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Word Count: 1,159
Supply chain management is a crucial area of B2B Electronic Commerce It represents planning organizing and managing your inventory online Consider the following situation that illustrates how e-commerce has facilitated this management of the supply chain If a businesses stock is stored in a database that is connected to both the office and the warehouse then at any given moment you can check your stock and update them If this system is connected to a customers site that is ordering from you then this will automatically update the warehouse and place the order Furthermore if the stock levels of a particular product go below a recorded level then the suppliers who are also connected to the system dispatch the required quantity of the good When the warehouse receives the product the suppliers are informed of delivery and a notice is sent to the warehouse that updates the stock automatically So EDI basically tries to give all parties involved a real-time view of what is happening in the day-to-day running of each business This helps when businesses are trying to optimize their supply chain to make their processes more efficient It is also interesting to note that e-commerce has empowered suppliers to a level that allows them to operate very efficiently Knowledge is power as the saying goes and with the connections between supplier and customer due to either private networks or the Internet suppliers have a wealth of knowledge available at any time This enables the supplier to anticipate demand and adjust production and delivery accordingly They no longer have to be re-active in their approach to business e-commerce has allowed them to be pro-active Now lets look at costs associated with inventory There are four major costs associated with inventory Holding costs Setup costs Ordering costs Shortage costs Holding or carrying costs refer to the costs for storage facilities handling ie moving insurance pilferage breakage obsolescence taxes depreciation and the loss of opportunity costs
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