Harry Potter has thrilled the kid's world with its magic wand. But the overwhelming customer-demand of Harry Potter's book is met by efficient supply strategy that captures the attention of very few. Scholastic, the publisher and distributor of Harry Potter and other popular children's books used different magic-wand to weave magic in its vast supply network. It managed its distribution network through electronically powered supply chain. And the result was dramatic - revenue was doubled and earnings per share were climbed over a five-year period. The publisher and distributor has successfully managed the phenomenal demands of Harry Potter through its cost-effective, customer-centric supply chain strategy built over improved electronic links it established throughout every nodes of its supply net-work.

Similarly, Dell Computer outperformed the competition in terms of shareholders' growth by over 3000%over an eight-year period, 1988-1996. The formula of this astounding success is again virtual integration, a strategy that is achieved by blurring the traditional boundaries between suppliers, manufacturers, and end users through electronically interlinking every parts of its supply chain.

But not everyone was so successful. Living.com purchased Shaw Furniture Gallery, one of the largest furniture stores in US, in March of 1999, to vertically integrate with top-line furniture manufacturers. After an investment of $70 million in e-business as the exclusive Amazon.com furniture link, Living.com declared bankruptcy on Aug. 29, 2000. Same fate met with Peapod, founded in 1989 and based in Illinois, US. Considered one of the America's leading and highly experienced online grocers, Peapod suffered a loss of $29 million in 1999, and was later sold-out!

Why, in some cases, does the new business model fail while in other cases it generates incredible success stories? Alternatively, if Dell and Scholastic can use the Internet and other electronic technology to develop such an effective business model, what inhibits other experienced firms like Peapod, once entertained more than 130,000 customers, from adopting similar techniques and improving their business performance?

"It is the better understanding of supply chain strategies in commensurate with organization goals and overall business environment", says David Simchi-Levi of Massachusetts Institute of Technology. According to David, Internet technology has forced companies to redefine their business models so as to create new opportunities. While acknowledging that the influence of the Internet and e-commerce on the economy in general has been tremendous, he found that reasons for the failure of Living.com, the on-line furniture mall, are investment in a new information system that did not function correctly in the specific business environment. Moreover switching to a carrier that had no experience with furniture delivery also led to an amazing 30% return rate, triggering to Living.com's downfall. Similarly, Peapod, the online grocery store, collapsed due to high delivery costs of its transporters.

These examples confirm that correct software tools when applied through right supply chain strategy can have a major impact on business performance. Developing integrated supply chain strategy is a necessary precursor before implementing electronic technology. Peter Nygrd, Chairman of Nygrd International, a global clothing enterprise based in Manitoba, US, says, "As apparel manufacturers develop quick response methods, a limiting factor to the overall supply chain can be the textile cloth manufacturing industry. Integrated strategies must be established between the textile supplier, apparel manufacturer, retailer and ultimately, the consumer, to ensure rapid delivery of fabrics to coincide with the time of need." Nygrd International with sales in excess of $300 million, manages a textile supply chain within the US market and other key countries including Korea, Japan, Europe and Indonesia. At the center of its efficient supply chain management of vast global network of suppliers and customers is installation of EDI or electronic data interchange.

Sheldon Leith, a partner with Ernst & Young's consumer products and retail group also observes, "The key value of automatic stock replenishing through electronic network system is that there's less labor and less stockpiled inventory. Overall, it automates paper-based processes, saves time and energy, which can be reapplied throughout the business."

But how much this electronically enabled stock-replenishment improves fill-Rate and customer satisfaction, which are so crucial in surviving today's volatile market. Consider the case of Wal-Mart, the world's largest retailer. It has been at the forefront of stock replenishing, offering shoppers more than a 98-per-cent chance of finding a complete selection. Wal-Mart uses Retail Link, a software system that provides vendors with up-to-date access to point-of-sale price and volume information, as well as its inventory positions and forecast of future needs. In the opinion of Narendra Mulani of Accenture and Hau Lee of Stanford University, who studied success formula of Wal-Mart, implementation of Retail Link helps the vendor to position the right inventories, and to interact with Wal-Mart about movement and promotions for products and categories. Also agreed Peter Nygrd, Chairman of Nygrd International. He found that using EDI within the supply chain is necessary to manage the constant change driven by consumer demand.