E commerce and supply chain management

1. E-COMMERCE AND SUPPLY CHAIN
MANAGEMENT

2. 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.

3. EC ACTIVITIES
Upstream
activities.
E-commerce
Activities
Internal
SCM
activities
Downstream
activities.
Exchanges
Auctions
Selling on
your own
Web site

4. 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.

5. Changes made by ORBIS

6. 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.

7. 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.

8. 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.

9. Innovative Solutions to the Order Fulfillment
Problem
• Same-day, even same-hour delivery.
• Dialing for dinners.
• Automated warehouses.

10. Dealing with Returns
Returning 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.