Posted: September 4th, 2013
Web-Based Supply Chain Paper
Web-Based Supply Chain Paper
In the modern world where technology has greatly advanced, and with globalization, competition has increased as well as the complexity of supply chain management. Therefore, integration of information is important to enhance supply chain management, whose critical success factor is communication to all the parties involved. Considering that supply chain is the network of various units in a business such as suppliers, distributors, and retailers where raw materials are processed and taken to the end user, the critical factor for any business is connecting these units together and ensuring timely informed decision. Therefore, information technology comes in to help with this. Hence, a web-based supply chain aims to ensure easy management of information (Ngai, Cheng & Ho, 2004).
Purpose of Web-based Supply Chain
Web-based supply chain is the use of the internet in supply chain management, where all the supply chain management activities are integrated as well as the network of the suppliers, factories, warehouses and the distribution centers as well as the retail centers (Tan, Shaw, & Fulkerson, 2000). Through this integration, the process of logistics is managed from one point, making it faster and flexible, as well as easy to coordinate the company and its suppliers and customers within the supply chain. The Web-based supply chain has managed to transform operation from electronic data interchange systems, EDI, as well as enterprise resource planning systems, ERP, into internet or intranet to support supply chain management. Its main purpose is integrating the supply chain management operations together for faster, flexible and easy coordination across the whole process from production to reaching the end user (Ngai, Cheng & Ho, 2004). It facilitates the sharing of information across the key parties involved, thus, improving information sharing for efficient supply chain management.
How Web-based Supply Chain Works
Traditionally, the different units of a supply chain operated independently with each having its own objectives and goals to fulfill. The new supply chain management requires integration of all units in order to make the whole process. The main thing to integrate the whole process is a flow of information across all the units to ensure informed decision. For this, internet is required, and it contains three components, the Outlet Monitor System, OMS, central Control System, CCS, and the Supplier Management System, SMS (Caso, 2005).
The OMS is the actual place where the sales to customers are made. The OMS is responsible for keeping track of the inventories or stocks in the various outlets. The tracking is done at certain intervals of time. This is done through communicating with the CCS to submit information to relay the current standings of the present inventory. The OMS does this by keeping a record of each product sold to customers every time the purchase is made. After a purchase, the purchased items are recorded in the computer, and the OMS is updating all the time. At certain intervals, it sends this information to the CCS. Therefore, each time an item is purchased it is marked as out of the store, thus, the inventory keeps updating (Caso, 2005).
On the other hand, the SMS is where the supplier caters for delivery of the raw materials. The supplier responds to the requests of the CCS, which sends information to the supplier after it receives information from the OMS to know the amount of goods required at the outlets. After receiving the information, the SMS dispatches more inventory to the outlets. It processes the requests and knows the amount of products to send to which outlets. It is also responsible for determining the mode of distribution to be used to the various outlets (Caso, 2005).
The CCS, on the other hand, is at the center of the other components and is responsible for monitoring, controlling, and processing information from the other components. It manages the OMS and the SMS. It processes the information from the various OMSs and sends in requests to the SMS in order to send more inventories to the various outlets. For instance, after learning the demanded quantity of a certain product, it sends in the request to the SMS, which then processes the request and dispatches the inventories. It is responsible for determining the amount of inventory to be sent, lead-time, and the threshold level. Therefore, by processing information from the other components, it can be able to compile some statistical data such as which outlets are performing well, what products are selling more, locations of the production points among others (Caso, 2005).
Users of Web-based Supply Chain
The users of web-based supply chain are the companies, suppliers, retailers, and distributors, with an aim of reaching the customers easily. Companies use it for managing their supply chain in production up to the customer, while suppliers will use it for their logistics to various customers, who are companies. The retailers use it for managing their inventories, and sales as well as deliveries to customers.
Examples of Web-based Websites
An example of a web-based supply chain is the Wal-Mart website, walmart.com. The website does some sales to customers. There is a CCS responsible for monitoring the website, which is an outlet for the supermarket. The CCS monitors the sales that are being made through the website. It sends the information to the SMS, indicating where the goods should be taken. In this case, the goods are delivered to the customers directly, rather than customer picking them up at the stores. Therefore, the purchases that customers make are recorded by the OMS that states where the customers are located as well as what they have purchased and sends this to the CCS. Another example of a web-based supply chain is the Amazon website that specializes in selling of books and entertainment products such as movies. When customers log on to their site, they can select items and the OMS, which is the website takes up the details of the purchase and sends in to the CCS that processes the purchase and sends information to the SMS, stating the product to be supplied to the customer. In this case, the OMS does not record the product bought, but states the product a customer wishes to purchase. SMS dispatches the product to the customer. Another example of a web-based supply chain following this basic format is the apple website owned by Apple Company. The website sells the products through the website, and customers can choose home delivery plans or pick them from the retail stores. Therefore, the OMS takes information on the selected products and sends it to the CCS. The CCS processes the requests and sends the information to the SMS that avails them in the retail centers or delivers to customers (Completepulse, 2009).
This is how the Web-based supply chain management works to enhance the whole process, thus, there is very little time wastage, and decisions are timely making it quite efficient, and through the different components, it is able to achieve efficiency. Through web-based supply chain, companies are able to make immediate decisions as well as to monitor their logistics, which would otherwise be quite hard considering the size of many companies and the amount of supplies they have to deal with.
Caso, B. (2005). Web based Supply Chain Management System. Retrieved from http://www.inf.utfsm.cl/~visconti/ili236/Documentos/CasoB.pdf
Completepulse. (2009). Top 25 Retail Sites. Retrieved from http://blog.compete.com/2009/09/17/top-25-retail-sites-july/
Ngai, E.W.T., Cheng, T.C.E. & Ho, S.S.M. (2004). Critical Success Factors of Web-based Supply Chain Management Systems: An Exploratory Study. Hong Kong Polytechnic University.
Tan, W.G., Shaw, M.J. & Fulkerson. (2000). Web-based Supply Chain Management. Information Systems Frontiers, 2 (1): 41-55.
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