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Traditional supplier selection problems are based on invoice costs. Many decision makers use countable and uncountable criterion such as quality, delivery, flexibility, cost, and response in the selection and assessment process. The main questions for the selection process are the needs of the firm the level of the success of the selection criterion to complete these needs (Dogan and Sahin, 2003).
Traditional SCM always used the telephone, fax and regular mail to contact their upstream (supplier) and downstream (customers) connections, however, the use of face-to-face negotiation is not longer needed, as it involved lots of time and costs. The traditional technological support for supply chain relationships are the Electronic Data Interchange (EDI) systems. By its very definition, EDI is an inter-organisational process, so business partnerships have been shown to be very important in the adoption and use of EDI. Also the traditional approach to SCM which includes the use of computer to EDI systems could require hearty technology expenditures but in the e-SCM environment, which is primarily Internet-based, the costs of information exchange along the supply chain are greatly reduced. In fact, it has been stated that operating in the e-SCM context only requires a free Web. Like William (2002) said the changeability between traditional and e-SCM includes the following points:
1. e-SCM places less relative value on long-term partnerships and strategic alliances, when compared to traditional supply chain organisations because of the reduction in technological expenditures associated with forging new relationships in the Internet based e-SCM.
2. Comparing traditional SCM and e-SCM, e-SCM can increase in partnership opportunities.
3. The cost savings opportunities are more effective in e-SCM.
4. Short-term, cost-driven benefits can be realised, and long-term partnerships can be developed as needed. The need for partnerships may not be as forceful as in the traditional supply chain but it allows firms to implement short-term competitive relationships that may have opportunities for ongoing relationships.
5. Autocratic leadership will be cost effective, highly responsive but structurally ineffective when operating in an e-SCM environment.
6. Participative leadership will be structurally effective and cost ineffective when operating in an e-SCM environment.
7. Transformational leadership will be both cost and structurally effective when operating in an e-SCM environment.
Different companies in a supply chain have different objectives. Due to the different needs of interior operations and differences in supply availability, members in a supply chain often use different types of IT systems. Comparably, IT systems between the supply chain members make the development of information sharing resource allocation and customer responsiveness much simpler (Tjader, et al., 2004). Finally, e-business integration is not new; as many companies have already pursued it as a way to gain a competitive advantage. The business can use the Internet to gain global visibility across their extended network of trading partners and help them respond quickly to changing business conditions, such as customer demand and resource availability.
Traditional supply chain analysis distinguishes between primary activities that add directly to getting the goods and services to the customer and delivery to buyers, support and servicing after the sale, and for support activities which provide the input and infrastructure that allows the primary activities to take place. The major distinction between the e-SCM and the traditional supply chain is that the e-SCM, while structurally based on technology-enabled relationships, makes decisions based upon efficiency benefits. As e-SCM was created using electronic linkages, it thereby provided low switching costs, which allows for the supply chain design to be very adaptable to changing trends, consumer preferences and competitive pressures (Williams et al, 2002). It can be argued that internet technologies can reduce production times and costs by increasing the flow of information, as a way to integrate different supply chain activities. Through doing this, the supply chain can be made more efficient and the services delivered to customers more readily. The supply chain involves electronic commerce that was used to traditional supply chain activities, such as market research, procurement, logistics, manufacturing, marketing and distributing (Chaffey, 2002). The Internet’s strengthening influence of convergence can be depicted.
The low-cost connectivity makes it possible for small and mid-sized companies to take advantage of SCM techniques. It is the main reason that the traditional supply chain management developed e-SCM. Companies willing to adopt Internet technologies and business models in an opportunistic way will clearly gain competitive advantages. Information Technology (IT) has contributed to the growth of world economy, as well as the Internet changing the way that companies practice business.
The current and future technological capability of the Internet means that it will be possible for demand data, as well as supply capacity data, to be clear to all the companies in the supply chain. In addition, using Internet based information transfer; supply webs will e replace the traditional organisational role of information within supply chains, thus making for a more interactive approach for supply chain partnering (Kehoe, and Boughton, 2001).