Using industry examples summarize three benefits of using e-commerce to streamline supply chain.

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teamques10 ★ 68k

Introduction:

i. E-Business can be used to improve supply chain management in number of ways. ii. Some of the main challenges faced are as follows:

Reduce order-to-delivery time.
Reduce cost of manufacturing.
Manage inventory more effectively.
Improve demand forecasting.
Reduce time to introduce new products.
Improve aftermarket/ post-sales operations.

Three major benefits:

i. Increased efficiency of individual process:
Here, the cycle time to complete a process and the resources needed to execute it are reduced.
If the B2B Company adopts e-procurement, this will result in faster cycle time and lower cost per order.
Thus the cycle time as well as the cost per order is reduced.
Industry example:
1. Schlumberger is a global company that started its life as a supplier in the oil and gas exploration industry with revenues.
2. This company has achieved increased efficiency in processes as a result of adoption of e-procurement system at its largest division.
3. The aim of this new system was to develop a single integrated system that would speed up purchasing processes.
4. With the new system, employees acts as purchasing agents, ordering directly via their desktop PC’s.
5. The system runs on the intranet and enables staff to access a simplified catalogue of office supplies and technical equipment.
6. The system automatically produces a requisition that is electronically routed to the person who will approve it and then converted into purchase order without the invention of purchase staff.
ii. Reduced complexity of supply chain:

This is the process of disintermediation.
Here, the B2B Company will offer the facility to sell direct from its e-commerce site rather than through distributors or retailers.
Thus, the cost of channel distribution as well as sale is reduced.
Industry example:
1. Vauxhall (www.vauxhall.co.uk), the UK part of general motors, provides a good example of disintermediation.
2. The initial aims of this website were not limited to online sales generation.
3. Additional aims include raising the profile and branding awareness of Vauxhall and lead generation for dealerships (such as brochure and test drive requests).
4. It provides a good example of the response to the opportunities provided by new electronic channels.
iii. Improved data integration between elements of the supply chain:
The B2B Company can share the information with its suppliers on the demand for its products to optimize the supply process.
It basically reduces the cost of paper processing.
It is possible to be more flexible in delivering a more diverse range of products and to reduce time to market,
Thus, increased information about the products and the transactions such as technical data sheets and order histories.
Thus, the facility to tailor the products more easily is obtained.
Industry example:
1. Here, we take an example of TESCO supermarkets efforts to encourage electronic trading with their suppliers from EDI to internet based purchasing.
2. TESCO, the UK’s largest grocery retailer, has built a reputation as one of Europe’s most innovative retailers in its use of information technology.
3. According to Barry Knichel, Tesco’s Supply Chain Director, the forecasting project has been successful as average lead times have fallen from seven to three days.
4. Suppliers have a better understanding of the product lines.
5. Thus, much better product availability and reduction in inventory is achieved.
6. It helps suppliers monitor changes in real time and so gives them more time to react.
7. The data obtained through this system can be analysed in number of ways to allow suppliers to see how sales perform by distribution centres, by individual store or even by TV region.

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