Supply-chain automation is often touted as the key to business success. It is a de facto way to build bottom-line results by focusing on efficiency, speed and business connectivity, and adding value to products and services.

As such, supply chain services are in high demand. According to the research group IDC, supply chain services generated sales of US$23 billion worldwide in 2000 and is on a pace that will bring it near US$83 billion by 2005.

The supply chain automation core is typically structured around the flow of physical goods, information and funds. In a typical supply chain, trading partners include raw material suppliers, manufacturers, distributors, retailers, service providers and government bodies, while the end user, or consumer, is the focal point of all activities.

Trading partners collaborate to streamline and integrate processes, thereby eliminating inefficiencies and non-value adding activities. The adoption of enabling technologies, such as product numbering, barcoding & scanning, XML/EDI and the Internet, are also needed to facilitate speedy and effective information flow for SCM.

But what happens when an SME lacks the clout to impose supply chain mandates on its suppliers, many of which are bigger companies?

It is all very well for supply chain automation vendors to rattle off examples of how Wal-Mart, Dell Computers and the like have nailed down SCM from end to end to boost their businesses and profitability. When these companies say jump, their suppliers generally ask how high? But it is a different story for the average SME.

Results from HKANA surveys indicate that there is a growing awareness and adoption of both logistics and supply chain management in Hong Kong, but most SMEs still know very little about supply chain management and the importance it plays in their business, she added.

Supply chain e-commerce will also be one of the largest drivers of the Chinese business-to-business market over the next five years.

He estimates supply chain ecommerce in China stood at approximately US$1.5 billion in 2000. By 2005, this is expected to grow to US$113 billion, while overall B2B ecommerce is expected to grow to US$133 billion. Much of this growth is going to be confined to China's traditional markets including steel, IT, chemicals, and petroleum.

While B2B growth in China over the next four years is expected to be strong, it will not be as revolutionary as many expected.

The Internet is the key enabler for supply chain automation, but even the most basic of systems needs the right hardware and software to make it work - just having an electronic connection between trading partners is not enough, Ms Lin said.

The cost of setting up a supply chain automation system varies from company to company, and the process is on-going.

Among the main areas of concerns for businesses thinking of setting up B2B data exchange are the content of data. As different parties in countries around the world require different information, such as production information, and each party tends to use different names to describe the same product or service, these differences can cause problems, Ms Lin said.

Although many companies claim they are e-enabled, an efficient flow of information and data between trading partners is impossible if each company uses proprietary data structure and format, interfaces.