1

2004.04Jordan

Gary GongGary GongVP & General Director, ACIVP & General Director, ACIInstitute for Information IndustryInstitute for Information Industry

How Internet & its applications How Internet & its applications as a key to create a sustainable as a key to create a sustainable development of Taiwandevelopment of Taiwan

2

ContentContentInternet & Internet & eBusinesseBusinessTrend for Trend for eBusinesseBusinessCurrent Status of Taiwan Current Status of Taiwan eBeBeHub:NeweHub:New Internet Applications Internet Applications Case Study : 3 Internet Case Study : 3 Internet APsAPsConclutionConclution

3

Internet & Internet & eBusinesseBusinessThe Internet EraThe Internet Era––Internet Usage Soars Internet Usage Soars ––4 Stages of Internet Development4 Stages of Internet Development

Business ChallengesBusiness Challenges––Key Factors Affecting a Business ModelKey Factors Affecting a Business Model––The Entire Value ChainThe Entire Value Chain––How to Reduce Cost How to Reduce Cost

What is eWhat is e--Business Business ––The Integration of The Integration of eBusinesseBusiness––Benefits & Saving from Benefits & Saving from eBusinesseBusiness

eBusinesseBusiness change the Textiles Industry change the Textiles Industry ––Traditional Business Flow for TextilesTraditional Business Flow for Textiles––Problems in Textiles IndustryProblems in Textiles Industry––eBusinesseBusiness in Textiles Industryin Textiles Industry

4

Internet Usage SoarsInternet Usage Soars

1926 1934 1942 1950 1958 1966 1974 1982 1990 1998E

Radio TV Cable TV Internet

12,000

8,000

6,000

4,000

2,000

0

10,000

Time to reach 50 million usersRadio 38 yearsTV 13 yearsCable TV 10 yearsInternet 5 years

Users in the US (Unit: 10,000)

Heading to Internet Era

Source: Morgan Stanley

50 million users

5

Stage Core Value BusinessModel

Stage ofLife Cycle

I Connection ISP/Portal

II Innovation B2C/C2C/C2B/ICP

III Benefit B2B GrowingIV Service Hub/ASP Early

Mature

4 Stages of Internet Development4 Stages of Internet Development

6

••How to cut How to cut CostCost(inventory/process (inventory/process /outsourcing. . .)/outsourcing. . .)••How to cut How to cut TTMTTM••How to create How to create NEWNEW business Modelbusiness Model

Business ChallengesBusiness ChallengesTodayToday’’s Customers Customer

Faster! Better! More services! But pay less!Faster! Better! More services! But pay less!

7

Key factors affecting a business modelKey factors affecting a business model

1960 1980 20001960 1980 2000

••ITES(IT Enabling Services)ITES(IT Enabling Services)

••TQCTQC••TTM(Time to Market)TTM(Time to Market)

••Cost down Cost down (Me(Me--too Product)too Product)••EfficiencyEfficiency

Disruptive Intensity

Disruptive Intensity

8

SupplierSupplier ManufacturerManufacturer DistributorDistributor End UserEnd User

Cut lead timeCut inv. CostCut procurement costBetter fulfilment of requirements

Cut lead timeCut mfg costCut order change CostBetter product line scheduling

Cut lead timeCut inv. costMin.logistics costQuick fulfilment of big accounts’orders

Optimise Optimise the Total the Total ValueValue

The Entire Value ChainThe Entire Value Chain

Everybody in the value chain needs optimise the total value, not just to cut its own cost down

High Tech(including PC) in US spend High Tech(including PC) in US spend US$500 billion ~ 1.5 trillion dollarsUS$500 billion ~ 1.5 trillion dollars in stock in stock costcostWhere to reduce the stock cost include:Where to reduce the stock cost include:1.1. 1010--30% in the 30% in the delay of external processdelay of external process2.2. 1010--30% in the 30% in the delay of internal processdelay of internal process3.3. 4040--65% in 65% in channelchannel(Fake sales)(Fake sales)4.4. 1010--25% in 25% in Collaborative processCollaborative process

How to reduce costHow to reduce cost

10

What is eWhat is e--Business?Business?

Source：e-Business White Paper in Taiwan, 2000

ee--CommerceCommerceTransaction of Transaction of products or products or service over service over

InternetInternet

ee--BusinessBusinessEnhancing business Enhancing business operating efficiency, operating efficiency, creating new business creating new business model and improving the model and improving the interaction with the interaction with the customers by the customers by the use of use of ICTsICTs

11

The Integration of The Integration of eBusinesseBusiness

Demand Chain

Adopting eBusiness enables an enterprise to better manage its business procedures which extend to its upper and down stream partners and to increase its market competitiveness

ChannelSupplier•ERP•MRP

•Inventory•Sales Support

Back-end Front-end

eBusiness

Supply Chain

12

Benefits of Benefits of eBusinesseBusiness1.1. higher sales value higher sales value 2.2. Lower inLower in--stock cost stock cost 3.3. Shorter lead time Shorter lead time 4.4. Lower manpower costLower manpower cost5.5. Simplified administration process(40% Simplified administration process(40%

SMEsSMEs save 10% manpower)save 10% manpower)6.6. Shortened procurement time(more than Shortened procurement time(more than

65% enterprises indicate that EB/EC help 65% enterprises indicate that EB/EC help them to reduce procurement time)them to reduce procurement time)

7.7. Better customer relationship managementBetter customer relationship management8.8. Quick ResponseQuick Response

13

Saving from Saving from eBusinesseBusinessSharing and circulation of Informationenhancing the communication between partnersIncreasing the efficiency to response

B2Bi make supply chain and collaboration easier and fasterB2Bi make supply chain and collaboration easier and fasterNIKENIKE: Production lead time(sport shoes) from 15M to 4M: Production lead time(sport shoes) from 15M to 4MCISCOCISCO: Production lead time(router) from 24M to 8M: Production lead time(router) from 24M to 8MGMGM: Production lead time(car) from 36M to 15M: Production lead time(car) from 36M to 15MOperation cost is hugely cut and competitiveness increasedMfg IndustryMfg Industry: O/H cost cut from US$10: O/H cost cut from US$10 $2$2, 80% less, 80% lessBank IndustryBank Industry: O/H cost cut from US$1: O/H cost cut from US$1 $0.01$0.01, 99% less, 99% lessTrade IndustryTrade Industry: O/H cost cut from US$150: O/H cost cut from US$150 $6$6, 96% less, 96% less

- Forrester Research

14

TextileFactories Garment

Factories

Traditional Business Flow for TextilesTraditional Business Flow for Textiles

Suppliers

Trading Company Customs

Agency

Out-sourcing Contractors

Waste of timeRedundant processesRe-keying errorsNo quick response to the need for critical materialsProduction information not being re-usableNo timely report on quality failure

Raw Material Suppliers

15

Raw Material Suppliers Factories Wholesalers Retailers Customers

Responding to the market needs and changes by increasing inventory level in respective knots of supply chainResponding to the market needs and changes by increasing inventory level in respective knots of supply chain

Problems in Textiles IndustryProblems in Textiles Industry

InventoryInventory

Inventory

Inventory

16

eBusinesseBusiness in Textiles Industryin Textiles Industry

Weaver/Knitter

Garment Factories

Raw Materials Suppliers

Contractors

Internet

Timely communicationEnquiry of product informationOnline orderingEnquiry of status on order fulfillmentEngineering data linkageEnquiry of shipment deliveryFinancing data linkageEnquiry of status on logistics

Trading Company

Customs AgencyBanks

Logistics

17

The evolution of The evolution of eBusinesseBusinesse will be the Trendwill be the TrendThe trends to The trends to eBusinesseBusinessB2BiB2Bi--B2B IntegrationB2B IntegrationSaving to Buyer/SupplierSaving to Buyer/Supplier

Trend for Trend for eBusinesseBusiness

18

The evolution of The evolution of eBusinesseBusiness

eBusiness

Infomationalization

Computerization

Automation

Inter-Corp Re-engineering

Re-Organization

Business Process Re-engineering

Process Automation

19

e Will be the Trende Will be the TrendB2B online transaction volume will jump to B2B online transaction volume will jump to 36%36%(2005)(2005)

from from 3%3%(2000)(2000) of total business transaction of total business transaction --JupiterJupiter

B2B market will over B2B market will over US$7000B in 2004US$7000B in 2004，，45%45%--75%75%B2B eService companies will provide online B2B eService companies will provide online marketplace services marketplace services -- Mark Hoffman, Chairman of Commerce One Mark Hoffman, Chairman of Commerce One

Companies purchase thru online marketplace will Companies purchase thru online marketplace will jump from jump from 23%(2000) to 70%(2002)23%(2000) to 70%(2002)，，volume will volume will jump to jump to 1400B in 20041400B in 2004(53% of total B2B online (53% of total B2B online transactiontransaction，，yearly growth rate around yearly growth rate around 200%200% --Forrester Forrester

20

The Trends to eThe Trends to e--BusinessBusinessB

2B i

Vertically Integrated Corporation

••Friends or enemiesFriends or enemies••Single trading relationshipSingle trading relationship••Asynchronous Asynchronous mgntmgnt..••Labor input/lower need for Labor input/lower need for integrationintegration

••Limited info. sharingLimited info. sharing

••Close interconnected Close interconnected relationship; relationship; collaboration collaboration instead of competitioninstead of competition

••Complicated partnership; Complicated partnership; information sharinginformation sharing

••Synchronous operationSynchronous operation; an ; an emphasis of realemphasis of real--time time interactioninteraction

••Software integrationSoftware integration w/ w/ trading partnerstrading partners

1970 1980 1990 2000Source: Benchmarking Partners

21

B2BiB2Bi--B2B IntegrationB2B Integration

Point to PointPoint to Point

Supplier Supplier connects with connects with customer via customer via B2Bi technologyB2Bi technology

Hub Hub IntegrationIntegration

Supplier Supplier connects with connects with customers via customers via eeHubHub

MarketplaceMarketplace

ASP integrate the ASP integrate the suppliers suppliers connecting with connecting with different different marketplaces marketplaces through B2Bi through B2Bi toolstools

22

Potential savings from electronic purchasing and supply chain management

Source: McKinsey, AMR Research

$100 13

64 3 2 $72

BeforeBeforeB2BB2B

Price reductions

Better compliance

Process improvement

Standardi-zation

Optimized capacity utilization

28% savings opportunity28% savings opportunity

AfterAfterB2BB2B

Savings to BuyerSavings to Buyer

23

Cost per sales interaction

Dire

ct c

all

Trad

e sh

ow

Tele

-m

arke

ting

Inte

rnet

Order processing cost

Pape

r-bas

ed

Inte

rnet

Source: eStats; Business Week

Cost per customer service interaction

In p

erso

n

Call

cent

erVo

ice

resp

onse

Inte

rnet

$277

$62$31

$1

$10

$7.50

$2.45

$0.18

$8-25

$0.30-1.00

Savings to SupplierSavings to Supplier

24

Current Status of Taiwan eCurrent Status of Taiwan e--BusinessBusiness

eReadinesseReadiness of Taiwanof Taiwan––Distribution of Internet SubscribersDistribution of Internet Subscribers––Internet UsersInternet Users––ee--Business MarketBusiness Market––B2C Transaction ValueB2C Transaction Value––Business OnlineBusiness Online––Penetration of ePenetration of e--ActivitiesActivities

TaiwanTaiwan’’s Worldwide Rankings Worldwide RankingiAeBiAeB ProjectProjectee--Taiwan Facilitates the Economic Growth Taiwan Facilitates the Economic Growth

25

61%

81%

100% 100%

47%

78%

100% 100%

0%

20%

40%

60%

80%

100%

household enterprise government school

Internet penetration

broadband penetration

Compiled by: FIND, ACI, III / sponsored by DOIT, MOEA (2004/12)

The The eReadinesseReadiness of Taiwanof Taiwan

26Source: FIND, ACI, III / sponsored by DOIT, MOEA

Distribution of Internet SubscribersDistribution of Internet Subscribers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999/12 2000/12 2001/12 2002/12 2003/12 2004/12

others

Mobile Internet

Cable Modem

DSL

Dial-up

Narrowband on the Decline; Broadband and Wireless Internet on the Rise

27

Source: FIND, ACI, III / sponsored by DOIT, MOEA (2003)

Internet Users in TaiwanInternet Users in Taiwan

11.7

12.252%

54%

10

11

12

13

2003 2004

million people

40%

50%

60%Internet user

Internet penetration

28

ee--Business Market in TaiwanBusiness Market in Taiwan

Source: FIND, ACI, III / sponsored by DOIT, MOEA (2004)

116.2 132.8

15.322.5131.5155.3

020406080

100120140160180200

2003 2004

NT$billione-procuremente-selling

29

22.1

34.7

49.3

65.6

79.4

95.2

0102030405060708090

100

2003 2004 2005 2006 2007 2008

NT$ billion

B2C Transaction Value in TaiwanB2C Transaction Value in Taiwan

Source: Department of Commerce (DOC) of MOEA (2004) (estimated)

30

Business Online in TaiwanBusiness Online in Taiwan

Source: FIND, ACI, III / sponsored by DOIT, MOEA (2004)

79%90%

71%81%

96%

78%

0%

20%

40%

60%

80%

100%

120%

business with Internetaccess

online business withbroadband access

business withbroadband access

2003 2004

31

Penetration of ePenetration of e--Activities in TaiwanActivities in Taiwan

Source: FIND, ACI, III / sponsored by DOIT, MOEA (2004)

6.0%

2.2%

6.7%

3.5%

9.2%

10.8%

3.4%

7.2%

3.5% 4.4%

7.2%

0%

2%

4%

6%

8%

10%

12%

ERP SCM CRM KM e-Learning PDM

2003 2004

32

TaiwanTaiwan’’s W/W Rankings W/W Ranking

Compiled by : FIND, ACI, III

•• No. 1 No. 1 -- Mobile Phone Penetration (ITU 2003)Mobile Phone Penetration (ITU 2003)

•• No. 7 No. 7 -- Broadband Penetration (pointBroadband Penetration (point--topic 2004)topic 2004)

•• No. 9 No. 9 -- Internet Hosts Penetration (ITU 2003)Internet Hosts Penetration (ITU 2003)

•• No. 9 No. 9 -- Number of IPv4 Address (TWNIC 2004)Number of IPv4 Address (TWNIC 2004)

•• No. 10 No. 10 -- Number of Broadband Lines (pointNumber of Broadband Lines (point--topic 2004)topic 2004)

•• No. 10 No. 10 -- Number of Internet Hosts (ISC 2003)Number of Internet Hosts (ISC 2003)

•• No. 14 No. 14 -- Number of IPv6 Address (TWNIC 2004)Number of IPv6 Address (TWNIC 2004)

•• No. 16 No. 16 -- Number of Internet Users (ITU 2003)Number of Internet Users (ITU 2003)

•• No. 18 No. 18 -- Internet Users Penetration (ITU 2003)Internet Users Penetration (ITU 2003)

33

iAeBiAeB ProjectProject(1/3)(1/3)

Assisting 15 1st tier PC Makers include Acer, Asus, and Inventec to get connected with 3000 2nd tier suppliers; forming a seamless SCM systemThe estimated profit herein resulted exceeds US$300M

A Plan:Connect Foreign Buyers & Local PartnersCompaq increase purchase volume more than US$ billions

while the supply chain cost was saved more than US$200MIBM saves costs on R&D, inventory, and operation around

of US$60M; R&D lead time reduced from 2~4 wks to 1 wkHp increases PO from Taiwan partners for 20% ; PO

processing time reduces over 50%

B Plan:Connect 15 1st Tier PC Makers & 3000 Suppliers

34

To connect 30 SC systems in 8 major sectors including steel, machinery, automobile, electrical machinery and electronics, petro-chemical, paper, food and textile which covers 6400 SMEsTotal budget US$24M, gov’t sponsor 30% and the enterprises invest 70%The estimated total value created included:

1. Cost saving:US$150M2. Increase of production value:US$300M3. Total profit up to US$440M

iAeBiAeB ProjectProject(2/3)(2/3)A/B Plus Plan:Duplicate A/B Plan Model to other Industries

35

Projects CProjects C//D/E D/E : : Introduce eIntroduce e--Service of Service of CCash flow, ash flow, DDelivery, elivery, and and EEngineering collaboration to ngineering collaboration to 2525 industrial supply chainsindustrial supply chains

Project Name

Project Function Current Achievements

Project C Global e-payment, online financing, global financial management, multi-bank financing and multi-bank account aggregation

• 8 banks construct a financial network

• 11 IT firms e-SCM connecting about 2,700 upstream suppliers

Project D Shipment tracking & tracing management, vendor inventory management and transportation planning

• 10 domestic e-Supply chain systems • Connect 1000 upstream suppliers,

350 logistics service providers & warehouses, 280 domestic & buyers, and 5 foreign logistics organizations

Project E Development cost and performance management, engineering design change management, design data sharing and design project management

• 6 e-Supply chain systems • Connect 21 international clients

and 164 suppliers who will coordinate together to work on design, spec. bug detection, workflow administration & project management

iAeBiAeB ProjectProject(3/3)(3/3)

36

K. Economy

50 60 70 80 90 95 00 01 06

Customs Protection

Export ZoneBig 10 Nat’l Dev’t Projects

R&D Institutes

Hsin-Chu Science ParkBig 10 Ind Dev Projects

Manufacturing Capital Investment R&DGDP(1000B)

10

5

ee--Taiwan Facilitates the Economic Growth Taiwan Facilitates the Economic Growth

e-Taiwanee--GovGov’’ttee--IndustryIndustryee--SocietySociety

NII

Industrial SocietyIndustrial Society

Information Society

18

4

10

Year

W/WRank

37

The Current B2B Framework The Current B2B Framework Buy or MakeBuy or MakeA New B2Bi FrameworkA New B2Bi FrameworkWhy You Need Why You Need eHubeHubeHubeHub Makes Collaboration Easier Makes Collaboration Easier How How eHubeHub Changes Business Changes Business Benefits of Benefits of eHUBeHUB ModelModelThe Vision of The Vision of eHubeHub

eHubeHub--New Internet ApplicationsNew Internet Applications

38

Tier 2

IBM HP SONY

LiteOn TaTung BenQ Elite

(1) Common suppliers have to invest different IT platforms to meet the requirements from different clients.

(2) Central factories duplicate the same investment on similar systems; an un-necessary waste and increase of overall cost for the specific industry

(3) Multi-layer structure; slower message flow through the supply chain

The Current B2B FrameworkThe Current B2B Framework

39

EDIFTP

HTTP. . .

EAI

SMTP

V1.0

V1.x

V2.0

V2.x

. . .. . .

Business Partners

IBM

Dell

HP

Compaq

Buy or Make?Buy or Make?

Process Format Channel Version = ?x x x x

B2Bi is too complicate to maintain for SME!

40

A New B2Bi FrameworkA New B2Bi Framework

Trading Partner Network

OEM

3PL

Disti

SupplierrCM

Carrier

Hub

Current Framework

Multi-Tier Linear Activity

OEM CM

Large Supplier

Small Supplier

Logistic Provider

Disti

Small Supplier

XML message? EDI?

eHUBeHUB ModelModel

New Framework

Large Supplier

Disti

41

Why You Need Why You Need eHubeHub??Connect with any trading partner anytime- Hook up and work- Year-round supportAn increase or a decrease of trading partners as you wish when onlineNo single marketplace can satisfy all your needs!No need to invest on new systems of data exchange for specific clients /suppliersA provision of high value added info for your trading partners

42

eHubeHub Makes Collaboration EasierMakes Collaboration EasierEnterprise internal systems e-Marketplace

Money

flow

Electronic

components

Energy

Hw framework

eHub

Middleware

Logistics

CRM

SCM

ERP

43

How How eHubeHub Changes Business Changes Business

Aspects

Connection framework

Connection infrastructure

Deployment time

Integration effort

Integration cost

Service provider

Today’s B2Bi B2Bi Hub

One to one

Decided by e-Marketplaces

Months

Forever

Difficult to estimate

Many

One to many

Decided by users

Minutes

Once

Easy to estimate

Few

44

•Duplicate investments on different B2B gateway systems among central factories(buyer) & Suppliers

•Suppliers of the central factories have to get their own suppliers online and integrate all B2B systems

•The cost and trouble to get connected with overseas hubs and bank/logistics partners

•eHub provides a single gateway connection

•eHub integrates all the central factories & provides professional support

•eHub integrates them all in advance; all you need to do is to hook up w/ eHub!

Why buy a cow when milk is so cheap?

Benefits of Benefits of eHUBeHUB ModelModel

45

The Vision of The Vision of eHubeHub

diffusion

diffusion

Diffusion-Main buyers in manufacturing

industryMain buyers

supplier

factoryOverseas

manufacturing spots

banks

Supply chain management

Delivery serviceCustoms

clearance

Free-trade zone in Great China

standards

Developing e-Business

Operations headquarter

eHub to Establish Taiwan the Global Logistics Center

46

GlobalizationGlobalizationJobs for white collars are decreasing

-The economic growth does not necessarily reduce the unemployment rate

-Productivity will be hugely increased, and no need to employ more manpower

-Fly vs. Bee (The rule of “No Game Rule”)-Globalization brings about new jobs, but more old jobs will be lost (structural unemployment)Core value exists in the capacities of life-long learning and cross-profession integration

47

1.1.The eThe e--Business Project : Business Project : For IT andFor IT and Major Manufacturing Major Manufacturing IndustriesIndustries

2.2.viaHubviaHub : : Global Supply Chain Global Supply Chain Community ServiceCommunity Service

3.3.Vitamin C (Cash) : Vitamin C (Cash) : Supply Supply Chain eChain e--Financing ProjectFinancing Project

3 Case Study3 Case Study

48

Overseas distributors /customers

Overseas Production Plant

Overseas distributors / customersBuyer

e-Marketplace

Supplier 2

Logistic center

BuyerSeller

Seller

Enterprise Headquarter

(PDM)

(SCM)

CRM

Supplier 1

Taiwan distributors / customers

(ERP)

M/C M/C

(SFCS)

GMS

FOCS

Ordering

Manufacturing

Delivery

Shipping

Domestic Production Plant

ee--Business Project FrameworkBusiness Project Framework

A

B

GoalGoalBuild a highly efficient eBuild a highly efficient e--Supply Supply chain framework chain framework to establish to establish Taiwan as a Taiwan as a global global logistics logistics centercenter

49

StrategiesStrategies1.1. Using Using IT industryIT industry as Pilot projects to build a benchmark and as Pilot projects to build a benchmark and

apply model to other industriesapply model to other industries2.2. Leverage the Leverage the buying powerbuying power from major intfrom major int’’l manufacturers to l manufacturers to

enforce suppliersenforce suppliers’’ B2B applicationB2B application

IT Industry

AB ProjectsAB Projects

Textile

Metal

Food Machinery

Automobiles

Electronic

Petrochemical Paper

50

ObjectivesObjectivesBY 2002 BY 2002 ……1.1.Promote at least Promote at least 1515 supply chain systems in IT supply chain systems in IT

industry which industry which 2,5002,500 SMEsSMEs to establish B2B eto establish B2B e--Business capabilitiesBusiness capabilities

2.2.Promote at least Promote at least 2525 supply chain systems in major supply chain systems in major manufacturing industries which manufacturing industries which 3,5003,500 SMEsSMEs to to establish B2B eestablish B2B e--Business capabilitiesBusiness capabilities

3.3.Increase internet usage of manufacturing industries Increase internet usage of manufacturing industries from from 32.3% to 50%32.3% to 50%

4.4.Increase eIncrease e--Procurement rate of mfg Procurement rate of mfg industries from industries from 5% to 10%5% to 10%

5.Generate 5.Generate revenue of Taiwanrevenue of Taiwan’’s s ee--Marketplace up to Marketplace up to US$120millionUS$120million

51

ActionsActions1.1. Enhance industrial eEnhance industrial e--Business infrastructureBusiness infrastructure

2.2. Build up theBuild up the ee--Supply chain pilot projectsSupply chain pilot projects

3.3. Reinforce industrial eReinforce industrial e--Supply chain capabilitiesSupply chain capabilities1.1. Duplicate the model of AB projectsDuplicate the model of AB projects2.2. Target the domestic industries with higher eTarget the domestic industries with higher e--ReadinessReadiness3.3. Target 1st and 2nd tier suppliers in the supply chainTarget 1st and 2nd tier suppliers in the supply chain

Develop e-Businessstandards

Provide tax incentives & low

interest loan

Train e-Business

professionals

Develop ITES industry

Contract Manufacturer

Supplier

Int’l Buyers

LSPs

A Project：•Procurement •Commodity Management•Supplier Management•Engineering Collaboration

B Project：•Procurement •Supplier Management•Engineering Collaboration•Shipment Visibility

52

ee--Business Project FrameworkBusiness Project Framework

Overseas distributors /customers

Overseas Production Plant

Buyer

e-Marketplace

Supplier 2

Logistic center

BuyerSeller

Seller

Enterprise Headquarter

(PDM)

(SCM)

CRM

Supplier 1

Taiwan distributors / customers

(ERP)

M/C M/C

(SFCS)

GMS

FOCS

Ordering Manufacturing DeliveryShipping

Domestic Production Plant

A

B

Overseas distributors /

customers

53

Index Task Items Objectives Reality Achieved Level

No. of IT supply chain system(Corporation Numbers）

15 systems（2,500）

18 systems（3,955 ）

120%（158%）

Other major manufacturing industries systems(Corporation Numbers)

25 systems（3,500）

30 systems（6,421）

120%（183%）

e-Marketplace revenue US$120million

US$196million

163%

Internet usage rate in overall manufacturing industry

50% 59.7% 119%

e-Procurement rate in overall manufacturing industry

10% 14.3% 143%

Summary of AchievementsSummary of Achievements

Over 100% Achieved Level in Each Task!!Over 100% Achieved Level in Each Task!!

54

BenefitsBenefits1.1. Establish largeEstablish large--scale escale e--Supply chain systemSupply chain system

•• 3 int3 int’’l and 15 domesticl and 15 domestic eSupplyeSupply Chain(eSCChain(eSC) were ) were established in the IT industryestablished in the IT industry

•• 30 30 eSCeSC were established in other major were established in other major industries with industries with US$500MUS$500M in cost reduction and in cost reduction and productivity increaseproductivity increase

2.2. Increase Increase US$3BUS$3B IntInt’’l purchasing in Taiwan l purchasing in Taiwan 3.3. EnhanceEnhance the global competitiveness of our the global competitiveness of our SMEsSMEs in in

quick response to orderquick response to order--takingtaking from sofrom so--called called 955 955 (i.e. 95% of orders delivered in 5 days) (i.e. 95% of orders delivered in 5 days) to to 982982

4.4. Pioneer in the world to adopt the intPioneer in the world to adopt the int’’l el e--Supply Supply chain chain standard(standard(RosettaNetRosettaNet, , PapiNetPapiNet, CIDX, OAGIS, CIDX, OAGIS……))

4.4. The investment for ICT services increased to The investment for ICT services increased to US$ US$ 48M48M and a new sector of eand a new sector of e--Marketplace service Marketplace service revenue also increased to revenue also increased to US$ 197MUS$ 197M

55

1.1.The eThe e--Business Project : Business Project : For IT andFor IT and Major Manufacturing Major Manufacturing IndustriesIndustries

2.2.viaHubviaHub : : Global Supply Chain Global Supply Chain Community ServiceCommunity Service

3.3.Vitamin C (Cash) : Vitamin C (Cash) : Supply Supply Chain eChain e--Financing ProjectFinancing Project

3 Case Study3 Case Study

56

Tier 2

IBM HP SONY

LiteOn TaTung BenQ Elite

BackgroundBackground

Problems:Problems:•• Different B2B IT platforms between coDifferent B2B IT platforms between co--suppliers & their customerssuppliers & their customers•• Main enterprises in supply chain invest in the similar informatiMain enterprises in supply chain invest in the similar information systems, on systems,

which causes higher total costs of the industry which causes higher total costs of the industry •• MultiMulti--tier structure makes worse supply chain visibility and slows thetier structure makes worse supply chain visibility and slows the

responsiveness responsiveness

57

Viacore

Big Suppliers

FinanceHub

BuyersBuyers

CiscoCisco

NECNEC

HPHPHub

VANCenter

Suppliers

Suppliers

LogisticHub

GTNexusGTNexus

DescartesDescartes

Bank ABank A

Bank BBank B

Bank CBank C

OverseaHub

Big Suppliers

Vision : Plug in Local, Connect GlobalVision : Plug in Local, Connect Global

58

2,000 trading partners2,000 trading partners connected to connected to StarBexStarBexInitiate a government support Initiate a government support "Star Project""Star Project" to to connect more than connect more than 500500 IT firms globally. Industry IT firms globally. Industry include include BenQBenQ, D, D--Link, Link, LiteLite--On, On, AcctonAccton, Elite, Elite--group group 10 Big brothers. The total revenue of the Big10 Big brothers. The total revenue of the Big--10 10 contributed contributed 5% GDP of Taiwan5% GDP of Taiwan in 2002in 2002The B2B transaction volumeThe B2B transaction volume on on viaHubviaHub is estimated is estimated as as US$6 billionsUS$6 billions by 2005/E. The connectivity by 2005/E. The connectivity coverage of domestic electronic suppliers will over coverage of domestic electronic suppliers will over 60%60% and there will be over and there will be over 90%90% logistics service logistics service providers connected to providers connected to viaHubviaHub by the end of 2005. by the end of 2005. viaHubviaHub will potentially become the worldwide will potentially become the worldwide largestlargest IT industry eIT industry e--community service providercommunity service provider

Business AchievementBusiness Achievement

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Applications in Applications in StarBexStarBexAP Model

BenQ

SiliTek

Elite

WP

D-Link

au Yageo

Accton

TaTung

LiteOn

Global Shipment Mgt.

Business will in StarBex

70% 80% 80% 60% 80% 70% 90% 70% 80% 50%

Global Procurement Mgt.

Global Inventory Mgt.(VMI)

Transaction amountwill be more than US$6B in 2006 !

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Enterprise BenefitsEnterprise BenefitsBenQBenQ－－Used 2/3 of time and 1/3 of cost to Used 2/3 of time and 1/3 of cost to implement the same scope as those who implement the same scope as those who implemented private B2B systemsimplemented private B2B systemsEliteElite--groupgroup－－Carried out Carried out ””ee--VMIVMI”” operations operations to reduce inventory & procurement costs. to reduce inventory & procurement costs. Total cost saving helped increase profits to Total cost saving helped increase profits to US$2.5MUS$2.5M per yearper yearDD--LinkLink－－153 suppliers connected to process 153 suppliers connected to process collaborative procurement management. collaborative procurement management. Cost saving of purchase order operation is Cost saving of purchase order operation is around around US$0.2MUS$0.2M annuallyannuallyStar ProjectStar Project will generate benefit estimated will generate benefit estimated about about US$31MUS$31M annually through 10 supply annually through 10 supply chain sponsors!chain sponsors!

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ConclusionConclusionThe essence of The essence of MIT(Made In Taiwan)MIT(Made In Taiwan) is our flexibility is our flexibility embedded in the highly specialized while closely embedded in the highly specialized while closely integrated systems alone the vertical chain of integrated systems alone the vertical chain of manufacturing. Such flexibility enables our quick manufacturing. Such flexibility enables our quick responses to the versatile market and is the core responses to the versatile market and is the core value of logisticsvalue of logisticsThe ICT sector needs most the support of good and The ICT sector needs most the support of good and global logistics, while it is also the benchmark global logistics, while it is also the benchmark sector other sectors can learn fromsector other sectors can learn from

Made In Taiwan eHubeHubeHub will facilitate Taiwanwill facilitate Taiwan’’s achievement to the goal of s achievement to the goal of

becoming the Global Logistics Centerbecoming the Global Logistics Center

Managed In Taiwanor Made by Taiwan

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Q & A

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