Sunday, May 31, 2015

E-COMMERCE – CONUNDRUM FOR MANUFACTURERS & THEIR SUPPLY CHAINS



Manufacturers build and sell their products to other manufacturers, retailers and wholesalers.  They usually do not sell direct to end-user customers.  As a result, they do not know end-customers.  Supply chains are meant to deliver low costs in the movement to factories and from them.
E-commerce is an opportunity for manufacturers.  There are large B2B opportunities with e-commerce sales.  These often involve accepting online orders and shipping from a factory or warehouse.  It is a basic program.
Advancing their position in e-commerce creates conflicts with manufacturers.  One, they do not practice—or understand—e-commerce immediacy with customer orders.  This fails to recognize and address what is happening with e-commerce.
Two, manufacturers often have good brand identity.  Yet, because of whom they sell to—intermediates in the larger view supply and selling chains, they do not sell to end-users.  They battle the large opportunity with online sales against selling directly to customers of their customers. 
As a result, their supply chains do not have the downstream focus and capabilities, especially to deal with the vital e-commerce immediacy. 
Manufacturers have to change.  The sales opportunities are too large to not participate directly in it.  It requires building a supply chain that can deliver e-commerce immediacy—and accepting a new way of looking at supply chains from their tradition low-cost views. E-commerce immediacy requires new supply chains—not relabeling the same-old practices.  If they do not, the supply chains meant for e-commerce will not succeed.  And that will hurt sales and may leave them watching competitors adapt and grow—at their expense.
They need the new supply chain management.