E-Business and Supply Chain Integration

ebusinessE-Business and Supply Chain Integration

Hau L. Lee and Seungjin Whang

Stanford University

Abstract

E-business— the use of Internet-based computing and communications
to execute both front-end and back-end business processes — has
emerged as a key enabler to drive supply chain integration. Businesses
can use the Internet to gain global visibility across their extended network
of trading partners and help them respond quickly to a range of variables,
from customer demand to resource shortages. This paper examines the
impact of e-business on supply chain integration on four critical
dimensions: information integration, synchronized planning, coordinated
workflow, and new business models. By adopting e-business
approaches businesses can reap the benefits of supply chain integration
— reduced costs, increased flexibility, faster response times — more
rapidly and effectively.

Introduction

Over the past decade a combination of economic, technology and
market forces has compelled companies to examine and reinvent
their supply chain strategies. Some of these forces include the
globalization of businesses, the proliferation of product variety,
increasing complexity of supply networks, and the shortening of
the product life cycles. To stay competitive, enlightened
companies have strived to achieve greater coordination and
collaboration among supply chain partners in an approach called
“supply chain integration.”

Information technology, and in particular, the Internet, play a key
role in furthering the goals of supply chain integration. While the
most visible manifestation of the Internet has been in the
emergence of electronic commerce as a new retail channel, it is
likely that the Internet will have an even more profound impact on
business-to-business interaction, especially in the area of supply
chain integration. The Internet can redefine how back-end
operations — product design and development, procurement,
production, inventory, distribution, after-sales service support, and
even marketing — are conducted, and in the process alter the
roles and relationships of various parties, fostering new supply
networks, services and business models.

E-Business and Supply Chain Integration

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