MSG Team's other articles

9733 How will the Sino American Trade War End?

The trade war between China and America seems to be getting worse every day. When negotiations between Trump and Xi Jinping were happening, the entire world was waiting with bated breath. A stalemate seemed like the most likely outcome, and that seemed to be the best result that all the concerned parties could have hoped […]

9097 Effects of FIFA World Cup on the Economy

The FIFA World Cup is an international sporting event. This event is held every four years. However, the host country changes every time. Countries have to bid against each other in order to win the rights to host the next World Cup. Many economists have questioned this practice. However, none have been able to find […]

9001 Documentation in Customs Clearance

Any Importer wishing to bring in cargo into the country may do so through air, ship, and road or multi modal transport. Every import consignment is required to be deposited by the transportation agency or the freight forwarder into the Customs Designated Bonded warehouse for Customs Clearance. Customs Clearance is facilitated by Customs Clearance Agent […]

11719 BPI Project Walk Through – Understanding People and Process

Business Process Improvement projects are ideally suited for every business operation, especially to augment the process efficiency, to implement process changes and to take the business operations to the next level and meet with the Business demands and Customer expectations. For any BPI project to be successful, the leadership and the ownership of the Business […]

9930 Information System for Training and Development

Introduction A successful organization is built on satisfied and trained employees. They are the company’s greatest assets. Employee development is defined as formal education, on-the-job training, previous job experience, personality mapping, and improvement in the current skill sets as to prepare the employee for future. A trained and developed staff will contribute to productivity increase, […]

Search with tags

  • No tags available.

During 1990s’, the popular method of exchanging information between trading partners were Electronic Data Interchange (EDI) and all major ERP vendors added EDI facilities to their products. However, EDI did not achieve its desired outcome as each organization needs its customized EDI (to account for its unique data format), high set up cost (requiring privately run Value Added Network) and little cohesion or standardization. A majority of organizations did not use EDI functionality while implementing their ERP systems.

The advent of the internet and intranet technologies since mid 1990s’ saw the exponential growth of electronic commerce (e-commerce). E-commerce involved buying of goods through the internet (comprising of advertising need, issue invitation to tender, reverse auction, etc.), selling of goods through the internet (comprising electronic auction, publishing electronic catalogues) and handle related processes electronically such as receive invoice, making payment, monitoring performance.

Response of ERP vendors: ERP vendors were not agile to quickly respond to the changing need where customers and suppliers, wanted information, contained in the backend ERP system, for effective collaboration, better information flow and minimizing cost across the supply chain. Customers demanded supply status, billing information, warranty compliance over the web whereas suppliers wanted online information on inventory, supply schedule, and payment status.

ERP products have rigid architecture, and any modification/ development requires complex coding and developing a link between backend ERP with front end web based e-commerce, was a challenging task.

ERP vendors responded to this challenge by their effort to enable their product. They have developed some functionality in-house but also used/ acquired third party products such as storefront. They have developed new workflows encompassing vendors, customers, shippers, distributors, and bankers. They have made these workflows web enabled by adopting open standards such as Java and XML.

ERP Ecommerce

Another challenge faced by the ERP vendors for web enabling their product was security issues relating to e-commerce transactions, which are carried out by Virtual Private Network (VPN) over internet backbone. They have to adopt authentication tools such as electronic signatures and digital certificates, Secured Electronic Transactions (SET) and confidentiality through symmetric key encryption/ public key cryptography.

E-commerce transactions can be broadly classified under e-procurement and e-selling particularly under the context of business to business transactions. Some details under these classifications are given below:

E-Procurement - A typical e-procurement requirement of an organization is depicted below:

  • Electronic tendering comprising of tender publication, submission, short listing, evaluation, and award. Facility for evaluation of IT/ Service contracts containing Complex evaluation matrix.

  • Compliance of agreed quantity Vis-a-Vis called quantity, consolidation of called quantity for obtaining agreed quantity discounts.

  • Facility for publication and updating of electronic catalogues by vendors.

  • Analytics for spend analysis that is used for strategic decisions, supplier relation management and minimization of maverick buying.

  • Facilities for reverse auctions through business to business marketplace.

For meeting the above requirement, ERP vendors carried out integration of web based front end with generation of demand (planning module), preparation of Purchase Order (procurement module), receiving of goods (warehouse module), payment (account payable module), dealt by back-end ERP system.

E-Sales - The biggest change that has been brought by e- commerce in respect of selling and marketing of goods is creating a new sales channel based on the web. This has impacted retail sectors in a big way through increased sales, expanded market reach including overseas market, improved customer loyalty, and reduction of transaction cost.

E-sales enhance value in respect of following business process:

  • Reaching the customer quickly and a transparent way through the process of electronic auction.

  • Processing customer orders promptly through storefront web applications.

  • Checking credentials of the customer.

  • Arrange drop shipment where the nearest distributor ships goods.

  • Providing facility to the customer to check the status of order through the web.

For meeting the above requirements, integration of web system with back-end ERP system was done. Before order acceptance, ATP (Available to Promise) status of the item is verified from planning module. For quoting price, dispatching of good and receiving of payment, sales, warehousing, and accounts receivable modules of ERP system are interrelated.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Cost Estimate and Accounting in ERP

MSG Team

Configuration Control and Setting Up of Base in ERP System

MSG Team

Change and Risk Management in ERP Implementation

MSG Team