Abstract
During the early 2000s, the advent of internet and e-communication enabled organizations to be more responsive and cater to their customers' needs in a better way. Over the last few years, integrated technologies and ERP systems has allowed organizations to gain market share and establish themselves as e-commerce players. This has been achieved through better synchronization, business realignment, and operational flexibility. The rapid development in fields of information technology has transformed old partnerships between suppliers, buyers, and service providers into a more collaborative business process where information and knowledge sharing is a key success parameter. Through enhanced IT capabilities, SMEs can cooperate to form a network and promote their joint capacities to acquire a complex project and integrate resources for a better planning and execution. In this chapter, the author seeks to highlight the importance for e-SCM to be implemented and adopted, current status of adoption through case studies, benefits of e-SCM as strategy and challenges plaguing adoption of e-SCM.
TopIntroduction
Over the last few years, technological development in the field of information technology has revolutionized every industry and disrupted business models and strategies. It has paved the way for new opportunities and bringing competitive advantage to organizations. Supply chain management is a key component of all industries in the business world and developments in IT has transformed the way a typical supply chain operates. Technological advancements in supply chain are critical, allowing improvements and enhanced efficiencies and quality in material, information and financial flows. A supply chain is deliberated as a network of organizations and/or individuals involving material, information and financial flows. The flows can be described as: Product flow- movement of goods from supplier to customers and/or returns. Information flow involves transmission of information about the order, product, customer feedback, order tracking and delivery status etc. Financial flow- consists of payment terms and conditions, mode of payment, ownership – lease titles etc. The efficiency and speed of these flows determine the quality of customer service and total costs associated (Stevens, 1989). Over the past decades, the advances in supply chain technologies has brought about a tighter integration and better efficiency in the flows through business realignments and improved operational flexibilities (shown in Figure 1 (b)) (O Cattaneo, 2010). Other contributing factors to the advances in supply chain include uncertain and volatile business environment, increased competition, and advanced communication.
Figure 1a. Showing traditional supply chain flows and flows in a re-engineered supply chain
Traditional model of supply chain involved movement of goods through the procurement of raw materials into the manufacturing/processing unit, involving warehousing, storage and distribution of goods to physical retail outlets including shops and distributors before reaching the final customer. The respective information and material flows are shown in Figure 1 (a). This involved a comparatively larger investment in terms of resources and had innate drawbacks like poor visibility across supply chain of information, production bottlenecks, bull whip effects leading to increased cost of operations, handling and storage etc. A traditional supply chain (Figure 2) is represented in the flow below.
Figure 2. A traditional supply chain
Key Terms in this Chapter
RfQ (Request for Quotation): Is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RfQ generally means the same thing as call for bids (CfB) and invitation for bid (IfB).
VMI: Vendor-managed inventory is an inventory management system in which a supplier assumes responsibility for the timely replenishment of a customer's stock.
E-SCM: It is the effective utilization of internet and business processes that help in delivering goods, services, and information from the supplier to the consumer in an organized and efficient way.
Outsourcing: Outsourcing refers to obtaining certain services or products from a third-party company, essentially sourcing something like accounting services or manufacturing of a certain input to another company.
ERP: Is the integrated management of core business processes, often in real-time and mediated by software and technology. ERP is usually referred to as a category of business-management software—typically a suite of integrated applications—that an organization can use to collect, store, manage, and interpret data from these many business activities.
Offshoring: Offshoring refers to obtaining services or products from another country, and is often what news articles are really referring to when they discuss outsourcing. While much offshoring involves outsourcing production to another company it can also refer to simply re-location certain aspects of a business to another country.