Page 1 Welcome! research dp&c. Page 2 Education in Pursuit of Supply Chain Leadership research dp&c D ISTRIBUTION P LANNING AND C ONTROL R ESEARCH e-

Page 1

Welcome! researchdp&c

Page 2

“Education in Pursuit of Supply Chain Leadership”

researchdp&c

DISTRIBUTION

PLANNINGAND

CONTROL

RESEARCH

e-BUSINESS

AND ITS ROLE IN THE SUPPLY

CHAIN

Page 3

Meet David F. Ross, PhD, CFPIM

13 Years Manufacturing and Distribution Industries

17 Years MRP II, ERP, Enterprise Business Systems

CPIM (1988), CFPIM (1996)

6 Years APICS CPIM Instructor

1991 Romey Everdale Award

3 Books on SCM/Logistics -Foundation Book for MPR CPIM Exam

Meet Your

Session Leader

Page 4

Goals and ObjectivesSummary of

Session Goals

and Objective

s

A Broad, Executive Introduction to e-Business

Nature of Today’s Competitive Environment

Defining e-Business Terms

Four Phases of e-Business

Today’s Technology Toolsets

Benefits of e-Business

Page 5

What Has Happened To e-Business?

Rise and Fall of the

“New Economy”:

1999 – Estimates Business-to-Consumer (B2C)

would exceed $450 billion by 2004

Business-to-Business (B2B) would exceed $5 trillion by 2004

Companies would spend $1.7 trillion in technology just to get in the game

If you were not trading through the Web you would

be “Amazoned” or “Enroned” and sink into irrelevance!

Page 6

What Went Wrong?

e-Business

Post-Mortem:

Over-excessive optimism

Technologies that were not yet ready

Problems with connectivity and interoperability

Huge infrastructure cost

Invalid business models and faulty practices

Risk, risk, and more risk!

Page 7

Internet Is Here To Stay!

Key Indicator

s:

Changes in technology infra-structures and interoperability

Expanding Usage and Popularity

Utilization by software developers

Declining costs

End of hype – growth of real productivity

Page 8

The Business World Has Changed

Power of the customer demanding personalization, super service, convenient solutions, product and service customization, low cost

Abandonment of strategies based on the vertical integration of resources

Explosion in global trade and outsourcing has changed the basics of competition

Key Drivers of Business

and Technology Today:

Page 9

The Business World Has ChangedKey

Drivers of Business

and Technology Today:

Companies need to be agile, lean, efficient, and more responsive to the customer, spawning virtual organizations and interoperable processes

Product cycle management that requires leveraging collaborative supply chain relationships

The Internet has truly revolutionized everything – the supply chain is the medium for competitive advantage

Page 10

Conventional Supply Chain

Stage 1

Supplier

RawMaterials

Stage 2

PrimaryManufacture

BulkProcessing

Stage 5

Retailer

DirectSales

Stage 3

FinalAssembly

Stage 4

Wholesaler

SupplyChannel

Stage 6

Customer

ConsumptionFinishedGoods

Product Flow

Materials and Finished Goods

Transportation and Delivery

Serial flow of goods and information through the Supply

Chain

Page 11

The Bull Whip Effect

Chained Pairs

Relationship Model:

Manufacturer1st Tier

Supplier2nd TierSupplier

Requirements Flow

Materials Flow

Requirements Flow

Materials Flow

Distributor

Requirements Flow

Materials Flow

Manufacturer

Materials Flow

Requirements Flow

Retailer

(Pair 1) (Pair 2)

(Pair 3) (Pair 4)

Page 12

Today’s Networked Value Stream

SupplyFunctions

Enterprise Boundaries

Supplier

Customer

Supply ChainEcosystem

Demand

DigitalData

Fulfillment

Internet Linkages

Customer

Functions

CoreCompanyEnablers

Supply ChainEcosystemSupplier

Supplier

Supplier

Supplier

Supplier

Supplier

Customer

Customer

Customer-focused, collaborative, agile, scalable, fast flow, digitized

networks

Page 13

Defining Terms

Defining Key e-

Business Terms:

☛ e-Business An inclusive term used to describe all of the business relationships driven by and operating with the Internet

☛ e-Commerce Refers to the process of performing transactions utilizing the Internet

☛ e-Fulfillment Activity of physically delivering products and services placed in the network supply system through e-commerce transactions

Page 14

Defining Terms (cont.)

☛ Business-to-Business (B2B)Use of Internet, e-commerce applica-tions that enable companies to sell goods and services to other businesses

☛ Business-to-Consumer (B2C) Use of internet, e-commerce applica-tions that enable companies to sell goods and services directly to the customer

☛ e-Procurement Automation and integration of the purchasing process through the use of Internet B2B trading exchanges

Defining Key e-

Business Terms:

Page 15

Defining Terms (cont.)

☛ Collaborative CommerceA business strategy that seeks to utilize Internet technologies to enable closer collaboration and interoper-ability of channel network partners

☛Trading Exchanges

e-Marketplaces Web sites (both private and public) focused on optimizing, synchronizing, and automating selling, buying, and fulfillment.

Defining Key e-

Business Terms:

Page 16

Four Phases Of e-Business

Incr

easi

ng

Bu

sin

ess

Val

ue

Increasing Business System Complexity

I-Marketing

e-Commerce

e-Business

e-Collaboration

1995-1998

1997-2000

1998-2003

2001-2005

-Marketing medium- Product &

service repository- Static

content

- Transactions- Customer

interaction- On-line catalogs,

bidding and personalization- B2C models- Electronic

payment

- B2B models- Extended value

chain- Procurement &

resource management- CRM- Virtual

marketplaces- ERP integration- Core competency- Content mgmt.

- Convergence of B2B models-Global

knowledge exchanges- Interoperative

value chains- Collaborative

processes- Speedy, agile,

scalable supply chains- Real-time

information sharing partners

Phase 1

Phase 2

Phase 3

Phase 4

Page 17

I-MarketingLeveragi

ng the Web for

Marketing

Products and

Services:

Goal: Provide information about company product/service wrap through the Internet

Characteristics:☛ Brochureware: information browsers

☛ Static text and graphics

☛ Access to printed product/service publications

☛ Catalogs and pricing

☛ Not transaction capable

☛ No interaction possible with the customer

Page 18

e-Commerce StorefrontPerformin

g Transactio

ns and Interactio

n Using the Web:

Goal: Provide customers with ability to buy and sell using the Internet

Characteristics:☛ Web-site personalization, self-service,

interactive shopping carts, bid boards, credit card payment, on-line communities

☛ Budding and auctioning

☛ e-Tailing and consumer portals

☛ Consumer care/customer management

☛ Web-site branding

☛ Electronic bill payment

Page 19

e-Business MarketplacesPerforming

Business-to-

Business Transactio

ns:

Goal: The transaction of products and services between businesses (B2B)

Characteristics:☛ Resembles traditional business

purchasing: long-term, symbiotic, and relationship based

☛ Uses e-Commerce functions and business transaction types

☛ Focused on the use of trading exchanges

☛ Used for MRO purchasing

☛ Slow expansion to production inventory purchasing

Page 20

Types Of Exchange

Three Types of Trading

Exchange

Independent ExchangeA many-to-many marketplace composed of buyers and sellers networked through an independent intermediary

Private ExchangeA closed marketplace dominated by a channel master composed of internal business units and preferred business partners linked by a single point of contact, coordination, and control

Consortium ExchangeA some-to-many marketplace consisting of a few powerful companies organized into a consortium and their trading partners

Page 21

e-Collaboration MarketplaceUsing the

Internet to

Activate the

Supply Chain:

Goal: The enablement of value chains based on collaborative and synchronized supply channel networks

Characteristics:☛ Activation of interoperable business

systems

☛ Expansion beyond transaction management to true collaboration

☛ Provide for greater supply chain visibility and connectivity

☛ Communication of forecasts, inventories, capacities, and supply chain events

Page 22

e-Marketplace Regions

Val

ue

of I

nte

rnet

Con

nec

tion

Supply ChainManagement

CollaborativeProduct

Commerce

CollaborativeStrategicPlanning

CollaborativeForecasting &Replenishment

CollaborativeChannel

Management

Supply ChainCollaboration

CollaborativeInventory

Management

CatalogManagement

B2BTransactions

Basic B2BCommerce

Complexity of Internet Connection

Page 23

Three Regions of

e-Collaboration Market-

places:

e-Marketplace Regions

Basic B2B CommerceProvides marketing information and transaction functions via the Web – tactical advantage

Supply Chain Management

☛ Collaborative Channel Management: serve customers with different value, and link supplier selection and transportation visibility with customer service functions

☛ Collaborative Inventory Management: provide inventory visibility beyond supplier chained-pairs

Page 24

e-Marketplace Regions (cont.)

Supply Chain Collaboration

☛ Collaborative Forecasting and Replenishment: real-time broadcasting of demand across the supply chain

☛ Collaborative Product Commerce: deployment of cross-channel teams of developers and engineers to accelerate the time from product conception to product roll-out

☛ Collaborative Strategic Planning: provide for the development of channel vision and strategy

Three Regions of

e-Collaboration Market-

places:

Page 25

Today’s Technology Toolsets

LogisticsFinancials

Procure-ment

Sales &Marketing

Manu-facturing

ProductiveResources

ERPSystem

Supply ChainManagement

EnterpriseBoundary

1. Channel capability-to-promise2. Collaborative planning3. Supply chain event management4. e-Logistics5. Message-centric visibility6. Inbound WMS/TMS

APSCPC

CRM

1. e-Selling/e-Service2. CPFR3. Sales force automation4. Collaborative demand planning5. e-Product configuration6. POS integration7. Data Warehousing8. Outbound WMS/TMS

E-Finance

e-Business Universe

Portals

B2Be-MRO

DataWarehouse

EDI

Page 26

e-Business Enablers & Benefits

Channel Function

Technology Enabler Channel Benefit

Channel Supply Management

Reduced inbound channel inventories and total costsAlignment of channel demand/ supplyDirect feed of requirements data into ERP backboneMetrics for event notification and exception management

Multi-partner ERP data integrationEDI, Web-driven synchronized channel requirementsCollaborative supplier baseB2B exchangese-Logistics/4PL services

Product and Service Processing

Capacity optimizationFlexible/agile manufacturingAlignment of demand with material planning Supply chain visibilityMinimize channel inventories

Collaborative product and service wrap designCollaborative planning, CPFR initiativesCollaborative supplier basee-Procurement initiatives

Page 27

e-Business Enablers & Benefits

Channel Function

Technology Enabler Channel Benefit

Channel Customer Management

Proactive e-RelationshipsMarket of oneResponsible and reliable fulfillment channel functionsMass customizationChannel demand transparency

e-CRMData Warehousinge-Service/Call centersMarketplace metricsReal-time, digital customer demand feedback

Channel Support Activities

Better utilization of channel assetsEffective channel decision- makingResponsive and reliable fulfillment channel functionsScaleable channel aligned with actual demand

e-Logistics/4PL servicesCustomized delivery channels“Real options” managementXML, Java, wireless communications technologiesInteroperable IT platforms

Page 28

e-Marketplace Regions (cont.)Today’s e-

Business Marketpla

ce Benefits:

Increased market supply and demand visibility

Price benefits from increased competition

Increased operational efficiencies

Improved partner and customer segmentation

Improved supply chain collaboration

Synchronized supply chains

Page 29

What’s NextFuture of

e-Business:

Terrorism, war and recession has hurt e-business

The hype and empty promises have soured the concept

Continued requirements for cost management and workflow efficiencies

Continued push for supply chain partner collaboration

Technology advancements for interoperability and low cost

Page 30

What’s NextFuture of

e-Business:

Heavy focus on the procurement side

Growing power of PTXs and CTXs

Growth of a portfolio concept to e-business and trading exchanges

Power of e-Differentiation

Page 31

e-Business Enablers & Benefits

Enabling the Enabling the Supply Supply Chain Chain

UniverseUniverse

Page 32

ThanksFor

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