E-COMMERCE AND SUPPLY CHAIN

MANAGEMENT
E-commerce is emerging
as a superb approach for
providing solutions to
problems along the
supply chain. As seen in
the Dell example

A major role of EC is to
facilitate buying, selling,
and collaborating along
the supply chain.
 EC ACTIVITIES
Upstream
activities.

Internal
Auctions SCM
activities

E-commerce
Activities

Selling on
Downstream
your own
activities.
Web site

Exchanges
Restructuring the Supply Chain

E-commerce can introduce

structural changes in the
supply chain. For example,
the creation of e-markets
drastically changes order
processing and fulfillment.
Changes made by ORBIS
 Integration of EC with ERP

• Since many middle-sized and large companies

already have an ERP system, and since e-
commerce needs to interface with ERP, it makes
sense to integrate the two. For example, SAP
started the mySAP initiative.
• The logic behind integrating EC and ERP is that by
extending the existing ERP system to support e-
commerce, organizations not only leverage their
investment in the ERP solution, but also speed up
the development of EC applications.
 PITFALLS
• The problem with this approach is that the ERP
software is very complex and inflexible (difficult
to change), so it is difficult to achieve easy,
smooth, and effective integration.
• One other potential problem is that ERP systems
tend to focus on back-office (administrative)
applications, whereas EC focuses on front-office
applications such as sales and order taking,
customer service, and other customer
relationship management (CRM) activities.
ORDER FULFILLMENT IN E-COMMERCE

Some applications of EC, especially B2C and

sometimes B2B, may have problems with their own
supply chains. These problems usually occur in order
fulfillment.
Innovative Solutions to the Order Fulfillment
Problem

• Same-day, even same-hour delivery.

• Dialing for dinners.
• Automated warehouses.
 Dealing with Returns
Returning unwanted merchandise and providing
for exchanges are necessary for maintaining
customers’ trust and loyalty.
• Return an item to the place where it was
purchased.
• Separate the logistics of returns from the logistics
of delivery.
• Allow the customer to physically drop the
returned items at collection stations from which
the returns can be picked up.
• Completely outsource the logistics of returns.