Got E-Supply Chain?

I’ve read many articles on developing an e-supply chain. Most had dramatic opening statements such as: “The internet is about to change the way you do business!” Or “If you don’t develop an e-supply chain strategy, competitors will leave you in the dust.” Or “Join the e-commerce revolution or die.”

I’m not disagreeing. But if you’ve ever bought a book from Amazon.com or at the very least, checked your email on Yahoo!; you already know this. Instead of going into detail explaining how Al Gore invented the internet, let’s discuss e-supply chain strategy.

Depending on your product and market, an E- strategy may be imperative (now I sound like an alarmist). Many larger companies have instituted this approach with great degrees of success. Cisco sells over $40 million worth of product every day over the web while General Electric expects to save $500 million by shifting procurement to the internet.

Ford uses their intranet to share designs among 4,500 engineers in three countries. They also have collaboration between dealers & headquarters and manufacturing with suppliers.

Sure, it’s expensive and requires reorganization…..but it cuts costs and decreases the time it takes for products to reach their market. Complex e-supply chains require deeper integration with suppliers and customers.

If you manufacture satellites, it helps if your suppliers have access to information on when certain parts are required and notified when technical specs change. If your customer can send design changes by updating your systems, the engineers can react quicker.

At this level of complexity there is a catch. Companies have to open their data to others. Allowing partners to review your information and update your systems is a matter of trust. E-supply chain optimization changes the way things are done.

A shift that affects jobs, processes and whole departments is never met with open arms. It takes buy-in, but I’m sure your company is no stranger to that.

Let’s discuss two strategies:

Open Exchange : This is rather simple. As a vendor you can join open internet exchanges such as BuyerZone.com. You and a myriad of other companies will display your wares and compete mainly on price. Many exchanges will have thousands of buyers & suppliers.

Where certain exchanges accept any company, some focus on a market. There are online exchanges for food products as well as steel. The exchange takes care of the online processing...…you ship the order. Even if you don’t win a bid, you can end up with a lead.

If your company manufactures jet fighters, an open exchange is not for you. Themed electronic market places are great. As a supplier you know you’ve reached a perfect demographic.

The cost of sale is lower and you get exposure to the masses.

As a buyer, your advantages come in three areas:

• Price and transparency. Many vendors are competing for your business at once.

• Efficiency. Procurement officers can source in one browser window. There is instant price discovery. In addition, transactions can be downloaded into an internal accounting system.

• Relationship. If you are satisfied with the quality and service of the supplier, how about direct contact. By expanding upon the relationship there may be better price opportunities or customization.

www.Alibaba.com has over 3.6 million members. Someone has to be looking for your product.

Wal-Mart has connected almost 80,000 of their suppliers to its point-of-sale system. If Folgers Coffee is running low in Fargo, North Dakota, Proctor & Gamble will know about it. Wal-Mart’s POS system alerts P&G to ship coffee to Fargo. Store managers save time by not having to comb the floor looking for sold put products.

The level of integration is only limited by trust between the buyer & supplier.

Improving the customer’s e-supply chain experience….and yours :

When salespeople find out customers can order from the web they get worried. It’s called commission. If they don’t book the order, will they get paid on it?

Here’s my suggestion: They say 80% of your business comes from 20% of your customers. Wouldn’t it be great to spend your time growing the 20%? Tiny accounts can take up more of your time that the large ones. Direct them to your new “order page.”

If small accounts can order from your web site, you’ll free up time. What about commissions for salespeople? If that customer is within a salesperson’s territory or zip code, pay them on it. It’s a great bonus and your sales staff will focus on the big fish.

How can you keep customers from jumping to another e-supplier? The best lessons for B-to-B come from B-to-C.

Ever look for mystery books on Amazon.com? What happens the next time you return to that site? You’re presented with mystery books on the home page. Awww shucks Amazon, you remembered.

By tracking what your customers are ordering, you can present them with suggestions the next time they visit. A little bit of personalization goes a long way.

Pre-populate order forms for your customers. This is generation instant gratification. People go nuts waiting for a web page to download. Why make existing customers waste time fill out their information again. The only information they should enter online is, which ones & how many.

Let your customers see the Top Ten most ordered products. What is everyone else buying? That’s information your customer will not pass up.

E-supply chain software lets you manage inventory effectively and instantly.

As you probably know, there are many online exchanges. These offer a great start. You’ve got broad coverage and industry specific. If you are invited or told to join a client’s closed exchange you are getting a glimpse of how supply chain is evolving.

Companies that are part of a strong supply chain network will fare better than companies that are, shall we say……single.

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