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1980s/90s: Supply chain management and efficient consumer response (ECR)

Effective management of the supply chain involved much closer integration between 

the supplier, customer and intermediaries and in some instances involved one organi‑

sation in the channel taking over functions that were traditionally the domain of the 

intermediary. Bottlenecks or undersupply/oversupply can have a significant impact on 

an organisation’s profitability. The two primary goals of supply chain management are 

to maximise the efficiency and effectiveness of the total supply chain for the benefit 

of all the players, not just one section of the channel, and to maximise the opportunity 

for customer purchase by ensuring adequate stock levels at all stages of the process. 

These two goals impact upon the sourcing of raw materials and stockholding. A recent 

phenomenon has been the rapid growth in global sourcing of supplies from preferred 

suppliers, particularly amongst multinational or global organisations. The Internet 

will provide increased capability for smaller players to globally source raw materials 

and therefore improve their competitiveness. Quelch and Klein (1996) argue that the 

Internet will revolutionise the dynamics of international commerce and in particular 

lead to the more rapid internationalisation of small and  medium‑  sized enterprises. The 

web will reduce the competitive advantage of economies of scale in many industries, 

making it easier for smaller companies to compete on a worldwide basis.

New integrated information systems such as the SAP enterprise resource planning 

(ERP) system have helped manage the entire supply chain. ERP systems include mod‑

ules which are deployed throughout the business and interface with suppliers through 

EDI or XML. These can potentially automate the requests for new orders. Technology 

has enabled the introduction of faster, more responsive and flexible ordering, manu‑

facturing and distribution systems, which has diminished even further the need for 

warehouses to be located near to markets that they serve.