E-chain chuggin'

Electronic supply chain management has reached the halfway mark in terms of uptake, according to a study of 100 New Zealand and 200 Australian organisations.

"The Supply Chain Report," commissioned by IBM, found 50 percent of respondents across industrial, retail and wholesale sectors use the Internet or electronic business for supply-chain collaboration with customers and suppliers.

The most common uses were collaborative email (25 percent), taking orders from customers over the Internet (25 percent) and placing orders with suppliers over the Internet (23 percent).

Charles Agee, IBM Australia and New Zealand marketing manager, presented the report at Employers and Manufacturers' association meetings around the country last week. He says 42 percent of respondents cited "reduction of inventory levels/costs/minimisation of stock holdings" as the main benefit of supply-chain management, followed by "reduction of distribution costs" (26 percent) and "improved customer satisfaction" (23 percent).

The study says organisations also recognise the ability of supply chain to assist them in meeting long-term objectives, such as sales growth and development of new markets.

However, there are a number of critical elements in a successful e-business enabled supply chain. As a starting point, companies must learn to place a great amount of trust in business partners at all levels of the chain.

"Many organisations need to develop a level of trust with partners that will enable closer collaboration," says Agee. "We have a hands-off approach to suppliers and partners, which acts as a barrier toward electronic supply chain. However, I think these barriers will be broken down as benefits of supply chain are realised and as businesses start to see what their competitors are doing."

The e-business strategy developed must also define specific company needs, goals and obstacles that a supply chain management initiative is going to address in the short and long term; consult a large cross-section of business partners to determine their needs and long term strategies; get the involvement of managers who best understand the business issues; adapt business strategies to meet smaller business partners' needs; select a wide range of trusted business partners to participate in the pilot program, and analyse major competitors' strategies.

In advising organisations on how to implement an electronic supply chain solution, Agee says to remember that "e-business, especially as it relates to supply chain, is all about business".

"We're seeing two types of organisation today in how they implement supply chain technology. We still have a lot which are using it to reduce cost and drive efficiency, but that really is a basic tenet of being in business.

"I would say that the exponential benefit in e-business and supply chain is in using it to strategically align your business. Open up new business, find new customers and deliver new products to the right customers at the right place," says Agee.

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