Lecturer: Ellis E' Confer

1
Internet Supply Chain Management ECT 481
Spring 2006

• Lecturer Ellis E. Confer
• E-mail econfer_at_cs.depaul.edu
• Office Hours Monday 400 530 pm

2
Session Number 1

• Session Date March 27, 2006
• Session Objectives
• Introductions Administrative Items
• Course Overview
• Initial Course Topics
• Assignments
• Session Topics Introduction to Supply Chain
  Management B2B Systems
• Course Administration Overview
• Historical Perspective on Internet Ecommerce
  Evolution
• B2B Ecommerce Overview
• Supply Chain Management Overview     

3
ECT 481 Course Objectives

• To examine the links between business strategy,
  information system technology architecture, and
  technical platform implementation as it relates
  to Supply Chain Management and Business-to-Busines
  s E-Commerce.

4
Course Description

• ECT 481 - Internet Supply Chain Management
• This course examines e-business strategies,
  architectures, technologies, approaches, and
  infrastructure requirements in the context of
  supply chain management (SCM). The focus is on
  the design, development, and implementation of
  e-business systems that facilitate the
  collaboration of an enterprise with its buyers
  and suppliers. Topics include SCM, global
  logistics management, messaging-based
  collaboration framework, extensible markup
  language (XML), extensible style sheet language
  (XSL), document type definition (DTD), and web
  services. This course also examines the
  integration of e-business systems and back-end
  systems such as enterprise resource planning
  (ERP) systems, virtual private networks (VPN),
  and internet security. Students will implement a
  collaborative extranet system component in team
  projects. Prerequisite ECT 425. Programming
  knowledge of or experience with ASP, ASP.NET,
  Java, Visual Basic, or VB Script will be helpful
  and is highly recommended.

5
Prerequisites Text and Supplementary Reading
Materials

• Prerequisites ECT425, Technical
  Fundamentals of Distributed Information Systems,
  is a required prerequisite. Programming knowledge
  of or experience with ASP, ASP.NET, Java, Visual
  Basic, or VB Script will be helpful and is highly
  recommended.
• 1. Building B2B Applications with XML by Michael
  Fitzgerald published by John Wiley Sons, Inc.,
  Wiley Computer Publishing 2001, ISBN
  0-471-40401-2.
• 2. Introduction to Supply Chain Management, by
  Robert B. Handfield and Ernest L. Nichols, Jr.,
  Prentice Hall, 1999, ISBN 0-13-621616-1
• 3. Other books will be referred to and handouts
  and web-links will be given as appropriate.

6
Grading Procedure

• The students final grade will be based on a
  weighted average of the exam score, the project
  report deliverables, project presentation, and
  class participation. Weights are as follows
• Weight
• HW Assignments 20
• Project 35
• Midterm Exam 20
• Final Exam 20
• Class Participation 5
• Grades will be determined as follows
•  
•  

7
Procedures and policies

• 1. No makeup exams will be given.
• 2. Homework assignments must be turned in on
  time.
• Late homework assignments will not be accepted.
• Turning in a hard copy version of an
  assignment is the most reliable way to ensure
  that assignments are received on time. When
  transmitting a soft copy of an assignment via
  email, make sure to give yourself adequate time
  for the mail to be delivered by no later than the
  day when the assignment is due. Email delivery
  problems do occur, please ask for a receipt of
  delivery.

8
ECT 481 Tentative Schedule of Discussions

• Session 1 Course Administration
  Overview
•          Supply Chain Management Overview
•          B2B Ecommerce Overview
•          Business Trends Opportunities
  Challenges
•  
• Session 2 Supply-Chain Management ERP
•          Supply Chain Value Chain
  Considerations (continued)
•          Enterprise Requirements Planning
•          Technical and Process Architectural
  Considerations
•  
• Session 3 B2B Systems Architecture Key
  Technology
•          Architectural Considerations
  (continued)
•          Design Development Processes
•          Key Technology
•          XML

9
ECT 481 Tentative Schedule of Discussions
(continued)

• Session 4 1st Homework Assignment Due
•   XML
•          XML as a Content Development Tool
  Internet-based EDI
•          Syntax Document Structure 
• Session 5 MIDTERM EXAM
• XML (continued)
•  
• Project Abstracts Due
• Session 6 XML (continued)
• Web Services
•         
• Session 7 Web Services (continued)

10
ECT 481 Tentative Schedule of Discussions
(continued)
Session 8 Middleware Security
Considerations Future Trends Emerging
Techniques and Technology - Independent Supply
Networks - Collaborative Planning and
Forecasting - Collaborative Transportation
Planning - Impact of Radio Frequency
Identification Devices (RFID) - Impact
of Wireless Cellular Technology Session 9
FINAL EXAM Session 10 No
class Session 11 Project
Presentations
11
Logistics

• Class time Monday evenings from 545 pm to 900
  pm.
• Class location Downtown Campus, Room (TBD)
• Rest periods (two options to choose from)
• Option 1 One thirty (30) minute break _at_ 730 pm
• Option 2 Two fifteen (15) minute breaks _at_ 715
  pm 830 pm
• Office hours - Monday, 400 pm 530 pm in room
  TBD
• Email address econfer_at_cti.depaul.edu

12
Instructor background Who Am I?

• Professional experience
• 20 years experience as consultant and
  entrepreneur
• Stints with Accenture, IBM, Sybase, Tandem, CNA
  Financial
• Presently senior executive with consultancy
  software development firms
• Educational training
• BSEE from University of Michigan
• Concentration in digital design and solid state
  physics
• MBA from Indiana University
• Concentration in finance operations research
• Leisure interests/hobbies
• gardening, music, fine dining, motorcycling,
  reading (non-fiction)

13
Introductions

• Who are you?
• Please send me an email message with the
  following.
• Your name?
• What is your profession (student or otherwise)?
• What is your major?
• Where are you in your graduate/undergraduate
  program?
• Why are you taking this course?
• What do you hope to learn from this course?
• Rated skill profile (project manager, process
  analyst, designer, developer, etc.) from 1
  (novice) to 5 (expert).
• Favorite websites (2 or more) and (briefly)
  reasons why.
• Anything else you feel is interesting and
  appropriate.

14
E-commerce B2B Marketplaces Origins and
Evolution
Discussion Agenda

• Objectives
• Discussion Baseline
• Evolutionary Perspectives Industry Comparisons
• Brief History of Ecommerce B2B Systems
• The BIG Picture B2B Market Perspective

15
E-commerce B2B Marketplaces Origins and
Evolution Evolutionary Perspectives Industry
Comparisons
But first..Lets put everything into perspective.

• There is no new thing under the sun
• Ecclesiastes, Chapter 1, Verse 9
• He who forgets the past is condemned to repeat
  it.
• Jorge Santayana

16
An Interesting Quote

• "Let us not forget that the value of this great
  system does not lie primarily in its extent or
  even in its efficiency. Its worth depends on the
  use that is made of it..For the first time in
  human history we have available to us the ability
  to communicate simultaneously with millions of
  our fellowmen, to furnish entertainment,
  instruction, widening vision of national problems
  and national events. An obligation rests on us to
  see that it is devoted to real service and to
  develop the material that is transmitted into
  that which is really worthwhile."
• Who said this? Bill Gates? Newt Gingrich? Al
  Gore? Alvin Toffler?

17
Perspective on the Internet, Ecommerce and
Earlier Technology Innovations

• Internet is a change agent in global commerce.
• There have been comparable periods of industrial
  change.
• Internet and Ecommerce evolution expansion is
  similar when compared and contrasted with
• railroad,
• telegraph,
• telephone, and
• radio.
• In all cases, early pioneers (practitioners,
  inventors, etc.) knew they were on to something.

18
E-commerce B2B Marketplaces Origins and
Evolution
Parallels between the evolution of telegraph,
radio, and the Internet.

• Each transmits intangible items (i.e.,
  information).
• Each shortened the time to transfer info.
• Their utility (i.e., their ability to deliver
  products services) is dependent on the efficacy
  and efficiency of their underlying network.
• All had initial usability, training,
  infrastructure problems.
• All have or are experiencing the S-curve in
  lifecycle product development.

19
E-commerce B2B Marketplaces Origins and
Evolution
Discussion Objectives

• Establish a discussion context regarding
  Ecommerce B2B marketplaces.
• Discuss historical and market perspective for
  the evolution of Ecommerce B2B marketplaces.

20
Mission Critical (Important) Terminology

• E-Commerce
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Supply Chain Management
• Business Process Re-engineering (BPR)
• Electronic Data Interchange (EDI)
• Intranet
• Extranet
• Security
• Firewall
• Virtual Private Network

21
E-commerce B2B Marketplaces Origins and
Evolution
Discussion Baseline Terminology Defined

• Electronic Commerce or E-commerce - the conduct
  of a financial transaction by electronic means
  more recently, the purchase of goods and services
  over the Internets World Wide Web. Includes the
  following types
• Business-to-Business or B2B E-commerce -
  inter-organizational E-commerce
• Business-to-Consumer or B2C E-commerce -
  electronic commercial interaction between the
  enterprise and the end consumer.
• Business-to-Employee or B2E E-commerce-
  intra-organizational E-commerce.

22
Distinguishing B2B B2C

• B2B E-commerce is the exchange of products,
  services, or information between businesses
  rather than between businesses and consumers.
• e-Business.
• Suppliers and Big Cs - transactions between
  businesses.
• Focus on transaction efficiency.
• B2C E-commerce the retailing of goods and
  services directly to end consumers via the
  Internet.
• Suppliers little Cs transactions between
  goods and service providers and end consumers.
• Dis-intermediation.
• (theoretically) lowers inventory and
  distributions costs.

23
Electronic Data Interchange (EDI) defined

• EDI Inter-company, computer-to-computer
  communication of data which permits the receiver
  to perform the function of a standard business
  transaction and is in a predefined standard
  format.
• Enabled Old-school B2B E-commerce. It still
  works.
• Enables electronic intra-company exchange of
  purchase orders and other transaction documents.
• EDI based on standards-based protocols.

24
Distinguishing Intranet Extranet

• Intranet defined
• An intranet is a corporate LAN or WAN that
  functions with Internet technologies behind the
  companys firewall.
• Extranet defined
• An extranet is a network that links the intranets
  of business partners using a virtually private
  network on the Internet.
• Designing extranets is difficult.
• Complexities of security, performance, management
  and policy.
• Extranet and B2B are not synonymous. Extranets
  can apply to B2C as well.

25
E-commerce B2B Marketplaces Origins and
Evolution
Supply Chain - all organizations and processes
related to products and services sourced by
buying organizations, typically from raw
materials through consumption.
B-to-B
B-to-C
Warehouse and Inventory Management
ProductDevelopment
Supplier Management
Transport
Category Management
Store Management
Customer Relationship Management
ProductDevelopmentManagement
E-ProcurementSoftware
Supply ChainManagement
CategoryManagement

• Product design
• Product development
• Vendor capacity
• Quality
• Sample management
• New product introduction

• Invoice processing
• Payment
• RFI/RFP
• Catalog development
• Vendor certification
• Item management
• Product availability
• Production planning
• Technical specifications
• Second- and third-tier suppliers

• Order management
• Product tracking
• Capacity management
• consolidation
• Replenishment
• Reverse logistics

• Goods-in scheduling
• New product introduction
• Planning for seasons and events
• Allocation

Supply Chain Context of E-commerce
26
E-commerce B2B Marketplaces Origins and
Evolution
Brief History of E-commerce and B2B marketplaces.

• E-commerce and B2B are not new concepts.
• Current systems emanated more directly from
  Electronic Data Interchange (EDI).
• EDI provides for the exchange transaction
  information over proprietary Value-Added Networks
  (VANs).
• EDI participants realized benefits such as
• reduction in process costs, and
• enhanced profitability.
• EDI participants also incurred significant
  expenditure in
• EDI deployment costs, VAN charges.
• EDI limited to a few very large wealthy
  organizations.
• Enter the Internet, B2B Marketplaces
  Internet-based EDI!
• B2B extranet system deployment on the rise.
• Third-party B2B Market Makers are key movers in
  evolution of internet-based EDI.

27
B2B Electronic Commerce Key Characteristics

• How is B2B conducted?
• B2B commerce can be conducted directly between a
  buyer and seller or via an online intermediary.
  The intermediary can be
• a person or
• an organization or
• an electronic system
• What are the types of transactions?
• Spot Buying
• buying goods and services at market prices
• often facilitated by a third party exchange
• Strategic Sourcing
• long-term contracts that are usually negotiated
  to get a good cost
• advantage
• often this is done by streamlining your supply
  chain

.
28
B2B Electronic Commerce Key Characteristics

• The key B2B entities include
• Selling Company
• Buying Company
• Electronic Intermediary
• Deliverer
• Network Platform
• Protocols and communication
• Back-end information system - including ERP
  (Enterprise Resource Planning)

29
B2B Electronic Commerce Key Characteristics

• What is the essential information processed in
  B2B Ecommerce?(i.e., what should you to expect
  to be sent back and forth between the buyer,
  seller and the intermediary)
• product details
• customer profile
• supplier conditions
• product process - capacities
• transportation, times, costs
• What are the primary B2B business models?  
• Company Centric Models 
• which would include
• Supplier Oriented Marketplace
• Buyer Oriented Marketplace
• Intermediary Oriented Marketplace (the Market
  Makers)
• Many-to-many Marketplaces also known as
• Trading Communities
• Trading Exchanges or Exchanges

30
B2B Business Cycle Primary B2B Business
Processes Key Applications

• B2B Business Processes
• Information Transfer
• Data Sharing
• Ordering
• Payment
• Customer Support Service

• Key Applications
• Distribution Control
• Inventory Management
• Supplier Relationships
• Payment Management
• Channel Management

31
E-commerce B2B Marketplaces Origins and
Evolution
The BIG Picture B2B Current Market Perspective

• B2B E-commerce participants include
• Existing prominent, well-established firms that
  sell directly to business customers.
• Emerging Market Makers a new breed of
  intermediaries
• Market Makers further segmented as
• Vertical hubs industry-specific focus.
• Functional hubs business process focus.
• Catalog models demand/supply aggregation.
• Auction exchange models engaging in matching
  buyers sellers.
• Barter models reciprocal value exchange.

32
B2B Supplier Marketplace Model Characteristics

• Supplier offers an e-store to promote sales.
• Customers are both consumers and business buyers.
• Popular type of initial e-marketplace.
• Auctions are becoming popular used to clear
  surplus inventories.
• ordered information.

33
B2B Buyer Marketplace Model Characteristics

• Buying company opens a bidding site to enhance
  its purchasing procedure.
• Model is unique to B2B not found in B2C.
• Online bidding can reduce the purchasing cost and
  cycle time.

34
B2B Intermediary-oriented Marketplace Model
Characteristics

• This is the Market Maker segment
• Consists of 3rd party player that opens an
  intermediary e-store for
• buyers and sellers.
• E-store may also be used for consumers and
  individual business
• buyers.
• Auction and bidding market making sites are
  gaining in
• popularity.
• Example might include an assembly company acting
  as an
• intermediary between allied customers and
  suppliers.

35
E-commerce B2B Marketplaces Origins and
Evolution
Emergence of online exchanges - three forces
shaping the B2B marketplace
B2C (Business to Consumer) B2B (Business to
Business)
Industry-Centric Exchanges
B2B Market Opportunity 4.5 - 8 trillion by
2004 IDC Gartner 2002
Market Makers

• Aerospace (Boeing)
• Automotive (GM/Ford)
• Agricultural (Cargill)
• Chemical (DuPont)
• Foods (GMA)
• Retailing (Wal-Mart)
• Utilities

• Vertical
• Foodbuy.com
• First Index (custom manufactured parts)
• Horizontal
• Commerce One Market Site
• Ariba Network

8000
1500
1000
500
0
1999
2002
2003
2004
2005
Technology Providers and Engines
Ariba Commerce One Oracle SAP I2 Manugistics EAI
Software Manufacturers
36
Ariba was First B2B Firm to Profitability!
Wall Street Journal Friday, January 12, 2001
37
E-commerce B2B Marketplaces Origins and
Evolution
So what should we expect?

• Currently experiencing re-vitalization (post
  recession).
• E-commerce has become mainstream and
  internalized by old economy
• firms.
• B2B uptake will continue with improved economy,
  probably tied to supply
• chain management improvements.
• A number of small technological,
  micro-improvements will impact the E-
• commerce and the internet over the short-term.
• Last-mile infrastructure improvements
  (ubiquitous broadband) has had
• significant impact on level of internet usage.
• Security will continue to be of paramount
  concern and will garner
• significant expenditure. An outstanding area of
  entrepreneurial opportunity.

38
B2B Critical Success Factors

• Plenty of buyers and sellers you need both to
  make a market.
• Liquidity value of a market make r is a
  multiple of the value of the transactions flowing
  through it market makers (MMs) must be focused
  on generating industry-leading liquidity.
• Fragmentation MMs add most value in highly
  fragmented markets.
• Inefficiency MMs must add value to both sides
  of the trade.
• Management with domain expertise senior-level
  industry relationships and creditability
  facilitate industry buy-in.
• Early mover advantage Ebay only had a year
  head start in the C2C auctions business, but that
  was enough.
• Partnerships for distribution and logistics
  UPS doesnt transport lumber, resin, or HCL acid.
• Neutrality few business opt to do business
  with their competitors or with subsidiaries of
  competitors do not sacrifice liquidity to gain
  neutrality.
• Public currency with a billion dollar market
  cap, if you dont yet have a real business, then
  go and buy one in the end, real value/dollars
  count.

39
Key Technology

• Key Ecommerce technology architecture components
  include the following
• web browsers
• application servers
• secure file transfer servers
• customer account management systems
• remote administration tools
• directory servers
• authentication systems
• commerce systems
• distributed computing infrastructures and
  databases
• messaging systems middleware
• firewalls and proxies
• security scanners

40
Remaining Mission Critical Terms

• Business Process Re-engineering (BPR) -
  fundamental rethinking and radical redesign of
  business processes to achieve dramatic
  improvements in critical performance measures
  such as cost, quality, service, speed.
• Security the combination of technology and
  policies designed to protect sensitive business
  information and to prevent fraud.
• Firewall a security screen placed between an
  organizations internal network and the external
  Internet.
• Virtual Private Network a wide-area network
  (WAN) created to link a company with external
  users (including mobile users, field
  representatives, or strategic allies).

41
Evolving B2B Trends XML

• XML (Extensible Markup Language)
• enables sharing of interactive documents across
  the Internet.
• offers format for representing data, a schema
  for describing data, and means for extending
  HTML.
• Key to transition from traditional EDI to
  Internet-based EDI.
• Processes most affected have been order
  fulfillment, production, logistics, and
  inventory.
• Electronics industry has taken the lead in XML
  use in the supply chain.
• Toshiba, Solectron, Intel, Ingram Micro ,
  American Express, Federal Express, and Cisco are
  key practitioners.

42
Supply Chain Considerations

• What is the Supply Chain?
• All organizations and processes related to
  products and services sourced by Buying
  Organizations, typically from raw materials
  through consumption.
• What is Supply Chain Management?
• Supply Chain Management (SCM) is the management
  of all activities along the supply chain from
  suppliers to internal logistics within a company
  and to distribution to customers.
• Contrasted with the Value Chain
• Value chain is a series of activities a company
  performs to achieve its goal by adding additional
  values as each activity proceeds to the next one.
• The value chain looks at every step in the supply
  chain management process - from source materials
  to delivery of the final product to the customer.
  
• The objective of the value chain is maximum value
  (to the customer) at the least possible cost (to
  the business).
• The supply chain focuses on getting source
  materials into manufacturing operation smoothly
  and economically.

43
Supply Chain Considerations
B-to-B
B-to-C
Warehouse and Inventory Management
Customer Relationship Management
ProductDevelopment
Supplier Management
Transport
Category Management
Store Management
ProductDevelopmentManagement
E-ProcurementSoftware
Supply ChainManagement
CategoryManagement

• Product design
• Product development
• Vendor capacity
• Quality
• Sample management
• New product introduction

• Invoice processing
• Payment
• RFI/RFP
• Catalog development
• Vendor certification
• Item management
• Product availability
• Production planning
• Technical specifications
• Second- and third-tier suppliers

• Order management
• Product tracking
• Capacity management
• consolidation
• Replenishment
• Reverse logistics

• Goods-in scheduling
• New product introduction
• Planning for seasons and events
• Allocation

44
Key Components of SCM
Courtesy of Network Computing magazine December
8, 2005
45
SCM Objectives

• Optimize the sharing of information across
  organizational boundaries
• Focus on value of time, efficiency.
• Attempt to gain time-based competitive advantage.
• Potential linkage to greater customer
  satisfaction, increased sales, enhanced product
  quality, and profitability.

46
Supply Chain Performance Metrics

• Products services offered
• Sales
• Market share
• Cost
• Quality
• Delivery
• Cycle times
• Assets utilized
• Responsiveness
• Customer service

47
New Imperatives of Supply Chain Management

• Build flexibility.
• Plan and measure accurately.
• Develop logistically separate operations where
  appropriate.
• Get lean by emphasizing simplicity and speed.
• Optimize timely information transfer.
• Mass-customize, treat customers unequally
  segment and stratify.
• Operate globally.
• Practice virtuality and collaborative management.
• Exploit electronic commerce.
• Leverage people,
• Operationalize new product introductions and
  phaseouts.

48
Supply Chain Example Apparel Industry
Customer
Retailer
Apparel Manufacturer
Information
Product
Textile Producer
Yarn Maker
49
Supply Chain Example Health Care Products
Customers
Hospitals/Drug Stores
Distributors
Information
Product
End Product Manufacturer
Raw Material Supplier
50
SCM Success Factor Effective and Timely
Information Management

• Successful SCM often times tied to
• coherent information technology strategy and
  appropriate architecture.
• information systems that diffuse organizational
  boundaries.
• Supply chain links suppliers, distributors,
  buyers, assemblers, etc. as virtual organization
• Embraces concept of the Inter-organizational
  Information Systems (IOIS)
• Systems that cross organizational boundaries.
• Requires technology that enables electronic link
  between organizations.
• Automates manual and paper-bound work.
• Earliest forms of these systems were time-sharing
  services, online databases, EFT, EDI.

51
Technology-based Applications for SCM

• Internet-based Ecommerce
• EDI
• Intranet/Extranet
• Traditional EDI
• Bar Coding and Scanning
• Data Warehouse
• Decision Support Systems

52
SCM Hype Cycle
53
Next Session Highlights

• Review of Supply Chain Concepts
• Reading Assignment covering first 3 sessions
• Introduction to Supply Chain Management
  Handfield Nichols Chapters 1 5
• Building B2B Applications with XML Fitzgerald
  Chapters 1