Constructing the e-commerce clustering platform and innovative business model - a case study for chinese herbal medicine industry

Chinese Herbal Medicine Industry (CHMI) is a historical, cultural and distinctive industry in Taiwan. In fact, the major customers and consuming groups of this industry are elders or people who live around neighborhood. Unfortunately, the existing customers lose gradually since the young customers or new consuming groups have not been developed or introduced to try the Chinese Herbal Medicine. Subject to the massive item amounts and limited expiration date, the companies stay at this industry still trade by following the traditional way such as receiving the orders by phone or fax then delivering the goods personally. The customers seldom combine or integrate the same requirement to place the orders on website not to mention trade on the innovative business platform. In this study, we will construct clustering industry e-commerce platform and innovative business management model to improve the efficiency and enhance the competitiveness of the CHMI. (1) Clustering industry e-commerce platform Establishing the uniform item name and prescription content will be assist in smoothing the inventory adjusted procedure and delivery schedule. This platform focuses on the process flow, inventory management system of the raw material, semi-product and finished –product. The inventory management is more reasonable and effective by implementing the demand forecasting function, besides, the material requirement planning (MRP) of the Chinese medicine will also be implemented and contributes benefits for establishing the safe stock and re-order point. (2) Innovative business management model Establishing customer relationship management (CRM) database will strength the relationship not only for Business to Business (B2B) but also for Business to Customer (B2C). This database will be a benefit for providing more individual service to specified customer by analyzing the historical trading records. This integrated model will decrease the inventory for the trader, manufacturer, wholesaler and retailer. Besides, the bullwhip effect and stock level in the supply chain will be alleviated remarkably. This study institutes six key performance indices to evaluate the performance and achievement of Chinese herbal medicine industry after establishing the e-commerce and clustering industry website. These KPIs are average turnover rate, medicine wasting rate, purchasing operation efficiency, data error rate, processing automation level and inventory level.