E-Business and the E-Business and the Supply ChainSupply Chain

Rony ThomasRony ThomasM080282MEM080282ME

ContentsContents

Role of E-BusinessRole of E-Business E-Business FrameworkE-Business Framework B2B addition to the E-Business FrameworkB2B addition to the E-Business Framework E-Business in PracticeE-Business in Practice

DefinitionDefinition Execution of business via the internetExecution of business via the internet Executable transactions through e-businessExecutable transactions through e-business

Providing informationProviding information Placing orders with suppliersPlacing orders with suppliers Allowing customers to place ordersAllowing customers to place orders Filling and delivering orders to customersFilling and delivering orders to customers Receiving payment from customersReceiving payment from customers

E-Business enhance these transactions through E-Business enhance these transactions through internet so execution is more efficient and high level internet so execution is more efficient and high level of responsivenessof responsiveness

ExamplesExamples Dell :-Displays product information for a PC Dell :-Displays product information for a PC

through internet with price configurationthrough internet with price configuration eBay:-Allow people to auction products over eBay:-Allow people to auction products over

the internetthe internet UPS and FedEx:- Allows people to track their UPS and FedEx:- Allows people to track their

packages over the internetpackages over the internet Software and music companies deliver orders Software and music companies deliver orders

through internetthrough internet

Division of E-businessDivision of E-business B2C :- Involves transactions between a company and B2C :- Involves transactions between a company and

a consumera consumer Amazon. COMAmazon. COM DellDell Wal-MartWal-Mart

B2B :- Involves transactions between two companiesB2B :- Involves transactions between two companies Dell selling computers to corporationsDell selling computers to corporations Intel selling microprocessors to DellIntel selling microprocessors to Dell

Value of e-businessValue of e-business Important that how companies implement e-Important that how companies implement e-

business else failurebusiness else failure Webvan fail in selling groceriesWebvan fail in selling groceries

Depends upon industries and the stage in the Depends upon industries and the stage in the supply chain a firm occupiessupply chain a firm occupies

Goal to provide a framework to executives to Goal to provide a framework to executives to identify where the value lies ,the magnitude identify where the value lies ,the magnitude and how value can be extractedand how value can be extracted

E-Business FrameworkE-Business Framework Consists of a scorecard that can be evaluated Consists of a scorecard that can be evaluated

by a firm to gauge impact of e-business and by a firm to gauge impact of e-business and gain insight into whether or not e-business gain insight into whether or not e-business make sense for them.make sense for them.

Divided into two categories :-Divided into two categories :- Impact on Responsiveness (affects a Impact on Responsiveness (affects a

company’s ability to grow and protect company’s ability to grow and protect revenue)revenue)

Impact on efficiency (affects company’s costs) Impact on efficiency (affects company’s costs)

Impact of e-business on Impact of e-business on ResponsivenessResponsiveness

Direct sales to customersDirect sales to customers Bypassing intermediaries and selling directly to Bypassing intermediaries and selling directly to

customerscustomers Eg. Dell sells PCs online to customers whereas HP has Eg. Dell sells PCs online to customers whereas HP has

to incur a lower revenue and margin due to distributor to incur a lower revenue and margin due to distributor and retailerand retailer

Twenty-four-Access from Any LocationTwenty-four-Access from Any Location Customers able to place orders even if the fulfillment Customers able to place orders even if the fulfillment

process is shutdownprocess is shutdown Allows firms to access customers who are Allows firms to access customers who are

geographically distantgeographically distant

Wider Product Portfolio and Information Wider Product Portfolio and Information AggregationAggregation

Increase sales by offering large selection of productionIncrease sales by offering large selection of production Large selection is possible with appropriate search toolsLarge selection is possible with appropriate search tools Amazon.com, DellAmazon.com, Dell

Personalization/CustomizationPersonalization/Customization Customer specific sites to display information on Customer specific sites to display information on

products that they buy frequentlyproducts that they buy frequently Individualized buying experience for each customerIndividualized buying experience for each customer Lands End allow shoppers virtually try on clothingLands End allow shoppers virtually try on clothing

Faster Time to MarketFaster Time to Market New product can be made available soon as first unit is New product can be made available soon as first unit is

ready to be producedready to be produced Dell introduces new products earlier than its competitorsDell introduces new products earlier than its competitors

Flexible Pricing ,Product Portfolio and Flexible Pricing ,Product Portfolio and PromotionsPromotions Easily alter prices by changing one entry in the databaseEasily alter prices by changing one entry in the database Can alter product portfolio that they offer as well as the Can alter product portfolio that they offer as well as the

promotions they are runningpromotions they are running Airlines make low cost fares for unsold seatsAirlines make low cost fares for unsold seats

Price and Service DiscriminationPrice and Service Discrimination Alter prices based on the characteristics of Alter prices based on the characteristics of

individual customers to enhance their revenuesindividual customers to enhance their revenues Services offered are also customized Services offered are also customized AirlinesAirlines

Efficient Funds TransferEfficient Funds Transfer Enhance revenues by speeding up collectionEnhance revenues by speeding up collection John McCain presidential campaignJohn McCain presidential campaign

Lower Stockout LevelsLower Stockout Levels Improved forecastsImproved forecasts Better match between supply and demandBetter match between supply and demand More inventory for customer demandMore inventory for customer demand

Convenience/Automated ProcessConvenience/Automated Process Automate purchasing processAutomate purchasing process Decrease cost of placing ordersDecrease cost of placing orders

Potential Revenue Disadvantage of E-BusinessPotential Revenue Disadvantage of E-Business

Impact of E-Business on CostImpact of E-Business on Cost Inventory (lower costs)Inventory (lower costs)

Improving Supply chain coordination and creating a better Improving Supply chain coordination and creating a better match between supply and demandmatch between supply and demand

Geographical aggregationGeographical aggregation Postpone the introduction of variety until after the Postpone the introduction of variety until after the

customer order is received, Dellcustomer order is received, Dell FacilitiesFacilities

Cost related to number and location of facilitesCost related to number and location of facilites Costs associated with the operationsCosts associated with the operations

Amazon.comAmazon.com

TransportationTransportation Product in a form of downloaded, internet save on Product in a form of downloaded, internet save on

cost and time for delivery. eg.mp3cost and time for delivery. eg.mp3 Inbound and outbound costsInbound and outbound costs E-business with aggregated inventories has got E-business with aggregated inventories has got

higher outbound costshigher outbound costs InformationInformation

Share demand information to dampen bullwhip Share demand information to dampen bullwhip effect and improve coordinationeffect and improve coordination

Cost of hardware and software setupCost of hardware and software setup

Applying the E-Business FrameworkApplying the E-Business Framework

Using E-Business to sell PCs: DELLUsing E-Business to sell PCs: DELL

Customer

Retail Store

Supplier

PC Manufacturer

Customer

Dell

Supplier

Pull Pull

Dell Supply Chain Traditional PC Supply Chain

Revenue impact on E-Business on Revenue impact on E-Business on the PC industrythe PC industry

Targeted segmented of people that are Targeted segmented of people that are comfortable selecting their own PC and comfortable selecting their own PC and willing to wait for its deliverywilling to wait for its delivery

Large number of different PC configurationsLarge number of different PC configurations Customization options are easy to display over Customization options are easy to display over

internetinternet Bringing new products to market fasterBringing new products to market faster Customized web pages for orders Customized web pages for orders

Price flexibilityPrice flexibility Eliminate distributor and retailer marginsEliminate distributor and retailer margins Order placed at any time of the dayOrder placed at any time of the day Decreasing workforceDecreasing workforce Easy collection of paymentEasy collection of payment

Impact of E-business on Dell Impact of E-business on Dell performance: Scorecardperformance: Scorecard

AreaArea ImpactImpact AreaArea ImpactImpactDirect SalesDirect Sales ++++ Lower StockoutsLower Stockouts ++24-hour access24-hour access ++ FacilitiesFacilities ++++Wider product Wider product portfolioportfolio

++++ Efficient fund Efficient fund transfertransfer

++++

PersonalizationPersonalization ++++ InventoryInventory ++++Faster time to marketFaster time to market ++++ TransportationTransportation --Flexible pricing, Flexible pricing, portfolioportfolio

++++ Convenience/ Convenience/ automated processautomated process

==

Price discriminationPrice discrimination == InformationInformation ==

++ Very Positive;+ Positive; =Neutral;-Negative;--Very Negative

Inventory CostsInventory Costs Reduce inventories by geographical aggregationReduce inventories by geographical aggregation Components assembled witin short period of timeComponents assembled witin short period of time Postponement along with component commonalityPostponement along with component commonality Reduction of costs by sharing information across Reduction of costs by sharing information across

Supply ChainSupply Chain Facility CostsFacility Costs Transportation CostsTransportation Costs

Value of E-Business for a Value of E-Business for a Traditional PC manufacturerTraditional PC manufacturer

Introduce new models on internet and when Introduce new models on internet and when demand increases, should be added on retail demand increases, should be added on retail chain chain

Lower transportation costsLower transportation costs Longer lead time but lower cost configurationsLonger lead time but lower cost configurations Should give retailers a chance to participate in Should give retailers a chance to participate in

E-businessE-business Eg:-GatewayEg:-Gateway

B2B Addition to the E-business B2B Addition to the E-business FrameworkFramework