[8] 2002 e-business-strategies-for-virtual-organizations

Moving from e-business to i-business strategies in virtual markets
identify the following areas for improvement: operating standards
and replenishment.
By applying common operating standards the retailer’s regional
distribution centres or stores can be optimized. When a regional
distribution concept is used, this strategy normally does not
include the exchange of information regarding the flow from the
retailer’s regional distribution centres to the stores, nor analytical
EPoS (electronic point of sales) data. However, there is still
a significant potential for improvement, e.g. delivery planning,
advanced shipping notes, cross-docking, and the use of bar
codes on pallets.
Efficient replenishment strategies build on EPoS data being
transferred to the supplier, who takes responsibility for deliveries
within agreed stock levels. If a direct-store-delivery system is in
operation, EpoS sales data is regularly included in the data
transfer from customer to supplier, otherwise the data flow is
normally restricted to contain the aggregate levels from the
customer’s regional warehouses. This concept contains a potential
risk for increasing the supplier’s costs, when the underlying
supply chain management strategies are not reconsidered. Since
retailers generally aim at minimizing their warehouse costs, they
tend to increase the frequency of orders, while reducing their
volume, thus striving for a ‘just-in-time’ delivery concept. This
will result in costs being transferred to the supplier, and most
likely an increased total cost volume within the supply chain. A
way of reducing the negative impact on the supplier is to provide
him with sales data and forecasts on either PoS or RDC level, thus
allowing a more accurate production and logistics planning.
Beyond the improvement of physical logistics, the flow of
information between the parts being involved in collaboration
and the handling of administrative issues play an important role
for succeeding with SRC efforts. Reducing non value added
activities by using information technology will result in cost
reduction, improved data accuracy, and less paperwork.
5.5.2 Driving supply chain management
In its current state, most of the impetus for supply chain
economics is coming from the retail side, based on achievable
cost reduction. While there may be a difference between
economies which focus primarily on increased gross margins
and those which target cost reductions, the strategy of supply
chain management that results is similar.
87