Y Narahari, Computer Science and Automation, India

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B2B MARKETPLACES AND E-PROCUREMENT
Y. NARAHARI Computer Science and
Automation Indian Institute of Science Bangalore
- 560 012 hari_at_csa.iisc.ernet.in http//www.csa.ii
sc.ernet.in
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OBJECTIVES OF THE TALK

• To bring out and understand the "important" role
  of electronic marketplaces in supply chain
  management
• To understand "critical" design and
  implementation issues of E-marketplaces
• To understand the issues in E-procurement

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OUTLINE OF THE TALK

• Introduction
• How do they add value?
• Design Issues
• E-Procurement

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ELECTRONIC MARKETS

• E-marketplaces are emerging to serve each point
  of every industry's supply chain
• E-markets are highly collaborative E-Business
  models that organize complex business processes
  between multiple participants into a virtual
  commerce community

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E-MARKETPLACES VALUE CREATION

• efficient transactional processes
• new business relationships
• new business models
• new businesses

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E-MARKETPLACES CATEGORIES

• Horizontal
• Vertical
• Private (sell side, buy side)
• Public

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EMERGENCE OF E-MARKETS

• Alliance of IBM - i2 - Ariba
• Alliance of GM - Ford - Chrysler
• Alliance of mySAP- Commerce One - Oracle
• chemdex, plasticsnet, e-steel, paperexchange,
  metalsite, capacityweb, mro, bandx, logisticsweb,
  etc.
• In India Indiamarkets.com, eBizchem.com,
  Autoexchanges

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E-MARKETPLACES A TAXONOMY
What is Bought
How it is bought
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BENEFITS TO BUSINESSES

• Extend the presence and reach of a company
• Facilitate doing business with anyone, anytime,
  anywhere
• Aggregation of content and facilitation of
  workflow lead to significant reduction in
  transaction costs
• Cycle times are reduced and deliveries are
  quicker
• Improves relationship with trading partners
• market efficiencies
• Better inventory management
• Better visibility leading to predictability

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BENEFITS TO BUYERS

• Aggregation of multiple suppliers
• Direct access to suppliers and through dynamic
  pricing
• Location and tracking of new suppliers
• Provides more negotiating power
• Leads to quick response buyers

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BENEFITS TO SUPPLIERS

• Provides reach to vast, untapped global markets
• True value of products can be realized through
  aggregation and participation of buyers
• Enables to support JIT practices
• Leads to quick response suppliers

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E-MARKETS DESIGN ISSUES

• NEGOTIATIONS
• Distributed Negotiations
• Integrative Negotiations
• Auctions
• DESIGN OF USER INTERFACES

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E-MARKETS DESIGN ISSUES

• ALGORITHMS
• Buyer Aggregation
• Supplier Aggregation
• Demand Aggregation
• Buyer-Seller Matching
• Dynamic Pricing
• Multi-Attribute Auctions
• Combinatorial Auctions

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EXAMPLE OF A MARKET ALGORITHM

• 3 BUYERS and 4 SUPPLIERS
• Buyer X (50 A, 10 B)
• Buyer Y (20 B, 30 C)
• Buyer Z (40 A, 20 C, 10 D)
• BUNDLING
• Bundle 1 (90 A) Negotiated contract
• Bundle 2 (30 B, 50 C) Sealed bid auction
• Bundle 3 (10 D) Dynamic auction

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EXAMPLE OF A MARKET ALGORITHM

• Sealed Bid Combinatorial Auction
• Supplier P (10 B, 10 C, p)
• Supplier Q (30 B, q)
• Supplier R (50 C, r)
• Supplier S (20 B, 50 C, s)
• An optimization algorithm decides the best bids
  and handpicks the optimal subset of bids, based
  on cost, delivery times, etc.

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E-MARKETS DESIGN ISSUES

• TECHNOLOGY
• Authentication and security
• Electronic payment
• Software architecture
• Distributed objects
• Agents and mobility
• Scalability
• Interoperability

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E-MARKETS DESIGN ISSUES

• INTEGRATION
• with existing best practices
• with existing business processes
• with existing catalogs
• with ERP software
• with the backend
• with other E-markets

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E-MARKETS SOFTWARE ARCHITECTURE
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E-PROCUREMENT

• All activities involved in obtaining materials
  and services and managing their inflow into an
  organization toward the enduser
• Basic steps
• Information
• Negotiation
• Settlement

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EMERGENCE OF E-PROCUREMENT

• Electronic catalogs
• Internet search engines
• Web-EDI
• On-line auctions and bidding
• Advances in E-commerce

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E-PROCUREMENT PROCESS
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BEST PRACTICE E-PROCUREMENT SYSTEMS

• Dell online (Ariba Buyer)
• Cisco
• Enron corporation (mySAP and Commerce One)
• Lockheed Martin (mySAP)
• GE capital (i2 Buyside solution)
• Defense Logistics Agency
• Lawrence Livermore Laboratories

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E-PROCUREMENT VALUE ADDITIONS

• Demand aggregation
• Bundling and supplier aggregation
• Optimal vendor selection
• Innovative dynamic auctions
• Multi-attribute decision support

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CONCLUSIONS

• E-markets are key to faster and more efficient
  trade
• E-markets have a positive influence all through
  the supply chain
• There are challenging technical and
  technological issues in setting up and operating
  E-markets
• E-procurement has emerged in a big way