E-Business Supply Chains Drivers, Metrics, and ERP Integration

Introduction

The world of business is witnessing the emergence of electronic supply chains (e-SC or e-supply chain). The Internet has radically changed the nature of supply chains at its core (Sambasivan, Mohamed, & Nandan, 2009). In fact, as more business is performed via the Internet, e-SCs are becoming an integral part of supply chain management (SCM; Gunasekaran, Patel, & Tirtiroglu, 2001; Sambasivan et al., 2009). Businesses are becoming supply chain-sensitive organizations. With business via the Internet requiring different fulfillment approaches, traditional drivers of regular supply chains are no longer adequate for explaining how and to what extent e-SC performance is driven (Sambasivan et al., 2009). E-commerce offers consumers more buying options than traditional business. Buyers can instantly compare prices, product attributes, and delivery parameters. As a result, customers have become increasingly demanding. The task of supply chain professionals is more complicated than ever because e-SCs rely on ERP software. This situation often leads to unsatisfied customers, which can force companies to close their doors.

SCM is responsible for ensuring that customer needs are satisfied in a cost-effective manner. To do this, they formulate strategies, allocate resources, organize activities, and assess performance. Effective and efficient SCM resource allocation is contingent upon a proper understanding and interpretation of its performance drivers (Stock & Boyer, 2009). However, managers often operate on the basis of their own experience and commonly-used methodologies that do not always result in the desired level of performance. Therefore, a framework to leverage actual drivers of e-SC performance is needed (Caputo, Cucchiella, Fratoccchi, Pelagagge, & Scacchia, 2004).

In fact, e-SCs involve partners that are linked by Internet technology in broad networks where customers, retailers, distributors, manufacturers, and suppliers are connected (Fliedner, 2003; Lightfoot, & Harris, 2003; Williams, Esper, & Ozment, 2002). Within and across the networks, actors collect, process, store, and disseminate information on materials, goods, funds, and services. e-SCs are composed of many-to-many connections, while relationships in traditional supply chains are characterized by one-to-one connections. A dramatic revision of current SCM techniques is needed (Caputo et al., 2004). Therefore, understanding e-SCM performance drivers and their integration with ERP becomes a necessity for any SCM professional. Based on the literature survey, little attention has been devoted to SCM performance driver evaluation despite the high volume of ongoing research in the field (Gunasekaran et al., 2001; Sambasivan et al., 2009).

This article discusses the performance drivers of eSCs, metrics for measuring efficiency, and their integration with ERPs. Considering the fact that e-SCs are becoming an integral part of the extended enterprise (Sambasivan et al., 2009), the first section of this article introduces a model of the traditional supply chain for both manufacturing and service systems. In addition, it assesses the logistical and cross-functional performance drivers of supply chains (Chopra & Meindel, 2010; Olver, Lant, Plant, Majeste, & Kursh, 2010). The section concludes with a brief comparison between physical product and information flow.

The second section examines e-SC structures and performance metrics for capturing and gauging system effectiveness and efficiency. It also explains the corresponding measures for the implementation of each metric. It should be noted that e-SC metrics and their corresponding measures are effective ways for managers to ensure that the supply chain is achieving the expected benefits (Riggins & Mitra, 2001).