SCM & Ecommerce for the Term Paper

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Importance of ERP

The rapid development within the information technology and software engineering gives unprecedented opportunities for integration and coordination and ERP software is one good example in this regard. Enterprise resource Planning (ERP) is a cross functional enterprise system that serves as framework to integrate and automate many of the business processes that must be accomplished within the manufacturing, logistics, distribution, accounting, finance and human resource functions of a business. ERP is a family of software modules that supports the business activities involved in back office processes. ERP software stores a lot of information that can be used in Supply Chain Management. "There's been no connection between an employee who needs a given product - say, a new laptop - and the end supplier. This is where major developments in business-to-business ecommerce have occurred. The basic idea is to connect a company's ERP system with the corporate end users who need the goods procured by the purchasing department. Using software from firms such as Ariba or Trade'ex, an enterprise establishes a corporate purchasing hub that integrates the company intranet with the ERP system, explained Daniel Aegerter, Trade'ex's CEO. Generally, this is done to handle so-called "indirect procurement" - the goods and services that support the company's operations" (Krapf 1999).

Previously, SCM operations were run by using information through Excel spreadsheet making the whole operations a cumbersome affair rather than a system in which information is flowing on a fast, reliable basis from all the areas of the company. ERP is the it solution that joins together all that information in a single application, and using this single source SCM can be run in a better way. Most companies that look for solution for their supply management first try to ERP. ERP helps then in streamlining all the different information spread in different directions. ERP is being recognized as a necessary ingredient for the efficiency, agility, and responsiveness to customers and suppliers that an e-business enterprise needs to succeed in the dynamic world of e-commerce.

Areas of Concern

Companies today are trying to reap more and more benefits from e-commerce particularly with reference to their supply chain management function. There are different questions and concerns that these companies should try to address if they want to get an edge in this changing and dynamic environment. Companies should look at both the long and short-term impacts of information exchanges and see what parts of the chain are most affected and what parts are most relevant. Also the companies should try to look for further improvements in the use of e-commerce in the supply chain management. For example, we can consider the case of inventories regarding which companies are making efforts. They would like to cut their inventories by improving forecasts, but even today no statistical model can forecast the day-to-day demand for a product with a three-month life cycle and thus what levels of safety stock to maintain. The industries that have product requiring shorter lead times and response cycles will have a different outlook to supply chain management than those companies with longer lead times and response cycles. So, the decisions vary and its is up to the companies to decide which elements of the chain are moire important for the company and could benefit more from ecommerce resulting in greater efficiencies. "To date, e-marketplaces have focused mainly on procurement -- and dealt with it reasonably well. But they have encountered problems in seeking to streamline tasks (such as production planning, inventory control, and scheduling) that lie closer to the heart of supply chain management. To devise solutions, it will be necessary to analyze what exchanges can and can't do. They will never reduce the time it takes to deliver goods physically, for example. But since the information flow in supply chains is typically linear, fragmented, and inaccurate, they can make a vast difference in this area" (Agrawal & Pak 2001).

Impact of Globalization

IT revolution also brought in its wake the phenomenon of globalization as result of which products are no longer produced and consumed within the same geographical area. These chabges definitely involve important supply chain elements. As opposed to previous practices when all elements of a product were produced under a roof or within easy to reach geogriaphical boundaries, now even the different parts of a product may, and often do, come from all over the world. This international supply chains mean that it would be diffcult to reduce the lead time after certain limits. When international boundaries are involved in the supply change then the role e-commerce technologies become more important.


It is astounding that technology that in the past was capable of processing orders and computing payrolls, has today changed the structures of organizations and the way their supply chains function. The search for improving organizations with the help of telecommunications is still going on and it or an information system has embraced the technological changes in its folds. Today the role of it in improving SCM is of utmost importance. Rather it won't be wrong to say that both of them complement each other to enable organizations with new ways of doing business.


Agrawal, M. & Pak, M. 2001, 'Getting Smart about Supply Chain Management'. The McKinsey Quarterly, pp: 22.

Smith, T. 2003, 'New Ideas for Streamlining the Supply Chain Game: Supply Chain Management Is Something Companies Are Becoming Increasingly Focused on, as the Task of Juggling Profits and Customer Satisfaction Becomes More Complex'. Business Asia, Vol: 11. Issue: 2, pp: 22+.

Vokurka, R. & Zank, G. 2003, 'The Internet: Motivations, Deterrents, and Impact on Supply Chain Relationships'. SAM Advanced Management Journal, Vol: 68. Issue: 2.…[continue]

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