E-Commerce and collaboration
E-Commerce has made a huge impact in a relatively short timescale. In the last decade it has redefined the term 'shopping' for consumers and changed the face of retail for merchants. Now every retailer recognises that they must have an online offer if they are to attract customers and keep pace with the competition. In order to survive and thrive, they need E-Commerce.
There are numerous challenges that E-Commerce presents for manufacturers, e-retailers and logistics providers.
And, remarkably, this is only just the beginning of the E Commerce story because its potential - in terms of emerging markets, cloud computing and mobile technologies, etc - hasn't even begun to be explored. The future is bright and the financial possibilities considerable. In JP Morgan's annual Nothing But Net: 2011 Internet Investment Guide on digital commerce, Goldman Sachs predicts that global E-Commerce sales will reach $963 billion by 2013, growing at an annual rate of 19.4 per cent.
However, as we have seen, there are numerous challenges that E-Commerce presents for manufacturers, e-retailers and logistics providers. For most of civilization, retail meant bartering with people in your own physical space and time. Enabled by e networks, in 2012, it often means short-term agreements executed for and with people in distant places who you may never meet. A successful E-Commerce transaction, therefore, is all about good order fulfillment. That means reliable and timely delivery.
More visible and even more collaborative
Yet in order to function properly, protect profit margins and inventories and raise customer service levels, the e-retailer is going to have to drive down costs by enhancing supply chain efficiencies. That means embracing a way of working closely with partners including logistics providers, intermediaries and even other e-retailers. In other words, the supply chain of the future will have to become even more visible and even more collaborative.
'Collaboration' doesn't simply mean sharing warehouse space - although that may be part of the solution in some instances, with competing retailers and competing manufacturers looking to consolidation centers for savings on everything from rent and utilities to transport costs. For example, rival consumer electronics companies are sharing facilities via DHL in Scandinavia, and Carrefour is sharing space with other retailers in France.
Logistics providers will also have to work together with their customers to improve forecasting and replenishment by integrating information systems and sharing business-specific information. Based on trust and linked information systems, companies will pool their data to create a whole new picture of financial and physical flows that wouldn't otherwise be possible. They'll aim to balance supply and demand to reduce the cost of shifting goods around the world - and to maximize sales for the manufacturer and seller.
Boosted by ever-cheaper computing power and storage space
The ability to do all this has been boosted by ever-cheaper computing power and storage space as well as the expansion of the cloud and cloud-based software services. Dell, Toyota and Wal-Mart have each found new ways to collaborate that were enabled by connectivity. Toyota, for example, links up with its suppliers electronically, sharing key information that allows Toyota to better coordinate its manufacturing schedule.
Even here there are challenges to confront. Simply having the technology to facilitate collaboration won't be enough on its own. The willingness among all players to make it happen has to be strong, too. E-Commerce is still in its infancy but, to be successful in its future, companies will require a community of spirit - and a new way of thinking.