The Tale of the Internet in the Supply Chain

The Tale of the Internet in the Supply Chain

Evan P. Greenbaum
Towson University

Greenbaum 1

The Tale of the Internet in the Supply Chain

Greenbaum 2

The Internet is without a doubt changing our society dramatically. We have social
networking sites like Facebook where you can see pictures and chat with friends from all over
the world, Twitter where you can voice your opinions and even view celebrity updates, and new
forms of communication like Chatroulette and Skype where you can face to face communicate
with anyone, anywhere. People say technology is a devil and a blessing. However, there is
really no right answer for those who feel that it is an immense benefit or major misfortune to
society. The Internet is a global form of communication that serves billions of users worldwide
and began with the development of electronic computers in the 1950s (Field 2011). The way the
Internet has affected the supply chain is definitely a prime example of whether or not technology
overall is a stupendous advantage to the world we live in today, or ample disadvantage. This
case is a very worthy lesson to research and discover more about because it not only is a
tremendous controversy in our society, but through evaluation, improvements to the supply chain
and world today can be constructed by accommodating ourselves to information gathered.
Through efficiency, effectiveness, and transformation of the Internet within the supply
chain, an answer to this debate as to whether the Internet brings along a lot more helpfulness or
burdens into the supply chain can definitely be concluded. The integration of the Internet into
the supply chain was aimed to improve efficiency in aspects of speed in which the supply chain
can produce, money in which the supply chain can make, and overall a way for the supply chain
to reach its maximum potential (Jacques 2012). The effectiveness of the Internet in the supply
chain has had a lot of mixed outcomes, some extravagant and what was expected, while some
outcomes that were very unpredicted (Blackhurst 2004). Overall when looking at the
transformation of the Internet in the supply chain as a whole, through gathered research, a
decision can definitely be constructed as to whether this technology in our society should be

The Tale of the Internet in the Supply Chain

Greenbaum 3

desired when looking at the big picture. This paper will explore the many great opportunities and
many winds that the Internet has brought to the supply chain.
Effciency
The integration of Internet technology, also known as E-business, into the supply chain
for certain was aimed to improve efficiency. Efficiency is how the Internet was supposed to aid
into everyones daily lives and well, make the supply chain at its absolute prime. The Internet is
supposed to make the supply chain more predictable because in previous times the supply chain
was very unpredictable (Blackhurst 2004). The way the Internet was aimed to do this was by
allowing a company to measure and manage the uncertainty within the supply chain in a
sharpened fashion, making for a much more lean supply chain. Without a predictable supply
chain, your costumers cannot rely on you. According to Alan Duncan, founder and director of
Forward Solutions working as a profession in the supply chain for fourteen years, the cost of an
unpredictable supply chain is detrimental to a companys success (Duncan 2003). This includes
an increase in working capital requirements, extended amount of inventory, and a loss of sales
through false delivery agreements to costumers (Duncan 2003). The Internet in theory is
supposed to also save time and money by doing everything much faster (Banker 2011). When
examining the Amazon Company, an online company where the user can directly order products
through an online store and database, this theory of time and money comes into play. Amazon
was aimed to increase efficiency by allowing users to no longer have to walk or drive to a store
to get products but instead, just shop online via the Internet (Heydari 2011). The Internet was
also marketed to make everything more global. This unquestionably would improve efficiency
in the supply chain because the more global a company is, the more access it has to the rest of
the world. This can also include potentially making the supply chain more resourceful by

The Tale of the Internet in the Supply Chain

Greenbaum 4

opening up many opportunities for raw substances from many different counties and allowing for
better strategies in each and every companies supply chain (Banker 2011). Although the
integration of Internet technology in the supply chain was aimed to overall enhance efficiency, it
brought forth many different effects both positively and negatively.
Effectiveness
The integration of the Internet in the supply chain has brought many beneficial effects.
There is no doubt that the Internet has done exactly what it was supposed to do in helping out the
efficiency of the supply chain. The Internet did in fact save time and money, made processes
much more expeditious and efficient, unbounded, flexible and truly did allow for the supply
chain to reach its maximum potential (Banker 2011). However, the Internet technology also did
so much more than that. Because of this remarkable integration between the supply chain and
Internet, companies were now able to sell their products online for a much higher price
(Rabinovich 2006). Companies no longer had to auction off their products to consumers at
smaller prices. The Internet also allowed for much more flexibility because companies began
having proper data online to analyze daily (Manzari 2011). When a company can see its
personal growth, as well as its mistakes, the company has a lot more control over how it can
accommodate itself by making improvements and fixing mistakes effectively. The E-business
allowed for the suppliers within companies to no longer have to use a middleman because it is a
strictly direct communication source. What this means is that there no longer had to be workers
in-between to communicate the message delivered between two firms (Jameshooran 2011). Not
only did the e-business world bring forth all of this, but consumers and even employees seem to
trust the Internet more (Jameshooran 2011). Trust is something that should never be
underestimated; when people can trust a company and the goods that it sells, success will sky

The Tale of the Internet in the Supply Chain

Greenbaum 5

rocket. In a technological world that we live in today, the Internet is something that society no
longer is really scared of but rather a resource that people are starting to embrace each and every
day it is around us. In fact, the supply chain should start seeing even more success because the
younger generations have become so accustomed to this online networking way of life because
they have been with it since they were born (Jameshooran 2011). This indicates that the Internet
is something that people have a lot more experience with due to its increased prevalence. The
Internet is also great for advertising. This is something that is absolutely detrimental to the
supply chain, because with good advertising comes regular costumers, and with regular
costumers comes well, success. Interestingly enough, something that proves just how much the
Internet is fitting into the social norm of the supply chain is the unique process in which it goes
about advertising nowadays. Costumers will constantly receive e-mails through the Internet,
which advertise new products, special deals and coupons, and even makes consumers experience
specific products offered to them based on anonymous Internet monitoring (Edward 2010).
Anonymous Internet monitoring is without a doubt a revolutionary in the current world.
According to an article in USA today, sixty-one percent of people surveyed say that they have
noticed ads online that seemed to be directed specifically at them (Edward 2010). Online
promoting through the Internet claimed to be a little over twelve billion dollars in revenue for the
first half of the year in 2010 (Edward 2010). This is an aspect that is most definitely affecting
the supply chain because more consumers are viewing products that are suitable and desirable to
them personally, making he or she much more likely to purchase a good online. In fact, with
social networking sites on the rise practically wherever you go you are bound to see
advertisements (Edward 2010). Lastly, the Internet is certainly a complement to the supply chain
(Xia 2008). When the Internet is doing well and at its prime, the supply chain can take full

The Tale of the Internet in the Supply Chain

Greenbaum 6

advantage of it. Likewise, when the supply chain is successful and calling for many consumers,
the Internet will undoubtedly step in and take full ascendancy. It is clear that the Internet has
proved its effectiveness. This exceptional technology provided for the much-needed access to
great opportunities in the supply chain including merchandising online, flexibility,
straightforward communication, and improved advertising and trust for consumers.
Case Study: Dell
It is has always been crucial for supply chain managers to know that incorporating the
Internet technology into their companies will actually be effective and work properly. A prime
example of where this proof all started is with the case study of the computer company Dell.
Dell was a major innovative business model for all in the supply chain as it was one of the firsts
to integrate the E-business into its company and prove that it truly did perform (Ghani 2009).
Dell was the first to start taking advantage of electronic order delivery directly to its costumers,
use online sales, customer support, and great relationship management (Ghani 2009). In fact,
Dell was ranked the number one PC maker in the United States market in 1999 (Ghani 2009).
After this computer company confirmed its success in the market, many other companies started
using this business model of integrating the Internet into its supply chain. In todays times, we
see this popular business model everywhere; Apple, Amazon, Target are just a few companies
where this model has burst into effect. When this case study was examined, the supply chain
was scrutinized before and after implementing technology. As shown in figure one on the next
page, in the conventional supply chain management the flow of information was only directing
one way (Ghani 2009). However, after the Internet was integrated as shown in figure two, the
flow of information was occurring everywhere to its supplier, manufacturer, distributor, and
customer all through a shared database (Ghani 2009). What this means is that companies need to

The Tale of the Internet in the Supply Chain

Greenbaum 7

be able to have information flowing everywhere, in order to be much more efficient. The case
study of the Dell computer Company is definitely an inspiration to all in the supply chain and
living proof as to why the Internet is so important.

Ghani (2009)

Ghani (2009)

Negative Effects

The Tale of the Internet in the Supply Chain

Greenbaum 8

Unfortunately, positives always come with negative effects in life and this too is apparent
in the supply chain Internet integration. There are many people in todays times that feel the
Internet makes everything more confusing and difficult (Jacques 2012). This brings downfall to
the supply chain with some customers not wanting to buy products online and even some
employees not wanting to work or do his or her job properly. Many also feel that we live in a
materialized world in a time period where people are way too dependent on the Internet (Jacques
2012). What could this mean for the supply chain? Well, what would happen if the Internet
were to crash and be destroyed completely or better yet even take over? The supply chain would
be destroyed (Jacques 2012). The Internet is also very overloading. In fact, when the Internet
first came out costumers could look up questions and products and get a very straightforward
general answer but now theres so much information that it has actually become complicated for
the users looking to purchase products, etc (Blyler 2003). Another negative about the Internet is
that consumers cant physically see samples of products (Blyler 2003). This is definitely an
extravagant downfall for some costumers who like to physically hold and use a product before
buying it, in order to feel more connected to it and actually trust that it lives up to what is stated
online. Finally, some of the population feels that all the advertising the Internet has brought into
the supply chain is creepy and annoying (Edward 2010). Some feel that the fact that the big
companies are anonymously monitoring your Internet and tailoring specific advertisements based
on users specific interests is a major invasion of privacy (Edward 2010). This is a paramount
instance in which the Internet can be a disadvantage to the supply chain leading to consumers to
acquire less. It is clear that the Internet has escorted many hardships into the supply chain
including confusion, difficulties, dependency, Internet overload, and even bothersome to many
consumers.

The Tale of the Internet in the Supply Chain

Greenbaum 9

Transformation
Overall when evaluating the transformation of the supply chain, compared to the past the
supply chain is definitely better off now. It is apparent that the consumer craves this need for
integration of Internet technology in the supply chain (W.P. Carley School 2010). The positive
effects definitely outweigh the negative effects. The positives of the Internet are so enormous
and detrimental to the success of the supply chain. According to the Arizona State University,
the president of the department of Supply Chain Management had deemed the Internet to be the
nervous system of the supply chain (W.P. Carley School 2010). This metaphor exemplifies the
E-worlds importance because the nervous system of a human is vital to life. After this
enormous transformation had occurred, another aspect came into play. Supply chain
management had realized that with this new integration, good Internet services and providers
were vital to supply chain management success (Field 2011). This meant that not only would a
company have to integrate Internet technology for its unique benefits, but also acquire specific
reliable and efficient Internet companies that were on the rise. Looking back at the example
mentioned earlier in this paper of Amazon.com that uses the Internet to sell products online, it is
transparent that the way this company was meant to improve efficiency in the supply chain was
certainty met and more (Mudambi 2010). As show in figure three on the next page, Amazons
supply chain process works through four different companies involved through Internet
communication. The four companies involved are Amazon, the Credit-card Corporation, product
supplier, and shipping companies like FedEx (Donat 2003). However, the costumer is strictly
considered a client of Amazon and not the supplier or other companies providing the products
(Donat 2003). This means that Amazon has complete ascendancy of the flow of cash in its
online company (Donat 2003). The transformation the Internet summoned into the supply chain

The Tale of the Internet in the Supply Chain

Greenbaum 10

through its nervous system type practices, superb providers, and online companies such as
Amazon have certainly proven how voluminous it persists.

Figure 3 (Donat 2003)

Conclusions and Further Study

Technology is a major debate in todays times. Some feel its great where others feel its
absolutely horrible. When analyzing the supply chains implementation of Internet technology
through efficiency, effectiveness, and transformation, it is apparent that the Internet has bought
forth so much more talent then harm. There will always be those who feel that the Internet is
confusing, difficult, materialized, overloading, and inferior to the traditional-pre world.
However, in specific supply chain company studies like Dell and Amazon, its heart-stopping

The Tale of the Internet in the Supply Chain

Greenbaum 11

effects in efficiency (predictability, time-saving, money-saving, globalizing), flexibility, online

selling, direct communication, trust, and advertising will always shine through. The connection
between the supply chain and Internet will continue to be on the rise in the future, as further data
and studies will be conducted (Dedrick 2008). As technology continues to advance,
modifications to the supply chain will continue to be conducted to make the supply chain more
appropriate, desirable, and fitting even as unbelievable as it is today. What the Internet has done
to the supply chain is an excellent lesson in just how impressive technology truly is.

Works Cited

The Tale of the Internet in the Supply Chain

Greenbaum 12

Banker, R., Mitra, S., & Sambamurthy, V. V. (2011). THE EFFECTS OF DIGITAL TRADING
PLATFORMS ON COMMODITY PRICES IN AGRICULTURAL SUPPLY CHAINS. MIS
Quarterly, 35(3), 599-A3.
Blackhurst, J. J., Wu, T. T., & O'Grady, P. P. (2004). Network-based approach to modelling
uncertainty in a supply chain. International Journal Of Production Research
Blyler, J. (2003). Wireless-Internet Access Gets Easier And More Confusing. Wireless Systems
Design, 8(3), 23.
Dedrick, J., Xu, S., & Zhu, K. (2008). How Does Information Technology Shape Supply-Chain
Structure? Evidence on the Number of Suppliers. Journal Of Management Information Systems,
25(2), 41-72.
Donat, J. (2003, September). e-Business For Managers. Retrieved from Calresco:
http://www.calresco.org/donat/bookeng.htm
Duncan, A. (2003, September 16). A Predictable Supply Chain. Retrieved from SCM News:
http://www.scmnews.com/scmnews-66-20030916APredictableSupplyChain.html
Field, A. M. (2011). COMPANIES TURNING TO ON-DEMAND SERVICES OVER THE
INTERNET. Canadian Sailings, 6-11.
Ghani, K., Zainuddin, Y., & Ghani, F. (2009). Integration of Supply Chain Management with
Internet and Enterprise Resource Planning (ERP) Systems: Case Study. Global Business &
Management Research, 1(3/4), 97-104.
Heydari, A., Teimouri, M., & Jamehshooran, B. (2011). Business ethics and its impact on SCA
(Case study Amazon.com). Interdisciplinary Journal Of Contemporary Research In Business,
3(2), 540-555.

The Tale of the Internet in the Supply Chain

Greenbaum 13

Jacques, A. (2012). The Role of Electronic Commerce in improving Supply Chain Performance.
Advances In Management, 5(3), 7-10.
Jamehshooran, B., Danesh, E., Teimouri, M., & Heydari, A. (2011). The past, present and future
of online Marketing. Interdisciplinary Journal Of Contemporary Research In Business, 3(2),
585-606.
Manzari, P., Dini, B., & Jalilvand, M. (2011). The Effect of Electronic Commerce in Business
Value and Supply Chain Process: Evidence from Iran. International Business & Management.
Mudambi, S. M., & Schuff, D. (2010). WHAT MAKES A HELPFUL ONLINE REVIEW? A
STUDY OF CUSTOMER REVIEWS ON AMAZON.COM. MIS Quarterly, 34(1), 185-200.
Rabinovich, E., & Knemeyer, A. (2006). Logistics Service Providers in Internet Supply Chains.
California Management Review, 48(4), 84-108.
W.P. Carley School (Creator). Arizona State University (Poster) (2010, May 4) Supply Chains
and Information Technology [Video] Retrieved from http://www.youtube.com/watch?
v=SXDvHgjRNDQ
Xia, M., & Xia, N. (2008). The Complementary Effects of E-Markets on Existing Supplier-Buyer Relationships in a Supply Chain. Journal Of Management Information Systems, 25(3), 964.