1 prentice hall, 2003 elc 200 day 12. 2 prentice hall, 2003 agenda questions from last class?...

Prentice Hall, 2003 1

ELC 200

Day 12

Prentice Hall, 20032

Agenda

Questions from last Class?Assignment 3Corrected

4 A’s, 8 B’s and 2 C’sI am not looking for generic textbooks answer but answers that are specific to your business.

5 Days till Daytona Beach Bike Weekhttp://www.daytonachamber.com/bwhome.html

Today we will finish discussing Company-Centric B2B and Collaborative CommerceThursday we will be talking about how to write an eBiz Plan

The completed eBiz plan is worth 22% of your grade


Buy Side E-Marketplaces:Reverse Auctions

Buy-side e-marketplace—a Web-based marketplace in which a buyer opens an electronic market on its own server and invites potential suppliers to bid on the items the buyer needs; also called the reverse auction, tendering, or bidding modelRequest for quote (RFQ)—the “invitation” to a buy-side marketplace (reverse auction)


Exhibit 5.6Buy-Side B2B Market Architecture


Conducting Reverse Auctions

Reverse auctions administered from a company’s Web site

Bidding process lasts a day or moreBidders may bid only once or view the lowest bid and rebid several times

Increasing number of reverse auction sites makes it impossible for suppliers to monitor all of them

Online directories list open RFQsUse software search-and-match agents to reduce the human burden in the bidding process


Bidding Through a Third-Party Auctioneer: Freemarkets.com

United Technologies Corp. needs suppliers to make $24 million worth of circuit boards

2,500 suppliers are identified as possible contractorsList is submitted to FreeMarkets (freemarkets.com)http://www.ariba.com/


Freemarkets.com (cont.)

FreeMarkets reduced the list to 50, based on considerations including:

Plant locationSize of supplierPlant capacityCustomer feedbackDetailed evaluation of the candidates


Freemarkets.com (cont.)

3-hour auction conducted of online competitive bidding:

First bid was seen by all biddersUsing reverse auction approach, the bidders reduced their bids

Comprehensive analysis of several of the lowest bidders Then recommended the winners and collected its commission feesResults

Original specification of $24 million was reduced to $18 million


Procurement Revolution at GE

TPN (now part of gxs.com)Purchasing was inefficient—too many administrative transactions

Process for each requisition took 7 days to send to biddersComplex and time-consumingCould only send out bids for 2 or 3 suppliers

Trading Process Network (TPN)—electronic bidsEntire process takes 7 days (for suppliers to bid)2 hours to send information to suppliers (7 days before)Evaluate and award bids same day


Procurement Revolution at GE (cont.)

Benefits to GELabor declined 30% and material costs declined 5%-50%--wider base of suppliers onlineRedeployment of 50% of the staffTakes half the time to identify suppliers, prepare a request for bid, negotiate a price, and award the contractInvoices automatically reconciled reflecting modifications



Benefits to buyersWorldwide supplier partnershipsCurrent business partners

Strengthen relationshipsStreamline sourcing process

Rapid distribution of informationTransmit electronic drawings to multiple suppliersDecrease sourcing cycle timeQuick receipt and comparison of pricing bids



Benefits to suppliersIncreased sales volumeExpanded market reach, finding new buyersLowered administration costs for sales and marketing activitiesShortened requisition cycle timeImproved sales staff productivityStreamlined bidding process


Aggregating Catalogs

Aggregating suppliers’ catalogs: an internal marketplace

Maverick buying to save time leads to high pricesAggregating all approved suppliers’ catalogs in one place

Reduced number of suppliersBuyers at multiple corporate locations

Fewer and remote suppliersLarger quantity/lower costs


Buying from MasterCardInternational’s Internal Catalog

Online buying program at MasterCard:Allows corporate buyers to select goods and services from company’s electronic catalogGoal is to consolidate buying activities from multiple corporate sites, improve processing costs, reduce the supplier base

Procurement department defines:Scope of products or projects to buyInvites vendors to bid or negotiate prices


MasterCard International (cont.)

Contract prices are stored in the internal electronic catalogFinal buyer at MasterCard compares available alternatives

Organizational purchasing decision coupled with an internal workflow management systemInternal electronic catalog is updated manually or by software agentsPayments are made with MasterCard’s corporate procurement cardBy 2002, the system was being used by more than 2,500 buyers


Group Purchasing

Group purchasing—aggregation several buyers into volume purchases, so that better prices can be negotiated

Internal aggregationEconomy of scaleReduced transaction processing cost

External aggregationAggregating demand onlinePutting together orders from multiple buyers to make large volumes/lower costs


Exhibit 5.7Group Purchasing Process


Electronic Bartering

Bartering exchange—an intermediary that links parties in a barter; a company submits its surplus to the exchange and receives points of credit, which can be used to buy the items that the company needs from other exchange participants

Exchange of goods or services without the use of moneyExchange a surplus for other needBenefits:

Faster than manuallyEasier to match


Collaborative Commerce (C-Commerce)

Collaborative commerce (c-commerce)—commerce consisting of activities between business partners in jointly planning, designing, developing, managing,and researching products and services

Web-based systems used between and among suppliers for:

Communication DesignPlanning Information sharingInformation discovery


Collaborative Commerce (cont.)

Varieties of c-commerce:Joint design effortsForecasting Between and within organizations

Aids communication and collaboration between headquarters and subsidiaries, franchisers and franchiseesC-commerce platform provides e-mail, message boards, chat rooms, online corporate data access around the globe, no matter what the time zone


Webcor Construction Goes Online with Its Partners

Webcor suffered from too much paperwork and poor communication with its:

ArchitectsDesignersBuilding ownersSubcontractors

Webcor’s goal: to turn its computer-aided design (CAD) drawings, memos, and other information into shared digital information


Webcor (cont.)

Webcor uses ASP that hosts its projects on a secured extranetMajor problem was getting everyone to accept software:

ComplexUser training is necessary

Webcor was in a strong enough position to choose not to partner with anyone who would not use ProjectNet


Webcor (cont.)

Webcor’s business partners can post send, or edit CAD drawings, digital photos, memos, status reports, project histories

Partners have instant access to new building drawingsCentral meeting place where users can both download and transmit information to all parties, all with a PC


Retailer–Supplier Collaboration: Target Corporation

Target Corporation is a large retail conglomerate:

Conducts EC activities with about 20,000 trading partners1998—established an extranet-based system for those partners that were not connected to its VAN-based EDI.


Target Corporation (cont.)

The extranet enabled the company to:Reach many more partners,Use many applications not available on the traditional EDI Streamline its communications and collaboration with suppliersBusiness customers to create personalized Web pages


Continuous Replenishment: Warner-Lambert

Warner-Lambert (WL) served as a pilot site for a program called Collaborative Planning, Forecasting, and Replenishment (CPFR)

Shared strategic plans, performance data, and market insight with Wal-MartTrading partners collaborate on making demand forecasts

WL increased its products’ shelf-fill rate from 87 percent to 98 percent

An empty shelf>>>lost present sales and future sales if the customer purchases a substitute product


Warner-Lambert (cont.)

WL is involved in another collaborative retail industry project—Supply-Chain Operations Reference (SCOR):

Divides supply chain operations into partsGives a framework with which to evaluate the effectiveness of their processes along the same supply chains to:

ManufacturersSuppliersDistributorsRetailers


Reduction of Design Cycle Time: Adaptec, Inc.

Microchip manufacturer supplying electronic equipment makers

Outsourced manufacturing tasks to Overseas manufacturesDelivery times exceeded their competitors

Solution to the problemExtranet and enterprise-level supply chain integrated softwareSignificantly reduced order-to-product delivery time


Reduction of Product Development Time: Caterpillar, Inc.

Heavy machinery manufacturer uses extranetRequest for customized component directly to designers and suppliers ship to buyers

Connect engineering and manufacturing division with worldwide

Suppliers Factories Distributors CustomersOverseas


Barriers to C-Commerce

C-commerce is moving ahead fairly slowly because:

Technical reasons involving integration, standards, and networksSecurity and privacy concerns over who has access control of information stored in a partner’s databaseInternal resistance to new models and approachesLack of internal skills to conduct c-commerce


Interorganizational Collaboration at Nygard of Canada

Nygard has become a leader in adopting IT and e-commerce in the apparel industry

Didn’t want to move manufacturing off shore (cheaper) due to longer lead and cycle timesCompany stays competitive by using EC to control costs of labor and manufacturingDeveloped an ERP and supply chain management that controls all internal operations, purchasing, product development, accounting, production planning, sales

This enabled the company to develop tight integration with its trading partners


Nygard of Canada (cont.)

The moment that a customer buys a pair of pants at a partner’s retail store:

Information moves from the POS terminalAutomatically generates a reorder at Nygard

SCM:Matches customers’ orders with the right fabricsSearches the market pool for the most efficient combinations of other material for use with those fabrics



Sales trigger orders

Manufacturing automatically industries, and global manufacturers are willing to operate with razor-thin margins as fabrics, zippers, and buttons

The moment that raw material is used, an automatic reorder of the material is generated

Allows just-in-time productionQuick order delivery (sometimes same day)



Web-based control system enables the company to:

Conduct detailed profitability studiesDecisions are evaluated by impacts on the bottom lineDecision support systems (DSS) models are used for this purpose


Infrastructure for B2B

Server to host database and applicationsSoftware for executing sell-side (catalogs)Software for conducting auctions and reverse auctionsSoftware for e-procurement (buy-side)Software for CRMSecurity hardware and softwareSoftware for building a storefrontSoftware for building exchangesTelecommunications networks and protocols


Extranet and EDI

Value-added networks (VANs)—private, third-party-managed networks that add communications services and security to existing common carriers; used to implement traditional EDI systems

Internet-based EDI—EDI that runs on the Internet and so is widely accessible to most companies, including SMEs


Extranet and EDI

Extranets—secured networks (by VPN), usually Internet-based, that allow business partners to access portions of each other’s intranets; “extended intranets.”


Integration

Integration with existing information systems issues

Intranet-based work flowDatabase management systems (DMBS)Application packagesERPBack-end sell-side integration works for sellers but not buyers and vice versa


Integration (cont.)

Integration with business partnersEasy integration with one company-centric sideNot easy to integrate for many buyers or sellersNeed buyer owned shopping cart that can interface with back-end information systems


The Role of XML in B2B Integration

Companies interact easily and effectively by connecting to their servers, applications, databases Standard protocols and data-representation schemes are needed

FIXML

Web is based on the standard communication protocols useful only for displaying static visual Web pages:

TCP/IPHTTP HTML


The Role of XML in B2B Integration (cont.)

XML (eXtensible Markup Language)—standard (and its variants) used to improve compatibility between the disparate systems of business partners by defining the meaning of data in business documents

Used to increase:Interactivity Accessibility with speech recognition systems


How XML works

XMLDocument

DTDDocument Type

DefinationsXML

Schemas

CSSXSLT

Style Sheets

BrowserDisplay


XML Unifies Air Cargo Tracking System

B2B intermediary, TradeVan Information Services of Taiwan provides information services about the cargo flights of different airlines

Different information systems have different query results XML facilitates data exchange between heterogeneous databasesInformation can be presented on wireless application protocol (WAP)-based cell phones


Air Cargo Tracking System (cont.)

System is expected to:Reduce delays significantlyBenefit of all members of the supply chainReturns a standardized yet personalized presentation for different airlinesEnables customs brokers to reduce the cycle time by preparing declarations of imports faster


Air Cargo Tracking System (cont.)

Buyers and other supply chain partners can schedule production lines with precision and in advanceQuality of door-to-door delivery companies is improved through fast communication

Answers to queries can be derived much fasterImproves the supply chain by reducing:

Delivery lead timesInventory levels


The Role of Software Agentsin B2B EC

Agent’s role in the sell-side marketplaceB2C comparison-shoppingB2B agents collect information from sellers’ sites for buyers

Agent’s role in the buy-side marketplaceAssisting large number of buyers requesting quotes from multiple potential suppliers in buy-side


Managerial Issues

Can we justify the cost?Which vendor(s) should we select?Which model(s) should we use?Do we need B2B marketing?Should we reengineer our procurement system?What restructuring will be required for the shift to e-procurement?What integration would be useful?What are the ethical issues in B2B?


Summary

The B2B fieldThe major B2B modelsThe characteristics of sell-side marketplacesSell-side intermediariesThe characteristics of buy-side marketplacesForward and reverse auctionsB2B aggregation and group purchasingCollaborative ECCharacteristics of Internet-based EDI and the role of XML

1 prentice hall, 2003 elc 200 day 12. 2 prentice hall, 2003 agenda questions from last class?...

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