E-business and E-commerce - Essay Example

? How do e-business and e-commerce affect the supply chains? and Section # of Introduction The ways of doing business have evolved a great deal since the past couple of decades; from the traditional brick-and-mortar model, to a mix known as click-and-mortar, and from there on towards a click-and-click strategy – the concept of business has moved from the tangible commerce to e-commerce as a drastic change (O'Connor, 1998, p. 333). E-business and e-commerce, both having almost similar features, have changed the scope of the game (business) and the associated variables (strategic components). Businesses have moved out from the stage where physical presence would become a major expenditure in a business, rather, the e-setup has killed this huge cost, and start ups today are fairly cost effective. One of the major issues that businesses face while switching to the ‘e’ channels is the fact that they can convert themselves to the same in isolation; however, the supply chain network does not allow isolated implementations to be a success (Ginkel, 1998, p. 313). For higher chances of a success i.e. to reduce the risk of failure, a business should move towards ‘e’ or any other channel in collaboration with its network of stakeholders, in particular its supply chain (Houlihan, 1985, p. 17). Traditional Supply Chain Mechanisms Traditionally, prior to the era of 80s, supply chain management was assumed as a part of the business, and restricted to the supplies of inventory or raw material, depending on the nature of the business under consideration. The era of 80s and 90s has brought about changes in the way supply chain looks today (JOHNSON and WHANG, 2002, p. 411). Serving as the era of transitional changes, the big names of the business industry such as Unilever and P&G realized that streamlining the supply chain can prove out to be a highly cost effective solution for running their business. Thereon, the phase initiated in business history, where supply chain networks gain importance (Wisner and Tan, 2000, p. 35). As the era of mid and late 90s saw the rising need of supply chain integration and businesses moving towards the ‘e’ channels, the early years of 2000s saw the application of ‘e’ channels across the supply chain network, keeping it tightly integrated from the rise of the raw material to the selling of the final commodity in the retail stores (Vickery et al., 1999, p. 18). Impact of e-business and e-commerce towards supply chain The add-on of the ‘e’ variable in business cycle has had a significant impact on how businesses have been conducted (Audy et al., n.d., p. 111). However, prior to moving forward with the discussion, it is critical to define the difference between e-commerce and e-business. Despite the fact that the terms tend to be used interchangeably today, e-commerce is about conducting a transaction which could either be B2B or B2C, or even C2C. On the contrary, e-business is about the application of the technology to enhance or improve a process or even replace it on the whole (Carter et al., 2000, p. 17). Adding up ‘e’ towards the business and commerce activities pulls the supply chain towards the core business processes for ensuring the network is integrated in a manner that does not allow any loophole, as that can turn out to be fatal for the business (Gurnani et al., 2011, p. 301). Classical example of how ‘e’ factor on the business and commerce can tightly couple the supply chain requirements is shown in the case of Dell. Dell, long back, has implemented e-business and e-commerce to their business; e-processes in terms of build-your-own-pc and e-commerce in terms of online purchases (Harland, 1996, p. S64). Such an application requires extensive cooperation from the supply chain; the process of supply chain remains transparent to the customer. As a customer assembles their computer on the website, at the back-end, the support team needs to ensure that the required components are readily available or could be arranged in a short span of time (Welborn and Kasten, 2007, p. 4). This not only requires an agile support, but at the same time, the supply chain network needs to be on their toes to ensure that they know the components in demand, and are actively involved in demand driven supply planning for Dell. While going devoting a major chunk of the business towards extreme customization, Dell would want to ensure a minimum warehousing or inventory costs because customer preferences change, and thus orders would take place in accordance with the changing preferences (Sharland, 2005, p. 383). Supply Chain networks, being considered a crucial component of the business process cycle today, is the major section to be appropriately integrated before deployment of ‘e’ in the business (Stobbe, 2008, p. 101). Deployment of ‘e’ in a business has evolved from being a competitive edge for a business to the need of the same today, implying the following increased burden towards the business for which the cooperation of supply chain is critical: Presence of e-business in an arena implies that the business aims at saving time and cost associated with the business processes as the chain of approvals, paper works, and the movement of files and processes has been eliminated and replaced by the virtual movement of data over electronic medium (Villena et al., 2009, p. 640). Inventory (raw-material in this discussion) is one of the major influencers and consumers of time and cost in a business process e.g. the delivery time, storage cost, time to expire, etc. When it comes to supply chain management, management of raw material is attributed to its additional costs towards storage, leakage, theft, and other costs pertinent to storage of raw material. Expiry date, if applicable, is also a cause of concern for the supply chain department. Application of e-business can easily be couple with cost-and-time-reducing-mechanisms for inventory such as JIT (Just In Time) mechanism whereby inventory levels are kept to the most optimal levels ensuring no excess costs incurred or time lost for them. This is done using various modes and models associated to forecasting the raw material requirement using variables such as time to delivery for raw material (lead time), process timing (time taken to convert raw material to finished goods), and the inventory replenishment or turnaround time. Similarly, the application of e-commerce would reduce time and cost associated to conducting a transaction, and at the same time, can also influence the stock-ups of inventory (finished goods in this scenario) (Lau et al., 2002, p. 239). Application of e-commerce and the data obtained from it can assist in large means towards the collecting the data, analyses of the same, and forecasting of the future demands and requirements of the customer, and accordingly, process and delivery schedules can be made (Lee and Ng, 1997, p. 192). Application of ‘e’ also implies that the business needs to keep its supply chain network updated on the technological advancements that it applies to itself. in such a scenario, firstly, the supply chain relationships with the business tightens and at the same time, the whole network becomes a transparent business whereby the stakeholders actually become part and well-wishers of the business (Lyles et al., 2008, p. 170). At the same time, it is worth mentioning that not involving or not taking the supply chain network into confidence prior to such applications on the business can prove out to be a fatal mistake (Balakrishnan and Geunes, 2004, p. 140). Classical Examples of Supply Chain Cases Today, a number of businesses exist over the ‘e’ platform that cannot survive technically unless they have full support from their respective supply chains. Consider the example of Amazon where the text selling giant has developed its line of products and services and today sells a number of utilities from mobile phones to digital cameras and other electronic goods of consumer usage. Amazon has developed its distribution centers that hold an appropriate amount of inventory essential to make the presence felt and ease the process of purchase from the customer. At this point, it is critical to highlight the fact that Amazon assists its suppliers to forecast their requirements ensuring that the right inventory is placed at the right time, and in the right numbers. Collaboration of supply chain networks is visible in case studies such as those of DELL, where customers assemble their own computers and the parts are available at the right time in the right numbers (Harland, 1996, p. S64). Similarly, Toyota, the inventor of JIT (Just In Time) inventory mechanism present the classical example on how supply chain networks can be knitted together to ensure that the customer gets the final product on time (Carter et al., 2000, p. 117). P&G and Wal-Mart is another widely read case of how inventory replenishment is communicated over the ‘e’ medium to the supplier (Welborn and Kasten, 2007, p. 5). The business books are filled with such and similar classy examples that illustrate the importance of embedding supply chain network as an integral business unit (Gurnani et al., 2011, p. 381). And this bond has been enhanced by the ‘e’ version of the same, enhancing the productivity of the relationship (Audy et al., n.d., p. 111). 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