Technological intermediaries as third party service providers Bjørn Jæger SCM-IT Research Group, HiMolde, May 26 2010

1. Technological intermediaries as third party service providers Bjørn Jæger SCM-IT Research Group, HiMolde, May 26 2010

2. Outline • Background and motivation • Project description • Demonstrator and compendium • Conclusions and future work

3. Background • 2000 - today: ongoing eProcurement project • Started with Wise – STX Europe (Langsten) • Fall 2007: Grant: Call for developing qualifications and expertise of special importance to the Mid-Norway region • Ved Økonomisk og administrativt forskningsfond Midt-Norge • Title: ”Effektivisering av verdikjeden for olje- og gassvirksomheten i Midt-Norge” • Kompetanseprosjekt - skal utvikle kompetanse i regionen • Part 1: Ruteplanlegging og forsyning til off-shore virksomheten • Part 2: Informasjonslogistikk (Information Logistics)

4. Characteristics of Mid-Norway • Oil and Gas • E.g: Ormen Lange Gas field (100 km offshore) • Can support 20% of Britain's gas needs for up to 40 years • Worlds longest Sub-Sea pipeline to Easington, England • All installations are sub-sea • Revenues ~ 200 mill NOK per day • Maritime • Ocean transport, ship's equipment, shipbuilding, shipbrokering, financing, insurance, classification and maritime offshore oil-related activities • The Norwegian-controlled offshore fleet is the second largest in the world after the United States • Fish, Aluminium

5. … cont. Characteristics of Mid-Norway • Company structure • Few large enterprises with national and multinational ownership • Many regionally owned SMEs • SMEs supports the large multinational companies • Value created mostly exported out of the region

6. Challenge for regional SMEs • Customers are large multinational enterprises who: • Face increased competition in global markets • Have state-of-the-art technology • Are e-Mature: many processes automated, well integrated ERP systems, global actors shopping in global markets • SMEs need to e-Transform to stay attractive

7. Regional demand for competencies • Investigation by Næringsforeningen i Trondheim • 65 Oil&Gas regional SME suppliercompaniesaskedwhat is needed to succeed • The twomainissueswere: • Havingcompetitiveproducts & services (62%) • Havingthe right competencies (47%)

8. Information LogisticsMotivation Increase regional owned SMEs share of the values created in the region

9. Information LogisticsResearch Question How can universities help regional SMEs to develop their competencies to increase or maintain their share of the values created?

10. Build competence based on other successful projects Use principles from the Bits&Pieces solution by Wise Consulting Wise Consulting is a technological intermediary categorized as a third party service provider

11. Project deliverables • Demonstrator Develop a demonstrator for a selected regional SME • Compendium Develop a teaching compendium for how to set up a technological intermediary as a third party service provider

12. Demonstrator • Steps to eTransform a regional SME supplier to comply with a large buyer • Selected regional owned SME supplier: • MJ: Molde Jarnvareforretning AS www.molde-jarnvare.no • Approx 100 workers • Serve Shipyard Industry • Large customer: STX Europe - Langsten

13. MJ Business Concept • MJ will be a one-stop supplier of machinery, tools, fasteners and industrial equipment. • MJ aims to maintain a leading position as a supplier of its range of goods to industrial concerns. John Sandøy, CEO

15. Customers Many of our biggest customers are high-tech industrial firms operating in the international market, with its growing competitiveness and ever-increasing demands for quality and efficiency at all stages. One of these stages is well-organized logistics and modern warehousing. This is precisely where MJ’s strength as a business partner lies. Our 2-box-system is a cost-effective and efficient storage system which has so far been adopted by 20 or so firms in the region. Each system is tailor-made to suit the client. “The right product at the right time” is a motto and subsequence of perhaps Norway’s most exciting industrial partnership – our association with the innovation and productivity to be found in the wealth of fields connected to marine/offshore and land-based industry.

16. Products and Suppliers • MJ has always aimed at providing leading market products from its own warehouse. With 40,000 articles in stock, we are able to give the very best of service to our customers at all times by offering same day delivery. Other standard items can be in the customer’s hands between one and four days of receiving the order. • Our comprehensive variety of products and sub-suppliers is the result of almost 80 years experience, and our products are recognized as the best on the market.

17. Some trends & issues • Regional owned SMEs are bought by multinational companies • Customers like STX Europe have many shipyards and operates globally • Wise Consulting observe a change in buying pattern – companies serving several locations are preferred • Can regional SMEs like MJ maintain their position?

18. Demonstrator in three steps forSupplier MJ – Buyer STX Europe Demonstrator built to show how a small supplier can use an intermediary in the eTransformation process The supplier MJ delivers “bits&pieces” (commodities) to buyer STX Europe By master students Oskar Bævre, Børge Gjengstø and Stian Kroknes and Bjørn Jæger

19. Bits & Pieces • Commodities • Many components each of low cost • Standard components • Buyer want to make procurement more efficient • Introduced eProcurement • SMEs faced major challenge • Use Intermediate to adopt

20. Demonstrator step one:Make a working model of the Current System for MJ-STX • Purchase Order sent via web-service integratedwith ERP system 2. Purchase Order received via web- services 6. MJ sends confirmation to STX via e-mail to Wise 3. E-Mail notification of arrived Purchase Order 4. Get Purchase Order manually via B&P Web Page 5. Print Purchase Order, Manually Register in PengVin, do Picking and Pricing

21. Issues for MJ • Confirmation must be given within 1 hour after the order is received. • These orders have the highest priority at the inventory dep. since they have to be shipped by trucks by 11 AM eventually the next day. • MJ stocks more than 40000 items, thus no single person knows the stock situation for a product by heart. • Orders arrive randomly any time of the day, sometimes many arrives simultaneously making it hard to pick the order before sending the acknowledgement.

22. ... cont. Issues for MJ • Can not trust stock level to confirm order before picking • Takes time to do the picking before confirming • Can only handle a few customers

23. Demonstrator step two:Make an automated end-to-end solution • Purchase Order sent via web-service integrated with ERP system 2. Purchase Order received via web- services 3. Purchase Order sent via web-service 4. Web service automatically receive Purchase Order, register it in PengVin, generate picking & price confirmation and sends confirmation back to stx via Wise

24. Demonstrator step three:Make a secure communication channel 1. Purchase Order sent and received via web-services Business sensitive content messages are encrypted by web-service at STX and decrypted by the web-service at MJ 2. Purchase Order sent via web-service 3. Web service automatically register in PengVin, generate picking & price confirmation and sends confirmation back to stx via Wise

25. Compendium Develop a teaching compendium for how to set up a technological intermediary as a third party service provider Goal: Make a set of student assignments both for non-programmers and programmers

26. Compendium (in Norwegian)By Beni Ruef and Bjørn Jæger Kapittel 1: Innføring Kapittel 2: XML og eProcurement Kapittel 3: Rammeverk for eBusiness og eProcurement Kapittel 4: Hensikten med oppgavene Kapittel 5: Oppgave A: Varebørs Kapittel 6: Oppgave B: Ikke-funksjonelle krav Kapittel 7: Oppgave C: Implementering

27. Conclusions • Adoption require e-knowledge at SMEs • Project aim was to give regional students e-skills that will have an impact over time • Security is currently not an issue • Students?

28. EU 2010: "e-business" is probably no longer an adequate term to capture the general trend of applying ICT systems in commercial exchanges. …. a distinction between "e-business" and "traditional business" is no longer possible. http://www.ebusiness-watch.org/

29. Future Work • Study the Role of the Intermediary in enabling regional SMEs for the global business environment • In Integrated value chains • In more open value chains/networks • Include Ownership of Data, Security & Trust & Risk elements

30. Takk for oppmerksomheten!

31. Some resources and definitions • Ownership of data • Open-Data Movement: Open-Cloud Manifesto by IBM and 150 others: www.opencloudmanifesto.org • Definition of competence used • Competence is a combination of theoretical knowledge and practical skills (action competence) • SMEs and eTransformation • Need to eTransform to maintain current business • Once eTansformed, global markets are available