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E-BUSINESS TRIDENT

E-BUSINESS TRIDENT

The three prongs of the E-business initiative, which would set apart a successful, firm from the also-rans are :

 E-SCM - Electronic Supply Chain Management.
 E-CRM - Electronic Customer Relationship Management
 ERP - Enterprise Resource Planning

E-SCM

What is supply chain management?

In the simplest sense, the supply chain is a series of processes starting from ones suppliers up to the stage when the final product reaches the hands of the’ customer. These processes are defined as a part of the relationship between the various business partners. Changing market realities are forcing companies to restructure their businesses in dramatic ways.
This need to change has come from such forces as competitive threats, stockholder expectations, or internal business requirements. For this the firms are re-evaluating their relationships with their business partners so that they may be converted to value adding relationships. And as a part of this exercise the companies are trying reduce the total cost of acquisition, possession, and disposal of goods and at the same time adding more value to each of the processes. For this reason the supply chain today has come to be termed as value chain.

One of the prime movers for bringing supply chain management from a conceptual stage to a real time application stage has been information technology. This would become clear from the example of Wisconsin Electric Power Company (WEPCO). Before IT enabled Supply Chain Management, the company had to follow the processes enumerated below in order to purchase an item


1. Determination of goods and process needs.
2. Needs determination for delivery.
3. Entering the order into the. computer.
4. Checking on information that the correct product is being bought.
5. Phone time to receive three bids and a buy.
6. Evaluation of bids.
7. Physical receipt of goods.
8. Matching freight bill, packing list with order.
9. Processing receipt.
10. Sending paperwork to accounts payable.
11. Entering paperwork into computer.
12. Matching for payment.
13. Receipt of invoice.
14. Matching invoice to receipt.
15. Receiving payment authorization.
16. Cutting the check.
17. Mailing the check.


Having learned the costs involved in these processes, WEPCO used IT to eliminate lots of non-value adding processes, and the result was that a typical purchase operation would involve the following processes:

1. EDI for ordering and invoicing.
2. Bar coding for tracking the items being ordered.
3. Automated Clearing House for payment.
4. Electronic Fund Transfer for payment.

In the paragraphs that follow we shall discuss this IT enabled SCM or eSCM

Electronic Supply Chain Management

The Electronic Supply Chain Management is a business framework consisting of many applications such as EDI, EFT etc.
These applications have been divided into two categories


a. Applications concerning planning.
b. Applications concerning execution.

The planning application focuses on demand forecasting, inventory simulation, distribution, transportation, and manufacturing planning and scheduling. Planning software is designed to improve forecast accuracy, optimize production scheduling, reduce inventory costs, decrease order cycle times, reduce transportation costs, and improve customer costs, decrease order cycle times, reduce transportation costs, and improve customer service.
The execution process addresses procuring, manufacturing and distributing products throughout the value chain. Supply chain execution applications are designed to manage the flow of products through distribution centers and warehouses and help ensure that products are delivered to the right location using the best transportation alternative available.

Descriptions of each of the categories of supply chain management applications are given below.

Elements of Supply Chain Planning

The various applications that come under Supply Chain Planning are

1. Advanced Scheduling
This provides a detailed coordination of all manufacturing and supply efforts based on individual customer orders. Scheduling is based on real-time analysis of changing constraints throughout the process, from equipment outages to supply interruptions. Scheduling is much more execution oriented and creates job schedules for managing the manufacturing process as well as the supplier logistics.

2. Demand Planning
This would generate and consolidate demand forecasts from all business units in large corporations. The demand-planning module supports a range of statistical tools and business forecasting techniques.

3. Distribution Planning
This would create operating plans for the logistic managers. Distribution planning is integrated with demand planning and advanced scheduling modules and hence gives the operating plan for fulfilling orders.

4. Transportation Planning
This facilitates resource allocation and execution to ensure that materials and finished goods are delivered at the right time and to the right place, according to the planning schedule, at minimal cost. This includes inbound and outbound, intra- and inter- company movement of materials and products. It considers such variables such as loading dock space, trailer availability, load consolidation, and the best mix of available transportation modes.

Elements of Supply Chain Execution

The supply chain execution module would have the following applications-

Order Planning

This application would select the plan that best meets the desired customer service levels with respect to the transportation and manufacturing constraints. Increasingly, the firms have to plan backward from customer priorities and fulfillment deadlines.

Production

This application would start with the master production schedule for the finished product, and then generates an MRP (Material Requisition Planning) to determine when, where and in what quantities various sub-assemblies and components are required to make each product.

Replenishment

This application would help in minimizing the amount of inventory in the pipeline and coordinate product handoffs between the various parties that are involved.


ERP

ERP system integrates processes across all the departments and divisions of your company. As information is changed within one business application, other related functions and applications are automatically updated, streamlining the entire business process. ERP systems have helped firms reduce inventories, shorten cycle times, lower costs, and improve overall supply chain management practices

Once the sole domain of manufacturing industries, ERP implementations have branched out to non-traditional areas such as healthcare, the coffee industry, and even higher education.
In fact, many e-businesses are discovering the value of having consistent, up-to-date data across the enterprise

ERP also supports companies operating multiple sites around the world, global sourcing for parts and services, international distribution and different metrics for measuring performance around the globe. For instance, a company’s U.S. sales office may be responsible for marketing, selling and servicing a product assembled in the U.K. using parts manufactured in Germany and Singapore. ERP enables the company to understand and manage the demand placed on the plant in Germany.
It allows the company to determine which metrics are best suited to measuring efficiency in a global economy with localized distribution, production and service operations.

ERP system can be seen as an automated record keeper or spreadsheet that can tally up company resources-such as raw materials and production capacity-and commitments, such as orders, regardless of whether the data is inputted through an accounting, manufacturing, or materials management system.
ERP software accomplishes this task by digitally recording every business transaction a company makes, from the issuance of a purchase order to the consumption of inventory, and continually updating all connected systems to reflect each transaction.

This integrated approach provides all users, from company
CEO to buyer at a remote plant, with a single, real-time view of their company’s available resources and commitments to customers. For example, if a salesman logs a new order into his laptop computer on the road, the transaction flows through the company, alerting the procurement system that parts need to be ordered and telling the manufacturing system to reserve a spot in the production queue for the newly ordered product.

ERP Application Suite

Service delivery excellence requires placing the entire organization into a unified transaction environment. This strategy implies having one common platform instead of many platforms that may not be compatible with each other. ERP packages integrate logistics, manufacturing, financial and human resource/payroll management functions within a company to enable enterprise-wide management of resources. Such functions include the following:


ERP packages integrate logistics, manufacturing, financial and human resource/payroll management functions within a company to enable enterprise-wide management of resources.
Such functions include (but are not limited to) the following:


Financial: general ledger, account receivable/payable, cost management; Manufacturing: sales order entry, invoicing, capacity planning; and Human Resources/Payroll: payroll, personnel management.

Case Study –I

E-Pharmacy
The Business

Located in the northern Brisbane suburb of Virginia, E-
Pharmacy is a marketing and information technology company that competes in the online mail order market and superstore pharmacy business.

The Motivation for Change

E Pharmacy’s founder, Brett Clark started the business because he believed the online environment was ideal for selling pharmacy products, particularly to people who were not well serviced by local pharmacy providers. Brett also saw the opportunity for e Pharmacy to provide an alternate distribution channel for small manufactures of pharmaceutical products.

“We already owned retail pharmacies” he said “online retailing seemed to be a natural extension of our business which would allow us to more efficiently service more customers, in addition to providing a low cost outlet for some of the lesser known brands. We now have over 7000 products online.”

And there were other motivations. “Being one of the first online in this market, gave us a chance to build a brand”, commented Brett, “this enabled us to differentiate ourselves in the marketplace and establish a position as the leading IT player in the pharmacy market.”

The Challenge

The challenge for e Pharmacy was considerable. “Basically we had to build a business model from the ground up and I took twelve months off to do this” said Brett.

E Pharmacy commenced with three clear goals:

1. To brand e Pharmacy as the leading distributor of pharmaceuticals and products to an online marketplace for small manufactures and distributors;
2. To facilitate specialist advice and support to ensure the corporate structure behind e Pharmacy will maximize the potential of future development; and

3. Development of a virtual private network to empower suppliers via collaboration to manage their own products improving efficiencies and sales.
Establishing these goals upfront was important to e-Pharmacy’s success as they were clearly able to define what they wanted which in turn meant the business was able to define the sort of technology solution it needed.

The Hurdles

Brett identifies three basic hurdles in building e Pharmacy.
The first was the need to outsource the building of e Pharmacy.
By understanding e Pharmacy’s core competencies, it was apparent that through a collaborative approach, e Pharmacy could achieve its goals by outsourcing technology development.
However, it was important to drive the development project from e Pharmacy’s perspective, and not that of the programmers, as past e-commerce developers had lacked experience in the retail sector resulting in operating platforms that did not address the fundamentals of business.
The second was maintaining the financial viability of the businesses whilst it was established and through the early growth phase. Being self funded, it enabled the company to concentrate on business fundamentals to generate profits. E Pharmacy always wanted to operate the site as they had operated traditional pharmacies, and in doing so, understood what realistic revenue streams could be generated.

Whilst the third challenge was gaining the acceptance of industry. Being a highly regulated industry, it was always going to be hard to win support from within. E Pharmacy has operated from day one with the highest level of transparency and probity to limit any negative industry comments. By creating an extremely high level of professional and ethical behavior that has been associated with the pharmacy industry, e
Pharmacy has gained support from the leading suppliers and industry players.

The Results

E Pharmacy is a Queens land success story and demonstrates the power of e-commerce in transforming businesses.
Beginning with one employee just three years ago, it now employs over seventy people and just opened its third fulfillment center in Townsville. This growth has been fuelled by online sales, which have consistently increased by over 300% per year, as customers have discovered the ease and convenience of shopping online.

“When I started this process I had three clear goals” Brett recently stated. “Each of these goals has been achieved”. “We are an industry leader with a strong brand name, our internal processes have been able to cope with our extremely rapid growth and our retail pharmacies use the system as a virtual private network. In addition, we have outsourced our backend system to other e-commerce companies for e-fulfillment , online dispensing, and sample distributions via a B2B model creating new revenue streams.
But implementing the system that created this success was not always easy.

The Implementation

The main strategy was to ensure there was a sustainable cash flow in the early days. This was achieved by using an existing retail pharmacy operating in a different market to base the operations from. In doing so, it ensured that the business had a revenue stream from another source other than just its own. After 18 months, and turning around $500,000 on two staff and three square meters of office space, e Pharmacy decided it was time to take the next step. The key to building the Virginia site was to make sure nothing was set in concrete. “In doing so, we knew that we could change what we were doing when we got it wrong” said Brett. The key to implementation is having a series of “stop-go” gates in the model. It allowed the process to be continually reviewed, valued to see whether e Pharmacy was on the right track, and if necessary stopped, or changed. In reality, it provided a mechanism for incremental adjustment, which is a necessity in innovative environments.

The Investment

The investment was funded by the three founding owners, using a mixture of existing cash flows, personal capital, and favorable trading terms with suppliers.

The Future

There are a range of future challenges for e Pharmacy. These include:

• Establishing e-pharmacy as a brand name Australia wide;
• Building an Australia wide distribution network;
• Providing services to customers in regional and remote areas such as advice, self managed health programs , patient compliance programs, and medication reviews ;
• Marketing the system overseas, particularly in Asia and New Zealand
• Opening channels for small local suppliers to distribute their healthcare products domestically and internationally
• Become a leader in healthcare e-fulfillment

The Advice

Brett’s advice to any company looking to implement a major e-commerce solution in their business is simple. To be successful a business must commit to the process 100%. This means fully evaluating the idea, including the financial requirements and developing a comprehensive business case that defines the required time, resources and financial return. He also advocates constructing the business case to ensure a quick profit, as long term return on investment scenarios often don’t work, particularly in the e-commerce area. Ultimately through, Brett believes the key to a successful e-commerce process is commitment. You have to commit to seeing the project through and be prepared to continually work with your suppliers, customers and staff to make the project successful.

“As e Pharmacy demonstrates” he said “e-commerce technology can completely change the shape of your business”. “In our case, it fundamentally changed the way we communicated with our suppliers, the way we serviced our customers and the jobs that our staff did”. “To cope with this fundamental change to my business”, Brett continued, “I had to be fully committed to the process and focused much of my energy on ensuring that my staff, customers and suppliers understood the changes we were making and why we were making them”. “Without my full commitment I couldn’t have asked for a commitment from my staff or suppliers” he concluded.


TUTORIAL 1:

1. Discussion about the technological aspects of E-commerce.
2. Find out the various companies engaged in online business and discuss about their strategies.

TUTORIAL 2:
1. How does security of the internet affect how much you
2. Does online shopping exclude certain age groups? shop online?
3. Will companies who do not offer online shopping be able
4. What particular items would you choose to buy online to compete with those who do in the long run? rather than in the actual store?

Comments

  1. Very well said. You have provided the most informative and helpful information. I really learned a lot.
    Online ERP Software ensured complete transparency between the developers of the application as well as their clientele. erp software could rectify any sort of problem at the click of a mouse.
    Thanks for such a nice blog...

    ReplyDelete
  2. Best blog, thanks for sharing this content. Best manufacturing erp software development.

    ReplyDelete
  3. Thanks for share this blog, Keep posting such instructional blogs and I am looking forward for your future posts.customized inventory management erp software

    ReplyDelete

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