The Impact of Internet on the Field of Supply Chain Management - Research Paper Example

The impact of internet on the field of supply chain management of 17 October Introduction Internet and computers are revolutionising the human life in many ways. The influence of computers and internet are visible in most of the major human activities at present. In business and communications, it is difficult to think of an organization without computers and internet connection. Internet controls the to and fro exchange of information of an organization. In fact all the departments of an organization like; production, planning, marketing, accounting, logistics etc need the support of computers and internet for the smooth functioning of the business activities. Supply chain management is an important organizational function in which the worth of computers and internet are unquestionable. (The efficient integration of suppliers, factories, warehouses and stores is necessary for an organization to ensure that the goods produced and distributed were in the right quantities, reach the right locations at the right time, so that the total system costs would be minimized)1. Internet helps the managers to cooperate between various departments in an organization so that the supply chain functions would run smoothly. This paper briefly explains the importance and impact of internet on supply chain management in the modern organizations. Importance and impact of internet on supply chain management The introduction of internet has revolutionized the supply chain operations and the traditional supply chain procedures were given for new methods and innovative strategies. For example, before the introduction of internet and computers, production decisions were taken 2 based on the forecasts (push system) whereas the introduction of internet resulted in the entry of Push-Pull-system in production and supply chain management. In other words, on markets, the consumers usually "pull" the goods based on their demands while the suppliers "push" the goods toward the consumers. The suppliers will get exact information about the movements of the goods in the market at the right time based on the consumption so that they can make necessary arrangements to deliver the goods to the retail stores based on the consumption or demand. This task was difficult before the introduction of internet as the supplier was forced to wait too long to collect the information about the movements of goods from various store managers and to take decisions about the quantity of goods to be delivered at a particular point of time. The timely to and fro flow of information through internet, made the suppliers capable of forecasting the future demand accurately. (“The Internet can create more sourcing opportunities for raw materials”)2. Consider a tire manufacturer in America. The major raw material required to produce tire is rubber. But America is not a prominent producer of rubber. It is necessary for an American tire manufacturer to look for rubber in prominent rubber producing countries like India, Malaysia etc. It is not necessary that the rubber prices are the same in both India and Malaysia. Internet can help the American tire manufacturer to locate the best quality rubber in the international market and he can compare the prices also so that he can make the possible best deal in rubber purchasing. Before the introduction of internet, it was difficult for the purchasing people to explore the world markets instantly to locate raw materials. In short, internet purchasing can reduce costs and the response times, both at the same time. (E-commerce allows transportation companies of all sizes to exchange cargo documents electronically over the Internet. E-commerce enables shippers, freight forwarders and trucking firms to streamline document handling without the monetary and time investment required by the traditional document delivery systems)3. Before the introduction of internet, lot of time were wasted for the paper works necessary for the logistics operations or supply chain management. On the other hand, the introduction of internet reduced the burden of paper works immensely so that time and investment required for the paper works were also reduced considerably. Book keeping or the files keeping was a big task in logistics operations earlier. It was difficult for the employees working in logistics or supply chain department to properly arrange or file all the documents necessary for the transactions of goods. Internet avoided such difficulties as the necessary details of logistics operations can be easily stored and retrieved from a computer. Networks and internet together made revolutionary changes in supply chain operations. It is possible for a person to book an American airline ticket from India and ask one of his friends in America to pay the price of that ticket. Moreover he can print the e-ticket also, staying at the convenience of his home. In other words, most of the current airliners even despatch their ticket to the customers through internet. (The immediate connection between a buyer and a supplier increases cooperation and efficiency between firms. The success of worldwide retail chain Wal-Mart frequently has been attributed to the electronic data interchange (EDI) system installed among its pool of suppliers. Also, the ubiquity of the Internet allows more companies to operate on a common platform without heavy investment in closed information networks such as EDI. And the more those companies conduct trades online, the more profitable Internet-based supply chain management will become)4. Relationship building is accepted as the core of every business function according to the modern business philosophies and principles. The customers always like to see immediate responses from the supplier so that their requirements were met in time. Because of the above principle, modern customers always like to establish business relations with suppliers who are capable of delivering goods in time. An intent controlled supply chain can give the business more flexibility and reliability compared to other means of supply chain management. It can close the link between the customers and the distribution centres so that the customers can manage the movements of the products requested in a proper and efficient manner. Customers always like the simplification of the process of purchasing. E-commerce is a prominent medium of purchasing for the modern consumers. It helps the people to purchase a product from any part of the world, staying in their home with the help of internet. The success of e-commerce activities depends on the efficiency of the supply chain management. In other words, proper supply chain management with the help of internet helped the e-commerce companies to grow at a rapid rate. (“In online consumer purchases, transaction efficiency increases as the ownership of inventory involved in the transaction do not postpone farther upstream in the supply chain when the transaction takes place”)5. Conclusions Internet has revolutionised most of the business functions and supply chain management is one area which observed revolutionary changes as a result of the introduction of internet. The cost and time needed for the traditional methods of logistics operations were considerably reduced with the entry of internet in supply chain management. The business relations between the organization and the customers were improved a lot because of the introduction of internet. Bibliography . 1. Park Gi, Sung-Yeon and Yun, Woong 2004, The Impact of Internet-Based Communication Systems on Supply Chain Management: An Application of Transaction Cost Analysis, JCMC 10 (1), Article 12, November 2004, accessed on 17 October 2010 http://jcmc.indiana.edu/vol10/issue1/park_yun.html 2. Lin Pei-Chun, Chen Shun-Sheng and Chen Chen-Cheng, TRANSACTION EFFICIENCY ANALYSIS OF AN INTERNET RETAILING SUPPLY CHAIN IN THE BOOK INDUSTRY, http://ibacnet.org/bai2007/proceedings/Papers/2007bai7163.pdf , p.9 3. Simchi-Levi, David, The Impact of the Internet on Supply Chain Management 4. SCM104: Internet Technologies and Supply Chain Management, accessed on 17 October 2010, http://www.supplychainonline.com/preview/SCM104/1.html 5. Sreenivas, M. Impact of E-Commerce on Supply Chain Management, accessed on 17 October 2010 http://www.ezilon.com/articles/articles/6473/1/Impact-of-E-Commerce-on--Supply-Chain-Management Read More