Role of Technology and the Web on Global Supply Chains

Technology has changed every aspect of the human life and supply chain is no different. Technology has not only affected the way the governance system work but has significantly affected the businesses and their supply chain systems. We have moved from the traditional brick and mortar to mail order to the current online method of business.

The technologies have helped the business to link the customers and the sellers directly in the supply chain network. Internet Technologies which include automated purchase order systems, public exchanges etc has helped in day to day supply chain of the business globally, cutting the cost of both supply chain management and carrying out the supply chain functions.  

Most organization use the web technologies to establish an internal network among its employees or to link few authorized people outside its organization who are need in its supply chain network. The technology has advanced in such a way that the member of a supply chain network can find any reliable information they need in order to complete the supply chain of the business, which reduces the cost and saves time as well. With the use of technologies, many tools have been developed as a supporting platform. These include applications such as:

a.   electronic mail, search engines, portals, collaborative tools

b . electronic Data Interchange(EDI)

c.  database management systems (DBMS)

d. enterprise resource planning (ERP) systems

e. geographical information systems (GIS)

f.  radio frequency identification (RFID) tags

g.  wireless and mobile technologies

h.  web 2.0 technologies

Taking Dell as an example, we can see the how technologies have affected the Dell’s supply chain. Dell uses server to server communication over internet to make a co-ordination between the supplier and the customer. It enables the customer to shop online with the use of Customer Procurement Application where data consistency is maintained. Dell’s EDI technology is a software which not only connects the customers to the Dell but also to the direct suppliers of the raw materials.

The customers are given choices to access their catalog in order to retrieve their personal configurations. Thus the customer catalog is maintained by the sales representative. The customers can facilitate shopping using internet browser, where by the order requisition from the shopping cart of the customer is sent to the customer ERP system for the processing of the same. An acknowledgement is sent to the customer by the electronic automated order processing system.

When an order is placed by the customer, the customer service at the Dell links its real time inventory where the offers are given to the customers based on their latest inventory data such as marketing the old stocks at lower cost or be it marketing the new products at higher cost or giving some discount on some particular product as an value added service. The customers are given direct access to view real time status of their order, the invoice and the purchase history details.

Hence without the technology the supply chain of Dell would not have been possible. Moving from the mail order days to the world of internet, today technology is the lifeline to this computer company. Dell has a strong hold at both the input and output end of the supply chain. It goes without saying that the costing of Dell computer is considerably lower compare due to the absent middle man and ordering personnel, low inventory, and of course the huge database that is collected without any additional effort.

IT has brought efficiency to this type of supply chain.

Reference:

http://smallbusiness.chron.com/role-internet-supplychain-management-b2b-32705.html

http://www.intechopen.com/download/get/type/pdfs/id/18521

http://www.marsdd.com/articles/dell-distribution-and-supply-chain-innovation/

http://www.wiley.com/college/turban/0471073806/sc/ch10

Additive Manufacturing's Disruptive Impact on Traditional Supply Chain Paradigms

Three weeks ago, I explored the topic of the "circular economy" and "reverse network" supply chains, the exciting potential future for industrial production and supply chain management touted by the Ellen MacArthur Foundation and their supporters. In keeping with the spirit of that post, I'd like to continue by sharing another area of the supply chain world that is receiving a lot of attention. You've probably heard and read many stirring reports about additive manufacturing (AM) - also known as 3D printing - an innovative technological breakthrough that uses a laser to melt plastics materials in specific stroke patterns that are defined by a software-built blueprint. The result is layers upon layers of synthetic materials that eventually yield a final product. Formerly used almost exclusively for design experts to fashion prototypes, the conditions have now become right for the technology and its accompanying materials to be used on a large scale and by average consumers or smaller firms.

A Stratasys OBJET1000 showing off a printed hubcap.
SOURCE: 3dfocus.co.uk

The benefits of AM are many and clear; its no wonder then that many are referring to AM's forecasted impact being like that of a "next industrial revolution." But the most salient and interesting for the purposes of our course are the ways in which AM is a "disruptive innovation," a new and promising technological advancement that will serve to disrupt traditional supply chain paradigms. In what ways will the increasing adoption and scaling of AM in industrial manufacturing and production impact supply chain management. As you can all probably surmise without even researching the matter, it will have enormous impacts upon the field. But lets dive into this a bit, focusing largely upon a curious 2013 white paper created by the researchers and practitioners at IBM's Institute for Business Value entitled, "The new software-defined supply chain: Preparing for the disruptive transformation of Electronics design and manufacturing."

The report covers three disruptive technologies in its review: 3-D printing (AM), intelligent robotics, and open-source electronics. They begin by outlining the ways in which the current world of production and supply have become standardized. These traditions of production and supply convention are best summarized as, "parts continue to become more standardized; assembly has continuously shifted toward modules from basic components; and complex mechanical controls continue to be replaced by simplified digital intelligence." 

There is a turning point, according to the authors, brought about by the growth and scalability of these three technologies. In particular, AM has the potential to alter the traditional model from beginning to end. In a much shorter appraisal, MIT and Technion logistics expert Yossi Sheffi offered his summary of the most important elements to the changes brought about by AM in "Outlook on the Logistics & Supply Chain Industry 2013," a July 2013 report by the Global Agenda Council on Logistics & Supply Chain Systems, one of many research subgroups assembled by the World Economic Forum. He offers the following (page 21) as the most disruptive changes to be expected:

• Increase in stock-keeping units (SKU)
• Manufacturing lead time reduction, resulting in tighter delivery schedules and an increase in JIT adoption
• Waste reductions and sustainability increases in materials, packaging, and transport
• Production cost reductions

In each case, Sheffi offers each new benefit as a something that offers a mitigating force that counters the most disruptive effects of AM's take-up and scale-up.

In the IBM report, the authors take this a step further and get into the power of AM to alter the literal network systems of supply chains. They claim that, though maintaining the requirement for economies of scale, AM will "fundamentally transform the principles of global mass production," and it will do so in three different ways:

1. On-demand manufacturing - rapid prototyping, shorter product design cycles, stockless inventory models, lower risk in manufacturing with smarter supply chains;
2. Customization - changes by customer, new retail models will emerge that engage this;
3. Location elasticity - new efficiencies, AM-induced paradigms, and consumer-related shifts will cultivate location elasticity, drawing manufacturers closer to the end consumer.

In particular, I found this idea that AM will alter producers' position on location. AM's adjustments to traditional producer concerns and consumer engagement may well draw manufacturing closer to the consumer, reducing logistics expenses and also decreasing the environmental cost of the system. The European financial and professional services firm Jones Lange LaSalle offered this visual to summarize the change. But even more interesting, IBM's analysts simulated the changes to supply chains over a 10 year span for a hearing aid. The image for this is below. Notice how over time the existence of many more production locations spring up, leading to much shorter distances between the points of manufacturing and their end.

Flipkart's 'Demand Sensing' Innovation

A few years ago, shopping online was a big deal in India. One of the major reasons behind this was the need for a Credit Card to do so. I remember the first time I tried shopping online in India and being disappointed on being asked for a CC. I had the money to pay for the goods, just not the plastic form of it. This was a problem faced by many Indians. Even those who owned a credit card, were afraid to use it due to the CC related frauds which were all very well publicised in the news.
 
All this changed when the e-commerce site, flipkart started its operations in 2007. They had a plan. By accepting “Cash on Delivery” mode of payment, they planned on targeting the very problem that stopped people from shopping online. When rapid advances in technology were encouraging everyone to use plastic money, flipkart took a step behind and started dealing in cash. And it worked for them. It was a huge risk in terms of dispatching products without having actually received payment, but it paid off. Today flipkart is the largest e-commerce site in India grossing revenues of more than 190 million as of Dec, 2013.

This journey of flipkart has not been easy, to say the least. Starting an e commerce site in India has posed its own set of problems which Flipkart had to tackle. The robust back-end that they built played a vital role in their success. Like most other e-commerce businesses flipkart started off with the consignment model of business, in which they acquired goods from suppliers on scoring customer orders. As their business grew, they shifted to the warehouse model, managing their own inventory based on consumer demand. With the need to manage an inventory came the need to forecast customer demand. Since they had no historical data to rely upon, they came up with their own innovative solution to use real time demand sensing and website performance measuring framework.

The VP of engineering, Amod Malviya came up with a two part real time website performance measurement framework. The first part of this framework has certain metrics which measures the performance of the website in the real time. The second part includes the A/B method of testing the website. The A/B method of testing is a type of hypothesis testing. By having 2 versions of the same website, differing in a certain aspect ‘x', it lets analysts infer what the impact of the change ’x' has on the website. This has allowed engineers/analysts to instantly deploy new models and test them instead of wasting time debating on whether they'll be effective.

Flipkart has the capability of having multiple live versions of the website at the same time. Whenever, an engineer/analyst wants to test a new model, he can divert a certain percentage of the web traffic, say 10%, to the new website model and measure its impact on sales. The website performance metrics measure the changes in performance in real time and throw alerts if the sales fall below a certain threshold. These changes can then be rolled back. 

This strategy has also been a huge hit with suppliers who can float new products in the market and get a sense of the demand before introducing them in earnest - a new and innovative way of sensing market demand.

Flipkart was started with a modest invest of $8000 in 2007 and since then has become a multi million dollar enterprise. In a way, company’s like Amazon and Ebay have shown Flipkart the way forward. But now that they are equals in the field of e-commerce in India, flipkart faces tough competition from these rivals. For flipkart, constant innovation is the only way to survive in the world of retail e-commerce.



Flipkart drives innovation through intelligent use of IT.
http://www.cio.in/case-study/flipkart-drives-innovation-through-intelligent-use-it
A/B testing:
http://en.wikipedia.org/wiki/A/B_testing
http://www.thehindu.com/features/magazine/the-flipkart-story/article3290735.ece
http://www.slideshare.net/himanshesh/flipkart-success-story-16376599

Product Design for Operational Effectiveness

The catch phrase today is that “money can't buy you happiness, but it sure can buy you everything else”. The situation at present is such that you can literally buy anything; be it a trip to Mars or someone to cut your nails!

So what does that mean to the business world? Traditionally a product or service had to have few basic characteristics and we had a good business. The product had to be producible, profitable, have utility and should be differentiable. The business had its loyal customers, and the rules were quite simple.

And then people changed, they became much more broad minded. They listened to new ideas. Self-actualization came in closer to the basic need. People wanted to explore and a traditional job and way of living was no longer necessary to them.

Suddenly a jacket could also be designed to be worn inside out and it was accepted. It was in fact fashionable to do so. Each generation came up with newer ideas and they also happen to have a larger disposable income. Experimentation became the “in” thing and people found newer and cheaper ways to do business.

A product now is never a single product; it is designed to be multipurpose. For example a mobile phone is not just a device used to make calls; it is now a camera, a networking interface, a torch, a gaming console, a television and even a mirror. This new product is a win-win situation to both the business as well as the consumer. A Product should be designed in such a way where it can deliver its value to customer and make a  profit for the organization. The more innovative the product is, the better it does in the market which of course makes the business more successful.

However it is not just about adding more features to the core product, these features need to coexist with effectiveness. It does not really work if a mobile phone has a 32 megapixel camera but takes 10 minutes to start the camera. Operational effectiveness has to be the number one criteria when designing a product. It has come to a point where the perceived functional benefits of a product is a major factor which influences a buying decision.

Hence the importance of product design is to make the customer happy by meeting the needs and the desires of the customer and by maximizing the value for the customer at minimal rate, which may require the enhancement or modification to the existing product rather than producing a new one. The first stage includes analyzing the customer needs, the market trend and planning for the product, followed by converting the ideas using the latest technologies into a resourceful product which can really satisfy the customer expectations. Finally bringing the product to the market for its final competition completes the full cycle of product design. Well, an organization must follow the three stages of product design in order to become successful.

A good team with enough knowledge on the supply chain of the organization is very essential. And the need for right kind of raw materials which meets the quality standards, the need for testing the product before it is out in the market are factor that may affect the process of product design.

Thus, product must be designed very well for customer satisfaction and must be powerful enough to provide a competitive advantage for the organization.

Reference

http://managementstudyguide.com/effective-product-design.htm

https://hotelexecutive.com/business_review/1211/increasing-operational-effectiveness-through-added-value-design

Product Designing – Impact on SCM

A lot of effort goes in before a product hits the market!!

There is always a minimum expectation from a product and then there is always a question that what “out-of-the-box” could the manufacturer provide. The success of every new product launched depends on these two factors: Meeting the minimum requirement and value addition.

At the same time companies are now interested in how to create a product with minimum resource consumption, reducing the dependence on external factors, increasing the reusability and recyclability. If a company can prepare a product that can be prepared from fewer raw material, which can be recycled and reused; brings their actual cost of production down significantly, leverages their sensitivity towards the environment, helps produce at faster rate, increases profitability – these factors can be a driving factor at any time for the success of a company. Product designers consistently strive towards achieving such goals.

Now, look at the bigger picture – How all of these will affect the supply chain management?

Let’s take an example. If a company can precisely define what is the target market for a particular product that they are going to launch? If “Yes” – what would it do to see that the right product is delivered at the right time and the company reap the maximum benefit?

What are the possible measures to achieve so? Let’s start counting.

Set up a plant that is near to the target market: This might look as a huge monetary investment even before the product has entered the market and earned some revenue for the company. But, in long run it is always profitable to stay close to the target market as it cuts down on other expenses that can be significantly high over a period of time. Almost all the companies are now trying to open up their manufacturing unit near the market that they target.

Create a product that requires less raw material: This actually can be tricky but there are myriad of examples where the company has used innovative ideas to prepare products that catch upon the market demand and are profitable to the company given their lower and smoother production cost and process respectively. Lot of companies invest premium in their R&D to come up with such products. This is a “win-win” situation for both consumer and the producer. Bio-plastics, LED based electronics, hybrid cars, houses built from recyclable, pre-fabricated houses are a few to count.

Low Price is in trend: With ever-fluctuating economy, companies want products that do not take a hit for a slow/retarded economic condition. Big giants like TATA and NISSAN have come up with low price cars to tackle middle class consumers and save themselves a chance to keep making money when the market dips. Consumer products that require less investment are in more demand.

Having said that, what are its implications on supply chain management or how the supply chain management can affect the fulfillment of these goals? A company trying to realize these targets must eventually find and design a supply network that is simplistic yet sophisticated.

Arranging Local Suppliers: Companies must find and arrange for local suppliers, given the fact that the cos of procurement can be real low and fast. However, finding out suppliers in the vicinity of the production unit sometimes can be a challenging task.

Products with fewer and cheaper raw material: A raw material that count for the maximum part of a product can be really boon for the manufacturer. The cost of raw material used is determining factor in the final price of the product. Plastic fabrication was one concept that TATA used in “Nano’ cars. It accounted to most of the fabrication, both inner and outer, in the car. This made the procurement process really easy and cheaper. The company could get its supply from fewer suppliers rather than depending on various suppliers for each and every raw material for different part of the car.

New technologies that help: Newer technologies believe in use and reuse of products or parts thereof. Many companies now have a strong channel in place to retrieve the outdated, broken, out-of-order scarp of their products from the market/customers. These no value product when recycled and reused fetch a lot of value to the company.

Undoubtedly, a product design and supply chain management go hand in hand to fetch the final goal for any company.

Reference: Information on public domain on internet.

Supply Chain Management – Globalize IT!!!

With ever increasing technology the world is more likely becoming a global village and more and more companies are now venturing into markets spatially far away. No wonders a US-based supplier can supply goods for an Indian manufacturer. The system is becoming more complex with thousands of millions transactions, deals, pacts, orders and deliveries. This demands for a robust system that can take of these complexities.

The chains are now converting into grids with multi-directional flow. All these needs to be monitored closely and continuously for the smooth functioning of the company. Technology comes handy here and helps us all the way to manage such daunting tasks with consummate ease. Not just that they help us manage this, technology also helps us learn from our previous experience and prepares us for any future. With the cost of technical services coming down this is becoming easier for small scale industries as well to employ techniques in their day to day business and manage their company more efficiently. Major IT industries today are offering such kind of services to companies ranging from small scale md-sized companies to multi-national players.

Having emphasized about the need of technology to manage the business efficiently we shall look into what are the techniques that are being used in day to day business world to achieve the sustainability in the global market.

Data Mining: Data mining processes focus on extraction of information from data sets, to discover patterns and convert them into more understandable format. This comprise of various processes like database management, artificial intelligence, machine learning and statistical methods. Companies from their database can better examine their functioning, strengths and weakness and get geared up for the challenges upfront. Machines employed to help in manufacturing, inventory management can be trained to learn from their functioning and improve their performance. Statistical analysis can reveal the pattern of business, future requirements and other relevant information upfront to a company.

Data Flow: Today it is easy to communicate with people over the globe and pass information. With visual and audio communication suppliers can actually provide the real time information to the procurers much faster and completing the whole process of order placement, quality check and delivery of the products.

ERP (Enterprise Resource Planning): One of the major advances in the field of businesses and supply chain management was the on-set of ERP techniques. ERP is a not a single tool but is suit of techniques to help assist the companies with their planning, procurement, production, delivery, cash and payments. It maintains a communication flow between the different sections of a business and outside stakeholders as well. Its ability to work on varied hardware and network platforms makes it really handy to use for front office and back office tasks.

Cloud Computing: Cloud computing is becoming more and more famous with every passing day given the varied nature of tasks that it can perform, its robustness and cost involved. Many software giants like Google, Microsoft and others are providing services. The technique can work like a virtual server connecting various computers, running and sharing software and functionalities. These servers since virtual in nature can be scaled up, down, moved and migrated with amazing ease. “On the Cloud” is the buzzword.

With more numbers of companies bringing these techniques into use the world is going to witness further advances and refinement in the supplier, manufacturer, consumers and service providers.

Reference: Information on public domain on internet.

Technology – A boon to Supply Chain Management

Technology, emails and software have kept into all types of businesses. Consumers want minute to minute notification of where their products are and when the products will reach them. In today’s global and complex chain of supply chain processes, technology has been the differentiating factor giving them a competitive advantage over other industries. Initially technology was intended for business-to-business interactions but now due to high level of consumer interaction with the processes technology has crept into business to consumer process also.

Following gives a description of the top technologies that are used by supply chain processes in various industries:

1)      Connectivity and Communication :

Mobile handsets, Bluetooth, personal area networking have all contributed a great deal in not only connecting the various distribution centres in the supply chain management processes but also the consumers to customer care representatives who give minute by minute detail of the flow product.

2)      Advanced Wireless: Voice & GPS :

The integration of voice and GPS into computer systems and their falling costs have made it easy for different industries to track the supply of the goods. Use of GPS is significantly helpful in the supply chain process because multiple agencies and people can track it without any investment on integration. Thus there is no expenditure in its implementation or coordination. In the words of V. Manohar, Information technology Manager of Azko Nobel India says that GPS is an integral part to optimise routes, communicate delivery status to consumers and also optimise the warehousing operations. 

3)      Speech recognition:

Imagine, labours giving instructions to the machines by literally speaking to them. At the same time, they can use their hands to do something else. Also, it is much easier for resources to give instructions to the electronic devices than to follow a set of steps to give an instruction to a computer or other electronic terminal. There need not be any money also to spend in training the labours to know the gadgets used in the manufacture or supply chain process. For instance, Lighthouse for the blind is a non-profit organization in St. Louis that employs non-sighted workers. It innovatively made use of the speech recognition technology to improve the accuracy of warehouse picking by 25%!

4)      Digital Imaging & Mobile printing:

With digital imaging, there might be no need for employing resources to verify the delivery of an item. Digital imaging can capture images and these images can in turn be used to capture delivery to customers or to capture the image that a product or raw material has safely and soundly reached its destination shelf. This is definitely another innovative way of using the technology in the supply chain management.

Also, mobile printing can be used in conjunction with Digital imaging to generate electronic invoices. Mission Foods which is one of the world’s largest producer of tortillas have innovatively started using mobile printers to generate handheld invoices rather than manual invoices.

5)      Bar Coding techniques and RFID:

Usage of 2- dimensional barcoding is the trend everywhere. Supermarkets such as Coles, aircrafts such as Emirates all use barcodes for tracking the products and boarding passes respectively. This technique has minimum manual interaction and tracks their processes effectively. World’s most coveted company in supply chain management – Wallmart uses radio frequency identification (RFID). These are different because with RFID merchandises can be tracked from a distance unlike bar codes. They can be used as smart tags on products. The employers can track the flow of such products quickly with their electronic handheld devices. Therefore, they can be easily used to track shoplifters and other ways of not-legal flow of products out of the stores.

Thus, business needs such as tracking of items, ensuring timely delivery of products, security and maintaining inventory – all can be effectively taken care by technology.

REFERENCES :

1)      http://www.scmfocus.com/supplychaininnovation/2010/08/gps-for-supply-chain/

2)      http://timesofindia.indiatimes.com/tech/enterprise-it/strategy/Supply-chain-Three-important-tools/articleshow/18063070.cms?referral=PM

3)      http://www.mirnah.com/images/White_Papers/Trends_SupplyChain/Top10Tech_wp.pdf

4)      http://www.supplychainbrain.com/content/general-scm/business-strategy-alignment/single-article-page/article/how-technology-can-ease-supply-chain-management-and-mitigate-risk/

5)      http://www.arkansasbusiness.com/article/85508/wal-mart-used-technology-to-become-supply-chain-leader?page=all

Why social media is an important tool for B2B Marketing

Social media is an example of how information technology has made the world to be so small. It is no doubt information technology is revolutionizing the way we live and work. Information technology is guiding us and helping us to shape the future.

Social media marketing is a term that describes use of social networks, online communities, blogs, wikis or any other online collaborative media for marketing, sales, public relations and customer service. Some of the common social media marketing tools include blogs, Twitter, LinkedIn, Facebook, Flickr and YouTube. People are interlinked and connected easily using these medias making it easy to embrace B2B or B2C marketing. 

Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. B2C is a contrasting terms referring to business-to-consumer (B2C) (Nemat, 2011). B2B branding is a term used in marketing.

As for businesses, in order to survive and beat the competition in today’s competitive world, they have to manage the future. Managing the future means managing information thereby keeping in track of the changing world and technology as well.

Social marketing makes it easy for your prospects and customers to share your message. According to a recent Forrester research report, 70% of consumers trust recommendations from a friend, whereas only 10% trust advertising (Forrester, 2013). B2B Marketers now have the power to connect with their customers in ways they never could before as more and more social media outlets come up.

In today’s world, B2B companies are decreasing their marketing dollars and spending more online. A recent survey by B2B Magazine revealed that over 48% of those surveyed were increasing their online marketing spend (B2B Marketing zone, n.d).

Social media marketing has three important aspects as highlighted by Lead Views, (2014). These are:

1. Creating a buzz - It is about creating buzz or news worthy events, videos, tweets, or even blog entries that attract attention, and become viral in nature. Buzz generation is what makes social media marketing work, it replicates a message, not through purchase of an ad, but through user to user contact
2. Building of asset - It requires building of assets that facilitate fans of a brand or company to promote it across multiple social media channels. Fan pages in Facebook or Groups in Linkedin are ideal examples.
3. Demands a democratic approach - Social media marketing is successful only when it is designed to allow customer/user participation and dialogue, with little or no control by the organization. If a company has something to hide, then maybe social media marketing is not for them, because honesty is required.  

So what are the advantages of B2B Marketing on social media?

Efficiency - social media marketing provides an instant connection between the company and its target audience. As soon as a company puts information up on the internet, it immediately becomes easily available to a large number of people.

Cost - Social media marketing is extremely cost-effective when compared to other marketing methods. Many social networking platforms charge little or no fee to register, allowing companies to utilize their services to locate and interact with their target audience without having to spend large amounts of money.

Effectiveness - Social media provides a lot of flexibility, when it comes to reaching out to the target audience. It can be used to connect with both the masses as well as a company’s niche segment. All one has to do is to ensure that they use their social media channels and assets carefully.

Personal Connection - Social media allows companies to open up a conversation with their audience, allowing them to provide feedback and express their ideas and suggestions about their business in real time. This is unlike most traditional marketing strategies.

Information technology social networks have certainly presented an important media for marketing. The cost and availability of information resources allow easy linkages and eliminate information-related time delays which is key in any supply chain network.

Works Cited

B2B Marketing zone, n.d. B2B Social Media Marketing –Is it relevant?. Available at: http://www.b2bmarketingzone.com/survey/wiki/  (Accessed 4 March 2014).

Forrester, 2013. How branded content will unlock the key to consumer trust. Available at: http://www.forrester.com/How+Branded+Content+Will+Unlock+The+Key+To+Consumer+Trust/-/E-PRE4784 (Accessed 4 March 2014).

Lead Views, 2014. B2B Social Media Marketing. Available at: http://www.leadformix.com/blog/2010/12/b2b-social-media-marketing-%E2%80%93is-it-relevant/
 (Accessed 4 March 2014).

Nemat, R., 2011. Taking a look at different types of e-commerce. World Applied Programming, 1(2), p. 100.

Asos- The Amazon of fashion

The other day I was browsing through a number of online fashion websites of the UK and USA and found some great dresses. While I was wondering which of my friends to call in those countries to order those dresses and then parcel them to me, I happened to visit the ASOS page. To my amazement, they not only deliver to India, but they deliver FREE and that too within a week!! There is indeed something different about this supply chain..

Asos is the largest european pure-player on online retail clothing.So what is it that enables it to get more than 60% of its business from outside the UK? Since its inception, Asos has been investing heavily in technology and uses a myriad of them to make its business work.

• Asos’s incredibly feature-rich website offers more than 60,000 product lines for customers to choose from. These products include women’s clothing and accessories, menswear, childrenswear and a wide variety of other clothing and accesories.

• The company uses a stealth-marketing strategy built on social-networking sites making customers feel they have discovered ASOS through blogs and tweets instead of throwing sales pitches into their faces.     

• Asos Life is an online community where staff, bloggers and customers chat about the latest fashion.

• Asos Marketplace allows designers to set up boutique stores on the Asos site selling their own creations. Asos takes a 10-15 per cent cut of everything they sell.

• Asos is also among the first retailers to set up a shop on a social networking website (Asos Facebook Store).

• Asos Fashion Finder, a service that aggregates and publicises brands that Asos does not sell. The idea is to make Asos a fashion destination than just a store.

• SaaS platforms like Red Prairie, Merret and Metapack platforms for warehouse management, stock control and distribution systems.

• Asos is soon beginning to generate petabytes of data. Big Data Analytics thus now forms a very major component of their expansion strategy. It is using Hadoop to mine customer buying patterns from its large quantities of data.

• They are using the ChinaNetCloud, a cloud service to spearhead their IT expansion in China.

• Asos does Price Optimization using a real-time stock system that allows visibility for both the customer and the firm, which in turn allows for flexibility of prices in response to demand.

• Using analytics tools such as Webtrend Analytics and Visitor Data Mart that analyze customer interactions on its various country websites.

• While it uses the radio frequency network (RFID) for warehouse management, Asos also uses GPS and other web-based applications to decide the optimal routes for order deliveries. These measures have improved their efficiency by 80%.

• Asos’ iPhone and iPad applications experience more than 1 million sessions every month.

As evident, technology is at the heart of Asos’ business. It uses a business model inspired by online and fashion best practices. Not surprisingly enough, Amazon is one of Asos’ major influencers.By using state-of-the-art technology, Asos has become over a billion dollar company in only a few years of its existence. Although with its focus on technology and R&D, Asos will have a bright future compared to its online pure play competitors, I wonder if the online experience will ever be able to substitute the shopping experience of a brick-and-mortar store. We can experience the impact of technology in every aspect of life, but the question is if virtual environments can replace real-life experiences.

References:

https://econsultancy.com/blog/61813-how-asos-sky-and-schuh-use-live-chat-to-personalise-online-shopping

http://www.slideshare.net/josephman1/asos-a-strategy-behio

http://www.slideshare.net/Helixa/asos-the-next-online-retail-model

http://www.ft.com/intl/cms/s/0/8c81c140-3de9-11e0-99ac-00144feabdc0.html#axzz2uroTrpOy

http://www.entrepreneurcountry.com/united-kingdom/ecosystem-economics/item/fashion-technology-and-asos

http://www.computerweekly.com/news/2240187436/CIO-interview-Pete-Marsden-CIO-Asoscom