How the Internet is Being Used by Businesses and Government - Essay Example

Industries and businesses, since the commercialization of the internet since the 1990s, have become vital in the face of turbulent markets and competitive market forces. The internet has become a virtual marketplace which has reshaped the nature of the businesses around the globe (Prufer & Jahn, 2007). Internet is a platform which brings together traffic receivers and traffic senders. Due to the internet, businesses now have more choice in the number of channels they can use to reach their customers. Today the internet is aggressively used as a channel for businesses both new and established ones. Internet exchanges are beneficial not just for the customers or end users but it helps businesses to exchange and grow together. Internet-based e-commerce includes business-to-business and business-to-customer exchanges taking place. Internet is widely used by different industries for different purposes. Business use internet for advancing their objectives, for cost reduction information flow, fulfilling orders and tracking dispatches, inventory management, production planning and enhancing customer relationship. Companies even reach their products directly to consumers through the internet. This paper will examine how internet is being extensively used in business around the world in different sectors. As internet and information technology advanced, electronic data interchange (EDI) help improve speed and efficiency and reduce transaction costs (Hsieh & Lin, 2004). EDI automates creation, transmission and processing associated with routine business forms like purchase orders, invoices and payments (Sokol, 1996 cited by Nissen 2001). Businesses around the world do global procuring and sourcing. EDI shortens the cycle and order fulfillment times. Barcoding and product numbering systems have also been developed and applied particularly although not exclusively to FMCG products. The intention was to provide a unique identification of the products but they have now been extended to shipments, stock locations and variable data (Power & Simon, 2004). The World Wide Web is one of the most popular forms of IT today. It is an information storage system that links computer based resources around the world. Transformation has taken place in the way exchange related activities take place. A website that serves as a marketing and sales point is a differentiator from competitors (Zsidisin, Jun & Adams, 2000). The web removes the physical and time restrictions. Operating costs are removed as are indirect expenses. The Web also strengthens B2B and B2C relationships as product information is available through multimedia such as sound and active pictures. Electronic fund transfer has enhanced the business process. The two most amazing example in the usage of internet technology who have integrated technology and serve the customers through their websites are Dell Computers and Amazon.com. It has become very easy to buy and sell books because of the internet. At the physical store, book lovers can browse through the jacket or the first few lines of the chapters before deciding to buy the book but the convenience and ease has increased with books now being easily available on the internet. There are now more than 600 book stores on the World Wide Web (Business Town, 2003). Physical book stores have limitations of the number of books they can carry but the online stores can carry millions of titles as they send the order directly to the publisher. According to a survey by Goldman Sachs, internet book retailing is the third among the products that have attained online success in retailing. The success of book sales on internet is due to various factors. They are inexpensive for a decision; buyers have ample choice to select from. And an excellent search process is available. One can browse through a list of a particular section or a subject and read reviews about the book, the author and the synopsis. This is not possible in a brick-and-mortar store. Prices too can be compared at different online stores which is not practical at the physical store. once a customer visits the website and leaves his contact details, the online stores can keep the customer regularly updated on new stocks or reviews or discounts offered from time to time. This requires no effort as the system can be automated and which would be a stupendous task for a physical store. Amazon.com has switched over from the brick and mortar industry and is now synonymous with e-commerce and uses technology to constantly improvise and innovate. It is perhaps the busiest location on the web and claims to have more than four million customers (Business Town, 2003). Amazon’s inventory turned over 42 times in 1997 compared with 2.1 times for Barnes & Noble. It uses the SAS technology to analyze the results of their ongoing efforts to improve personalization. Multi-threading allows Amazon.com to apply multiple processors to complex analytic tasks. They constantly evaluate the new product page layouts and new search technology. Amazon.com has one of the world’s largest data warehouses, which allows it to personalize customer satisfaction. Data warehousing allows them to manage growth. Their data includes order data, inventory data, and customer data. The data warehouse is connected to almost every system in the company. It sells virtually anything to more than 38 million customers (SS, 2002). Amazon.com adopted the collaborative-filtering technology through which they could analyze the customer’s purchase and suggest other books purchased by others with similar tastes. This led to mass customization and increased their online market manifold (Mellahi & Johnson, 2000). Barnes & Noble too started pushing its online division in 1998 and the same year Borders Books & Music, Inc. moved into the web. This store has an information desk and café. This has further smoothened the process of searching for a book. They have also formed an online community that can exchange views and thoughts about a book before or after purchase. Borders is today is the second largest retailer of books, music and video, after Barnes & Noble. Books.com another book store claims to have four million titles compared to 2.5 million of Amazon.com. This store offers 20 to 40 percent discount and in addition the buyers also earn credit with every purchase which they can use to buy further books. They also offer electronic books which can be downloaded directly to the user’s home computer. This means books can be sold on demand as it can be directly printed when the buyer wants. Rare books have become very easy to search for Companies also need to be responsive to diverse needs of the customers and hence use build-to-order or mass customization process as a means to meet the specific needs of the customers. Dell Computers, the No. 1 PC maker uses technology for its direct sales model where the PC’s are made by electronic order and supplied directly to the customers. They have eliminated the middlemen in their supply chain and are an outstanding example of an innovative business model through effective SCM (Chou, Tan & Yen, 2004). Today Dell generates a new manufacturing schedule for its plants every two hours that reflects actual orders received. The company uses a combination of all these strategies for pooling inventory to cater to the changing and diverse needs of the customers. While agility implies using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile market place, leanness means to develop a value stream to eliminate all waste including time and to ensure a level schedule (Naylor, Naim & Berry, 1999). Another outstanding example of supply chain enhancement through the use of World Wide Web is that of Noble Jewelry Limited, Hong Kong. According to Yau (2002), the company gained cost savings, faster communication and information exchange, shorter order fulfillment cycle, accuracy, greater customer satisfaction, lower inventories, demand forecast, production planning, better customer relationship, and covering new market segments. In 1998 the company started a website with an information platform and a product catalogue. Gradually they added a product showroom, auto-quotation, and facility to order online. By December 2001, they were able to give specific information on their website including order status, and detailed product information. Authorized customers were allotted their own username and password by means of which they could gain access to their own panel. The status of order in progress, the delivery status was all displayed on their panel. A customer could keep track of all the steps from order placement till dispatch. It was meant to make the customers feel comfortable when accessing the website. The database which then customers accessed was the same as the one that their employees accessed too. The design process too was enhanced by the participation of the customers. The customers could give their ideas and designs while it also allowed the company designers to get approval from the customer by sending them the design images. This facilitated customized products and customer-oriented service. It eliminated the role of a salesperson that would identify the customer’s requirements, liaise with the designing and production department. The earlier process was prone to errors and miscommunication. The operation process showed who carried out which process at what time, the wastage details and the usage of metals and stones. Technology allowed integration with other business partners and effective resource planning. This gave a wider choice in selecting and deciding on the resources. All the process could be so planned to be able to meet the delivery schedule of the customer. This also helped in keeping low inventory. Investigations revealed that they had blocked capital in stocks up to HK$35 million. The headquarters could now keep total control over the inventory and material flow. They were aware when the production in China was completed; they knew when the material had reached Hong Kong. Noble achieved a fair amount of success and savings with this adoption. They had to train and educate their staff to derive the maximum benefit. What is essential is the ability to adapt to the rapid changes that take place as the popularity of internet increases, customer demands increase and swift technological changes. Sales force automation (SFA) is a tool which helps to convert the customer leads generated by the marketing team into actual sales. In the global competitive environment this is essential to improve the efficiency and productivity of the sales team. The data collected helps the management to take informed decisions and plan the sales and marketing (Singh, 2003). SFA tools helps build, nurture, and manage client relationships. Companies like Pfizer are partnering with technology firms to enhance customer experience. Customer relationship management (CRM) is a strategic relationship management process that combines the best business practices, resources, knowledge and appropriate CRM software to serve personalized customer needs and to increase customer loyalty (Smith, 2006). Customer data analysis is a key part of CRM. Pfizer, one of the world’s leading pharmaceutical companies is utilizing the services of a leading IT solutions company to manage its sales force globally. Using a popular CRM tool, Seibel, Pfizer plans to integrate data from over 10,000 sales persons spread across Europe. The tool captures data regarding each salesman’s hospital visits, visits to the doctors, distribution of free samples, and their feedback. This data is then integrated, analyzed, and presented in a format to help the higher management take strategic decisions. Daily data has to be entered by the salesmen, which can be accessed by the company through the internet and thus real-time information makes decision-making process faster. Zara, a Spanish fashion clothing company, uses proprietary information system to connect its stores to its headquarters. Zara employs specially designed hand-held devices or PDAs at all its stores, which facilitates rapid and accurate exchange of market data. Through this they keep track of the total order fulfillment process – plan procurement and production requirements, monitor warehouse inventories, allocate production to various factories and other suppliers, keep track of shortages and oversupplies (Ferdows et al., n.d.). Companies are moving closer to their customers and customer relationship management has become imperative even in the automobile industry. Technology has helped to add value to the service that General Motors (GM) was giving to its customers. GM is now able to constantly monitor, product and supply chain data apart from adjusting engineering, production, sales and distribution activities (Koudal & Wellener, 2003). GM has implemented an integrated network through which they have been able to connect the company with suppliers, customers, alliances, dealers and partners. Sharing information requires trust on the part of all the participants (Lippert & Forman, 2006) because only through information sharing and tight control can one regain control over the supply chain. Barilla, Italian pasta is a case example. Pasta is a product that has both low demand and supply uncertainties. Overreaction by the retailers leads to high level of demand fluctuations causing significant waste and losses. Barilla managed to avoid such losses by initiating information sharing and coordinated replenishment programs and the supply chain efficiency was greatly improved. Inventory dropped by almost 50% and the stock-out rates were down to almost zero. The right and innovative can provide a competitive edge to firms. Some aim to create the highest cost efficiencies in the supply chain and internet helps to have tight and effortless information integration apart from enabling production and distribution schedules to be optimized (Lee, 2002). Eliminating steps in the channel reduces costs as Wal-Mart has done. They have a direct-to-store distribution process for their stable high-volume products. Inventory pooling strategies are quite common in retailing where different retail dealers share inventory. Internet again helps in providing information transparency amongst members that share inventory. Saturn Corporation, a major US automobile maker, is an example of sense and respond supply. It has a service strategy it matches the urgency of the customers’ needs (Dawson, 2004). Saturn Corporation has a jointly managed inventory that involves sharing inventory with Saturn dealers. Its ability to match the parts supply critical to the customers’ needs has increased after sales satisfaction. Since the demand for parts is highly unpredictable in nature, Saturn has adopted the pull system. It does not position inventory for parts as per forecast but replenishes the stocks at the retailers on one-for-one basis. Thus, it can be seen that while internet did start in the early 1990s it was only in late nineties that aggressive e-commerce was started. In late 1990s most business sectors introduced business-to-business exchanges leading to efficiency and better customer relations. It simultaneously started in the retail segment which includes retail grocery stores like Wal-Mart, online book stores like Amazon.com which has made the physical stores redundant, in the automobile industry, in chemicals, in fashion industry, in the pharmaceutical industry like Pfizer. Different industries have derived different benefits from the use of internet. While come have reduced costs by better inventory management, some use it to move closer to the customers which is essential in the competitive environment. Some like Zara use it for responding immediately to the changed customer requirements while some like Barilla have been able to avoid losses by information sharing,. Information sharing is a great advantage which has been exploited by every industry and internet technology has contributed to the growth of businesses to a large extent. It has speeded up the transactions while enhancing customer satisfaction in the last ten years in practically every industry. References: Business Town, (2003), Internet - Profiles of Successful Internet Businesses, 29 July 2007 Chou, D. C., Tan, X., & Yen, D. 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