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Electronic Commerce: Is This the Future State of The Supply Chain?


Jeffrey Carr
Jeffrey Carr, Partner, Transportation and Logisics Group, Ernst & Young LLP.

82nd Annual International Conference Proceedings - 1997 

Understanding Electronic Commerce(EC) Is Critical To Assessing It's Impact On the Supply Chain. Electronic Commerce is defined as conducting or enabling the buying and selling of goods or services through electronic networks, including the Internet.

All facets of the Supply Chain are impacted by the use of Electronic Commerce. Our presentation will briefly define the key terms and will describe several examples of Electronic Commerce.

Four Overriding Electronic Commerce Tenets

  1. EC is not just a single technology or tool.
  2. It cannot be accomplished by any single enterprise working alone.
  3. Electronic commerce systems and procedures must be consistent with power structures.
  4. The EC channel introduces a new customer-supplier relationship.

Electronic Commerce Creates A Threefold Motivation For Business

  • Technology enabled business improvements. We will see rapid changes and re-organizations in response to competition. The "one-call" concept now popular in the chemical industry will require major restructuring of customer service, Logistics and Marketing to ensure complete and accurate control of each supply chain.
  • New sales and marketing channels. Direct ordering via electronic means requires new skills in customer reaction, order fulfillment, payment means and warrantee
  • New information based products, services and applications. A new fast-growing industry in information collection, sorting and distribution has lead to mergers in previously unrelated industries. TV stations merging with magazine companies merging with film libraries to provide total saturation of a media business. Banks are entering new financial markets and telephone companies will merge with cable operators.

Understanding Electronic Commerce. The drivers or enablers are a new connectivity infrastructure and process-specific applications that will result in:

  • Dematerialization: The reduction of fixed assets involved in selling.
  • Disintermediation: The reduction or elimination of middlemen in the sales process.
  • Electronic Affinity Groups: Formation within industries of companies needed like products or inter-industry groups, including buyers and sellers forming new electronic markets.

The ValueWebSM is a EC Marketplace designed to facilitate electronic commerce between companies worldwide.

The focus is a particular products or services in Affinity Groups.

An Example is PetroWebTM formed for the Petroleum industry. This new marketplace includes parts and other MRO items frequently used and requiring fast response.

Additional ValueWebs are envisioned for Utilities, Transportation, Telecommunications, Manufacturing, Health Care, Insurance and Automotive industries.

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