Electronic Commerce

Semester 2 Term 2 Lecture 26

Intranets & Manufacturing• Today’s manufacturing companies are driven by a

new set of operating requirements as they face intense global competition and significant unpredictability in both customer demand and material availability

• As customers insist on customised products at mass-produced prices, the pendulum has shifted in the direction of flexible, demand-driven manufacturing

• In such a competitive environment, companies need to reengineer operations to produce and distribute products effectively at low cost and high quality

Integrated Logistics

• Logistics is a relatively new discipline that grew out of the integration of materials management and physical distribution

• Logistics serves as a tool for identifying and effectively managing interim linkages in the supply chain

• Firms that operate in isolation are placing themselves at a competitive disadvantage

• Not only must firms collaborate internally across business functions, but also they must establish external linkages with other firms

Integrated Logistics (Contd.)

• Essential to optimising the supply chain is the integration of key inbound and outbound logistics operations to reduce order cycle times, improve service levels, and reduce operating costs

• Achieving these strategic goals demands efficient management of logistics operations that focus on optimum utilisation of products, materials, resources and space

• The logistics function can be divided inot supplier management, inventory management, distribution management and warehouse management

Supplier Management

• With customised manufacturing there is an increasing need to integrated inventory systems with purchasing and distribution planning

• The supply chain uses bills of distribution and sourcing rules to simultaneously plan the entire replenishment network, and then automatically release purchase orders to suppliers

• The ogal is to simplify routine transactions, reduce paper handline; and provide an electronic communications framework for daily procurement activities

Benefits of Supplier Management

• The trend in purchasing is to reduce the number of suppliers and get them to become partners in business in a win/win relationship

• The benefits are seen in reduced purchase order processing costs, increased numbers of purchase orders processed by fewer employees and reduced order processing cycle times

Inventory Management

• The goal is to shorten the order-ship-bill cycle• When a majority of partners are electronically

linked, information that was fax or mailed in the past can new be sent instantly

• Documents can be tracked to ensure they were received, thus improving auditing capabililities

• The inventory management solution should enable the reduction of inventory levels, improve inventory turns, and eliminate out-of-stock occurrences

Distribution Management• The goal is to move documents related to shipping e.g.

bills of lading, purchase orders and advanced ship notices

• Paperwork that typically took days to cycle in the past can now be sent in moments and contain more accurate data, thus allowing improved resources planning

• Logistics covers requirements with optimised purchasing operations, sophisticated warehouse management, and precise invoice auditing and materials management, as well as extensive plant management functionality

Warehouse Management

• The goal is to automate the warehouse distribution process, from receiving and put-away to picking up and deployment

• The goal is to optimise activity in all the functional areas: warehouse administration, receiving, product storage, picking and shipping