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Brussels, 23 January 2002

Information and communication technologies crucial to business logistics, says Commission survey

Information and Communication Technologies (ICTs) are bringing about a real revolution in business-to-business (B2B) relations. Although less apparent in business-to-consumer (B2C) transactions, their impact on enterprises is substantial. So says a survey, published by the European Commission today, about the impact of ICTs on the logistics of businesses across Europe. Based on replies from a sample of 180 companies in February-September 2001, the survey cites lower stocks, faster delivery times, changes in job profiles and a shift from competition to co-operation among enterprises as some of the most tangible effects of ICTs on B2B relations. For big companies, most ICT headaches are to do with managing large and complex networks and telematics systems. Small and medium-sized companies (SMEs) master smaller, more flexible electronic platforms and applications relatively easily, but sometimes lack appropriate finance to go digital in logistics.

ICTs began having a significant impact on B2B relations five years ago, with the development of the customised web and telematics applications, and the ensuing development of electronic commerce and, more recently, electronic marketplaces. Commercial enterprises in all Member States now acknowledge the importance of these technologies to their business. There is evidence that ICTs are contributing to the emergence of genuinely innovative, lasting concepts, such as "pull flows" and collaboration processes between enterprises. "Pull flows" can be defined as "production on demand" or just in time production processes with new forms of co-operation between manufacturers and their partners across supply chains.

ICT use is also expected to have a lasting impact on B2C transactions, wherever it confers a competitive advantage in logistics and "back-office" customer services. Relations between the players in the same logistical chain are intensifying: distribution platforms, supply and demand flows are growing and new business collaborative processes are developing.

There is also a transformation in the economic environment in which businesses work: some jobs are changing (wholesalers, postal operators and carriers/logisticians) and new players are appearing, such as "infomediaries" (who provide virtual links in the delivery chain), "supply-demand interfacers", and suppliers of complete logistic solutions. Fundamental changes in roles and jobs are taking place within businesses (logistics directors, purchasers, computer scientists, distance sellers, administrative personnel, warehouse handlers, and drivers), which means there is an urgent need for training, and logistics are taking on a strategic role.

The ICT logistics revolution affects business competitiveness by reducing operating costs. Industry sources confirm that the supply chain costs may be reduced by 8-10%, which should in turn result in lower consumer prices.

The overall impact on employment is low, but there is a considerable need for retraining. ICTs are also contributing to the emergence of a new dimension in relations between competing businesses: competition stops where co-operation becomes more profitable. This results in the sharing of storage facilities or distribution platforms (in outsourcing contracts), and the development of common e-marketplaces.

Today, the technical aspects of electronic marketplaces are being fine-tuned and better co-ordinated. Enterprises are moving from a purely technological approach to a broader business-oriented approach, which puts the customer back at centre stage and recognises that marketplaces are not simply new tools (based on new technologies), but must also supply new answers to the "old" problems of the "traditional" economy.

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