Ec elim purch

R=IQi

Will eCommerce Eliminate Purchasing?

Copyright The ProAction Group 2001

Agenda

Purchasing today, Sourcing tomorrow eCommerce to Business eBenefits eCosts and eRisks eNext steps Purchasing, eliminated or revolutionized?


Purchasing Today

75% of time spent on transactional tasks– Order placement– Order tracking– Expediting orders– Claims processing– Invoice payment and audit– Validating perpetual inventory– Bill of material creation / re-creation– Inspection


Sourcing Today and Tomorrow

Select capable suppliers & build relationship Lay foundation of information exchange

– Trust & connectivity Provide suppliers what they need to leverage

their infrastructure for you:– Commitment of supply– Demand visibility– Strategic plans– Customer needs


Sourcing Today and Tomorrow

Align processes to take advantage of tools and technology

Measure and reward– The supplier– Your organization– The supply chain (or the supply grid!)

Prepare and support change– Leverage supplier expertise


The Plan Must Tie to the Organization’s Interests

Customer AND Shareholder

“Nothing is worse than doing efficiently what should not be done at all”

Peter Drucker


Strategic Sourcing C r a n i u m

F a c e

M a n d i b l e

C l a v i c l e

S te r n u m

S c a p u l a

H u m e r u s

R a d i u s

U l n a

I l i u m

S a c r u m

P u b i s

I s c h i u m

V e r te b r aD i s k

C o c c yx

C a r p a l s

M e ta c a r p a l s

P h a l a n g e s

F e m u r

P a te l l a

F i b u l a

T i b i a

Ta r s a l s

M e ta ta r s a l s

P h a l a n g e s

C a l c a n e u s

C e r v i c a l ve r te b r a e

R i b

S k u l l

S h o u ld e r g i r d le

U p p e r l im b

Th o r a x

S p in a l c o lu m n

P e lvi s

L o w e r l im b

F o o t

H a n d

SKELETON, ANTERIOR VIEW

(Skeleton)

(Muscles)

(Eyes / Senses)

(Skin)

(Brain)


Paradigm Shifts

Utility

Time

Push - Supplier to Customer

Pull - Customer from Supplier

eBusiness supply chain demand visibility - End User POS to mother earth Supplier


A Paradigm Shift


CAPS - Future of Purchasing & Supply - 5 & 10 Year Forecast

The Internet will become the backbone of electronic order communication and metrics publishing.

Systems for low strategic value purchases will emphasize electronic efficiency

Tactical purchasing will become more automated and consortia and third-party purchasing will become more prevalent– head counts will be reduced

The Internet will be the front end for proprietary information systems, combining databases accessible by suppliers, purchasing, and customers, to create a seamless link

Internet commerce will be commonplace and businesses that do not adopt the world of e-commerce will be faced with extinction


The Role of the Web

1,000’s of Buyers - each with their own system

1,000’s of Suppliers - each with their own system

VERY COMPLEX


The Role of the Web

1,000’s of Buyers - each with their own system

1,000’s of Suppliers - each with their own system

The WEB


eCommerce to Business

Web storefront Web marketing Integrated selling

Catalog searching Individual to

supplier

Unassisted selling (VMI)

Personalized marketing

ERP / Legacy integrated

Web configurator Community to many

suppliers

V=C^i ™


Companies Address Business

Enterprise procurement– Ariba, Commerce1– Suitable for large companies

Vertical marketplaces– Independent Funeral Director’s Cooperative, Chemdex,

PlasticsNet, Vertical Net Community Sourcing

– 3PLEX (Sourcing capacity / shipments)– Creates a “virtual Fortune 100” company

Research and Sourcing– Find– Qualify– Obtain quotes


The Purchasing Community

Multi-Company Purchasing Volume

Sister Company Sister Company Sister Company

Division Division Division Division Division Division

Location

Location

Location

Location

Location

Location

Location

Location

Location

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Dept

Location

Depth of boxes determined by time factor negotiated (zero depth for spot buying)

Volume - units

Time


eStatistics

1997: B to B: $8B 1999: B to B: $137B (Yankee) 2002: B to B: $327B (Forrester) 5% savings increases profits 28%

(Killan)


eBenefits

eBusiness saves money eBusiness reduces inventory eBusiness provides good service eBusiness provides good information quickly eBusiness makes other systems more effective eBusiness provides a new set of internal controls eBusiness simplifies administration


The Ink is InDellible

“In the future, it will be possible for component suppliers to have a direct window into factory workflow via the Internet. This will enable them to use information to deliver parts in real time, essentially eliminating inventory and further accelerating the pace of commerce.”

Michael Dell, Chairman of the Board and CEO, Dell Computer Corp.


eBenefits

Global 24 x 7 Incremental revenues w/o incremental costs Personalized Customers receive information when it’s

convenient for them Reduced in-house customer service

requirements Provides backbone for multi-link demand

visibility


eBenefits (con’t.)

Up-to-minute information 70% of calls placed to companies are:

– What is the price of the product?– Is the product in stock?– What’s the status of my order?

(source: Open Market)

All can be answered with no marginal cost via the internet



Orders placed can be verified for accuracy (algorithms)

Confirm order placement / shipment system to system

Use systems to audit andprocess payments



Reduce #, frequency, size of physical catalogs

Internet catalogs can be:– Searched – Views analyzed– Secured– Personalized by individual / dept /

company / group– Updated with not printing or postage costs


eBenefits (con’t.) Web sites tracking

– Where views come from– Path traverse through the site– Where they leave from– How long they stay– Page views

Integrate with existing systems– Inventory control– Order processing– Fulfillment– Customer service– Accounts payable– Cash forecasting


eCosts

System integration System development (primarily borne by

suppliers) Re-engineering process to enable company

to take advantage of e-business Change management


eRisks

Faster communication reduces option to rethink decisions

Internet security If implemented without holistic approach,

benefits may not materialize Requires specific set of internal controls Requires acceptance of paperless

purchasing


eNext

Understand the capabilities of eBusiness Select an approach to eBusiness (enterprise,

vertical, community) Review sourcing tasks and company needs Select capable suppliers and applications Reengineer processes to capitalize on new

tools and suppliers Test, implement, and monitor


Sourcing Approach

Critical Product FamilyNon-Critical Product Family

Low Dollar Volume

High Dollar Volume

• Community Purchasing

• Outsource to Primary Supplier

• Integrated Supplier

• Supplier Alliance• Community

Purchasing• Integrated Supplier

• Strategic Supplier Alliance Supported by eBusiness

• Supplier Alliance• Approved Supplier

Lists


eNext

Understand the capabilities of eBusiness Select an approach to eBusiness (enterprise,

vertical, community) Review sourcing tasks and company needs Select capable suppliers and applications Reengineer processes to capitalize on new

tools and suppliers Test, implement, and monitor


“The Web is an insidious process-reengineering tool” Graeber Jordan, Boeing


Eliminate or Revolutionize?

Eliminate– Purchase orders– Invoices– Checks– Order tracking phone calls– Order taking

Revolutionize– Inventory management– Product evolution– Distribution options– Expanded community– Internal controls– Order process

One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.

— Elbert Hubbard


From

Thanks! Do not hesitate to call us with any questions

Timothy Van [email protected]

www.proactiongroup.com

mailto:[email protected]

http://www.proactiongroup.com/


References

VanMieghem, Timothy, Implementing Supplier Partnerships. New York. Prentice Hall, 1995.

Anthony J. Bingham, director of operations, Apartments.com. Interview conducted in September, 1998.

CNEC; “CNEC – Insights into Electronic Commerce.” www.cnec.org/ecinsight/insight.html. June 17, 1997.

Bronwin Fryer “Straight from the screen. Newfangled software may revolutionize procurement, but not without some old-fashioned reengineering.” CFO Magazine, November, 1998

V=C^i™ developed by Dan Tiernan of Aatlas Commerce, additional information available at www.aatlas.com

“The Beer Game.” Published by Harvard Business School February 24, 1997, Boston, MA



http://www.aatlas.com/

Ec elim purch

Business

Transcript of Ec elim purch