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E-Businss And Supply Chains

E-BUSINESS ENABLES COSTS TO BE MINIMISED IN SUPPLY CHAINS. IDENTIFY RELEVANT THEORY UNDERPINNING THIS ASSERTION, AND ILLUSTRATE YOUR ANSWER WITH EXAMPLES OF PRACTICE IN THE AIRLINE INDUSTRY.

Companies are embracing e-business in their supply chain in order to: overcome the global dispersion in their supply chains operations, in particular, manufacturing and distribution facilities, manage localised markets requiring more customised products, counter increased competition arising from the digitisation of markets, become more responsive to customer needs (Kalakota and Robinson, 1999) and because: "the bulk of most companies costs can be directly attributed to activities within the supply chain" (Hadley, 2004, p. 29). Before e-business' contribution to cost reduction in the supply chain is discussed, it is first important to distinguish between terms. According to Chaffey (2002), e-commerce, which refers to: "all electronically mediated information exchanges between an organisation and its external stakeholders," is a subset of e-business, which uses Information and Communication Technology (ICT) to transform key business processes, some of which, such as processing a purchasing order, that are not strictly included in e-commerce. Both e-business and e-commerce have the ability to streamline and re-structure the supply chain, the process through which: "raw materials, intermediate products, and finish goods are acquired, transformed, stored, and sold" (Kalakota and Robinson, 1999). Supply chain management (SCM) helps organisations to integrate their supplier, distributor and customer logistics requirements within this chain (Laudon and Laundon, 2002), in terms of both the upstream supply chain, equivalent to buy-side e-commerce (transactions between suppliers and intermediaries) and downstream supply chain, equivalent to sell-side e-commerce (transactions between customers and intermediaries). The supply chain can follow either a ‘push' or ‘pull' model, being...