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Introduction to Internet Business Systems

Introduction to Internet Business Systems. B 2 B is the Word! Business 2 Business Models, Values, Future Prof.Anna Story INBS 510. EDI Electronic data interchange ERP Enterprise resource planning KM Knowledge management CRM Customer relationship management EIP

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Introduction to Internet Business Systems

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  1. Introduction to Internet Business Systems B 2 B is the Word! Business 2 Business Models, Values, Future Prof.Anna Story INBS 510

  2. EDI Electronic data interchange ERP Enterprise resource planning KM Knowledge management CRM Customer relationship management EIP Enterprise information portal SCM Supply chain management EAI Enterprise application intergration MRO- most common Maintenance repair operations RFQ Request for quote A host of acronyms

  3. Relationships Size Velocity Integration Technology Partners uptime Security Flexibility Bottom line Rules of E- Business PC Magazine June 21, 2000

  4. Technology is cause and driver Ability to streamline information is the cost effective value You have to throw out the old business design Create flexible outsourcing for cost and customer satisfaction Listen to customers and become the cheapest, most familiar or best Use technology for every aspect Create E-B Community Develop Strong leadership strategy More Rules? Kalakota and Robinson 2000

  5. Integrate Integrate Integrate • FedEx-proactive transformation • Merged with Caliber Logistics • Obtain the IT system • The warehouse, fullfillment and shipping for any company • Partner with National Semiconductor • Dedicated line to FedEx for orders • fedEx houses inventory, ships, cycle time

  6. Future Shock & The Innovator’s Dilemna • Alvin Toffler in Future Shock stated “we do nothing at all, do not respond quickly or effectively enough in the face of demanding change” • Clayton Christensen in The Innovators Dilemna “ disruptive technologies are initially rejected by mainstream firms”

  7. Major Trends Driving E-Business • Consumer trends • Services /processes • Organizational trends • Enterprise technology trends

  8. B2B Broad Spectrum Applications • Product- specifications, prices and sales history • Customer- sales history and forecast • Supplier- product line, lead time, sales terms and conditions • Product process- capacities, commitments and plans • Transportation- carriers, lead times, costs

  9. B2B apps…cont. • Inventory- levels, carrying costs, locations • Supply chain partners- key contacts, partner’s roles and responsibilites and schedules • Competitor- benchmarking, competitive product offerings, market share • Sales and marketing- point of sale, promotions • Supply chain process and performance- process descriptions, performance measures, quality, delivery time, and customer satisfaction

  10. Supply Chain Management “ the coordination of order generation, order taking, and order fulfillment and distribution of products, services or information” Kalakota and Whinston, 1997 B2B E-business contributes to lower purchase cost, reduced inventory, efficiencies, and decreased sales and marketing costs.

  11. Link manufacturers, retailers, customers and suppliers Streamline the flow Manage demand and sourcing & globalization Customer service, growth and revenue Knowledge management More responsive to to consumers and the need to reduce costs to maintain competitive edge eSupply Chain Trends Integrate

  12. Predominent Industry Sectors • Computing electronics • Motor vehicles • Petrochemicals • Utilities • Paper/office supplies • Shipping/warehouse • Food/agriculture • See http://www.gs.com ( Feb 15 2001 report)

  13. Supply Chain Components • Upstream • suppliers • Internal • Processing • Packaging • Downstream • Distributors • customers

  14. Procurement Approval cycle Create requisition PO-Approved Select Product Submit order Supplier Fulfillment To recipient receiving $$$ Ship Accounts payable

  15. SCM- Distributors, Vendors and Shipment Providers • Fulfillment – JIT inventory • How does www.dell.com do it? • Some Solution providers • www.evolve.com • www.i2.com • Check the above out and understand their value

  16. Management control Level of empowerment Online product selection Electronic ordering Application integration Information and reporting www.ariba.com ORMS –operating resource mgmt Eliminates eternal paper chase First to market with integrated suite of applications Production related goods Non-production related goods E-Procurement : Evaluate

  17. E-procurement • www.grainger.com • A distributor • www.stapleslink.com • Corporations open accounts and receive discounts on orders

  18. Benefits of E-Procurement • Reduced procurement labor • Reduced materials cost • Redeployment of staff involved in procurement • Reducing manual works • Reduced cycle time • Automatic reconciliation of invoices with purchase orders • Discovering new suppliers

  19. Entities of SCM • Selling company • Buying company • Electronic intermediary • Deliverer • Network platform • Protocols and communication • Back end information system

  20. Characteristics of B2B ec • Company centric EC • Selling to customers via electronic auctions • Purchasing or procurement via electronic bidding • An attempt to automate the transaction process of buying and selling • Private and public e-marketplaces • Private- “one to Many” • Public- “many to many”

  21. B2B Models • Company Centric Model either • Sell side • Buy side • Exchange- Marketplace • Buyers and sellers meet electronically • Vertical • Horizontal • E-Service

  22. Buy Side: One-from-Many,E-Procurement • Purchasing agents (buyers) • Direct purchasing • Use of material is scheduled • Not a shelf item • Indirect purchasing • MROs • Nonproduction materials • Inefficiencies in procurement management of indirect materials

  23. A Traditional Purchasing Process Flow Source: ariba.com, February 2001.

  24. Buy Side: One-from-Many,E-Procurement (cont.) • Innovative procurement management • Innovative purchasing as strategic approach to increase profit margins • Web facilitation includes: • Electronic tendering • Volume purchasing • Aggregating supplier catalogs at buyer’s site • Group purchasing • Others

  25. Buy Side: One-from-Many,E-Procurement (cont.) • Goals of procurement reengineering • Increase purchasing agent productivity • Lower purchasing prices of items • Improve information flow and management • Minimize maverick (unplanned) buying • Improve payment process • Streamline purchasing process to make it: • Simple • Fast

  26. Buy Side: One-from-Many,E-Procurement (cont.) • Goals of procurement reengineering (cont.) • Reduce administrative processing cost per order • Find new suppliers and vendors to provide faster/cheaper goods and services • Integrate procurement process with budgetary control in an efficient and effective way • Minimize human errors in buying or shipping process

  27. Buy-Side B2BMarketplace Architecture

  28. Buy Side: Reverse Auctions • Pre-Internet Reverse auction process • Prepare description of product to be produced • Announce project via ads, mail, telephone • Send detailed information to interested vendors • Vendors prepare proposals • Bidders submit document proposals • Proposals evaluated • Problems: • Laws • Expensive • Errors

  29. Buy Side: Reverse Auctions (cont.) • Web-based reverse auction process • Buyers prepare bidding project information • Buyers post project on portal • Identify potential suppliers • Invite suppliers to bid • Suppliers download project information • Suppliers submit electronic bid • Reverse auction in real-time, or it can take a few days • Buyers evaluate and award contract

  30. Buy Side: Reverse Auctions (cont.) • Web-based reverse auction process • Benefits: • Electronic process is faster • Administratively much less expensive • Enables location of cheapest possible products

  31. Procurement Revolution at GE • TPN at GE Lighting Division • Purchasing was inefficient—too many administrative transactions • Process for each requisition took 7 days • Complex and time-consuming • Could only send out bids for 2 or 3 suppliers • Trading Process Network (TPN)—electronic bids • Entire process takes 7 days (for suppliers to bid) • 2 hours to send information to suppliers • Evaluate and award bids same day

  32. Procurement Revolution at GE (cont.) • Benefits to GE • Involvement in procurement process • Labor declined 30% • Material costs declined 5%-20%--wider base of suppliers online • Redeployment • 60% of the staff • Sourcing department concentrates on strategic activities instead of paperwork, etc.

  33. Procurement Revolution at GE (cont.) • Benefits to GE • Time to identify suppliers, prepare a request for bid, negotiate a price, and award the contract • Was 18-23 days • Now 9-11 days • Invoices automatically reconciled reflecting modifications • GE procurement departments share information about their best suppliers across the world

  34. Procurement Revolution at GE (cont.) • Benefits to buyers • Worldwide supplier partnerships • Current business partners • Strengthen relationships • Streamline sourcing process • Rapid distribution of information • Transmit electronic drawings to multiple suppliers • Decrease sourcing cycle time • Quick receipt and comparison of pricing bids

  35. Procurement Revolution at GE (cont.) • Benefits to suppliers • Increased sales volume • Expanded market reach, finding new buyers • Lowered administration costs for sales and marketing activities • Shortened requisition cycle time • Improved sales staff productivity • Streamlined bidding process

  36. Procurement Revolution at GE (cont.) • Deployment strategies • Start EC in one division and slowly go to all divisions • Use the site as public bidding marketplace to generate commission income to GE

  37. Benefits for Centralized Buy-Side Procurement Professional • Spending analysis • Catalog management • Contract management • Approval controls

  38. Benefits of Sell Side Procurement • Delivers a Web Based private trading sales channel • for distributors and manufacturers • Web storefronts and transaction systems

  39. Sell-Side Marketplaces:One-to-Many • Virtual sellers—Bigboxx.com.hk of Hong Kong • B2B office supply retailer services • Large corporate clients • Medium corporate clients • Small offices • Goal—sell products in various SE Asian countries • Offers more than 10,000 items • Uses more than 300 suppliers

  40. Sell-Side Marketplaces:One-to-Many (cont.) • Virtual sellers—Bigboxx.com.hk of Hong Kong (cont.) • Company portal attractive, easy to use • Browse online catalogs • Use search engines • Payments • Cash or check upon delivery • Automatic payments • Credit card • Purchasing card

  41. Sell-Side Marketplaces:One-to-Many (cont.) • Virtual sellers—Bigboxx.com.hk of Hong Kong (cont.) • Delivery • Owns trucks and warehouses • Delivery scheduled online • Same day (within an hour) • Specifically scheduled time • Ordering system integrated with SAP-based back-office system

  42. Sell-Side Marketplaces:One-to-Many (cont.) • Virtual sellers—Bigboxx.com.hk of Hong Kong (cont.) • Value-added services • Track status of order • Check stock availability • Promotions • Customized prices • Group accounts and central approval—for businesses with multiple branches • Standing orders automatically activated • Large number of reports and data available

  43. Dell Intel IBM Cisco Sell-Side Marketplaces:One-to-Many (cont.) • Direct sales from catalogs • Configuration and customization • Efficient customization for direct sales • Business customers • Customize products • Receive price quote • Submit order • Successful cases

  44. Sell-Side Marketplaces:One-to-Many (cont.) • Direct sales from catalogs • Benefits • Reduces costs (to buyers and sellers) and errors during the process • Speeds up order cycle • Ability to customize products • Offer different prices to different customers

  45. Sell-Side Marketplaces:One-to-Many (cont.) • Direct sales from catalogs (cont.) • Limitations • Channel conflicts with distribution systems • High cost when traditional EDI used • Large number of business partners is needed to justify system

  46. Selling Side:Auctions and Other Models (cont.) • Billing and collection • Automatic calculation of shipping weights and charges • Payment—encrypted credit card data • Billing information—easily downloaded into existing systems • Successful if: • Sufficient number of loyal customers • Products well known • Price not major purchasing criteria

  47. Sell-Side Case:CISCO Connection Online (CCO) • Benefits—saves the company $363 million per year in: • Technical support • Human resources • Software distribution • Marketing material

  48. Cisco Connection Online (CCO) (cont.) • Customer service—Cisco Connection online • Online ordering—Internet Product Center builds virtually all products to order • Order status—customer tools for finding answers to order status inquiries

  49. Cisco Connection Online (CCO) (cont.) • Benefits to Cisco • Reduced operating costs for order taking • Enhanced technical support and customer service • Reduced technical support staff cost • Reduced software distribution costs • Lead times reduced fro 4-10 days to 2-3 days

  50. Cisco Connection Online (CCO) (cont.) • Benefits to customers • Quick order configuration • Immediate cost determination • Collaboration with Cisco staff

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