These past few years have witnessed an incredible growth in e-commerce. The potential power of the internet to streamline global business has hardly been realized, however, as new products and applications are constantly being introduced to the market. The pace is not likely to subside much, either, until the e-commerce industry matures to a much more sophisticated stage.

E-commerce fulfillment is one segment that has experienced a lot of growth lately, and with good reason. According to Morgan Stanley Dean Witter, "The US had a $1.37 trillion investment in inventory in 1998, and 40% of carry costs on this inventory was obsolescence. The dollars are big enough that a legitimate proposal to cut into this overhead will get a hearing."

Why is there such an inventory glut? Partly because companies don't have an accurate idea of real-time demand, says Morgan Stanley Dean Witter. Most are using intermediaries to sell their products or they don't have any lead time from customers on changes in demand. Moreover, manufacturers don't know the amount of inventory and manufacturing capacity residing in their supply chains.

This lack of information and cost of carrying excessive inventory cuts into a company's bottom line. For one, defect rates tend to be higher because to identify a defect the product must be used first. A tighter production-to-consumption link can reduce the amount of defective products in the supply chain. Likewise, better integration between the supply and demand chains makes it easier and less timely to resolve exceptions such as back orders, returns, and incorrect orders, while at the same time improving delivery times, order status, and customer satisfaction.

Seeing the SC in Real Time

Optum's TradeStream application (www.tradestream.com) helps manage customer fulfillment over the internet and promises to reduce inventory levels up to one-third. The product brings together information in real time to create supply-chain transparency. It's made up of two fundamental elements. The first is a central data repository that aggregates order and inventory data from any source, including ERP systems, legacy applications, and trading partners. The second is composed of intelligent, web-based applets that leverage this data to provide available-to-deliver and order track-and-trace capabilities, resulting in lower inventory levels and improved customer fulfillment.

For example, TradeStream acts as the "availability button" on e-commerce sites by allowing buyers to calculate inventory availability, ability to meet shipping schedules, and cost of delivery in real time at the point of purchase. It then determines the inventory available from multiple suppliers in a trading network and allows customers to monitor the entire order-fulfillment process from order capture to final delivery. "The market is ready for a product that actually exists and performs as advertised. This is not an 'intent' to deliver. We have product today," notes David J. Simbari, Optum's president and CEO. TradeStream is designed for enterprises, private trading communities, and industry exchanges, and can be deployed in either a license or subscription service model.

Indeed, when it comes to gaining a competitive edge in e-commerce, real-time visibility is everything. Viewlocity (www.viewlocity.com) offers several products that help integrate trading communities. It begins by integrating all the systems within an enterprise's four walls, enabling a company to take the next step of integrating externally with its trading partners. Disparate systems are not an obstacle. Viewlocity's products offer "cross-domain visibility all through the supply chain, and fully supports European, Asian, and US standards," notes Mary Haigis, the company's chief marketing officer. "No matter how sophisticated or unsophisticated your system is, Viewlocity can provide integration," Haigis adds. "The key is to solve problems before they happen," she says.

Implementation of Viewlocity's products can be done quickly, resulting in a faster return on investment. The company boasts 3,500 installations and 1,100 customers. wt

sidebar: Automating the Dreaded Shipping Contracts

While e-commerce has forced companies to re-examine the way they manage various aspects of their supply chains; it has also brought about changes to other activities, such as the negotiation of long-term shipping contracts between shippers and ocean carriers. This process has historically been a particularly onerous one that has been both time and labor intensive. GoCargo.com's latest product offering, NaviPact, vows to make some dramatic improvements, though. "The typical negotiation process time takes from three to five months," says Heather Haboush, director of business development. "NaviPact can reduce that time considerably," she remarks. The application is targeted toward large companies with large numbers of international shipments.

At present, the RFP process is largely conducted off-line. Corporate shipping projections must be gathered, often from different business units, and a master spreadsheet must be created for estimated shipping volumes by trade lane, commodity, equipment type, etc. Next, the shipper develops an RFP for the global tender, selects the carriers who will receive the RFP and sends it out. After waiting anywhere from three to six weeks for the selected carriers to reply, shippers must then spend additional time on clarifying details, analyzing proposals, and making numerous phone calls.

NaviPact automates and streamlines the entire process. Complex spreadsheets are eliminated in favor of on-line collaboration. Multiple users within the organization, located anywhere in the world, can access, update, and approve a global tender in draft format before beginning the tender. Carriers enter their responses directly into the NaviPact application. The shipper can compare standardized carrier proposals on a line-by-line basis in real time. Shippers also have a choice between two different tender formats: a standard RFP process that permits shippers to restrict visibility of the tender results so that participating carriers do not view other carriers' quoted rates and services; or a dynamic RFP that lets carriers view their competitors' prices and services but not identity. This option provides carriers with valuable market intelligence about pricing and services.