adapted from e-logistics h. donald ratliff [email protected] pinar keskinocak...
TRANSCRIPT
E-business: changes the way we think!!!
BuyingSelling FulfillmentInventoryTransportationSoftwareInvestmentOutsourcing
Internet
The worldwide number of Internet users: 196 million in 1999 (International Data Corporation)
The number of users is expected to reach one billion by 2008
Users who have been online for more than three years spend an average of 10.5 hours per week online, compared with 6.6 hours a week for newcomers
By 2002 there will be over 85 million smart hand-held devices in the world
E-commerce growth
E-commerce volumes double every 9-12 months
B2B volumes are expected to exceed B2C by a factor of 6 to 12 by 2005
By 2002, E-commerce revenues will exceed 1% of Global Economic Product
On-line Retail
founded 18731000 stores in the U.S.
on-line presence: May 1997
founded 19711100 stores in the U.S.on-line presence: late
1998
founded 1994no physical stores
on-line presence: July 1995
Revenues
1998 sales (mil. $)
0500
1,0001,5002,0002,5003,0003,500
Barnes &Noble
Borders Amazon.com
Store sales
On-Line sales
$3.1 B (+10%) $2.7 B
(+17%)
$0.6 B (+313%)
Profits
1998 A/T income (mil. $)
92.4 92.1
-124.5-150
-100
-50
0
50
100
150
Barnes & Noble Borders Amazon.com
Market Cap
40
30
20 $1.3 B$1.3 B
20015010050
$19.2 B$19.2 B
40
30$2.2 B$2.2 B
Amazon.com
$300 million distribution-center initiative Books, music videos, toys and
electronics New DCs in Nevada, Kentucky and
Kansas“Fastest expansion of distribution
capacity in peacetime history” Bezos
Ref: Wall Street Journal Sept 8, 1999
Challenges
Don’t outsource -- keep skills they develop
Design flexible DC’s -- don’t know what will go in them
Features: Orders with many address and message on
each Wish lists Tracking searches: Pokedex?
Package Delivery
E-services Shipment rating Document
preparation Tracking E-mail alerts Programmer APIs
UPS 55% of online Christmas
FedEx 1994 tracking web site “Smarter companies” Dismissed residential Dismissed mail order 10% of online Christmas
USPS Cheap home delivery 34% of online Christmas
Wall Street Journal Nov 4, 1999
Package Delivery Challenges
20 million customers expected to purchase over the Internet by 2007
Home Deliveries Currently 10% of the package delivery volume
Average revenues per delivery Commercial Areas: $28.00 Suburban Areas: $10.40
Core businessCapacityCost -USPS
E-Grocery
$450 billion brick-and-mortar industryE-grocery growth forecast
$148 million $3.5 billion by 2002
Webvan
Management Lewis Borders (Borders Books) George Shaheen (Andersen Consulting Chief Exec)
Financial ½ year revenue = $395,000 ½ year net loss = $33,500,000 Market cap = $4.9 billion
Logistics $1 billion with Bechtel Group for 26 giant warehouses Focus on automation (carousels)
Automation!
Ref: Wall Street Journal Sept 22, 1999
Delivery parametersWebVan
Free for orders > $50 $3.95 for orders < $50 or redeliver Scheduled 30 min window (2 pm to 10 pm)
Streamline $30/mo
Peapod $5-$20 per delivery in Chicago
HomeGrocer Free for orders > $75 90 minute window Next day delivery
Keys to home delivery
Efficient customer receivingRouting efficiency
Frequency Multi-product delivery Logistics expertise
B2C Personalization
Pink DotAmazon.comCDNowCollaborative filtering technology
Net Perceptions Andromedia
LikeMinds serverVignette
Ref: USA Today 11/15/99
Top 10 online businesses
Intel Corp. ($10.5 billion) Cisco Systems Inc. ($9.5 billion) IBM Corp. ($8.8 billion) Dell Computer Corp. ($6.1 billion) Federal Express Corp. ($5.6 billion) United Parcel Service of America ($5.4 billion) America Online Inc. ($4.4 billion) Ingram Micro Inc. ($3.0 billion) Nortel Networks Corp. ($2.4 billion) Tech Data Corp.($1.7 billion)
E-commerce revenues
Smaller number of clientsLarger volume per transaction/clientRestricted sales to certain clientsInterface with back-end systemsComplex buy/make/sell decisionsComputer to computer
B2B vs B2C
E-business transactions
Enterprise Resource Planning (ERP)
Intra CompanyRigid Interfaces
Electronic Business Integration (EBI)
Inter CompanyFlexible Interfaces
e-Procurement
Advantages Broader base of suppliers Automatic billing Lower transaction cost
Office DepotProcessing purchase order and paying
invoice >$100Using the Web $15 to $25
Shorter cycle time
e-Procurement
GE TPNPost Pre-screened suppliers Requests for Quotes (RFQs) Multi-round bidding process
Commerce One Electronic procurement Multiple languages/currencies International date Number and address formats International tax requirements
E-Cars
Ford Microsoft alliance Minority interest in CarPoint
GM 42 days to fill a special order New initiative
Toyota New system at a plant in Canada
Production within 5 days of orderAnother 10 days to the dealer
Ref: Wall Street Journal Aug 25, 1999, Sept 21 1999
Integrated Business Communities (IBCs)
Ford-Oracle (AutoXchange) Ford's extended supply chain online Ultimately $300 billion in annual
transactions
GM-Commerce One (GM MarketSite) Transactions between GM suppliers,
dealers and other business partners
Build to order
Direct salesVirtually integrated with suppliers and service
providers Daily production requirements to suppliers Inventory levels and replenishment needs Direct shipment from suppliers (e.g. Sony) Real time information on service measures High involvement in planning customers' PC needs
(e.g. Boeing) Inventory turns 30 times per yearFounded in 1984
B2B PersonalizationDell Computer
> 1,500 personalized Premier Pages for corporate customers, linked to the customer’s intranet.
Configure PCs, direct access to corporate-specified personal computers, negotiated discounts, records of orders and payments, track delivery status, access to technical support.
Staples Customized supply catalogs that can run on a
company’s intranet, containing only those items and prices negotiated in contracts with that company.
Maintain lists of previously ordered items: easy reordering
Price discounts, recommending new items
Collaboration
Collaborative forecasting Wal-Mart: Collaborative forecasting for a new test
product (medicine for flu and allergies). Incorporate information about everything from planned
changes in store layouts to precise meteorological data about pollen counts and when flu season will hit a certain region.
Eliminated a full 2 weeks of inventory from the supply chain, halved order cycle times and eliminated stock-outs.
Collaborative designCollaborative replenishment
Vendor-managed inventory (VMI) programs
CPFR
CPFR.orgCreate collaborative relationships between
buyers and sellers
Electronic Business Integration (EBI)
“Traditional” EDI 30 years Very rigid
XML (eXtensible Markup Language) Pure Internet standard - Feb 1998 Flexible “tags” Easy for humans to read Easy for machines to process Makes data portable Will rapidly replace EDI
Can FedEx reinvent itself?
Tracking shipments Discount air carriers Low cost truck lines Ocean carriers
Deal with Cisco Merge-in-transit Up to 100 shippers/merge Plan shipments and coordinate customs Command and control center Tens of millions of dollars
Wall Street Journal Nov 4, 1999
E-hubs
Trading hubs Products Logistics services
Transaction hubsDecision hubs
Why use a hub?
Volume efficiency (Do it cheaper!)
Special knowledge or technology (Do it better!)
Neutrality (Do it fairer!)Outsourcing (I don’t want
to do it!)
Info hubs
Trading hubs Products Logistics services
Transaction hubsDecision hubs
Truck Load-matching “Hubs”
DAT Services - 1978 Largest load-finding service
Internet Truckstop - 1995 1st exclusively internet
National Transportation Exchange 2,000-20,000 lb mySAP.com Marketplace portal
30 new load-matching sites last year
Source: Heavy Duty Trucking, 1999
Ocean Load-matching “Hubs”
Raterequest Request best rate Specify bid to match
Celarix
Trading hub issues
Catalog models Standards Updating
Auction models Price uncertainty Service uncertainty
Exchange models Price determination Service uncertainty
Info hubs
Trading hubs Products Logistics services
Transaction hubsDecision hubs
Ship & track hub
Shipment planning & bookingShip and delivery noticesElectronic paymentTracking and tracing
Celarix - iSuite UPS Worldwide - eLogistics.net
Buy & ship hub
Procurement consolidation
National Golf Course Owners
Info hubs
Trading hubs Products Logistics services
Transaction hubsDecision hubs
Route planning hub
Easyroute.comDescartesOn-line routingFocus on small fleets
“Do everything” hub
E-commerce in Asia
One in five CEOs of Asian companies expects to see a fifth of their revenue come from e-business in the next five years (Pricewaterhouse-Coopers and the World Economic Forum)
The number of Internet users in Asia will triple to 60 million by 2003 (Goldman Sachs)
E-commerce volume $35 billion by 2002 (International Data Corp)
E-business future
Opportunities New transportation
demand Capacity utilization Paperless transactions Visibility Connectivity
technology Decision technology Outsourcing
Concerns Speed of change Lack of expertise New technology Complexity Short lead-times
E-logistics opportunities
Collaboration Vendor managed
replenishment Fulfillment
Home delivery Personalization
Collaborative filtering Build to order Electronic Business
Integration (EBI) Tracking
Disintermediation Merge in transit Sourcing
Integrated Business Communities (IBCs) Trading exchanges Information exchanges
E-hubs Collective buying Planning
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