Page 275 - Electronic Commerce

Chapter 5

Suppliers can:

Share information about changes in customer demand
Receive rapid notification of product design changes and adjustments
Provide specifications and drawings more efficiently
Increase the speed of processing transactions
250 Reduce the cost of handling transactions
Reduce errors in entering transaction data
Share information about defect rates and types

FIGURE 5-9 Advantages of using Internet technologies in supply chain management

Increasing Supply Chain Efficiencies
Many companies are using Internet and Web technologies to manage supply chains in
ways that yield increases in efficiency throughout the chain. These companies have found
ways to increase process speed, reduce costs, and increase manufacturing flexibility so
that they can respond to changes in the quantity and nature of ultimate consumer
demand.
For example, Boeing, the largest producer of commercial aircraft in the world, faces
a huge task in keeping its production on schedule. Each airplane requires more than
1 million individual parts and assemblies, and each airplane is custom configured to meet
the purchasing airline’s exact specifications. These parts and assemblies must be
completed and delivered on schedule or the production process comes to a halt.
Using EDI and Internet links, Boeing works with suppliers so that they can provide
exactly the right part or assembly at exactly the right time. Even before an airplane enters
into production, Boeing makes the engineering specifications and drawings available to its
suppliers through secure Internet connections. As work on the airplane progresses, Boeing
keeps every member of the supply chain continually informed of completion milestones
achieved and necessary schedule changes. Instead of waiting 36 months for delivery,
customers can now have their new airplanes in 10 months or less.
Although Dell Computer is famous for its use of the Web to sell custom-configured
computers to individuals and businesses, it has also used technology-enabled supply chain
management to give customers exactly what they want. Dell’s tier-one suppliers have
access to a secure Web site that shows them Dell’s latest sales forecasts, along with other
information about planned product changes, defect rates, and warranty claims. In
addition, the Web site tells suppliers who Dell’s customers are and what they are buying.
All of this information helps these tier-one suppliers plan their production much better
than they could otherwise. The information sharing goes in both directions in Dell’s
supply chain: tier-one suppliers are required to provide Dell with current information on
their defect rates and production problems. As a result, all members of the supply chain
work together to reduce inventories, increase quality, and provide high value to the
ultimate consumer. The improved coordination between Dell and its tier-one suppliers has

Copyright 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.