The evolution and impact of E-Business

Solution Preview

Evolution of e-business

Since the dawn of the Industrial Age, buyers and suppliers have been linked in rigid and inflexible relationships, creating supply chains that were only as strong as their weakest link. The basic tenet in this Industrial Age thinking is to drive down cost and improve efficiency by owning every part of the supply chain. Think of automobile manufacturers, for example. For the last thirty years they have sought to own the bulk of the supply chain as a mechanism for improving efficiency. The driving factor in a supply chain was a need for more effective and more complete information flow, and this could only be achieved through ownership.

Then along came the Internet and nearly overnight, the economic models of industries began to change dramatically. Since the Internet can enable effective and complete information flow at a relatively low cost, the need to own other parts of the supply chain has diminished considerably. The need is now to be able to connect business to other businesses to gain access to this information. In tandem with this is the move away from buying assets as this is no longer the only way to drive down costs and improve efficiencies.

Several factors will continue to propel the evolution of the Connected Economy. First are the long-term sustainable benefits resulting from this technology. A recent Goldman Sachs report estimates that pervasive adoption of Internet B2B networks could increase the industrial output of advanced economies by 10% in the coming decade. The catalyst for much of this change has been the advent of Net Markets. These new digital marketplaces are disrupting the old linkages in existing Industrial Age supply chains. They are emerging as new channels for buying and selling products, and forcing organizations to restructure the way they compete in their industries. Traditional competitors, Ford, DaimlerChrysler and GM, for example, are now becoming business partners. Organizations like Cisco and Dell are now outsourcing parts of their supply chain, such as manufacturing and logistics, rather than acquiring more assets. Other businesses and industries are being simultaneously disintermediated and re-intermediated as ...