E commerce Improve customer relations service

Abstract

E-commerce is not only web-based shopping and trading; rather, it incorporates holistic business efficacy at all operational levels. The term ‘supply chain management’ (SCM) is used to denote coordination, scheduling and control of product/service procurement, manufacture, deliveries and inventories. It forms the mainstay of e-commerce. A supply chain is considered efficient if it has the right services/products at the right time and place for reducing costs or saving money and improving cash utilization. Innumerable American firms have started banking on e-commerce for achieving more efficient supply chains.
Introduction
Modern-day competition is of a supply chain-wide nature; it is not limited to individual firms. The term ‘supply chain’ may be defined as a system of distribution alternatives and facilities for whole corporate networks to collaborate for the purpose of designing, producing, delivering, and servicing products. Ever since the concept was introduced, SCM has been growing in significance for corporations, particularly in the current increasingly competitive international marketplace. Supply chain development is currently driven by factors such as globalization, swift technological advancements and highly competitive marketplaces, with a number of firms joining hands and performing tasks they are most adept at. Mining corporations concentrate on mining activities, timber firms are focused on lumber making and logging, and production firms concentrate on various kinds of production, right from component production to ultimate assembly. In this way, all firms keep pace with the swift changes characterizing the current era, and keep updating their skills and knowledge to remain competent in the marketplace. Where, at one time, firms operated independent warehouses and truck fleets, they are currently weighing up whether such operations are actually a core organizational competency or outsourcing these tasks to other firms whose core competency is logistics would be a better idea. For achieving high operational efficacy levels and remaining updated on ongoing technological changes, firms must pay attention to their core competency. Such focus is crucial to remaining ahead of competition (Hugos, 2003).
Literature review
Supply chains include firms and business activities necessary for designing, making, delivering, and using services/products. Companies rely on supply chains for offering them necessary elements for surviving and thriving. All firms fit into at least one supply chain, where they have some definite part to play. Uncertainties linked to market evolution and the pace with which change occurs has rendered awareness and understanding of supply chains and operating rules increasingly vital for organizations. Organizations that can capably forge and engage in robust supply chains enjoy a substantial edge over competition (Hugos, 2003).
Integrated SCM systems form the backbone of e-business goal attainment. While “SCM” has been defined in several different ways by different authors, the need for it is clear: firms have been struggling to attain efficacy in the areas of sourcing, production and delivery. Efficiency of supply chain – i.e., to have the right products at the right time and place – may bring about customer service improvements, besides facilitating cost-cutting efforts. The business domain is now moving at an unprecedented pace, rendering agility and adaptation to changes highly salient for all e-businesses and their infrastructure (Shaojun & Zhang, n.d).
Sound SCM necessitates concurrent customer service improvements as well as improvements to individual supply chain members’ (organizations’) internal operational efficiencies. The most elementary level of customer service involves consistent high rates of order-filling and timely delivery, and extremely low product return rates. Internal efficiency with regard to supply chain firms implies the firms enjoy a lucrative Return on Investment (ROI) rate in assets (including inventory) and find ways of lowering sales and operational expenses. SCM operation is characterized by a basic practice pattern. All supply chains have their own distinctive operational challenges and market demands; nevertheless, identical problems are evident in all cases. Firms belonging to all supply chains need to engage in independent as well as collective decision-making with regard to their activities in the domains of inventory, manufacturing, location, information and transport (Hugos, 2003).
The above decisions collectively help define supply chain efficacy and capabilities. What a firm can do to remain competitive and how it can do it is highly reliant on supply chain efficacy. If an organization’s strategy is serving mass markets and competing based on price, the prudent thing would be to forge its supply chain keeping in mind optimization for decreasing costs. Likewise, if the corporate strategy is serving a particular segment of the market and competing based on customer convenience and service, optimization for supply chain responsiveness is needed. A firm’s market and supply chain influences who the firm is and the function it performs (Hugos, 2003).
Information constitutes the basis of decision-making with regard to the remaining drivers of supply chain, namely, inventory, manufacturing, location, and transport. It forms the link between all supply chain operations and activities. As long as the link is sound (or information is precise, complete and delivered on time), supply chain players can all make sound decisions to aid their respective operations. This facilitates supply chain profitability maximization in general. This forms the principle of operations of free markets such as stock markets, whose supply chains share some common dynamics with other markets. Supply chains put the information they have to two uses: 1) coordination of everyday affinities linked to the remaining drivers’ functioning and, 2) planning and forecasting for anticipating and meeting upcoming demands (Hugos, 2003).
When the members of a given supply chain display readiness to team up and engage in information-sharing with each other, it becomes possible to coordinate the tasks of product introduction, development, and replenishment with the use of optimisation-based advanced scientific techniques. “Intelligence” makes information powerful; the subsequent frontier is its integration into every supply chain process element. Data-sharing constitutes a foundational SC integration step, enabling firms to enjoy POS (point-of-sales) visibility, in addition to information such as demand forecasts, shipment planning, inventory, and capacity. After achieving visibility, intelligence assists in: 1. Identifying when things go beyond control, necessitating colossal information synthesis for understanding trends and patterns. 2. Identifying means of resolving the scenario. 3. Creating reaction plans, and 4. Coordinating and synchronizing plans for every supply chain entity for ensuring they work harmoniously (Lee, 2002).
When cellphones and other such products take lesser time to get outdated than the time taken by supply chains to transfer them from the developmental stage to store shelves, manufacturers clearly fail unless their planning and supply chain function execution takes place at extreme speeds, flexibility, and precision. In these increasingly typical instances, one will find virtually no error margin for huge demand shifts and serious disruptions in the supply chain. Previous inflexible, sequential production resource planning instruments have, for long, been failing when it comes to SCM of any complexity or size (Chen & Hasan, 2008).
Over the last few decades, web-based shopping has been taking up a continuously annually-increasing share of American retail sales, a trend that has made it critical to pay attention to the e-commerce domain, where SCM approaches are devised and executed bearing in mind the needs of internet shoppers. For keeping pace with e-commerce’s growing retail sales share in America, SCM professionals have been pivoting for securing and maintaining limited essential warehouse space, meeting customer service needs, and employing emergent technology for increasing overall efficacy. Buyers’ growing preference for internet shopping has moved the customer service delivery quality burden away from physical stores to SCM professionals and practices. Both non-commercial and commercial buyers expect the purchases they make on the internet to arrive accurately, speedily and at economical prices. Hence, logistics professionals have been shouldering increasing responsibility to make sure the right product reaches it destination with optimal efficiency.
Implementation
Within the New Retail age, buyers enjoy more choices when it comes to products available and where they can be bought. Hence, the shopping medium is as significant as product choice and brand retailers ought to decide on their approach focusing on customer experience optimization and client interactions.
Amazon is the world’s biggest internet shopping company. Initially, it was only a web-based bookstore; however, currently, it encompasses a wide range of products including DVDs, Blu-ray, video games ,CDs, electronics, toys, furniture, jewelry, food, etc. It saves considerably on storage expenses through the integration of partner warehouses and Distribution Center inventories. Hence, Amazon does not need to maintain high inventory levels like other physical stores. With regard to its intercity transportation, the company has established a few transport hubs or injection points, situated in districts with high client concentration for saving costs. Orders are first integrated in distribution centers, followed by supply of long-haul shipment by truckload (TL) shippers or less than truckload (LTL) shippers, carrying the products between Distribution Centers and injection points. Considering the relatively low per mile cost for TL and LTL shippers, overall transport expenses may be saved (Yu, Wang, Zhong & Huang, 2016; Amazon.com Investor Relations, 2018).
According to analysts, the year 2012 was when warehousing finally gained recognition as a tool for competitiveness of multichannel e-businesses. Amazon.com most notably embodied the above milestone, achieving dramatic expansion of its distribution center and warehouse network for better competing against physical stores. The company even manages same-day delivery in certain areas. Its strategy and goal has always remained clear: becoming the e-business “Wal-Mart”. By no less than one key measure, the strategy has been effectively executed by the company. At first, it lost considerable sums of money owing to its investment in developing its supply chain for supporting the biggest internet gorilla. Wal-Mart’s best practices did not do much to help as they entailed pallet-based large-scale pick-pack-ship operations. Products enter Wal-Mart warehouses, are stored, and eventually picked up, packed and transported via truck, all on pallets. Amazon needed to be the best when it came to piece picking, packing, and shipping. While products may enter warehouses and get stored on Wal-Mart-like pallets, their picking, packing and shipping (via parcel) had to be as one unit only. With time, Amazon came up with a large share of its own related technology, facilitating its move from only selling those products stocked in its own warehouses to the merchandizing of products directly drop-shipped between supplier and client. This necessitated the development of advanced distributed order management systems for sourcing orders from company warehouses as well as several other warehouses and supplier manufacturing units (Lapide, 2013).
Challenges and future directions
The link between buyer loyalty and logistical performance is stronger for the e-commerce sector as compared to all other sectors. Though internet businesses are almost always characterized by small orders, their shipment is quite complicated, giving rise to a much larger logistics scope requirement and logistics service provided directly to end clients who invariably hold great expectations when it comes to logistics service quality. A large number of research works reveal that clients regard logistical performance as a key e-commerce factor, particularly last mile distribution service quality. Logistics model ought to concentrate on this aspect in the future. Firms like Amazon that have a sound self-support logistical division are able to provide superior quality logistics services to their clients, thereby enjoying high customer satisfaction rates. E-commerce logistics’ future development ought to consider classifying logistical service primarily on the basis of specific organizational situation (Yu, Wang, Zhong & Huang, 2016).
With business globalization, logistics model design increases considerably in its complexity. In the initial stage of logistics service provision, the firm may rent warehousing facilities and outsource transport as this strategy is most economical and favorable as regards sales performance. Taking into account the pros and cons of outsourcing and self-dependence, firms generally decide following trade-off. Financial status, informationization capability, sales volume, and management level are some factors that must be taken into account. Future technologies to support e-commerce include the following future perspectives: Cloud computing, IoT (Internet of Things), and Big Data Analytics. The aforementioned 3 technologies might be capable of upgrading and transforming e-commerce logistics for broader implementation, aiding big firms as well as small-to-mid-sized companies in deriving benefits from the current e-commerce age (Yu, Wang, Zhong & Huang, 2016).
Mike Duke, the Chief Executive Officer and President of Wal-Mart, has set down four strategies which will help build the Next-Gen Walmart. For becoming more global, the President discussed the necessity of sharing best practices, serving its clients in the form of a local store, and leveraging the organization’s supply chain at the global level. Furthermore, he underscored the significance of talent. Wal-Mart must recruit the top talents the labor market has to provide, besides identifying the top talents already employed with the company. The President further underscored the global-level challenges the retail sector is set to experience in the course of the subsequent two decades, including technology’s effect on pricing, particularly, and shopping habits, in general. In the near future, the retail sector will witness a price transparency age. Duke noted Wal-Mart’s necessity of churning the loop of productivity and delivering its business model of ‘Daily Low Price’ everywhere (Duke, 2010).
Meindl and Chopra (2010) state that Amazon's utilization of automated warehouses, drones and other such technologies, and its formidable presence on the internet has a forceful impact on the overall retail sector. However, simultaneously, the company’s Whole Foods purchase suggests it desires a tangible presence as well, with physical stores complementing its internet presence. Retail’s future is a set of channels; ‘omni-channel retail’ has become overly simplistic. All these channels are different and retailers must come up with the right channel feature to cater to their specific buyer segments. One must keep in mind the fact that retail doesn’t have a solely web-based future; physical stores have not lost their significance entirely. However, how the two above retail approaches are combined remains to be ascertained. Firms have been trying out a number of diverse business models in their attempt to ascertain what will work best for their particular organization (Chopra & Meindl, 2010; Balocco, Miragliotta, Perego & Tumino, 2011).
Conclusion
With e-commerce’s constant development, businesses’ supply chains have undergone dramatic changes, reflected increasingly in the e-commerce-based SCM. Sound e-commerce SCM is gaining increasing significance with growing customer expectations and production lines expanding outward, globally. SCM systems are aiding e-businesses in rising to the associated challenges through linking them to suppliers and clients worldwide and offering IT infrastructure that enables seamless digital communication between commercial partners.





References
Amazon.com Investor Relations (2018). Investor Relations. Retrieved May 19, 2018, from Amazon.com Investor Relations and Filings with the SEC: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-irhome&c=97664
Balocco, R., Miragliotta, G., Perego, A., & Tumino, A. (2011). RFID adoption in the FMCG supply chain: An interpretative framework. Supply Chain Management, 16(5), 299-315.
Chen, C., & Hasan, N. (2008). How to succeed with supply chain planning. Supply Chain Management Review, 30-36.
Chopra, S., & Meindl, P. (2010). Supply chain management: Strategy, planning and operation (4th ed.).Upper Saddle River, NJ: Prentice Hall
Duke, M. (2010). "Next generation Wal-Mart". Vital Speeches of the Day, 76(9), 425.
Hugos, M. (2003). Essentials of supply chain management. Hoboken, NJ: John Wiley & Sons.
Lapide, L. (2013). A tribute to the ever-evolving warehouse. Supply Chain Management Review, 17(2), 4-5.
Lee, H. L. (2002). Unleashing the power of intelligence. International Commerce Review: ECR Journal, 2(1), 61-73.
Shaojun, X. I. A. O., & Zhang, S. (n.d.) The Role of Supply-Chain Management in E-commerce.
Yu, Y., Wang, X., Zhong, R. Y., & Huang, G. Q. (2016). E-commerce logistics in supply chain management: Practice perspective. Procedia CIRP, 52, 179-185.