Organising the supply chain to take maximum advantage of developments in e-commerce promises many competitive benefits, including added value, reduced cost, greater efficiencies and improved customer service. At the same time, c-commerce transforms rigid, linear supply chains built on static information sharing to interactive dynamically changing environments capable of responding in short order to real-time events occurring among trading partners and customers. The outcome is likely to widen the gap between the successful companies and the poor performers. Nevertheless, while the theory is gloriously simple, many organisations are struggling - and will continue to struggle - with the reality. Internet connectivity between business processes within supply chains has been labelled a Holy Grail, but then Sir Galahad found nothing easy about retrieving the Grail, either. Achieving the desired gains requires building infrastructure, trusting your supply chain partners with proprietary information and maximising your use of the Internet as a tool to strengthen the extended enterprise. The early birds are already hard at it.
Take nutritional supplement and health-care supplier Blackmores, which has purchased JD Edwards' OneWorld Xe software to create a business-to-business (B2B) supply chain and sales-order system. Blackmores plans to allow its retail partners and sales force to use standard browsers over the Internet to place orders and check stock through a B2B Web site - with no proprietary software needed on the enquirer's side. The system will be implemented progressively over a two-year period. Blackmores' remote sales representatives will be able to make orders using the same interface screen as retail customers, while large customers, such as supermarkets and department stores, will be free to use their pre-existing EDI (electronic data interchange) front ends to communicate with Blackmores. It's a similar story at ABC Retail. ABC recently implemented Connect's CommercePlus e-commerce system to simplify order transmission and control the procurement costs of dealing with up to 300 different suppliers of products to ABC Retail stores. The e-supply chain solution caters for ABC's large corporate suppliers with sophisticated EDI systems and also provides for the needs of smaller, Internet and fax-reliant suppliers.
"We are developing the e-supply chain management system in phases," says Doug Walker, head of ABC Retail. "The next step is functional acknowledgement from the EDI-enabled suppliers. From there we hope to evolve to a full two-way trading system where suppliers can check orders and can replenish stock levels depending on their supply status." Neither Blackmores nor ABC Retail are unique in wanting to implement electronic payment and invoicing to create a fully electronic supply chain management system. Others are equally hard at it.
Yet the organisations that currently have that goal would seem to be amongst an elite minority. A recent Accenture report, "eCollaboration: How Supply Chains Will Drive the New Economy", shows that in Australia supply chain is a blind spot for many senior executives, despite accounting for between 60 and 70 per cent of a company's ability to add value. The report shows that whereas adoption of the Net in business presents tremendous opportunities, many businesses still have a way to go in "Webifying their value chain".
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.