Supply Chain Management
2016-05-31
The active development of new information technologies, including the Internet, has led to the emergence of a new direction of the business. It is the e-business. It is a special form of business that is implemented through the information systems and standards in the production process as well as trade of goods and services.
It should be noted that e-business can be considered as a direction of the business that continuously use digital technologies as well as the Internet for products and services optimization (“The Power of the Supply Chain”, 2016). In this case, the Internet plays the role of the main mean for communication. The main parts of the e-business are the following:
internal organization of the company that is based on a unified information network (Intranet), which can enhance the staff collaboration and optimizing the planning and management processes;
external interaction (extranet) with partners, suppliers and customers.
According to the opinion of the specialist Zhu, there are five main areas of e-business:
business – business;
consumer – consumer (customer -to- business-to-consumer);
business – consumer;
business – administration;
consumer – administration (Zhu, 2015).
It should be noted that logistics is the base in all above mentioned areas. Thus, we can say that the electronic business is based on logistics. In other words, supply chain management and e-business create a special system with some features. For example, flows of material and human resources, finance and information are converted the e-business and supply chain management into a single system, where the main actors are manufacturers, suppliers, distributors, consumers.
At the same time, the e-business has several main fields of use. They are production process, payments and other financial calculations, marketing system and sales of goods. In this case, the level of use of information technologies plays the role of a measure, by which the business can be included to the e-commerce (Yuen, 2010).
Thus, one can say that the e-business involves much more areas than just supply chain management. This is the main difference, which separate e-business and supply chain management.
Promotion of e-business on the Internet provides producers the access to the huge number of customers as well as their preferences. It allows recording clients’ orders directly in the enterprise management system. Thus, one can say that distance and transportation costs relegate to the background, as all products are delivered to customers with the nearest warehouse of the supplier.
E-business shifts the centre of gravity to the buyer side in the market as well as in the logistics system. The buyer gets the opportunity to conveniently and quickly select and compare the product all over the world on the screen of his computer. It becomes much easier to get what he wants, but not what’s left in the warehouse. The interactivity of Internet technology allows communicating individually with each client, and the result of this dialogue is valuable marketing information. In this case, there are some differences in the system of the e-business and supply chain management.
The basic business model of e-commerce built on the principle of “bits are cheaper than bricks”. Property, shopping areas, sales staff, security, operating inventories and sometimes even stocks are replaced in online retailers through the using the disk space, computer programs and a dozen specialists. But, that is more important, the time to market and changes in the product range are reduced. Also, the scalability of the business is almost unlimited. At the same time, items that are not in stock may be presented on the virtual showcase.
It changes the workflow in logistics and order processing procedures. Using Internet technology involves the electronic form of documents, their transition, accurate accounting and operational control. The flexible format of the data in XML allows transmitting data over the WAN. Such processes as the centralization of order reception and decentralization of delivery are characteristics of the e-business.
In theory, e-commerce provides unlimited opportunities for companies to conduct international business. The supply chain management can be applied in certain conditions. For example, the appearance of transport means has led to the conquest of space; the e-commerce has eliminated it. The client does not matter where the supplier is, if it meets required price and quality. Also, the supplier does not matter where the customer is. It is one more crucial difference between e-business and supply chain management systems.
The Internet becomes for companies to not only a means of global search of partners, but also a new logistics channel. Many goods and services can be provided to the client over the network. Now the manufacturer of the product may open an online store and sell it around the world without trade margins. It is not a feature of the standard supply chain management system. At the same time, a new sales channel should complement and develop old ones. The Internet only reinforces the image of the brand and information support, allows manufacturers to use a more flexible pricing system. Given customer requirements, the delivery of goods must be produced efficiently and in the shortest possible time, for which the manufacturer needs the distribution network.
Thus, the manufacturer’s decision to develop the e-commerce makes it and its distributors to connect to the Internet to stay in e-business. It forms a new specific system of e-business and supply chain management. The proper management of sales channels is strategically important in such scheme. As a result, the e-business together with supply chain management form a new system that is more complicated and effective.
Initially, the newly created commercial Internet companies had a successful start due to the innovative superiority in its product niche and major economies of scale. But increased competition and growth of the business influence Internet companies and now their success increasingly depend on the effective functioning of business (including, reaction time, accounting and control, the quality of the products, which customer receives and the logistics organization). It requires, first of all, major investments, and, secondly, professional knowledge and skills.
References
The Journal (Newcastle, England). (2016). The Power of the Supply Chain. Retrieved from https://www.questia.com/newspaper/1G1-379291589/the-power-of-the-supply-chain
Yuen, M. (2010). E-business strategy and application in supply chain management by New Zealand SME wholesalers. Aut.researchgateway.ac.nz. Retrieved 27 May 2016, from http://aut.researchgateway.ac.nz/handle/10292/1108
Zhu, Y. (2015). The Comparative Analysis of C2B and B2C. IJMS, [online] 7(5). Available at: https://www.questia.com/library/journal/1P3-3844606801/the-comparative-analysis-of-c2b-and-b2c [Accessed 25 May 2016].
