Вы находитесь на странице: 1из 5

ELECTRONIC SUPPLY CHAIN MANAGEMENT: SOME LATEST

ISSUES AND PRACTICES

Nizar Hussain M1 and Dr. Suresh Subramoniam2


1 2
Lecturer Assistant professor
Riyadh Community College College of Business Administration
King Saud University Prince Sultan University
Saudi Arabia Saudi Arabia
E-mail: nizarhussainm@yahoo.co.in E-mail: sureshsubramoniam@gmail.com

Abstract:

Supply chain management (S CM), a management method to optimize internal costs and
productivities, has evolved as an application of e-business technologies. SCM is a powerful
strategic function capable of radically improving customer value propositions by the reengineering of
intranet and internet-enabled collaborative channel partnerships. Latest developments in
information technology have propelled the e-Supply Chain Management (e-SCM) concept to newer
dimensions. In the past, neither markets nor products changed much over time, enterprises
that gained initial superiority could leverage on, considerable resources and process knowledge,
mature distribution channels, advertising and marketing clout, and the newest technologies, to
maintain that lead. Today, it is evident that there is no such thing as sustainable competitive
advantage and also that all advantages are temporary. The cause for the rapid acceleration in the
erosion of competitive advantage in almost all the businesses can be traced back to the rapidly
developing newer technologies. Still more deadly is the sudden growth of newer business models
that have been quick in challenging the present leaders by leveraging on special competencies
which permit them to invade the market and conquer the targeted customer segments better. This
paper conducts an extensive literature review to identify the latest trends in e-SCM. It also attempts
to study some of the issues associated with e-SCM along with their solutions and practices.

Keywords: e-Supply Chain Management, Reengineering, Intranet, Internet, Information technology.

1. Introduction to information sharing, how the Internet can be


used as a medium to access and transmit
As energy costs continue to rise, manufacturing information among supply chain partners [3].
and service companies have looked to their supply However, the Internet not only enables supply
chains as important areas for strategic cost chain partners to access and share information, but
reduction and competitive advantage. The problem also to create, storage, dissemination and
is that most companies have already picked the application of organizational knowledge. This third
low-hanging fruit in supply chain savings through type of impact of the Internet on SCM is called
economies of scale, consolidating source materials knowledge management (KM). There is no
and other measures. As businesses search for universal definition of KM. KM refers to the set of
other efficiencies, one opportunity is streamlining processes or practice of developing in an
supply chain management. The internet is playing organization the ability to create, acquire, capture
an increasing role in the search for efficient supply store, maintain and disseminate the organization's
chain management (SCM), but the novelty of both knowledge [4]. This paper examines the following
the concept of SCM and the internet has placed the areas in detail.
combination of the two in the position of finding the
right balance of both [1]. The Internet has many • E-business and supply chain management
impacts on the supply chain. One of the most
covered topics in the literature is the impact of e- • Information sharing and supply chain
business, which refers to the ability of a firm to management
electronically connect, in multiple ways, many
organizations, both internally and externally, for • Knowledge Management and supply chain
many different purposes [2]. Another impact refers management
2. E-business and supply chain independent panels of expert judges until tentative
management reliability and validity is established; and (c) further
refine and validate the multi-item scales using
To achieve joint optimization of key SCM decisions, survey data from 79 North American manufacturing
it is preferable that there be a free flow of all users of ERP systems. The scales developed in this
relevant information across the entire chain leading paper should be valuable tools for researchers and
to a comprehensive analysis. An overview of practitioners interested in assessing the
information flows facilitated through e-business success/failure of ERP system implementations.
technologies in a supply chain are shown in Figure
1. As can be seen in this figure e-business ERP
technologies facilitate information sharing either in
supply chains using a number of technologies like
enterprise resource planning (ERP), point of sale Raw Manuf- Who-
(POS), and /or vendor managed inventory (VMI). mate- acturing lesa- R- C-
rials / ler et- us-
Further, the focus of information sharing is to and Delivery and/ ai- to-
facilitate integrated and/or coordinated decision parts opera- Dist- ler m-
making in supply chains. This leads to several supp- tions ribut- er
liers or
potential research issues in this interdisciplinary
area, and this paper address some of them. In
general, we can classify these research B2B Actions POS / VMI B2C Actions
contributions as adopting either a strategic or
tactical focus.
Materials Flow Information Flow
2.1 Strategic Focus ?????? ¶
In e-business and SCM, there are several issues of Figure 1: Information flows using e-business
strategic importance. To start with, Sahin and technologies in a supply chain.
Robinson [5] present a comprehensive literature
review of the value of information sharing and Supplier performance is another area of
physical flow coordination in SCM. Based on their interest in the context of e-business technologies.
review, they highlight gaps in the current body of This focus is motivated by the fact that
knowledge and identify areas for future research. manufacturing firms typically spend 55% of earned
For any researcher wishing to continue or initiate revenue on purchased products and services.
research in exploring coordination issues in supply Guimaraes, Cook, and Natarajan [8] empirically
chains, this paper is a valuable starting point. In the examine the critical factors that account for the
next paper, Frohlich [6] focuses attention on performance of supplier networks. Their theoretical
Internet-based linkages to suppliers and customers framework links supplier network performance with
(conceptualized as e-integration). A conceptual the effectiveness of Information technology use and
model relating three sets of strategic barriers the depth in supplier relationships. A unique aspect
(internal, customer, and supplier) to e-integration of this research is the incorporation of industry clock
and the potential impact on performance is speed as a moderator variable in their framework.
proposed and empirically validated. Based on this, Their empirical results support their hypothesis, and
he proposes that in implementing technology-based this is the first study integrating industry clock
changes in the supply chain, managers should first speed measures in assessing supplier network
concentrate on removing the internal barriers to performance.
such changes and thus, adopt an inside-out
implementation perspective. 2.2 Tactical Focus
Enterprise Resource Planning (ERP) There are several tactical issues of interest in e-
systems are used to coordinate decision making in business and SCM. To start with, Business-to-
supply chains. However, there is a lack of rigorous Business (B2B) and Business-to-Consumer (B2C)
strategic research examining whether these system exchanges are dramatically changing the manner in
implementations are successful in achieving this which supply chain activities must be structured.
objective. A first attempt at addressing this issue is Bapna and Goes [9] study B2C online auctions over
the paper by Stratman and Roth [7]. The authors an open-source, ubiquitous Internet protocol
follow a rigorous methodological process to: (a) computer network. They develop an analytical
identify a portfolio of eight generic constructs that model that characterizes the revenue generation
are hypothesized to be associated with successful process for Yankee auctions used to sell multiple
ERP adoption; (b) operationalize each construct as identical units of a good to multiple buyers. The
a multi-item measurement scale by applying a model is validated using empirical and simulated
manual item sorting technique iteratively to
data. From a theoretical perspective, their information sharing and supply chain
contribution is the design of a partitioning scheme management. Like many changes experienced in
of the discrete valuation space of the bidders such other areas of business, the introduction of
that equilibrium points with higher revenue computer technology brought unprecedented
structures become identifiable and feasible. From a changes in the way organizations manage their
practical perspective, they find that auctioneers are, information sharing processes. From their use in
most of the time, far away from the optimal choice product development to surveys of after-sales
of key control factors such as the bid increment, customer satisfaction, computers have been
resulting in substantial losses in a market with playing pivotal roles in the flow of information, not
already tight margins. To address this shortcoming, only within individual organizations but also
they propose a set of tools, varying in their level of between organizations.
abstraction and information intensity requirements,
which could be used by auctioneers to maximize B2B exchanges have been
their revenues. significantly affected by the transformation in
information sharing processes. Starting with the
Webster [10] studies approaches automated order entry system in the mid 1970s,
used by make-to-order firms for managing their lead computer technology has facilitated information
times and prices in the face of changing market sharing between organizations involved in inter-
conditions. Given an expanding e-business organizational transactions. B2B exchanges using
infrastructure, the issue of jointly managing the Internet-based communication systems have
marketing mix of price and lead-time is critical. A attracted special attention because of their market
structurally simple model to examine policies for growth potential and impact on business structures
adjusting price and capacity in response to periodic throughout the world. Even after the demise of the
changes in how the market values price and lead- dot.com boom at the turn of the century, this
time is proposed. The key results are: (a) when particular sector has experienced a steady growth.
throughput stability is highly valued, firms should The revenue from Internet-based B-to-B exchange
maintain a constant capacity and absorb changes in was $43 billion in 1998 (E-procurement, November
the market by manipulating lead time and/or prices; 20, 2000). In the year 2002, the market size grew
and (b) from a profit maximizing perspective, stable to $870 billion. After another four years, the
lead times with adjustments to prices and/or number is expected to reach $5.8 trillion [12].
capacity are optimal. Adoption of Internet-based information sharing
systems in industrial purchasing is not limited to
Arcelus, Pakkala, and Srinivasan [11] particular industry types or certain firm sizes. It is
present a common model for studying pricing happening in the high-tech, aerospace industry as
decisions in the presence of either global risk- well as in agricultural and dairy industries. Also,
sharing agreements among supply-chain partners, companies of various sizes, from industrial giants
or integrated brick and click environments in B2B such as GE to small start-ups, are conducting
markets. The problem of price uncertainty in both Internet-based B-to-B exchanges.
environments is modeled as a stochastic repetitive-
sales problem. The model identifies sufficient Even before the Internet became
conditions for regenerative ordering cycles resulting available for commerce, business managers were
in a simple optimal two-price purchasing policy. thrilled by the prospect of its efficiency,
From an implementation perspective, the simple effectiveness and innovation, which they believed
result should be useful for purchasing managers would overcome barriers in time and geography
worldwide and across B2B markets. As is obvious, and improve inter-organizational relationship [13].
the papers published in this issue cover a wide The core of its benefits is cost reduction, which
spectrum of strategic and tactical research issues in results from timely and speedy transactions,
e-business and SCM. However, it is safe to say that inventory reduction, easy access to new markets
we have only scratched the surface. This and suppliers, and efficient management of the
observation is based on not only the explosion in whole supply chain process, to name a few. In the
academic research in this area but also on the 1980s and early 1990s, many American
continual development and diffusion of companies introduced inter organization networks
technological developments. Hence, there are in their supply chain management which enabled
several opportunities for future research in this them just- in-time procurement.
area.
The immediate connection between a buyer
3. Information sharing and supply chain and a supplier increases cooperation and efficiency
management between firms. The success of worldwide retail
chain Wal-Mart frequently has been attributed to the
One of the most recent applications of computer electronic data interchange (EDI) system installed
technology involves the Internet in the area of among its pool of suppliers. Also, the ubiquity of the
Internet allows more companies to operate on a of the market depending on the relationship
common platform without heavy investment in between transacting partners. Scrutiny of the
closed information networks such as EDI. And the overall geography of supply chain management,
more those companies conduct trades online, the which includes the markets and hierarchy and
more profitable Internet-based supply chain various hybrids in-between, may broaden our
management will become. perspective on the role of new communication
technology.
McFarlan [14] emphasized that executives
should understand if communication technology can Second, few previous studies consider
be the core of their competitive strength or if it will Internet-based communication systems on a
simply play a supporting role. Wigand [15] also continuum of supply chain management problems
emphasized the importance of optimal that have existed long before the Internet. Although
organizational fit and alignment in the deployment the use of the Internet is new, the problems
of information technology. He made it clear that accompanied by its use are not. In discussions
what brings added value to a firm is not information about B-to-B e-commerce, Internet-enabled
technology itself, but well-tuned coordination markets are often described as entirely novel
between business strategies and technology. A phenomena. But, in reality, except for some purely
recent issue of the McKinsey Quarterly reported online market makers that account for only a
that some companies that made heavy investments fraction of B-to-B e-commerce, it is extremely
in supply chain management information systems difficult to separate traditional markets from
performed worse than companies that did not, Internet-based markets. By failing to recognize the
although technological investment in supply chain evolutionary rather than revolutionary nature of
management increased the efficiency of firms on market transformation, some of the research adds
average [16]. These findings clearly demonstrate confusion to the understanding of the current
what managers have been told repeatedly. To marketplace.
adopt this new communication technology
successfully, firms must have a working supply 4. Knowledge Management and supply
chain and know how the technology can improve chain management
their existing supply chain.
Knowledge Management (KM) is concerned with
While these lessons are invaluable to the creation, storage, dissemination, and
managers, there has been little research on how to application of organizational knowledge. Knowledge
integrate Internet-based information sharing is usually defined [17] as information in context, or
systems in order to conduct successful supply chain actionable information. Successful KM rests upon
management. Although intensive research has an organization possessing a supportive culture
improved our understanding of the new characterized by high trust and the ready sharing of
communication technology as a tool of supply chain needed information [17, 18], sufficient technological
management, the efforts seem to be lacking two sophistication [19], and appropriate attitudes and
attributes that can be crucial for marketing research motivation towards organizational success [20].
as a discipline striving to solve managerial
problems and as a research tradition based on To achieve success at SCM, an
cumulative knowledge. organization must possess–and share–knowledge
about many different facets of this process. The
First of all, many of previous studies knowledge sources are both internal to the
focused on either the overall picture of Internet- organization (e.g., knowledge of the whereabouts of
based B-to-B e-commerce or technical details of subassemblies, knowledge of sources of
how the transactions will be executed. Whereas manufacturing delays) and external to the
such information is essential for understanding the organization (e.g., knowledge of the final customer's
status of B-to-B e-commerce, its applicability to expectations, knowledge of where en-route
individual firms. Supply chain management components are and when they are expected to
decisions are often too remote. In addition, arrive at their destinations).
overwhelming interest in market transformation has
accompanied relative ignorance of hierarchical Lack of knowledge sharing between
governance mechanisms. In previous studies on B- members of the supply chain has been shown to
to-B e-commerce, the market system is offered as a significantly affect overall performance [21, 22, 23].
governance mechanism of supply chain As such, we argue that KM can enhance the degree
management. However, the market is only one of of success of existing SCM efforts as well as
the two classical forms of governance mechanisms. increase the likelihood of success of new SCM
The other governance mechanism, hierarchy, undertakings. While many SCM projects have
deserves equal attention in the context of B-to-B e- resulted in improved performance [24, 25, 26], we
commerce. Additionally, there exist many variations believe that higher levels of performance
improvement are possible by coupling KM initiatives 13. Hammer, M., & Mangurian, G., The changing value
with SCM programs. of communications technology. Sloan Management
Review, 28, 1987, pp 65-71.
14. McFarlan, W. F., Information technology changes the
5. Conclusion way you compete. Harvard Business Review (May-
June), 1984, pp 98-103.
The Internet provides a tool that allows supply chain 15. Wigand, R. T., Electronic commerce: Definition,
activities to be carried out in a synchronized, theory, and context. The Information Society, 13(1),
instantaneous manner, facilitating maximum supply 1997, pp 1-16.
chain performance. The positive benefits of 16. Kanakamedala, K., Ramsdell, G., & Srivatsan, V.,
integrating the Internet into management of the Getting supply chain software right. The McKinsey
Quarterly, (1), 2003.
supply chain generally outweigh the risks and
17. Davenport, T. and L. Prusak, Working Knowledge:
associated costs, and firms who have completed How Organizations Manage What They Know, HBS
such integration hold a current competitive Press, Boston, MA, 1998.
advantage over those that have not. Internet is a 18. Shaw, R. B.,Trust in the Balance: Building
supply chain management tool that can be used to Successful Organizations on Results, Integrity, and
improve customer satisfaction, reduce costs, Concern,Jossey-Bass, San Francisco, 1997.
smooth production flows and shorten cycle times. 19. Tuggle, F.D. and N. Shaw, An Extended Model of the
Effects of Organizational Culture Upon the
References Acceptance of Knowledge Management, in A.
Gunasekaran, O. Khalil, and M. R. Syed (eds.),
1. William M Lankford, Supply chain management and Knowledge and Information Technology
the internet, Online Information Review, Emerald, Vol Management, Idea Group Publishing, Hershey, PA.,
28, Number 4, 2004, pp 301-305. 2002.
2. Fahey L, Srivastava. R, Sharon JS and Smith DE. 20. Pfeffer, J., The Human Equation: Building Profits by
Linking e-business and operating processes: The Putting People First, Harvard Business School
role of knowledge management. IBM Systems Press, Boston, Ma, 1994.
Journal 2001,40(4), pp 889-907. 21. Armistead and Mapes, “The Impact of Supply Chain
3. Cristina Giménez and Helena R. Lourenço, e Integration on Operating Performance,” Logistics
Supply Chain Management: review implications and Information Management, vol. 6, 1993, pp. 9-14.
directions for future research, Document de Treball / 22. Anderson, E. and C. Fine, 1999, “Business Cycles
Working Paper # 17, October 2004, an Productivity in Capital Equipment Chains”, in
4. E.W.T. Ngai, E.W.C. Chan, Evaluation of knowledge Quantitative Models for Supply Chain Management,
management tools using AHP, Expert Systems with ed. S. Tayur, et al, (Kluwer Academic Publishers,
Applications, Elsevier, 29, 2005, pp 889–899. Boston).
5. Sahin, F., & Robinson, E. P., Flow coordination and 23. Bhaskaran, S., Simulation analysis of a
information sharing in supply chains: Review, manufacturing supply chain, Decision Sciences 29
implications, and directions for future research, (3),, 1998, pp 663- 657.
Decision Sciences, 33(4), 2002, pp 505-536. 24. Arntzen, B. C., Brown, G. G., Harrison, T. P., and
6. Frohlich, M. T., e-Integration in the supply chain: Trafton,L. L.., Global supply chain management at
Barriers and performance, Decision Sciences , 33(4), Digital Equipment Corporation, Interfaces, Vol. 25,
2002, pp 537-556. No. 1, 1995, pp. 69-93.
7. Stratman, J. K., & Roth, A. V. , Enterprise resource 25. Camm, J., T. Chorman, F. Dill, J. Evans, D.
planning (ERP) competence constructs: Two-stage Sweeney, G. Wegryn,, Blending OR/MS, Judgment,
multi-item scale development and validation, and GIS: Restructuring P&G’s Supply Chain,
Decision Sciences , 33(4), 2002, pp 601-628. Interfaces 27(1), 1997, pp128- 142.
8. Guimaraes, T., Cook, D., & Natarajan, N, Exploring 26. Lin, G., M. Ettl, S. Buckley, S. Bagchi, D. Yao, B.
the importance of business clockspeed as a Naccarato, R. Allan, K. Kim, L. Koenig, Extended-
moderator for determinants of supplier network Enterprise Supply-Chain Management at IBM
performance. Decision Sciences , 33(4), 2002, pp Personal Systems Group and Other Divisions,
629-644. Interfaces, 30:1, 2000, pp 7-25.
9. Bapna, R., Goes, P., Gupta, G., & Karuga, G.,
Optimal design of the online auction channel:
Analytical, empirical, and computational insights.
Decision Sciences , 33(4), 2002, pp 557-577.
10. Webster, S., Dynamic pricing and lead-time policies
for make-to-order systems, Decision Sciences, 33(4),
2002 pp 579-599.
11. Arcelus, F. J., Pakkala, T. P. M., & Srinivasan, G., A
purchasing framework for B2B pricing decisions and
risk-sharing in supply chains. Decision Sciences,
33(4), 2002, pp 645-666.
12. Hamm, S., B2B isn't dead, it's learning, Business
Week Online, 2002, Dec 18.