Go Online or Go Bust: Why Smart Businesses Are Adopting e-SCM
March 30, 2016

Sweeping changes in the way customers look for and buy products are forcing organizations to sit up and review their business model. Emerging technologies such as mobile and social are changing the way customers talk and the way they shop. Given that more than 40 percent of the world’s population has access to the Internet, and more than four billion Google searches are conducted every day*, organizations are in a big hurry to take their business online. The explosion of e-commerce in recent years has underlined a simple business fact: go online or go bust.

Ripple effect

E-commerce has had a ripple effect on two related business processes—procurement and collaboration—transforming the key area of Supply Chain Management (SCM).

SCM is a process where suppliers collaborate with retailers to provide best prices and high value by way of goods/services to end customers. Traditional SCM is a slow information loop. The advent of digital has disrupted this system by giving customers the power of instant information on competitive products, prices and availability. Businesses today are competing to woo customers who are spoilt for choice. As the customer demands change and expectations soar, companies are scrambling to be the first to satisfy them and win their loyalty.

The e-commerce-e-SCM nexus

e-SCM is a natural corollary of brick-and-mortar businesses moving online to e-commerce platforms. The relationship between e-commerce, e-procurement and e-collaboration is a complex and interdependent one. E-procurement deals with backend operations with suppliers, procuring materials and value added services such as warehousing, inventory management, payments and distribution. E-collaboration platforms enable communication and strengthen relationships between suppliers, vendors and retailers that ensure long-term sustainability of supply. E-commerce, on the other hand, is the front end of the business, the customer-facing aspect that uses technology to deliver a convenient and pleasant buying experience.

Typically, e-procurement feeds e-collaboration, which in turn acts as a driver of e-commerce. Each of these components needs to work together like a well-oiled machine to deliver exactly what the customer ordered.

Win-win situation

The answer to ensuring that all the three levers of e-procurement, e-collaboration and e-commerce work together seamlessly is having an integrated e-SCM system. e-SCM drives efficiency in procurement, manufacturing, and harnesses the power of data for mass customization. e-SCM assumes critical importance both from an organizational and brand perspective in today’s connected world. It can minimize variance in production and supply, optimize inventory and logistics, and provide visibility into the entire movement and flow of goods down the line. It integrates data from geographically dispersed suppliers, carriers and retailers in real-time enabling swift access to information, driving better business decisions, and higher revenues. For customers, the company that delivers on its promise, offers customization, and is easy to interact with earns their loyalty and wallet share. As such, e-SCM ensures a win-win situation for all stakeholders—vendors, partners and carriers get more business; and customers, higher satisfaction.

How does e-SCM help e-businesses?

  • Information Organization: Digital systems such as SAP help identify relevant planning parameters on the basis of time-series data. This reduces ambiguity in the procurement process.
  • Planning, Scheduling and Forecasting: With reams of data (demand, capacity plans, production schedules, macroeconomic factors etc.) available a click away, vendors can use web-based analytics tools to forecast and plan for short and long term. Live modeling and collaborative interaction tools foster ongoing communication, enabling faster decision making for production and inventory optimization.
  • Workflow Management: Effective liaising between employees and vendors and suppliers can ensure tight control on costs, time and accuracy of orders. Thus, e-collaboration becomes easier through workflow management tools.
  • Customer Relationship Management: CRM platforms integrated with delivery modules enable real-time customer feedback and pre-empt issues. This makes for open, transparent and responsive e-commerce transactions, building customer trust.

e-SCM, leveraging real-time data, can help businesses unlock value from e-commerce by optimizing procurement and manufacture, and customizing delivery.