V .P Nimna, International Journal of Advanced Research and Development.

(Volume2, Issue10)
Available online at www.ijarnd.com

Role of Supply Chain Management in E-Commerce

Nimna.V.P
Guest Lecturer,
Department of Commerce, Zamorin’s Guruvayurappan College, Kerala, India

ABSTRACT
As markets become intertwined on a global scale, the way customer demands are being supplied is getting
redefined. Raw materials, labour, and production can be obtained from a dynamic range of sources as businesses
large and small look for the lowest cost. This is why supply chain management is incredibly important to the
growing e-commerce sector. As production takes on a more global field, coordination and control of the flow of
a company’s goods become all the more integral to ensuring smooth and productive operations. This paper
explains about how SCM in e-commerce activities and why is it important.

Keywords: E-commerce, Role, Supply Chain Management.

1. INTRODUCTION
Innovations in technology have motivated business organisations to use it for their day to day operations.
Technology has eased the business process. Today it plays an important role in improving business by helping
them shift from traditional ways of operations to new efficient ways of working. Use of ICT in business reduces
manpower, paperwork, as well as a time constraint. Organizations today have started working via websites and
they are selling or buying via the internet. This type of business transaction is called E-Commerce. The emergence
of E-commerce technologies has created innumerable opportunities for businesses to develop and streamline their
supply chains.

Competitions in the 21st century will be across supply chains, not individual companies. A supply chain
is a network of facilities and distribution options for the entire network of companies to work together to design,
produce, deliver, and service products-commerce are a term for business which is done with the help of a website.
It is an advanced technology which is beneficial for customer and businesses as well. For an e-commerce business,
major requirements are websites and effective Supply Chain Management (SCM). SCM focuses on the
procurement of raw, manufacturing of the product, distribution of the product in spite of location issues, till
product reaches to the consumer.

2. OBJECTIVES
The objective of this study is to understand the role of Supply chain management in E-commerce practices and
identify the problems occurring in creating and maintaining a SUPPLY CHAIN MANAGEMENT SYSTEM for
the e-commerce industry.

3. SCM IN E-COMMERCE --PROBLEMS

E-commerce business in India is completely dependent on effective SCM. It is very important to merge e-
commerce business with SCM and for this, we need proper ICT based systems. By which information flow would
be proper in between enterprise, customer, and SCM. These days’ e-commerce sites are fighting for developing
proper SCM so that they can beat each other. Few problems discussed in this paper are:

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 V .P Nimna, International Journal of Advanced Research and Development.

3.1 Globalization
One of the biggest challenges that e-commerce companies are facing is how to reduce their supply chain cost. In
order to satisfy customers’ price expectations, companies have opted to relocate manufacturing to low-cost
countries around the world in an effort to reduce direct and indirect costs and to minimize taxes. But, having
global suppliers contributes significantly to the complexity that comes from extended delivery lead times.
Customers not only want lower prices, but they also want their products on time.

3.2Improper Flow of Information

SCM in the enterprise needs a proper flow of information in between suppliers, enterprise, and customer etc. If
the flow of information is not proper then enterprise won’t able to communicate with the supplier as well as with
customer also.

3.3 Problem in Payment Gateways

Indian payment gateways have an unusually high failure rate by global standards. E-business companies using
Indian payment gateways are losing out on business, as several customers do not attempt making payment again
after a transaction fails. Payment gateways need to be improved.

3.4 Low Internet Penetration

Internet penetration in India is still a small fraction of what is there in a number of Western countries. On top of
that, the quality of connectivity is poor in several regions. But both these problems are on their last legs. The day
is not far when connectivity issues would not feature in a list of challenges to e-business in India.

4. GROWTH IN E-COMMERCE
The traditional approach of business was not technology oriented. Physical presence was required for selling or
buying of goods. Business without computers was very difficult to conduct. Businesses kept record/data of their
businesses in papers, files etc which was difficult to update and retrieve. Postal mails were used by businesses to
exchange information in between businesses. Of late computer technology was introduced in business for storing
and retrieving data. After the advent of Information and Communication Technologies (ICT) for businesses,
perspective doing business was completely changed. ICT reduces business processes provide fast communication
between trading partners or in between customer and organization etc.

Today organizations, want to have a competitive advantage over their competence, continuously
rethinking about expanding their business to reach to different customers at different locations. This cannot be
possible by normal distribution channel, outlets, etc. For this, they use internet which can be accessible from
anywhere in the world and SCM help them to deliver their product to customer wherever they want at an affordable
price.

Fig- 1: E-commerce activities.

5. SUPPLY CHAIN MANAGEMENT

Supply Chain Management includes business processes from manufacturing operations, purchasing,
transportation, and physical distribution of products to end user.

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 V .P Nimna, International Journal of Advanced Research and Development.

Successful supply chain management coordinates and integrates all of these activities into a seamless process. In
addition to the departments within the organization, SCM deals with partners include vendors, carriers, third party
companies, and information systems providers. SCM helps organisations for internal activities such as inbound
and outbound transportation, warehousing, and inventory control. Sourcing, procurement, and supply
management fall under the supply-chain umbrella. Forecasting, production planning, scheduling, order
processing, and customer service all are part of the process as well. Importantly, it also embodies the information
systems necessary to monitor all of these activities.

6. SCM IN E-COMMERCE
E-commerce business is completely dependent on SCM. When a customer purchases something using e-
commerce site he wants that particular product in minimum time. If the logistic department is not able to provide
it fast then the customer will not prefer that site again in future. New e-commerce sites are rapidly coming every
day but customers prefer those sites which have proper SCM to deliver the products on time.

ICT and in particular internet plays a key role in the integration of supply chain. While the most visible
manifestation of the internet has been in the emergence of electronic commerce as a new retail channel. The
Internet has a 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. The term “e-business”— as distinct from “e-commerce” — can be used to describe this exciting adoption
of the internet to accelerate the goal of supply chain integration. In this context, e-business specifically refers to
“the planning and execution of the front- end and back-end operations in a supply chain using the internet.”

In last five years, Indian E-Commerce business has grown immensely. People are using e-commerce sites to
purchase a product because SCM helps enterprises to purchase/manufacture products on time and can able to
deliver to the customer on time.

Fig- 2: Role of E-commerce in Supply chain Management

6.1 Advantages of SCM in E-Commerce

Awareness among businesses in India is rising day by day about the opportunities offered by e-business.
According to customer’s point of view ease of internet access is the critical factor that helps them to access e-
commerce site and purchase. Safe and secure payment modes are fundamental along with the need to invent and
popularize innovations such as Mobile Commerce. E-commerce provides connecting with consumers and
conducting transactions. Virtual stores operate 24 hours a day, 7 days a week.

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 V .P Nimna, International Journal of Advanced Research and Development.

Improved supply chain network

Supply chain management software provides complete visibility across the entire supply chain network. It allows
users to monitor the status of all activities across all suppliers, production plants, storage facilities and distribution
centers. This enables more effective tracking and management of all related processes, from the ordering and
acquisition of raw materials to manufacturing and shipping of finished goods.

Enhanced CRM
SCM plays a vital role in establishing a relationship between enterprise and customer. SCM removes intermediate
stages of delivery of product and establishes communication between customer and enterprise directly using
websites and internet. Websites help enterprise to keep in touch with the customer directly and they can get
requirements and feedback about products directly.

Trade Globally
SCM provides facility to trade globally. If a business wants to do business globally then their SCM should be such
that they can import raw material from anywhere through SCM or can export their finished product in any country
easily. Indian market is also growing day by day. Business organizations have adopted ICT in their businesses.
These organizations are purchasing raw material from different countries, bringing them in their factory, then
converting it into the finished product and sending their products to other countries by using proper SCM.

Virtual Businesses
With the advent of dynamic websites, organizations are focusing on virtual businesses like they are listing their
products on websites rather than providing it to distributor or C&F by which many people can see their products
and can purchase it from websites and further delivery of the product is dependent upon SCM logistic department.

Minimized delays
Many supply chains are plagued by delays that can result in poor relationships and lost business. Late shipment
from vendors, hold- ups on production lines and logistical errors in distribution channels are all common issues
that can negatively affect a company’s ability to satisfy customer demand for its products. With SCM software all
activities can b coordinated and executed from start to finish.

Reduction in Cost
SCM based on e-commerce removes various stages of distribution, retailers, outlets, outlet staff etc. This decreases
the overall cost of the product and customer gets the direct advantage of reduced cost of products as compared to
the cost of product available at stores.SCM provides ICT based facilities to establish communication in between
enterprise and customer so that they can directly communicate with each other and SCM takes care of the delivery
of product etc.

Customer Satisfaction
Customers expect timely deliveries. E-commerce wants to satisfy their customers and keep the right amount of
inventories. Websites help the enterprise to keep track of customer requirements and are attuned to changes in
their demand for various products and brands. By using an e-commerce integrated supply chain, the enterprise
could track demand, determine how long the suppliers take to fulfill orders and order goods from their suppliers
in time to keep their inventories replenished and their customers happy.

7. CONCLUSION
Today effective supply chain management is becoming the strategy choice for the enterprise to compete in the
corporate world. E-commerce provides important means for effective operational supply chain management. It
uses the ICT to relate the customers, retailers, manufacturers, suppliers, and employers, improve greatly the level
of enterprise management. SCM make balance in between supply and demand can receive market information in
a very short time, improve the production rate and economic benefit, reduce the production cost and fasten the
products circulate, enhance the core competitive force of enterprise. With the spread and improvement of e-
commerce technology, it will surely push the further development of supply chain management, and the enterprise
who can realize and solve the problems.

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 V .P Nimna, International Journal of Advanced Research and Development.

8. REFERENCES
[1]. Joseph M, Kelly T; "Intelligent Supply Chain Management, Information Integration, and Case Studies";
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[3]. Noel P, John D; "Agile Logistics at the Global Transpark: from Practices to Infrastructures"; The Fifth
National Agility Conference, Agility Forum, 1996 (CDROM).
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[7]. Zhang Shensheng; “Virtual Enterprises and Electronic Business”; Chinese Mechanical Engineering;
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