Chat with us, powered by LiveChat ECOM 402 SEU E Supply Chain Management Case Study | Gen Paper
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Deryn Graham
University of Greenwich, UK
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This chapter provides an introduction to the E-Logistics and the E-Supply Chain Management paradigm.
It presents definitions and an overview of Logistics and Supply Chain Management, and the logistics
processes of the Supply Chain.
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Logistics and Supply Chain Management has been
a vital part of every economy and every business
entity. Supply Chain Management (SCM) encompasses the management (including the planning,
design, implementation and control) of all of
the logistics processes (including procurement,
warehousing, inventory control, manufacturing,
distribution and sales order fulfillment functions)
of a business. Both sciences have become prestigious research fields in the past few years. More
than 75 journals include these terms in their titles
(Folinas, 2012).
The objectives of this chapter are to define
and provide an overview of concepts and terms,
namely; Logistics, Supply Chain Management,
E-Logistics and E-Supply Chain Management
(E-SCM). The chapter describes the logistic
processes of Supply Chain Management, the
relationships between Information Technology
(IT), and resulting trends such as greater Supply
Chain Integration and Collaboration.
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The field of Logistics has existed for some considerable time, defined as: “1. The science of
the movement of supplying and maintenance of
military forces in the field; 2. the management of
materials flow through an organization, from raw
materials flow through to finished goods; 3. the
detailed planning and organization of any large
complex operation” (Collins, 1990, p. 903). This
DOI: 10.4018/978-1-4666-3914-0.ch001
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definition is indicative of the age and military
origins of the term, the latter two definitions are
more appropriate to modern business. The second
definition describes supply chain management,
minus the important references to information
and information flow.
Whilst the field of Logistics has been in existence for some considerable time, with strong
military associations, the concepts of E-Logistics
and E-Supply Chain Management are relatively
new. In the early days, logistics was considered
not to make much of a contribution to profitability and given little capital investment, process
and delivery cycle times were long and global
competition virtually none existent.
Beginning with the early days of production
systems, the history of production systems has
moved on from the limitations of production and
supply famously coined by Henry Ford: “Any
customer can have any car painted any colour that
he wants, so long as it is black”. Kiichiro Toyota,
founder of Toyota, started with the production
of 20,000 vehicles a year, a very far cry from the
production figure at the Ford plants. Identifying
that in order to best raise efficiency levels when
starting out from limited production volumes, it
would be necessary to eliminate stockpiling in the
production process, and to achieve this it would
be necessary to ensure the Just-In-Time (JIT) supply of parts to all segments of the manufacturing
process. Thereby, reducing stockpiling and the
need for warehousing of parts, driving out waste,
etc. JIT was developed by the Japanese and first
used for Toyota. With JIT, supplies and components are “pulled” though the system when and
where needed.
Manufacturing processes can involve push or
pull production systems. Push is based on sales
forecasts which in turn push products into the
warehouse, this is also known as “make to stock”
and is based on an estimate of how many products might sell. Production of parts pushes the
production of the end product. Conversely, Pull
systems (the opposite of push), is when a product

is made only when a customer order arrives. It is
based on actual demand in the market, and is also
known as “make to order”. In this case, demand
for parts pulls the manufacturing of parts for the
end product.
The Push system is not used much as it requires
companies to hold massive amounts of stock which
will increase warehouse inventory costs. Holding
stock will also cause other problems such as stock
obtaining defects due to long periods of being on
the shelf, this could lead to problems further in
the supply chain as damaged stock could be used
in production which will produce a bad quality
product and the whole production process will
have to stop until fixed.
Pull is the most used in mass production with
reduced warehouse costs as well as less inventory
being held (material is only needed when orders
come in). An example is Dell computers, which
makes computers to order (specification) when
ordered. Pull systems produce products with a
short lead time, the time between receiving and
delivering the order.
The concept of Lean Management also originated at Toyota in Japan. Lean Management provides a competitive edge by eliminating waste, with
the aim that every step adds value to the process.
A Supply Chain is the chain of activities from
the raw materials to the customer, a classic supply
chain description is: “Farm to Fork”. A typical supply chain involves activities such as sourcing the
raw materials, transporting the raw materials for
processing, transporting the processed goods for
warehousing, before transporting the goods again
for packaging, packaging the goods, transporting
the packaged goods to a central distributor, before
finally transporting the finished goods to local
retail outlets and ultimately customers.
A Supply Chain can be defined as the sequence
of an organisation. The sequence refers to the facilities (warehouses, factories, processing centres,
distribution centres, retail outlets and offices), and
functions and activities (purchasing, forecasting,
inventory management, information management,
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quality assurance, scheduling, production, distribution, delivery, transport, supplier management,
and customer management).
Supply Chain Management development can
be traced back to the use of modern logistics
(circa 1980s). Supply Chain Management relates
to an organisation’s operations, involving the optimisation of material and information flows for
that organisation. This management is achieved
through the use of business applications software,
such as Enterprise Resource Planning (ERP)
systems for example.
The two kinds of movement in the supply chain
are material and information flows. Material flow
is the flow of materials from suppliers to customers, via manufacturers, assemblers and distributors. Information flow is bidirectional throughout
the supply chain. The information flow is equally
important to the material flow and is enhanced
by the use of IT to gather customer demand information for instance to upstream supply chain
functions and subsequently pull (demand-driven)
supply chain operations.
Information Technology (IT) encompasses
software (applications), hardware (including computers, scanners, etc.), firmware and middleware,
as well as the network infrastructures (internet,
intranet, etc.), platforms and operating systems,
and the World Wide Web (WWW). The Internet
refers to the physical network (infrastructure),
connecting computers across the globe, using
WAN (Wireless or Wide Area Networks). The
Intranet is the internal network connecting computers within an organisation, using Local Area
Networks, or LANs. There is also the Extranet
which is a network that uses the Internet to link
multiple Intranets. The World Wide Web (WWW)
is essentially the main technique for publishing
information on the Internet, displayed on web
pages and accessed via (Web) browsers.
The objectives of supply chain management are
to get the right products, in the right quantities, to
the right place, and at the right time, at a minimal
cost. The primary goal is to eradicate waste of all
forms, where supply chain entities touch, such
as logistics, inventory, procurement, customer
management, product development and financial
functions. A second goal is to abandon vertical
integration (vertical integration is expanded
upon later), divesting non profitable functions,
and collaborating with supply chain partners.
Thirdly, there is the explosion of global trade,
internet technologies and international logistics.
The internet has opened up markets to the smallest of companies, allowing them to have a web
and therefore a market presence. Fourthly, today’s
market place requires companies to be agile and
efficient with shorter times frames for services,
product mixes and volume and variety changes,
leading to the spawning of virtual organisations,
for example Amazon. Finally, applying the technologies; tools centred on the Internet for competitive advantage, thus transforming all functions
of SCM to the Web and in addition, the Cloud,
thereby generating new sources of competitive
advantage through cyber collaboration, enabling
joint product innovation, on-line buying, markets,
network planning, operations management, and
customer fulfillment.
The elements of SCM are:
•
•
•
•
•
Demand
Production
Procurement
Distribution
Fulfillment
Logistics is a primary activity in the Value
Chain.
There are conflicting objectives between
companies in the supply chain; rapid response
to the market, minimum variance between products, minimum inventory, the aim for quality
(Total Quality Management [TQM]), and product

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lifecycle support (reverse logistics – working
backwards to improve logistic processes in the
product lifecycle).
Within each company in the supply chain
there are also conflicting objectives: Marketing
objectives include the rapid introduction of new
products, new products requiring short (but usually
unknown product lifecycles), and the provision of
a high variety of products. There can be problems
with raw materials procurement, difficulties in
forecasting quantities to be ordered and increasing
transportation costs. There can also be production
problems, with long production lead times and
high production costs.
These conflicting objectives have led to a
drive towards supply chain integration. There is
a common belief that managing the entire supply
chain as a single entity can significantly improve
cost and service performance. Integration is the
process by which parts of a whole become more
connected so that they are in effect less “part” and
more “whole,” i.e., such that functions formerly
carried out by one part are carried out by others,
and usually vice-versa. Supply chain integration
is the process of transformation or “rationalisation” of the supply chain by which functions are
redefined and redistributed so that these are carried out faster, cheaper, better (more quality, i.e.
meeting requirements of the “customer,” who is
the next “receiver” in the supply chain).
In order to achieve an integrated supply chain,
a baseline of the current material flow within the
supply chain needs to be established to enable
functional integration. For example, a supply
chain involving the functions of: Purchasing (of
raw materials), Material Control, Production,
Sales and Distribution (to customers: Customer
Service), can be integrated into three main functions: Materials management, Manufacturing
Management and Distribution. These three functions can be integrated internally or externally to
the organisation.
Barriers to internal integration include the
organisation’s structure (e.g. department centric),

the availability of comparable and valid measurement systems, inventory ownership, information
technology—compatibility and use, and knowledge transfer capability—is such information
flow possible? Integration can be backwards or
forwards, and vertical: From or to the raw materials (suppliers) to or from the finished goods
(customers), requiring the ability to produce goods
previously purchased, raising the issue of make
or buy (“Make-buy”). Successful supply chain
management requires mutual agreement on goals,
trust, and compatible organisational cultures.
Integrated supply chains offer opportunities:
•
•
•
•
•
•
•
The generation of accurate pull data
(demand).
A reduction of lot size (production) and
Vendor Managed Inventories (VMI).
Postponement: Keeping the product generic as long as possible.
Channel assembly: Sending individual
components and modules rather than finished goods to the distributor.
A drop in shipping and special packaging costs: The supplier will ship directly to
the end consumer, rather than to the seller.
Standardisation: Reducing the number of
variations in materials and components.
Electronic ordering and funds transfer:
“Paperless” ordering and 100% material
acceptance, payment by “wire.”
Supply Chain Management began from the
late 19th century to the early 1960s, with the
decentralisation of logistics, to then focus upon
Total Cost Management (TCM), before the consideration of Integrated Functions (during the
1980s). In the mid-1990s these concepts, such as
integrated logistics were consolidated, leading to
Supply Chain Management. Today, the internet
has changed SCM radically to E-SCM with the
evolution of E-Marketplaces and exchanges, collaborative planning and fulfillment management
(Ross, 2003).
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Modern Supply Chain Management has arisen
in response to modern critical business requirements, the extension of available tools for modern
enterprise management providing sources of cost
reduction and process improvement. Available
tools such as those for ERP (Enterprise Resource
Planning), TQM (Total Quality Management) and
BPR (Business Process Reengineering). SCM is
comprised of five stages: Management; Warehousing and transportation; Total Cost Management
(TCM); Integrated Logistics Management; SCM;
and e-SCM (Ross, 2003).
E-Commerce or Electronic Commerce can
be considered as “all electronically mediated
transactions between any organization and any
third party it deals with” (Chaffey, 2011, p. 10).
A subset of E-Commerce is Social Commerce,
where site owners incorporate reviews and ratings
into a site. Linking social networking sites aids
understanding of customer requirements with a
view to converting this information into sales.
E-Business (Electronic Business) is “the transformation of key business processes through the use
of Internet technologies” (Chaffey, 2011, p. 12).
Laudon and Laudon (2011) describe E-Commerce; digital markets and digital goods, from the
perspective of management information systems.
They describe the impact of E-Commerce technologies on the world markets and collaborations
for B2B (Business to Business) E-Commerce.
Logistic processes are now also prefixed be
“E”, for example E-Procurement. Electronic
Procurement relates to “the electronic integration
and management of all procurement activities including purchase request, authorization, ordering,
delivery and payment between a purchaser and a
supplier” (Chaffey, 2011, p. 355).
The common denominator for all E-Logistics
processes namely the “E” is the exploitation of
technology to give a competitive advantage and
to add value. Improvements in the available tech-
nologies have led to vast increases in information
and knowledge acquisition, and new concepts
such as Big Data (massive repositories of data)
and Cloud Computing. The Cloud Computing
model, more commonly referred to simply as
Cloud Computing or “The Cloud”, provides access to “clouds” of shared computing resources
such as storage and applications, over a network,
usually the Internet. The future appears to see
more delegation of technology provision and
management through Cloud Computing, as well
as greater marketing opportunities (E-Marketing)
and e-tailing (on-line retailing) and m-commerce
(mobile commerce), etc., with more internationalisation and globalisation.
Evolutions in electronic business especially
business models relying on new developments
in logistics and supply chain management challenge traditional channels for creating value for
customers. The adoption of electronic supply chain
models not only helps enterprises to improve their
business processes today, but also enables them
to incorporate new technologies for E-commerce
solutions in the future.
Organisations are restructuring their supply
chains; in order to accommodate new technologies
and new ways of doing business on the internet.
In particular, this has led to the creation and
adoption of integrated supply chains, the development of virtual business communities, business
process re-engineering and business operations
re-orienting, enabling dynamic responses to new
customer demands, and new customer or consumer
behaviour, segmentation and values. In order to
respond to new customer demands, new models
such as Cloud Computing and new resources,
such as Big Data, have been created.
An area this book does not discuss is the realm
of Social or Ethical considerations. The Internet
and WWW have had huge implications for society
and its behaviour. Historically technological progress and innovation has always taken precedent
over social and ethical concerns, but real issues do
exist. Cloud Computing for instance, raises again

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worries about security and the right of access to
certain data, and whether or not, some data and
services should be cloud-based with commercial
proprietors as the custodians of such information
and resources.
The E-Logistics and the E-Supply Chain
Management paradigm is expanded upon in the
subsequent chapters that provide empirical evidence through case studies, such as those from
India, China, Europe, and the UK.
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E-Logistics or Electronic Logistics is part of an “Egenre,” which includes E-Learning, E-Business,
E-Commerce, etc. All of these terms essentially
refer to the major and significant employment of IT
for that domain. In the case of E-Logistics the use of
IT has been manifold, from software applications;
databases, data warehousing, knowledge bases,
data mining, etc. to the use of Radio Frequency
Identification (RFID), the Internet and the World
Wide Web. However, the greatest impact of IT has
been the change of the material flow in some cases,
for example the production of music, newspapers
and books, from a “material” (a physical product)
to data (an “electronic” product). This means that
E-Logistics has become Information-Logistics
with E-Products, E-Production and E-SCM in
the literal sense.
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E-logistics and E-Supply Chain Management have
affected the structure, nature and management of
organisations, changing the external environment
in which businesses operate. New tools and techniques have been needed for logistics managers
to use to measure cost and performance, and in
assessing the role of logistics in ensuring customer
satisfaction in different areas of business activ-

ity, evaluating logistics trade-offs in relation to
integrated strategy and enabling the debate on the
impact of logistics decisions on the environment
and global industries. This has facilitated the
analysis of the contribution of E-business logistics
to competitive strategy, productivity and value
advantage and judgment of critically concepts
and methods applicable to the implementation of
E-logistics. It has also led to the identification of
how major functional areas within business influence E-logistics, the engagement and reflection
upon problem solving in E-logistics.
The book is comprised of chapters that subsequently examine most of the key aspects of
E-Logistics and E-Supply Chain Management,
organised in three sections. Each section refers to
a specific area regarding E-Logistics and E-Supply
Chain Management. This first section serves as an
introduction to E-Logistics and E-Supply Chain
Management. The three chapters synthesize the
literature and provide definitions of E-Logistics
and E-Supply Chain Management, as well as
analysis of the main concepts and parameters.
The second part of the book looks at the logistics and management functions of E-Supply
Chain Management: Procurement; Distribution
and Transport; Fulfilment; Traceability; Customer
Relationship Management; Supplier Relationship
Management; Enterprise Resource Planning,
with discussions in this section based on real life
examples.
The final part of the book on Evolving
Business discusses further the future research
directions for E-Logistics and E-Supply Chain
Management: Radio Frequency Identification in
the E-Logistics interface; Cloud Computing in
Supply Chain Management; Data Modelling and
Information Logistics; The evolution and impact
of IT on Logistics and SCM; E-Production; Future Considerations of Sustainability and Reverse
Logistics. This section describes the future challenges of logistics and supply chain management,
the examination of case studies providing a very
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useful tool in this endeavour. These cases refer
the future practices of logistics and supply chain
management to various business sectors.
5()(5(1&(6
Chaffey, D. (2011). E-business & e-commerce
management: Strategy, implementation and practice (5th ed.). Upper Saddle River, NJ: Prentice
Hall.
Folinas, D. K. (2012). Outsourcing management for supply chain operations and logistics
service, handbook. Hershey, PA: IGI Global.
doi:10.4018/978-1-4666-2008-7
Hanks, P. (1990). Collins dictionary of the English
language (2nd ed.). London, UK: Collins.
Laudon, K. C., & Laudon, J. P. (2011). Managing
information systems: Managing the digital firm
(12th ed.). Upper Saddle River, NJ: Pearson.
Ross, D. F. (2003). Introduction to e-supply chain
management: Engaging technology to build market –winning business partnerships. New York,
NY: The St. Lucie Press.
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