Mumbai University > Information Technology > Sem 7 > E–Commerce & E-Business

Marks: 10 M

Year: May 2013

• Introduction

  i. A good example of how the introduction of information systems can be used to improve supply chain management is provided by BHP Steel. An Australian firm.

  ii. It uses a PC-based technology for supply chain management.

  iii. The various stages in implementation of e-commerce in a company are illustrated as follows:

• Stages:

  i. Early implementation:

  • This was a PC based EDI purchasing system.

  • At this stage, the various objectives were :

    • Reduce errors to zero.
    • Reduce administration costs.
    • Improve management control.
    • Reduce order lead time.

  • Benefits of this phase included rationalization of suppliers to 12 major partnerships (accounting for 60% of invoices), 80% of invoices placed electronically by 1990; 7000 items were eliminated form warehouse, to be sourced directly from suppliers on demand.

  • Shorter lead times were achieved.
  • At this stage, the main barriers to implementation were technological.

  ii. Electronic trading gateway:

  • This was again EDI based, but involved a wider range of parties both externally (from suppliers through to customers) and internally (from marketing, sales, finance, purchasing and legal).
  • The aim was to provide a combined upstream and downstream solution to bring benefits to all parties.
  • The main learning from this process was the difficulty in getting customers involved-only 4 were involved in 4 years, although an industry based method for data exchange was used.
  • From 1994 there was no further uptake of this system.

  iii. The move towards Internet Commerce:

  • The Internet was thought to provide a lower cost alternative to traditional EDI for smaller suppliers and customers, through using a lower cost value added network.
  • Thus, e-commerce basically facilitates extended reach of electronic communications with supply chain partners.
  • It also broadens the type of communications to include catalogue ordering, freight forwarding and customer ordering.
  • The strategy divided transactions into three types:
    • Strategic (high volume, high value, high risk) - a dedicated EDI line was considered more appropriate.
    • Tactical (medium volume, value and risk) – EDI or Internet EDI was used.
    • Consumer transactions (low volume, value and risks) – a range of low cost Internet technologies could be used.
  • Electronic communications have played a major role in facilitating new models of supply chain management. Technology applications that have facilitated supply chain managements are as follows:
    
    • E- mail
    • Web based ordering
    • EDI of invoices or payments
    • Web based order tracking
  • Benefits of deploying these technologies include:
    • More efficient, lower cost execution of process.
    • Reduced complexity of Supply Chain (disintermediation).
    • Improved data integration between elements of supply chain.
    • Reduced cost through ease of dynamic outsourcing.
    • Enabling innovation and customer responsiveness.