3 2. Literature Review This literature review is composed of three parts. The first section deals with the problems in supply chain management. These problems build in the value challenges that inhibit firms to realize the full value of supply chain collaboration, which will be discussed in section two. The third section introduces the corporate capabilities to handle the challenges. 2.1 Problems in Supply Chain Management Supply chain problems result from many causes such as natural disasters, labor disputes, supplier bankruptcy, as well as acts of war and terrorism. They can seriously disrupt or delay material, information, and cash flows, any of which can damage sales, increase costs — or both. Broadly categorized, potential supply chain problems include delays, disruptions, forecast inaccuracies, systems breakdowns, intellectual property breaches, procurement failures, inventory problems, and capacity issues (Copra and Sodhi 2004). Facing the supply chain problems, the concept of managing a supply channel, in fact, is not new. It has been discussed since the late 1950s. The SCOR (Supply Chain Operations Reference-model) from Supply Chain Council (SCC) provides the integration of supply chain management activities, which includes current business activities, business process activities, and IT enabling activities (Figure 2-1). The basic structure of the reference-model focuses on the five key supply chain processes: Plan, Source, Make, Deliver, and Return. The plan process balances aggregate demand and supply to develop a course of action which best meets sourcing, production, and delivery requirements. The source process procures goods and services to meet planned or actual demand. The make process transforms products to a finished state to meet planned or actual demand. The deliver process provides finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management. The return processes associated with returning or receiving returned products for any reason. The return processes extend into post-delivery customer support (SCC 2002).