Title: ELC 200
1ELC 200
2Agenda
- Questions from last Class?
- Assignment 3Corrected
- 4 As, 8 Bs and 2 Cs
- I am not looking for generic textbooks answer but
answers that are specific to your business. - 5 Days till Daytona Beach Bike Week
- http//www.daytonachamber.com/bwhome.html
- Today we will finish discussing Company-Centric
B2B and Collaborative Commerce - Thursday we will be talking about how to write an
eBiz Plan - The completed eBiz plan is worth 22 of your
grade
3Buy Side E-MarketplacesReverse Auctions
- Buy-side e-marketplacea Web-based marketplace
in which a buyer opens an electronic market on
its own server and invites potential suppliers to
bid on the items the buyer needs also called the
reverse auction, tendering, or bidding model - Request for quote (RFQ)the invitation to a
buy-side marketplace (reverse auction)
4Exhibit 5.6Buy-Side B2B Market Architecture
5Conducting Reverse Auctions
- Reverse auctions administered from a companys
Web site - Bidding process lasts a day or more
- Bidders may bid only once or view the lowest bid
and rebid several times - Increasing number of reverse auction sites makes
it impossible for suppliers to monitor all of
them - Online directories list open RFQs
- Use software search-and-match agents to reduce
the human burden in the bidding process
6Bidding Through a Third-Party Auctioneer
Freemarkets.com
- United Technologies Corp. needs suppliers to make
24 million worth of circuit boards - 2,500 suppliers are identified as possible
contractors - List is submitted to FreeMarkets
(freemarkets.com) - http//www.ariba.com/
7Freemarkets.com (cont.)
- FreeMarkets reduced the list to 50, based on
considerations including - Plant location
- Size of supplier
- Plant capacity
- Customer feedback
- Detailed evaluation of the candidates
8Freemarkets.com (cont.)
- 3-hour auction conducted of online competitive
bidding - First bid was seen by all bidders
- Using reverse auction approach, the bidders
reduced their bids - Comprehensive analysis of several of the lowest
bidders - Then recommended the winners and collected its
commission fees - Results
- Original specification of 24 million was reduced
to 18 million
9Procurement Revolution at GE
- TPN (now part of gxs.com)
- Purchasing was inefficienttoo many
administrative transactions - Process for each requisition took 7 days to send
to bidders - 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 (7 days
before) - Evaluate and award bids same day
10Procurement Revolution at GE (cont.)
- Benefits to GE
- Labor declined 30 and material costs declined
5-50--wider base of suppliers online - Redeployment of 50 of the staff
- Takes half the time to identify suppliers,
prepare a request for bid, negotiate a price, and
award the contract - Invoices automatically reconciled reflecting
modifications
11Procurement 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
12Procurement 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
13Aggregating Catalogs
- Aggregating suppliers catalogs an internal
marketplace - Maverick buying to save time leads to high prices
- Aggregating all approved suppliers catalogs in
one place - Reduced number of suppliers
- Buyers at multiple corporate locations
- Fewer and remote suppliers
- Larger quantity/lower costs
14Buying from MasterCardInternationals Internal
Catalog
- Online buying program at MasterCard
- Allows corporate buyers to select goods and
services from companys electronic catalog - Goal is to consolidate buying activities from
multiple corporate sites, improve processing
costs, reduce the supplier base - Procurement department defines
- Scope of products or projects to buy
- Invites vendors to bid or negotiate prices
15MasterCard International (cont.)
- Contract prices are stored in the internal
electronic catalog - Final buyer at MasterCard compares available
alternatives - Organizational purchasing decision coupled with
an internal workflow management system - Internal electronic catalog is updated manually
or by software agents - Payments are made with MasterCards corporate
procurement card - By 2002, the system was being used by more than
2,500 buyers
16Group Purchasing
- Group purchasingaggregation several buyers into
volume purchases, so that better prices can be
negotiated - Internal aggregation
- Economy of scale
- Reduced transaction processing cost
- External aggregation
- Aggregating demand online
- Putting together orders from multiple buyers to
make large volumes/lower costs
17Exhibit 5.7Group Purchasing Process
18Electronic Bartering
- Bartering exchangean intermediary that links
parties in a barter a company submits its
surplus to the exchange and receives points of
credit, which can be used to buy the items that
the company needs from other exchange
participants - Exchange of goods or services without the use of
money - Exchange a surplus for other need
- Benefits
- Faster than manually
- Easier to match
19Collaborative Commerce (C-Commerce)
- Collaborative commerce (c-commerce)commerce
consisting of activities between business
partners in jointly planning, designing,
developing, managing,and researching products and
services - Web-based systems used between and among
suppliers for - Communication Design
- Planning Information sharing
- Information discovery
20Collaborative Commerce (cont.)
- Varieties of c-commerce
- Joint design efforts
- Forecasting
- Between and within organizations
- Aids communication and collaboration between
headquarters and subsidiaries, franchisers and
franchisees - C-commerce platform provides e-mail, message
boards, chat rooms, online corporate data access
around the globe, no matter what the time zone
21Webcor Construction Goes Online with Its Partners
- Webcor suffered from too much paperwork and poor
communication with its - Architects
- Designers
- Building owners
- Subcontractors
- Webcors goal to turn its computer-aided design
(CAD) drawings, memos, and other information into
shared digital information
22Webcor (cont.)
- Webcor uses ASP that hosts its projects on a
secured extranet - Major problem was getting everyone to accept
software - Complex
- User training is necessary
- Webcor was in a strong enough position to choose
not to partner with anyone who would not use
ProjectNet
23Webcor (cont.)
- Webcors business partners can post send, or edit
CAD drawings, digital photos, memos, status
reports, project histories - Partners have instant access to new building
drawings - Central meeting place where users can both
download and transmit information to all parties,
all with a PC
24RetailerSupplier Collaboration Target
Corporation
- Target Corporation is a large retail
conglomerate - Conducts EC activities with about 20,000 trading
partners - 1998established an extranet-based system for
those partners that were not connected to its
VAN-based EDI.
25Target Corporation (cont.)
- The extranet enabled the company to
- Reach many more partners,
- Use many applications not available on the
traditional EDI - Streamline its communications and collaboration
with suppliers - Business customers to create personalized Web
pages
26Continuous Replenishment Warner-Lambert
- Warner-Lambert (WL) served as a pilot site for a
program called Collaborative Planning,
Forecasting, and Replenishment (CPFR) - Shared strategic plans, performance data, and
market insight with Wal-Mart - Trading partners collaborate on making demand
forecasts - WL increased its products shelf-fill rate from
87 percent to 98 percent - An empty shelflost present sales and future
sales if the customer purchases a substitute
product
27Warner-Lambert (cont.)
- WL is involved in another collaborative retail
industry projectSupply-Chain Operations
Reference (SCOR) - Divides supply chain operations into parts
- Gives a framework with which to evaluate the
effectiveness of their processes along the same
supply chains to - Manufacturers
- Suppliers
- Distributors
- Retailers
28Reduction of Design Cycle Time Adaptec, Inc.
- Microchip manufacturer supplying electronic
equipment makers - Outsourced manufacturing tasks to Overseas
manufactures - Delivery times exceeded their competitors
- Solution to the problem
- Extranet and enterprise-level supply chain
integrated software - Significantly reduced order-to-product delivery
time
29Reduction of Product Development Time
Caterpillar, Inc.
- Heavy machinery manufacturer uses extranet
- Request for customized component directly to
designers and suppliers ship to buyers - Connect engineering and manufacturing division
with worldwide - Suppliers Factories
- Distributors Customers
- Overseas
30Barriers to C-Commerce
- C-commerce is moving ahead fairly slowly because
- Technical reasons involving integration,
standards, and networks - Security and privacy concerns over who has access
control of information stored in a partners
database - Internal resistance to new models and approaches
- Lack of internal skills to conduct c-commerce
31Interorganizational Collaboration at Nygard of
Canada
- Nygard has become a leader in adopting IT and
e-commerce in the apparel industry - Didnt want to move manufacturing off shore
(cheaper) due to longer lead and cycle times - Company stays competitive by using EC to control
costs of labor and manufacturing - Developed an ERP and supply chain management
that controls all internal operations,
purchasing, product development, accounting,
production planning, sales - This enabled the company to develop tight
integration with its trading partners
32Nygard of Canada (cont.)
- The moment that a customer buys a pair of pants
at a partners retail store - Information moves from the POS terminal
- Automatically generates a reorder at Nygard
- SCM
- Matches customers orders with the right fabrics
- Searches the market pool for the most efficient
combinations of other material for use with those
fabrics
33Nygard of Canada (cont.)
- Sales trigger orders
- Manufacturing automatically industries, and
global manufacturers are willing to operate with
razor-thin margins as fabrics, zippers, and
buttons - The moment that raw material is used, an
automatic reorder of the material is generated - Allows just-in-time production
- Quick order delivery (sometimes same day)
34Nygard of Canada (cont.)
- Web-based control system enables the company to
- Conduct detailed profitability studies
- Decisions are evaluated by impacts on the bottom
line - Decision support systems (DSS) models are used
for this purpose
35Infrastructure for B2B
- Server to host database and applications
- Software for executing sell-side (catalogs)
- Software for conducting auctions and reverse
auctions - Software for e-procurement (buy-side)
- Software for CRM
- Security hardware and software
- Software for building a storefront
- Software for building exchanges
- Telecommunications networks and protocols
36Extranet and EDI
- Value-added networks (VANs)private,
third-party-managed networks that add
communications services and security to existing
common carriers used to implement traditional
EDI systems - Internet-based EDIEDI that runs on the Internet
and so is widely accessible to most companies,
including SMEs
37Extranet and EDI
- Extranetssecured networks (by VPN), usually
Internet-based, that allow business partners to
access portions of each others intranets
extended intranets.
38Integration
- Integration with existing information systems
issues - Intranet-based work flow
- Database management systems (DMBS)
- Application packages
- ERP
- Back-end sell-side integration works for sellers
but not buyers and vice versa
39Integration (cont.)
- Integration with business partners
- Easy integration with one company-centric side
- Not easy to integrate for many buyers or sellers
- Need buyer owned shopping cart that can interface
with back-end information systems
40The Role of XML in B2B Integration
- Companies interact easily and effectively by
connecting to their servers, applications,
databases - Standard protocols and data-representation
schemes are needed - FIXML
- Web is based on the standard communication
protocols useful only for displaying static
visual Web pages - TCP/IP
- HTTP
- HTML
41The Role of XML in B2B Integration (cont.)
- XML (eXtensible Markup Language)standard (and
its variants) used to improve compatibility
between the disparate systems of business
partners by defining the meaning of data in
business documents - Used to increase
- Interactivity
- Accessibility with speech recognition systems
42How XML works
43XML Unifies Air Cargo Tracking System
- B2B intermediary, TradeVan Information Services
of Taiwan provides information services about the
cargo flights of different airlines - Different information systems have different
query results - XML facilitates data exchange between
heterogeneous databases - Information can be presented on wireless
application protocol (WAP)-based cell phones
44Air Cargo Tracking System (cont.)
- System is expected to
- Reduce delays significantly
- Benefit of all members of the supply chain
- Returns a standardized yet personalized
presentation for different airlines - Enables customs brokers to reduce the cycle time
by preparing declarations of imports faster
45Air Cargo Tracking System (cont.)
- Buyers and other supply chain partners can
schedule production lines with precision and in
advance - Quality of door-to-door delivery companies is
improved through fast communication - Answers to queries can be derived much faster
- Improves the supply chain by reducing
- Delivery lead times
- Inventory levels
46The Role of Software Agentsin B2B EC
- Agents role in the sell-side marketplace
- B2C comparison-shopping
- B2B agents collect information from sellers
sites for buyers - Agents role in the buy-side marketplace
- Assisting large number of buyers requesting
quotes from multiple potential suppliers in
buy-side
47Managerial Issues
- Can we justify the cost?
- Which vendor(s) should we select?
- Which model(s) should we use?
- Do we need B2B marketing?
- Should we reengineer our procurement system?
- What restructuring will be required for the shift
to e-procurement? - What integration would be useful?
- What are the ethical issues in B2B?
48Summary
- The B2B field
- The major B2B models
- The characteristics of sell-side marketplaces
- Sell-side intermediaries
- The characteristics of buy-side marketplaces
- Forward and reverse auctions
- B2B aggregation and group purchasing
- Collaborative EC
- Characteristics of Internet-based EDI and the
role of XML