The landscape of the supply chain has changed drastically over the past five years. It went from local to global in manufacturing, procurement, sourcing, logistics, and customers. As such, there are some major challenges in the supply chain network:
- There are no boundaries within the network.
There are no physical or virtual boundaries left within the supply chain. For example, the customer could be in North America and ordering a product via the Internet from Ireland—but this creates a problem. Why? Each party involved is not aware of the rules and regulations they need to comply with, and do not understand that an order confirmation from the manufacturer is crucial to the retailer’s (manufacturer’s customer) delivery schedule to the end consumer.
- It is difficult to make the pieces of the puzzle fit cohesively.
Each process within the supply chain needs to work together. For example, it’s crucial for a warehouse to know when the shipment will arrive. If the warehouse is unaware of the delays caused by the transportation company, it will cause labor/capacity and equipment availability issues.
- Not being able to adapt to rapidly changing customers’ preferences.
Organizations need to understand the shifts that are occurring in the customer’s requirements. For example, Coca-Cola recently came out with a product that contains 90 calories for diet-conscious customers. In this scenario, if the organization’s manufacturing and product development was not aligned with the customer’s requirements, an organization could in turn lose these customers.
Now, the daunting question: How can an organization eliminate these challenges/risks and still make its supply chain work accordingly.
The answer: E-commerce.
E-commerce is an electronic exchange of data or a transaction, like an electronic funds transfer (EFT), or an electronic data interchange (EDI). E-commerce within the supply chain helps create links for each business process. This allows organizations to communicate and collaborate with trading/business partners. There are benefits for using e-commerce- based applications:
- All information regarding changes in rules and regulation are communicated between trading partners. The shipper is aware of the new laws regarding the delivery destination or location. For example, in the US, the new security program known as the “10+2 rule” mandates that advanced shipment notification (ASN) has to be provided to customs 24 hours before a shipment arrives at US borders.
- Any changes in the demand for a product/service are communicated instantaneously either via the Internet or through data interchange (portal, EDI, e-mail etc.). This eliminates the excess costs associated with manufacturing and delivering products where there is no demand—or spike in demand.
- Knowing what inventory is in the store, or in the plant is essential when confirming customers’ orders. By using e-commerce, organizations can get better visibility into inventory levels—regardless of where the inventory is residing. All details of inventory will be provided via ASN or an inventory portal.
Organizations must be aware that the transition to e-commerce needs to happen in a manner where the following considerations are taken into account:
- Clearly define each business process. If business processes aren’t clearly defined, gaps will be created within an organization’s supply chain.
- Provide adequate training on e-commerce applications to all parties involved (both internally and externally). If an organization doesn’t provide sufficient training to staff and suppliers, workarounds will be created to avoid using the application which in turn creates additional costs for an organization.
- The user interface (UI) make sure the e-commerce application is user-friendly. If organizations don’t provide the proper interface, it will take longer to process a transaction because more time is spent understanding the application than actually processing a transaction.
Organizations with an integrated supply chain reap the benefits of faster development cycles for a product and handle changes in the market place without creating a fiasco for the parties involved. With the help of an e-commerce enabled supply chain, companies are able to expand their business into emerging and existing markets and can streamline their business processes with customers and suppliers.
How about you? What are your thoughts on the benefits or drawbacks of e-commerce? I welcome your comments.