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E -THEMATIC THEMATIC NETWORK ON E-FULFILMENT

E -THEMATIC THEMATIC NETWORK ON E-FULFILMENT. Steering Committee Meeting June 17, 2005. Results & RTD Recommendations Joris Tenhagen & Twan van Lankveld. Contents. 1 Short introduction E-Thematic 2 Methodology and deliverables 3 B2C and B2B analysis

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E -THEMATIC THEMATIC NETWORK ON E-FULFILMENT

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  1. E -THEMATIC THEMATIC NETWORK ON E-FULFILMENT Steering Committee Meeting June 17, 2005 Results & RTD Recommendations Joris Tenhagen & Twan van Lankveld

  2. Contents 1 Short introduction E-Thematic 2 Methodology and deliverables 3 B2C and B2B analysis 4 Key issues, barriers and bottlenecks and recommendations

  3. 1 Short Introduction E-Thematic A ‘E-mergency’ for E-Thematic? B Description of E-Fulfilment C E-Thematic project

  4. Suppliers Manufacturers Distributors Customers Enterprise Supply-side Demand-side 1A ‘E-mergency’ for E-Thematic? Supply Chain Developments 1980’s Internal orientation Main issues:  WAR!!!!!! Paradigm: costs/lean and mean End 1990’s Customer Satisfaction and Retention Main issues PARTNERSHIP AND AGILITY Paradigm: win-win/customers first 2005 Role for E-Fulfilment!

  5. 1B Description E-Fulfilment Definition E-Fulfilment defines that part of e-Business, which aims at efficiently and effectively integrating a company’s back-office processes, activities and functions, arising from order capture through to final delivery to the customer.

  6. 1C E-Thematic project Description • A Thematic Network addressing the area of e-Fulfilment. • Value in networking. No own research. • 3-year project: July 2002 - July 2005 • Funded by European Commission Directorate General for Information Society as part of the 5th Framework Programme for Information Society Technologies

  7. Project members Seminars Expert meetings Presentation reports E-Thematic Steering committee Industry experts Website News letter Establishing E-Fulfilment Forum ‘Touch points’ Objectives • Exchange knowledge and information • Identify emerging applications and technologies • Identify good practice from the industry and the research sector • Make recommendations regarding future European research in the area of e-Fulfilment • Provide an information base regarding e-Fulfilment • (www.e-thematic.org)

  8. 2 Methodology and deliverables Cluster Report 1 • Definition of e-fulfilment • Current RTD projects • Good practice examples Cluster Report 2 • Recent internet trends • Website analysis • Database development Focus presentation Credit card companies Software developers Taxation experts Universities Standardisation organisations State of the Art Report on e-fulfilment • Analysis of B2B and B2C markets • Organisations, applications and technologies • Integration: software, standards & technology Best Practise Cases • Europe • US • Asia Key barriers and bottlenecks in e-fulfilment RTD recommendations E-fulfilment Forum

  9. Database (related E-Fulfilment studies)

  10. 3 B2C and B2B analysis A Introduction B Analysis approach C Results analysis • Internet penetration • Product coverage • Services • Distribution coverage • Languages D Conclusions

  11. 1 3A Introduction Europe is lagging behind? E-Commerce penetration* 2000: 11% 2005: 48% E-Commerce penetration* 2000:3% 2005: 36% E-Commerce penetration* 2000: 8% 2005: 25% Country specific laws and regulations? Differences in business culture? ‘Lack’ of development velocity? Limited number of implementations? * Source: BCG, 2001, B2B E-Commerce (as % of total B2B)

  12. 3B Analysis approach Coverage Website analysis+ Literature study • Total website inputs: 592 • Variables: 79 • Countries covered: 48 • Regional coverage: • North-America: 191 websites • Europe: 193 websites • Asia: 114 websites • Other regions: 94 websites • Type: • B2C (379 sites) • B2B (111 sites) • Logistic services (102 sites) Country Physical Region Type Products Distribution Area Payment Options Delivery Time Tracking After Sale Services Applications Languages Customer interface Content of website Used items ….

  13. 3C Results analysis Internet penetration (Users & Buyers)

  14. Products CoverageB2C B2B Broad product range vs focused offerings

  15. 75,70% 74,70% 69,70% 48,30% 33,30% Services - Delivery time 24 hours Delivery by Product In General Food&Bev  24 hours 50,00% Lifest&Flow 40,20% 24 hours to 3 days Toys 36,40% 3 to 5 days Elec&Comp 34,10% 5 to 10 days Clothing 33,90% > 10 days Books&CD 27,70%

  16. Services - Payments Investments in Alternative Payment Methods (US) Payment options B2C 100,00% 96,60% 89,10% 84,20% 58,40% 58,20% 55,50% 51,30% 44,30% 33,70% 17,50% 10,20% Asia Europe North America Others Creditcard Payment on delivery Banktransfer Europe is frontrunner in payment options (sales rate increase by number of options)

  17. Direct Tracking via website Direct Tracking via website 81,30% 58,40% 52,20% 43,60% 14,80% 6,70% 6,00% 2,6% Services – TrackingB2C B2B Asia Europe North America Overall Asia Europe North America Overall Why buy online if you can’t trace? Alternative tracking facilities still favourite

  18. Distribution coverage B2C B2B Distribution coverage outside country of origin Distribution coverage outside country of origin Asia Europe North America 52,60% 39,80% 31,10% 19,70% 18,60% 15,10% Region for region, especially in B2C ( due to lack of presence)

  19. 87,70% Languages B2C Languages B2B English National English National Asia 100,00% Europe 96,30% 93,30% 97,70% 97,50% 94,70% North America 71,30% 70,40% Overall 40,90% Europe is ‘less’ internationally focussed

  20. 3E Conclusions Scope Strategy • In Europe, 68% of companies have someone at the board level responsible for e-business, compared to 91% of US firms • 60% of the European websites are targeting the local market (in national language mainly). • Region for region focus • European websites are more specialised compared to other regions • Credit card payment option is offered in all regions • Payment on delivery is more common in Europe • Online applications (e.g. tracking) provided Services

  21. Barriers doing business online (B2B) Security & Trust come before Costs and Organisational issues

  22. Barriers to buy online (B2C) Different mind sets!

  23. 4 Key issues and RTD recommendations Key issues, barriers and bottlenecks: A IT B Organizational C Logistics/operational D Taxation E Regulatory F Cultural/Financial

  24. Methodology and deliverables Cluster Report 1 • Definition of e-fulfilment • Current RTD projects • Good practice examples Cluster Report 2 • Recent internet trends • Website analysis • Database development Focus presentation Credit card companies Software developers Taxation experts Universities Standardisation organisations State of the Art Report on e-fulfilment • Analysis of B2B and B2C markets • Organisations, applications and technologies • Integration: software, standards & technology Best Practise Cases • Europe • US • Asia Key barriers and bottlenecks in e-fulfilment RTD recommendations E-fulfilment Forum

  25. 75,70% 74,70% 69,70% 48,30% 33,30% Services - Delivery time 24 hours Delivery by Product In General Food&Bev  24 hours 50,00% Lifest&Flow 40,20% 24 hours to 3 days Toys 36,40% 3 to 5 days Elec&Comp 34,10% 5 to 10 days Clothing 33,90% > 10 days Books&CD 27,70%

  26. E-fulfilment success cycle Cautious investment Legacy systems IT standard issues Low margins Organizational issues Operational issues Regulatory issues Taxation issues

  27. A Information Technology Key issues: • Segmented standards • standards = building blocks • many standards available (e.g. industry specific) • Knowledge/awareness on standards • internal focus/implementation complexity • not 1 e-fulfilment application covers the whole chain of processes • Non-standardised processes • basic standards are customised • internal focus/implementation complexity

  28. No off-the-shelf standard processes • customised processes • Legacy systems • in-house developed systems (important ‘pure-players’ in e-fulfilment)

  29. Information Technology Purchasing WMS Other Issues: • Legacy systems • Long pay off for IT investments • No standard process in the company Production Sales ERP Finance HRM Interface formats ERP implementation difficult change management process Information scattered throughout ERP system Customized ERP system (miss use of standard) • Too many (industry) specific standards • Lack of knowledge on standards • Production/ sales organizations tend to think about interfacing as once off issues

  30. 3PLs experience these issues differently: • 3PLs have standardised their processes & messages internally and externally with their customers • Limited number of standards used • Use of middleware • Traditional external focus and flexibility of 3PLs (connectivity with their customers is important)

  31. Communication model of 3PLs • Arrival confirmation • Shipping information (Yard Management) • Shipping notification • Quality status update • Turnover data • Shipping information • Shipment information • Material/relation master data • Arrival confirmation • Purchase order • Goods receipt • Stock photo • Inventory changes • Delivery notes • Goods issue • Shipping information • Shipment information (Yard Management, unloading info) Forwarder Master data 8 Plant (EDI) 2 1 Inbound 9 Shipper 3 Plant ( non EDI) 10 11 Warehouse/inventory 12 Supplier 4 13 14 Subcontractors Outbound 15 5 Financial systems Transport and admin 16 17 6 7 Customer Subcontractor supplier Forwarder

  32. Recommendations • Research the development of the standardisation of processes in e-fulfilment (B2B and B2C) • map the processes as standards (with the stakeholders for B2B and B2C) • use existing IT standards (e.g. EDI, XML) • main process elements: order to cash cycle (order entry, credit checks, stock checks, fulfilment, delivery) • adjust developed IT standards if necessary • develop e-fulfilment manual • conduct pilots in several industry segments • Initiate E-thematic forum: knowledge sharing/exchange • set up pilot projects • promote best practises (E-thematic database) • Stimulate IT innovation in companies (large, SME’s) more directly (e.g. infrastructure for SME’s in China): • develop SME solutions • E-fulfilment Awareness Tool

  33. B Organisational Key issues: • Change management • complexity of implementation • limited scope of implementation projects • Fear of information sharing

  34. Recommendations Knowledge/awareness sharing: • Educate companies (large & SME’s): • opportunities available in cross company border IT improvement (standardisation, communication) • develop pilots, best practises (E-thematic database) • focus on the external environment: multi-client, throughout the supply chain (even between different supply chains) • Possible platform: E-thematic forum

  35. C Logistics/operational Key issues: • Fragmented European logistics solutions • leads to high costs, multiple carriers, lower service • need for integration • Last Mile Logistics • especially in B2C market • multiple calls in home deliveries • Pure-players: high investment in infrastructure • warehousing, IT, distribution

  36. Shipper Shipper Europe USA Lead 3PL Lead 3PL = Shipper to 3PL/3PL to 3PL flows = T&T shipment information = delivery flows

  37. Recommendations • Research the opportunities to standardise cross-company T&T systems in the delivery process • Research with regard to pick-up systems for B2C market (DG TREN) • what systems are most feasible in terms of costs and quality?

  38. D Taxation Key issues: • Differences in tax regulations in EU member states • national sales limits determine country of VAT payment • VAT is not refundable in case of the return of non-accepted products by consumers • fiscal representation by e.g. 3PLs is becoming more difficult (higher risks, 5 year audit period) • Differences in customs between EU member states • regulations (e.g. import duties for non-EU products) • flexibility

  39. Recommendations • VAT: • higher national limits, European limit? • address non-refundable issue in returns • fiscal representation, import duties: harmonisation of taxation policies across EU members • Customs: Single European Authorisation (SEA) • in proposal phase

  40. E Regulatory Key issues: • Data Protection • privacy of data • differences in national regulations • Processing of returned items • national regulations with regard to disposal and scrapping of returned materials • Taxation (see D)

  41. Recommendations • Harmonisation of regulations and policies with regard to • privacy of data • taxation • returns processing

  42. Physical presence outside country of origin Distribution coverage outside country of origin Asia Europe 19,70% 18,60% 16,40% North America 15,10% Others 8,20% 7,40% 6,40% 6,50% F Cultural/Financial Key issues: • European marketplace requires companies to operate a large number of websites (nationalised) • Number of European languages • Lack of trust in on-line purchasing

  43. Security of on-line exchange of financial data • Wide variety in payment methods • credit card/COD/bank transfers/private label cards/gift certificates • Uncertainty with regard to: • (inter)national settlement of disputes • terms and conditions of distant selling contracts

  44. Recommendations • Be tough on fraud • liaise with banks, credit card companies and software developers on further development of reliable financial internet traffic • European legislation on internet fraud • Raise awareness among European customers (buyers/consumers) with regard to: • legal rights (e.g. European airfare policy) • privacy issues • promote a European ‘Ombudsman’ • Promote uniform European payment method

  45. E-fulfilment success cycle Cautious investment Legacy systems IT standard issues Low margins Organizational issues Operational issues Regulatory issues Taxation issues

  46. Contact information Project Coordinator Karel Vanroye Buck Consultants International karel.vanroye@bciglobal.com Tel: +32 (0)2 709 77 50 Dissemination Manager Jacob Bangsgaard ERTICO – ITS Europe j.bangsgaard@mail.ertico.com Tel: +32 (0)2 400 07 00

  47. E -THEMATIC THEMATIC NETWORK ON E-FULFILMENT Thank you for your attention!

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