Purpose of Supply Chain Management
Electronic or digital business has setup its place in the market today very effectively whereas it has also affected the physical market very well. Biggest e-commerce industry’s organization in the United Kingdom is Amazon. Supply chain management of the e-commerce industry is quite different and effective too. Supply chain management defines the movement of the goods and services to the other industries and to the customers. It involves supply of raw materials to the other companies who will mold them into finished goods whereas supply to the market so that customers can consume the same (Christopher, 2016).
Amazon is a company which was almost first organization setup goodwill being an online business company. Under this brand name, all kinds of products are easily available which could be consumed sitting at home. Customers do not need to put many efforts while shopping through online websites. Amazon has developed goodwill of delivering genuine products because in this type of industry, the biggest risk factor is of getting defected products (Nepstad, et. al., 2014).
Supply chain management is the process of delivering the different varieties of goods and services across the different organizations as well as to the customers. There are a number of departments are linked with the supply chain management. Marketing team plays the role of generating demand of the products manufactured by the organization and other departments like wholesalers and consumers. Previously supply chain management and the distribution network were considered as the same, whereas there is a huge gap available between these two processes (Gil, et. al., 2010).
Supply chain management is the process of managing customer’s demand and as per customer’s demand adequate report submission to the production team with the appropriate time of the production so that customer’s demands could be fulfilled in the appropriate time. Basic functions of the supply chain management are to take orders from the customers and from the retailers and from the supermarkets. After taking orders from them, appropriate activities like procurements of those orders and quality of the products to maintain the constant demand of the products.
Whereas the distribution network of an organization is a process through which product reaches to the consumers. In the normal business organization after producing finished products, products are distributed to the wholesalers and distributors and after that they reach to the retailers, supermarkets, etc. And from there, customers could get those products in the required quantities from retailers and from the supermarkets (Ahi & Searcy, 2013).
Amazon is online company which provides all kinds of products to its customers in very reasonable rates and as well as in a very less duration of time. Apart from making available of different kinds of products at the doorstep of the customers, they also provide return systems also in scenarios where customer’s does not need thee product anymore; customer got the defective item, etc. These are some of the benefits which are provided by the online websites in relevance to the physical market. Customers have reduced shopping offline till the time they does not need urgent products (Monczka, et. al., 2015).
- As soon as possible, products will reach to the Amazon, the fast they can process the orders taken from the customers so maintain their interest in shopping online.
- Supply chain management also includes various numbers of contracts from the suppliers, distributors, courier companies, etc. All these activities are necessary for removing the disturbances from the working procedure of the organization (Wisner, et. al., 2014).
- Amazon has invented various kinds of delivery systems under which customers could get products within 24 hours, within 12 hours, etc. on paying a certain amount extra over the product’s price.
- Supply chain management has reduced the work of the other departments of the organization because previously Amazon needs to search every time for courier companies to deliver the customer’s orders but now courier companies have contracted for a certain period of time to overcome from the situation searching courier companies for the orders’ delivery.
- Amazon has a big advantage of goodwill which has helped the company to build reputation across the different parts of the globe. Customers who shop regularly on online websites, their first preference is Amazon and after that other companies come (Fawcett, et. al., 2011).
Benefits to Amazon from the Supply Chain Management
There are a number of e-businesses models present in the global economy which has brought drastic change in the business environment. Below are some of the models:
Business to customer or B2C model of business determines the relationship between buyer and the seller. In this type of business model, manufacturer or seller directly sells the products to the customers. Amazon which sells their products online is the best example of this kind of business model as customers select the certain products and place orders and then Amazon’s packaging team processes the order and then it is being delivered to the doorstep of the customer (Zott & Amit, 2010).
Amazon has started producing their own products to give competition to the organization whose products are sold by them. This will help the customers to purchase more durable and reliable products ass Amazon has a valid reputation amongst the various places of the globe.
Business to Business or B2B model of business defines the importance of all types of sellers who sells various kinds of products. Under this model of business one organization purchases some products or says raw materials to mold them into finished goods. For instance, manufacturer of biscuits purchases sugar and flour from other organizations within the business industry. Amazon also uses this business model as Amazon Company acts as the mediator between the customer and the seller, they provide a platform to sell the things to the sellers and they also provide a platform to the customers to buy at reasonable prices form the store and to perform this function they charge a reasonable rate of commission from the seller (Balocco, et. al., 2010).
Maintaining adequate relationship between the suppliers of intermediate products helps the organization to maintain the qualitative products because changing supplier could bring change in the quality of the products.
Customer to Business model of e-business determines the importance of the consumers in the term of business. Under this type of e-business model, consumers’ decisions affect the prices of the products. Auction sale is the best example for this kind of business model, under auction all interested customers are invited and then they bid as per their convenience and understanding towards the property. The customer who will bid with the highest amount for the certain products or property, the particular product will be sold to him/her. This kind of auction sale is generally performed by the banks who mortgage the properties and relevant goods in return of providing loans and if the person being declares as defaulter then his/her mortgage goods are sold under auction (Monteiro, et. al., 2013).
Banks and other agencies who organize auction sales needs to adopt the innovative techniques of posting advertisement regarding their sales through electronic as well as through print medium to attract more number of consumers.
Customer to customer type of e-business model defines the relationship of customers amongst the customers. Under this term, all the consumers become sellers when required and sells their products to the customers who require their products through an online platform. E-bay is the best example of this kind of business types. For instance, a customer having a play station from last 6 months but due to lack of time customer who purchased the play station is unable to play hence he decided to sell but where to sell he was not aware about the online platforms. E-bay provides buyers a platform to sell their used stuff to the buyers who require those products (Leonard, 2012).
Current E-business and E-commerce models
Online websites which provides platforms to sell used products have two options of free advertisement positing as well as primary customers under which customers’ needs to pay certain amount and their advertisement of selling products is being posted and shown to other customers on priority basis.
There are a number of benefits for maintaining a good relationship with the suppliers. Having effective supplier management is also becomes an intangible asset for organization. In the Amazon Company, they have very adequate supplier management through which organization could turns its opportunities into strengths and the impact of weaknesses could also be reduced with the effective supplier management techniques (Lambert & Schwieterman, 2012). Some of the benefits are discussed below:
- Decreased Cost: When organization move towards the new supplier in order to reduce its cost of production, various types of costs needs to be incurred for selecting adequate supplier amongst the dynamic environment of the business. And maintaining supplier relationship management helps the organization to avoid those various costs. If relations with the suppliers would remain constant that would be beneficial for the organization to avoid various issues and this also helps the organization to maintain the quality of the products (Tseng, 2014).
- Efficiency:An old supplier of the organization will understand the requirements of the organization without explaining to them. Whereas new supplier will consume time as well as it also affect in the delivery time period. Hence, it increases the efficiency for the organization when suppliers perform their duties very well.
- Reduce Price changing: Regular shifting of supplier would lead to changing in prices of the product continuously whereas supplier relationship management determines the benefit of maintaining fixed suppliers leads to avoid the change in the prices of the products. Regular changes in the price of the product also lead to shifting of the customers from other brand’s products and this will directly affects the profitability of the organization.
- Improvement in the understanding: Adequate supplier relationship management system brings an effective development of the behavioral understanding between buyer and the seller. Suppliers send the goods adequately to the manufacturers which helps them to produce effective and efficient goods on time. This helps the producers to take less time in comparison towards the time taken from the new suppliers.
- Improvements in the operations: Durable and reliable relationship between supplier and buyer helps to extract the innovative and unique ideas. As effective supply chain management could result in reducing costs and in improvement in the customer service. As customer service is also beings an important part of the supply chain management because providing adequate services to the customers because after sales services is an important part of the organization because it brings improvements in the relationship with the suppliers and the buyers (Prajogo, et. al., 2012).
Amazon Company has gained number of benefits from maintaining supply management relationships because the important factor affecting Amazon is customer services as they provide products to their customers online and chances of being defective and damaged products are valid as these are transported through road, air and train basis. Supply chain management has various parts and their various parts have various resources of affecting adequate customer relationships.
Conclusion
Supply chain management is the process of providing adequate raw materials and other supportive materials which would help the organization to produce finished goods that could be sold in the market to gain a reasonable rate of profit which is also useful for the growth and expansion of the business. Maintaining adequate relationships in the supply chain management helps the organizations to build effective goodwill in the market and along with maintaining goodwill in the market, it is also necessary for providing qualitative products to the customers. Because changing suppliers does not affect the prices of the commodities infect it also affects the productivity, stability and profitability of the organization. There is different e-business models present in the world business environment and that business environment is also useful for the purpose of maintaining effective and adequate relations (Meng, 2012).
References
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