Role of E-Business in the Global Supply Chain

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E-business, also called e-commerce, refers to the set of electronic tools and processes businesses use to provide superior customer service, reduce costs, shorten lead times and improve the availability of information. The benefits of deploying e-business ultimately lead to increased sales and profitability. For this reason more companies each year develop and expand their capabilities in this area.

Superior Customer Service

  • Companies can improve the quality and efficiency of serving customers through the deployment of e-business tools and processes. An example of this is the provision of websites for use by customers to shop, order and track their purchases online. In 1970 it was common for consumers to shop by catalog, phone in their order to a customer service representative and then wait for their order to arrive, at which point they would pay for the product. Today, customers can shop at any time and from any location by accessing the World Wide Web. Detailed specifications for products are offered online along with user reviews to provide consumers with the capability to make educated purchasing decisions, and orders and payments are processed online at the time of purchase. Additionally, order confirmation is provided to the buyer upon completion of payment along with an estimated delivery date, and tracking information is provided by most shippers so the buyer knows exactly when product will be delivered.

Reduce Costs

  • The contrast between the supply chain flow of 1970 and today demonstrates how cost has been removed by automating processes. A portion of the customer service staff has been replaced by the online order processing, while the number of customer phone calls inquiring about order status has been reduced by providing automated order confirmation and tracking information. Additionally, the cost to collect payments has been reduced by processing payments online.

Shorten Lead Time

  • In 1970, the total process time required to order a product could often take as long as 10 to 12 weeks. The time for a consumer to request and receive a catalog, make purchasing decisions and then place orders could take as much as six weeks. Combine that with similarly long lead times for manufacturers and distributors to process orders, package, ship and deliver, and you have a supply chain that is slow and unresponsive.

    Today's lead times have been reduced dramatically through the use of e-business tools and processes. Consumers can identify and research multiple purchase alternatives in minutes instead of weeks, and order receipt is instantaneous for the seller. Product availability is generally known at the time of purchase and shipping time is more narrowly defined and tracked. Each of these factors reduces a 12 week lead time to less than two weeks in many cases.

Improve Communication and Availability of Information

  • Another facet of e-business benefits is improved communication and availability of information, as a wide variety of automated tools are intended to proactively answer questions the customer may have. The ability to quickly compare product options and costs from multiple manufacturers allows educated decision making before the purchase, leading to fewer customer returns. Providing customers with the ability to track order status and estimated shipping dates allows the customer to plan their life or operation accordingly. Additionally, multilingual websites allow buyers to research products and place orders without facing language barriers.

  • Photo Credit Ryan McVay/Photodisc/Getty Images
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