ECommerce: efulfillment, eprocurement and elogistics

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E-Commercee-fulfillment, e-procurement and
e-logistics
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What is e-commerce?

• Commerce transacted over the Internet
• Is product information displayed on the
  Internet?
  
• Is negotiation over the Internet?
• Is the order placed over the Internet?
• Is the order tracked over the Internet?
• Is the order fulfilled over the Internet?
• Is payment transacted over the Internet?

3
Existing Channels for Commerce

• Product information
• Physical stores, EDI, catalogs, face to face,
• Negotiation
• Face to face, phone, fax, sealed bids,
• Order placement
• Physical store, EDI, phone, fax, face to face,
• Order tracking
• EDI, phone, fax,
• Order fulfillment
• Customer pick up, physical delivery

4
Revenue Impact of E-Commerce

• Length of supply chain
• Product information
• Time to market
• Negotiating prices and contract terms
• Order placement and tracking
• Order fulfillment
• Payment

5
Cost Impact of E-Commerce

• Facility costs
• Site and processing cost
• Inventory costs
• Cycle, Safety, Seasonal inventory
• Transportation costs
• Inbound and outbound costs
• Information sharing
• Coordination

6
On-line Retailing 2002

• Ernst Young studied 7222 consumers 74
  companies in 12 countries
  
• Online purchases increasing in scale and scope
• over 2/3 surveyed bought on line in past 12
  months
  
• 96 shopped more often and purchased more
• On-line shopping beginning to affect store
  traffic
  
• Demographic profile of on-line shopper begin to
  resemble the typical middle-class on-land
  shopper
  
• Over half of all shoppers say they visit stores
  less often
  
• For high-cost, fragile, personal, perishable
  goods and low-cost commodity items, 38 consumers
  shop on-line but buy through another channel
  
• Consumers price-sensitive
• Different pricing structures exists for on-line
  and off-line operations on-line prices not
  necessarily lower
  
• Customer expect same merchandise assortments
  online and in stores, but only 44 of companies
  interviewed offer same SKUs online and on-land
  
• Customers most displeased with shipping costs
• No. 1 reason for abandoning a shopping cart
• 89 companies charge for delivery
• 11 operate delivery service as profit centre

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Challenges for Bricks--Mortar Stores

• According to John Quelch, London Business School,
  the five key factors affecting consumers
  patronage of a store are
  
• Product assortment (e.g. Amazon.com)
• Price
• Service (Touch and feel necessary?)
• Convenience of the shopping experience
• Ambience (Recommendations and reviews
  substitutes for browsing at Amazon.com.)
  
• How will the Internet impact on these factors for
  your target market?
  
• New ways to attract and engage customers
• Traditional Stores, salespeople, brands, direct
  mail, advertising in mass media
  
• New Web, touch-screen kiosks, electronic shelf
  displays, handheld shopping assistants,
  intelligent agents, etc. (Which will sustain?)
  
• Past successes
• 1936 shopping cart buy more than one can
  carry, shop less often
  
• 1980s UPC scanner faster and more accurate
  checkout, rich source of market data
  
• Past failures
• Interactive TV, CheckoutChannel, VideOcart

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Challenges for Bricks--Mortar Stores

• Retailers by-passed manufacturers (e.g. PG)
  sell and deliver directly to consumers
  
• Internet still a transaction-sales medium rather
  than a relationship-building medium
  
• Neiman-Marcus use Internet to augment its
  formidable personalised communication and service
  capabilities
  
• Customers want to transform simple needs into a
  new style, feeling, expression or lifestyle
  
• Karstadt Department Stores, Germany multi-media
  theme house concept (a la IKEA) ? My-World
  online shopping mall (1.2 million products)
  
• Are you capable of competing on the web?
• Can you create a seamless customer experience?
• e.g. Can customers return goods bought on-line to
  physical stores?
  
• Can you deliver the goods?
• Integrate IT systems for ordering, cash
  transactions, warehousing, shipping, etc.
  
• Ship faster, cheaper over longer distances?
• Karstadt uses its direct mail subsidiary for
  logistics
  
• Partner/Out-source logistics function (e.g.
  Nike-UPS)
  
• Ultimately, technology may change the outward
  appearance of the playing field, but the game
  remains the same.

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Supply Chain Models

• Supply management
• Supplier management (finding new sources,
  maintaining current relationships)
  
• Procurement (making purchase decisions)
• Inventory management (receiving, storing,
  controlling inventory)
  
• Order fulfilment
• Order capture (process of taking customer from
  the buy decision point through to successful
  data capture and checkout)
  
• Order processing (credit check, invoicing, pick
  list generation, etc.)
  
• Pick and pack (physical selection and
  assembly/customisation of goods, inspection)
  
• Ship (transporting goods from warehouse to
  customer)
  
• After-sales service and returns handling
• Level of outsourcing?
• eToys all in-house
• Calyx Corolla manages its supply
  relationships, outsource order fulfilment
  
• Amazon manages order fulfilment supply processes
  outsourced to ToyRUs
  

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Definitions and Measures of Key Supply Chain
Objectives
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E-fulfilment

• Dictionary satisfaction or happiness,
  achievement of that is desired
  
• (No mention of deliveries in a van?)
• Web pages of supply-chain related websites!
• Findel the integration of people, products,
  systems and processes to meet customer
  requirements before, during and after online
  purchasing.
• Traditional fulfilment houses
• Marketing or customer relations initiative
• Mass mailing of promotional materials or samples
• Mail order logistics
• E-commerce
• Web design and hosting, catalogue/content
  management, call centre management, order
  processing, credit checking and payment
  processing, goods sourcing, assembly and
  packaging, picking, delivery and returns.

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E-fulfilment challenges

• Information technology became powerful sales
  tools in e-commerce for products such as toys,
  books, CDs, etc.
  
• Enormous product selection
• Ability to suggest products (data mining)
• For products where touch and feel matter,
  e-tailing is more difficult
  
• How to try out a bed? A sofa?
• Virtual reality showrooms, interactive design,
  etc.
  
• Order fulfilment critical for e-commerce
• Late deliveries, damaged goods return, frustrated
  customers, etc.
  
• Fulfilment cost spiralling upward, inventories
  explode.
  
• Order fulfilment even more challenging for
  physically large consumer products that are bulky
  to ship, e.g. furniture, home appliances,
  bicycles, boats, etc.
• Managing the virtual supply chain -- Fundamentals
  important!

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Case Study Furniture

• Traditional Retailer
• Customer tries sofa in showroom, selects fabric
  from samples, places order.
  
• Retailer takes a deposit, passes order to
  manufacturer.
  
• Manufacturer orders fabric, schedule order into
  production cycle.
  
• After production, manufacturer ships batch of
  orders to a region.
  
• Retailer holds inventory local warehouse, does
  final assembly, touch-up, local shipment to
  customer.
  
• Retailer responsible for design assistance,
  after-sales service, repair and returns.
  
• Pure e-tailers
• Website include many manufacturers (typically not
  name-brands).
  
• Customer order by mouse-clicks.
• Internet firm transmits order to Manufacturer.
• Manufacturer schedules production.
• Internet firm arranges for a third-party
  logistics firm to co-ordinate delivery.
  
• Multiple handoff complicated if repairs needed.
  
  
• Return rates of 30 can bankrupt an Internet
  firm.

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Traditional Retailer vs. e-tailer

• Delivery
• Both limited by the manufacturer (e.g.
  custom-order fabric).
  
• Cost
• Sales
• Traditional showroom inventories.
• Web website design, advertising, IT assisted
  touchfeel, scalable?
  
• Fulfilment
• Transportation cost depends on volume and
  geographical density.
  
• Variety
• E-tailer has advantage, limited only by supplier
  relationships.
  
• Quality
• Traditional retailers repair goods locally before
  delivery to customers.
  
• For e-tailers, handoffs and out-sourcing reduce
  control over quality.
  
• If repairs out-sourced to third party, quality
  failures exposed to customer, and quality level
  lower? (since less concern for reputation for
  out-sourced repairer).
• Unconditional guarantee return rate?

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Other Supply Chain Structures

• Pure e-tailers with warehouses
• Typically stock fast-moving, smaller products,
  not customised.
  
• Process identical to pure e-tailer for
  custom-ordered products (e.g. sofa)
  
• Warehouse provide facility for
• Repairs (thus reducing external quality
  failures),
  
• Returns to be processed and re-sold,
• Inventory (enabling shorter order delivery lead
  time, transportation cost consolidation).
  
• Manufacturer Direct
• Channel conflict for existing name brands with
  retail outlets?
  
• Resistance from traditional retailers customer
  visit showroom, then order on-line.
  
• Niche player? Market segmentation?
• Cost and delivery issues similar to e-tailers.
• Returns can be sent back to factory for repairs.
• Product variety limited
• Retailers on the Web
• Ethan Allen Customer can visit the showroom (300
  in U.S.) and order on-line, manufactured sofa
  shipped to closest retail store, which handles
  repairs and local delivery (gets 10 commission).
  Showroom visited by customer gets 25
  commission.
• Allows 24-hour shopping and local service.
• Consortium Internet for ordering and answering
  customer inquiries, partnership with local
  retailers.

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Comparison of Order Fulfilment Costs
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Core Concepts for Efficient e-Fulfillment

• Improving the use of information
• Leveraging existing resources

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Cutting-edge Companies Using Cutting-edge
Techniques
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Using the Right Strategy
Suitable environment
Suitable products
Strategy
Information-based logistics-services provider and
timely order information are available
High-value, bulky items with uncertain demand
Logistics postponement
Information infrastructure has sufficient capacity
Information-content goods
Dematerialization
Distributed and substitutable stocks are
available for pooling
Low-value, high-shipping-cost item
Resource exchange
High delivery-value density (DVD) in an existing
delivery network is available
Non-bulky items with stable demand
Leverage shipments
High DVD to conveniently located physical outlets
is available
Easy-to-carry items with higher value
Clicks-and-mortar
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The State of Retailing On-line

• 2003 breaking even
• operating margin of -16 in 2002
• 79 of on-line retailers profitable in 2003
• 2004
• 6.5 of total retail sales
• 24 growth outpaces the 7 in traditional retail
• 2005 Major growth sectors
• Travel (US60.9 billion, up 20)
• Apparel (US12.2 billion, up 36)
• Computer hardware and software (up 36)
• Sources Forrester Research, ClickZ.com

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Channel Integration

• According to Forrester Research annual study of
  150 retailers (2003)
  
• Retailers believe 24 of offline sales influenced
  by the Web.
  
• 87 of retailers accept in-store returns of
  on-line purchases
  
• One in 4 consumers also makes additional purchase
  in the store !
  
• Cross-channel promotion
• 77 of retailers collect e-mail address at their
  (bricksmortar) stores
  
• 66 of retailers surveyed in 2004 provide
  printable coupons on websites that can be
  redeemed in stores
  
• 53 of retailers enable sales staff to place
  online orders for customers

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Lessons for E-tailing

• R. Burke, Indiana University
• Use technology to create an immediate, tangible
  benefit for the consumer
  
• Camera to recognise customers (invasion of
  privacy) now used to recognise vegetables
  
• Make the technology easy to use
• Execution matters prototype, test, and refine.
• Recognise that customers response to
  technologies vary.
  
• Build systems that are compatible with the way
  customers make decisions.
  
• Cereal grouped by ingredients customer only know
  brand names
  
• Study the effects of technology on what people
  buy and on how they shop
  
• Customer less price-sensitive when info on goods
  shown graphically than text-based
  
• Co-ordinate all technologies that touch the
  customer.
  
• Revisit technologies that failed in the past.
• Use technology to tailor marketing programs to
  individual customers requirements.
  
• Build systems that leverage existing competitive
  advantages.
  
• Technology is just a platform for change. How we
  use it to create value for the customer is what
  determines the future.
  

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Keys to Winning the Last Mile

• Understand your product characteristics
• Where are your customers, and what are the
  delivery-value densities?
  
• What level of demand uncertainty exists for your
  product?
  
• What fraction of your products can be
  dematerialized?
  
• Understand your environment
• What is the existing physical infrastructure in
  customer regions?
  
• What information networks are available?
• Are there available information-intensive
  logistics-service providers?
  
• Formulate your options
• Use as much as dematerialization as possible
• Use information to coordinate your deliveries
  intelligently
  
• Explore potential links to existing
  infrastructures and partnerships for leveraged
  resources
  
• Assess you options
• Consider costs, efficiency, reliability and
  risks
  
• Identify additional values and services that can
  be offered to customers
  
• Explore synergies between online and offline
  order fulfillment

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E-procurement
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B2B E-Business
B2C
Suppliers
Manufacturers
Distributors
Retailers
Consumers
B2B
B2B
B2B
B2C

• Business Purchases/Procurement

Logistics Fulfillment Mechanism
Types of Purchases
Products
Suppliers
Maintenance, repair, operating
(MRO) goods (Office supplies,
spare parts, airline tickets)
1. Operating Inputs
Not industrial specific (horizontal)
General (UPS)
2. Manufacturing Inputs
Industrial specific (vertical)
Raw materials, components
Specialized
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Traditional B2B Trading Exchanges
Industrial Buyer
Manufacture Rep.
Manufacture Rep.
Manufacture Rep.
Supplier 1
Supplier 2
Supplier 3
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Internet Based B2B Trading Exchanges
Industrial Buyer
E-Marketplace
Supplier 1
Supplier 2
Supplier 3
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Revenue/Cost Impact of B2B E-Business

• Revenue impact

-- Suppliers can access more buyers result in
a larger customer base -- Better information shar
ing, less degree of bullwhip better customer
service -- Facilitate fast funds transfer -- Bu
yers can access more suppliers market becomes
more competitive, may lower purchasing price

• Cost impact

-- Eliminate sales /purchasing reps, smaller
purchasing/sales department lower l
abor associated inventory cost
-- Require larger investment in IT
infrastructure -- Reduce transaction costs -- Pa
ying transaction fees for using E-marketplace
software provided by a third party (e.g. Free
Markets Online)
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B2B E-Marketplace Transaction Models
Sellers
One
Many
AUCTION
EXCHANGES
Many
EBay
Exostar
Buyers
EDI
REVERSE AUCTION
One
WalMart/PG Dell/Suppliers
FreeMarkets Online (Ariba)
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Types of (Single Item) Auctions

• English auction
• Open bidding
• Ascending price
• price raised successively until one bidder
  remains
  
• Last bidder wins at final price
• Dutch auction
• Price lowered continuously
• First bidder who calls out that accepts the price
  wins at that price
  
• (First-price) sealed bid auction
• Bidders submit bids without seeing others bids
• Object sold to bidder with highest bid at her bid
  price
  
• Vickrey auction
• Bidders submit bids without seeing others bids
• Object sold to bidder with highest bid
• Winner pay second-highest bidders bid price

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Combinatorial Auctions

• Multi-items
• Bidders may bid for a subset of the items
• Value to bidder depends on the collection of
  items received (Synergistic effects)
  
• Sequential or simultaneous auctions?
• Bidding strategies?
• Allocation of items to bidders?
• Fairness?
• Maximize revenue?

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What is Reverse Auction?

• One buyer many suppliers bidding using software
  distributed through the Internet
  
• The bidders can see the low bid at all times (but
  not identity of low bidder)
  
• Closed bidding period with conditional extension
• Sellers and buyer observe outcome on-line real
  time
  
• Third party supplier provides auction tool
  (software) and runs the auction.

Seller 1
Buyer
Seller 2
Seller 3
Seller 4
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What is Exchange/Aggregator?
Seller 1
Buyer 1

• Exchange

• Online intermediary connecting
• many buyers and many suppliers
• with similar or complimentary needs
• Exchanging information, buying and
• selling products

Seller 2
Buyer 2
Exchange or Aggregator
Seller 3
Buyer 3

• Aggregator

• Similar to Exchange
• Multiple buyers (sellers) bundle
• together to increase buying
• (selling) power

Seller 4
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Example Exostar

• Launched by BAE Systems, Boeing, Lockheed,
  Raytheon in 7/2000
  
• Internet Trading Exchange for the aerospace and
  defense industry
  
• Provides a long list of services. More than an
  auction or E-Procurement server

E X O S T A R
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Exostar Member Benefits

• Significant cost reductions. Streamlined
  transactions and simplified
  
• internal processes accelerate buying and
  selling cycles and reduce
  
• demand on internal resources
• Stronger buyer-supplier relationships. As a
  member, you are invited
  
• into an exclusive community of your peers,
  where relationships are
  
• easier to develop, maintain and strengthen
• Simpler, clearer communications. The Exostar
  networks standardizes
  
• and streamlines communication between buyers
  and suppliers.
  
• Forms, orders and management processes are
  consistent, ensuring
  
• clearer communications and increased efficiency
  for your team
  
• Priority access to new products and services now
  in development.
  
• From engineering and design resources to
  production, logistics
  
• and marketing applications and resources

Source www.exostar.com
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Auction versus Exchange
Auction Reverse Auction
Mainly for driving down prices
One time deal
Mainly for reducing transaction costs improvin
g supply
chain coordination
Exchanges Aggregators
Long term collaboration
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On-line Auction vs. Exchanges/Aggregators

• On-line Auction Works Best When
• Products are commodities or near commodities and
  can be traded sight unseen
  
• Trading volumes are massive relative to
  transaction costs
  
• Buyers and sellers are sophisticated enough to
  deal with dynamic pricing
  
• Companies use spot purchasing to smooth the peak
  and valleys of supply and demand
  
• Exchanges/Aggregators Works Best When
• Products are specialized, not commodities
• Purchasing is done through pre-negotiated
  contracts
  
• Long-term relationships are important

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B2B Software Vendors

• Oracle
• i2 Technologies
• Manugistics (acquired by JDA Software in 2006)
• Ariba
• Commerce One (bankrupt in 2004, acquired by
  Perfect Commerce in 2006)
  
• Agile (acquired by Oracle in May 2007)
• VerticalNet/B2eMarkets

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E-procurement Systems

• Software applications to automate, streamline and
  support purchases
  
• Used typically for non-production materials
  (office supplies, computer equipment, business
  travel) 35 to 60 of expenditures of a firm!
  
• Benefits
• Lower prices paid for goods and services
• Reduce administrative costs
• Shorten acquisition cycles
• Reduce maverick (off-contract) spending
  increased use of preferred suppliers
  
• Improve inventory management
• Improved data gathering and reporting on
  expenditures
  
• Enhanced negotiation leverage with suppliers
• Growth in sale of such systems predicted in
  2001, only 10 of 5000 largest companies have
  bought e-procurement systems
  
• Challenges and Areas of improvement needed
• Streamlined catalogue management better supplier
  enablement
  
• Lack of policies and controls to drive
  compliance
  
• Integration with other systems (payment,
  logistics, other business applications, etc.)
  
• Cost, maintenance and user-training for
  e-procurement systems

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E-procurement The Reality 2004

• Aberdeen E-procurement Benchmark Report,
• study of 150 enterprises using e-procurement

Table 1 E-procurement Impact (Average
Performance)
Source Aberdeen Group, December 2004
42
Table 2 E-procurement Performance 2001 vs. 2004
(Average)
Table 3 E-procurement Costs 2001 vs. 2004
(Average)
Source Aberdeen Group, December 2004
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E-procurement The future

• Strategies of companies reaping the greatest
  benefit
  
• Elevated e-procurement from a tactical
  transaction management activity to a strategic
  source-to-pay initiative for driving compliance
  
• Secured senior executives support and policy
  changes to drive system adoption and compliance
  
• Shifted supplier enablement and catalog
  management tasks to supplier networks or catalogs
  hubs managed by e-procurement vendors or another
  third party
• Clearly defined reinforced cost, processes, and
  performance metrics for measuring e-procurement
  success
  
• Other Strategies recommended
• Extend process breath and category coverage
• Leverage spend data for improved sourcing and
  compliance management
  

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E-Logisticsinternet impact to logistics
management
45
Challenges in Logistics Management

• Challenges
• Poor information flow
• Poor customer services
• High paper intensity, low-tech interactions
• Missing, inaccurate documentations
• Lack of alternatives
• Scheduling difficulties
• High prices
• Lack of qualified people

Source 2001 Mercer Management Consulting Survey,
in concert with Optimum Logistics and theJournal
of Commerce
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Distribution Logistics

• make the right quantities of the right product
  or services available at the right place at the
  right time.
  
• Function of intermediaries in the distribution
  channel
  
• Re-assortment/sorting (consolidation/breakbulk)
• Routinize transactions (transport, lot-size,
  payment)
  
• Facilitate searching (matching buyers and
  sellers)
  
• Impact of Internet E-Commerce on the distribution
  channel?

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Impact of Internet on Distribution Channel

• The Death of Distance
• Distance no impact on electronic communication
  and electronic delivery
  
• The Homogenization of Time
• Website open 24/7, no seasonality
• Seller need not be awake or present to serve
  buyer
  
• The Irrelevance of Location
• Web accessible from any place on earth
• Retail location not important or even necessary
• From marketplace to marketspace
• Content? Context? Infrastructure?

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Marketplace vs. Marketspace

• Conventional Bookstore
• Content
• Sell books
• Context
• Shop (physical space) with shelves and tables
  (and a café?)
  
• Infrastructure
• Retail space with display and large stock of
  books, helpful (human) staff
  
• Convenient location, pleasant surroundings, high
  traffic

• Amazon.com
• Content
• Provide information about books
• Context
• Interface via a screen
• Infrastructure
• Hugh database, fast (computer) server
• Warehouse stocks no books yet stocks all books
  in print
  
• Location immaterial

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Long term effects of E-Commerce

• Distribution media instead of distribution
  channel
  
• No longer passive conduits for products but
  active element in the production and market
  transaction of goods
  
• Rise in commoditization
• Information availability minimizes price
  differentiation
  
• Drives towards mass customisation
• Disintermediation and Reintermediation
• Insurance brokers and travel agents bypassed
• New intermediary search engines, auction sites,
  call centres, etc.

50
Supply Chain Technology Evolution
Intra-Enterprise Transactional Integration
Intra-Enterprise Transactional Optimization
Inter-Enterprise Transactional Integration
Inter-Enterprise Supply Chain Execution
Real time Supply Chain Optimization
51
What is e-logistics?
E-Logistics Information Liquidity
The ability to acquire and use information when
it is needed, what is needed, and in an
appropriate context
52
The Grand Vision of Global E-Logistics
Suppliers, manufacturers, distributors, packaging
plant, etc.
Banks, credit authority Invoicing, funds transf
er
Carriers, ship, truck, etc. Transport manifests,

insurance contracts.
Freight forwarders, 3PL Import/export declaratio
n,
quota compliance, etc.
Customs Office, Inspection Authority, Certifica
te of Origin Issuer,
Customs brokers.
Source Stephens Inc.
53
E-Logistics Services
Marketplace, Execution and Collaboration

• Freight exchange/auction
• Purchasing portal
• Automated billing and settlement
• Lane optimization
• Documentation
• Automated booking
• Service failure notification and resolution
• Automated tracking and tracing
• International trade compliance and landed costs
• Product development collaboration
• Pricing, revenue and profitability management
• eMarketing
• eFulfillment
• Data mining (performance management)

54
E-Logistics Value Proposition

• Logistics exchanges will bring price efficiency
  to the most segmented market
  
• Load matching and other optimization tools will
  improve asset utilization
  
• Integrated supply chain execution and
  collaboration tools will dramatically reduce
  business interaction costs and achieve a leaner,
  quicker and more reliable supply chain
• Collaborative product development and revenue
  management tools will allow business to improve
  its return on investment
  
• eLogistics will greatly improve the industrys
  information liquidity

55
E-Logistics PlayersSystem Providers Turned
e-Logistics Service Providers

• Players in the space - examples
• Manugistics, Manhattan Associates, EXE
  Technologies(SSA Global), Descartes, SAP, JD
  Edwards/PeopleSoft/Oracle, Siebel Systems,
  
• Strengths
• Domain knowledge, Proven solution components,
  Customer base, Critical mass, Existing
  partnership, Established
  
• Weaknesses
• Old tech infrastructure Have to teach an old
  dog new tricks?

56
E-Logistics Players DotComs

• Players in the space abound
• Aspen Associates, Capstan.com, Celerix.com,
  Clear Cross, DigiLogistics, Logistics.com,
  FreightWise, NTE, Global Freight Exchange, iShip,
  myCustoms, RightFreight, Savi Technologies,
  Nistevo, SameDay, Tradiant, Vestera, Retek, ,
  Ariba, FreeMarkets
  CommerceOne, PurchasePro,
• Strengths
• Tech savvy, Faster in product development,
• Weaknesses
• E-Logistics network takes time and money to
  build, Lack of funding, Challenge in building
  customer trust, Shifting from heavy
  transaction-fee-based business model to
  value-added model,

FreightWise/NTE,
OpenHarbor,
GT Nexus,
57
Freight Exchanges
after the dust settles
Dot.com vision perpetual on-line global
exchanges, carriers and shippers bid for
match-ups, the exchanges take a commission.

• Reality Smaller in scope and more focussed
• Long-term ( 1 yr) tenders rather than day-to-day
  match, (FreightTraders)
  
• Private cooperative community of traders rather
  than open auctions and exchanges.
  
• Membership fees and transaction (e.g. search)
  fees, not commissions (Teleroute)
  
• Value-added service invoicing, POD processing
  and credit risk (X4freight)
  
• Web-enabled software services, not exchange.
  (eLogistics)
  
• Niche e.g. same-day courier-style deliveries,
  value-added service, e.g. mobile communications
  for proof of delivery and postcode lookup
  (Courier Exchange)

58
Driving Force for e-global logistics

• Government regulatory pressure
• Global customs modernization convention
• International Trade Compliance U.S.
  Exporter/Importer of Record Rules, Ocean Shipping
  Reform Act
  
• Security regulations C-TPAT (Customs Trade
  Partnership Against Terrorism), 24-hr advance
  manifest
  
• Market pressure
• Globalization of trade
• E-Commerce
• Internal operational pressure
• Demand for better customer service
• Demand to minimize duty and tax payments

59
Business Process of an International Trade
Source Stephens Inc.
60
Market Opportunities for e-global logistics

• Global sourcing
• Searching trade leads
• Buyer/supplier screening and qualification
• Contract negotiation
• Global logistics
• Arrange international shipping
• Customs clearance
• Document preparation
• Shipment of goods
• Global settlement
• Credit management
• Financing and settlement

(See handout from Stephens, Inc.)
61
Hong Kong

• Electronic Transactions Ordinance (2000)
• Give electronic records and digital signatures
  used in electronic transactions the same legal
  status as that of their paper-based counterparts
  and
• Establish a framework to promote and facilitate
  the operation of Certification Authorities (CAs)
  so as to ensure trust and security in electronic
  transactions.
• Public Key Infrastructure (PKI) Certification
  Authorities (CA)
  
• HongKongPost, DigiSign (subsidiary of Tradelink),
  HiTrust.com
  
• Tradelink
• Joint venture of HKSAR Government and private
  firms
  
• Facilitate electronic transactions between
  businesses and HKSAR government
  
• Import/export declarations, certificate of
  origin
  
• Automated manifest service for the 24-hr rule for
  U.S. Customs
  
• Customer base of 53000 companies, 80000
  transactions per day

62
Hong Kong the future

• Closer Economic Partnership Arrangement (CEPA)
• Trade liberalisation, zero-tariff for 273
  categories of import to China
  
• E-logistic services JingMaoLink, China-HongKong
  Cargo Manifest Interface, Road manifest (ROMAN)
  
• Pan-Asian E-Commerce Alliance
• Secure Cross Border Trade Transaction Service
• pilot between Hong Kong, Japan, Korea, Singapore
  and Malaysia
  
• Digital Trade and Transportation Network (DTTN)
• Hong Kong Logistics Council initiative
• neutral, open, non-exclusive, transparent
  electronic document exchange
  
• 1) Standards and protocols
• 2) Core message infrastructure
• 3) Value-added service
• Tradelink to be non-exclusive DTTN service
  provider
  
• launched in 2006, 40 members so far

63
Integrated e-logistics service

• Streamlined information flow for planning
• Seamless integrated Logistics Management and
  Enterprise Resource Planning function
  
• Real-time tracking and exception reporting

(From DigiLogistics.com Ltd.)
64
E-logistics systems

• Business benefits
• On-time delivery and fulfilment, lead-time
  reduction
  
• Customer service improvements increased
  collaboration and co-ordination
  
• Increased sales
• IT benefits
• Reduced time for data entry, management and
  integration
  
• Plug Play, easy integration with existing and
  third-party systems
  
• Transaction processing and monitoring
• Network effect benefits
• Lower transportation cost, improved capacity
  utilisation
  
• Flexible and responsive supply chains
  (co-mingling, merge-in-transit)
  
• Single point of connection for participants

65

• References
• H. Lee and S. Whang, Winning the Last Mile of
  E-Commerce, MIT Sloan Management Review, Summer
  2001, 54-62.
  
• R. F. Maruca, Retailing Confronting the
  challenges that face bricks-and-mortar stores,
  Harvard Business Review, July-August, 1999.
  
• Global Online Retailing Report, Ernst Young,
  2001.
  
• e-procurement Finally ready for prime time,
  Aberdeen Group, Inc., Boston, MA, USA. (2001).
  
• P. Rowlands, The art of getting it there Are
  fulfilment and e-fulfilment the same?
  (Editorial), e.logistics Magazine, March/April,
  2003.
• D.F. Pyke, M.E. Johnson and P. Desmond,
  e-fulfillment Its harder than it looks,
  Supply Chain Management Review, October, 2003.
  
• The E-procurement Benchmark Report Less Hype,
  more Results, Aberdeen Group, Inc., Boston, MA,
  USA. (2004).
  
• e-Global Logistics The Engine Powering
  Globalization, R. Y. Roberts, Industry Report,
  Stephens, Inc., November, 2000.
  
• Freight exchanges Finding their second wind?,
  e.logistics magazine, Spice Court Publications
  Ltd., January, 2003.