chapter 6 company-centric b2b. ck farn2 a,b 計畫 1999 年行政院 iaeb 推動方案 industrial...

Chapter 6

Company-Centric B2B

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A,B 計畫

1999 年行政院 IAeB 推動方案 Industrial Automation and E-Business 運用資訊科技提升產業競爭力第一優先：資訊業

補助 B2B 專案，以提升台灣資訊產業之競爭力

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A Plan

Major foreign computer buyers, with annual acquisition over US$3B

B2B EC to link up with local suppliers, expediting ordering cycles and Target: Compaq (7.5B), IBM (3.5B), HP

(3.5B), Dell (4.5B) 3 projects awarded: Compaq (TaiWeb),

IBM, HP (eMercury)

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B Plan

Local computer companies with revenue over NT$20B

To help at least 200 suppliers on-board a B2B application

25 projects awarded Mostly around e-Procurement

Other industries, projects funded by IDB,DOC and SMEA

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What’s Next

CDE plans Cash (eFinancing) Delivery (Logistics, track and trace, VMI) Engineering (Design, early involvement,

engineering change)

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Concepts and Characteristics of B2B EC

B2B EC defined Transaction conducted electronically

between business over the networksInternetExtranetsIntranetsPrivate networks (e.g., EDI)

Automated trading improves the process

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1600

1400

1200

1000

800

600

400

200

01998 1999 2000 2001 2002 2003

*source ： Forrester

CAGR=99%

CAGR=68%

B2B ECB2B EC

B2C ECB2C EC

Scale of EC

Billion

US

$

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Concepts and Characteristicsof B2B EC (cont.)

Market size and content Expected to grow from $1.1 trillion in 2003 to $10 trillion by

2005 Percentage of Internet-based B2B from 2.1% in 2000 to 10% in

2005 Tightly coupled supply chain vs. Loosely coupled

marketplace Production parts vs. MRO (maintenance, repair and

operations) Private and public e-marketplace

Private—one-to-many mode Public—many-to-many mode

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How is B2B conducted?Directly between buyer and sellerVia an online intermediaryAlong the supply chainWith or without intermediaries

Types of transactionsSpot buying—determined by dynamic supply

and demandStrategic sourcing—long term contracts

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Supply chain relationships Interrelated subprocesses and roles

Acquisition of materials Processing products and services Moving to distributors Purchase by consumer

Traditional process managed through paper transactions

B2B applications offer competitive advantages for supply chain management (SCM)

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Supply chain activities

Product design Time to market

Procurement Order fulfilling cycles 955 983 982 (for computer manufacturing)

Logistics Delivery cycle time

Payment Payment process cycles, financing, error rate

Service

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B2B modes of operations

Traditional EDI Electronic Data Interchange ISO/EDIFACT

Web-based Solutions Turn-key solutions

An system between in-house ERP and exchange services B2Bi

Business to business integration Application to application communications XML-based Process integration, eg. RosettaNet

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Problems

Supply NET instead of supply-chain 1-to-many vs. many-to-many connections Differences in processed

Power and trust Web-based

Many different interfaces B2Bi

Process integrations Solutions

Standard, and standard mechanism RosettaNet like, or eB-XML

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Entities of B2B EC Selling company—marketing management

perspective Buying company—procurement management

perspective Electronic intermediaries—optional third party

directory service provider (scope of service may be extended to order fulfillment)

Trading platforms—pricing and negotiation protocol (auctions, reverse auctions)

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Entities of B2B EC (cont.) Payment services—mechanism for transferring money to

sellers Logistics providers—logistics to complete transaction

(packaging, storage, delivery) LSP: Logistics service suppliers 3PL: 3rd party logistics

Network platforms—Internet, VAN, intranet, extranet ASP: Application service providers

Protocols of communication—EDI or XML RosettaNet- XML based process standard for electronics

Back-end integration—connecting to ERP systems, databases, functional applications

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Product (PDM) Customer Supplier Product process Transportation

Inventory Supply chain Competitor Sales and marketing Supply chain process

and performance

Information processed in B2B

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Electronic intermediaries in B2B Consumers and business may share intermediaries Businesses may use different intermediaries with different

suppliers Benefits of B2B models

Eliminate paper-based systems Expedite cycle time Reduce errors Increase employee productivity Reduce costs Increase customer service and partnership management

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B2B Models

Company-centric models Sell-side marketplace (one-to-many) Buy-side marketplace (many-to-one)

Many-to-many marketplaces—the exchange Buyers and sellers meet to trade

Trading communitiesTrading exchangesExchanges

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B2B Models (cont.)

Other B2B models and services For the purpose of selling For the purpose of buying Value chain integrators Value chain service providers Information brokers

Vertical vs. horizontal marketplaces Vertical—one industry or industry section Horizontal—service or product used in several types

of industries

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B2B Models (cont.)

Virtual service industries in B2B Travel and tourism services Real estate Electronic payments Online stock trading Online financing Other online services

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Selling Side: Auctions and Other Models

Forward auctions—quick disposal of items Revenue generation Increased page views Member acquisition and retention—bidding

transactions result in additional registered members Selling from own site when:

Large companies that conduct auctions frequently don’t benefit from using intermediaries

E-marketplace already in use, cost of adding auction not too high

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Selling Side:Auctions and Other Models (cont.)

Using intermediaries when: No resources required Own and control auction information Fast time to market

Searching and reporting Search and report all auction activities Standard reports available Additional analysis of complex information

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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

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Sell-Side Case:CISCO Connection Online (CCO)

Benefits—saves the company $363 million per year in: Technical support Human resources Software distribution Marketing material

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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

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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

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Benefits to customers Quick order configuration Immediate cost determination Collaboration with Cisco staff

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Sell-Side Intermediaries Marshall Industries—(a subsidiary of

AvnetMarshall) multinational distributor of electronic components known for its innovative uses of IT and the Web Products and services

MarshallNetMarshall on the Internet (portal)Strategic European InternetElectronic Design CenterPartnerNetNetSeminarEducation and News Portal

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Sell-Side Intermediaries (cont.)

Marshall Industries—a subsidiary or AvnetMarshall (cont.) Survival strategy

Continuous improvement programs and innovationsTeam-based organization, flat hierarchy,

decentralized decision makingProfit sharing compensation for salespeople

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Sell-Sid Intermediaries (cont.)

Marshall Industries—a subsidiary of AvnetMarshall (cont.) Survival strategy

CRM highly promotedWeb-based services create value between

suppliers and customersEC initiatives supported by:

– Changing internal organization– Changing internal procedures

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Boeing’s PART Acts as an intermediary between the airlines

and parts’ suppliers Provides a single point of online access

through which airlines and parts’ providers can access the data needed

Goal: provide its customers with one-stop shopping for online parts and maintenance information and ordering capability

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Boeing’s PART Spare parts business using traditional EDI

Mechanic tells purchasing department parts are needed, purchase is approved, purchase is made

Large airlines connect to Boeing's VAN Boeing finds part and delivers

Debut of PART on the Internet Encourages customers to order parts electronically—

cheap, easy, fast 50% of customers using Internet within first year

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Boeing’s PART Benefits of PART online

Improved customer serviceSignificant operating savingsNew sales opportunitiesCustomer service online reduced

– Phone calls (purchasing, order status etc.)

– Data entry

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Boeing’s PART Portable access to technical drawings/support

Boeing On Line Data (BOLD) provides availability to:

– Engineering drawings

– Manuals

– Catalogs

– Other technical informationPortable Maintenance Aid (PMA)—solves

maintenance problems

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Boeing’s PART Benefits to Boeing’s customers

Increased productivity—less time searching for information

Reduced costs—delays at gate reduced because all information is available

Increased revenues—faster service provides time savings

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Buy Side: One-from-Many,E-Procurement

Purchasing agents (buyers) Direct purchasing

Use of material is scheduledNot a shelf item

Indirect purchasingMROsNonproduction materials

Inefficiencies in procurement management of indirect materials

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Buy Side: One-from-Many,E-Procurement (cont.)

Innovative procurement management Innovative purchasing as strategic approach

to increase profit margins Web facilitation includes:

Electronic tenderingVolume purchasingAggregating supplier catalogs at buyer’s siteGroup purchasingOthers

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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

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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

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Direct vs. indirect sourcing Tools to automate purchasing goods

Direct or mission critical– 80% of manufacturer’s expenditure

– Long-term relationship with vendor of known quality goods

– Tight integration with suppliers along supply chain

Indirect—use of public exchanges for indirect sourcing

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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

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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

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Buy Side: Reverse Auctions (cont.)

Web-based reverse auction process Benefits:

Electronic process is fasterAdministratively much less expensiveEnables location of cheapest possible products

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Procurement Revolution at GE

Refer to Book

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Aggregating 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

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Group Purchasing

Group purchasing—orders from several buyers are aggregated 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

Or, order from sites scattered world-wide are aggregated

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Electronic Bartering

Electronic bartering Exchange of goods or services without the use of

money Exchange a surplus for other need Bartering exchange

Submit surplus to exchange for points Points used to buy what company needs

Benefits: Faster than manually Easier to match

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Collaborative Commerce (C-Commerce)

Web-based systems used between and among suppliers for: Communication Design: design for manufacurability, design

for maintenability Planning: CPFR- Collaborative forecast,

planning and replenishment Information sharing Information discovery

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Collaborative Commerce(C-Commerce) (cont.)

Reduce design cycle time by connecting suppliers: Adaptec, Inc. Microchip manufacturer supplying electronic

equipment makers Outsources manufacturing tasks Delivery times exceeded their competitors

Solution to the problem Extranet and enterprise-level supply chain integrated

software Significantly reduced order-to-product delivery time

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Collaborative Commerce(C-Commerce) (cont.)

Suppliers Distributors Overseas

Factories Customers

Reduce product development time by connecting suppliers: 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

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Extranet and EDI

Secure interorganizational networks Traditional EDI limits accessibility of

small companies Internet-based EDI offers wide

accessibility to companies around the world

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Integration

ERP software Customer, supplier, and other databases Legacy systems Catalog (product) information Inventory systems Sales statistics Decision support systems (DSS) and SCM

applications

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Integration (cont.)

Integration with existing information systems Issues in integrating with back-end information

systems: 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

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Integration (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 B2Bi

Requires strict industrial standards, e.g. Rosettanet

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Implementation Issues

Justification and prioritization Must conduct cost benefit analysis of proposed

projects Include organizational impacts

Possible channel conflicts Dealing with resistance to change due to processes

reengineering

Cost-benefit analysis related to: Finding B2B opportunities Prioritizing potential initiatives

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Implementation Issues (cont.)

Vendor selection Primary vendor uses its software and

procedures, adds partners as needed Integrator mixes and matches existing products

and vendors to create “best of the breed” Affiliate programs

Referral program Useful for B2B intermediaries

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Implementation Issues (cont.)

Implementing e-procurement Fit e-procurement into EC strategy Review and change procurement process itself If ERP or SCM is in place—integrate e-procurement, If not

in place—BPR before implementation Coordinate buyer’s information system with seller’s

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Managerial Issues

B2B marketing—sell-side marketplaces require advertisement and incentives

Which models to use and when—need for implementation strategies and prioritization

Purchase process reengineering (BPR) Establish buy-side marketplace on its server if

volume is big enough to attract major vendors Join third-party intermediary-oriented marketplace

if volume is small

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Managerial Issues (cont.)

Integration—trading in e-marketplaces is interrelated with logistics Particularly true in many-to-many exchanges Company-centric marketplaces must integrate:

Logistics Other support services

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Business ethics Accessing unauthorized areas in the tracing

system should not be allowed Privacy of partners should be protected

technically and legally

Auctions—both forward and reverse Benefits are substantial Implementation is relatively simple Considerable flexibility in implementation

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E-procurement—critical success factors Need to cut down number of routine tasks Reduce overall procurement cycle using

appropriate information technologiesWorkflow GroupwareERP softwareB2B models

chapter 6 company-centric b2b. ck farn2 a,b 計畫 1999 年行政院 iaeb 推動方案 industrial...

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