A01 chaf6542 06 se fm indd

www.pearsoned.co.uk/chaffey

➔ 

A short history of the Sainsbury’s 

approach to e‑fulfilment models

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The telecoms supply chain

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The site also contains a range of 

study material designed to help 

improve your results.

Web support

Links to other chapters

The main related chapters are:

● 

Chapter 1 introduces the supply chain as a key element of digital 

business

● 

Chapter 7 considers the e‑procurement part of the supply chain 

in more detail

Case studies

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Part 2  Strategy and applications

  In the end business all comes down to supply chain vs supply chain. 

 (Robert Rodin, then CEO of Marshall Industries, one of the 

largest global distributors of electronic components, 1999)  

 Supply chain management is essentially the optimisation of material flows and associated 

information flows involved with an organisation’s operations. To manage these flows, digital 

business applications are today essential. Supply chain management is presented as the 

premier application of digital business in  Part   2    of this book since it is a unifying concept that 

incorporates  both  e‑procurement  ( Chapter   7   )  and   sell‑  side  e‑commerce  ( Chapters   8     and   9 ). 

By applying information systems, companies can enhance or radically improve many aspects 

of the supply chain. In the context of  Figure   1.4   , which was used to introduce the concept of 

digital business, supply chain management can be enhanced through  buy‑  side e‑commerce, 

internal communications, relationships with partners and  sell‑  side e‑commerce. Digital 

business technologies enable information flows to be redefined to facilitate the sharing of 

information between partners, often at lower costs than were previously possible. 

 Supply chain management capabilities are best known for their importance in deliv‑

ering profitability. For example, AMR (2008) reported that Nike, a company best known 

for its marketing, used improvements to its supply chain to increase operating margins of 

between 10 and 15% in each of the preceding four years. But for Nike and other companies 

which constantly innovate to renew products, selecting the right technology is important to 

‘ orchestrate the constant collaboration between supply, demand, and product management 

groups that brings profi table new products to market ’. Managing distribution and returns 

from e‑commerce sites is a further challenge.  Internet Retailing  (2010) reported that while 

the average rates of return to a  high‑  street retailer can be as high as 10%, the average for UK 

e‑commerce sites is 22%. 

 The importance of supply chain management capabilities to customer satisfaction and so 

repeat business for a digital business is highlighted by  Mini case study   6.1   .  

     Introduction 

 Mini Case Study 6.1 

 Constant investment in technology is vital for electronics component distributor  Premier Farnell , a growing 

business with a mission to deliver  industry‑  leading customer service. 

 The  FTSE‑  250 company, which supplies electronic components in North America, Europe and Asia, has 

a demanding group of valuable customers who need to know swiftly and accurately when their order will be 

shipped. 

 Most of them are design engineers building prototypes of  high‑  tech goods, working for manufacturers of 

a wide range of equipment. 

 ‘For our customers, service is paramount,’ explains Laurence Bain, chief operating officer. ‘They are 

looking for a product and they are looking for it now. 

 ‘So we had to address the completeness of our product range, our stock levels, and ensure  next‑  day 

delivery.’ As a result, an efficient supply chain operation is essential. 

 Premier Farnell sets a tough target: 99.9% of shipments must arrive the next day. Shipments also need 

to be complete. 

 Add to this a move into China – Premier Farnell now offers  next‑  day delivery to 90 cities for items in its 

Chinese distribution centre – and the company would seem a prime candidate for investing in a new supply 

chain management or ERP system. 

 Premier Farnell uses its global supply chain system to 

improve  customer  satisfaction 

FT

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