2. Table Of Content
The Role of the Internet in Supply Chain Management
■ Objectives........................................................................... 4-15
■ Review of Literature........................................................... 16 -20
■ Research Methodology........................................................ 21-22
■ Data analysis & Interpretation............................................ 23-24
■ Results & Discussions ......................................................... 25-26
■ Conclusion………………………………………………………………………. 27-28
3. The Role of the Internet in Supply Chain Management
Submitted in partial fulfilment of the requirements for the
Degree of Masters of Business Administration
Submitted By:
Chandan Singh
MBA Final Year
Spring 2016
4. Objectives of Supply Chain Management
■ The fundamental objective is to "add value".
■ SCM is consists of all parties (Including Manufacturing, Marketer,
Suppliers, Transporters, Warehousing, Retailers and even Customers)
directly or indirectly involved in fulfilments of a customer. The main
objectives of Supply Chain Management are to improve the overall
organization performance and customer satisfaction by improving
product or service delivery to customer.
5. ■ Supply Chain Management involves Movements and Storage of all materials including
Raw Material, WIP (Work In Progress) and Finished Goods.
■ An ideal company moves far beyond the traditional belief that buyer’s primary role is to
obtain goods and services in response to internal needs. They:
■ Achieve Efficient Fulfillment
■ Drive Customer Value
■ Enhance Organizational Responsiveness
■ To Maximize Overall Value Generated
7. Why is supply chain management so important?
■ To gain efficiencies from procurement, distribution and logistics
■ To make outsourcing more efficient
■ To reduce transportation costs of inventories
■ To meet competitive pressures from shorter development times, more
new products, and demand for more customization
■ To meet the challenge of globalization and longer supply chains
■ To meet the new challenges from e-commerce
8. ■ To manage the complexities of supply chains
■ To manage the inventories needed across the supply chain
■ Why is supply chain management difficult?
■ Different organizations in the supply chain may have different, conflicting
objectives
■ Manufacturers: long run production, high quality, high productivity, low
production cost
■ Distributors: low inventory, reduced transportation costs, quick
replenishment capability
■ Customers: shorter order lead time, high in-stock inventory, large variety of
products, low prices
■ Supply chains are dynamic - they evolve and change over time
9. What Is the Role of the Internet in Supply-
Chain Management in B2B?
■ 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. A key to the reduced cost is
Internet-based, generally available information that increases the
transparency and speed of transactions. Members of supply chains can
quickly and reliably find the specific information they need to complete
an exchange of goods or services, and receive rapid payment.
■ Procurement
■ The Internet reduces the cost of purchases by giving supply-chain
partners quick access to information about sources, availability, pricing
and technical data.
10. ■ Members of the supply chain must cooperate in making this information
available online, possibly in secure folders only accessible to account
holders who are supply-chain partners. Once information required to
make a purchase is available online from several sources, procurement is
more efficient because the best source can be identified more quickly.
While the actual prices paid do not necessarily diminish, the cost of the
procurement transactions is lower.
■ Supply
■ On the supply side, the most important role of the Internet is to greatly
increase the size of the accessible market. Suppliers using the Internet to
market their goods and services can sell world-wide. With the Internet's
greater transparency regarding pricing, suppliers have lost some of the
strategic levers that allowed them to cultivate preferred accounts with
higher margins.
11. ■ The ability of competitive suppliers to achieve greater sales volumes
balances this disadvantage. Once the supplier has found a customer, he
benefits from similarly reduced transaction costs as the purchaser,
because completing the transaction is quicker and more efficient.
■ Direct Transactions
■ For supply chains in general, the role of the Internet has been to reduce
the power of intermediaries. Suppliers can offer their products and
services directly to customers, and purchasers can find what they need
directly from producers. This disintermediation has simplified supply-
chain management by making real time data on changes in demand and
supply available to the markets, rather than having the information
filtered through re-sellers. This trend has been especially pronounced in
B2B transactions, while intermediaries remain more important in retail.
12. ■ Collaboration
■ While supply-chain management through the Internet is still in its
infancy, the possibilities exist for even closer integration of supply and
procurement functions. Suppliers are interested in having a high,
predictable sales volume, while purchasers are looking for a reliable,
low-cost source. Companies can satisfy both goals by providing data on
production and on procurement needs to each other under long term
relationships. The resulting high, steady volume allows the supplier to
offer his products at lower cost, while the purchaser benefits from this
cost reduction and receives a reliable supply.
13. The Advantages of Supply Chain
Management Systems
■ Effective supply chains give businesses a competitive advantage in the
marketplace and help mitigate risks associated with acquiring raw
materials and delivering products or services. By implementing supply
chain management systems, businesses are able reduce waste, overhead
costs and shipping delays in a scientific way. The benefits of this
systematic approach impacts areas ranging from product quality to order
turn-around times.
■ Quality Assurance
■ Many manufacturers in the U.S. have relocated their operations to
countries such as China, India and Russia in an effort to cut production
costs.
14. ■ This has caused experienced domestic personnel to opt for other job
assignments. As a result, product quality within the supply chain has
become a pressing issue. Defects and rework attributable to poor
systems are raising the costs of doing business. One of the advantages of
supply chain management is that it incorporates quality techniques, such
as quality management systems, to improve operations.
■ Inventory Buffers
■ In almost every type of business, there is variability in customer
spending. This requires companies to manage their inventories in a way
that minimizes holding costs while providing enough flexibility to meet
customer demands. If inventory levels fall too low, businesses may have
to pay overtime to produce products or lose out on revenue by making
customers wait or shop somewhere else. Supply chain management
systems typically include inventory buffer levels that are pre-determined
with careful analysis of historical trends.
15. ■ Hipping Options
■ As e-commerce continues to grow globally, buyers have more options to
order products than ever before. Shipping options need to keep pace
with the demands of the marketplace, which requires companies to
readjust their supply chains to meet customers’ preferences. Whether it
is small parcel shipping or larger bulk orders, shipping in a quick and
accurate fashion is key for business success. Supply chain management
systems help companies determine the optimal ways to ship while
reducing costs to the lowest possible level.
■ Risk Mitigation
■ Managing risk is a key responsibility for business leaders, and supply
chain management systems allow for the identification of critical risk
factors in an organization or with their suppliers. Whether it is product
quality, compliance with applicable laws or operational safety,
management must mitigate risk in an effective manner.
17. ■ Types of IT use in SCM
■ The first construct, types of IT use in SCM, refers to the ways in which
companies employ IT for the purposes of SCM. Based on prior research
discussed above, three different types of IT use in SCM – transaction
processing, supply chain planning and collaboration, and order tracking
and delivery coordination – were identified and chosen to represent the
first construct.
■ The first type of IT use, transaction processing stands for the use of IT for
increasing the efficiency of repetitive information exchanges between
supply chain partners. In this type of IT use the exchanged information is
typically related to such tasks as order processing, billing, delivery
verification, generating and sending dispatch advices, and producing
order quotes. The second type of IT use,
18. ■ supply chain planning and collaboration, represents the use of IT for
sharing planning-related information such as demand forecasts and
other demand information, inventory information, and production
capacity information, with the
■ intention of increasing the effectiveness of the supply chain. Finally, the
third type of IT use in SCM, order tracking and delivery coordination,
refers to the monitoring of individual orders or shipments, which may
consist of components or final products, with the aim of coordinating
their delivery or conveying timely information of their location.
■ The importance of information in an integrated supply chain
management environment:
■ Prior to 1980s the information flow between functional areas with in an
organization and between supply chain member organizations were
paper based. The paper based transaction and communication is slow.
19. ■ Supply chain organizational dynamics:
■ All enterprises participating in supply chain management initiatives
accept a specific role to perform. They also share the joint belief that
they and all other supply chain participants will be better off because of
this collaborative effort. Power within the supply chain is a central issue.
There has been a general shift of power from manufacturers to retailers
over the last two decades. Retailers sit in a very important position in
term of information access for the supply chain. Retailers have risen to
the position of prominence through technologies.
■ The Wal-Mart & P&G experiences demonstrate how information sharing
can be utilized for mutual advantage. Through sound information
technologies Wal-Mart shares point of sale information from its many
retail outlets directly with P&G and other major suppliers.
■ The development of Inter organizational information system for the
supply chain has three distinct advantages like cost reduction,
productivity, improvement and product/market strategies.
20. 1. Remote Input/output mode: In this case the member participates from a
remote location within the application system supported by one or more
higher-level participants.
2. Application processing node: In this case a member develops and shares
a single application such as an inventory query or order processing system.
3. Multi participant exchange node : In this case the member develops and
shares a network interlinking itself and any number of lower level
participants with whom it has an established business relationship.
4. Network control node: In this case the member develops and shares a
network with diverse application that may be used by many different types
of lower level participants.
21. RESEARCH METHODOLOGY
■ Supply Chain Methodology
■ Theoretically “Effective supply chain management is all about delivering
the right product in the right quantity and in the right condition, to the
right place, at the right time and at the right price.”
■ Practically this is the most difficult thing to do in a globalized internet-
connected world economy. Talk to the Operations staff of any Company
and all you will hear are the increasing complexities of serving the
demands of a global customer base. With shrinking product life cycles
and very low barrier to entry in most industries, no one can ever prepare
for the next onslaught from a new competitor. Operations teams are
always on their toes to keep the finished goods flowing while managing
the cost of production, to keep their competitive edge. Reliance on
complex software solutions is increasing to keep the wheel of global
commerce going.
22. The steps of methodology are as described
Collecting & analysing data – both primary & secondary
Identifying the factors contributing to the problems
Prioritization of reasons contributing to the problem
Planning strategically the feasible solutions to the problem
Implementation of the solutions
23. Data Analysis & Interpretation
India to have 651 million smartphones, 18.7 million tablets by 2019
■ India, the second largest smartphone market globally, is expected to
witness a mani-fold growth in the number of smartphones to over 650
million in the next four years, a study by networking solutions giant Cisco
said today.
■ The country also considered one of the world's fastest growing Internet
market, is expected to see the number of tablets hit more than 18
million by 2019, according to the US-based firm's Visual Networking
Index (VNI) global mobile data traffic forecast for 2014 to 2019.
■ "In India, the number of smartphones grew 54 per cent during 2014,
reaching 140 million in number and the number of smartphones will
grow 4.7-fold between 2014 and 2019, reaching 651 million in number."
24. The number of tablets grew 1.7-fold during 2014, reaching 2. Million in
number and is expected to grow 9.2-fold between 2014 and 2019,
reaching 18.7 million
25. Results & Discussions
■ Overview of the Indian e-commerce industry
■ The e-commerce market in India was estimated at USD17.6 billion in
2014, and is expected to grow at a CAGR of 40 per cent to touch USD136
billion by 2020. The online travel segment at USD12 billion alone,
comprises about 68 per cent of the ecommerce industry in
■ India, including travel and e-ticketing websites. Ticketing accounts for the
largest share of the online travel market, with domestic air ticketing
driving growth. At USD3 billion, e-commerce retailing is the second
largest and fastest-growing segment. This is followed by the financial
services and classified segments, job searches and online matrimony
which contribute to about 15 per cent of the market by value.
26. The state-owned Indian Railway Catering and Tourism
Corporation (IRCTC) has emerged as one of the largest online sites, with the website
itself, attracting about 45 per cent of all visitors to travel websites in India and 19 per
cent of the total internet audience.
27. Conclusion
■ Technology and logistics are key to the success of e-commerce
businesses. Unlike other sectors where logistics is a support function,
logistics here enables growth in e-commerce retail with respect to
strategy and execution. Time-definite deliveries including same-day and
next-day deliveries as well as delivery with in a particular time window
could continue to gain prominence in the future. The service reliability
for these segments is expected to remain critical for the success of e-
commerce retailers and logistics providers. The ability to handle cash for
COD transactions and timely cash remittance could be imperative for
servicing the sector. The increasing network of e-commerce-focused
retail logistics providers and
■ increasing emphasis of full-fledged LSPs on the e-commerce retail sector
are expected to lead to intensified competition in the market, putting
pressure on costs and margins.
28. ■ The concept of captive logistics arms might be hived off since it is not a
core business for e-commerce retailers. Also, while the e-commerce
logistics sector is expanding at a rapid level, it might be difficult to scale
the logistics infrastructure and capabilities at a
■ corresponding pace; thus leading to an increase in outsourcing as
opposed to building in
■ house services. In the short-term, specialized services such as time
bound deliveries, card swipe at delivery and other value added services
could be managed in-house, while standard deliveries could be
outsourced to 3PLs. However, in the long-term, with an increase in
specialized services, these could also be outsourced to 3PL providers.
■ The government’s plan to implement GST is a positive step toward
simplifying the tax structure on sale of goods and services. The
government would require to study the taxation and jurisdictional laws
to address the multi-jurisdictional nature of e-commerce transactions
