E-COMMERCE AND SUPPLY CHAIN MANAGEMENT

E-commerce is emerging as a superb approach for

providing solutions to problems along the

supply chain. As seen in the Dell example

A major role of EC is to facilitate buying, selling, and collaborating along

the supply chain.

EC ACTIVITIES

E-commerce Activities

Upstream activities.

Internal SCM

activities

Downstream activities.

Exchanges

Selling on your own Web site

Auctions

Restructuring the Supply Chain

E-commerce can introduce structural changes in the supply chain. For example, the creation of e-markets drastically changes order processing and fulfillment.

Changes made by ORBIS

Integration of EC with ERP

• Since many middle-sized and large companies already have an ERP system, and since e-commerce needs to interface with ERP, it makes sense to integrate the two. For example, SAP started the mySAP initiative.

• The logic behind integrating EC and ERP is that by extending the existing ERP system to support e-commerce, organizations not only leverage their investment in the ERP solution, but also speed up the development of EC applications.

PITFALLS

• The problem with this approach is that the ERP software is very complex and inflexible (difficult to change), so it is difficult to achieve easy, smooth, and effective integration.

• One other potential problem is that ERP systems tend to focus on back-office (administrative) applications, whereas EC focuses on front-office applications such as sales and order taking, customer service, and other customer relationship management (CRM) activities.

ORDER FULFILLMENT IN E-COMMERCE

Some applications of EC, especially B2C and sometimes B2B, may have problems with their own supply chains. These problems usually occur in order fulfillment.

Innovative Solutions to the Order Fulfillment Problem

• Same-day, even same-hour delivery.• Dialing for dinners.• Automated warehouses.

Dealing with ReturnsReturning unwanted merchandise and providing for exchanges are necessary for maintaining customers’ trust and loyalty.

• Return an item to the place where it was purchased.• Separate the logistics of returns from the logistics of

delivery.• Allow the customer to physically drop the returned

items at collection stations from which the returns can be picked up.

• Completely outsource the logistics of returns.