Penn State Erie – Frank DeWolf

                  

Signifies material that will be on the next MIS204 test

Penn State Erie – Frank DeWolf

E-Commerce – The process of buying and selling goods and services electronically involving transactions using the internet, networks, and other digital technologies.E-Business – The use of the internet and other digital technology for organizational communication and coodination and the management of the firm.B2B – Business to business electronic commerce.B2C – Business to consumer electronic commerce.C2C – Consumer to consumer electronic commerce.Intranet – An internal network based on internet and WWW technology and standards. Available only to employees.Extranet – Private (secure) internet connection which allows an enterprise to communicate electronically to outside trading partners (customers and suppliers).

Electronic Commerce Definitions

Penn State Erie – Frank DeWolf

Total (Billions

US$)

$657.0 $1,233.6 $2,231.2 $3,979.7 $6,789.8 8.6%

North America

$509.3 $908.6 $1,495.2 $2,339.0 $3,456.4 12.8%

Asia Pacific

$53.7 $117.2 $286.6 $724.2 $1,649.8 8.0%

Western Europe

$87.4 $194.8 $422.1 $853.3 $1,533.2 6.0%

Rest of World

$6.8 $13.0 $27.2 $63.3 $150.5 %2.4

2000 2001 2002 2003 2004% of total

Sales in 2004

Forrester Research Internet Commerce

Worldwide Net commerce -- both B2B and B2C -- will hit $6.8 trillion in 2004.

Worldwide Net commerce -- both B2B and B2C -- will hit $6.8 trillion in 2004.

Penn State Erie – Frank DeWolf

Manufacturers’ Objectives for E-Commerce Initiatives •New business opportunities and broader customer reach: 62.2 percent •Cost savings reasons: 45 percent •To reach a wider group of suppliers: 26.1 percent

E-Commerce: Barriers to Entry •Companies with no e-commerce initiatives: 17 percent •Lack of human resource capabilities: 51.9 percent •Lack of technical knowledge inside the company: 43.6 percent •One third identify concern over security issues on the Internet. The index shows that 24 percent of respondents have no security efforts in place, with five percent reporting security breaches within the past six months.

NAM/Ernst & Young E-Commerce Trends

Penn State Erie – Frank DeWolf

Employees and the Internet •Companies where most office employees have Web access: 72.7 percent •Manufacturers that have an intranet: 39 percent •Companies where most office employees have e-mail: 83.2 percent •Respondents that feel e-mail is a vital management tool: 65.3 percent •Nearly 18 percent of companies are already using the Internet to provide on-line education and training for employees.

Interacting with Suppliers

•Respondents connecting electronically with a majority of their suppliers: 8.6 percent •Manufacturers who use a Web-based marketplace to locate suppliers: 26 percent •Companies that share product designs and specifications with suppliers through the Web: 22.9 percent •Less that 3 percent of sales and goods are transacted over the Internet

NAM/Ernst & Young E-Commerce Trends

Penn State Erie – Frank DeWolf

• Reaching new customers or suppliers

• Creating new ways of selling / supporting existing products

• Reducing costs

• Improving product quality

Role of Electronic Commerce

Increase Sales & Reduce Costs!!Increase Sales & Reduce Costs!!

Penn State Erie – Frank DeWolf

• Automation of purchase, sale transactions from business to business

• Electronic Data Interchange (EDI)

• Exchanges: Commercial on-line market, many buyers, sellers

• Forward auctions – disposition of excess inventory

• Reverse auctions - purchases

B2B E-COMMERCE

Penn State Erie – Frank DeWolf

Defined as the way of organizing the activities undertaken to design, produce, promote, market, deliver, and support the products or services a business sells.

Value Chains in Electronic Commerce

Penn State Erie – Frank DeWolf

• Identify customers– Market research, customer satisfaction surveys

• Design– Concept research, engineering, test marketing

• Purchase materials and supplies– Vendor selection, quality and timeliness of delivery

• Manufacture– Fabrication, assembly, testing, packaging

Value Chain Primary Activities

Where are YOUR biggest e-commerce opportunities?

Penn State Erie – Frank DeWolf

• Market and sell– Advertising, promotion, pricing, monitoring sales

and distribution channels

• Deliver– Warehousing, materials handling, monitoring

timeliness of delivery

• Provide after-sale service and support– Installation, testing, maintenance, repair, warranty

replacement, replacement parts

• Internal Support Activities

Value Chain Primary Activities

Where are YOUR biggest e-commerce opportunities?

Penn State Erie – Frank DeWolf

e-Businesse-Business

EmployeesEmployees

CustomersCustomersSuppliersSuppliers

• Customer serviceCustomer service• Product catalogsProduct catalogs• Electronic ordersElectronic orders• E-Order statusE-Order status• Customer collaborationCustomer collaboration

• e-Sourcinge-Sourcing• Indirect Indirect

ProcurementProcurement• Reverse AuctionsReverse Auctions

• IntranetIntranet• Paper eliminationPaper elimination• Data WarehouseData Warehouse• Productivity appsProductivity apps

B2B E-Commerce Strategy

Strategy Must Cover All FrontsStrategy Must Cover All Fronts

Penn State Erie – Frank DeWolf

OrderManagementVendor Selection Settlement

Receive Req.

& IdentifySuppliers

Sametime Meeting*, E-mail, FAQ’s, Newsletters, Manuals, Contacts, T&C’s, Holiday Schedules, Profiles, Etc.

Production / Inventory

Quality / Productivity

•Shipment Authorization•Carrier Selection•Customs Information•Bar Code Labels•Supplier Shipment Notification•Carrier Tracking

•Shipment Authorization•Carrier Selection•Customs Information•Bar Code Labels•Supplier Shipment Notification•Carrier Tracking

•Electronic Invoicing•A/P Access*•Evaluated Reciepts (ERS)

•Electronic Invoicing•A/P Access*•Evaluated Reciepts (ERS)

•Quality process•CTQ Identification & Tracking

•Quality process•CTQ Identification & Tracking

•Supplier auctions•Purchase Orders•Schedules / Reschedules - Demand

Forecasting•T&C’s•Drawing Distribution•Scorecards

•Supplier auctions•Purchase Orders•Schedules / Reschedules - Demand

Forecasting•T&C’s•Drawing Distribution•Scorecards

•RFQ’s•Drawings•Specifications•Qty & Schedules•Document Management

•RFQ’s•Drawings•Specifications•Qty & Schedules•Document Management

•Report Cards•Deviation Requests•Productivity Ideas•CTQ Capture•Discrepant material info•Field Failure•Remote Diagnostics

•Report Cards•Deviation Requests•Productivity Ideas•CTQ Capture•Discrepant material info•Field Failure•Remote Diagnostics

•Kanbans•LOB Tracking•Bailment•E&ZD

•Kanbans•LOB Tracking•Bailment•E&ZD

SupplierQuality

Prepare& Dist.RFQ's

P.O. Placement

&Admin

Ship &

ReceivePayment

Status &

Tracking

Collaboration &

Admin

GE - e-Procurement Business Example

Auction

Web

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Penn State Erie – Frank DeWolf

Forward Auctions•Used to sell something that you own•One seller, many potential buyers•Bidders bid UP; high bidder(s) win•Consumer: eBay, Yahoo!, Amazon•B2B: Many surplus asset selling sites

E-Commerce

Reverse Auctions•Used to buy something you will need•One buyer, many potential sellers•Bidders bid DOWN; low bidder(s) win•Replaces traditional “Price Negotation” process•B2B: FreeMarkets, CommerceOne, GE Sourcebid,

GXS Selection

Reverse Auctions Obtain the Lowest Market Price

Auction Basics

Penn State Erie – Frank DeWolf

GE Reverse Auctions

Review Stage: Accept the Invitation

Supplier Review

Penn State Erie – Frank DeWolf

GE Reverse Auctions View Parts

Penn State Erie – Frank DeWolf

GE Reverse Auctions

AuctionAuctionUpdatesUpdates

Place BidsPlace Bids

Over 10,000 SourceBid Events To Date

Bidding

Penn State Erie – Frank DeWolf

GE Reverse Auctions Monitor Auction

Penn State Erie – Frank DeWolf

Reverse Auctions

•““Rack and Stack”: categorize and prioritize the buyRack and Stack”: categorize and prioritize the buy

•Run some Pilot events, and adapt your plansRun some Pilot events, and adapt your plans

•Develop a strong planning process Develop a strong planning process

•Supplier relationships are still important!Supplier relationships are still important!

•Build a good quotation packageBuild a good quotation package

•Some events will go nowhere…others will amaze youSome events will go nowhere…others will amaze you

•The goal is NOT to drive your suppliers out of businessThe goal is NOT to drive your suppliers out of business

•Consistent, timely feedback after the event is crucialConsistent, timely feedback after the event is crucial

•Deliver the results…measure implementation speedDeliver the results…measure implementation speed

•Implement an auction results tracking systemImplement an auction results tracking system

This Changes the Sourcing GameThis Changes the Sourcing Game

Lessons Learned

Penn State Erie – Frank DeWolf

•Get a good PC and Internet Connection

Reverse Auctions

•Gain some bidding experience

•Seek out online selling opportunities

•Know your true costs

•Know your competition

•Act on opportunities: Excess capacity, inventory

•Develop a “rapid response” selling team

•Do your homework before the bidding begins

Get Ready for Real Time Selling

•Differentiate your product – features, services, IP, etc.

Selling via Auction