According to Berger, a study conducted by Momentum Research Group found that US organizations involved in internet business solutions realized cumulative cost savings of US $ 155 billion in a three year period starting in 1998.
Johnson and Whang stated that the key aspect of supply chain management has been management of information flow, with the transfer of information between companies their suppliers and customers through internet the importance of information management has created an effective supply chain. E-business is defined as a "marriage between the internet and supply chain integration." This marriage has led to transformation of many processes within a supply chain from procurement to product design and customer management. Various forms of e-business applications can be categorized into e-commerce, e-procurement and e-collaboration (2002).
According to Berger "e-commerce can be defined as the conduct of business communication and transactions over networks and through computers or as the buying and selling of goods and services, and the transfer of funds, through digital communications. It can include all inter-company and intra-company functions (such as marketing, finance, manufacturing, selling and negotiation) that enable commerce." E-commerce communicates through e-mail, EDI, file transfer, facsimile, videoconferencing, workflow or interaction with remote computer. E- commerce has also associated with portals, e-marketplaces, e-auctions or virtual inventory. E-commerce impacts upon the three major factors of supply chain namely Physical, Financial and Informational flows.
Impact of E-Commerce
According to Berger e-commerce essentially gives the companies an access to markets and customers without moving the products and inventory physically, thus the physical movements can be avoided and product information made available through internet.
With e-commerce solutions and information access being made available '24x7x365', product tracking and tracing information are made simple thus eliminating traditional paper based approach. Hence information flow also gets affected by e-commerce.
Similarly financial flows too get affected by faster payments and settlement at every stage of the supply chain by e-commerce solutions.
On further analysis it is observed that e-commerce impacts on supply chain for five principle reasons, which are as follows:
1. Major companies cannot afford to sit silent for underperformance, thus "the performance gap can no longer be hidden."
2. The Y2K problem compelled most of the companies to implement newer technologies and software. The e-commerce revolution has lead to the adoption of ERP systems, which manage operations not only internally but also with customers and suppliers. But some companies are in the initial stages of implementation of above steps and thus are unable to enjoy the benefits of these investments.
3. Last few years has seen an unprecedented investment by technology companies leading to "an acceleration of development of new software technology to support supply chain management."
4. Change of supply chain is a tough task and thus most of the companies have been avoiding some areas of supply chain. "The supply chain is one of the last major areas of business benefit."
5. The development of internet technologies have made world smaller and supply