NFORMATION TECHNOLOGY AND INTERNATIONAL BUSINESS
Miss. P. PIRAKATHEESWARI, Lecturer in Commerce,
Sri Sarada College for Women (Autonomous), Salem – 16.
Computerization has changed the way business is conducted the world over. No aspect of business has remained untouched by the information technology (IT) revolution. This is especially true of international business where people located in different parts of the world conduct transactions with each other. The activities of international business include manufacturing, in-land transportation, customs and excise matters, port operation, shipping, clearing and forwarding, etc. During the course of these transactions, a large number of documents are created and exchanged, many of these documents or the information contained therein is repeated, while creating and mailing these documents before the advent of IT., hundreds of man-hours would be lost in repetitive operation, innovations in IT have revolutionized international business; the use of technology in managing and processing information. Especially in large organizations helps save time, bring down costs, and reduce manpower, manual data input and transfer has now become not only obsolete, but also irrational.
In international business today, IT finds maximum utility in the following areas:
1. Electronic procurement
2. Electronic marketing
3. Electronic logistics
A modern competitive enterprise seeks to hold an edge over the market. IT helps provide this competitive advantage through its various applications tools. By adapting these tools in various areas of business, the organization can gain many advantages in terms of accessibility to a customer or supplier in any part of the world, speed of operations, reduction in man power, etc. due to the reach of the internet it is possible to conduct buying and selling transactions irrespective of geographical location. Internet banking helps in the speedy execution of payments and settlement of accounts. A website can be a virtual showroom, where products can be displayed, demonstrated, and sold. Such a website can also provide various after- sales service tips and suggestions, launch discussions forums, ask for customer feedback, and educate the customer. IT application such as electronic data interchange (EDI) has also enabled logistics operations to be paperless.
1. Electronic Procurement
E-procurement essentially comprises a number of inter-related methods for improving the procurement process through the use of electronic systems and processes. The need for e-procurement stems from the fact that in today’s globalized world, a manufacturer can source inputs such as raw materials, components, machinery and consumables from any part of the world. The manufacturer is constantly looking for suppliers who can offer quality materials at the most competitive rates. The internet has become a favourite hunting ground for the best bargains. Small companies can purchase their inputs through various websites, which sell a variety of items. However, for the larger organizations, electronic procurement is a systematically outlined process. Here, enterprises use automated applications to streamline buying both production and non-production goods and services.
The entire electronic procurement process can be divided into three major components: pre-purchase, purchase, and payment activities. Pre-purchase activity can begin with a Request For Purchase (RFP) generated by the user department and sent to the purchase department. The electronic platform helps to plan pre-purchase activities starting with the vendor pre-qualification process. Vendors are invited to register their interest in a prescribed application form. They are asked to provide information about their organization, availability of resources, such as manpower, machinery, and monetary resources. Reference letters from their bankers help establish their standing in the market. A list of their present customers is also sought to gauge their market base. The short-listed vendors are registered and whenever there is a requirement of their services, a Request For Quote (RFQ) is sent to them. In case of very large purchase orders, venders are invited to bid in a competitive bidding process. Tender evaluations tools help identify the most suitable bid. A number of companies resort to reverse auctions, whereby, they announce the auction process on their website and ask the vendors to make their bids before the deadline. The bids are then opened and evaluated, before the contract is awarded to the selected vendor with the most suitable offer. This process is called a reverse auction because in this case the auction is for procurement instead of a sale.
Benefits of Electronic Procurement
Reduction in Manpower Cost
Reduction in Purchase Cycle Time
Wider Choice of Vendors
Better Prices for the Purchased Goods
Reduction in Transaction Cost
Fewer Human Errors
Better Relations with the Vendors
Better Compliance with Regulations
2. Electronic Marketing
Internet has changed the way we exchange goods for money. It has broken geographical barriers between buyers and sellers. The internet enables a manufacturer in India to sell his/her goods to a customer in any part of the world through the World Wide Web. It is necessary, however, that the buyer has access to internet and has the necessary know-how and desire to make online purchases.
The internet has provided a very effective platform for electronic marketing or e-marketing. E-marketing means using digital technologies to help sell your goods or services. This is different from a conventional market place, where sellers display their goods and buyers can touch and feel the goods and bargain with sellers. In case of e-marketing, sellers can display photographs, video films and specifications of their products. In most cases, the prices are also displayed so that buyers have a clear idea about the product and price.
Benefits of E – Marketing
24*7 Connectivity – The buyer can access the seller’s website 24 hours a day and 7 days a week.
Less Expensive – E-Commerce websites can be launched with a very small budget. The expenses involved are website development charges, web-space rental, hosting charges and website maintenance charges.
Worldwide Reach – The biggest benefit of business over the internet is its global reach.
Online Payment Facility – The buyer can make online payments via credit card. This facility speeds up the transaction, assuring the seller of payment.
Measurement of Effectiveness – By putting a counter on the website, the seller can count the number of visitors to the website and the number of buyers who actually made on-line purchase.
Ease of Operation – The buyer need not leave the comfort of office or home to purchase goods on the internet. The payment can be made with a click of the mouse and the goods can be delivered at the buyer’s door step.
User-Friendliness – Most e-marketing websites are very easy to use. The buyer is guided through various procedures to purchase the good on-line. Many sellers have established call centers to be in direct touch with the buyer.
Personalized Service – Visitors to the websites are normally advised to register themselves, so that each time they visit the website they are recognized and provided suitable services.
Creation of Consumer Databases – The seller can keep a data base of the name, age, address, sex, contact numbers and important dates, such as birthdays and marriage anniversaries of online buyers.
3. Electronic Logistics
Electronic logistics is use of web –based technologies to support warehousing and transportation management processes. E-logistics enables distribution to couple routing optimization with inventory tracking and tracking information.
In international trade and distribution, computerization is slowly but surely tacking hold of every aspect of business. From computerized trade leads available through the department of commerce, to electronic letters of credit, to telecommunicated documents, to computerized freight booking, tracing and documentation system, to electronic freight tariffs, automated freight payment systems, computerized loss and damage reporting.
There is a tremendous scope of the application of IT in logistics. In fact, modern supply chains are held together by the strength of IT, through its ability to transmit huge amount of data speedily, or make global data available to expedite the decision making process.
Due to the advantages offered by IT, many logistics providers are planning to handle majority of their commercial transactions electronically. Also, exporters are already using IT for various activities ranging from e-procurement of goods to availing transportation services on the net.
Important Electronic Tools
Shipping lines are keen to encourage their customers to use the internet and have developed a number of attractive tools. The biggest benefit of these tools is that both shippers as well as shipping lines gain by using them. Following are some of the important tools:
Electronic receipt of vessel schedule information
Tracking and tracing of cargo
Remote bill of lading (B/L) printing
Single data entry reporting
Online tendering, etc.
1. Electronic Receipt of Vessel Schedule Information
Shippers can visit a logistics portal to check the schedule of different shipping lines and choose what suits their supply chains the best. This saves shippers time and effort. The shipping lines, too, benefit as they do not have to inform individual shippers about their voyage schedules. At present, the only limitation to this system is that not every portal maintains information about every shipping line, nor does every shipping line provide updated information on their sites or related portals.
2. Tracking and Tracing of Cargo
The biggest benefit shippers enjoy as far as e-logistics is concerned, is tracking and tracing the cargo. With e-connectivity they need to spend less time per enquiry with shipping lines about the status of their cargo and significantly improve their supply chain visibility. However, different portals offer different services.
3. Remote Bill of Lading Printing
The main benefits of this facility are reduced production and distribution costs for the carriers. The shipper’s gain is fast and error-free receipt of documents. More and more shippers are using this facility and are demanding simplified transmission of transport documents. One of the reasons for this is error-free transmission of Bill of Lading. Shipping lines normally dispatch the Bill of Lading within 48 hours of vessel sailing.
4. Single Data Entry Reporting
With the aligned system of documentation, the format of various shipping documents is now standardized. Information once keyed in any document will automatically appear in all aligned documents. This system saves repetitive data entries and also saves substantial time and cost.
5. Exception Reporting
Shippers across the world, who work tirelessly towards manufacture of quality products, also want reliable delivery schedules. Exception reporting by the shipping line helps the shipper to know if there are any deviations from the instructions, which he/she has given to the shipping line.
6. Online Tendering
To find out the ocean freight rates from various shipping lines, the shipper has to send an enquiry separately to each shipper. Online tendering helps the shipper to send out rate enquiries to as many shipping lines as desired by merely pressing a button. Today, in the era of rationalization, mergers and acquisitions, the shipper’s global requirements are getting increasingly complex. Online tendering helps them get competitive quotations from shipping lines operating on various routes. These multinationals maintain databases of such quotations in order to choose the most competitive rates on various routes.
Technology is changing at a very fast pace. Various aspects of electronic business such as e-procurement, e-marketing, e-logistics use a number of technology products. The life cycle of technology products is very short. We are living in a knowledge-driven era, where everyone has access to information thanks to internet and a variety of other sources of information. However, the market is dominated by those, who translate information into knowledge and use the knowledge to improve productivity and efficiency of their enterprises. India is enjoying an enviable position because of its leadership in the area of information technology. A number of business solutions are developed in India for world wide applications. However, such applications take a long time to be implemented in India itself.
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About the Author
P. Pirakatheeswari P. Pirakatheeswari
Miss. P. PIRAKATHEESWARI, Lecturer in Commerce, Sri Sarada College for Women (Autonomous), Salem – 16. (show bio)
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