The Difference Between Esupply Chain

Published Date: 02 Nov 2017

E-Supply Chain

Nowadays the world internet economy is increasingly putting a quality on the ability of companies to quickly adapt to changing market factors. Moreover, the profuse growth of internet has completely transformed the nature of businesses and the way in which they compete. Thus, it not only just have new business models appear but also more importantly traditional businesses have benefited from a new lease of life afforded by the automation of their exiting processes and transformation of their existing supply chain relationships into computer mediated collaboration in e-supply chains.

E-supply chains have materialized from the application of internet technologies in the of supply chain interactions. In this part, the main purpose of this assignment is to analyze the different between the e-supply chain and traditional supply chain and the advantages and challenges of e-supply chain. Then, we will also discuss about the impact of e-commerce on supply chain. In addition, we will mention about the implementation and the trend of e-supply chain. Nevertheless, we will descript about the communication process on e-supply chain

2.0 The Difference between E-Supply Chain and Traditional Supply Chain

Many organizers’ decision-makers use countable and uncountable standard, such as quality, delivery, flexibility, cost and response in the selection and evaluation process. There are some different operate between use traditional supply chain management and e-supply chain management.

For the traditional supply chain management, they connect their customers and supplier by used the telephone, fax and regular mail, or face-to-face or negotiation. However, the use of face-to-face negotiation is no longer needed, because it is involved in a lot of times and costs such as transportation fee. But using of e-supply chain management, using the web to eliminate paper transactions can generate substantial savings of cost and time, such as removal of purchase orders, delivery confirmations, bills of material and invoices. Using of web can improve communications with those in different time zones or who work outside normal office hours.

Moreover, e-supply chain’s benefit can switch away from paper can also speed up response and thus reduced in the errors such as re-keying data and receiving orders by telephone calls or handwritten faxes and unclear typeface. Furthermore, some international organizer are using of video conference machine that using of internet, to carry out the meeting with few company which is in different country or states, it can help company to save a lot in provide for the staff fly for meeting which include flight ticket, hotel expanses, and other expanses.

The traditional technological support for supply chain relationships are the Electronic Data Interchange (EDI) systems which is the structured transmission of data between organizations by from one computer system to another computer system. But in the e-supply chain management environment which is Internet-based and there are reduces of the costs of information exchange along the supply chain. To operating in the e-SCM context only requires a free Web. Besides that, there are some system use in the e-supply chain management such as Oracle Supply Chain Management R12 , that enables to drive supply chain processes based on real-time demand information, and in turn provide customers accurate information on pricing and availability.

E-SCM is the use of electronic contact, thus providing low switching costs, so that the design of the supply chain is very adapt to changing trends, consumer preferences and competitive pressures. Moreover, Internet technologies can reduce production times and costs by increasing the flow of information, this is large reason for organizers are willing to adopt internet technology compare to the traditional supply chain management.

The table below show that the different between traditional supply chain and the e-supply chain management.

Traditional Supply Chain Management

E-Supply chain management

Relative value on long-term partnerships and strategic alliances

Less

More

Partnership opportunities.

Increase

Decrease

Cost savings

Less

More

Participative leadership, cost

Structurally effective ,ineffective

Not structurally effective, effective

Transformational leadership, cost

Effective, effective

Not effective , not effective

Table : The Different between E-Supply Chain and Traditional Supply Chain Management

3.0 The Advantages and Challenges of E-Commerce Supply Chain

3.1 Advantages of E-Commerce Supply Chain

(1) Benefit for keeping the relationship between customers recently.

The competition of e-commerce changes the competition steeply from enterprise and enterprise to supply chain and supply chain; in order to attract and keep the customers, we would offer to them a business operation mode which is more convenience and lower costs, keep and grow up the closely relationship with existing customers. To make the supply chain gain more value added service, make customers more satisfy.

(2) Benefit for growing up the business.

By applying the supply chain management based on e-commerce, it can achieve to manage its product and business by network. At the same time, Supply Chain e-commerce means to achieve the enterprise through an organized, unified management plan; it can reduce circulation, reduce costs, improve efficiency, achieve a higher level, and promote the business development of the relevant companies.

(3) Benefit for developing the new core business

By applying the supply chain management based on e-commerce, it is not only can achieve the corporate restructuring, but also can offer more function service type, it will surely attract more new customer, while bringing new business. Actually, by using this way, either enterprise or customers will get the benefit from it, getting more value of business and reducing costs at the same time, it’s "double-winning".

(4) Benefit for improve the operating performance

By applying the supply chain management based on e-commerce, it is not only reduce the costs of production, reduce the replying timing and market feedback timing, but also offering an overall service, so the customer will get the best quality of the product as well as the best service. It can provide the e-commerce to each part of the supply chain, and achieve the resource sharing of market and enterprise.

(5) Benefit for information sharing

To design an information flow, product flow and cash flow based on e-commerce supply. The enterprise inside the supply chain can make a trading through the internet, so it is easy to handle all useful information; to understand the requirement of the customers and the product supply from a supplier in time. Customers are also facilitated to order and trace the product. Supply chain management is the key and most effectively way to achieve the e-commerce.

3.2 Challenges of E-Commerce Supply Chain

5.0 Impacts of E-Commerce on Supply Chain

In the era of e-commerce, the enterprise using network technology to achieve the exchange of information and capital flow between enterprises and enterprise. Many enterprises are not only selling a product, they also have to provide a good customer service to their consumers in order to achieve the customer satisfaction. Therefore, the enterprises will use the internet to make the supply chain more flexible, efficiency and effectiveness. What are the impacts of e-commerce on supply chain?

Internet can coordinate the procurement between enterprises and their suppliers. As suppliers, they provide the selling business process to the buyer. The business process are including catalog creation, content and order management, fulfillment, invoicing, shipment, and settlement. Consequently, the enterprise through the internet to browse the supplier’s catalog and order the product to the suppliers based on the needs of enterprises as well as sent the purchase orders to the supplier. It can increases price transparency, shorter the procurement time and improve the efficiency of procurement.

In general, e-commerce has increased the sensitivity reaction to market changes. It can useful to reduce inventory cost and total of inventory .The firm using just-in-time (JIT), Manufacturing Resource Planning (MRP II), and change to distribution requirements planning (DPR), reorder points ROP and Automatic Replenishment Programs (ARP) based on demand information .

Along with the e-commerce using in supply chain, it make the large changes in distribution system. The e-commerce provides a new distribution channel to the final customer. E-commerce provides businesses more flexibility to manage the movement of products and information flow between company, suppliers and customers.

In addition, the customer is one of the impacts of e-commerce on supply chain. E-commerce will allow customers to access information, place delivery orders, tracking, online shipping inquiry and pay freight bills by using the Internet. E-commerce also help enterprises can convenience to receive the customer feedback and provide timely service. From the customer feedback, Enterprises can improve and provide a better customer service.

The emergence of e-commerce has changed the relationship between customers and enterprise. Shipment tracking is the next point. Many customers need accurate time-in-transit information for the shipping. Therefore, e-commerce will allow customer to establish an account and obtain real-time information about cargo shipments. Customer can obtain bills of lading, place a cargo order, the analyze charges, freight claim, and other functions. The application uses encryption technology to secure business transactions.

By using the Intranet, all the departments in the firm can exchange information and elimination of paperwork. The firms manage the business activities due to integrated and sharing information. The business activities are planning, purchasing, inventory, distribution, marketing, customer service and other activities.

Electronic working is an area that has a more direct impact on the supply chain. Many companies give their employees to access internet when working. They have given them e-working tools such as employee portals, knowledge management systems and computer-based training. E- Working has a significant impact on the supply chain and the ability employees to manage the complex events and problem in the supply chain.

6.0 Implementing of E-supply chain

6.1 Radio Frequency ID (RFID)

When electronic readers scan the tags, the data can be captured and sent to a computer-network database. Such real information allows manufacturers, suppliers, and distributors to keep track of products and components throughout their manufacturing processes and transportation networks, resulting in greater efficiency and more visibility along the supply chain. For example, some of supermarket and hyper store have experiment placing removable "smart tags" on individual garments such as jeans and underwear that would allow workers hand-held scanners to identify exact inventory on the shelves.

6.2 Enterprise Resource Planning (ERP)/Material Requirements Planning (MRP)

The next wave of technology affecting the supply chain was the implementing of IT packages known as enterprise resource planning (ERP). Companies such as Oracle (ehow.com) introduced software (oracle.com) to integrate everything in the back office (the part of the business dealing with internal matters, is opposite to the front office, which deals with the customers). ERP is essential for bringing together the information inside the firm and from different geographic locations, but its inability to tie in to the customer and take advantage of e-commerce has been a problem. MRP, a computerized IS that addresses complex inventory situations and calculates the demand for parts from the production schedules of the companies that use them. Denso, the Japanese spare parts supplier for Toyota, uses MRP to calculate the demand for parts from the production schedules of the non-Toyota companies it supplies.

7.0 Trends of E-Supply Chains

Emerging trends in supply chains that will impact the nature of future e-supply chain. Customer Centricity is the emerging trends in E-Supply Chain today.

Customer Centricity

The demand for greater value from the customers has resulted in the trend of logistics companies providing customer-centric services and solution. In fact in their pursuit of achieving operational excellence in their areas of expertise, customer companies now expect increased participation and greater responsibility from the logistics service provider in supporting activities within the supply chain. Therefore, the logistics company like FedEx, DHL and others provide professional logistics and supply chain services, customized to the demand of business user, operating philosophy, and business strategies.

All items are tracked and managed by the logistics companies, using a state- of-the-art information system from pickup to delivery. Moreover, given the central role of the logistics provider in the supply chain, the logistics service providers are expected to and often do array information-based services to strategically manage the inventory levels across the supply chain, increasing the customer service levels while reducing warehousing and inventory costs. One of the examples of customer centric logistics is NEC warehouse managed by FedEx in Singapore.

However, with increased customization at every stage of operation it becomes more difficult to manage the various activities efficiently. Therefore, the business processes of the logistics service provider need to be flexible enough to meet the different and diverse needs of the various customers. Customer-centricity expected to be a major growth area for logistics companies to maintain and set up their competitive advantage.

8.0 Communication Processes on E-Supply Chain

Classic communication between supplier and buyer was done using paper-based systems. Increasingly, those paper-based processes are being replaced using electronic data interchange (EDI).

8.1 Classic Paper Based Systems

Classic supply chain system documents are paper-based, with a number of inherent limitations. Documents are used to create other documents. As a result, the probability of an error increases as information is transcribed from one document to another. Further, some of the developers of documents and some environment, e.g., loading docks, are seen as having limited reliability.

8.2 Electronic Data Interchange

Electronic data interchange is the electronic transmission of data in standard format.

Figure : Electronic Data InterchangeTypically it takes the form of particular documents such as purchase orders or invoices. When compared to paper, EDI can have a substantial impact on the costs.pic

8.3 Purchase Order Processes

Typically, purchase orders originate when an ordering department indicates that there is a need for some goods to be purchased, e.g., to be used in a production process. Generally, the ordering department is responsible for choosing the amount of goods to be ordered, when they are needed, etc., based on their assessment of their particular needs. The internal order is copied onto a purchase order from which establishes the legal contract between the supplier and the buyer. A copy of the purchase order is kept in purchasing, one is sent to the ordering department, one is sent to accounts payable, one is sent to the receiving dock and two are sent to the buyer. Of those two sent to the buyer, one is signed and returned to the supplier indicating acceptance of the contract.

8.4 Examples

Manufacturer

Retailer

Customers

Product Flow

Information Flow

Figure : Manufacturer Storage with Direct Shipping in Eng Tin Noodle Manufacturer

Chopra and Meindl (2004) stated that there are six distinct distribution network designs that may be used to move products from factory to customer. One of the distribution options that we discussed is manufacturer storage with direct shipping. Eng Tin Noodle Manufacturer that we interviewed is using this distribution network design as shown in Figure 2.

Eng Tin Noodle Manufacturer stored the inventory at the manufacturer and the customers (retailer or end customers) place their orders on the phone. After received the orders, Eng Tin Noodle Manufacturer also uses drop-shipping with product delivered directly from the manufacturer to the customer location.

Eng Tin Noodle Manufacturer delivers their products directly to the retailers (pasar) and the customers (hawkers or food stalls) twice a day by van. The location of retailers and the customers are in the area of Johor Bahru. Therefore, transportation costs are high with drop-shipping because the average outbound distance to the customer is large.

However, supply chains of Eng Tin Noodle Manufacturer can save on the fixed cost of facilities when using drop-shipping because all inventories are centralized at the manufacturer. This help to eliminate the need for other warehousing space in the supply chain of Eng Tin Noodle Manufacturer. In addition, Eng Tin Noodle Manufacturer can reduce the handling costs because they ship orders directly from the production line.

Response times tend to be large when drop-shipping is used because the order has to be transmitted from the retailer to the manufacturer. However, there is as difference in Eng Tin Noodle Manufacturer because the customers can place their orders directly on phone to the manufacturer and the orders do not need to be transmitted from the retailer.

Apart from that, Eng Tin Noodle Manufacturer storage allows a high level of product variety to be made available to the customer. With a drop-shipping model, every product at the manufacturer can be made available to the customer without any limits imposed by shelf space. For example, Eng Tin Noodle Manufacturer is a factory that is providing variety products of flour, such as yellow noodles, wantan mee, and wan tan skin. Customers can orders the variety of products directly because of aggregation at manufacturer.

9.0 Conclusion

In this assignment, we have designed seven parts to introduce about the E-Supply Chain which analyze the different between the e-supply chain and traditional supply chain and the advantages and challenges of e-supply chain. Hence, we will discuss about the impact of e-commerce on supply chain and also mention about the implementation and the trend of e-supply chain. Nevertheless, we will descript about the communication process on e-supply chain. Then, we can now conclude our findings as follow.

Firstly, in the part of the different between E-supply chain and traditional supply chain, we find out the traditional technological support for supply chain relationships are the Electronic Data Interchange (EDI) systems which is the structured transmission of data between organizations by from one computer system to another computer system. But in the e-supply chain management environment which is Internet-based and there are reduces of the costs of information exchange along the supply chain.

Based on the analysis from the different between E-supply chain and traditional supply chain, we find out the advantages and challenges of e-supply chain.

Furthermore, on the impact of e-commerce on supply chain, we found that e-commerce using in supply chain, it make the large changes in distribution system. The e-commerce provides a new distribution channel to the final customer. E-commerce provides businesses more flexibility to manage the movement of products and information flow between company, suppliers and customers. In addition, E-commerce will allow customers to access information, place delivery orders, tracking, online shipping inquiry and pay freight bills by using the Internet. E-commerce also help enterprises can convenience to receive the customer feedback and provide timely service. From the customer feedback, Enterprises can improve and provide a better customer service.

Building on the research, in the part of implementing of E-supply chain can be includes with two main system which is Radio Frequency ID (RFID) and Enterprise Resource Planning (ERP)/Material Requirements Planning (MRP). Radio Frequency ID (RFID) is electronic reader scan the tags, the data can be captured and sent to a computer-network database. ERP is essential for bringing together the information inside the firm and from different geographic locations, but its inability to tie in to the customer and take advantage of e-commerce has been a problem. MRP, a computerized IS that addresses complex inventory situations and calculates the demand for parts from the production schedules of the companies that use them.

In addition, in the century of technology developed, E-supply chain has become a trend. Customer Centricity is the emerging trends in E-Supply Chain today. The demand for greater value from the customers has resulted in the trend of logistics companies providing customer-centric services and solution. In fact in their pursuit of achieving operational excellence in their areas of expertise, customer companies now expect increased participation and greater responsibility from the logistics service provider in supporting activities within the supply chain. Then, customer-centricity expected to be a major growth area for logistics companies to maintain and set up their competitive advantage.

Moreover, we descript that classic paper based systems, electronic data interchange and purchase order processes are the process of communication process on e-supply chain. Classic supply chain system documents are paper-based, the probability of an error increases as information is transcribed from one document to another. Electronic data interchange is the electronic transmission of data in standard format. Typically it takes the form of particular documents such as purchase orders or invoices. When compared to paper, EDI can have a substantial impact on the costs. Typically, purchase orders originate when an ordering department indicates that there is a need for some goods to be purchased

In short, all parts of our assignment had introduced and how the e-supply chain process.

Appendix