The Impact of E-Business Technologies On Supply Chain Management

Supply Chain Management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. It spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.

E-Business means using the Internet or related technologies for any of our normal business operations. We might use it for buying, selling, advertising, managing. We may use the Internet to reduce costs, improve productivity, or increase revenue.

Introduction
The internet is having a significant impact on how firms interact with each other and their customers. Past stumbling blocks for supply chain integration such as high transaction costs between partners, poor information availability, and the challenges of managing complex interfaces between functional organizations are all dissolving on the internet. E-business impacts supply chain management in a variety of key ways. These include:

• Order-placement process
• Order-fulfillment process
• E-purchasing
• Virtual supply chain
• Changes in the distribution system
  

Order-Placement Process
It involves the activities required to register the need for a product or service and to confirm the acceptance of the order. The internet has enabled firms to re-engineer their order-placement process to benefit both the customer and firms. The following advantages are provided by the internet.

• Cost reduction
  Using the internet can reduce the cost of processing orders because it allows for greater participation by the customer. This approach reduces the need for call centers.
  
• Revenue flow increase
  A firm’s web page can allow customers to enter credit card information or purchases order numbers. This approach reduces the time lag.
  
• Global access
  The internet also allows firms to accept orders 24 hours a day from virtually any location.
  
• Pricing flexibility
  Firms with their products and services posted on the web can easily change prices as the need arises, thereby avoiding the cost and delay of publishing new catalogue.
  

Order-Fulfillment Process
It involves the activities required to deliver a product or service to a customers.

• Information sharing
  Sharing of information can obviously be a problematic issue as the companies in a supply chain may not be prepared to share their production data, lead times, specially when those companies are independent of each other. The internet provides a quick and efficient means to share information along the supply chain. For example, the enterprise resource planning (ERP) systems facilitate the flow of information across functional area, business unit, geographic region, and product line.

• Inventory management
  Unused and unsold inventory can carry burdensome costs. There are holding costs, including warehouse and production-line storage costs, insurance costs, and costs due to obsolescence. In essence, e-business technologies allow firms to replace inventory with information and then use the information more productively. The use of radio frequency identification (RFID) can provide accurate information regarding the quantity and location of inventories and increase suppliers’ service level to customers.

E-Purchasing
The emergence of virtual marketplaces, enabled by internet technologies, has provided firms with many opportunities to improve their purchase process. The main target of electronic communications is not to just replace one communication medium with another. That is, replacing paper with electronic data. It is to take advantage of the specifics of electronic communication for the overall business flow and eliminate processing delays and the need for data re-entry. The following four approaches of e-purchasing are usually used:

• Electronic Data Interchange (EDI)
  A technology that Enables the transmission of routine, standardized business documents from computer to computer over telephone or direct leased lines
• Catalog hubs
  A system whereby suppliers post their catalog of items on the Internet and buyers select what they need and purchase them electronically
• Exchange
  An electronic marketplace where buying firms and selling firms come together to do business
• Auction
  A marketplace where firms place competitive bids to buy something
  

Virtual Supply Chain
The advent of the internet opened an entirely new set of opportunities for supply chain design. Many companies create virtual supply chains. Virtual supply chains may hold the key. These systems are designed for flexibility, complexity and speed in managing networks of suppliers, manufacturers, distributors and warehousing agents virtually. A virtual supply chain that networks all parties together is something that is inevitable in order to increase profitability and reduce costs.

Changes In the Distribution System
E-business will give businesses more flexibility in managing the increasingly complex movement of products and information between businesses, their suppliers and customers. it will close the link between customers and distribution centers. Customers can manage the increasingly complex movement of products and information through the supply chain.

Reference

Supply chain management from Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Supply_chain_management

The Virtual Supply Chain – the ultimate Supply Chain Management Strategy
http://searchwarp.com/swa11929.htm

IT-enabled supply chain management in logistics
http://www.expresscomputeronline.com/20030804/opinion3.shtml

E-Business and Supply Chain Integration
http://jobfunctions.bnet.com/thankyou.aspx?authId=6zInjrV7SuINXuq84od6CeIqEyMqe0aCDBLaOQ9/ZMudAecy+onDtqJOcRaFySog&&promo=100511&docid=72898&view=72898

Internet Technologies and Supply Chain Management
http://www.supplychainonline.com/previews/SCM104/2.html