Web technology and supply chain managementDocument Transcript
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12,4 Web technology and supply chain
David C. Chou
338 Department of Computer Information Systems, Eastern Michigan University,
Ypsilanti, Michigan, USA
Department of Management, University of Nebraska-Lincoln, Lincoln,
Nebraska, USA, and
David C. Yen
Department of Decision Sciences and MIS, Miami University, Oxford,
Keywords Manufacturing resource planning, Supply chain management, Internet,
Worldwide web, Telecommunication services
Abstract Supply chain management is critical since ﬁrms always confront the competition on
their supply chain efﬁciency. This article discusses the trend in supply chain management by
examining Web technologies that transform and streamline the supply chain management.
Companies strive to improve market share, grow corporate proﬁt, and gain strategic
advantage. In order to achieve these goals, supply chain competency must be placed at
the heart of a company’s business model. Firms realize that the competition is driven
by customer demand. Effective supply chain management can offer customers high
quality products and services with low prices.
Just like enterprise resource planning (ERP) and customer relationship management
(CRM), supply chain management (SCM) is also an important component of extended
enterprise applications. SCM serves as the back-end application by linking suppliers,
manufacturers, distributors, and resellers in a cohesive production and distribution
network. Beyond the pervasive adoption of ERP systems, which aim to facilitate
internal operations and to increase productivity, ﬁrms are generating explosive
demand for SCM applications.
The network economy combines enhanced, transformed, and new economic
relationships that are based on computer networks and human knowledge. Its
connectivity is mainly realized through the intranet and extranet that exist within and
across ﬁrms. SCM applications utilize these networks aiming to control costs, reduce
paperwork, lower inventory, and shorten product cycles. Electronic data interchange
(EDI) has been heavily used in industries. Nowadays, the Internet and the World Wide
Web are widely accepted since they broaden the scope of connectivity among
individuals and businesses. Web technologies allow ﬁrms to collaborate with business
partners to gain the beneﬁts of reducing costs, enhancing customer satisfaction, and
Information Management & retaining competitive advantages.
Vol. 12 No. 4, 2004
The power of SCM is well exempliﬁed by Dell Computers. Started in 1984 in Austin,
pp. 338-349 Dell Computers was ranked the No. 1 PC maker in the US market in 1999 (Shah, 2001).
q Emerald Group Publishing Limited
Dell’s direct-sales model is well known to the business community. Dell’s PCs are made
DOI 10.1108/09685220410553550 by electronic order and are delivered directly to its customers. They have eliminated
the middleman within their supply chain and have also exempliﬁed an innovative Web technology
business model through their effective SCM. Dell Computers continues to enhance and
broaden its competitive advantage by integrating the Internet into its entire business
and supply chain
process, including online sales, procurement, customer support and relationship management
This paper ﬁrst discusses the implications of SCM and its evolution. Next, the
impacts of the Internet and Web technology on SCM and the major concerns on 339
managing Web supply chain are discussed. Later, Dell Computers’ successful SCM
implementation is illustrated and discussed. Next, key steps to implement SCM are
addressed and its future development is discussed.
Implications of SCM
Although SCM has gained in popularity, there remains confusion about its meaning
and deﬁnition. Some ﬁeld experts regard SCM as an operational process that involves
the ﬂow of materials and products. Other experts deﬁne SCM as a managerial
philosophy or the implementation of a managerial philosophy. These deviations can be
found in the following deﬁnitions (McKeown, 2000):
SCM as a managerial philosophy:
Supply chain management is an integrative philosophy to manage the total ﬂow of a
distribution channel from supplier to the ultimate user.
SCM as the implementation of a managerial philosophy:
The extension of integrated behavior to incorporate customers and suppliers through
external integration is called supply chain management.
SCM as a set of managerial processes:
SCM is the process of managing relationships, information, and materials ﬂow across
enterprise borders to deliver enhanced customer service and economic value through
synchronized management of the ﬂow of physical goods and associated information from
sourcing to consumption.
A single and encompassing deﬁnition of SCM (Mentzer et al., 2001):
Supply chain management is deﬁned as the systemic, strategic coordination of the traditional
business functions within a particular company and across businesses within the supply
chain, for the purposes of improving the long-term performance of the individual companies
and the supply chain as a whole.
The last deﬁnition implies that SCM involves multiple ﬁrms, multiple business
activities, and the coordination of those activities across functions and/or ﬁrms in their
supply chain process.
Effective SCM can help lower production and distribution costs through seamless
cooperation between business partners in their supply chain. In the meantime, the
performance of supply chains can affect customers’ satisfaction. Therefore, SCM can be
seen as a source of competitive advantage and a lever for proﬁt margin. Speciﬁcally,
the goals of SCM can be categorized as the following:
decrease inventory costs by matching production to demand. This goal is
consistent with the concept of just-in-time (JIT) inventory management;
reduce overall production costs by streamlining the products ﬂow within the
production process and improving information ﬂow between business partners;
improve customer satisfaction by offering increased delivery speed and
ﬂexibility through the seamless cooperation with the distributors and vendors.
340 Functions of SCM
In a simpliﬁed supply chain, the following typical functions can be found in SCM:
(1) Demand planning. Demand planning determines how much product should be
made through data mining on the enterprise database.
(2) Supply planning. Supply planning covers replenishment requirements and it
makes sure that safety stocks are at appropriate levels.
(3) Manufacturing scheduling. Manufacturing scheduling looks at available
resources and prepares a production schedule based on real-world restrictions.
(4) Transportation planning. Transportation planning determines the best, most
cost-effective method for warehousing and shipping.
Some less common functions can be found in certain SCM applications:
(1) Graphical supply chain modeler. Graphical supply chain modeler provides
visible simulations for supply chain modeling. Especially in supply chain
design, a graphical modeler enables rapid modeling of a supply chain, starting
at the extended enterprise and proceeding down to lower levels. Designers can
use intuitive click, drag and conﬁgure techniques to achieve swift development.
(2) Supply chain optimizer. Supply chain optimizer performs linear programming
simulations for creating an optimized plan or schedule. Supply chain optimizer
enables the enterprise to synchronize global purchasing, manufacturing,
product ﬂow and distribution while adhering to strategic objectives.
Driving forces of SCM
The popularity of SCM is attributed to several driving forces, i.e. global sourcing, an
emphasis on time- and quality-based competition, and their respective contributions to
greater environmental uncertainty (Mentzer et al., 2001).
Corporations have increasingly networked with global suppliers for seeking
effective ﬂow of materials for manufacturing process. In today’s market, the
competitions are based on time and quality. Delivering a defect-free product to the
customer on time is a requirement in the market place. In order to meet such
requirements, a closer coordination with suppliers and distributors is desirable.
Global outsourcing and performance-based competition, combined with rapidly
changing technology and economic conditions, all contribute to marketplace
uncertainty. This uncertainty requires greater ﬂexibility on the part of individual
companies and distribution channels, which in turn demands more ﬂexibility in
Evolution and history of SCM
The driving forces of SCM explain the sources of developing SCM. Historically, a ﬁrm
was not likely to make either its supplier or customer a partner. In many industries,
each ﬁrm played one supplier against another, demanding and getting lower prices Web technology
The post-World War II supply chain was a set of linear, individualized processes
and supply chain
that linked manufacturers, warehouses, wholesalers, retailers and consumers together management
in the form of a human/paper chain (Ganeshan, 2002).
Beginning in the 1960s and 1970s, ﬁrms started to view themselves as closely linked
functions whose joint purpose was to serve their customers. This internal integration 341
was often referred to as material logistics management or materials management
(Fredendall and Hill, 2001). During this period, SCM innovations such as material
requirement planning (MRP) were developed. Those ﬁrms that successfully integrated
these functions did improve their performance. However, some constraints, such as
customers’ or suppliers’ unresponsiveness did hinder the improvements. These
constraints prevented the ﬁrms from instantly responding to market changes.
In late 1970s and early 1980s, US ﬁrms faced ﬁerce competition from their Japanese
counterparts. Especially in the automobile industry, Japanese carmakers utilized
just-in-time delivery to achieve efﬁcient inventory management. Detroit’s Big Three
had to ﬁnd ways to communicate with suppliers effectively. The solution at the time
was to communicate through batch orders and via a standard called electronic data
interchange (EDI) (Mount and Caulﬁeld, 2001).
Since the 1990s, the pervasive adoption of Internet and Web technology have
promised a ubiquitous and less costly way to tie companies and their business partners
together in the supply chain. The great collaboration made e-Commerce buzzwords like
“B2B” and “B2C” known to almost everybody in business circles. With the
advancement of information technology, the collaboration of business partners will
continuously improve the effectiveness of SCM. Gartner Group even gave a
“c-Commerce” (collaborative commerce) tag to the emerging business model starting
from the year 2000 (Gartner Group Inc., 1999). A summary of SCM evolution stages is
illustrated in Table I.
SCM and the Internet
Information technology (IT) contributed to the growth of world economy. In the
network economy, business applications and management must embrace the Internet
in order to survive in the e-Commerce age.
Stage Years Milestone Lessons learned by ﬁrms
Introductory 1960s-1970s MRP Firms are closely linked functions. Internal
integration will help serve customers better
Growing Late 1970s-late 1980s EDI Just-in-time delivery demands for efﬁcient
communications with suppliers
Pre-mature 1990s-present E-commerce, The Internet provides a ubiquitous and
B2B and B2C cost-efﬁcient way to tie together companies
and their business partners in the supply
Future (mature) Starting from 2000 C-commerce Collaboration of business partners will
continuously improve the effectiveness of Table I.
supply chain management Stages of SCM evolution
IMCS Impacts of the Internet
The Internet changes the way companies do business. The changes are permanent in
12,4 the transition from the industrial economy to the network economy. SCM has been
enabled by convergence, which refers to the integration of computer and
communication technology (Short, 2002). The Internet-strengthened power of
convergence can be depicted in two aspects:
342 (1) Ubiquitous and low-cost connectivity makes it possible for small and mid-sized
companies to take advantage of SCM techniques.
(2) Speedy network transmission helps businesses realize seamless and real-time
communications and transactions.
The potential challenges and impacts made by the Internet can be categorized as
Shifting power to buyers. Although many e-Commerce experts have profound
arguments on the impact of the Internet, the simplistic impact on the supply chain is
that the Internet is shifting power from the seller to the buyer irreversibly. The search
power for the buyer is now unbounded. Suppliers also provide products and services
information through their Web sites. Not only the consumer beneﬁts from this power
shift, but also purchasing agent within business and government enjoy this service.
Facilitating global interconnectivity. The Internet not only provides businesses and
individuals with the convenience and ﬂexibility in transaction and communication, but
also brings the competitions into the global arena. The Internet facilitates companies to
conduct business in the global village.
Enabling the trading partners to better coordinate and collaborate. The Internet
enables the trading partners within the supply chain (or the value chain) to better
coordinate and collaborate for mutual beneﬁts. Technologies that are based on the
Internet make seamless integration possible among business partners.
Breaking the old paradigms of inter-organizational boundaries. The Internet changes
the way supply chains are managed, planned and controlled. SCM-related information
and decisions are integrated into the Web, breaking the old paradigms of
inter-organizational boundaries. By implementing the Web-based SCM and CRM,
companies can virtually eliminate the boundaries among business partners to form the
Overall, the Internet offers the business community a variety of opportunities and
challenges. Any companies willing to adopt Internet technologies and business models
in a timely manner will clearly gain competitive advantages.
Web technology’s contribution
The Internet seems to be an extra distribution channel to most ﬁrms. In fact, the
Internet and Web technologies can support the entire supply chain’s operations.
Internet-based supply chain operations are fast and inexpensive. Moreover, customers
can instantly check the status of their orders by simply clicking their computer mouse.
Corporate executives and managers can conduct real-time access to ﬁrm’s inventory
level, and so do their suppliers and distributors. Speciﬁcally, Web technology made the
following contributions to SCM.
Developing e-Commerce applications. Web technology offers a variety of supports
for online communications and transactions. Online procurement is an example of
business transactions that fulﬁlls e-Commerce applications. Burlington Northern Santa
Fe (BNSF), for example, took the initiative to implement an Internet-based indirect
procurement. It resulted in cost saving and performance improving for both BNSF’s Web technology
procurement executive and the suppliers (Koch, 2000).
XML-based information exchange and sharing. Electronic data interchange (EDI)
and supply chain
played an important role in the evolution of SCM. Trading partners used EDI for management
information exchange, such as sending requisitions and receiving purchasing orders.
However, EDI has not been progressed as rapidly as expected, mainly because it was
difﬁcult to implement and costly to maintain. EDI’s inter-organizational standard on 343
documents’ format and structure make it difﬁcult to follow. Another drawback of EDI
is that it does not operate in real time (Graham, 2002).
The XML- (Extensible Markup Language) based Internet system allows
organizations to exchange data on a transaction-by-transaction basis. An XML ﬁle,
together with XML schema, provides a deﬁnition and semantics of the document for
business transactions. As XML documents and XML schema are text-based, they can
be transmitted through HTTP protocol. Since implementing XML data transmission is
cost-efﬁcient, small and mid-sized companies that previously could not afford
EDI-based solutions will be able to beneﬁt from the timely information exchange with
Applications integration. Applications integration is one of the most important IT
strategies since it can create or modify the interactions among related applications and
to encompass canned software, legacy applications and Web services. Web services
can deploy software vendors’ products to solve current integration needs; its big
players in the market include IBM and Microsoft.
Partners’ collaboration. Collaboration among trading partners helps SCM
participants gain great beneﬁts from providing end customers with high quality,
low cost products through ﬂexible and efﬁcient distribution. Web technology boosts
the supply chain visibility by providing more real-time data from all links of the supply
chain, resulting in greater collaborations among trading partners.
Web services technology
Web services and service-oriented architectures use Simple Object Access Protocol
(SOAP), Web Services Deﬁnition Language (WSDL), and XML speciﬁcations as the
basic means for Internet connections. Web services communication can involve either
simple data passing or two or more services coordinating some activity. The goal of
Web services is to provide a universal set of communications protocols to enable
computer systems and business processes to seek each other out over the Internet, and
have meaningful interactions without human intervention.
A service is a function that is well deﬁned, self-contained, and does not depend on
the context or state of other services. The IT industry will standardize on the
capabilities of various services over time. In the long run, the industry will deﬁne
standard capabilities of SCM, CRM, ERP, and other services. These services will
become standard and could be seen as commodities.
Concerns to Web-based SCM
Although the implementation of Web-based SCM possesses great potential for cutting
costs and driving efﬁciencies, this process does generate some cultural and technical
Cultural concern. A seamless collaboration among trading partners in the supply
chain is based on the efforts of trust and commitment, cooperative norms,
interdependence, compatibility, managers’ perceptions of environmental uncertainty,
IMCS and extendedness of a relationship (Min, 2001). In order to gain full collaboration, all
trading partners have to reach a common vision about the SCM strategy. Moreover,
12,4 corporations need to overcome natural resistance by revealing business secrets to their
Technical concern. Technical concerns on Web-based SCM are manifold. The
biggest concern stems from the insecure nature of the Internet. Due to the open
344 standard of Internet technologies, Web sites are vulnerable to attacks. Therefore, data
security becomes a high priority for Web-based SCM implementation. Application
integration is another technical concern. As Web services are in the premature stage,
the integration with legacy applications place a great challenge to Web-based SCM
implementation. By the same token, system-wide integration among trading partners
is also a challenge.
Case study: Dell Computers
Dell Computers has survived the recent economic slowdown since March 2000. This
phenomenon was the result of “Dell’s super-efﬁcient supply chain”, as described by
Dick L. Hunter, Dell’s vice president who was overseeing Dell’s SCM (Millet, 2001).
Dell’s success story demonstrated a real case of effective integration of SCM and the
Dell’s built-to-order model
Dell Computer was found by Michael Dell in 1984 with a simple concept: by selling
computer systems directly to customers, Dell could best understand their needs and
efﬁciently provide the most effective computing solutions to meet those needs. This
direct business model eliminates retailers; it can distribute computers much more
quickly than the slow-moving, indirect distribution channels (Dell Computers, 2002a).
Dell achieved a great innovation in SCM by adopting a direct-sales model; that is, a
demand-driven supply chain in which the traditional build-to-stock approach is
replaced with a build-to-order model. With the new model, Dell was able to reduce
inventories, cut costs, and reduce production cycles. Dell has expanded its JIT practices
from the company to the entire supply chain as suppliers have been integrated into
Dell’s operations (Zacharia, 2001).
A well-managed supply chain reaps the best fruit from the build-to-order tree. Dell
has created efﬁciencies through its materials management process. They met the
demands of customer orders by building the customized systems in a timely manner.
With the implementation of i2 SCM, Dell has enhanced its procurement process that
has resulted in almost 90 percent of the company’s procurement being done online and
leaving only two hours of inventory on the factory ﬂoor (Dell Computers, 2002b).
The Internet and Web services
Dell’s build-to-order model utilized the Internet well. The Internet provided Dell not
only a direct-sales channel, but also a great opportunity in managing its supply chain.
Launching e-Commerce. Dell launched www.dell.com in 1994 and added
e-Commerce capability in 1996. At Dell’s Web site, customers may review, conﬁgure
and price computer systems within Dell’s entire product line; order computer systems
online; and track orders from manufacturing through shipping. These value-added
initiatives enable Dell’s SCMto meet customer demands today. By the end of 1999,
Dell’s Web site generated $35 million each day in revenue (Dembeck, 1999).
Collaboration with suppliers. Dell constantly improves its collaboration with its Web technology
global suppliers. The heart of its success is valuechain.dell.com, an Internet portal that
provides a pipeline for real-time information exchanges between Dell and its suppliers.
and supply chain
Through the pipeline, Dell sends forecasts to its suppliers and gets responses back management
about their ability to support those requirements from a supply/demand perspective.
Dell also sends requests to have materials pulled into its factories on a two-hour basis
per facility (Lewis, 2001a). Dell added powerful software applications from i2 and Agile 345
to its Internet-based platform, realizing better materials ﬂow and other improvements.
In addition, these programs enabled Dell to apply next-generation thinking on inbound
and outbound logistics and continuity of supply. Dell’s ability to strengthen the
collaboration with suppliers over the Web has paid off. Using valuechain.dell.com, the
company has spent around $26.4 billion on worldwide procurement of direct materials
and $800 million on outbound logistics (Lewis, 2001b).
Web service initiatives. Dell focused its early Web service initiatives on direct
materials management and inventory management, which generated a signiﬁcant
impact on the bottom line. Dell began by closely connecting its assembly operations
with the network of logistics providers that operate the distribution centers for direct
materials. In the past, Dell had to hold substantial inventory in the supply chain to
ensure timely delivery of products to its customers.
To ensure that it did not run short of key components, suppliers had to maintain
ten-day inventory buffers at vendor-managed hubs, and Dell itself had to maintain
buffers of 26 to 30 hours at assembly plants. Every week, Dell distributed a new
52-week demand forecast to all suppliers.
Today, Dell generates a new manufacturing schedule for each of its plants every
two hours that reﬂects actual orders received, and publishes these schedules as a Web
service. The XML-based schedules can be fed directly into disparate
inventory-management systems that are maintained by all vendor-managed hubs.
Thus, the hubs always know Dell’s precise material requirements and can deliver the
materials to a speciﬁc place accordingly. With this approach, Dell has been able to cut
the inventory buffers at its plants to just three to ﬁve hours (Hagel, 2001). Dell’s
ultimate goal is to eliminate excess inventory throughout the supply chain, but not just
to push inventory from the manufacturer to the supplier. Using an event-management
Web service, Dell sends out queries on the status of orders to suppliers, and then
suppliers’ systems will automatically send back responses. Dell expects that this
system will reduce hub inventories by as much as 40 percent, while improving gross
margin by better matching demand and supply.
Dell surpassed Compaq to become the No. 1 PC maker in the world in 2001. Dell’s
success should be attributed to its direct-sales model and the utilization of effective
SCM. The resulting efﬁciency ratios such as inventory turnover and plant utilization
placed Dell in an advantageous position, which encouraged consolidation among
competitors to achieve the same level of efﬁciency. Although the slow PC market
forced Dell’s revenue to drop, its core competency in SCM helped Dell manage 15
percent increase in product shipments as industry volume dropped 5 percent in 2001
IMCS SCM implementation and development
In order to enhance competitive advantage through effective SCM, more companies
12,4 intend to invest in better technological solutions. Nowadays, an effective SCM program
confronts two major challenges:
(1) Integrating Web-based SCM applications with legacy enterprise applications,
which are based on mainframe or client/server systems.
346 (2) Linking systems with their supply chain partners to enable seamless supply
Switching from traditional business operations to a new system empowered by SCM is
not an easy task. For example, when announcing an unexpected shortfall in third
quarter earnings, Nike, a famous sports apparel maker, attempted to blame the results
on a new SCM system from i2 Technologies (Farmer, 2001).
Steps to achieve supply chain excellence
SCM needs to be implemented in a cautious approach during the premature stage. A
phased implementation allows system errors to be found early and to be remedied
before moving to the next phase. To create an efﬁcient SCM system, a company needs
to stick with the following phases (Martin and Roth, 2000):
Phase I – creating vision. This phase needs to complete the following tasks:
deﬁne how far the supply chain will spread from customers to suppliers;
identify the existing and potential issues along the supply chain; and
decide how the SCM would work to realize the seamless integration among the
various business partners. Deﬁne the method of information ﬂow, demand
exchange and data exchange.
Phase II – establishing commitment. This phase consists of the following important
set up organizational priority;
seek top executives’ support and personnel’s commitment; and
gain supports from suppliers, distributors and customers.
Phase III – making preparations. This phase consists of the following needed tasks:
re-train people to become more literate on information technologies;
prepare the legacy enterprise applications for the SCM integration; and
form implementation teams, including professional consultants if needed.
Phase IV – selecting the SCM vendor. This phase includes the following important
evaluate and decide the vendor for speciﬁc SCM solutions; and
. select a suitable SCM vendor to meet company’s requirements.
Phase V – formalizing SCM applications. This phase includes the following tasks:
conduct pilot test program;
work with suppliers, distributors and customers to re-engineer the work
work with software vendors and consultants to train all personnel who have Web technology
access to SCM applications; and
and supply chain
. integrate new SCM applications with the legacy enterprise applications.
Phase VI – continuous assessment and improvement. The last phase includes the
following important tasks:
. make the performance measures align to re-designed processes and assign them 347
to speciﬁc individuals for monitoring and assessing;
work closely with the software vendor to reﬁne the system in a timely manner;
improve the SCM applications based on survey results received from business
Future development of SCM
With the advancement of Web technologies, the revolutionizing trend of SCM may
focus on helping decision makers better manage customer relationships, efﬁciently
integrate internal applications, and collaborate in real-time with trading partners. In
particular, development of SCM may focus on the following four directions (Ganeshan,
Customer and employee self-service. In order to improve customer service and gain
customer loyalty, ﬁrms need to provide the tools that help customer customize and
streamline their business transactions over the Internet. Through self-service
applications, customers may browse catalogs, check updated prices, place and
approve orders, check status of orders and obtain invoicing information in real-time.
Employee self-service is another major element of Web-enabled SCM. A Web-based
SCM combines all business sources to form single source business intelligence for
decision makers. In addition, enterprise application integration enables employees to
make better decisions easily.
Vendor-managed inventory and automatic replenishment. Vendor managed
inventory (VMI) is a technique that allows suppliers to be empowered by managing
inventories of agreed-upon items. VMI is now a widely practiced initiative in the retail
industry. For example, Procter and Gamble (P&G) and Wal-Mart have developed
well-functioned VMI systems. A Web-based VMI system, in which the suppliers
monitor inventory information via the Internet and replenish the items according to a
predetermined contract, will improve customer service, reduce inventory buffers,
reduce administrative costs, and reduce uncertainty for the supplier.
Collaborative planning, forecasting, and replenishment. Collaborative planning,
forecasting and replenishment (CPFR) is a new SCM initiative that is revolutionizing
the B2B e-commerce world. As a new business model, CPFR helps businesses align
processes and standardize technologies to share forecasts and other planning
information securely, simultaneously, globally and in real-time. The key idea of this
initiative is to share information, including forecasts, pricing and promotions, store
openings, production and shipping schedules, inventory and replenishment, over the
Internet among business partners.
The emergence of exchanges. The Internet has created a medium to connect
fragmented buyers and sellers, to lower transaction costs, and to make price
transparent in the supply chain. The newly created market mechanisms include
auctions, catalogs, and exchanges. For example, the Net Market Maker gives
IMCS participants in the supply chain the opportunity to manage their inventory in an
efﬁcient manner. Excess inventory can be auctioned while peaks in demand can be met
12,4 by buying from certiﬁed suppliers at reasonable costs from these exchanges.
In today’s market situation, most ﬁrms cannot operate as autonomous entities but as
348 participants in integrated supply chains. In order to meet customers’ expectations,
ﬁrms try their best to shorten product development, reduce costs and prices, improve
quality, and expedite distribution. SCM utilizes a growing body of tools and techniques
for coordinating and optimizing these key processes. Additionally, SCM facilitates
coordination among trading partners, which enables opportunities for synergy. A
ﬁrm’s competitive advantage, in turn, is highly dependent on the efﬁciency of its
supply chain. Dell Computers, through its efﬁcient SCM and built-to-order business
model, gained a great success in 1990s.
The business environment changes rapidly. Therefore, the focus of SCM must
evolve accordingly. The change in corporate strategy increases their dependency on
suppliers. A wide range of products and services provided by the suppliers makes SCM
increasingly complex. Under this situation, the collaborative relationship between
trading partners in the supply chain becomes critical. Effective SCM must be
responsive to this challenge. Fortunately, the Internet is able to facilitate this challenge.
The Internet offers the supply chain enormous potential and entirely new methods
for streamlining coordination between business partners and customers. The Internet
enhances SCM’s performance and it is an essential part of e-Commerce. As the SCM
evolves in the information age, the network supports coordination between business
partners to make all the information, transactions, and decisions ﬂow through the
network. As a successful SCM model, Dell Computers has established competitive
advantages with the advancement of the networked economy.
Generally speaking, in an environment where the competition is increasingly based
on supply chain efﬁciency, ﬁrms need to put SCM at the heart of their business model
to be successful. They must take advantage of the Internet and Web technology to
achieve higher-quality and lower-cost collaboration with trading partners.
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