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E-business & Logistics

The Power of the Web: Modernizing Your Supply Chain Management Plan

by Ian Lodge

Logistics providers have always known that a company’s success depends on the success of its supply chain. Now companies in every industry have begun to realize that to meet customer expectations, efficient supply chain management is not just a strategic advantage—it’s a competitive necessity.

Just as companies have recognized the importance of an efficient supply chain, new tools have begun to arise that claim to improve every aspect of a company’s supply chain plan. One of these tools is the private marketplace, an online community that ties a company to its suppliers, its partners and even its customers.

In the past, basic supply chain management was simply rudimentary information management. Companies gathered important information - such as shipping rates, suppliers’ warehouse stock and delivery dates - by placing telephone calls and sending emails. When demand fluctuated, both manufacturers and logistics providers lacked the visibility needed to respond quickly and efficiently. This form of supply chain management would often result in high cost per unit sold, poor delivery performance, low customer service levels and a greater need for expedited shipments.

Although advanced supply chain management solutions have made collaboration more efficient than with traditional models, faster communication with suppliers and logistics providers is still needed as customers turn to the Web as a primary source for products and services. In today’s business world, customers expect to have their demands met quickly and efficiently, and companies need to respond to these demands in real time to stay competitive.

Private Marketplaces
Now there are private marketplaces. As business continues to evolve, the keys to survival lie in a company’s ability to streamline the connection between the participants in a supply chain, and view all participants’ information via one access point. Private marketplaces can accomplish both of these goals, allowing companies to fully realize the competitive potential of their supply chain, and improving both efficiency and profitability.

Also, since marketplaces allow for data to be instantly shared among participants, companies can make business decisions in real time - allowing them to meet customer demand more efficiently.

Another advantage of private marketplaces is that they provide a community for businesses that share a common goal. The initiating company controls marketplace membership, determining which suppliers, manufacturers, logistic providers and customers have access.

In addition, private marketplaces are scalable, providing a forum for companies to work out business issues with their regular suppliers, logistics providers and customers before expanding their sights globally into a public marketplace.

Once a company is ready, the transition from private to public marketplace solution is more easily made, and a company can further capitalize on its potential for growth and savings. Public marketplaces, or online trading communities, provide great opportunities to expand business connections - and more industry-specific Web communities are sprouting up all the time. By participating in public marketplaces, companies can gain access to a wide range of information and reach a wealth of new suppliers and customers immediately.

For example, marketplaces allow logistics providers to improve equipment usage, streamline operational workflows, plan more efficient transportation networks and improve customer service.

Logistics providers can also capitalize on new selling opportunities by determining if services can be provided more quickly or at lower cost to the customer in the marketplace. They can then underbid or quote a better delivery date than their competitor(s) before the business is awarded.

Logistics providers can also gain immediate visibility into multiple jobs, allowing them to combine loads for maximum efficiency and reduced transportation costs.

Advantages for Manufacturers
For manufacturers, a marketplace can provide greater efficiency, leading to better customer service and reduced costs. For example, if a logistics provider is unable to meet a shipping date, other suppliers have access to the information immediately, and can offer to step up and perform the task. The company does not need to waste time searching for another shipper - the shipper will come to them.

Marketplace solutions also allow companies to respond more quickly to changes in demand and delivery needs, with the assurance that these changes will be handled at the least possible cost. This ability to adapt to changes in the market will improve customer service and reduce costs.

Through the Web, companies can further leverage their solutions, gaining an instant connection to every participant in their supply chain. The use of Web-based solutions, such as private marketplaces, results in greater efficiency, better customer service levels and a better-integrated logistics community. Modernizing the supply chain through online private marketplaces is the next logical step for companies who seek to stay ahead of their competition - and who recognize the almost limitless potential offered by the power of E-Business solutions.