Electronic business technologies enable the separation of two streams occurring in the supply chain – the product flow stream and the information flow stream – which remain in close interdependence in a traditional chain. This allows the manufacturer to reorganize the supply chain, maintaining their advantageous position at the beginning of the product flow stream, while changing their disadvantageous position at the end of the information flow stream to a position closer to the end customer.
These new forms of supply chains, whose functioning is based on electronic business technologies, are referred to as electronic supply chains. In this article, we will present a model of the first such chain – the manufacturer’s virtual wholesaler and the physical wholesaler responsible for warehousing and distribution of goods.
Virtual wholesaler and physical wholesaler
The considered model is shown in Fig. 1. The model includes a virtual wholesaler (created and controlled by the manufacturer) and a physical wholesaler. Red arrows indicate the flow of orders, black arrows indicate the flow of goods. The virtual wholesaler is an IT system that allows retail stores to place orders via the Internet directly with the manufacturer. The manufacturer handles the received orders from an information perspective, while delegating the physical delivery of goods to a selected physical wholesaler. By physical wholesaler, we mean here:
1. An actual physical wholesaler, which is a separate business entity and has its own goods purchased from the manufacturer, or:
2. An actual physical wholesaler where the manufacturer has a deposit of their own goods, or:
3. The manufacturer’s distribution center.
The primary advantages of this model for the manufacturer are as follows:
1. Reversal of the relationship between the manufacturer and wholesalers – it is not the wholesaler who has the ability to choose the manufacturer as one of several possible suppliers, but the manufacturer who has the ability to choose one of many wholesalers as the one who can fulfill a given order. This, of course, significantly improves the manufacturer’s position during contract negotiations with wholesalers.
2. Direct, ongoing contact with retail – the manufacturer has “moved” one link down the information flow chain. The manufacturer no longer needs the presence of an intermediary to gain access to information coming from further links in the chain. Furthermore, the manufacturer now becomes the provider of this information to the wholesaler.
The article comes from the magazine “Logistyka”, No. 1/2006.