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Supply Chain Management in E-Commerce

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Introductory Overview

Supply chain management is one of the most crucial aspects of business on the modern world. Businesses are working tirelessly to ensure that the supply chain is handled appropriately. Indeed, it is a profoundly broad aspect that focuses on the determining, obtaining, and managing goods, services and the resources of production.

Whereas the scope of supply chain management might seem to include good and services only, it is crucial to understand that it incorporates the movement of information. Indeed, information is a fundamentally vital to the progress of a business because it facilitates coordination and market analysis among other issues of importance. Accordingly, therefore, supply chain management serves three main purposes in businesses as shown in this list.

In the distant past, supply chain management was conducted manually since the world had not established proficient technological tools. However, the modern world has made critical steps in terms of technological discoveries and prowess. Trites and Boritz (2012) indicated that the rapid advancement in E-business can render the academic resources out-of-date due to rapid improvement. As such, it has led to a situation where those processes are handled fast and efficiently.

In line with this development, e-commerce has become a major business venture in the global economy. Evidently, it has penetrated in the market profoundly because people have appreciated the importance of using technology as a business enhancement. Similar to all businesses, E-commerce requires the application of supply chain management in order to ensure maximum returns.

This paper will focus on the importance of supply chain management in E-commerce. The evaluation of this importance will be conducted in line with two components of E-Commerce that include its strategies and aspects of conducting of E-Business. In a nutshell, the importance of supply chain management will be framed in relation to the three components.

Proposed Hypothesis

It is hypothesized that the incorporation of supply chain management with e-commerce has played a fundamentally vital role to ensure efficiency. As such, the idea of technological management of resources has enabled companies to reduce the efforts required to communicate. This venture has led to increased efficiency and quality of the services provided by the business. Moreover, the use of supply chain management in e-commerce has changed the strategies of conducting business.

Importantly, it has revolutionized the domestic and global strategies of engaging in business. This resonates with how the businesses handle and interact with their customers. Indeed, customer-business relationship is a crucial aspect when it comes to the creation of a successful business.

In this regard, it is hypothesized that the ease of conducting business can attract new consumers and help to maintain the present customers. This condition is facilitated by the capability of supply chain management to enhance communication between the consumers and the enterprise. Importantly, the supply chain management can act as a tool of developing customers’ loyalty index.

Furthermore, the networking and coordination of business functions such as marketing, procurement and manufacturing among others reduce the cost of operation. In essence, it has been noted that the use of electronic supply chain management plays a crucial role to ensure that these functions are harmonized. As such, the unification of business functions is expected to adjust the forces experienced in the market.

Additionally, the harmonization can reduce the time required to address any requests for goods and services. Accordingly, the reduced time of response is critical because it ensures that the needs of the customers are addresses timely. The essence of timely supply is reinforced by the well-organized distribution systems as well as the functional coordination. From a different perspective, the reduction of operational cost is a factor that enables the business to improve performance.

In effect, improved and proficient performance ensures that the goals of the organization are achieved. The interconnection of departments ensures that the various personnel coordinate and achieve a common organizational goal. This goal is achieved due to the sharing of information between the various departments. In the ultimate point, the well-coordinated supply chain is imperative to ensure that the business realize its full potential and competitive advantage (Du, 2007).

Context for Discussion

With regards to the context of this discussion, there are various aspects that will be addressed. First, the research touches on the e-commerce that applies modern ways of conducting business using technology. It is a platform that utilizes a network of computers and internet connections to coordinate the various business players. It includes various technological applications that include the use of mobile commerce, internet marketing and the transfer of money.

In addition, it draws from other improvisations, including the online transaction processing, EDI, as well as the automated collection of data. The principle aspect of e-commerce is found on the fact that business players have to use World Wide Web at a certain instance in their lifecycle.

Indeed, this is a characteristic of the modern e-commerce where the internet has become a critical component of operation and globalization. However, this does not imply that the World Wide Web is the only tool which can be applied. In essence, other applications such as the emails can be used in this venture. In most cases, e-commerce provides some of the following services.

  1. The provision of E-tail stores that enable the use of online catalogs, as well as the integration of virtual stores.
  2. Provide a platform of selling and purchasing commodities through the websites made by the business owners.
  3. Allow the business owners to collect data that can be used to conduct and improve business.
  4. It enables business owners to use the EDI technology when exchanging data among various businesses.
  5. The systems are used to relay information to the customers, distributors, and other relevant stakeholders.
  6. Ecommerce can be used effectively to provide a secure platform of transacting. This has become very important due to the rising online theft and fraudulent activities taking place.

With regards to these areas where e-commerce is applied, it is evident that this discussion will have a broad scope. The second field that is discussed with regards to the context of the paper includes supply chain management. Indeed, this was elaborated in the introductory part. Importantly, it is meant to coordinate the various business players and departments. As such, they can play their diverse roles to achieve a common objective.

E-Business Models and Strategies

Cost Reduction

Supply chain management is a tool that enables businesses to reduce the cost of operations and inventories (Reis et al., 2014). This supply design is a strong management approach to reduce the costs and improve the services offered. In essence, this tool manages to reduce the cost and improve efficiency due to the alignment of supplies. In essence, the management tool is mandated to control the purchase price, warehousing and inventory management among others.

In another perspective, the reduction of cost is not considered as a bare venture that does not have any implication. Instead, this aspect of management is used to gain a competitive edge over other businesses. Of course, reducing the price of the operations has a direct effect on the level of prices. As such, the customers prefer using the companies’ services to other producers. Objectively, the supply chain management systems reduce the cost through a number of aspects.

First, for purchased commodities, getting a part from the handle of the acquisition transaction expenditures play a fundamental role to ensure that the inventory level is reduced. In addition, it allows the reduction of the purchasing and reception labor employed by the company in question. When it comes to the e-commerce services that have been stipulated, similar states of the changeover costs helps to decrease the inventory by employing the short runs. Further, it can facilitate the reception of labor at low prices through the long runs.

Second, the supply chain management reduces the cost by cutting the actual transacting expenditure. In fact, the supply chain management with regards to e-commerce has a track record of reducing this cost. This is facilitated by the use of computer networks to carry out some of the critical and involving roles.

For example, the networks are used to produce purchase orders and ASNs in order to cut the expediting and past performances of the vendors. E-commerce requires the prior planning before the execution of strategies and deployment of resources. As a result, the supply chain management helps to initiate the changeover before the completion of the previous implementations. It facilitates the teamwork and sharing of work among the players in order to cut the lifecycle of any inventory in the company.

In addition, the E-business strategies employ the distribution center especially when it comes to the dissemination of information. In line with this aspect, the supply chain management in the e-commerce environment allows the use of technological deployments where manual operations are required. For example, the use of barcode readers to collect data, certification of the main company vendors, application of counting scales, and the eradication of any receiving functions help to decrease the transaction expenditures.

Moreover, supply chain management helps the company in question to reduce the inventory holding cost. This is achieved by improving the manner in which space is used by the business owners. In essence, this function applies to businesses that operate in the e-commerce environments. In this case, although e-commerce uses online platforms to facilitate transactions, businesses manage warehouses and stores. In this case, the manner in which they are planned can affect the profitability of the business ultimately.

The application of supply chain management in E-commerce has enabled companies to predict the behavior of demand portrayed by the customers. When the manual and naïve ways of forecasting are applied, there are possibilities of making critical errors the may affect the accuracy. This accuracy helps to reduce the overstock, the necessity of reversing logistics, and backorders among other aspects that increase the cost of operations.

The E-commerce also enables the managers to use the data when predicting future behavior. Since the computer networks can store a lot of historical data, the company uses it to simulate the future. In most case, the e-commerce supply management environments store data in a central database system. This implies that all operations are recorded and stored in an area where it can be retrieved easily. In fact, these databases allow the storage and access of information that does not include basic information such as date and retailer only.

Instead, the business can track other aspects such as the level of advertising, reduction of price, and other aspects of importance. When these important aspects are stored in accessible locations, the forecast can help to ensure that the company stocks the important commodities. In turn, this ensures that the e-business does not engage in proving services and goods that are not highly demanded.

Supply chain management also helps to reduce the cost by cutting the lead times in the company cycle. For the bought and manufactured commodities, the reduction of lead time for the suppliers, transportation and reception cycle enables a reduction of cost. As such, the reduction of lead time and the increment of inbound unit improves the reliability of if the supplies and decrease the SSI.

Increased Profits

Supply chain management applies strategies that have a positive effect on the profitability of the company. Surely, a business investment exists in order to make profits for the shareholders and owners. Of course, lack of profits implies that the business is not worth, and the shareholders cannot sustain it.

In essence, profits are made when the company achieves to increase the sales and reduce the costs. In a nutshell, such costs and expenditures include the transaction, operations, and transportation costs among others. In the previous paragraph, it was established that the supply chain management play a crucial role to ensure that the cost of conducting business is reduced by the proficient supply chain management systems.

This undertaking is fulfilled when the managers eliminate the unnecessary processes and players. For example, the intermediation process that uses the brokers is eliminated by the e-commerce supply chain management. Since the cost is reduced essentially, the company can provide the services at a low price to attract customers. As a result, the sales are increased due to the preferable prices whereas the costs are reduced robustly.

The overall effect leads to increased profitability of the business services. In addition, the market share increases profoundly such that the customers prefer the company’s products to other service providers. In essence, it can be argued that the entire application of supply chain management lead to the acquisition of a competitive advantage over others companies.

With regards to the strategies of E-businesses in the perspective of the supply chain management, these three aspects are the main impacts of applying this factor. In essence, the reduction of cost, increment of outputs, and the addition of profits are the most critical factors of a successful business. This implies that supply chain management cannot be ignored when attempting to make a lasting E-business.

Increased Outputs

In perspective, the application of supply chain management leads to a condition in which the output of the company is increased profoundly. First, the management aspect enables the business to increase the efficiency of the business operation. This implies that the communication between the various business players is improved.

They can communicate and regularly inquire in order to make the appropriate decisions. In addition, it implies that all the business-related decisions are made within the required time. As such, the e-businesses can deliver services to customers within the required time. Further, the inputs required to maintain the e-businesses can be tracked using the supply chain. The producers and innovators can plan in accordance to the progress of delivery of these inputs.

Moreover, supply chain management enables the customers to reach the business owners and conduct business. The company can create knit and a strong relationship among the members of the company that includes the customers, suppliers and the managers. The company will, therefore, grow as a result of the increased as well as timely response to the various stakeholders. As such, the application of supply chain management enables the company to make critical development due to the increased outputs and subsequent sales.

Conducting E-Business

While conducting the business, the business owners must come to terms with their supply management in the retrospective and prospective future. As a result, the efficiency of the business process of the e-business is a crucial aspect of organizational operations. The integration of supply chain management enables the producers of commodities and services to track the various components across many suppliers.

The managers and producers can tell the progress of transportation of the important material to enable the progress of the business. The idea of using e-commerce environment sets up a system where the ERP solution providers use interconnected computer systems. The various business partners are allowed to communicate continuously until the delivery of resources and information is achieved.

When the delivery of information and other materials is tracked on real time basis, the business owners can plan for the business functions and timelines. This process is initiated by the purchasing personnel who are mandated to place the orders. This is based on the fact that the authority of the supply chain lies with the manager mandated with the function of making purchases.

In addition, supply chain management in the e-commerce environment is also facilitated by the ability to communicate fast. Communication in any business is a fundamentally vital factor for it to realize success. As such, the use of computer network implies that all the players are included in the entire system of interconnectivity.

The manufacturers can inquire about the progress of inputs delivery to the relevant premises. In turn, the suppliers can inquire about the amount of products that should be delivered. The central point of this efficiency is based on the fact that communication can be facilitated in very timely manner.

Reliability of Inputs in the Company

The inputs require in an e-commerce business are the fundamental requirement when it comes to the creation of successful investments. As a result, they are required to sustain the production of goods and the provision of services to the customers. The supply chain management plays a crucial role to ensure that the inputs provided are reliable. Importantly, the E-businesses rely on the flow of information profoundly. In line with that importance, it must ensure that the information is accurate.

Otherwise, the use of inaccurate information can imply that the company makes the wrong decisions. In addition to accuracy, the supply chain management ensures that the information flowing in and out of the company is consistent. This implies that the information of the past and the present shares logical connection to allow the managers to make valid decisions.

In fact, it is noted that poor supply chain management can affect the production process and halt the provision of the services. Without the reliable provision of inputs to the required premises and departments, the company cannot provide the time-sensitive orders made by the customers. From a different perspective, the lack of proficient delivery of inputs can render the employees dormant and idle. However, the employees will still be paid for the sake of the time they used in the company.

When the business incurs cost without possible returns, there is the possibility of making critical losses. In cases where the supply chain system collapses before the inputs reached the producers, they might seek material from alternative sources of provision. This decision implies that the company procures instantaneously. In most cases, those procurements involve sources that do not have a good business relationship with the company in question.

As a result, the suppliers will tend to charge high prices for their commodities. As a result, the company incurs additional costs that had not been anticipated or included in the budget. In this scenario, the company undergoes an increased cost that might force it to charge customers higher prices that the previous ones.

In addition, the profitability of the company decreases and the dividends are a reduced for the shareholders. Due to these possible impacts, the company is mandated to ensure that the supply chain management is maintained in the right manner. As such, the failure of this system has the capability to halt the entire business venture.

Integration in Business

The integration of business stakeholders is one of the most critical undertakings in the modern world. It has been established that business owners can perform excellently if the business players unite to achieve a common organizational goal. In fact, the past business owners did not consider the customers as crucial components of the investment. However, it is evident that the customers are some of the critical players in the E-commerce environment.

Their attitude and commitment to the business play a fundamentally vital role to ensure the success of online transaction and reliability of their personal data. In this regard, it is important to ensure that the customers are integrated with the business venture. On the other hand, there are the distributors and suppliers of the business. They also play a major role to ensure that the company gets the inputs such as information and internet connectivity to facilitate the provision of services.

The distributors help to disseminate the services and commodities either manually or online. In this case, they distributors can conduct their role on the online platforms. It has been established that business owners have realized this aspect of integration and accepted it profoundly. As a result, they have been investing heavily to ensure that the service provision is competitive. In fact, the focus of most e-businesses is not limited to their respective and immediate jurisdiction.

Instead, most of the investments in E-commerce ensure that the operations are aligned with the global jurisdictions. Of course, an E-commerce business can invest in the global platform easily because it operates online. The online platform helps the customers to transact easily regardless of their geographical locations around the world. The mentioned integration of the suppliers and customers informs the quality improvement programs that operate based on the six sigma model of operation.

These changes that are introduced in the supply chain management to ensure improvement require high integration and collaboration among the business owners, customers and the suppliers. With this collaboration, the company can use efficient tools such as the just-in-time ordering platforms (Balakrishnan & Geunes, 2004).

These systems allow the service providers to communicate fast and obtain the required inputs fast. As such, it is evident that the order made using the just-in-time systems are processes immediately bearing in mind that the process is computerized. The computerized system available in the e-commerce environment uses the order processing platforms to execute these functions automatically. In addition, the payment of these commodities is processes efficiently and over a short time.

Importantly, it removes the need for human interaction in the business process and cycles. As a result, the customers, business owners, and suppliers collaborate without meeting in person. The model increases efficiency because human interaction is time-consuming and tedious.

Indeed, there are very little operations that can be conducted using the human interaction models. However, it also ensures that the business players have mutual trust. Nonetheless, this condition cannot warrant the application of these manual models because they are less effective than the latter.

Support to Company Infrastructure

Essentially, the E-commerce businesses have many infrastructures that facilitate the provision of services. As such, the resources available should be managed appropriately to ensure that the business gets the optimal benefits. The most crucial undertaking that the business owners are required to make is ensuring a balance. This undertaking is aimed to make sure that there is an optimal balance of fully owned systems of distribution.

In addition, the supply chain management is mandated to obtain full services of contracting services in the company. In most case, it is quite costly to establish fully operating distribution systems and contracting system when some other costs are taken into account. These costs include those that are primary in the eyes of the business owners and the customers receiving the services. However, the supply chain management provides an alternative option to the business owners.

The options enable the company managers to control the outgoing the supply chain. Essentially, relying on the contractors is more affordable than creating the systems. However, it has an inherent risk whereby the company can be incapacitated to manage the systems when the services and authorizations are released from the e-business platforms.

Increment of Business Events

The use of supply chain management in the E-business environment plays a crucial role to ensure that the business events are increased (Yang, 2012). This increased number of events in business is achieved by the creation of automatic systems and networked management where the business players can operate. In the same aspect, the business enjoys the organization and design of a united managerial system which reduces the business means and unnecessary links.

Importantly, the intermediaries are some of the most unfavorable links in the business. As a result, they should be eliminated to avoid a long supply chain that increases the costs and affect the prices. As such, the supply chain management is considered as a strategy that ensures the development of business by increasing the business event substantially rather than building on unnecessary process.

The ultimate effect is the ability of the customers to interact with business owners to conduct business rather than engaging in unnecessary processes that can be handled directly. From a different perspective, the application of supply chain management is crucial when it comes to the facilitation of operations and performance.

As such, it is established that the reduction of the demand response time increases the business transactions conducted by the players. For example, if the intermediaries are eliminated in the business using the automated systems, the customers reach the commodities faster than the latter model.

As a result, the business will serve more customers per unit time due to the reduced process of ordering and transacting. In that regard, the fact that customers have a direct connection to the producers ensures quality services and direct inquiries. In fact, this aspect forms the basis of globalization because the worldwide market requires quick and swift interactions among the parties.

The Review of Hypothesis versus the Findings

In the hypothetical section, some few fact-based speculations were provided with regards to the expected findings. First, it was stipulated that supply chain management ensure the efficiency of the business operations. It was indicated that the technological management of business processes improves communication. In addition, the hypothesis showed that the proficient communication is the basis of creating a smooth flow of information.

In essence, the same exemplifications were indicated in the findings. It was established that supply chain management under the e-commerce environment develop the proficiency of business when it comes to communication.

However, the ultimate findings indicated that the supply chain management improves efficiency in many ways that include integration of business players and collaboration in decision making (Chang & Graham, 2012). Additionally, efficiency is improved by the automatic systems when processing orders and making payments.

The second hypothetical stipulation indicated that the use of supply chain management in E-commerce helps to reduce the cost of operation. The hypothesis stated that the reduction of cost is facilitated by cutting the expenditures used in operations. However, the findings provided some of the specific ways in which the cost of operation is reduced in E-commerce. Some of these aspects of cost reduction include the reduction of lead times.

Further, the supply chain management in E-commerce reduced the transaction expenditures. In most businesses, the cost incurred when making the transaction have a high impact on the expenditures of the company. It is considered as one of the ways in which the companies reduced the inventory level. Importantly, it was indicated that the E-commerce environment is a strategy of reducing the reception labor.

Indeed, labor is one of the main expenditures that befall a company. However, this research indicates that management of supply chain under E-commerce helps to reduce the labor in long runs. This implies that the hypothesis was substantially consistent with the findings when it came to the issue of cost reduction. However, the findings have provided a detailed explanation concerning the ways in which it is reduced.

Also, the hypothesis had indicated that the supply chain management in E-commerce helps to coordinate the various business players. The same finding was realized in the final results after reviewing the literature. In this case, it is evident that the customers and suppliers are integrated with the business to ensure they work together to discharge services. However, the findings were detailed with regards to how the collaboration helps the business to achieve the common organizational goal.

Connection to an Area of Development

This research topic is connected to an area where I wish to start a pure electronic supply chain management for all E-businesses. In this case, the manual supply chain management is being used in many businesses around the world. This supply chain management system increases the cost required to maintain the business process. In addition, the manual means of managing supply chain are essentially inefficient.

For example, the manual order processing systems take a lot of time to accomplish the required tasks. In regard to this factor of efficiency and time, it is crucial to adopt and embrace automatic system that can enable the company reduce the expenditures of resources.

Before the implementation of this campaign and pursuit, it is crucial to identify the benefits that will accrue from the application of profound electronic supply chain management. In addition, this paper helps to identify the hindrances that prevent businesses to benefit from the electronic supply chain management. Accordingly, the implementation will be set up in a manner that avoids those limitations.

Hindrances in Supply Chain Management

Difficulties of Using Supply Chain in E-commerce

There are various aspects in the modern business that hinder the utilization of supply chain management in the E-commerce environment. As a result, they are unable to exploit the benefits of this system effectively. First, the use of supply chain management in the E-commerce arena is considered as a gray area. In this case, most of the business players, especially the customers, are hesitant to participate actively in the chain due to the use of automatic systems.

Indeed most of the customers do not have the necessary knowledge to operate the systems and make the necessary operations. The condition of little knowledge of the technological system has made the customers shy away from the supply chain. Of course, if the customers do not participate actively, the entire system does not satisfy its mission. This is based on the fact that the primary goal of a business is to ensure that the customers’ needs are satisfied.

Otherwise, the entire process of providing the services cannot make any profit if the customers do not use it to obtain goods and make payments. However, this scenario is mostly experienced in the developing countries because technology has not advanced robustly. Indeed, with low technological penetration in these countries, the customers do not have advanced skills and interests. As such, the global companies that seek to reach the customers worldwide have a great challenge.

In most case, they respective countries have the companies that offer similar services to the customers locally. As a result, they consider buying the commodities manually rather than engaging in the supply chain in E-commerce environment. However, some of these phobias portrayed by the customers emerge from the conduct of the businesses. For example, some of the E-commerce businesses such as Amazon and E-Bay engage in the transportation of commodities after the orders are placed.

This transportation is conducted through shipping. This process of shipping the goods takes a lot of time since the water transportation is not swift. In other cases, the transportation fails in the process of supply chain and leads to adverse effects on the reliability of the system. When such a case happens, the customers reduce their willingness to engage in E-business when it comes to global operations.

Lack of Correct Prioritization

Companies are working hard to identify some of the areas that require expert-based improvement of the supply chain. Essentially, the experts are very rare even when the business owners have committed funds to allow the improvements. When the experts are hired, the standards of operation are not standardized to set the conventional requirements.

As a result, they develop systems that are consistent with their knowledge rather than the standards of operations required. Consequently, the improvements are not informed by the use of fact-based prioritization of these development needs. As such, the lack of factual prioritization is affected by the limited number of people who have the required knowledge to make improvements. The ultimate effect is a case in which the players are not able to utilize the supply chain management entirely and effectively.

The Use of Gained Knowledge

The findings made in this research paper are vast, knowledgeable and applicable to the future engagements. In this case, the findings are related to the benefits of supply chain management with regards to the E-business. This touches on the application of electronic systems of supply chain management to businesses.

In particular, it was discovered that the electronic supply chain management can enable business to reduce the cost of operations by cutting the transaction expenditure and decreasing the lead times. In addition, it was indicated that the management can increase the reliability of the business because processes are accomplished in a timely manner. Importantly, the discussion revealed that supply chain management is hindered by the lack of technological knowledge and the hesitation to engage in E-businesses.

As a result, this knowledge will during the implementation of global electronic supply chain management. Importantly, it indicates that the implementation must start with popularizing the use of E-commerce in the society.

This will ensure there is no more hesitation among the potential customers and suppliers. In addition, there should be a program to train people concerning the use of supply chain in an E-business environment. As such, the entire implementation of E-business globally will be successful because the approach is profound and holistic.

Conclusion

It cannot be disputed that supply chain management is one of the most crucial aspects of a successful business. It is applied profoundly in E-business because it has various benefits to the electronic commerce. In line with this aspect, this paper has established that E-business reduced the cost of operations by cutting the expenditures of transactions and processing.

Additionally, it increases the efficiency of the business processes, reduced the time required to respond to customer’ requests and increase the business reliability. Jointly, these effects enable the business players to collaborate effectively and efficiently in order to enhance coordination. Nonetheless, the hesitation of business suppliers and customers when it comes to the use of e-commerce are critical hindrances to the full realization of the potential benefits.

References

Balakrishnan, A. & Geunes, J. (2004). Collaboration and coordination in supply chain management and e-commerce. Production and Operations Management,13 (1), 1-2.

Chang, K. & Graham, G. (2012). E-business strategy in supply chain collaboration: An empirical study of B2B e-commerce project in Taiwan. International Journal of Electronic Business Management, 10 (2), 101-112.

Du, L. (2007). Acquiring competitive advantage in industry through supply chain integration: A case study of Yue Yuen industrial Holding Ltd. Journal of Enterprise Information Management, 20 (5), 527-543.

Reis, J., Neto, P., Fusco, J., & Machado, S. (2014). Supply chain strategies in the context of an e-commerce chain. Independent Journal of Management and Production, 5 (2), 438-459.

Trites, G., & Boritz, E. (2012). EBusiness: A Canadian perspective for a networked world (4th ed.). Toronto: Pearson Prentice Hall.

Yang, M. (2012). Supply chain management under e-commerce environment. International Journal of Innovation, Management, and Technology, 3 (3), 210-213.