Role of e-Commerce in

Supply Chain Management

Group No. - 7
At a Glance

Supply Chain
 The flow of materials, information, money, and
services from raw material suppliers through factories
and warehouses to the end customers
E-Supply Chain
 A supply chain that is managed electronically, usually
with Web technologies
Supply Chain Parts

 Upstream supply chain

Procurement
The process made up of a range of activities by which an
organization obtains or gains access to the resources
(materials, skills, capabilities, facilities) they require to
undertake their core business activities
 Internal supply chain
 Downstream supply chain
E-Supply Chain Management (e-
SCM)
The collaborative use of technology to improve the
operations of supply chain activities as well as the
management of supply chains
The success of an e-supply chain depends on:
 The ability of all supply chain partners to view partner

collaboration as a strategic asset

 A well-defined supply chain strategy

 Information visibility along the entire supply chain

 Speed, cost, quality, and customer service

 Integrating the supply chain more tightly

Role of E-Commerce in
Supply Chain Management
Information Source
 Businesses can use e-commerce to provide customers with product and related information
in a timely and efficient manner. It can be useful in providing news, updates, instructions
and upgrades.
Distribution
 E-commerce provides businesses with a new distribution channel to get products to the end
users. E-commerce can also be used to reduce the number of layers between the company
and its customers. It allows for a business to sell directly to its target market, reducing costs
and increasing efficiency.
Inventory
 Inventory management is simplified through reporting systems connected to the shopping
cart software and allows for businesses to carry more items than with a brick-and-mortar
store. E-commerce also allows for additional efficiency with just-in-time inventory
processes or print-on-demand.
Activities & Infrastructure of E-
SCM
 Supply chain replenishment
 E-procurement
 Supply chain monitoring and control using RFID
 Inventory management using wireless devices
 Collaborative planning
 Collaborative design and product development
 E-logistics
 Use of B2B exchanges and supply webs
Activities & Infrastructure of E-
SCM Contd.
E-Procurement
 The use of Web-based technology to support the key procurement

processes, including requisitioning, sourcing, contracting,

ordering, and payment.
 E-procurement supports the purchase of both direct and indirect

materials and employs several Web-based functions such as online

catalogues, contracts, purchase orders, and shipping notices
Collaborative Planning
 A business practice that combines the business knowledge and

forecasts of multiple players along a supply chain to improve the

planning and fulfilment of customer demand
Infrastructure of E-SCM

 Electronic Data Interchange (EDI)

 Extranets
 Intranets
 Corporate portals
 Workflow systems and tools
 Groupware and other collaborative tools
Determining the Right Supply
Chain
Strategy
 Functional products are staple products that have stable
and predictable demand and call for a simple, efficient,
low-cost supply chain
 Innovative products tend to have higher profit margins,
volatile demand, and short product life cycles. These
products require a supply chain that emphasizes speed,
responsiveness, and flexibility rather than low costs
Key Enabling Supply Chain
Technologies: RFID and Rubee
Radio Frequency Identification (RFID)

Tags that can be attached to or embedded in

objects, animals, or humans and use radio waves to
communicate with a reader for the purpose of
uniquely identifying the object or transmitting data
and/or storing information about the object
Wal-Mart using RFID
How RFID works in Manufacturer-
Retailer Supply Chain
Key Enabling Supply Chain
Technologies
RuBee

Bidirectional, on-demand, peer-to-peer radiating

transceiver protocol under development by the
Institute of Electrical and Electronics Engineers.
Difference Between RFID & RuBee
 Supply Chain
Problems and Solutions
Typical Problems along the Supply Chain
 With increasing globalization and off shoring, supply

chains can be very long and involve many internal and

external partners located in different places
 A lack of logistics infrastructure might prevent the

right goods from reaching their destinations on time

 Quality problems with materials and parts also can

contribute to deficiencies in the supply chain

Bullwhip effect
 Erratic shifts in orders up and down supply chains
 Impact of E commerce on SCM
 Cost efficiency
 E-commerce allows transportation companies of all sizes to exchange
cargo documents electronically over the Internet. E-commerce enables
shippers, freight forwarders and trucking firms to streamline document
handling without the monetary and time investment required by the
traditional document delivery systems.
By using e-commerce, companies can
 reduce costs

 improve data accuracy

 streamline business processes

 accelerate business cycles

 enhance customer service 

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

 Will allow customers to access rate information, place

delivery orders, track shipments and pay freight bills.
 By making more information available about the
commercial side of companies, businesses will make their
web site a place where customers will not only get detailed
information about the services the company offers, but also
where they can actually conduct business with the company.
Shipment Tracking
 E-commerce will allow users to establish an account and obtain
real-time information about cargo shipments. They may also
create and submit bills of lading, place a cargo order, analyze
charges, submit a freight claim, and carry out many other
functions.
 In addition, e-commerce allows customers to track shipments
down to the individual product and perform other supply chain
management and decision support functions. The application
uses encryption technology to secure business transactions.
Freight Auditing
 This will ensure that each freight bill is efficiently reviewed for
accuracy. The result is a greatly reduced risk of overpayment, and
the elimination of countless hours of paperwork, or the need for a
third-party auditing firm. By intercepting duplicate billings and
incorrect charges, a significant percent of shipping costs will be
recovered.
 In addition, carrier comparison and assignment allows for instant
access to a database containing the latest rates, discounts, and
allowances for most major carriers, thus eliminating the need for
unwieldy charts and tables.
Shipping Documentation &
Labeling
 There will be less need for manual intervention
because standard bills of lading, shipping labels, and
carrier manifests will be automatically produced; this
includes even the specialized export documentation
required for overseas shipments.
 Paperwork is significantly reduced and the shipping
department will therefore be more efficient.
Online Shipping Inquiry

 This gives instant shipping information access to

anyone in the company, from any location. Parcel
shipments can be tracked and proof of delivery quickly
confirmed.
 A customer's transportation costs and performance can
be analyzed, thus helping the customer negotiate rates
and improve service.
 Few tips to bear in mind while
Evaluating an e-SCM initiative
 Get Perspective -One should envision the business as a whole
including its current strategy and where it wants to go. Supply
chain strategy is increasingly being integrated with overall
corporate strategy.
 Don't Underestimate Learning Costs - The cost of training
people to use new software should not be underestimated.
 Link to existing architecture - Supply chain applications must
link to existing enterprise resource planning applications. ERP
serves as the nerve center of the organization. Ideally, it should
be a single point of visibility for inventory and order taking.
 And last but not the least - “Think Global, Start Local”