TATA INFOTECH OFFICES	Supply chain management crystallizes concepts about integrated business planning that have been espoused by logistics experts, strategists, and operations research practitioners as far back as the 1950's. Today, integrated planning is finally possible due to advances in IT, but most companies have much to learn about implementing and applying analytical tools needed to achieve it. The information revolution has accelerated significantly in recent years. Astonishing gains in PC computing speed, e-commerce, and the flexibility of data management software have promoted a range of applications. Widespread implementation of Enterprise Resource Planning (ERP) systems offers the promise of homogeneous, transactional databases that will facilitate integration of supply chain activities. In many companies, however, the scope and flexibility of installed ERP systems have been less than expected or desired. Experts believe that Internet developments will soon induce improved ERP systems that allow data to be distributed among companies in virtual supply chains. In any event, competitive advantage in supply chain management is gained not simply through faster and cheaper communication of data. And, as many managers have come to realise, ready access to transactional data does not automatically lead to better decision-making. A guiding principle is: To effectively apply IT in managing its supply chain, a company must distinguish between the form and function of Transactional IT and Analytical IT. Transactional IT is concerned with acquiring, processing and communicating raw data about the company's supply chain. The data may originate from internal sources, such as a general ledger system, or it may originate from external sources, such as orders placed over the Internet. To effectively apply IT in managing its supply chain, a company must distinguish between the form and function of transational IT and analytical IT. By contrast, Analytical IT evaluates supply chain planning problems using descriptive and normative models. Descriptive models, such as demand forecasting or managerial accounting models, describe how supply chain activities, costs, constraints and requirements may vary in the future. Normative, or optimization, models, such as a linear programming model for capacity planning, describe the space of supply chain options that the manager wishes to explore in optimising his decisions. Optimisation models are constructed from supply chain decision databases using descriptive models. They are the only analytical tools capable of fully evaluating the complex interactions and ripple effects that make supply chain management difficult and important. For this reason, supply chain managers in a wide range of companies have recently acquired and begun employing optimisation modeling systems. next page>>>