E.Commerce
Version: April 26, 2000
WHICH E-BUSINESS IS RIGHT FOR YOUR SUPPLY CHAIN? by Sunil Chopra and Jan A. Van Mieghem (Forthcoming in Supply Chain Management Review)
The Internet is revolutionizing the way companies conduct business. Or is it? We argue that the value of the Internet for a firm is strongly dependent on the firm’s industry and on the strategy it pursues. A survey of firms with an online presence displays wide disparities in performance. While Dell has successfully used the Internet to boost revenues and earnings, Amazon lost $585 million on revenues of $1.6 billion in 1999. Firms that fully exploit the revenue enhancements and cost reduction opportunities offered by the Internet and optimally integrate e-business with existing channels are likely to be the big winners in the Internet age.
A Strategic Framework to Evaluate Supply Chain Opportunities from E-business The framework starts from the premise that supply chain decisions must be evaluated in a strategic context based on the answers to the following three questions: 1. 2. 3. What is your firm's desired strategic position? Given your the firm's strategic position, what supply chain capabilities are needed to support the strategy? Given the desired supply chain capabilities, how should the supply chain be structured?
The Role of E-business in a Supply Chain E-business involves the execution of business transactions over the Internet. Companies conducting ebusiness perform some or all of the following activities over the Internet across the supply chain: • • • • • • Providing product and other information Negotiating prices and contracts Placing and receiving orders Tracking orders Filling and delivering orders Paying and receiving payment. The goal is to create fit between the desired strategic position of the firm and the capabilities of supply chain processes used to satisfy customer needs (Porter 1996). The desired strategic position may be articulated in terms of a clear priority
WHICH E-BUSINESS IS RIGHT FOR YOUR SUPPLY CHAIN? by Sunil Chopra and Jan A. Van Mieghem (Forthcoming in Supply Chain Management Review)
The Internet is revolutionizing the way companies conduct business. Or is it? We argue that the value of the Internet for a firm is strongly dependent on the firm’s industry and on the strategy it pursues. A survey of firms with an online presence displays wide disparities in performance. While Dell has successfully used the Internet to boost revenues and earnings, Amazon lost $585 million on revenues of $1.6 billion in 1999. Firms that fully exploit the revenue enhancements and cost reduction opportunities offered by the Internet and optimally integrate e-business with existing channels are likely to be the big winners in the Internet age.
A Strategic Framework to Evaluate Supply Chain Opportunities from E-business The framework starts from the premise that supply chain decisions must be evaluated in a strategic context based on the answers to the following three questions: 1. 2. 3. What is your firm's desired strategic position? Given your the firm's strategic position, what supply chain capabilities are needed to support the strategy? Given the desired supply chain capabilities, how should the supply chain be structured?
The Role of E-business in a Supply Chain E-business involves the execution of business transactions over the Internet. Companies conducting ebusiness perform some or all of the following activities over the Internet across the supply chain: • • • • • • Providing product and other information Negotiating prices and contracts Placing and receiving orders Tracking orders Filling and delivering orders Paying and receiving payment. The goal is to create fit between the desired strategic position of the firm and the capabilities of supply chain processes used to satisfy customer needs (Porter 1996). The desired strategic position may be articulated in terms of a clear priority