, lower inventories, the quality of decision making, the reduced overhead costs make information technology supply chain management a highly desirable strategy. (Add Reference Here) Information technology Supply chain Management Characteristics Supply Chain and the Need for enabling Information technology. A company simply implements a piece of software and presents it to existing infrastructure is wrong and dangerous. Companies need to cautiously evaluate the impact of new e-applications and information technology to the overall business. A useful e-business would facilitates the accuracy on delivery premises, enabling the overnight order fulfillment and allows a real-time information which require a high standard of integrated business systems. (Add Reference Here) (Shepherd 1999) Current supply chain has been designed to take products to consumers through existing assets so hardly to have a revolution. Online-installation & Training services to obtain solutions faster with more accuracy and on line inventory. E-business emphasizes less on how to enhance physical systems but strongly focus on the information flow, practices and relationship between participants. Using the web to allow a consumer, business or commercial to order their instructions. Receive a satisfaction and reduce the cycle time for order fulfillment. It is talking about the exploitation on e-commerce for financial benefits across a network of business interchange (Add reference here) Purchasing from Tactics to E-Sourcing and E-Procurement The procurement improvement will be focus on how to empower on purchasing power, expertise and infrastructure across companies in supply chain network. As former adversaries learn to work together to upgrade the supply chain levels, web-based e-procurements systems will offer a tremendous opportunity to promote a better-managed, indirect spending. Companies have mutually attained a level of internal excellence will now look to some form of network-based buying, conducted over the internet. Procurement portals will serve as a basis for bring these complementary opportunities together in a powerful way. (Add Reference Here) Customer Care with Product and Service Support. The first one of customer care automation system is to attain more profitable growth by serving less valuable customers more efficiently but on less effectively by matching service with value and need. The second one is to acquire more high-value customers or greater sales volume with these customers through the more effective use of focused customers care resources and improved utilization of the information being gathered from customers. (Add Reference Here) Suppliers can achieve these goals by creating an automated sales and service opportunities that produce a stable, satisfied base on less valuable customers. They can make a larger proportion of customer care resources and dollars available to target higher-potentials customers. In addition, they can leverage the customer information to deepen relationship, thereby creating a more loyal customer bases and greater long term value for both customer and supplier. (Add Reference Here) Finally, an automated, value added relationship in which suppliers become superior sources of customer support by learning from each transaction to provide progressively better service, receiving, storing, analyzing, and responding to real-time customer input about the need for new products and services, becoming better promoters by using technologies to establish a economical, one-to-one marketing models with automatic response mechanisms, supporting all customers more effectively, creating more genuine sales opportunities, and ensuring better field support for sale staff, and enabling customers to get their own information and place their own orders, 24 hours per day or 7 days per week, and thus lowering overall customer service costs. (Add Reference Here) After knowing all kinds of concepts of SCM, SME and E-SCM from secondary research, there will have primary research from In-depth Interview in the following chapter of findings and analysis. To evaluate the contribution of information technology application for SMEs in total supply chain management. E–supply chain is a hit topic and will be prevailing in the future that completely link the constituents together and make the connection through value chain from suppliers to end users. (Add Reference Here) SMEs will integrated the e–supply chain system and they will really know the benefits brought from the e–supply chain system on higher profit margins, improved customer service and quicker response to market. The e–supply chain using the advanced I.T. technologies to improve supply chain integration and performance is now essential for survival. (Add Reference Here) There are some contributions SMEs on better development through using E–supply chain. In the following part, there will be more details to explain the similarities components for SMEs to optimize their development in turbulence competitions. E – Commerce Electronic commerce is wide range of tools and techniques utilized and synchronized to conduct business in a paperless environment around the supply chain’s players. Electronic Commerce includes the Electronic data interchange (EDI), e-mail, internet and websites. Electronic commerce influences significantly on how SMEs to conduct their business. For examples, the most common use of e–application on SMEs is to search the vendor and information online, a linkage and communication through EDI, shipments trace and track. So, the vendor or suppliers have their own website on product introduction and promotion, brand building. (Add Reference Here) Besides this, SMEs are able to automate the process the documentation electronically between suppliers and customers. In 21st century, the internet access and roaming are getting common and easier, information exchange is cheaper and more effective over the world. Therefore, e – commerce is becoming a major focus for SMEs and represents significant opportunities for integrated supply chain management. (Add Reference Here) E – Marketplace E–marketplace basically is a web- based community that delivers between buyers and suppliers on an effective execution of supply chain activities. This marketplace enables a commercial forms especially SMEs to access into e–commerce immediately without setting up a burden initial costs. There are two parts which are B2B transactions exchange platform and information portal. (Add Reference Here) The B2B transaction platform is the place where business transactions taking place. Businesses can communicate and conduct business transactions through the platform on real time based online. Sellers can publish their products details on an on – screened catalogues, conduct the promotions by posting a profiles or specific information. On the other hands, buyers also able to handle all activities on entire procurement process from raising a purchase requisite to goods receipt and payment. The platform provides them with a sophisticated authorization arrangement ensuring transactions are taking place under a proper control. (Add Reference Here) E-mail E mail is the most widespread and the most ubiquitous Internet technology. It is very common for SMEs to use E mail to communication with each other. It is because E-mail is very efficiency for making company a fundamental on communications. Also, e mail takes advantage of separating the time of sending the message from receiving it. (Add Reference Here) Internet At the fundamental level, internet is root of network; internet provides an instant and global access to an amazing number of organization, individuals and information sources. Through systems like the popular World Wide Web, internet users are able to conduct organized searches on specific topics as well as browsing various websites to discover the vast resources available to them through their computer. (Add Reference Here) Internet also offers tremendous potential for SMEs to share information with supply chain members on timely and cost effective manner. It is necessary for SMEs to explore their website because there are numerous opportunities provided by the internet. Internet provides opportunities for the development of EDI systems. It also provided an incredible source of information about potential suppliers of products and services. (Add Reference Here) WebPages Once a company starts to use a website, they will discover a wide range of benefits for their companies to achieve a variety of market benefits. The benefits for SMEs to have a WebPages are having an internet savings, increased market effectiveness and changes in consumer’s attitudes. The significant examples of having a websites are lower cost imposed, image improved, and higher loyalty. (Add Reference Here) Moreover, WebPages are able to enhance SMEs on brand and category management. Webpage is not only beneficial on cost deduction but also on the brand building. (Add Reference Here) Electronic Data Interchange (EDI) “It allows members of supply chain to reduce paperwork and share information on invoice, order, payments, inquiries and scheduling among all channel members” William M. Pride & O.C Ferrell EDI refers to a computer–to–computer based information exchange in a standard format. Edi describes both capability and practice of communicating information between two business parties electronically instead of the traditional forms a mail, courier or fax. EDI utilizes the linkage between supply chain members together in terms of order processing, production, inventory, accounting and transportation. If SMEs use EDI, there will be a numerous benefits as following shown. SMEs can reduce a numerous of paperwork while doing it owns operation. Also, SMEs can provide better communication and customer service for clients. It is quicker for SMEs to access information in order to increase competitive advantages with the competitors. Finally, SMEs can achieve a higher productivity when SMEs reduce cost significantly. (Add Reference Here) In addition, EDI improves productivity through faster information transmission as well as reduced information entry redundancy. The accuracy can be improved dramatically by reducing human errors. Moreover, EDI can save a huge administrative cost such as labor cost and material cost associated with printing, mailing and handling paper – based transaction. (Add Reference Here) E – Sourcing Sourcing for goods and services is a crucial part in supply chain. To many SMES, finding the best supply and services at the lowest cost and under the most advantageous transportation arrangement is laborious process to SMEs. Different companies would make different decision making on what kinds of arrangement should be by different human being and their knowledge. (Add Reference Here) The Aberdeen Group in Boston identified sourcing as the most effective level for designing a high efficiency supply chain. “It is during the sourcing process that the cost of an organization’s products and the structure of its supply chain network and defined. Effective sourcing reduces costs, improves quality and spreads time-to-time cycles… Internet-based sourcing automation or e – sourcing can streamline strategic sourcing by creating highly efficient and collaborative online negotiation environments that deliver” “Supporting the complete sourcing cycle will require companies to configure the appropriate mix of technologies, strategy and product and supplier expertise into e – sourcing frameworks that address four key processes.” “Strategic e – Sourcing” – Tim Minahan It is stated that e sourcing includes using web – based technologies to automate and streamline the identification, evaluation, negotiation and configuration of the optimal mix of suppliers, products and services into a supply chain network that can rapidly respond to changing market demands. E – Procurement. E–procurement affords efficiency in the process by utilizing fewer resources to produce given level of purchases for SMEs. When SMEs are roaming on the web, they can easily search globally for alternative supply chain sources of a product or service. With another click of the mousse, SMEs can ascertain information about the sources identified through the electronic search. All of this research can be done in office without any phone calls and any additional manpower incurred on this sourcing issues. “… Most manufacturing industries have not shifted their direct materials procurement to the Internet. Three are many reasons for the slowness in adoption, not be least of which are the fear of using new systems in this critical area and the reluctance of suppliers to become e-commerce capable. But simply put, the Internet has the potential to fully integrate manufacturing supply china, from the point raw materials come out of the ground of final disposition of the product.” “Supply Strategy” – Kevin R. Fitzgerald May 2001 There is strongly believed that a large savings in which e–procurement-offering manufacturers are staggering. The benefits are: A reduction on transaction cost, in an area of the total spend that would deteriorate the company development. Reduction on inventor and obsolete products. SMEs can place their requisition timelier to market in order to meet the market fluctuation and real demand. Quicker reaction to change market trends, enabling manufacturing to gain a competitive edge in new product development. (Add Reference Here) 1. To reduce the inventory investment in the chain The inventory reductions result in significant channel – wide savings. Increased stock availability and reduced order cycle time occur through channel – wide inventory management and closer collaboration between channel parties. (Add Reference Here) 2. To increase customer service The customer service is provided by elimination on stock redundancy. Having a sufficient safety stock is to meet desired service levels. The amount of safety stock required may result into lower stock required due to reduce uncertainly. (Add Reference Here) 3. To facilitate a competitive advantage among the channel. Examining the firms is in channel to have a particular cost advantages such as the lowest labor rates or capital cost. Managing the supply chain entirely can facilitates a competitive advantage and larger profitability for the channel through coordinated attention to costs, better service and lower inventories. (Add Reference Here) Objective 3 (Recommend measures for the future development of information technology supply chains and its impact on manufacturers, logistics services provider and trading firms) E–business is getting popular nowadays; SMEs starts get used to implement the E–business system in order to improve significantly on their service and acquiring the competitive advantage. During a turbulent competition ahead, SMEs encounter many threats such as an advanced technology. Competitions are not limited to the SMEs development; SMEs are advised to implement more information technology to facilitate the communications through the business transactions. Therefore, SMEs can acquire more opportunities through e – business applications. In the following parts, there will be some recommendations proposed for SMEs and SCM parties that are manufacturer, logistics service provider and trading firms to obtain a better competitive edge through using an effective supply chain management. Recommendation to the SME Manufacturer The evolution of global SCM has been refined for local manufacturer to compete and acquire more orders from increasingly demand. Changing role of SME Manufacturer Traditionally, most of the manufacturers get used to be effective on how to produce at lower cost. They really know shifting their production line offshore and competing aggressively. Nowadays, SME manufacturers are sustainable going forwards to offer better services and integrating the supply chain. (Add Reference Here) Stage 1 SME manufacturers develop to act as a provider of labor, machines and manufacturing capabilities Stage 2 SME manufacturers act as a provider of sourcing capacity, managing quota, product development capabilities and sourcing package services. Stage 3 SME manufacturers are one of the parties in a supply chain partner between retailers and other service providers. They collaborate and create such new concepts Vendor Managed Inventory, Collaborate Planning Forecast and Replenishment and Floor Ready Merchandise, etc. To achieve the goals through minimize the total logistics cost and improved lead-time by sharing the risks and benefits. (Add Reference Here) Recommendation for SME Manufacturers There are several suggestions to point out the ways on how to improved their quality and sustain the development from turbulent competitions. Build core competencies to obtain a SCM – driven orders Have to understand and analyze what the actual needs and demands from customers and their preferred characteristics. Speed Sourcing SMEs compete for increasing ‘Open–to–Buy” strategies. SMEs must have enough capabilities to have their own designs and production. SMEs manufacturers also should contemplate themselves on having their brand in order to have larger profit margin and consider how to shorten the lead-time. These decisive factors are definitely based on strong materials research knowledge, in – house design expertise, ability to communicate effectively with retailers on the latest design trends and access to flexible manufacturing. (Add Reference Here) Replenishment Sourcing Focus on how to maximize the orders with minimal design changes; SMEs should build SCM capabilities to minimum stock – out and the improvement on – shelf performance. (Add Reference Here) Recommendation to the SME’s Logistics Service Providers The global SCM evolution has redefined the way in which the logistics service providers around the world. The change role of Logistics Service Providers There are fiercely competition on shipping, freight forwarding and logistics service provider. The competitions are traditionally transformed from “commodity” services to position themselves more aggressively as an ‘extended arm’ of their customers’ logistics organizations. These demands of service intimate close relations with their customers and their customer’s customers in order to work effectively among the supply chain. (Add Reference Here) The logistics industry has been evolving through different stages Stage 1 Transportation, delivery and freight consolidation services with an emphasis on price and capacity availability. Stage 2 The industry had been evolved into modern stage Point-to-Point delivery, information tracking, bulk packaging, and documentation management. Stage 3 A total logistics solution is started to be prevailed and the most innovative concepts are carried out – outsourcing is very popular in operation such as inspection, package, distribution centre management and inventory control. Moreover, there are more I.T system implicated to SME to facilitate the information acquired and the services provided such as Ready Delivery, Cross–Docking, CFPR–collaborative forecast, planning and replenishment and Vendor Managed Inventory (VMI). (Add Reference Here) Recommends for logistics service providers Responding to the SCM challenges where customers demand more than just ‘Moving products’, logistics service providers need to offer a sustainable innovative logistics to enhance SCM between SMEs and retailers. This can be achieved through. (Add Reference Here) Efficient Communication with SCM – enabling technologies The use of EDI, SSCC (Serial Shipping Container Code), and this I.T application could minimize communication and processing errors, real – time information tracking and better usage of scarce and expensive resource to provide SMEs. (Add Reference Here) Systems integration with Suppliers and Retailers especially SMEs The common example of this is the usage the EDI communication. The EDI standardizes in format and allow the transactions timely and accurate exchange of critical information such as Arrival Notice, Transport instruction and Cargo handling movement. These standards and advantages facilitate the further integrated into systems application on inventory management and distribution management. (Add Reference Here) Logistics Operation Excellence The materials handling systems and equipment from the simple standardized pallets are absolutely beneficial to the application of cross docking and minimize the double handling in put away, storage and re–palletizing, to offer total SCM package integration. (Add Reference Here) The recommendations to small and medium Trading offices THE SCM evolution has restructured the ways in which trading companies in continue to support Retailers to find their sourcing in different geographical areas. The changing role of Trading Offices Representative from the foreign retailer or organization, more trading office acts as a ‘Middlemen’ and conduct a wide range of tasks. They evolved over time towards the value – adding equation. Trading Offices moved away from “Post – Office” activities to offer more value – added services. Stage 1 Locating factories, conduct a quality control, negotiating the prices and basic merchandising Stage 2 Product development, materials searching, source capability management and production planning Stage 3 Suppliers Management and development, training, upgrading, monitoring and the joint working with suppliers are to provide a SCM service and the quality assurance. Recommends for trading offices To be survived from the SCM challenges, it is very important for trading offices to act as a value – adding ‘Conduit”, continues to enhance SCM service between manufacturer (SMEs) and retailers. This can be achieved. Efficient communication with SCM enabling technologies The use of EDI to minimize the communications and processing errors, real time information exchange and the better use of expensive resources. (Add Reference Here) Vendor Development To identify, jig, train and upgrade suppliers in SCM – enabling the technologies and SCM service implementations in areas such as Floor – Ready – Merchandise (FRM), crossing and Vendor Managed Inventory (VMI) (Add Reference Here) Developer and Enforcer of “Manufacturability Package” Which is the ability to translate design effectively, line planning to work samples and full production are according to various degree of supplier’s SCM maturity. This could include the management of effective product management to allow speed sourcing and distribution management for replenishment sourcing. (Add Reference Here) As conclusions, SMES are proposed to make an evolution on changing their mind and attitude on how to acclimatize the competitiveness environment. Moreover, SMEs must contemplate themselves about risks when they are changing through using e – business applications. For example, after fully automation on the operation, how to handle the redundant employers is big question. The lay–off are engineering are the determination on the successful or not for the company growth and development. There may be some risks are need to be consider, too. For example, the team spirit and motivation are critical factors, how to convince and motivate the staff pay more efforts and commitment are the determination on how easy to implement the IT evolution. Naylor, J.B., Naim, M.M., Berry, D 1999, ‘Leagility: integrating the lean and agile manufacturing paradigms in the total supply chain’, International Journal of Production Economics, Vol. 62 No.1/2, pp.107-18, viewed 12 May 2009, http://www.sciencedirect.com/science/article/B6VF8-3WG359G-9/2/14adb269e87558eff9679a05641b35ca. ‘Helping Small Firms Run Large Supply Chains’ 18 Jan 2006, National Institute of Standards and Technology, ScienceDaily, viewed May 11, 2009, http://www.sciencedaily.com­ /releases/2006/01/060118091105.htm Management of Distribution Channels, viewed 12 May 2009, http://www.exforsys.com/tutorials/supply-chain/supply-chain-distribution-management.html Supply Chain Management, viewed 12 May 2009, http://en.wikipedia.org/wiki/Supply_chain_management#Supply_chain_management. Read More