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Trends in Supply Chain Management

Discuss about the Logistics and Supply Chain Management for Integrated Organisation.

In last quarter century, supply chain management has experienced various new trends and technologies. The first trend in supply chain management was seen in 1960 when decentralized logistics management was introduced where organizations focused on operations performances, warehousing, transportation efficiencies and physical distribution of management concepts (Tatoglu et al. 2016). However, the most important trends that took place in supply chain management during the last 25 years are total cost management, integrated logistics management, concept of current supply chain management and technology based supply chain management (Wiengarten et al. 2013). Among these trends, introduction of e-commerce within technology enabled supply chain management can be considered as the most effective trend. This study will focus on the role of e-commerce in supply chain management.

 E-commerce supply chain

Figure 1: E-commerce supply chain

(Source: Tatoglu 2016)

According to Weele and Raaij (2014), the affiliation between e-commerce and supply chain management is the deployment of expertise in order to enhance the operations of supply chain management. This new drift in supply chain management has improved its efficiency and responsiveness by distributing real-time information related to inventory, manufacture development, orders of the consumers, status of delivery and other key information such as design of a product, accessibility of a product and demand among the associates of supply chain. Using ICTs (information communication technology) in supply chain management has enabled electronic supply chain management, which is known as the most reflective and continuing change in modern business practices. As mentioned by Wiengarten et al. (2013), internet supply chain is helping to communicate and doing business with suppliers and customer more effectively. Besides, e-commerce has also helped supply chain management is some other ways. Supply chain management was viewed as an rigid series of proceedings that somehow managed to get products out of the door. Supply chain management also involved problematic inventory forecasts, inflexible developed plans and theoretical shipping schedules (Tatoglu et al. 2016). Usage of internet has changed all that and has distorted the traditional procedure into something closer to an accurate science. According to Weele and Raaij (2014), e-commerce have helped the supply chain organizations to evade pricey disasters, diminish organizational overhead, minimize unnecessary inventories in order to increase work capital, eliminate outdated business methods, harvest  cost-cutting and revenue-producing benefits, speed up manufacturing and receptiveness to customers and receive greater profit margins on finished products. Effective implementation of electronic supply chain management can save millions of revenue and can improve customer services. It also helps companies to ensure that internal systems are working properly (Liu et al. 2014).

Role of E-commerce in Supply Chain Management

 Current channels of supply chain management

Figure 2: Current channels of supply chain management

(Source: Weele and Raaij 2014)

E-commerce provides supports in different fields of supply chain management that is outlined in the table below,

Different fields of supply chain management

Impacts of e-commerce

Advertising

Establishment and allocation of products, enhanced sale channels, improved service level for consumers, decrease inflow time of order, sale through internet and figuring out potential markets

Stock management

Visibility, decrease enhancing cost and pricing, decrease warehousing cost, accounting and consumer dispensation and ordering

Research and development

Research about the consumer demand, time engineering, relationships management with the customers, planning for launching new products and data research

Supplies

Ordering, selecting proper suppliers, improving inter-organizational methods and transfer of power from seller to buyer

Transport

Surfing the orders related to raw materials, shipping management and shipping activities

Communication and relations among suppliers

Decreasing cost of orders, enhancing assistance and harmonization  business, improvement of completion process and product delivery

Production

Electronic edifice and manufacture, sale transactions, faster transfer of qualitative problems

Table 1: Impact of e-commerce in different fields of supply chain management

(Source: Liu et al. 2014)

The need of e-commerce was felt when organizations were demanding to integrate all the entities of supply chain. This integration was only possible with communications network in order to develop a collaboration between different entities and functions of supply chain. This communication system is a part of e-business that have helped companies to develop proper interaction especially with customers and other stakeholders (Waters and Rinsler 2014).

On the other hand, internet is a compilation of local and confidential communication network that connects organizations to customers and business-to-business (Tatoglu et al. 2016). The momentum and east of the use of internet can assist the course of information from the vendor to the client. As a result, processing cost and customer services cost comes down. Another unique and useful system in e-business is company intranet that also depends on internet expertise. This network allows users to carve up information with each other and may spread many locations throughout the world (Wiengarten et al. 2013). This system is extremely useful in supply chain management. Marketing and sales, accounting and economics and customer services can be connected with each other through company intranet. Therefore, supply chain management and all its operations are facilitated.          According to Waters and Rinsler (2014), there are two primary technologies of e-business that are considered as the most important factors of e-business which are extranet and electronic data interchange (EDI). Extranets are same as intranets; however, but instead of exclusively being domestic to the organization, extranet enlarges the company’s intranet to other companies such as distributors and manufacturers. EDI is a trendy expertise, which is used to relocate information over extranet (Tatoglu et al. 2016). This technology is also known as a key technology of e-business in supply chain management because it allows “computer-to-computer” replacement of normal transaction credentials amid two companies over extranet (Camarinha et al. 2013).


It is true that e-business is the most effective enhancement that supply chain management had in last 25 years (Weele and Raaij 2014). However, there are several managerial challenges associated with implementing e-business and its mechanism. As mentioned by Waters and Rinsler (2014), implementing e-business can necessitate the use of considerable quantity of capital resources. Capital outlays and properties are developed to cover the initial funding, software and hardware requirements, salaries of employees related to information system and continuation and enhancing cost of the system (Saldanha et al. 2015). These costs are considerable and may discourage some organizations from implementing e-business in their supply chain management. Customers now a days, expect orders to be packed much more quickly than in the past (Tatoglu et al. 2016). A number of distribution centers are warehouses are habituated to deal with pallet-size orders. Therefore, they are not developed in way to deal with a lot of single-item or open case shipping (Shaikh et al. 2014). That is why; a recommendation is provided in the next paragraph that can help an organization to deal with the challenges associated to the implementing process of e-business in supply chain management (Wiengarten et al. 2013).

The Impact of E-commerce in Different Fields of Supply Chain Management

Managers of the organizations should predict the business as a whole including its present strategies and future strategies. Besides, implementing supply chain management is not enough as employees must be trained so that they can use new software. Supply chain applications must connect to present enterprise resource planning applications (Weele and Raaij 2014). ERP is responsible for serving as the nerve center of an organization. Preferably, it should be a single point of visibility for inventory and order taking.

In the end, it can be said if e-business can be implemented properly then it can help organizations to reduce cost, improve market opportunities and increase efficiencies (Waters and Rinsler 2014). According to Hsin et al. (2013), it is also seen that these improvements can reduce bullwhip effect (manufacturing instability which have resemblance with sales volatility), reduced inventory levels and streamlines procurement method (Wiengarten et al. 2013). Besides, it is also seen that these improvements took place in supply chain management even in the time of economic shocks together with the post Y2K stock market bubble and IT speculation bust and recession of 200. That is why; it can be said that e-business is the most effective trend in supply chain management.

Reference

Camarinha-Matos, L.M., Afsarmanesh, H. and Rabelo, R. eds., 2013. E-business and Virtual Enterprises: managing business-to-business cooperation (Vol. 56). Springer.

Hsin Chang, H., Tsai, Y.C. and Hsu, C.H., 2013. E-procurement and supply chain performance. Supply Chain Management: An International Journal,18(1), pp.34-51.

Liu, H., Ke, W., Wei, K.K. and Hua, Z., 2014. Moderating Role of Ownership Type in the Relationship between Market Orientation and Supply Chain Integration in E-Business in China. Journal of Global Information Management (JGIM), 22(4), pp.34-53.

Saldanha, J.P., Mello, J.E., Knemeyer, A.M. and Vijayaraghavan, T.A.S., 2015. Implementing supply chain technologies in emerging markets: an institutional theory perspective. Journal of Supply Chain Management, 51(1), pp.5-26.

Shaikh, A., Rafiq, M. and Iyer, R.K., 2014. Exploring e-Business Trends with Supply Chain Management Perspective. International Journal of e-Education, e-Business, e-Management and e-Learning, 4(3), p.211.

Tatoglu, E., Bayraktar, E., Golgeci, I., Koh, S.L., Demirbag, M. and Zaim, S., 2016. How do supply chain management and information systems practices influence operational performance? Evidence from emerging country SMEs. International Journal of Logistics Research and Applications,19(3), pp.181-199.

Waters, D. and Rinsler, S., 2014. Global logistics: New directions in supply chain management. Kogan Page Publishers.

Weele, A.J. and Raaij, E.M., 2014. The future of purchasing and supply management research: About relevance and rigor. Journal of Supply Chain Management, 50(1), pp.56-72.

Wiengarten, F., Humphreys, P., McKittrick, A. and Fynes, B., 2013. Investigating the impact of e-business applications on supply chain collaboration in the German automotive industry. International Journal of Operations & Production Management, 33(1), pp.25-48.

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