Supply Chain ​​Management - Strategic Element in Business Development

Liviu MĂRCUȚĂ, Alina MĂRCUȚĂ, Carmen ANGELESCU, Cristina TINDECHE .

Faculty of Management, Economical Engineering in Agriculture and Rural Development, Bucharest, Romania [email protected]

Print ISSN 1843-5254, Electronic ISSN 1843-5394 Bulletin UASVM Horticulture 71(1) / 2014

Abstract presents the role that

This paper try supply chain management plays in a business developing. Starting from the fact that the supply chain management is an important source of improving the company’s efficacy concludesand efficiency, that because it facilitates the logisticis a integration element between in business companies, development and because the integrated it management of the supply chains of the partners, in view of creating added value for the final client, the supply chain management strategic allows the creationKeywords: of long Supply term Chain relationships Management, or partnerships logistic, business, which performance, contribute to thefirms performance. of firms.

INTRODUCTION

The successful implementation of the Supply This scientific paper aims to highlight the role Chain Management leads to the emergence of a that Supply Chain Management has in developing new type of competition on the market which takes business, dwelling on features that e-commerce place not between companies, but between supply has, as following: profit increase by reducing costs chains, being an effective method of creating value areand also accomplishing described the some main appropriate electronic connectionsservices for for the client. the client, but not by growing sales volume. There In order to speak about the role of supply chain management in the development of e-businesses, within the e-commerce, relations which may we have to determine The the differenceCouncil of betweenSupply contribute to an efficient implementation of Chainlogistics Management and supply chain Professionals management. (CSCMP), Supply Chain Management. SupplyThus, Chain according Management to Supply Chain Management includes more issues than the traditional logistics functions, represents “planning being one of the most powerful instruments in theirand management conversion and of the all themanagement activities involved of logistic in increasing efficiency of the company, especially activities”establishing the source and purchase of products, in increasing the operational efficiency. Supply and Chain Management unifies all the processes in (CSMP, 2012). a single homogenous chain from the supplier, Oliver Webber(1992) show that Supply manufacturer, and merchant to the client. Chain represents a network of organiza- tions Resources and capabilities are combined and the which are involved by upstream and downstream design, manufacturing, and delivery of goods, connections in different processes and activities services and information are performed in an which generate values as products and services organization which is objective-oriented. which reach the end users. 136

Supply Chain ​​Management - Strategic Element in Business Development

Thus, Supply Chain Management unifies all mation flows and the coordination arrange­ments the processes in a single homogenous chain from acquire new values. the supplier, manufacturer, and merchant to the In a period in which globalization acquires client. Resources and capabilities are combined new values, when the Interned is used increa­ so that the design, manufacturing, and delivery of singly, in which the e-commerce has become an goods, services and information are performed in important source of incomes for an increasing an organization that is objective-oriented. number of companies, when the number of In a broader sense, a Supply Chain consists users is increasingly growing, the Supply Chain of two or several organizations which are legally Management is involved in the successful separated, but connected through material, development of the electronic commerce. financial and information flows, which may be This type of commerce has some particularities companies which manufacture components and that differentiates it from the standard commerce end products, companies which provide logistics and in its context, the logistic activity has an and the end user itself. Accordingly, the above important role. The elements which, have to be definition of a Supply Chain also includes the analysed are the relation between the value of target group - the end client. traded products and the generated transport In a narrow interpretation, the term of Supply expenses, as well as the complex stock. The logistic Chain refers to the big companies with several chain organization may contribute to a diminished seats, often located in Supplydifferent Chain countries. Management period of time necessary to process orders, to a From this definition results that logistic mana­ proper stock management and to profit increase. gement is a part of the The e-commerce is characterized by the and it’s role is to plan, implement and efficiently fact that it provides a high speed related to the control the normal and reverse flows, to stock performance of transactions, thus allowing the goods, services or information related to goods access to new market segments and a higher and services, establishing the connection between flexibility of the commercial policies. At the same the delivery places and consumption places, with time, the supply, promotion and distribution the aim of fulfilling the clients’ needs. costs are diminished, the trading procedures are The logistic activities can be divided in the simplified, an increase of the transaction value following 3 main categories: transport manage- occurs due to the method offered which stimulates ment, warehouse management and supply, Each of the buyers, by offering them the possibility to theseRight activities includeRight other products, sub-activities at the whichRight compare the prices offered by various sites, involve the enforcementRight of the 7RRight which costs, refers at the to: contributing to the increase of competitiveness Right“ quantity of the Right between companies. time, of the quality,et at al. the, The e-commerce offers the consumers a place and with the information sent to supple­mentary option to purchase online based all the partners” (Vasiliu 2008). on a visit made to a virtual store or site, which may Because, as indicated, the Supply Chain Mana­ be operated by a retailer, which usually performs businessgement includespartners, logistics,to product it and refers service both suppliers, to the the online commerce activity simultaneously with coordination, and to the collaboration between the standard physical sale operations. Also, be a site which belongs to a wholesale distributor and distribution channels and clients which thus it may combine the storage and logistics capability contribute to the integration and fulfilment of an of its disposal with a web platform which allows efficient management of the supply and demand the performance of direct sales to the consumers relation. Thus, it moves from the operational or it may be a site managed by a seller or by a activity, owned by the logistic, to a strategic activity producer which eliminates the intermediaries and outside the organization. establishes direct connections with the consumers. The notions presented above are applied to On the other hand, the electronic commerce all the companies that perform business acti­vi­ contributed to the upgrading of the methods of ties, including e-commerce. E-commerce leads to goods sale and delivery in the context in which changes in the logistic chain because the infor­ the clients request quickly delivered products and Bulletin UASVM Horticulture 71(1) / 2014 137 et al

MĂRCUȚĂ methods. products that can be ordered by flexible ordering - the e-commerce involves the supply of infor­ma­ tion regarding the online processing of orders, In this logistic chain, there are some critical booking of ordered products, calculation of pro­ points that may contribute to the failure of a duct prices and price management; business. Thus, the buyers want quick deliveries - together with the increase of volume of small which can be followed during the entire order orders, the increase of storage spaces and logis­ process, with specified costs. tic infrastructure occurs; Delay of orders, heavy return policies or - the e-commerce offers a higher self-service capa­ partially fulfilled orders are critical points which bi­lity. may be remedied only by establishing a proper Dantuma and Hawkins (2001) consider that logistic chain. Therefore, the electronic commerce innovation brought by e-commerce may be by requires the implementation of certain information three types: product innovation which implies the architectures in which the use of the Information development of new products and services or the and Communication Technology (ICT) and of development of new features of these products the Internet technologies is essential both in the and services; process innovation which implies performance of commercial transactions, and in the design or achievement of products or services; the organization of logistic chain. relation innovation which implies the use of new Bayles (2001), compares the standard modalities or methods of seller-buyer interaction. commerce with the electronic commerce and are: The three elements which define the structure identifies the main features of e-commerce and of of transactions are the base of these innovations, the logistic system which characterizes it, namely: - the e-commerce implies the delivery of a higher - the transaction preparation which means provi­ number of small packages to a larger number of ding the market with information regarding buyers; products or services and the receipt of these - the existence of a higher number of buyers unknown information; by the sellers; - transaction fulfilment means on the one hand the - the higher is the demand of products from a understanding and agreement regarding the higher number of buyers, more unpredictable order or the payment; and on the other hand, ordersand unstable to the it producers becomes; and distributors, and the transfer of products or services from the - because the buyers place directly online these seller to the buyer; - production support which refers to the - collec­ the sellers interact directly with them, both the tion and use of information regarding the trans­ origin and the destination of the orders is more actions made in order to establish marked trends dispersed; servicesand in viewtraded. of supporting the development, - in case of online orders, the responsibility covers productionThe main and electronic marketing ofrelations the products existent and the entire logistic chain, from supply to delivery; within the electronic commerce and their logis­ - the clients of e-commerce have much higher tic particularities expectations as regards the quality of comple­ men­tary services and demand a more rapid delivery of products; Because e-commerce may be performed - the e-commerce faces a higher incidence of re­ between different and types of entities, the following turned packages; typesB2C of (business-to-consumer) electronic relations were outlined - there is a higher demand of information connec­ (Florescu Dumitru, 2007): ted to the path of an order, but also a higher is a type of availability of information; elec­tronic commerce by which the sales are made - a certain reserve and caution of online sellers and to individual buyers. Numerous problems related service providers as regards the international to their behaviour may occur: security barriers, commerce; providing the buyers’ protection, transfer speeds. - the existence of an increased concern regarding E-commerce is the most spread trading the direct marketing; method on the Internet and is characterized by: Bulletin UASVM Horticulture 71(1) / 2014 high number of clients but with a relatively low 138

Supply Chain ​​Management - Strategic Element in Business Development

Fig. 1

Matrix of interconditionalities between logistics and e-commerce (Adapted from Dantuma and Hawkins, 2001) environment.transaction value; access is made by user name and mentCritical domain analysis wherefore of oneconcepts may present in logistics many password,B2B (Business-to-Business) and the Internet is used as technologic managementdefinitions and andopinions supply regarding chain thesemanagement. concepts.

is a type of electronic commerce which emerged in the ’80, By their own analysis, synthesis and reflection in which the participants are represented by capacityCustomizing multiple the points supply of view chain were management compared companies and which generates higher incomes conceptin the analyzed for the domain. e- commerce domain. thethan interactions B2C. The are existence predictable environment and repetitive. is highly standardizedC2B (consumer-to-business) being represented is a by type extranet, of electronic and Given that commerce which refers to consumers which sell their the Internet Making enjoys recommendations an increased using, and e-commerce drawing products or services on the Internet or which are searching conclusions.is an opportunity for business development. for sellers in order to place bids for products or services sold by them. Combining theoretical elements with C2C (consumer-to-consumer) is a type of electronic the practical ones have allowed us to ma­ke re­ commerce which refers to direct sales between consumers. commendations in this scientific paper regarding success chances increase for developing approaches of supply chain management in e- commerce affairs. The main aim of this research is to present the The methodology of our study was based on role that Supply Chain Management has in business’ content analysis of the important definitions of development, as well as its characteristics of the Supply Chain Management and the associated implementation within e-commerce. The second terms, based on a variety of secondary sources aim of the scientific paper is to highlight the main represented by scientific papers and other publica­ electronic associations within e- commerce and tions in the field. their logistic particularities MATERIALS AND METHODS So we pursued the study and analysis of the concept Supply Chain Management, to set conceptual delimitation’s in order to clarify the Among the research objectives are to be men­ Determining the main concepts of supply inextent e-commerce. of the Supply Chain Management concept chaintioned management.the following: In order to accomplish this and to present the particularities of its application intent, there were studied the main bibliographic references in logistics and supply chain manage­ Bulletin UASVM Horticulture 71(1) / 2014 139 et al

MĂRCUȚĂ RESULTS AND DISCUSSIONS the - which are the delivery terms Based on the presented information, - which are the methods to collect money? successful implementation of SCM will lead to In case of e-commerce, several logistic issues, a new type of competition on the global market, which influence the costs of these activities and not between companies, but between logistic the business profitability, have to be taken into chains, because many companies have reached a account, namely: maximum limit as regards the cost optimization The method of sending the order, which can and the improvement of customer services which be made by the client online or by phone, and of could offer them competitive advantages and finding alternatives for each type of order and the therefore try to find other outside sources of method of its fulfillment. Issues connected to the advantages. timetable of receiving orders by phone, the method Thus, the manufacturers improve the acquisi­ of registering the orders, the existence of price tion and production costs especially as result of tolists be and determined. the possibility of providing information delocalization. In turn, the distributors promote regarding the delivery, payment method etc. have chain.subcontracting. This means the expansion outside the organization and the integration in a supply The method of receiving, registering, control and centralizing the orders The management of a logistic chain involves The method of sending the orders to the the streaming of flows by optimizing as much suppliers. The following issues have to be taken as possible the costs (costs connected to stock into account: issues regarding the stocks which maintenance, costs connected to the circulation of would allow the fulfillment in any moment of physical flows, cots which involves the suspension the orders, the existence of minimum stocks, the of physical flows). establishment of methods of placing the orders As regards the flows which have to be opti­ with the suppliers, the establishment of maximum mized, they may be physical (oriented, mainly, delivery terms, the establishment of payment from upstream to downstream, but also reversed), terms and payment methods, the establishment financial flows (from upstream to downstream) of product return policy, the delivery method, and information flows (circulates by both ways, insurance and transport payment. preceding, accompanying or following the The method of product receipt, their control physical and financial flows). They start from the and delivery preparation. At the same time, “supplier’s supplier” to the “client’s client”. have to be found solutions for the case in which Thus, the Supply Chain Management has be­co­ the products are defective, the method of their me an effective way of creating value for the client, replacement, the delay for the client, how the client its role and connection between source, inter­ will be notified about the delay, how the package mediaries, producers, buyers and users becoming will be packed, if certain sizes of the package have increasingly important. to be observed, which are the transport costs etc. Supply Chain Management applications mana­ The method of delivery and of money collecting ge, forecast the demand, synchronizing the supply because there are several ways in which the client placewith theand demand. time. The correlation of supply with could gain possession of the order: product pickup demand offers the demanded product at the right at the company seat, delivery by post, express delivery, delivery by own personnel. At the same The usage of electronic commerce implies the time, transport fees have to be determined for organization of a logistic chain which takes into each of the methods, who will bear the transport account some issues, as the following: costs,CONCLUSION how these costs and the order will be paid. - which are the suppliers - which are the supply types - the intervals at which the supply is performed In this period characterized by the increa­sing - how are the products brought desire of globalization, the key for the compe­ - how are the products arranged in storage titiveness of an enterprise could be the electronic facilities and how are they packed commerce which may secure the entering into -Bulletin how UASVM is the Horticulture delivery 71(1) made / 2014 new market segments. 140

Supply Chain ​​Management - Strategic Element in Business Development

The e-commerce would extent company’s learn,mance innovate of the organization, and to evolve. and identification of possibilities by reducing cots and achieving some methods by which the companies continue to accessible services for clients. The advantages of electronic commerce are A successful implementation of supply chain represented by: management should accomplish the divergent - theclients expansion of the potential market by attracting admeasurements.exigencies of sales and production, quality and an increasing number of geographically spread price, costs and services, financial and qualitative

- development of the regional economy The Supply Chain Management objectives - increase of the visibility of products and services should be collaboration, confidence, appropriate sold by their enlisting on different sites, search themanagement costumer. of planning, as well as admitting that engines or portals Supply Chain Management starts and ends with - diminishingdepartment of total costs, but especially of the REFERENCES logistic ones related to supporting the sales 1. , . E-commerce logistics and fulfillment: delivering the goods, - diminishing of expenses for materials as a result 2. Bayles D. (2001), R.W. . E-commerce in Prentice Hall, New York cialof diminishing operations the consumption of paper or of the logistics sector. Assessing the effects on the logisticsDantuma value L.M.Y., chain, TNOHawkins (2001) other supplies used in the fulfilment of commer­ 3. u, and V. Report. Comert 01-41,ul TNO electronic and - a better dimensioning of stocks siTelematica impactul Instituut, organiza Delfttional - the diminishing of trading period FlorescBucurestiV. Dumitru (2007) , Amfiteatru Economic - the increasing of the level of knowledge and 4. M.D. . Supply chain nr.21, education of the employees as a result of management: logistics catches up with strategy. Oliver, R. K., Webber (1992) salaries.exchanges with the organizational culture of the 5. M. I. G. Logistics, partners, which directly influences the level of London, 1992 Vasiliu, C., Felea, Mărunțelu, Caraiani (2008), Choosing e- commerce as a way of trade prac­ Logistica și distribuția mărfurilor, Editura ASE, București CSCMP Supply Chain Management Definitions. tice means also, choosing an appropriate logistic 6. Council of Supply Chain Management Professionals, (2012), system, which should be suitable and adapted to [online] costumers’ requirements, connected to delivery Council of Supply Chain Management Professionals. available at: http://cscmp.org/aboutcscmp/definitions. speed, products and services originality, order asp, (Accessed September 2012) system flexibility and so on. The aim of the supply chain management is the clients’ satisfaction, obtaining of a high perfor­

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