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E-Commerce Topics:
» Introduction of E-Commere
» The Advent of E-commerce
» Types of E-commerce
» The Scope of E-commerce
» Supply Chain Application
» What is E-commerce?
» Advantages of E-commerce
» The Business Model
» Developments in Supply Chain Management
» Business-to-business transactions in E-commerce
» Business-to-consumer transaction in E-commerce
» Electronic Data Interchange (EDI)
Introduction of E-Commere
The astonishing growth of internet and particularly the world wide wed has led to a critical mass of customer and companies participating in a global on-line market place. Business owners around the world are increasingly turning to internet to increase the efficiency and profitability. A large number of companies have come to the net to maintain a electronic presence, market products, generate sales leads, provide customer support and open up electronic stores that can be accessed by the internet users. Some benefit are enjoyed by these companies include lower purchasing cost, lower overheads etc. the internet also provides to be a great equalizer, allowing the smallest companies to compete against the giants in the industry.
The Advent of E-commerce
Electronic commerce is a general term applied to use of computers and telecommunication technologies to support trading
in goods and services. It is defined as any from of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact. In other words, it is a term for buying, selling, ordering, or delivering
something electronically. The general idea about e-commerce is that it means online shopping.
Types of E-commerce
Business-to-business (B2B)
The internet can connect all business all business to each other, regardless of the location or position in the supply chain. This ability presents a huge threat to traditional threat to wholesaler and brokers. This category has been well established for several years.
Business-to-consumers (B2C)
The business-to-consumers is focused on the use of a virtual of the World Wide Web that allows an internet user to browse and order goods or services from storefronts online catalogue. This category largely equates to electronic retailing.
Business-within-business (intra-company)
Companies suited around the world are now implementing the applications of web based technology to improve and transform their business communication and processes. The-business-within-business e-commerce takes the intranet beyond its popular role as a corporate and product information center.
The Scope of E-commerce
E-commerce encompasses a broad range of activities. The core component includes trading of physical goods and services.
The conventional activities include.
- Searching for product information
- Ordering product
- Paying for goods and services
- Customer service
E-commerce also includes the business activities:
- Pre-sales and post –sales support
- Internal electronic mail and massaging
- Online publishing of corporate documents and forms
- Managing corporate finance and personal systems
- Manufacturing logistic management
- Supply chain management for inventory
- Facilitation of contact between traders
- Tracking orders and shipments
- Advertising and promotion of products and services
E-commerce beneficiaries:
- Benefit to customers
- Access to more information
- Rapid response to needs
- Lower cost and prices
- Global choice
- Easier market research and comparison
- Benefit and opportunities to suppliers
- Shortened supply chain
- Substantial cost saving
- Mass customization
- Global presence
- Competition on specialty
- Improved competitiveness
Supply Chain Application
Supply chain application delivering the right product to the right place, at the right time and at the right price is one of the
most powerful engines of business transformation. Supply chain application is a concept that is well known and well used
throughout the business world today. It has brought along many changes in business that has produced long term benefits for companies and, most importantly, consumers.
Definition
Supply chain application is the oversight of materials, information, and finances as they move in a process from supplier
to manufacture to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating
these flows both within and among companies. It is said that the ultimate goal of any effective supply chain
management system is to reduce inventory.
Supply chain management flows can be divided into three main flows.
- The product flow
- The information flow
- The finance flow
The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs.
The information flows involves transmitting order sand updating the status of delivery.
- The ability to compare price between multiple vendors easily
- The ability to search large catalogs easily
Larger catalogs - a company can build a catalog on the web that would never fit in an ordinary mailbox. For example,
Amazon sells 4,000,000 books and associated items. Imagine trying to fit all of the information available in Amazon’s database into a paper catalog.
Improved customer relations - with automated tools it is possible to interact with a customer in richer ways at virtually
no cost. For example, the customer might get an email when the order is confirmed, when the order is shipped, and after the order arrives. A happy customer is more likely to purchase something else from the company.
The Business Model
E-commerce allows people to create completely new business models. In a mail order company there is a high cost of
printing and mailing catalogs that often end up in the trash. There is also a high cost in staffing the order taking department
that answers the phone. In e-commerce both the catalog distribution cost and the order taking cost fall towards zero. That
means that it may be possible to offer products at a lower price, or to offer products that could not be offered before because of the change in cost dynamics.
Definition
For purpose of this policy, electronic commerce is defined as the use of electronic ordering and payment mechanisms via
an interactive electronic mechanism such as the World Wide Web to effect remote payment for Stanford university goods or
services. This policy does cover business-to-business e-commerce pursuant to which the university purchase goods or
services or to electronic ordering and payment mechanism that are typically used between other business or institution and Stanford university, usually referred to as electronic data interchange or electronic funds transfer.
Purpose
Electronic commerce provides a convenient way to handle business transaction such as conference registration or the
purchase of course materials. However, reasonable step should be taken to protect the personal information and privacy of
purchasers. It is also in the university’s best interest to facilitate the transfer of electronic commerce transaction data to its
financial system. The purpose of this policy is to establish guidelines for electronic commerce.
Policy
a. relation to university mission - any use of electronic commerce at Stanford must be consistent which guide memo
15.3, unrelated business activity. Which prohibits the use of Stanford resources for any activity not related to the university’s mission.
b. authorized vendor - Stanford has contracted with an internet commerce transaction services vendor to handle the
authorization and management of electronic orders. This arrangement allows the university to.
- Consistently require the vendor to take necessary and reasonable steps to ensure that transactions are secure.
- Assure appropriate integration with university financial systems.
- Ensure that parties comply with Stanford names use the private policies.
- Use tested emergency response and recovery producers.
- Leverage university transaction to reduce costs, and
- Provide current technology and support for developing applications.
Developments in Supply Chain Management
Six major movements can be observed in the evolution of supply chain management studies creation, integration, and
globalization (lavassani et al., 2008), specialization phases one and two, and SCM 2.0.
1. Creation Era
The term supply chain management was first coined by an American industry consultant in the early 1980s however the
concept of supply chain in management, was of great importance log before in the early 20th century, especially by the
creation of the assembly line, the chacteristics of this era of supply chain management include the need for large scale changes, reengineering, downsizing driven by cost reduction programs, and widespread attention to the Japanese practice of management.
2. Integration Era
This era of supply chain management studies was highlighted with the development of electronic data interchange system
in 1960s and developed through the 1990s by the introduction of enterprise resource planning systems. This era has continued to develop into the 21st century with the expansion of internet- based collaborative systems. This era SC evolution is characterized by both increasing value-added and cost reduction through integration.
3. Globalization Era
The third movement of supply chain management development, globalization era, can be characterized by the attention
towards global systems of supplier relation and the expansion of supply chain of organization can be traced back to several decades ago(e.g the oil industry), it was not until the late 1980s that considerable number of organization started to integrate sources into their core business. This era is characterized by the globalization with the goal of increasing competitive advantage, creating more value-added, and reducing costs through global sourcing.
Supply Chain Management Objectives
The objective of every supply chain is to maximize the overall value generated. The value supply chain generates is the
difference between what the final products is worth to the customer and the effect of supply chain expends in filling the
customer’s request the difference between the revenue generated from the customer and overall cost across the supply chain.
For example a customer purchasing a computer from dell pays 2000 which represents the supply chain receives. Dell and other
stages of the supply chain incur cost to convey information and transport the item and transfer find of 2000 that the
customer paid and sum of all the cost incurred.
Principles of Supply Chain Management
1. Introduction
Supply chain management has received a lot of attention and the terminology has been used (sometimes misused) by
companies to describe the set of manufacturing and logistics processes the result in delivering a product to their customers.
The supply chain encompasses all activities associated with the flow and transformation of goods from the raw materials
stage, through to the end use as well as the associated information flows. Supply chain management is the integration of
these activities through improved supply chain relationship to achieve a competitive advantage.
2. Supply chains extend beyond immediate customer and supplier.
If your company produces many product which have different customers, suppliers and delivery methods, how do you deal
with the complexity of your supply chain? One approach used in the DAMA project was to pick a specific product, like a
men’s nylon parka and trace the entire process step for the product from raw materials to its purchase by a consumer.
3. Supply chains are not constant.
Knowing that integration is difficult to accomplish, why would the companies want to spend the resources to synchronize their business processes? The study below shows why. There are big rewards for the successful partnerships.
4. Parallel data sharing is better than serial.
There is a somewhat obvious relationship between forecasting and lead-time that is frequently overlooked in supply
chainplanning. If a company could produce near perfect forecasts, the lead-time to acquire the forecasted product would be
unimportant. The lead time could be very long, although the dilemma is in reality, the further out the selling period; the less accurate that forecast is likely to be. The forecast accuracy would not be as important because the company could respond to
merchandise or requesting service. The focus of this e-commerce application is on the consumer’s use of a merchant’s web
storefront or website. Consumers anywhere can browse and order goods or services online anytime. This approach is modeled on the traditional shopping experience found in stores like Safeway, K-mart.
Electronic Data Interchange (EDI)
Electronic data interchange (EDI) is the inter organizational exchange of business documents in structured machine
process able form.
Electronic data interchange can be used to electronically transmit document such as purchase orders, invoices, shipping
bills, receiving advice and other standard business correspondence between trading partners.
EDI can also be used to transmit financial information and payments carried out over EDI are usually referred to as electronic funds transfer (EFT).
EDI should not be viewed as simply a way of way of replacing paper documents and traditional methods transmission such as mail phone or in person delivery with electronic transmission.
But it should be seen not as end but as means to streamline procedures and improve efficiency and productivity.
Electronic data interchange is a structured transmission of data between organizations by electronic means. It is more
than mere E-mail; for instance, organization might replace bills of lading and even cheques with appropriate EDI message.
It also refers specially to a family of standard, including the X12 series. EDI also exhibits its pre-internet roots, and the standard tend to focus on ASCII-formatted single messages rather than the whole sequence of condition and exchanges that make up an inter-organization business process.
Electronic data interchange is simply a set of data definition that permit business forms that would have been exchanged
using paper in the past, to be exchanged electronically. This simple set of definitions has spurred a number of organization to put in place an operational environment in which the exchange of electronic business forms substitute for the exchange of paper forms.
This has resulted, in some cases, in the establishment of an EDI environment, which arguably represent the most advanced state of electronic commerce today, causing some of view EDI and electronic commerce as one and the same. We view EDI only as a subset of electronic commerce, albeit a very. As such, EDI provides an excellent example of working electronic
commerce environment and is a good starting point for examining electronic commerce. Electronic data
interchange aims at single point collection of data for use by various agencies participating in a common activity.
Objective of EDI
The basic documents for transaction of business will be taken once by one agency, and other agencies will take the information from the agency, electronically, avoiding the need to either physically take the document from one office to another or keying in the data again and again involving the attendant problems of manual labor and errors creeping in at each stage of data entry.
Standards of EDI
EDI has been established within various industries as a reliable and efficient from of data transmission. It is a technical representation of a business conversation between two entities, either external or internal or internal. From its inception, EDI was applied differently within these industries and therefore different standard were set up.
Benefits of EDI
Within various industries, EDI has been used to great advantage, and many benefits have been expounded in its regard. EDI’s benefits relate to environment impact, improved time efficiency, improved accuracy and increased flexibility, enhanced partnership, labor cost, shipping. EDI creates a system where by documents and data can easily be transported from one source to another, and is able to overcome incompatibility issues.
Specifications of EDI
Organizations that send or receive documents from each other are referred to as trading partners in EDI terminology. The trading partners agree on the specific information to be transmitted and how it should be used. This is done in human readable specification. While the standards are analogous to building codes, the specification are specification are analogous to blue
prints. Larger trading hubs have existing message implementation guideline which mirror their business processes for processing for processing EDI and they are usually unwilling to modify their EDI business practices to meet the needs of their trading partners.
Transmission of EDI
Trading partners are free to use any method for the transmission of documents. In the past one of the more popular methods
was the usages of a bisync modem to communicate through a value added network (VAN). Some organization have used
direct modem connection and bulletin board system (BBS), and recently there has been a move towards using some of the
many internet protocols for transmission, but most EDI is still transmitted using a VAN. In the healthcare industry, a VAN is
referred to as a clearing-house.
