The Effect of E-Commerce on the Supply Chain

As technology continues to play a bigger role in our society, it has a direct effect on not only the users of the technology, but also the supply chain as a whole. It is hard to imagine a time before the immediate availability of knowledge, goods, and communication in a social aspect, but to imagine the impact the visibility had on the supply chain is a whole different aspect. As most are aware, the basis of supply chain is a network of businesses who must coordinate to develop and run a smooth supply chain to get raw materials through their development, sourcing, production, and logistics stages to provide an end product to the customer in the most effective and efficient way possible. With the integration of e-commerce, this redefines how consumers learn about, select, purchase, and use products.

Almost every aspect of e-commerce has a positive effect on the supply chain. E-commerce helps to improve data accuracy, lower operating costs, accelerate business cycles, streamline business process, improve visibility, and enhance customer service. Very important in the supply chain, is the close link that this new form of communicating has developed between customers and distribution centers. Company websites provide a great link between the customer and the purchased goods by providing tracking numbers and other innovative features.

While e-commerce has had an unbelievably positive effect on the supply chain, there are some minor downfalls. Because of the immediate access to information, products, and services, many take the luxury for granted. As generations are raised with this sense of immediate gratification, many are ignorant to the thought, effort, and performance required to make these demands possible. Although the improvements in tracking orders, RFID, GPS, and many other new implementations to the supply chain have increased productivity and efficiency immensely, the logistics remain fairly the same. Distance will always play a huge factor in a supply chain, especially with companies specializing in specific activities. With the recent explosion in global supply chains, now more than ever, logistics are important if not the most vital aspect of a supply chain. It is predicted that this holiday season will be more hectic than previous years. One major difference that will take a toll on the major global shipping companies this year is the impact of e-commerce and the delayed shopping that it accommodates. UPS predicts that on December 20th, they will be shipping 28 million packages; that is 300 packages delivered every second of that day. It also has reported that they are expecting to deliver 6.5 million air packages, requiring an additional 400 flights that day to facilitate on-time delivery of the holiday packages.

Overall, e-commerce has had a significant effect on the supply chain. Buyers and sellers that engage in e-commerce are no longer restricted by geographical boundaries, store hours, or catalog buying. The internet provides 24 hour, seven day a week access to an unlimited array of goods and services. Supply chain managers have their work cut out for them when trying to predict and understand rapid swings associated with the heavy use of e-commerce in our globalized market, but with the right visibility and responses, these potentially negative consequences can be less harmful to the effectiveness and efficiency of the supply chains that make our economy.



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