The Relationship between Supply Chain Management and E-Business – A New Technique

8/2/2019 The Relationship between Supply Chain Management and E-Business A New Technique

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The Relationship between Supply Chain Management and E-Business A New Technique

Prepared By:

Prof.Lakshmi Narayana.K

Research Scholar,

Rayalaseema University, Kurnool,

Asst.Prof, Department of MBA,

M.S.Engineering College, Bangalore.

E-mail: [email protected]

Mob: +91-9741101011

Abstract:

In recent years, the area of Supply Chain Management has generated a substantial amount of

interest both by managers and researchers. This interest has also been fueled by the growth in the

development and application of e-business technologies. These technologies enable the supply

chain manager to make coordinated decisions by integrating the diverse and sometimes

conflicting objectives of the various trading partners in a supply chain. The purpose of this paper

is to highlight strategic and tactical issues for analyzing supply chains in an e-business.

Keywords: B2B, B2C, C2C, E-Business, E-Collaboration, E-Commerce, E-Procurement, Supply

Chain Management.

INTRODUCTION

Supply Chain Management has generated substantial interest in recent years for a number ofreasons. Managers in many industries now realize that actions taken by one member of the chain

can influence the profitability of all others in the chain. Many international business researchers

are of the opinion that increased globalization of markets and increasing international

competition imply that firms in all nations will face similar, if not identical, competitive

environments. In India due to liberalization of economy, the companies are facing acute

Dr.P.Paramashivaiah

Professor, Post Graduate

Studies,Department ofCommerce,

Tumkur University.

E-

mail:[email protected]

om

Prof.Ajata ShatruSamal

Research Scholar,

Rayalaseema University,Kurnool,

Asst.Prof, Dept.MBA,

NCET, Bangalore.

E-
mailto:[email protected]://opt/scribd/conversion/tmp/scratch6275/[email protected]://opt/scribd/conversion/tmp/scratch6275/[email protected]://opt/scribd/conversion/tmp/scratch6275/[email protected]://opt/scribd/conversion/tmp/scratch6275/[email protected]:[email protected]


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competition in the international markets. Many manufacturing companies are forced to improve

the quality of their products and reduce their manufacturing costs.

This paper is divided into two parts. First part deals with how e- Business is changing supply

chains. Second part of the paper is designed to examine the related research in this area. For the

purpose of the study, the e-Business applications are divided into three categories:

* E Commerce

* E Procurement

* E Collaboration

E-commerce helps a network of supply chain partners to identify and respond quickly to

changing customer demand captured over the Internet. E-procurement allows companies to use

the Internet for procuring direct or indirect materials as well as handling value-added services

like transportation, warehousing, customs clearing, payment, quality validation and

documentation. E-collaboration facilitates coordination of various decisions and activities

beyond transactions among the supply chain partners, both suppliers and customers over the

Internet.

The main objective of Supply Chain Management is 'Customer Satisfaction' and to achieve this,all roadblocks are eliminated in between ultimate customer and the raw material supplier.

Features of Supply Chain Management

* Customer focus

* Retaining existing customers

* Streamlining of operations

* Minimum Fixed Cost

* Elimination of paper work

* Just in time

* Transparency at all levels

* Developing multiple supply sources for a multiple components


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* Customer value enhancement and cost reduction

E-COMMERCE

Buying and selling on the Internet is known by the generic term e-commerce, just like e-mail,

which is the way of sending mail through the net. Business on the net is classified into B2B

(Business to Business), B2C (Business to Consumer) and C2C (Consumer to Consumer). B2B

transactions are largely between industrial manufacturers, partners, and retailers or between

companies. B2C transactions take place directly between business establishments and

consumers.

B2B sites are essentially the net meeting points for buyers and sellers of the industrial world.

They serve a limited number of customers. The Turnover would be many times that of the most

B2C sites and most importantly they make profits. B2C sites are offering low value items CDs,

Cassettes, Food, Toys, Flowers, and Cards etc because no complicated logistics are involved.

C2C sites don't form a very high portion of web-based commerce. Most visible examples are the

auction sites. Basically, if someone has something to sell, then he gets it listed at an auction sites

and others can bid for it.

E-PROCUREMENT

The Internet offers a natural platform to facilitate efficient procurement as numerous buyers and

sellers find each other and transact according to some pre-specified protocols. The following are

the procurement strategies available for a manufacturer.

* Strategic Partnership

* Online Search Strategy

* Combined Strategy

1. Strategic Partnership


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Strategic partnership strategy is to develop a long-term supply relationship with a specific

supplier.

2. Online Search Strategy

Online Search Strategy is to shop online for a better price.

3. Combined Strategy,

The combined strategy is to combine both sign a long-term purchase contract with a supplier

upto a certain level, but if necessary additional quantity may be purchased online.

E-COLLABORATION

We define e-collaboration as business-to-business interactions facilitated by the Internet. These

include information sharing and integration, decision sharing, process sharing and resource

sharing. There are many new cases that examine different elements of collaboration from

information sharing and integration to process and resource sharing.

Several cases have highlighted the impact of information integration on some particular aspect of

the supply chain. Some of the cases are focused on managing supply while others are more

focused on the customers. For example, the Solectron case focuses on how the use of

information has transformed Solectron from a simple contract manufacturer into a full service

supply chain integrator General Motors and Lufthansa cases illustrate how information can be

used to increase customer loyalty and manage the prices.

RESEARCH IN SUPPLY CHAIN MANAGEMENT

Research in Supply chain management has identified twelve distinct management areas that are

associated with the subject. Each area represents a supply chain issue facing the firm. For each

area, we provide a brief description of the basin content and refer the reader to a few articles that

apply.

The twelve categories are,

* Location


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* Transportation and logistics

* Outsourcing and logistics alliances

* Sourcing and supplier management

* Marketing and channel restructuring

* Inventory and forecasting

* Service and after sales support

* Reverse logistics and green issues

* Product design and new product introduction

* Information and electronic mediated environment

* Metrics and incentives

* Global issues

1. Location

Of the twelve categories, decisions in this area have perhaps the longest time horizon. Decisions

at this level set the physical structure of the supply chain and thus create constraints for more

tactical decisions such as transportation, logistics and inventory planning. Engineering tools

such, as mathematical models of facility location and geographic information systems are very

useful in sorting the location choices.

2. Transportation and logistics

It includes all issues related to the physical flow of goods through the supply chain, including

transportation, warehousing and material handling. This category addresses many of important

choices related to transportation management including vehicle routing, dynamic fleet

management with global positioning systems and merge-in-transit.

3. Outsourcing and logistics alliances


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It examines the supply chain impact of outsourcing logistics services. With the rapid growth in

third party logistics providers, there is a large and expanding group of technologies and services

to be examined. These include fascinating initiatives such as supplier hubs managed by third

parties.

4. Sourcing and Supplier management

This category addresses the issue of outsourcing components and the management of the

suppliers who provide them. Make/buy decisions fall into this category. These decisions should

involve top managers and strategic thinkers because they can literally define the future of the

firm. For example, IBM to outsource its PC operating software to Microsoft and its central

processing unit to Intel.

5. Marketing and Channel restructuring

It includes critical decisions related to getting the products from a firm's factories all the way into

the customer's hands. As with facility location, these decisions impact the supply chain structure

as well as define an interface with marketing.

6. Inventory and forecasting

It includes techniques for ongoing inventory management and demand forecasting. Industrial

engineers and operation managers have employed statistical models for forecasting and

inventory planning. Stochastic inventory models can identify the potential cost savings from

sharing information with supply chain partners, but more complex models are required to

coordinate multiple locations.

7. Service and after sales support


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This category covers the important issue of providing service and service parts. Some leading

firms, such as Saturn and Caterpillar, build their reputations in this area, and this area and this

capability generates significant sales.

8. Reverse logistics and green issues

This area examines both reverse logistics issues of product returns and environmental impact

issues. Growing regulatory pressures in many countries are forcing managers to consider the

most efficient and environment friendly way to deal with product recovery. Product recovery

includes the handling of all used and discarded products, components and materials.

9. Product design and new product introduction,

It deals with design issues for mass customization, delayed differentiation, modularity and other

issues for new product introduction. Traditionally, products destined for world markets would be

customized at the factory to suit local market tastes. The customized product is desirable and

managing worldwide. Thus if the French version selling well, but the German version is not,

German products can be quickly shipped to France and customized for the French market.

10. Information and electronic mediated environments

This category addresses the impact of information technology to reduce inventory and the

rapidly expanding area of electronic commerce. It focuses attention on integrative ERP software

such as SAP and Oracle as well as supply chain offerings such as Manugistics, i2's Rhythm and

PeopleSofts Red pepper.

11. Metrics and Incentives

It refers to the measurement of both engineering and organizational processes and the related

economic motivations. Several recent articles concentrate on the link between performance

management and supply chain management.


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12. Global issues

It considers the issues beyond local country specific operating environments to encompass issues

related to cross-border distribution and sourcing 12. For example, currency exchange rates, duties

and taxes, freight forwarding, customs issues, government regulation and country comparisons

are all included.

Conclusion

Supply chain management is indeed a large and growing field for both engineers and managers.

Nearly all major manufacturing consulting firms have developed large practices in the supply

chain field and the number of books and academic research papers in the field is growing

rapidly. In fact, each of the twelve areas covered in our treatment of supply chains are important

in themselves. Finally, the Internet continues to change many fundamental assumptions about

business, pushing managers to continue to evolve their supply chain practices or find themselves

driven out of the market.

References

1. Hammond, J.H. and M.Kelly, 1990, "Note on Facility location", Harvard Business School,Harvard University, Cambridge.

2. Kopczak, L., H.Lee, and S.Whang, 1995, "Note on Logistics" Graduate School of Business,Stanford University, Stanford.

3. Bowersox, D.J., 1990, "The Strategic Benefits of Logistics alliances, Harvard Business

Review, 36-45.

4. Venkatesan, R., 1992, "Strategic Sourcing: To make or Not to Make" Harvard BusinessReview, 98-107.

5. Fisher, M.L., 1997, "What is the Right Supply Chain for your product?" Harvard BusinessReview 105-120.

6. Lee, H.L. and S. Nahmias, 1993, "Single-Product, Single-Location models in Logistics ofproductions and inventory" Handbooks in Operations Research and Management Science,

Amsterdam

7. Cohen, M.A., Y.S. Zheng, and V. Agrawal, 1997, "Service Parts Logistics: A BenchmarkAnalysis", Supply Chain Management Review, 627-639


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8. Herzliner, 1994, "The Challenges of Going Green", Harvard Business Review, 37-50.

9. Gilmore, J.H. and B.J. Pine, 1997, "The Four Faces of Mass Customisation", Harvard

Business Review, 91-101.

10. Woolley, 1997, "Replacing inventory with information", Forbes, 48-54.

11. Laughlin, K.A., 1997, "Five steps to improved performance measurement", Supply Chain

Management Review, 52-58.

12. Arntzen, B.C., and G.G. Brown, 1995, "Global Supply Chain Management at DigitalEquipment Corporation", Interfaces, 69-93.

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The Relationship between Supply Chain Management and E-Business – A New Technique