Internet commerce Essay Example | Topics and Well Written Essays - 1000 words

Internet commerce - Essay Example The orders are taken in seconds and customers want the overnight fulfilment of the order. The new concept of just-in-time ordering impacts the whole supply chain starting with the end customer through the manufactures and suppliers. Because the number of orders varies every day, there is an opportunity that one supplier might wrongly predict the demand and run out of one of the components. The lack of some part leads to the break down of the whole system. Unfortunately, most of the companies heavily advertise their products and do not realize that the component shortage leads to the loss of existing and potential customers because they are not able to satisfy the demand they had stoked. The shortage issue is especially critical for the popular products. Taking into account the example of PlayStation2 many of the potential customers were willing to buy the product but could not find it. As the result, they have switched to other brands. As the study has proved, one week delay in delivery leads to 5 percent probability of order cancellation. It is especially important for the large companies to retain customers because the struggle for market share is very intense. ... Importance of manufacturer/supplier communication In order to solve the above problems it is vital to get wired tightly with the suppliers, thus the suppliers should at least know what the manufacturer knows. For example, if the demand in the last two days has increased significantly, it is a good idea to contact the supplier and share this information. If such communication and information sharing occurs regularly, the suppliers are able to get ready for unexpected demand growth better. The close communication helps to deal with the demand decreases as well. Sometimes the surplus of product leads to even greater loss of income become these products have to be kept somewhere. Fortunately, most of the products sold through internet do not spoil over time and have extended warehouse holding. For example, if there is the surplus of MP3 players, the warehousing costs will be significantly lower compared to the holding of TV sets. At the moment, the communication between manufactures and suppliers is quite limited and suppliers are not able to handle the huge unpredictable number of orders from manufactures selling via internet. Partially, this shortage of products is the result of the poor communication - the suppliers do not get enough information from manufactures. It is easy to take a lot of orders, however, the manufacturers are slow to deal with the supply. For some reason companies are not willing to adopt new methods of managing supply and continue forecasting based on the historical principles and the judgment of the sales people. Nevertheless, the monthly planning is not useful any more and causes