Challenges Facing Electronic Supply Chains in the New E-Commerce Landscape

Introduction

That 440 of the 500 Fortune firms have closed their doors must be a wakeup call for all of us. Yes, only 60 of the Fortune 500 companies in 1955’s Fortune ranking are still in operation today. “In other words, fewer than 12 percent of the Fortune 500 companies included in 1955 were still on the list 62 years later in 2017, and 88 percent of the companies from 1955 have gone bankrupt” (Perry, 2017). That nearly nine out of ten of 1955’s Fortune 500 companies are gone is disturbing and calls for a deeper analysis of what business schools teach their graduates and how they contribute to business success or failure. This represents an 88 percent failure rate. The probability that an organization in business today will still be in business in twenty years is only 12 percent. Businesses around the world experience many challenges to acquire raw materials, parts, subassemblies, and the other necessary inputs to their production systems. Organizations must work to ensure they excel or simply survive in this extremely competitive environment. As businesses move into the e-commerce platform to gain market shares, they realize that electronic supply chain management (e-SCM), powered by enterprise resource planning systems (ERPs), is the new norm and no business organization can operate without both e-SCM and ERPs in the new world of e-commerce. Because business via the internet requires different fulfillment approaches, traditional drivers of regular supply chains are no longer adequate for explaining how e-SCM performance is driven. The task of e-SCM professionals is, therefore, more complicated than ever. This situation often leads to unsatisfied customers, which can force companies to close their doors. Therefore, understanding the dynamics of e-SCM performance drivers and their integration with ERPs, along with their accompanying challenges, becomes a necessity. Little attention has been devoted to e-SCM dynamics with ERPs and the challenges they pose to organizations. This article discusses the new e-SCM challenges facing organizations as they attempt to enter the e-commerce platform. In the e-commerce environment, e-SCM is one of the most important factors to organizational success. Effective e-SCM can enhance competitiveness and increase market share, leading to higher profitability. Nevertheless, the new e-SCM professionals and other key players must understand the factors that undergird e-SCM performance, their drivers, and the necessity of fully functional ERPs for an effective e-SCM.

Although Lardner’s Law, also known as the Law of Squares, states that any reduction in transportation costs will be directly proportional to the increase in the market area where the product can be sold, most business leaders do not understand to what extent supply chain management matters. The rationale has often been that if you want to increase profit, you have to master finance principles and apply them. Business leaders tend to forget that transportation is the largest logistics cost. Today’s reality is hard to accept: Our ordinary solutions to business problems are not effective. Business organizations are facing extraordinary challenges that necessitate extraordinary solutions. As businesses become globally sensitive entities, supply chain management becomes the most important matter because all companies along the supply chain are important to business success or failure (Gruchmann, Böhm, Krumme, Funcke, Hauser, & Melkonyan, 2019). In addition, we observed graduates who chose to ignore operations management principles and models and decided to run operations using their best guesses. This situation often results in high operating costs, making strategic operations reviews the new norm.