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VENDOR RELATIONSHIP MANAGEMENT: Re-engineering the Business Process Through B2B Infrastructure to Accelerate the Growth of Small Businesses in Geographically Isolated Areas. William McDaniel Albritton Collaborative Software Development Lab University of Hawaii. Co-authored by Joy M. Agustin

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william mcdaniel albritton collaborative software development lab university of hawaii

VENDOR RELATIONSHIP MANAGEMENT:Re-engineering the Business Process Through B2B Infrastructure to Accelerate the Growth of Small Businesses in Geographically Isolated Areas

William McDaniel Albritton

Collaborative Software Development Lab

University of Hawaii

participation
Co-authored by

Joy M. Agustin

Funding by

City Bank

UH New Economy Research Grant Program

Participants

Dr. Philip Johnson

City Bank

FedEx

Hilo Hattie

United States Postal Service (USPS)

University of Hawai’i

10 Local Businesses

Participation
geographically isolated businesses
Issue

Small businesses limited to local market

Solution

Global marketplace of the Internet

Example: Village near Chincheros, Peru

1995 – village’s income = $300 US per month

1996 – Internet connection

Online partnership with export company

Sell produce in New York

1998 – village’s income = $1500 US per month

“Wiring the Pueblo”, Business 2.0David Batstone, 1998

Geographically Isolated Businesses
expanding local hawai i businesses
Virtual Merchant

(+) Ideal in early 90’s

(+) Direct control of inventory and information

(-) Overhead of sales, marketing, and web site

(-) Problem of being noticed on the Internet

Metamediary/Virtual Mall

(+) Larger well-established company

(+) Has brand name recognition

(+) Takes care of sales, marketing, and web site

(-) Maintaining inventory and information

Expanding Local Hawai’i Businesses
vendor relationship management vrm partners
Metamediary (Host)

Sales, marketing, and website

Virtual Merchant (Vendor)

Maintain inventory and information

Financial Institution

Transaction processing and loans

Shipping Provider

Order tracking

Vendor Relationship Management (VRM) Partners
partner services
Partner Services

VirtualMerchant

TransactionProcessingandLoans

ProductShipping

ProductInformation

OrderInformation

FinancialInstitution

Shipping Provider

OrderTracking

TransactionProcessing

Metamediary

virtual merchant metamediary
Virtual Merchant/Metamediary

VirtualMerchant

ProductInformation

OrderInformation

FinancialInstitution

Shipping Provider

VRM System

ProductInformation

OrderInformation

Metamediary

shipping provider
Shipping Provider

VirtualMerchant

ProductShipping

OrderTracking

FinancialInstitution

Shipping Provider

VRM System

OrderTracking

OrderTracking

Metamediary

financial institution
Financial Institution

VirtualMerchant

TransactionProcessingandLoans

MerchantSales

FinancialInstitution

Shipping Provider

VRM System

TransactionProcessing

Metamediary

vrm prototype
Web-based application

Designed with Microsoft Components

Microsoft Windows 2000

Active Server Pages (ASP)

Internet Information Server (IIS)

Open Database Connectivity (ODBC)

Microsoft Access

4 main interfaces

Metamediary (Host)

Virtual Merchant (Vendor)

Financial Institution

Shipping Provider

VRM Prototype
vrm prototype1
Metamediary Interface

Maintaincontactinfo.

Createvendor

accounts

Sendorderstovendors

View statusoforders

VRM Prototype
vrm prototype2
Vendor Interface

Maintain contactinfo.

Maintainproductinfo.

View customerinfo.

Receive orders

View status oforders

VRM Prototype
vrm prototype3
Financial Institution Interface

Maintain contactinfo.

View vendorand hostcontactinfo.

View vendorsales

VRM Prototype
ordering a product
Ordering a Product

Customer

Shipping Provider

VRM System

Metamediary

VirtualMerchant

ordering a product1
Ordering a Product

Customer

Order

Shipping Provider

VRM System

Metamediary

VirtualMerchant

ordering a product2
Ordering a Product

Customer

Order

Shipping Provider

VRM System

Metamediary

Order

VirtualMerchant

ordering a product3
Ordering a Product

Customer

Order

Shipping Provider

VRM System

Metamediary

Order

Notification and Shipping Label

VirtualMerchant

ordering a product4
Ordering a Product

Customer

Order

Shipping Provider

VRM System

Metamediary

Order

Notification and Shipping Label

Product

VirtualMerchant

ordering a product5
Ordering a Product

Customer

Order

Product

Shipping Provider

VRM System

Metamediary

Order

Shipping Information

Notification and Shipping Label

Product

VirtualMerchant

ordering a product6
Ordering a Product

Customer

Order

Product

Confirmation Number

Shipping Provider

VRM System

Metamediary

Order

Shipping Information

Notification and Shipping Label

Product

VirtualMerchant

ordering a product7
Ordering a Product

Customer

Order

Product

Confirmation Number

Confirmation Number

Shipping Provider

VRM System

Metamediary

Order

Shipping Information

Notification and Shipping Label

Product

VirtualMerchant

ordering a product8
Ordering a Product
  • Benefits of VRM BPM
    • Customer
      • only sees metamediary
    • Metamediary
      • no product inventory
      • no shipping
    • Virtual Merchants
      • no advertising
      • no web maintenance
returning a product
Returning a product

Customer

Shipping Provider

VRM System

Metamediary

VirtualMerchant

returning a product1
Returning a product

Customer

ReturnRequest

Shipping Provider

VRM System

Metamediary

ReturnRequest

VirtualMerchant

returning a product2
Returning a product

Customer

ReturnRequest

ShippingLabel

ShippingLabel

Shipping Provider

VRM System

Metamediary

ReturnRequest

VirtualMerchant

returning a product3
Returning a product

Customer

ReturnRequest

Product

ShippingLabel

ShippingLabel

Shipping Provider

VRM System

Metamediary

ReturnRequest

VirtualMerchant

returning a product4
Returning a product

Customer

ReturnRequest

Product

ShippingLabel

ShippingLabel

ShippingInformation

Shipping Provider

VRM System

Metamediary

ReturnRequest

ReturnNotification

Product

VirtualMerchant

returning a product5
Returning a product

Customer

ReturnRequest

Product

ShippingLabel

ShippingLabel

ShippingInformation

Shipping Provider

VRM System

Metamediary

ReturnRequest

ReturnNotification

ReceivedNotification

Product

VirtualMerchant

returning a product6
Returning a product

Customer

ReturnRequest

Product

ShippingLabel

ShippingLabel

ShippingInformation

Shipping Provider

VRM System

Metamediary

ReturnRequest

ReturnNotification

ReceivedNotification

ReceivedNotification

Product

VirtualMerchant

returning a product7
Returning a product

Refund

Customer

ReturnRequest

Product

ShippingLabel

ShippingLabel

ShippingInformation

Shipping Provider

VRM System

Metamediary

ReturnRequest

ReturnNotification

ReceivedNotification

ReceivedNotification

Product

VirtualMerchant

returning a product8
Returning a product
  • Benefits of VRM BPM
    • Customer
      • only sees metamediary
    • Metamediary
      • no product inventory
      • no shipping
    • Virtual Merchants
      • no advertising
      • no web maintenance
vrm prototype5
Portability

Windows NT/2000

Reliability

Microsoft products seem to attract viruses

Access database

Typically 10 to 20 users

One megabyte of data

Scalability

Need to change to SQL Server

Security

Secure Socket Layer (SSL)

Cannot load pages unless go through Login page

Other general security concerns

VRM Prototype
survey of 10 local businesses
Vendor interviews

E-commerce issues and solutions

30-45 minutes interview

Topics

Degree of technological sophistication

Use of Internet for sales and marketing

Desires for and barriers to growth

Present and future financial services

Survey of 10 Local Businesses
survey results
Business Size

Staff of 1-2 (7 businesses)

Staff of 5-25 (3 businesses)

E-commerce

9 businesses on the Internet

8 individual websites

Trouble getting site noticed (4)

Product not easily sold online (2)

No problems (2)

Percent of business from Internet

95%+ (3)

30-95% (0)

10-30% (2)

<10% (3)

Survey Results
survey results1
Future Business Direction

Keep growing (3)

Eventually sell business (3)

Have brick & mortar store (1)

Outsource web site (1)

Survive/continue at same pace (2)

Advantages of Using a Metamediary/Virtual Mall

9 companies gave positive comments

High visibility

Wider customer base

Increase traffic

Less hassles

No maintenance of websites

Survey Results
survey results2
Disadvantages of Using a Metamediary/Virtual Mall

7 companies gave negative comments

Concerns over setup with metamediary

Insufficient time to keep up with production

Possible competition with other products

Loss of control over advertising

Slower payment process

Increase number of small orders

3 companies currently use a metamediary

Metamediary/Virtual Mall Product Preferences

Wholesale (6)

Drop-ship (2)

Commission (1)

Survey Results
survey results3
Financial Services

Present

Credit card transactions (8)

Merchant account (3)

Future

Loans (2)

Other banking services (2)

No loans (2)

Not interested in additional services (4)

Survey Results
expert critiques
Participants

Business Owners (2)

Bank Employees (3)

Topics

Advantages

Disadvantages

Suggested Improvements

Expert Critiques
expert critiques1
Advantages

Easy for inexperienced small vendors

Banking

Advertising

Ordering

Shipping details

Eliminate paper traveling between partners

Vendors can get paid immediately by metamediary

Metamediary does not need to store inventory

Expert Critiques
expert critiques2
Disadvantages

Vendor packs orders themselves

Not geared toward vendors that do not “produce” their own product

Metamediary immediately pays vendors

Competition between metamediary and vendor

Competition between vendors on web site

Expert Critiques
expert critiques3
Suggested Improvements

Include contract negotiations in business process

Metamediary and shipping company

Metamediary and vendors

Financial institution and other 3 partners

Add information on individual product sales

Add user log

Investigate third party shipping software

Add fulfillment center as a fifth partner

Expert Critiques
what s next
Is this a viable approach?

Under what conditions?

When should we think about proceeding?

What’s Next?