E-commerce and supply chain management the nexus unleashed: challenges and opportunities

Transcription

1 Discovery REVIEWS The International journal ISSN EISSN Discovery Publication. All Rights Reserved E-commerce and supply chain management the nexus unleashed: challenges and opportunities Publication History Received: 22 April 2016 Accepted: 20 May 2016 Published: 1 June 2016 Citation Devesh Gaurav, Aadarsh Das, Sujata Smiti Gupta. E-commerce and supply chain management the nexus unleashed: challenges and opportunities. Discovery, 2016, 52(246), Page 1217

2 E-COMMERCE AND SUPPLY CHAIN MANAGEMENT THE NEXUS UNLEASHED: CHALLENGES AND OPPORTUNITIES Devesh Gaurav 1, Aadarsh Das 1, Sujata Smiti Gupta 2 1 Department of Manufacturing Engineering, NIFFT, Ranchi 2 Department of Applied Sciences and Humanities, NIFFT, Ranchi deveshtiwary208@gmail.com, ad199621@gmail.com sujatasgupta.nifft@gov.in Abstract With the progress in technology, the internet has evolved from a nutshell into being the epicentre of the entire business fraternity. The concept of e-commerce and supply chain management together has set new milestones in trade, nurturing it into an ever-dynamic arena. Role of e-commerce is pivotal when the network of supply chain partners, reacts aptly to the changing customer demands captured over the web. Gone are the days when the orthodox way of doing e-commerce used to prevail in the world. The duo of e-commerce and supply chain management have revolutionized the way business and trade is done these days. The ever-increasing footprint of supply chain management coupled with the new e-commerce system, having recently evolved, is the urgent need of the hour for sustainable business. This paper closely examines the intertwining relationship between e-commerce and supply chain management, the challenges observed, the potential solutions, and above all, the ever growing opportunities. Keywords: E-commerce, Supply Chain Management, Warehouse Management, Blue Ocean Strategy 1. INTRODUCTION Supply Chain management is the management of a network of interconnected business involved in the ultimate provision of product and service packages required by end customers (Harland,1996). It spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. No innovation or invention in the previous decades had a stronger impact on our daily lives than the development of the World Wide Web. The internet saw the up rise of electronic commerce, or e-commerce, defined as the trading or facilitation of trading in products or services using computer networks. It draws on technologies such as mobile commerce, supply chain management, etc. E-commerce has the capability to integrate all inter-company and intra-company functions, meaning that the 3 flows (physical, financial, information flow) of supply chain can also be affected by e-commerce. Section 2 focuses on how e-commerce and supply chain management are connected to each other. Section 3 addresses the various challenges faced, and enumerates some strategies to overcome the different shortcomings. Suggested paths for future work including the plethora of opportunities get mentioned in section 4. Page 1218

3 2. INTEGRATION OF TWO CONCEPTS The internet plays a decisive role in reaching the targets of supply chain integration. The amalgamation of e-commerce and supply chain management will lead to better asset utilization, faster time to market, and more satisfied and happy customers, coupled with higher return on asset. The combination of e-commerce and supply chain management focuses on customers and integrates the whole process of supply chain by making complete use of external resources. The development of e-commerce provides an excellent platform for the implementation of supply chain management. E-Commerce technology provides information visibility throughout the supply chain. The integration of production planning, scheduling, and inventory control with procurement process completes the loop (Rayport & Svokla, 1995). Electronization & networked management of product and business in the supply chain management system will materialize only when supply chain management is implemented based on e-commerce. Supply chain management based on e- commerce will establish the direct relationship between customers and enterprises, thus compelling the enterprises to pay heed to all types of needs of the customers. 3. CHALLENGES & POTENTIAL SOLUTIONS The path to global e-commerce triumph can be a Herculean task for retailers entering an international market for the first time. Thus a holistic approach is mandatory to take care of supply chain management issues, so that the growth in business is never hampered. There are numerous compelling challenges that come across often, but with great solutions too. It is not often cheap to install new facilities and warehouses, but relying on outdated, dilapidated ones can dwindle the hard-earned share in the market. Incorporating specialized facilities such as mega e-fulfilment centres, local delivery centres, and returns processing centres, can be instrumental to fulfil online orders effectively and conveniently. A glimpse on some recent advancement reveals how start-ups in India are dealing with the above issues. In the recent past, start-ups like Flipkart, Paytm announced that they would invest heavily on building state-of-the-art warehouses. Flipkart may end up spending $500 million to add warehouses in next 5 years. Ravi Gururaj, a serial entrepreneur-turned-investor who heads Nasscom s Product Council, India, has brought his latest venture, QikPod, which will install automated, self-serve lockers in residential complexes, office compounds, cafes and kirana stores. It will help e-commerce players overcome the problem of failed deliveries and make last-mile logistic less complicated. The next concern is the poor transportation infrastructure outside major cities in developing countries. On the affirmative side, there are predictions that online sales in developing countries will increase over the next five years, and that by 2017, nations like Page 1219

4 India, Indonesia and Mexico are expected to experience the highest growth rate in B2C(Business to Customer) e-commerce sales. Proximity to the highest volume markets is associated with higher cost real estate. Logistics clusters located directly outside the city centres can have easy access to customers via highway and public transportation. These would involve less establishment cost with higher returns. The concept of localisation will come handy for, a universal strategy won t work across different places. Each market needs its own plan of attack. Investigating local customs to meet preferred forms of convenience can drive success locally as well as innovations globally. For example, U.K. s local trend of Click and collect in brick-and-mortar locations, together with India s cash-on-delivery mode of payment, are gaining great momentum globally. Since 1980 s, retailers began setting up own distribution centres, thereby in control of logistics. This can backfire often when handling thousands of overnight deliveries to locations scattered around the world. This has led to the birth of strategic partnerships promoting efficiency and customer satisfaction. Third party logistics providers are driving same day delivery in secondary markets all around the globe. 4. FUTURE SCOPE/OPPURTUNITIES Companies can apply different scope of e-commerce application into their supply chain process. Hoek(2001) proposed that e-commerce application can be applied to supply chain through the following approaches: Partial applications are limited to segments of supply chain. Integral applications are integral throughout the entire supply chain. Operational applications are limited to business transactions. Strategic applications are essential part of business strategy. Firms can create a blue ocean strategy with the new supply chain management. Examples of strong opportunities include New E-Commerce Global E-Commerce Multichannel/ Omni commerce Competitive Differentiator A blue ocean strategy with a new supply chain is continuation of progress for some companies; for others, it involves transformation. The new supply chain enables a firm to be more responsive to customers. It builds brand and creates competitive advantage and value to the customers. Innovative supply chains support blue ocean strategies for global e-commerce and multi-channel sales. All of this means increased revenue and profit. Page 1220

5 5. CONCLUSION To sum up, the internet has become the backbone of business. The aspects of speed and connectivity of internet technology have altered the nature of conducting business dramatically. Integrating e-commerce into the existing supply chain is the ultimate mantra for any company s survival in a completely unpredictable world of business. It ensures that the firm stays in the driver s seat in the globally competitive environment. With the wings of e-commerce technology ever expanding, it will surely accelerate the further development of supply chain management, and the enterprise who can realise and solve the problems with it, can pre-empt market opportunities. REFERENCES 1. Bakos, J. Y. (1991). A Strategic Analysis of EM. MIS Quarterly 14 (4), Bakos, J. Y. (1998). The Emerging Role of EM on the Internet. Communication of the ACM 41(8), Forrester, J.W. (1958). Industrial dynamics: A major breakthrough for decision makers. Harvard Business Review 38 (July/August), Golicic, S. L., Davis, D. F., McCarthy, T. M., and Mentzer, J. T. (2002). The impact of ecommerce on supply chain relationships. International Journal of Physical Distribution & Logistics Management 32 (10), Grieger, (2003). Electronic Marketplaces: A Literature Review and a Call for Supply Chain management Research. European Journal of Operational Research 144, Hoek, R. (2001). E-supply Chains - Virtually Non-existing. Supply Chain Management 6 (1), Kathawala, Y., Abdou, K., and Franck, G. (2002). Supply chain/electronic hubs: a comparative analysis. Benchmarking: An International Journal 9 (5), Kaplan, S. and Sawhney M. (2000). E-hubs: The New B2B Marketplaces. Harvard Business Review (May/June), Lee, H.L., and Whang, S. (1999). Supply Chain Integration Over the Internet. CommerceNet(January) 10. Lee, H.L., and Whang, S. (2001). E-business and supply chain integration. Stanford Global Supply Chain Management Forum. 11. Mentzer, J. T., Dewitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. and Zacharia, Z.G. (2001). What is supply chain management? in Mentzer, J.T. (Ed.), Supply Chain Management. Sage Publication. Thousand Oaks CA Ordanini, A. (2006). What Drives Market Exchanges in B2B Exchanges? Communications of The ACM 42 (4), Rayport, J. F. and Sviokla, J. J. (1995). Exploiting the virtual value chain. Harvard Business Review (November/December), million-to-add warehouses-in-next-5-years/articleshow/ cms Page 1221