Strategic Internet application trends in supply chain management
Richard A. Lancioni , Michael F. Smith, Hope Jensen Schau
Department of Marketing, Fox School of Business, Temple University, Speakman Hall, Philadelphia, PA 19122, USAAbstract
The Internet is evolving as a powerful force in the new marketplace where the nexus of competition has changed from individual firms to efficient supply chain networks both between firms and within industries. This study explores Internet adoption patterns and operational applications in US supply chain networks. The data reveal that the integration of the Internet into supply chain management applications has increased and has moved away from indiscriminate application of novel Internet technologies towards becoming a focused endeavor with precise expectations and measurable goals. Specifically, the study finds that Internet usage within supply chains is maturing as evidenced by enhanced and increased productivity, reduced costs and increased profit for participating firms.
D2002 Elsevier Science Inc. All rights reserved.
Keywords:Internet; Supply chain management; Electronic Data Interchange
1. Introduction
Over the last 5 years, US business operations have begun to feel the power of the Internet in real, measurable ways. Some estimates suggest that revenue from supply-chain planning suites will reach US$4 billion by 2004 [3]. The Internet’s impact was initially, and continues to be, multi-dimensional in scope. The president of GENCO stated: ‘‘Exchange of information will fuel the efficiency through-out the supply chain. It’s as much abthrough-out distributing information as it is distributing the physical product’’ [12,p,38]. For some industries, the Internet has made exist-ing productivity smoother and more efficient, while for others it has actually increased overall productivity levels. One clear example of the potential for increased supply chain productivity is in the health-care industry where acquisition expenses alone can account for upwards of 45% of a firm’s total expenses [3]. Other industries have found the Internet to improve communication among cus-tomers and suppliers, smoothing the existing flow of goods and services throughout the supply chain, while in other instances, the Internet has helped firms more effectively manage their branch and international operations, saving valuable corporate resources.
Indeed, the Internet has, in multidimensional ways, positively affected the ways firms are managed from oper-ations to strategic planning. The Internet has amplified the trend away from single firm competition, in favor of competitive supply chain networks. In a strategic context, an analyst from the Gardner Group indicated that ‘‘Today, more companies are becoming aware of their competition, and that’s driving the need for supply-chain management’’ [3,p,110]. Furthermore, ‘‘the level of adaptation and coop-eration increasingly necessary in the supply chain means that electronic commerce takes on an increasingly critical role’’ [15,p,175]. By allowing real time communication between supply chain members, interlocking databases and up to the moment shipment tracking, the Internet has quickly become an essential business component in today’s competitive markets. One of the management areas where the Internet has had a substantive influence is on supply-chain management. Here, the Internet has affected all areas of operation from transportation and fleet management to the ways companies procure materials and process orders.
The ubiquitous impact of the Internet on domestic supply chains has raised many questions as to the range of its application by companies and the degree of Internet usage in various operational areas. For example, how has the Internet been applied to purchasing and what has been its effect on procurement strategies? How has the Internet been applied in the management of inventories and what specific areas has its application been most frequently been
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E-mail address:[email protected] (R.A. Lancioni).
used? What cost improvements and service affects has the Internet allowed firms to enjoy since its application to supply chains more than 3 years age? On what manage-ment planning level (strategic, tactical or operational) has the Internet had the most profound impact? What influence does company size has on the application of the Internet to supply chain management? Do preexisting Extranet sys-tems foster or hinder the application of the Internet in supply chains? Are Electronic Data Interchange (EDI) and Just-in-Time (JIT) systems enhanced through the addition of the Internet or made more limited by the new tech-nology? And, what is the trend in usage of the Internet in supply chain management? These and many other ques-tions are important ones to find answers to, if firms are to plan effectively for the future deployment of the Internet in the management of their supply chain systems. The import-ance attached to the application of digital technologies is exemplified in a report cited by Roberts [16], which indicates 8 – 35% reductions in supply chain costs, 22 – 85% reductions in inventory, 12 – 42% delivery improve-ments and 17 – 68% cycle time improvement.
2. Objectives of the study
To find answers to the questions above, the Department of Marketing at Temple University conducted an on going nationwide survey of firms that are members of the Council of Logistics Management (CLM) to determine their usage of the Internet in their supply chain systems. The first study was conducted in 1999 and the second study was completed in early 2001. While the first study focused on Internet usage across supply chain issues, the more recent study also incorporated managers’ perceptions of the effectiveness of the Internet for these issues.
3. Methodology
In the first study, 1000 CLM members were randomly selected from the CLM membership roster and were sent e-mail questionnaires that were four pages in length. In the 2001 study, a similar number of CLM members were also selected and emailed the same questionnaires to determine the changes that have occurred in Internet usage in their respective supply chains. The 1999 study had a response rate of 18.1%. The 2001 survey had a response rate of 19.3%. Although the respective response rates are relatively low, the number of returns may be compensated by the extreme heterogeneity of the industries and companies represented by the respondent firms. Furthermore, the method of selecting potential respondents in conjunction with the purely exploratory and descriptive nature of this research makes this an acceptable sample for our research.
Another factor that affects response rates is corporate overall use of the Internet, in supply chain operations. It
has been noted that many firms may be concerned about security issues and, therefore, may be less likely to allow access to supply chain operations over the Internet[3]. Other Internet integration issues concern reliability, scalability, ease of use, payment[15]sharing information, system switching costs[7], consistent standards and the characteristics of the product such as value, frequency of purchase and information requirements[8]. Consequently, one study indicated that less than 3% of buyer – seller communications transpired through an electronic medium such as EDI or the Internet [10]. Mueller [13] reports that only 50 of Wallace Computer Systems Services 131,000 customers are using third party e-procurement systems. Finally, Kilgore[9]quotes a National Association of Purchasing Management/Forrester Research report, which indicates that 60% of surveyed respondents are still in the earliest stages of deploying an e-procurement system.
Aside from the seven substantive supply chain decision areas, the questionnaire also addressed Extranet and Intranet usage. All of the supply chain dimensions addressed in the questionnaire were analyzed using Student’st-test, multiple response and cross-tab analyses. Extranet and Intranet usages were also explored by contrasting the size of the firms measured in terms of sales, number of employees and involvement in international operations.
4. Study findings
The two surveys indicate that Internet usage in supply chain management has declined somewhat from 90.1% of all firms in the study to 77.8%. This result should be viewed with caution due to the self-selection bias inherent in this type of survey. For instance, more firms may have been willing to claim Internet participation in 1999, when Internet applica-tions were more fashionable. Also, queried respondents may be unaware of their firm’s total Internet usage level. The strategic implications of the decrease in Internet usage is in part due to the expertise firms have gained in applying Internet technology to their operations. As shown in the 1999 study, participant companies were eager to deploy the Internet wherever possible in their respective supply chain operations, e.g., in customer service, purchasing, inventory management, etc., hoping to reap some sort of benefits such as lower costs and improved efficiency. This early adoption behavior may be classified as a ‘‘whatever sticks’’ approach, where the new Internet technologies were indiscriminately applied to discover which uses yielded the best results. But this ‘‘rush to judgment’’ approach did not provide such benefits across the board. These firms found that only selected areas of the supply chain saw significant improve-ments, such as, in inventory (E= 3.74) management, pur-chasing (E= 3.89) and transportation (E= 3.40). The effectiveness levels in customer service (E= 3.03), vendor relations (E= 3.10) and order processing (E= 3.19) while still good, were below the expectations of senior supply chain
managers. It is surmised that a learning curve dynamic has developed in supply chain management regarding the deploy-ment of the Internet. As time goes on, some areas will continue to show demonstrable improvement, while others will show modest gains or level off.
Table 1 shows the relative changes in each operational area of the supply chain in terms of Internet application from 1999 to 2001. The single largest increase in Internet usage occurred in purchasing from 45.2% in 1999 to 86.7% of the firms in 2001. The benefits accruing to the procurement area include lower labor overheads due to the downsizing of purchasing departments as on-line vendor catalogues enable individual departments to procure products and services directly without the need for a purchasing department, and the reduced paperwork and administration needed to process a purchasing transaction.
The second largest increase in Internet usage was in transportation rising from 56.2% of firms in 1999 to 84.3% in 2001. The rise in this area is in part due to the sharp increase in technology such as Internet fleet management, system-wide ‘‘customer capable’’ tracking and tracing software packages, improved claims management, lower back-haul rates due to improved fleet management, improved operator productivity, increased outbound truckload and carload ship-ments. The result has been sharply lower transportation costs and higher levels of productivity. For example, in the area of tracking and tracing, United Parcel Service lowered its individual per trace costs from US$1.54 to less than US$0.40 when the Internet tracking was developed in 1999.1 Inventory management enjoyed an increase in Internet deployment rising from 30.1% in 1999 to 48.5% in 2001. The increase was, in part, due to the lower costs firms experienced from lower inventory levels. This was achieved through the real time availability of stock level information at all levels in the supply from customer stocks, field inventories and plant inventory levels. For example, the Big Three auto companies lowered stock levels in all parts of their assembly process by an average of 4% in 1999. Each one-point drop in inventory results in more than one hundred million dollars in savings for the individual firm.2
Customer service experienced the fourth largest increase in Internet usage over the last 2 years rising from 52.5% of the sample respondents in 1999 to 67.1% in 2001. This approx-imately 15% increase results from the ability of firms to raise their customer service levels through improved service response times and faster problem resolutions. Concomitant with these benefits has been the ability of firms to develop higher levels of customer retention and loyalty. This has enabled many companies that, heretofore, had more difficulty with customer churn when confronted with competitive price challenges, to respond with better service strategies to offset the competition.
Vendor relation applications of the Internet increased by 11.9% from 1999 to 2001. The rise was, in part, due to the development of on-line catalogues, Internet exchanges and the ability of firms to integrate their production plans with the procurement support needed from vendors. The Internet enabled both parties to keep in close touch with one another in the development of JIT and vendor-management-inventory programs and to make near seamless stock level adjustments. With the trend toward the development of strategic vendor partnerships, the Internet has made it much easier for com-panies to develop such relationships.
5. Purchasing and the Internet
The use of the Internet in managing purchasing in the supply chain has developed rapidly over the last 10 years. Boyle and Alwitt [5]indicate, in the context of the plastics industry, that the most often cited use of the Internet was for consummating the transaction and acquisition of tech-nical advice. For example, Roth[17]reports on a study of e-Procurement applications that shows that top performers conduct more than 20% of their transactions online. The research shows that the Internet is utilized in a variety of procurement applications including communication with vendors, checking vendor price quotes and making pur-chasing from vendor catalogues. The Internet has also enabled companies to set early warning damage systems, provide information on warranty agreements and assist in vendor negotiation. One study indicated that electronic commerce systems have the potential to reduce order cycle times from 7 to 3 days [1]. After instituting a new electronic request-for-proposal process, Xerox expects to realize a 15 – 20% savings in annual spending [4]. The research demonstrates that the application of the Internet to procurement has grown substantially in all purchasing applications. As shown in Table 2, in nearly every pur-chasing area, the percentage of firms utilizing the Internet has nearly doubled. Procurement areas experiencing the greatest growth in the Internet are ‘‘early warning dam-age’’ notification systems by vendors and the status of vendor warranty programs for buyers. Both areas are critically important in the management of supply chains.
1
UPS Lowers Supply Chain Costs,Warehousing Management, Winter, 2000, p. 24.
2 ‘‘The Power of Inventory,’’On-Line Logistics, April, 2000, Vol. 3.
Table 1
Internet applications by logistics decision area application
1999 2001 % Using Purchasing/procurement 45.2 86.7 Inventory management 30.1 48.5 Transportation 56.2 84.3 Order processing 50.7 63.4 Customer service 52.5 67.1 Production scheduling 12.3 19.5 Relations with vendors 45.3 57.2
Both Internet applications can significantly lower purchas-ing costs and improve product quality for firms.
6. Inventory management and the Internet
Inventory management is the most costly area in the supply chain to manage and maintain. Inventory generally accounts for approximately 45% of the costs of a logistics system in a firm. Generally, any cost reduction that results from the use of the Internet in this area translates into immediate profit improvement. One study reports a reduc-tion in system-wide inventories for Herman Miller, of nearly 30%, with the application of digital technologies [18]. Table 3 shows that application of the Internet has grown dramatically from 1999 to 2001 in several inventory management areas including JIT delivery programs and the maintenance of field depot stock levels. An area where the Internet has grown is in the communication of stock-outs to customers. Such notification has reduced the number of backorders and improved in-stock maintenance across com-pany supply chains. Customers are prenotified of what is available before orders are placed and they can order substitute products whenever necessary. The percentage of firms using the Internet in this way rose from 31.5% in 1999 to 45.5% in 2001.
The largest usage increase in Internet application to Inventory in supply chains occurred in the development of EDI programs with vendors. Here, the Internet is either replacing existing EDI systems or augmenting those already
in place. Existing EDI programs can be expanded with the Internet or replaced with less expensive systems.
The growth in Internet inventory applications will enable firms to become more proactive in managing inventory. Inventory planning will become more precise and the ability of firms to respond to demand and or supply ‘‘spikes’’ will become less of a problem. Contingency inventory planning will be more streamlined at the plant, field, depot and customer inventory levels in a supply chain.
7. Transportation and the Internet
Transportation applications of the Internet have grown substantially from 1999 to 2001. In almost areas, its usage has nearly tripled over the 2-year period. Atkinson[2]notes that since transportation is a communications-intensive business, there are many advantages to using the Internet to increase communications efficiency. In one instance [2], Honeywell found that it was able to reduce the transportation scheduling bidding process from 2 to 3 weeks to 72 h. For example, in monitoring of pickups from regional distribution centers, usage has climbed from 22.3% to 64.4%. In addition, in the tracking of drop-offs at regional centers, the usage again tripled from 21.9% in 1999 to 65.5% in 2001(Table 4).
On-time arrivals monitoring also increased from 41.1% in 1999 to 62.2% in 2001. The rise in this area has resulted in significant cost savings for carriers and improved customer service for buyers. The Internet has reduced the number of lost shipments and reduced shipper claims. When claims do arise, the research shows that the use of the Internet for claims management has grown significantly from 26.0% in 1999 to 67.7% in 2001. Such growth demonstrates the value that firms perceive the Internet to have in this area. Cemex reportedly reduced its 3-h delivery window to 20 min using digital technologies[18].
8. Order processing and the Internet
The second most popular application of the Internet in supply chain management is order processing. For instance, Bryant[6]notes that in the electronic manufacturing services industry, one of the benefits of the Web is the streamlining of the quotation process. Do It Best, a building distributor, reports[14]that since shifting to electronic purchasing, they
Table 2
Purchasing and procurement applications
1999 2001 % Using
EDI with vendors 37.0 48.3 Purchase from catalogs 39.4 58.9 Communicate with vendors 52.1 67.2 Negotiate with vendors 36.0 69.2 Check vendor price quotes 32.9 73.5 Early warning damage notification 21.9 43.7 Vendor warranty issues status 19.4 45.6
Table 3
Inventory management applications
1999 2001 % Using
EDI programs with vendors 27.4 62.6 JIT delivery programs 28.4 42.5 Communicate out-of-stock 31.5 45.5 Order ship date delays 37.0 53.1 Raw material inventory levels 24.7 46.7 Emergencies affecting inventory 31.1 45.5 Finished goods inventory levels 27.4 55.4 Field warehouses/depots inventory levels 32.9 62.4 Field depots on out-of-stock 26.0 59.1
Table 4
Transportation applications
1999 2001 % Using
Pickups, regional distribution centers 22.3 64.4 Drop-offs, regional distribution centers 21.9 65.5 Monitor on-time arrivals of carriers 41.1 62.2 Managing claims, overall performance 26.0 67.7
have been able to reduce inventory by US$4.5 million do to the elimination of mail time. The Internet applications in these areas, which have grown since 1999, are ‘‘order placement and status’’ (52.1% in 1999 to 67.7% in 2001) and the ‘‘monitoring of vendor orders’’ (27.3% of firms in 1999 to 55.5% in 2001). Again, as experienced in many of the supply chain functions, the overall usage has increased dramatically since 1999.
Undoubtedly, the data demonstrate that the Internet is playing a significant role in lowering overall purchasing costs for firms. This has enabled buyers to develop knowledge of competitor prices and make more economical purchases for their respective companies. The single largest increase was in ‘‘obtaining price quotes from vendors,’’ rising from 19.2% of firms using the Internet in this way in order processing to nearly 48% in 2001 (47.7%). As an example of effective application of digital technologies, Herman Miller was able to reduce its order-to-delivery cycle from 8 to less than 2 weeks, while Weyerhaeuser was able to reduce order-pro-cessing time from 3 to 4 weeks to 15 min[18].
Another area in order processing usage rate that has increased dramatically for Internet application is in the tracking of returned customer merchandise. A return order can cost a firm as much as 12 times more to process than an out bound order. Better management of this process will help firms reduce this cost by as much as 50%. The percent of firms using the Internet in this way grew from 21.5% in 1999 to 35.5% in 2001(Table 5).
9. Customer service and the Internet
Maintaining service levels has and will continue to be an important task for firms. This research shows that a great number of companies are recognizing the potential that the Internet has in this area. Since 1999, areas where the Internet was used in customer service increased significantly in 2001. For example, in the provision of technical information to customers, the usage has grown from 29.8% of firms in 1999 to 52.2% in 2001. In the use of the Internet to receive
customer complaints, 43.8% of firms used the Internet in 1999 and 58.8% in 2001(Table 6).
The single largest increase occurred in the area of out-source service management. Only 15.1% of firms used the Internet in this way in 1999. In less than 2 years, over 50% of all companies are now using the Internet in this way, enabling them to outsource many functions and lower their operational costs and reduce overhead.
10. Vendor relations and the Internet
Managing vendor relations in supply chains is a key ingredient in maintaining an effective flow of products and services. The research shows that Internet application has increased most significantly in ‘‘monitoring vendor raw material stock levels.’’ The number of firms using the Internet in this way grew from 13.7% in 1999 to 56.6% in 2001. In support of this increase, one study indicated that information quality had a positive impact on buyer – seller relations[10]. The rise was due to the improved data linkages between supplier firm raw material levels and the production sites of customers. In addition, customers were more willing to share their production schedules with their vendors, thereby cre-ating a close link between the two entities.
Another area that grew significantly over the 2-year period was ‘‘performance ratings of vendors.’’ The Internet applica-tion doubled from 28.8% of firms in 1999 to 46.6% of firms in 2001. Along the same line, rating the onetime performance of vendor carriers also grew from 20.5% of firms in 1999 to 52.2% of firms in 2001(Table 7).
Table 5
Order processing applications
1999 2001 % Using
Customer order status/placement 52.1 67.7 Monitoring vendor order efforts 27.3 55.5 Customer on out-of-stock 28.8 41.4 Check customer credit 22.3 39.8 Check vendor credit 21.5 42.3 Tracking returned customer merchandise 21.5 35.5 Total customer order cycle performance 22.4 29.6 Credit processing status of customers 21.5 32.7 Obtain price quotes from vendors 19.2 47.7 Provide price quotes to customers 31.1 42.3
Table 6
Customer service applications
1999 2001 % Using
Receive customer complaints 43.8 58.8 Provide technical service 29.8 52.2 Notify customers of emergencies 33.9 48.8 Sell to customers 47.9 63.1 Manage outsourcing of service 15.1 50.3
Table 7
Vendor relations applications
1999 2001 % Using
Vendor deliveries to depots 26.0 41.1 Vendor raw material stock levels 13.7 56.6 Purchase from on-line catalogs 41.1 52.3 Receive queries from vendors 38.4 48.9 Provide vendor information from queries 28.8 42.1 Vendor ratings on overall performance 28.8 46.6 Process returns/damaged products 24.7 38.3 Ratings of on-time performance of carriers 20.5 52.2
11. Internet and production scheduling
Production schedule coordination within supply chains has been improving over the last 5 years with the deployment Internet technology in logistics operations. This has enabled firms to expand their production operations around the world and manage them more effectively. The concept of the ‘‘extended enterprise’’ has been applied in numerous indus-tries enabling companies to take advantage of the low labor costs in various countries including China, Indonesia and the Philippines. This study demonstrates the growth of the Internet in coordinating production scheduling in variety of areas including those with vendors that increased from 21.9% in 1999 to 31.3% in 2001. The present data show the increasing integration of vendors into the supply chain operations of their customers and the growth of information sharing between them(Table 8).
Coordination of production schedules with field ware-houses using the Internet has also expanded from 13.7% of firms using it in 1999 to 27.1% in 2001. The doubling of the usage has significantly reduced the supply surges in invent-ory at field warehouses and enabled firms to keep inventinvent-ory levels much lower while simultaneously lowering costs. Another example of the significant increases in the use of the Internet to better manage production schedules is dem-onstrated in its use to coordinate JIT inventory programs (20.5 – 40.2%) with vendors. Again, improved coordination with vendors enabled companies to streamline their JIT programs and expand its usage to other product lines and other vendors.
The opportunity to take advantage of lower production costs and to source parts and finished goods from inter-national suppliers was enhanced through the increased use of the Internet to coordinate production schedules and supply requirements with domestic and international locations (19.1 – 38.4% and 16.4% and 43.6%). Efficient management of international supply chains is becoming a reality and not just an idea that many companies are enjoying. Geography is no longer a hurdle that prevents firms from internationalizing their supply chain operations.
12. Intranet and Extranet usage
This study shows that Intranets and Extranets are incorp-orating more supply chain management information into their databases. In the 1999 study, six of every nine companies were using their Intranets to manage their supply chains. In the 2001 study, 8 of every 10 companies in the sample are using their Intranets to run their supply chain operations. Similar results were shown in the development of Extranets with more and more firms including vendors and customers into their systems (45.2% in 1999 and 78.3% in 2001). The use of both systems to manage supply chains included the whole range of operational activities including purchasing, inbound transportation, inventory levels and outbound trans-port shipments.
13. Company size and the Internet
Boyle and Alwitt [5,p,333]found that ‘‘larger firms are more apt to use the (Internet) technology than small firms are.’’ Their findings were supported by this study where Internet usage was also compared to company size using the number of employees and sales volume as measures. A median split was used to dichotomize the size of firms based on firms with 500 or less and those with over 500 employees. Firms were also grouped in those whose sales volume was under US$250 million and those over US$250 million. The 1999 and 2001 studies, both found that larger firms as measured by employment were more likely to use the Internet to communicate with customers on order status (t= 3.65, P< .001) and to manage the outsourcing of customer service functions (t= 4.44,P< .003).
Using sales volume as an indicator of size, smaller firms were more likely to use the Internet in operational ways such as communicating with vendors on finished goods inventory levels (t= 2.09,P< .059) and with vendors on out-of-stocks (t= 2.56,P< .022). Conversely, it was found that larger firms use the Internet for purchase items from vendor on-line catalogs and supply lists (t= 2.02,P< .053) and to provide vendors with ratings for on-time performance of carriers (t= 2.25,P< .043).
14. Management applications
In a study of the application of digital technologies in Europe, Loebbecke and Powell [11] conclude that: ‘‘The Internet offers logistic service providers opportunities to streamline intra- and interorganizational processes and to increase customer satisfaction. Customers could access cur-rent information on freight rates, tariffs and schedules, find out about delivery time requirements and transport costs, and decide on the appropriate transport medium without a large investment’’ (p. 27). Similar conclusions can also be reached from the current study where it is shown that the Internet is
Table 8
Production scheduling applications
1999 2001 % Using
Coordinate schedules with vendors
21.9 31.3 Coordinate schedules with
field depots
13.7 27.1 Coordinate with JIT of vendors 20.5 40.2 Coordinate schedules with
multiple US sites
19.1 38.4 Coordinate schedules with
multiple international sites
used not only for operational decision-making, but also for strategic planning in supply chain management. Because of the realization that significant cost reductions in supply chains can result in major profit improvements, companies have been rapidly deploying the Internet in their operations from vendor relations to the management of field inventories. The most significant benefit of the Internet for supply chain managers is in the provision of rapid, accurate and compre-hensive information about each stage in their supply chain systems. In addition, the Internet has provided managers with the ability to be ‘‘agile’’ in managing their supply network. This includes the ability to:
1. Quickly adjust inventory levels, 2. Add or reduce carriers when needed,
3. Increase the speed in reacting to customer service problems,
4. More effectively manage distant facilities, 5. Reduce the level of paperwork in a supply chain
system,
6. Adjust material throughput when necessary, 7. Track shipments more accurately,
8. Develop cost effective purchasing strategies, 9. Improve production scheduling and
10. Reduce operational redundancy in supply chain systems.
The increased flexibility in managing supply chains that the Internet has provided has enabled logistics managers to introduce ‘‘customization’’ and integrate customers more deeply into their supply chains. This is manifested in the ability of firms to customize service solutions for their customers when problems arise. For example, customers can trace their own shipments rather than rely on the carriers to do it for them. Vendors can view customer production schedules and inventory levels and coordinate their own supply chains with that of their buyers. Carrier performance can be monitored at all levels of the supply chain from pro-duction point to field depots through to customer delivery locations. Inventory turnover can be monitored at customer demand locations and replenishment schedules established to reduce out-of-stock situations. JIT programs can be better managed through the Internet, thereby improving the pay-offs from these hybrid operations. Of course, the driving force that propels the growth of the Internet in supply chain man-agement is the lower costs and improved profits that com-panies have enjoyed from its application. Every dollar saved from supply chain efficiencies goes directly to the bottom line. This trend will continue to motivate companies to look for additional strategic applications of the Internet in their supply chain systems in the future.
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Richard A. Lancioni is Professor of Marketing and Logistics and Chair of Marketing Department, Fox School of Business and Management, Temple University, Philadelphia, PA. He has authored more than 120 articles in the field of logistics and marketing, and has conducted numerous seminars for many of the Fortune 500 companies including IBM, General Motors, Exxon-Mobil, Roche Pharmaceutical, DuPont, Coca Cola and many others. He has lectured and given seminars around the world including Europe, Japan, Australia and South America. He is recognized as one of the leading logisticians in the US. His research interests include customer service, pricing management, supply chain management and marketing. He is a member of the American Marketing Association and the Council of Logistics Management.
Michael Smith is currently Associate Professor of Marketing and Director of the E-Business Program, Temple University, Philadelphia, PA. He has authored numerous articles in the fields of retailing, marketing, pricing and channels of distribution. He has conducted numerous seminars for many of the leading US business firms. His research interests include channels management, retailing, supply chain management and marketing management. He is a member of the American Marketing Association and the Council of Logistics Management.
Hope Jensen Schau is currently an Assistant Professor of Marketing, Fox School of Business and Management, Temple University, Philadelphia, PA. She has authored several articles and proceeding papers in the fields of e-marketing, consumer behavior, advertising and marketing. Professor Schau’s research interests include Internet marketing, supply chain man-agement and marketing manman-agement. She is a member of the American Marketing Association and the Association for Consumer Research.