06/04/2016

ECOMMERCEFOREFFECTIVESUPPLYCHAINMANAGEMENT

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ECOMMERCEFOREFFECTIVESUPPLYCHAINMANAGEMENT
ByM.S,S.Varadan
LeveragingIT
Essentiallythethreedimensions,whichhavetobetakencareof,arecost,serviceandvelocity.Thecrucial
factorsrelatetotheswiftandaccurateflowofinformationandcorrespondingactionstobetriggeredalong
the Supply Chain. With the availability or low cost communication media like the internet, it becoming
possibletoutilizethisforcuttingdowncostsandthatthesametimecarryingoutthebusinessactivitiesin
a quick manner to meet the customer meets. Thus, a strategic IT intervention can be made to enhance
competitiveadvantage.
The performance measures for an Effective Supply Chain are twofold a) NonFinancial Performance
Measuresandb)FinancialPerformanceMeasures.AmongtheNonFinancialMeasuresarei)CycleTime ii)
Customer Service Level iii) Inventory Levels. Among the Financial Measures, the main ones are i) cost of
rawmaterialii)InventoryCosts and iii) Transportation. In the highly competitive environment today, cost
reduction assumes a major importance. The question therefore is how to use Electronic Commerce for
cuttingdowncosts?
GrowthofB2BEcommerce
A recent NASSCOM survey reveals that ebusiness transactions are expected to reach Rs. 3500 crores by
2001 and out of this as much as Rs. 3200 crore would comprise B2B transactions. With the requisite
regulatoryframeworkinplaceandhopefullytelecominfrastructureimproving,ecommerstransactionsare
expectedtowelltoRs.15000croreby2000.
ThebigadvantageofB2Becommerceisitscontributiontoreductionincosts.Firstly,themosteconomical
supplier can be located quickly and the cost of processing transactions is reduced Companies like IBM
report savings of billions of dollars in material acquisition cost. Automobile giants like Ford, CM and
Chrysler are setting up joint exchange to buy components from suppliers over the Internet. On the new
economyfrontcompanieslikeDell,Ciscoisalsodoinglikewise.
What the B2B portals attempt to do is to provide a similar platform for the business processes as would
happen normally. For example, a buyer can go to a Website and can search and locate the right products
and suppliers. Of course, for the search itself tobedonein reasonable time, powerful search engines are
necessaryandthisiswhattheportalsprovide.Also,requestforquotationsandcomparisonof competitive
quotes can I be done and ultimately even the orders can be placed "online". The actual payment for the
goods is still the conventional payment systems but even this may change in future. From the suppliers
pointofview,useofportalhelpshimtoreachouttomorepotentialcustomers.
The major benefits of using horizontal 82B portals are i) with the greater and speedier availability of
vendor information, the time for locating and evaluating Suppliers is much reduced ii) Better pricing
throughaccesstovastsupplierbaseandavailingofdiscountsiii)ReducingthecycletimeinSupplyChain
Management and iv) Lower Inventory contributing to reduce the costs. Overall, it results in substantially
lowering the procurement costs. The Goldman Sachs report states that doing business with suppliers on
line could reduce the cost of making a car as much as 14 percent. Industries like automobiles,
manufacturingandretailamongothershavepotentialtobenefitimmenselythroughthisapproach.
NeedforQuality
ThestressonqualityovertheentireSupplyChainiscriticaltosuccessespeciallyintheecommercearena
where the time for transaction is drastically reduced. Ensuring quality in every link of the chain is
necessary,asthechainisonlyasstrongasitsweakestlink.Soqualityistobeembeddedineverylinkof
the supply chain. When this happens, the internet's benefits as an effective medium of commerce will be
truly realized. As the National President of IIMM, V.K.Jain states "Competitiveness of the Supply Chain is
evidencedinthemarketplacethroughtheChainofferings.Whatis visible to the ultimate customer is the
finalbrandhowever,every element of the chain contributes to the success of the brand that is identified
inthemarketwiththechain".
IntheB2Benvironment,smallandmediumenterprises are very much a part of the otherwise cascading
effect of noncompliances in quality can be disastrous. Hence quality assurance measures all through the
supplychainareavitalaspectandnottobemissed,amidstthemultitiervendorstructures.Oneneedsto
effectively control the critical points, as quality assurance measures all through the supply chain is an
aspectthatisvitalandnottobemissed,amidstthegrowinghypeaboutecommerce.

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ECOMMERCEFOREFFECTIVESUPPLYCHAINMANAGEMENT
EducationalProgrammes
IIMMhas30branchesand19chaptersalloverIndiaanditsmembershipcomprisesof8000individualsand
institutions. IMAA conducts very popular programmes for the working professional. These days more
emphasisisbeinggiventoeCommerce,SupplychainManagementanddoinginternationalbusinessinthe
eway. Handson experience in the IT usage is provided. IIMM also plans to introduce the Eexamination
systeminthefirstphaseandgoforwebbasedlearningmethodologysubsequently,toimpartknowledgein
aconvenientanduserfriendlymanner.Thesedevelopmentprogrammesforyoungandupcomingmaterials
managementprofessionalswillhelpbuildlargeandcompetenthumanresourcesbase,whichwillultimately
formthebedrockforsuccessfulecommerce.

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