E-Commerce in Transport & Logistics: Supply Chain Management - Coursework Example

E-Commerce in Transport & Logistics: Supply Chain Management Student Name: Student ID: Lecturer: Subject: Course: Due Date: Word Count: 2510 Table of contents Abstract E-commerce is the term used to describe any business on the Internet. It can also outline the electrical sites like Comet UK that trades in televisions or Amazon UK that trades in items such as books. The two are E-commerce web sites. Supply chain management is the running of a network of linked businesses involved in the eventual provision of commodities and services parcels required by end users. E-commerce has greatly affected the trend in all the activities in supply chain management. E-commerce has particularly improved the revenue realized by the shipping industry and has assisted the firm in the industry minimize their costs of operation. This report explains the impacts that e-commerce has in the shipping industry. It also describes the various areas in the supply chain management that e-commerce has enormously transformed. Introduction A production supply chain is described as the flow of physical goods and related information from the source to the end user. The main supply chain activities include production planning, purchasing, materials management, distribution, customer service and sales forecasting. These processes are significant to the success of any business activity concerning the producers, wholesalers and even the service providers. Electronic commerce and the Internet are essentially altering the nature of supply chains and re-describing how end-users view, choose, buy and use commodities and services. The consequence has been the emergence of new business-to-business supply chains that emphasize on the consumer rather than the product. They also offer customized commodities and services. Application of e-commerce has both the potential to complicate demand and supply operations and also the ability to manage the complicated transactions (Sriram & Ivancevich, 2001). E-commerce has thus affected both the efficiency and effectiveness of supply chain management in the following areas/ways: Cost efficiency E-commerce allows transportation firms of all sizes to exchange cargo records electronically through the Internet. E-commerce assists shippers, shipment forwarders and trucking companies to streamline records and documents handling without necessarily incurring the monetary and time expenses common with the traditional records and documents delivery systems. Through the use of e-commerce, firms can minimize costs, enhance data accuracy, streamline business transactions, enhance business cycles and improve service delivery. Ocean transporters and their collaborating partners can trade bill of lading instructions, shipment invoices, and the status of the transporting containers, motor carrier consignment instructions and other records with enhanced accuracy and efficiency by doing away with the need to re-view or re-format record. E-commerce in this case is the most effective method because the only tools required are a personal computer and Internet connection (Mrphy & Daley, 2002). Changes in the distribution system E-commerce offers an opportunity for business transactions to be executed in the most possible flexible manner. It allows flexibility in managing the complicated means in which commodities and information moves between businesses, their producers or manufacturers and the customers. E-commerce closes the gap between clients and distribution centers. Clients can manage the ever expanding complex movement of commodities and information through the system of supply chain (Halldorsson, Herbert & Tage, 2003). Customer orientation E-commerce is a significant connection in the sustenance of logistics and shipping services for both local and external clients. E-commerce allows organizations to deliver improved services to their clients, enhance the expansion of the growth of the e-commerce schemes that are vital to their businesses and minimize their operating costs. Clients are able to access information regarding the rates, consign delivery orders, track consignments and pay freight bills through the use of e-commerce which is supported by the Internet. E-commerce also allows clients to carry out trade with business companies. E-commerce simplifies the procedures of organizing transportation services and thus assists in creating companies’ businesses and improves the value of the share holder (Halldorsson, Herbert & Tage, 2003). By increasing the amount of information available concerning the commercial side of the organizations, business web sites are turned into a place where clients can get both detailed and complete information about the services the organizations can offer and also where and how they can execute business transactions with the firms (Kaushik & Cooper, 2000). In general, web site can offer universal, self-service program to clients. Shippers can request for any service and access any related information concerning transportation firms solely from the Internet. The effects of e-commerce are moving business organizations a significant step forward by offering clients a quicker and easier method of carrying out business transactions. Shipment tracking E-commerce enables the users to create an account and acquire real-time information concerning cargo shipments. They may also formulate and submit bills of lading, put a shipment order, evaluate charges, submit a luggage claim and perform several other functions. E-commerce in addition assists clients to track consignments down to the specific commodities and carry out several other functions concerning supply chain management and decision support services (Lavassani et al., 2008). Shipping notice E-commerce can assist in automating the receiving process by electronically conveying a packing list ahead of the consignment. It also assists organizations to record significant details of every pallet, package and item being transported. Freight auditing E-commerce ensures that every freight bill is efficiently and effectively evaluated for accuracy. The consequence is a greatly minimized risk of overpayment and the removal of countless time of paperwork, or the demand for a third-party auditing companies. By intercepting second copy billings as well as wrong charges, a considerable percent of transportation expenses will be recovered. In addition, shipper comparisons and assignments assists for immediate access to a database composed of the most recent, discounts and allowances for most of the significant major shippers, therefore removing the requirement for unwieldy graphs and tables. Shipping Documentation and Labeling E-commerce reduces the need for manual assessment and evaluation of shipment transactions because standard bills of lading, carrying labels, and transport manifests can be created automatically. This also includes the exceptional export documentation needed by the overseas carriers. Paperwork is considerably minimized and the transport department will thus be more effective and efficient. Online shipping inquiry E-commerce allows for immediate transport information to be accessed by everyone in the firm from any location at any time. Parcel shipments can be tracked and a verification of delivery be confirmed. A client’s transportation expenses and performance can be evaluated, therefore enabling the client bargain for rates to improve service. In addition to the effect e-commerce has on the above explained areas it has great impact on the performance of supply chains. E-commerce affects the performance of supply chains both in terms of revenues and also costs to a firm. Revenue Impact of E-commerce E-commerce enables business organizations to increase revenues by direct sales to clients. Manufacturers, producers and other affiliates of the supply chain that lack direct contact or link to the clients in traditional retail channels can utilize the Internet to reduce the supply chain by avoiding the retailers and selling direct to the end users. A good example is where a firm like Toshiba sells laptops online direct to the customers. Due to that the firm will get higher margins than traditional laptop manufactures that shares the profits from sale of laptops with the retailers. In this case, the retailer will be placed in a weaker position to capitalize on this chance from e-business than other affiliates of the supply chain. For instance, operating through the Internet would benefit an airline more than a transport agent. Flexibility on price, product portfolio and promotions Availing on-line commodities and other information in the supply chain permits y on price, commodity portfolio and promotions. The Internet allows the information which is centrally located mainly at the manufacturers web serve accessible by anyone interested provided that they have access to the Internet access. Alterations in price, commodity portfolio or promotions only need a single database entry and the change is effected. This is opposed to the traditional mail order firms where new catalogs have to be sent to all the clients indicating the alterations in either price or commodity. The firm only needs to update the new changes on the web site for the clients to view. This permits vibrant revenue management in which prices show the real demand and inventory positions in a similar manner to airline yield management. For instance, a shipping company may use the Internet to change prices on cargo transportation and delivery times for different commodities. These will of course be based on demand and availability of the appropriate services (Lucking-Reiley & Spulber, 2001). Faster time to market On-line commodity information permits a quicker time to market as the commodity will be launched as soon as the first unit is produced and is available for sale. This is principally valuable in production firms with short product life cycles. In this case, e-commerce offers an advantage over a manual commodity information model (Leyland, 2003). A new product launched in the traditional model calls for a sizeable volume of new commodity to be manufactured and distributed to fill the physical channels. A computer manufacturing firm like Toshiba will easily introduce a new product to the market as soon as the first unit is ready and available. In the shipping industry, a firm will launch a new service to its clients as soon as all the arrangements for the offering of the new service are available (Halldorsson, Herbert & Tage, 2003). Information aggregation and presenting a wider product portfolio The Internet permits information aggregation and presentation of a wider commodity portfolio from several sources to promote revenue. For instance, Yahoo! Shopping offers commodity details from a higher number of retailers and promotes revenues for all by drawing clients because they have higher chances of getting the commodity they are looking for (Chaudhury et al., 2002). Physical retail supply chains can collect commodity availability details across all the shops on the Internet to satisfy clients by referring them to the suitable location. As opposed to direct sales and the removal of the middle man it has become necessary to establish hubs or portals to connect clients to other firms and their commodities. This develops shopping and satisfaction through one-stop and the hosting firm can get revenues by charging advertisement and commission fee (Lavassani et al, 2008). Price and service customization E-commerce assists in price and service customization through price and contract bargaining. By considering individual opinions, the commodity or service may be modified and priced appropriately. Maintaining client profiles and making them log-in assists in such price and service discrimination by permitting subsequent client specific routing. Personalizing the buying experience for each client is hard in a physical shop where the shop layout cannot be altered for every specific client. Information from the log in data can be used to establish price discrimination and change prices depending on individual clients to increase revenue (Mentzer, 2001). Global Access E-commerce promotes revenue growth by drawing clients who are unable to make orders in the course of the normal working hours. These clients can place their orders at any time regardless of where they are located. For instance, clients can purchase products and order for shipment even when the pick up time for orders in the shipping firms are closed. Clients for the industrial supplier Graigner stores can make their orders even after closer time for pick up orders. E-commerce also enables a small specialty store dealing with a unique product to serve a large client base irrespective of their location (Tan et al, 2000). Under the same, e-commerce promotes revenues by quickening the collection of funds. Funds can be collected faster through the Internet as compared to physical means (Chan, 2004). Cost Impact of E-business In designing and operating supply chain flows it is stated that the effect of e-commerce on supply chain expenses is best understood by taking into account the four drivers of supply chain performance (NECC, 2001). Facility costs Facility expenses which include site and processing costs can be minimized through e-commerce because it allows the differentiation of order placement and order compliance. Site expenses can reduce as direct client-manufacturer contact and geographical centralization removes or minimizes retail sites. For instance, Amazon supplies its clients from a few warehouses while firms like Borders and Barnes and Noble have to sustain facility expenses for all their retail shops (Lambert, 2008). An e-commerce can minimize processing expenses if they can raise the amount of client participation. For instance, clients buying from L.L. Bean the carry out all their duties of choosing the commodities, making an order and paying. This is contradiction to a call center where a worker is involved in the order transaction. In some cases e-commerce may be faced by greater processing costs because they have to carry out all the tasks carried out by the end users at the retail shops. By differentiating compliance from order placement, an on-line business can facilitate the order fulfillment rate. This minimizes the peak load for compliance with the order and as a consequence the requirements and expenses are reduced. A direct sales producer can minimize handling expenses because less supply chain steps are involved in the commodity flow to the client (Lambert, 2008). Inventory costs E-commerce assists in centralization of inventories because the inventories do not need to be necessarily carried to the client. This geographical centralization minimizes the necessary inventory levels because of enhanced aggregated unpredictability in the demand. In some cases, e-businesses can minimize inventories by delaying commodity differentiation until after the client order has been made provided that time lag between the time the on-line order is made and filled (Electronic Data Interchange, 2002). Delaying assembly or commodity differentiation enables an organization to ‘assemble to order’ modified commodities from usual components. Conceptually, delaying commodity differentiation reduces the supply procedures that operate in drag mode that is, after a specific order has been made. A significant advantage of e-business is that by differentiating ordering from fulfillment, enhanced flexibility in performing its operations is achieved by implementing the delays (Bakos, 2003). Transportation costs Inbound and outbound transportation should be distinguished. A firm sustains inbound transportation expenses to draw replacement order in from the producers while it sustains outbound transportation expenses to deliver the commodity to the client. Generally, replacing orders has a lower unit transportation expenses than client order due to economies of scale (Simchi-Levi, Kaminsky, & Simchi-Levi, 2007). Physical centralization enhances the distance moved by a client order, while minimizing the distance moved by a replenishment order. Therefore, compared to a business organization with many physical outlets an e-business with will most likely incur higher transportation expenses per unit. It is evident that transportation expenses are removed for downloaded information products (Haag, 2006). Supply chain coordination E-commerce allows the sharing of demand and other relevant information including inventory positions across the supply chain to diminish the bullwhip effect and enhance co-ordination. Sharing management and forecasting information further enhances coordination and minimizes overall supply chain expenses while improving the matching of demand and supply. Information processing expenses are also likely to lower in an e-business when compared to a traditionally oriented firm (Haag, 2006). Conclusion E-commerce affects many aspects of a business especially the supply chain management. It increases the revenue of an organization and minimizes the operational expenses of a business. An e-business benefits from on-line transactions by capitalizing on all the potential revenue chances of an organization. A business firm that emphasizes on centralization considerably minimizes facility costs as well as site expenses. Centralization brings about reasonable inventory benefits. This is likely to be the trend where the firm enjoys appropriate economies of scale or for new commodities or low-volume high variety commodities which have huge demand improbability and benefit mainly from statistical aggregation. The supply chains are able to delay or postpone processes to and after a client have placed an order through e-commerce. Commodity differentiation can be delayed through e-commerce (Miller, 2002). Outbound transportation expenses to the client are minimized and only form an insignificant fraction of total commodity expenses. E-commerce is therefore a significant contributor to supply chain management due to its ability to shorten business processes thus saving on time and other resources (Halldorsson et al., 2007). 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