Business-to-business ecommerce, thriving on the back of the exploration of technology innovations, has drastically changed the behaviours of the market. Frost and Sullivan predicts global B2B ecommerce will reach USD 6.7 trillion by 2020 to become twice as large as the B2C market and businesses will see a compound annual growth rate of 7.7% in B2B ecommerce over the next five years (Frost & Sullivan, 2015).
People are living in “today” and a “networked” economy, seeking fast, responsive and lean/agile supply chains where markets are experiencing a dramatic shift of power from manufacturers/suppliers to customers - the products are no longer pushed through the supply chain but pulled by the customers who are less patient but are desiring more.
In this extensively connected economy, ecommerce is now fundamentally transforming the way that the traditional B2B supply chains operate.
Ecommerce boosts integration and connectivity of B2B supply chain
The traditional supply chain is being challenged as the static one-size-fits-all strategy with discrete and batched planning systems are now facing their end. Business leaders are compelled to formulate new supply chain management strategies by increasing agility and connectivity of business processes through B2B technologies. Thus business partners along the entire value chain are able to team up to achieve integrated decision making and collaboratively deal with today’s fast changing market. Supply chain integration and seamless digital exchanges have become primary drivers to sustain revenue growth and differentiate the organisation in challenging economic times.
Ecommerce brings new dynamics to supply chain flexibility
Supply chain flexibility is reflected in the capability of the enterprise to accept changes and adapt to the volatile market conditions, alongside its upstream and downstream players. The traditional B2B SCM (supply chain management) is manufacturer-centric, primarily dealing with quantity of orders, piles of pallets and large shipments. The production plans are based on demand forecasts (“input driven”) and orders are fulfilled through an independent network, built through fragmented information systems where key information cannot be transmitted quickly and accurately from different parts of supply chains. The SCM processes are heavy, lengthy and sequential where small changes may cause major cost and rework.
Ecommerce helps achieves organic coordination, linking all concerned parties of the supply chain whilst ensuring business data integrity and smooth flows of information across customer demands, supply, procurement, R&D, production and logistics. It enables supply chain enterprises to possess flexibility that develops their SCM ability to adjust their speed, planning, target and decision making in a timely manner. ‘Ecommerce-engined’ supply chains are faster, leaner and more dynamic, allowing businesses to handle market demands for different types of products in varying quantities within a short period of time and at a lower cost.
Ecommerce redefines SCM best practices
As B2B ecommerce involves multi-tiered supply chains and an omnichannel of communications, the success is reliant on new SCM strategic approaches that accurately and swiftly respond to market changes, to deliver improved customer experiences and repeat business.
Ecommerce has redefined following best practices that would continue transforming and necessitate modifications to the supply chain as B2B ecommerce keeps evolving.
Velocity - The speed of “plan-to-deliver” is the goal of ecommerce, reflecting organisational capabilities in achieving accurate forecasts, right level of inventory, improved visibility of product and logistics movements, effective management of demand variability and increased profits through the whole of the supply chain.
Collaboration - Ecommerce flows through multi-layers of B2B supply chain from customers to suppliers, where all business partners collaborate at significantly increased velocity. It integrates multiple and disparate supply chains to deliver a consistency of lead-time and differentiated products and service bundles to customers. Developing a culture of open communications whilst creating a system that encourages collaborations internally and externally is the key to success.
Technology Integration - Ecommerce connects the entire ecosystem of customers, suppliers and partners encompassing the extended supply chain. Given the length and complexity of B2B supply chains, technologies such as ERP, vendor management system (VMS), and transportation management system (TMS) are enablers linking all steps of the supply chain and should be integrated across all partners’ systems. The degree of technical integration determines SCM visibility and enables adequate attention on potential supply chain risks, which is vital to success.
About David Duan
David is a subject matter expert in procurement with an extensive background in delivery of procurement transformation services, major saving initiatives and supply performance improvements for various global organisations including Nokia and Accenture. He is a result driven business manager whilst being a constant innovator to enable procurement step change as well as ensuring best practices for business innovations.
About Apsiz
Apsiz Services Ltd are leading experts in delivering procurement transformation and improving commercial performance. Our people are senior strategic and operational commercial management practitioners drawn from across the public and private sectors.
The range of commercial and procurement consultancy and advisory services Apsiz specialise in include spend analysis, spend recovery, strategic sourcing, category management, eSourcing, eAuctions, contract management and strategic supplier management. Based on our prior experience of delivering category strategies and frameworks within the public sector, Apsiz provide market leading Bid Writing and Bid Management support services.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now