Supply Chain Management and E-commerce - Report Example

Management Info Systems Project wk9 Dawn Chamberlain ISM5026-2 Introduction A successful business is one which manages its resources effectively. Inthe past, effective strategies were developed to manage the factors of production; labor, capital and raw materials. In the modern economic scenario, information has become an additional vital resource. A business concern needs to process a large amount of data regularly. Drawings and specifications of raw materials, details of approved vendors, details of purchases, process drawings and flow charts, records of machine wise or shift wise production, stock levels of raw materials and finished goods, financial records and statements, product catalogues and price list and customer data, are some examples. Managing information involves collection, storage, retrieval, analysis, distribution and utilization of data. Managers rely heavily on the outputs generated by data analysis to make important business decisions. Reliability and security of data are therefore, very important considerations. Application of information technology has revolutionized processing and management of data and opened up a host of new possibilities in all aspects of social life; education, employment, business, healthcare and governance. Since the data is stored systematically in computer systems, quick and selective retrieval of data is possible. Apart from standard types of software available for various applications, it is possible to design special packages as per the needs of specific customers. Government departments, public and private businesses, production establishments, traders and retailers have all adopted electronic information management. According to Navid (2012), inventory control, process control, machine and manpower utilization, cost control, market research, customer studies, financial analysis etc. are some of the areas where computerized information systems are used. For effective supply chain management, close monitoring of material flow and information flow are important. Computerized information system enables a business to save costs and to maintain its competitiveness by cutting down space and manpower requirements. It also facilitates quick retrieval, analysis and secure sharing of data. Information System for Supply Chain Management Supply chain management (SCM) integrates sourcing, manufacturing and distribution functions and the various persons and organizations involved in these functions with the ultimate aim of providing better value to the customers. Customers want new products based on new technologies at lower costs and in a competitive market, businesses have to adopt innovative techniques to stay ahead. Quick decisions, flexible operations, higher quality and lower overheads across the supply chain will help the business to deliver more value at lower costs. In order to achieve savings in cost and time and to avoid wasteful rework, there is a need for collaborative efforts between the suppliers, manufacturers, distributors and the customers on a regular basis. This necessitates sharing of considerable amount of data in the form of drawings and confidential design data, between individuals and firms forming part of the supply chain. Quick and secure data and information flow between the various persons and organizations within the supply chain is a therefore a very critical parameter. It is in this context that a computerized database management system becomes imperative. Information technology has been able to cater to these requirements quite well. Many different types of Enterprise Resource Planning (ERP) software are now available for integrated management of all the aspects of business in a supply chain management system. However, the type of software and the scale of implementation chosen should be commensurate with the size and profitability of the business in order to be cost effective. Use of information technology in SCM results in reduced lead times, which means lesser inventory holding and lesser carrying costs at all points in the value chain. Designs can be modified to match customer needs, since reliable feedback is available. Likelihood of delays or shortages can be known sufficiently early for initiating contingency plans. With the streamlining and standardization of all products and processes, all the partners in the supply chain can go for international certifications like ISO, UL and CE. Improvement in delivery times increases customer satisfaction. When the customer is also a part of the value chain and the benefits of an efficient and cost effective management system accrue to everyone in the value chain, long term relationships can be sustained. According to “an explorative study of progressive companies” by Auramo, Kauremaa and Tanskanen (2005), use of information technology in SCM resulted in “enhancement of service level, improvement of operational efficiency, improvement of information quality, enabling of agile supply chain operating models and receipt of strategic benefits when coupled with process design” (Auramo et al). Supply Chain Management and E-commerce E-commerce encompasses all aspects of conduct of business through electronic media including exchange of information, buying and selling, automation of business processes, online collaboration and discussion. E-commerce employs e-mail, website and online catalogues in the place of traditional modes of letter, phone, fax, printed forms and catalogues for dissemination of information and conduct of business. E-commerce has a very high impact on SCM. E-procurement facilitates enlisting of new approved vendors and simplifies billing and payments. It makes the process more transparent and also helps reduce costs. E-commerce promotes information visibility throughout the supply chain and results in better understanding among the suppliers, various departments within the business and end customers. Supply and delivery schedules can be flexible without affecting end targets. Designs can be modified during execution for better results. Custom features can be introduced partially in the production line for specific customers, as complete traceability can be maintained. Normally work instructions are passed down the hierarchy with detailed drawings and specifications. In addition, the production operators can be given access to the information system, so that they can verify the customer requirements and delivery schedules by themselves. This promotes better understanding and sense of belonging among the employees. In an information technology enabled environment, it is very easy to integrate e-commerce and SCM to realize the maximum benefits of both. Dell is a typical example of a company where e-commerce coupled with a robust SCM helped it to survive in the PC market. From struggling to sell PCs, the company went on to become the market leader. The success mantra was: Sell direct through e-commerce or website, build to order and ship direct. Dell has a unique way of allowing its customers to individualize their computer system online by selecting the various hardware components from a list. “Dell demonstrates effective e-commerce enabled SCM in conducting business. Dell adjusts to its changing environment by deploying a comprehensive integration of e-commerce and SCM” (Harsono). Many other companies have followed Dell’s example and achieved considerable business success. Another example of how business improvement can be achieved using electronic data processing and analytical tools is the case of Blue Cross And Blue Shield, discussed as part of week3 study. Blue Cross And Blue Shield had to process large amount of data as part of their efforts to improve the health of their customers. They realized considerable savings in costs by switching over to electronic data processing system and applying Analytics software to get meaningful information about their clients. This also led to improved customer satisfaction. Future of IT Enabled Systems Information Technology is now finding application in all spheres of life. The Government is using IT for e-governance, enabling it to provide quality service to the citizens. Educational institutions, charitable trusts, voluntary organizations and small and big enterprises are all using internet and e-commerce to a large extent. E- Learning is becoming very popular. Working from home has become very common. There are now lots of e-commerce avenues for even house wives and retired persons. Life without internet will become impossible in the near future, because parallel manual systems are disappearing due to lack of demand. The convenience of shopping from home is attracting more customers to the online mode. Availability of products at lesser prices and money back guarantees are also added attractions. Many reliable sites like Amazon have a variety of products and almost anything that an average consumer may require is available online. The most important infrastructure for successful e-commerce is the internet. Continuous availability, reliability and speed of the internet are critical enabling features. Internet speeds are very poor in many developing countries and connectivity is also poor. Also availability of internet in rural areas is limited. The availability of reliable internet connections at reasonable cost is a prerequisite for the growth of e-commerce. The increasing use of mobile internet also demands increase in infrastructure. Security of data over the internet is another issue which needs to be addressed effectively. Effective regulation to control fraudulent websites has to be enacted by collaborative efforts between governments. Guidelines for safe use of internet for financial and other personal transactions should be disseminated. Digital TV with interactive modes is becoming very popular. Through this medium, e-commerce companies can reach consumers who are not using personal computers. The interactive mode will enable the TV to work as a procurement machine. Since any ordinary TV can be converted to digital TV with minimum additional hardware, this is set to become a popular route for online purchases. Shopping using mobile phone has already become popular and e-commerce firms are gearing up for ‘m-commerce’ (Satterlee, 2001, p.101). With the availability of multiple devices to access internet, business through e-commerce is bound to grow very fast in the future. The future of brick and mortar stores seems to be bleak, considering that consumers are shifting to online purchase. However, innovative retailers can find ways of attracting customers to their brick and mortar stores (Savitz, 2012). To attract customers who prefer to make purchase online, retailers can provide mobile point of sale within the stores. This is a way of combining the pleasure of person-to- person interaction with modern e-commerce. This will also curb the tendency to look around for a product in an offline store and later making the purchase online. There are still areas where human interaction can provide improved buyer satisfaction. It is really challenging to replace the physical experience of trying out a garment with an online experience. In short, retail firms can tempt a customer to buy a product from their own online stores at the close of an effective sales talk. Conclusion Computerized information management system is the best possible option to process the vast amounts of data required by modern businesses. The vast amounts of data used by modern businesses can be stored and retrieved easily and cost effectively. Also businesses of today need to adopt SCM techniques to stay ahead in the market and maintain competitive edge. E-commerce is increasingly becoming the preferred method for buying and selling. Therefore, businesses have to realign their systems to facilitate e-commerce. Integration of the requirements of e-commerce in the SCM system is possible with computerized information management systems and this offers tremendous advantages to the business in terms of savings in cost and increase in overall efficiencies. As governments switch to e-governance, their interaction with the market will also follow the electronic mode. This will further increase business through e-commerce. So businesses which have switched to computerized information management and e-commerce will have a competitive edge as they can offer better price and faster service. With more consumers opting for online purchase through the medium of desktops, laptops, mobile phones and digital TVs, e-commerce is destined to become the major mode of future business transactions. Since all correspondence, placing of order, and invoicing are done electronically, use of paper is minimal. This is an added advantage as it provides an environment- friendly alternative. Therefore, we may conclude that computerized information management systems will lead to an increase in the efficiency of the economy as a whole. Reference Auramo, J., Kauremaa, J., & Tanskanen, K. (2005). Benefits of IT in supply chain management: An explorative study of progressive companies. International Journal of Physical Distribution & Logistics Management, 35(2), 82-100. Navid, N. (2012). Role of e-commerce in supply chain management to minimize costs.African Journal of Business Management, 6(17).Doi:10.5897/ajbm11.2264 Harsono, A. The Impact of E-commerce in supply chain management at Dell Inc. retrieved from http://www.academia.edu/8383730/THE_IMPACT_OF_E-COMMERCE_IN_SUPPLY_CHAIN_MANAGEMENT_AT_DELL_INC Satterlee, B. C. (2001). E-Commerce: A Knowledge Base. iUniverse. Savitz, E. (Oct 25, 2012). The Future Of E-Commerce: Bridging The Online/Offline Gap. Forbes. Retrieved from http://www.forbes.com/sites/ciocentral/2012/10/25/the-future-of-e-commerce-bridging-the-onlineoffline-gap/ Read More