E-Commerce Application in Manufacturing
Manufacturing is the transformation of raw materials into finished goods for sale, or intermediate processes involving the production or finishing of semi-manufactures. The production of goods and services is the result of the efforts of many organisations - a complex web of contracts and co-operation known as the supply chain or the value system. As shown below manufacturing requires various Components (e.g. wheels, seats, etc.), Sub-assemblies (e.g. engine, gearbox, etc.) etc, as well as include transportation, storage, paperwork (Orders, Invoices, etc).
Each supply chain transaction adds cost without adding intrinsic value.
As discussed above, E-Commerce can be applied to the supply chain to reduce costs or improve service. In this way e-commerce can enhance manufacturing process by:
•Enhancing efficiency.
•Reducing cost/cycle time
•Providing accuracy and flexibility
Supporting Inventory levels
E-Commerce Application in Wholesale
Wholesale is the sale of goods or services in large quantities and at lower prices to someone other than consumers. Wholesale consists of the sale of goods/merchandise to retailers, to industrial, commercial, institutional, or other professional business users or to other wholesalers and related subordinated services. Sometimes called middleperson, middleman or distributor.
Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots, for example pharmaceuticals; store, refrigerate, deliver and install goods, engage in sales promotion for their customers and label design.
Problems of Traditional Wholesale System
Under the impact of market forces, wholesale systems have undergone great changes. With various types of enterprises entering the wholesale market, traditional wholesale companies and trading corporations are now no longer the mainstream operators. Instead, specialized national or regional wholesale markets have emerged as major players.
However, even these wholesale markets cannot compete with foreign wholesale enterprises, which employ advanced management and operation methods. The operating costs of an enterprise using wholesale markets as its distribution channel are high. The costs include posting resident staff at the wholesale markets, setting up local warehouses, and establishing distribution centers in different regions in order to cover the national market.
Besides, tethered by the quality of the resident staff and geographic limitation, it is difficult for enterprises to obtain the right market information from the wholesale markets. As a result, although enterprises pay high costs, they cannot respond quickly to market demand. Further, as wholesale markets require large land supply and other supporting social resources, they create burden and wastage for the economy. Nevertheless, these wholesale markets have become a major component of wholesale sector characterized by its high input and low output.
Role of E-commerce in Wholesale
In a sound market economy, low operating costs, access to information and quick response are the key to success for an enterprise. Through advanced information technology, enterprises can reach out to the global market and at the same time obtain information from around the world at low cost and high speed.
Lower Transaction Costs.
E-commerce provides a fundamental solution to the problem of diminishing profit margin and brings new opportunities to the stagnant traditional wholesale business. It supports:
- Low operating costs
- Access to information
- Quick response
- Through the Internet, wholesalers can now gain the competitive edge that could only be enjoyed by multinational companies in the past.
E-commerce is developing worldwide at an unprecedented speed. Network economy has made a big impact on traditional economy. By shortening the distance between manufacturer and consumer, e-commerce posts serious threats to intermediaries in the supply chain. It also weakens the role of traditional wholesalers. Those that are unable to adapt to the network economy will be hard hit, while those that make use of new technology and seek change will transform into small but powerful new players.
It can be expected that wholesalers in the future will operate more like a portal site of an enterprise where only information gatherers, market analysts, a small number of operation and management personnel and network technicians are visible. Compared to the existing major wholesalers that have large number of employees, they will be much smaller in scale requiring less staff and less physical space. However, the ubiquitous and ever expanding Internet provides them with a cyberspace that will enable them to reach out to their customers throughout the world easily. It also offers them a wide range of information, intermediary and business services.
E-Commerce Application in Retail
Retailing involves selling products and services to consumers for their personal or family use. Department stores, discount stores and specialty stores like jewelers, toys are all examples of retail stores. Service providers, like dentists, hotels and hair salons and on-line stores, like Amazon.com, are also retailers.
Many businesses, like Home Depot, are both wholesalers and retailers because they sell to eoMumers and building contractors.
Importance of Retailing
As the final link between consumers and manufacturers, retailers are a vital part of the business world. Retailers add value to products by making it easier for manufactures to sell and consumers to buy. It would be very costly and time consuming for you to locate, contact and make a purchase from the manufacturer every time you wanted to buy a candy bar, a sweater or a bar of soap. Similarly, it would be very costly for the manufactures of these products to locate and distribute them to consumers individually. By bringing multitudes of manufacturers and consumers together at a single point, retailers make it possible for products to be sold, and, consequently, business to be done.
Retailers also provide services that make it less risky and more fun to buy products. They have salespeople on hand who can answer questions, may offer credit, and display products so that consumers know what is available and can see it before buying. In addition, retailers may provide many extra services, from personal shopping to gift wrapping to delivery, that increase the value of products and services to consumers.
Role of E-commerce in Retailing
Advances in technology, like the Internet, have helped make retailing an even more challenging and exciting field in recent years. The nature of the business and the way retailing is done are currently undergoing fundamental changes. However, retailing in some form will always be necessary. For example, even though the Internet is beginning to make it possible for manufacturers to sell directly to consumers, the very vastness of cyberspace will still make it very difficult for a consumer to purchase every product he or she uses directly. On-line retailers, like Amazon.com, bring together assortments of products for consumers to buy in the same way that bricks-and-mortar retailers do.
In addition, traditional retailers with physical stores will continue to be necessary. Of course, retailers who offer personal services, like hair styling, will need to have face-to-face interaction with the consumer. But even with products, consumers often want to see, touch and try them before they buy. Or, they may want products immediately and won’t want to wait for them to be shipped. Also, and perhaps most importantly, in many cases the experience of visiting the retailer is an important part of the purchase. Everything that the retailer can do to make the shopping experience pleasurable and fun can help ensure that customers come back.
E-Commerce Application in Service sector
The service sector or the service industry is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing and primary goods production such as agriculture), and primary industry (extraction such as mining and fishing).
The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry. However the focus is on people interacting with people and serving the customer rather than transforming physical goods.
The service sector consists of the “soft” parts of the economy such as insurance, tourism, banking, retail and education.
Public utilities are often considered part of the tertiary sector as they provide services to people, while creating the utility’s infrastructure is often considered part of the secondary sector, even though the same business may be involved in both aspects of the operation.
Issues for service providers
Service providers face obstacles selling services that goods-sellers rarely face. Services are not tangible; making it difficult for potential customers to understand what they will receive and what value it will hold for them. Indeed some, such as consulting and investment services, offer no guarantees of the value for price paid.
Since the quality of most services depends largely on the quality of the individuals providing the services, it is true that boobs “people costs” are a high component of service costs. Whereas a manufacturer may use technology, simplification, and other techniques to lower the cost of goods sold, the service provider often faces an unrelenting pattern of increasing costs.
Differentiation is often difficult. How does one choose one investment advisor over another, since they (and hotel providers, leisure companies, consultants, and others) often seem to provide identical services? Charging a premium for services is usually an option only for the most established firms, whe charge extra based upon brand recognition.
Role of E-commerce in Service sector
As discussed above c-commerce can be implemented in service sector for gaining competitive advantage by providing strategies for differentiation and cost leadership and customer satisfaction.
E-commerce will improve the speed of transactions, reduce management expenditure, increases competitiveness and helpful in the banking, insurance and financial sectors, and real estate, construction, telecom, tourism, postal and logistics services.
