Biz and Bytes (Vol. 8.

Issue: 1, 2017)
E-ISSN: 0976 0458, Print ISSN: 2320 897X

E-Commerce: A Study On Web Based Supply Chain Management

Dr Anupama
Assistant Professor,
SGGS College, Sec-26, Chandigarh
Abstract
The internet or World Wide Web is having a significant impact on how firms interact with each
other and their customers. Various problems faced by supply chain management such as high
transaction costs between partners, poor information availability and managing complex
interfaces are all being resolved on web. The company can reduce huge cost and can increase
their profit margins by achieving efficiency in supply chain management function. Various
companies have achieved huge success with the help of information technology during recent
years. Earlier customer faced lot of hesitation and lack of trust on these online companies. But
with the changing time, market scenario has changed. Now both companies and customers
transact freely and confidently through internet and also with the help of technology integrity,
authenticity and security of online transactions have been achieved. In this paper, we examine
how the web is changing supply chain management function in present era of globalization.
(Key words: E-Commerce, Electronic Data Interchange, E-Business models, Supply chain
management)
Introduction
The internet and information technology has revolutionized the way entrepreneurs performs
their functions and manage their business activities. With the advent of World Wide Web and
networking technology it has significant impact on how firms interact with each other and their
customers. Supply –Chain management through the internet is still in its infancy stage. An
efficient supply chain management function can be beneficial for both suppliers and purchasers.
Company can achieve considerable success by integrating SCM with internet. Problems faced
by SCM earlier such as high transaction costs between partners, poor information availability
and the challenges of managing complex interfaces between functional organizations are all
diminishing on the web. Ultimately it can result in high and study volume which allows supplier
to offer their product at lower cost and purchasers will also benefit from low cost source and
reliable supply. In this paper, we examine how the web is changing supply chain management
function in the business world and how with the changing business world various aspects of
supply chain have also changed.
Objectives Of The Study
1. To study the concept of supply chain management
2. To study e-commerce and integrated supply chain management
3. To study the concept of Electronic Data Interchange
4. To study role of web based supply chain management function in various e-business
models.
Research Methodology
Supply chain management is one of the most important functions of production management.
Our main objective is to study role of supply chain in this modern era of information technology.
For the purpose of our study secondary data was collected from internet journals and articles. It

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was further analyzed to find out results and objectives of our study.
Supply Chain Management
Supply chain management (SCM) is “the systematic, strategic coordination of the traditional
business functions and the tactics across these business functions within a particular company
and across businesses within the supply chain, for the purposes of improving the long-term
performance of the individual companies and the supply chain as a whole.1 Supply chain
management is one of the most important functions of business management. It aims at acquiring
raw materials of right quality and quantity at right time so that production process can be
completed without any hindrance. It also aims at ensuring delivery of finished products to
customer at right time and at right place. The internet has emerged as a most cost effective means
of driving supply chain integration. E-Business applications for supply management are
categorized into three parts which are as follows:-
E-Procurement: helps in handling value added services like transportation, warehousing,
customs clearing, payment, quality validation and documentation with the aid of internet. Due to
increasing competition, fast changing customer preferences and short product life cycle
production function requires flexibility. Internet offers a platform to facilitate efficient
procurement as various buyers and sellers find each other and transact according to some pre-
specified protocols. Companies like SciQuest, E-connect and Pass act focused on linking buyers
and sellers together without ever touching the product using information intermediary. They
successfully achieved the power balance between customers, distributors and suppliers. They
have all reoriented their business models which are specifically focused on individual industry.
E-Collaboration
E-Collaboration promises to provide far better efficiency than e-Commerce and e-Procurement.
It can be defined as business to business transactions facilitated by the Internet. E-Collaboration
facilitates various activities which are beyond transactions which includes decision sharing,
process sharing, resource sharing, information sharing and integration. It is beneficial for both
suppliers and customers. For e.g. Coordination of engineering changes in the bills-of-materials
for a product that is manufactured by an outsourced partner.
E-Commerce

E-Commerce has considerable impact on supply chain management of various organizations.
Manufactures of both tangible and non tangible products have also turned to the internet as a
direct channel of distribution. With the advancement of technology quality of supply chain
management function has also improved. It helps in meeting distinct customer demands and
demands are also met from a common inventory system that server replenishes at a finite speed.
The manufacturer can provide direct services to their customers as per their needs and demands.
It provides them flexibility in inventory management and shipment facility. A person can order a
book at Amazon website, but the delivery may come from the warehouse of its distributor Ingram
books. E-commerce has become an important tool for small and large businesses worldwide, not
only to sell to customers, but also to engage them. In the year 2012, e-commerce sales topped $1
trillion for the first time in history.
Electronic Commerce And Integrated Supply Chain Management
Supply Chain Management is concerned with management of all types of functions which are
necessary for successful production of goods and services. It includes procurement of raw

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materials, production function, stock holding and distribution process etc. Supply chain
management starts from acquisition of raw materials and finishes till successful delivery of
products to customers. With the help of e-commerce supply chain management can be made
more efficient and speedy. There has been integration of logistics of upstream and downstream
activities over the years. But now this function is extended which means integrating the internal
and external partners on the supply and process chains to get raw materials to manufacturers and
finished products to the customers. Most companies fail to integrate their supply chain due to
number of reasons the most important being lack of system integration and fragmented supply
chain responsibilities. These days SCM not only focus on acquisition, production and
distribution of goods but also they have started focusing on individual demands made by
customers.SCM also includes providing value adding services and information for the end
customers with the help of technology.
Due to ever increasing competition companies need to adapt themselves to better ways of doing
national and international business which includes moving towards computerized “paperless
operations”, reduced operating costs and easy adoption of new processes. A firm can reduce
significant amount of costs by using electronic networks for searching appropriate goods and
services. NASDAQ system and Easy Sabre airline reservation system are very good examples
of inter organizational electronic networks while former creates the electronic market for over
the counter stocks and latter allows customer to search for and compare ticket prices and
availability before ordering. Commerce Net allows firms in Silicon Valley to order computer
supplies on World Wide Web. These services provide tools for searching the data and connect
different buyers and sellers through information network.
An E-commerce based Supply chain management, in general, includes the following functions:
· Supplier Management. Here main objective is to reduce number of suppliers and
results can be seen in the form of The benefits are seen in reduced purchase order processing
costs; increased numbers of purchase orders processed by fewer employees, and reduced order
processing cycle times.
· Inventory Management. The main objective is to shorten the order-ship-bill cycle.
When persons involved here are electronically linked information can be transferred easily.
Documents can be recorded and tracked easily. It will also helps in reduction of inventory levels
and eliminates out-of-stock events.
· Distribution Management. The goal is to move documents related to shipping (bills of
lading, purchase orders, advanced ship notices etc) in Earlier it too several days to complete
paper work but now this can be completed in moments thus saving time, energy and cost. It will
also help in resource planning.
· Payment Management. Technology has made payment process simple and efficient.
The goal is to link suppliers and distributors so that payment can be sent and received
electronically. It increases the speed at which companies can compute invoices and bills. It has
managed to reduce clerical errors, transaction costs, fees and makes billing process fast.
Integrity, authenticity and security of all transactions are maintained in proficient way.

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· Financial Management. The goal is to enable global companies to manage their money
in various foreign exchange accounts. All financial statements and records can be maintained,
compared and analysis which can help companies in taking important financial decisions.
· Sales Force Productivity. The goal is to improve the communication and flow of
information among the sales, customer, and production functions. Linking the sales force with
regional and corporate offices establishes greater access to market intelligence and competitor
information that can be funneled into better customer service and service quality.
The new and improved SCM helps in reducing transaction costs, shorten product life cycle,
improves production process and companies can produce variety of customizable products.
Technology has made this function far more superior and efficient. An electronic commerce
based supply chain management has the following characteristics:
· Raw materials or finished goods can be outsourced or distributed anytime from
anywhere in the world.
· A centralized, global business and management strategy with flawless local
implementation.
· Information can be transferred not only within a company but across other industries and
enterprises.
· The flawless integration of all supply chain processes and measurements, including
third-party suppliers, information systems, cost accounting standards, and measurements
systems.
· The development and implementation of accounting models such as activity-based
costing that link cost to performance are used as tools for cost reduction.
· A reconfiguration of the supply chain organization into high-performance teams going
from the shop floor to senior management.
Recent surveys on supply chain in Europe showed that there has been substantial change in
customer service and it will influence logistics management of firms in coming days and
information technology will be the key element for development of European logistics to take
place.
Electronic Data Interchange (EDI)
EDI is software through with business data can be exchanged between two originations. It is
standard format which is used to transfer electronic documents or business data from one
computer to another. These electronic documents are considered as equivalent for paper based
orders, data transfer and confirmation between trading partners.Various benefits of EDI are as
follows:-
· There is option of storing and manipulating data electronically
· Shipping and billing errors can be reduced to great extent.
· Increased speed and accuracy in the system reduces cycle time and whole procedure can
be made more efficient.

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· Fast flow of information is beneficial for trading partners as they can expand their
business in more competent way.
· EDI saves superfluous recapture of data. It leads to faster transfer of data, less errors, time
saving and hence more smooth business processes.
Role Of EDI In Supply Chain Management
EDI stands for Electronic Data Interchange. In this world of business there are large number of
systems, each company uses its own system to manage the business. This standard has been
developed to integrate disconnected systems. These systems require some common protocol
which can help these systems to interact with each other. This task is done through Electronic
Data Interchange.
Trading partners needs to communicate continuously with each other in supply chain
management. From the time when raw materials are ordered from suppliers till finished
products are sent to customers, it's a never ending process for trading partners. For e.g. when
suppliers receive order from customers, reply is given in the form of confirmation or
modification and sent to customer's system. Receipt of order and confirmation is done within few
minutes with the help of EDI. Earlier this whole procedure was very time consuming and
cumbersome when done manually through phone or e-mail. If a company implements EDI in its
communication system, immediately all trading partners such as suppliers, logistics providers,
customers get linked electronically. An EDI system consists of following processes:
1. Data Conversion where data is converted into standard EDI format.
2. Transmission where EDI message is transmitted to other parties.
3. Receiving where message is received by respective system.
So EDI has made online transactions between trading partners more time saving, cost effective
and easy. It has made supply chain management function more efficient as compare to earlier
done by business organizations.
Case Study: Dell Inc
Dell Inc. is one of the first to establish a customer driven PC configuration capability. It is first
company which is delivering products to customers directly having no intermediaries. Dell's
efficient make-to-order assembly models receives order from its own direct-to-customer retail
channels using call centers, fax and phone orders but no retail stores. A unique application is
available on Dell's website where customers can experiment with different computer
configurations using a “Choice board” capability that shows price differences for components
and calculates the total prize before finalizing the order. Here customer submits their order
through web site, then that order is translated into design, the components are ordered and then
the right resources are electronically scheduled to fulfill the order “Direct from Dell”. With the
help of new model, Dell was able to reduce inventories, cut costs and reduce production cycles.
Dell also provides e-procurement applications and consulting services. Dell also informs
customers about its new technologies and offers suggestions on how to use them. Dell's success
story shows a real case of effective integration and implementation of e-commerce in its SCM.

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Internet based Supply-Chain Management in various e-business models.

1. B2B
B2B (business-to-business) firms deals directly with other business firms or Government also
rather than individual customers. For e.g. Automobile companies manufactures their products at
one place but there parts such as batteries, electric components, seats are purchased from
different companies who produce these parts. B2B supply chains have partially migrated to the
Internet, as online marketplaces reduce the cost of both supply-chain management and the
carrying out of supply-chain functions. With the help of web based technology firms can reduce
significant amount of transaction cost, increase speed of transaction and transparency of
information. Some of the important business activities and the impact of internet on these
business activities have been discussed as follows:-

Types Of B2B models:

Many (B2B) e-business models have been established based upon who controls the market
place. The market is controlled and decided by the buyers, the suppliers and the intermediaries.
Following are the e-business models to be considered for B2B e commerce.
Buyer Oriented B2B. In this model buyer purchases thousands of products and uses the internet
to open a market-place and a website for suppliers to do bidding. In the buyer oriented B2B
model, a buyer like General Motors uses such type of platform which allows suppliers to do their
bidding. The buyer loads the products via a catalogue or a directory, with specific requests
regarding make, model, size, price and so on.
Supplier Oriented B2B: In this model a supplier invites individual customers and business
customers to order products through electronic market store. Dell and CISCO are supplier
oriented B2B market.
Intermediary Oriented B2B: This is a type of electronic intermediary company that establishes
an exchange market where buyers and sellers can make deals. www.Grainger.com and
Procure.net is globally acclaimed largest distributor of maintenance, repair and operations
supplies.
Wal Mmart
Wal-mart operates the largest supply chain in the world. The company established a retail link in
the year 1991 which connected large suppliers to Wal-mart's own inventory management
system, requiring them to track sales by store and replenishing items by rules of Wal-Mart's
devising. In 1997, Company moved retail link to an extranet and then upgraded its system to
make more efficient forecasting, planning and replenishment system. As of July 31, 2016,
Walmart has 11,539 stores and clubs in 28 countries, under a total of 63 banners.
B2C Model
In Business to Consumer model transactions are conducted between company and consumers
who are end users of their products or services. In this model companies deals directly with
customers thus removing wholesalers and retailers from supply chain. Business is done through
various e-commerce websites. Companies can focus on direct marketing and selling and they
can earn huge profits through this platform. Customers too can get products or services at lower

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costs thus saving time and money. Companies like Myntra.com, Amazon.com, Flipkart.com,
Voonik.com etc have earned huge success in online business. One can find there apps on smart
phones also thus making shopping more easy and comfortable for customers.
B2C companies divide into five major categories: direct sellers, online intermediaries,
advertising-based models, community-based models and fee-based models. Each type is so
different from the others that they are not directly comparable. In fact, some B2C businesses
utilize more than one type to reach different audiences.

Direct Sellers
Direct sellers, such as online retailers, sell a product or service directly to the customer via a
website. You can further divide direct sellers into e-tailers and manufacturers. E-tailers are online
retail stores that sell wide variety of products on their websites. Some e-tailer has physical stores
along with virtual online presence. These stores are popularly known as “clicks and mortar” or
“clicks and bricks”. Barnes & Nobel, Wal-Mart and JCPenny have physical stores as well as
online stores whereas Amazon.com and ebay.com is completely a virtual store. E-tailers are
growing at faster pace as it has advantage of vast customer base especially working class who
cannot spend much time on going to physical stores and find online shopping more comfortable
and time saving.

Online Intermediaries
Online intermediaries perform the same function as any other broker. They are called transaction
brokers. These websites perform online transactions on behalf of customers for range of
activities like financial services, job placements, travel services etc. Online transaction brokers
provide customized services according to needs of customers. For e.g. online stock brokers not
only provide information regarding stocks and prices but also make suggestions and help
investors make a profitable investment charging considerably less commission.

Advertising-Based Models
Popular websites rely on advertising-based models. These websites offer a free service to
consumers and use advertising revenue to cover costs. Service providers offer range of services
in different areas such as arranging for computer repairs, business consultancy, education
consultancy, online tutorials and information access. They draw a large number of visitors,
making them ideal advertising streams for other companies. Advertisers will pay a premium to
sites that deliver high traffic numbers.

Community-Based Models
Community-based models combine the advertising method that relies on traffic at sites that focus
on specialized groups to create communities. Community sales and advertising take advantage
of social and network marketing by focusing on specific groups that want specific products. For
example, sites used by computer programmers are perfectly placed to advertise computer
hardware and software products. At least one social media website uses member information to
target advertisements to interests and locations.

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Fee-Based Models
Pay-as-you-buy or paid subscription services fall under fee-based models. The most common of
these are online subscriptions to journals or movie sites such as NetFlix. These companies rely
on the quality of their content to convince consumers to pay a usually nominal fee.
Case e.g. Amazon Business Model
Amazon.com started business in the year 1995 and within a span of 8 yrs after its incorporation
Amazon reached the $ billion sales level. Amazon also follows direct model for shipments which
makes delivery faster by reducing time gap. By investing in warehousing and material handling
company ensures to achieve its aim of shipping 95% of orders on the day of purchase. Company's
excellent logistics capabilities are clearly shown in latest inventory availability information,
delivery date estimates as well as delivery date estimates as well as delivery shipment
notifications and update facilities.
3. C2C Model
Customer to customer (C2C) is a business model that creates type of marketplace where
customers can trade with each other. With the emergence of internet C2C market has also
achieved immense popularity. The main function of C2C markets are online auctions and
classifieds. Online companies such as eBay, craiglist, OLX and other sites have fostered greater
interactions between customers. Here products sold are often used as second hand and C2C sites
make their money from fees charged to sellers for listing items for sale, adding on promotional
features and completing transactions. C2C is expected to grow in the future because of its cost
effectiveness as it minimizes the cost of using third parties. E Bay is a good example of e-
commerce business individuals and businesses are able to post their items and sell them around
the Globe.
There are various other e-business models which are emerging at rapid rate such as mobile
commerce, Peer to Peer commerce, e-Governance etc. No doubt with the advancement of
technology ways of doing business and marketing has improved. Mobile devices are playing an
increasing role in mix of ecommerce. Some estimates show that purchases made on mobile
devices will make up 25% of the market by 2017.
With rapidly increasing competition
companies need to adapt themselves to better ways of doing global business which includes
moving towards computerized, “Paperless” operations to reduce operating costs and facilitate
the adoption of new processes. With success of various online companies like Myntra, Flipkart,
Snapdeal, Amazon etc we can see that there is great scope for emerging online companies in
future also in the area of marketing. There efficiency and timeliness in performing various
transactions has achieved customer trust and loyalty which is the main reason for their huge
success and profitability.
Conclusion
The rapid growth of web based information transfer between companies, their suppliers and their
customers has decidedly increased the importance of information management in creating
effective supply chains. With the help of internet transactions are done in real time and all parties
can be kept updated without human intermediaries. E-Commerce helps companies to identify

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and respond quickly to changing customer demand captured over the internet. The use of
technology results in reduced cycle time, efficient customer service and reduced inventories.
This has definitely paved the way for success of business organizations around the world.
References
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[ 3] Ecommerce Sales Topped $1 Trillion for First Time in 2012". eMarketer. Retrieved 14 May
2013.
[4] Eisingerich, Andreas B.; Kretschmer, Tobias (March 2008). "In E-Commerce, More is
More". Harvard Business Review 86: 20–21
[5] Gerstner, L. (2002). Who says Elephants Can't Dance? Inside IBM's Historic
Turnaround. pg 172. ISBN 0-06-052379-4
[6] Mentzer, John T., William DeWitt, James S. Keebler, Soonhoong Min, Nancy W. Nix,
Carlo D. Smith, & Zach G. Zacharia (2001): Defining Supply Chain Management.
Journal of Business Logistics, Vol. 22, No. 2, pp. 1–25.

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