B2B Integration : A Practical Guide to Collaborative E-commerce

Supply Chain Management (SCM) 413
review, passes it on to the purchasing agent for procurement. The
purchasing agent then contacts the appropriate supplier from the approved
list of suppliers, considers various factors such as competitive rates,
quality, quantity available and lead-time and then issues a purchase
order to the supplier.
The supplier acknowledges the purchase order, giving details including
the date of shipment and mode of transport. The purchasing company
warehouse receives the goods in due time and after proper verification,
delivers the same to the requisitioner and reports the delivery and
acceptance of goods to the accounts department. Simultaneously, the
supplier also sends the accounts department the invoice for the goods
shipped and accepted by the warehouse. The accounts department
then issues instructions to the bank for payment in accordance with the
terms of payment agreed upon with the supplier or as mentioned in the
purchase order.
14.2.4. Activities in a supply chain
A supply chain involves three-tier activity (see Figure 14.3):
• Upstream activities;
• Internal activities; and
• Downstream activities.
Upstream activities
The first part of a supply chain involves activities, such as material and
service inputs of upstream external suppliers who provide raw materials,
component parts, end products, services, infrastructure support and
computer technology.
While most companies rely on one level of suppliers, manufacturers
depend upon a complex hierarchy of suppliers in their supply chains. The
number of suppliers involved in a manufacturing process is much larger
than in any other sector as the product produced tends to be more
complex. For example, a typical automobile manufacturer may depend
on 60,000 to 100,000 suppliers, due to the requirement of enormous
number of parts which make up the end product. As the products are