Page 367 - E-Bussiness and E-Commerce Management Strategy, Implementation, and Practice

M06_CHAF9601_04_SE_C06.QXD:D01_CHAF7409_04_SE_C01.QXD 16/4/09 11:13 Page 334

334 Part 2 Strategy and applications

The benefits of supply chain management according to a PMP (2008) survey are shown
in Figure 6.1. You can see that although benefits of reducing costs and increasing prof-
itability are mentioned frequently, many respondents mentioned that supply chain
management also assists with delivering better service to customers.
The figure also shows the challenges of implementing supply chain management
technology since a large proportion had not fully realised the intended benefits,
although the majority believed they would in the long term.

Sample frame
PMP surveyed a broad range of companies, including those from the manufacturing
(32%) and retail sectors (17%) where supply chain issues are particularly important. In
addition companies responded from distribution & logistics (13%), energy & utilities
(10%) and IT & telecoms (6%). The respondents represent a spread of different-sized
companies, with 16% having in excess of £5 billion turnover, 7% in the £1 billion to £5
billion bracket and 13% in the £500 million to £1 billion range.

Much of the excitement generated by the e-business concept concerns the benefits that com-
panies can achieve through increasing the efficiency of the whole supply chain. Companies
such as Tesco (Case Study 6.2), that have enthusiastically embraced technology to manage
the supply chain, have been reaping the benefits for many years.

Problems of supply chain management

We have reviewed some of the benefits of using technology to support supply chain manage-
ment in Box 6.1. We can also review the benefits of SCM from the perspective of problems that
can occur in a supply chain and consider how e-business technology can assist (Table 6.1). This
introduces many of the key concepts of technology enabled supply chain management which
we will review in this chapter.

Table 6.1 A summary of the problems of supply chain management and how e-business technology can assist

Problem of supply chain management How e-business technology can reduce problems in SCM

Pressure to reduce costs of manufacturing Reduction in paperwork through electronic transmission of orders,
and distributing products in order to remain invoices and delivery notes. Reduced inventory holdings needed through
competitive better understanding of demand. Reduced time for information and
component supply across the supply chain. Lower SCM system
purchase and management costs through use of online services (SaaS)
Demand forecasting Sharing of demand by customers with suppliers as part of efficient
consumer response (ECR)
Failure to deliver products on time Supplier becomes responsible for item availability through
consistently or lack of items on shelf in retailer vendor-managed inventory
Failure to deliver or ship correct product Human error reduced. ‘Checks and balances can be built into system’
High inventory costs Inventory reduced throughout the supply chain through better demand
forecasting and more rapid replenishment of inventory
Time for new product development Improved availability of information about potential suppliers and
components, for example through online marketplaces