Economic Impact Based on Andrew McAfeePaper, September, 2000 MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida Internet & Manufacturing

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 22000/11/04Economic Impact of the Internet Revolution: Manufacturing Main topics IT, Internet (TCP/IP), e-marketplaces Their influence on manufacturing performance Taxonomy of mechanisms that affect Manuf. Areas of impact Levels of transformation Future developments Data needs

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 32000/11/04Economic Impact of the Internet Revolution: Manufacturing Areas of impact (I) Growth, output, productivity Productivity grew 48% to 74% more in the second half of the 90s than in the first. – Missing link provided by the Internet P Q1Q1 Q2Q2 Increased Demand Lower Costs (Goldman Sachs study) Increase in GDP growth of 0.25%+ over a 10-year period Services: Not the same picture (productivity decline) Internal costs reduction (Cisco data)

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 42000/11/04Economic Impact of the Internet Revolution: Manufacturing Source: US Bureau of Business Statistics

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 52000/11/04Economic Impact of the Internet Revolution: Manufacturing Areas of impact (II) New organizational forms Decentralization & freelancing: Virtual factory Continuous availability of information Networking and virtual supply chains E-marketplaces: Agregation: Availability of a large number of buyers and suppliers Facilitation: Availability of information about potential partners Specific tools: Auctions (fwd/rev), procurement....

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 62000/11/04Economic Impact of the Internet Revolution: Manufacturing internet Cost Reduction Firm Growth Firm Oganization Virtual Supply Chain Virtual Factory Productivity internet

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 72000/11/04Economic Impact of the Internet Revolution: Manufacturing Levels of transformation (I) Within Companies Intranets Enterprise Information Technology (EIT) Systems integration Data sharing Messaging Web-based front end Procurement savings Raw materials, MRO goods

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 82000/11/04Economic Impact of the Internet Revolution: Manufacturing Levels of transformation (II) Alliances across partners Point-to-point links Integration across companies Definition & automation processes that Cut-across companies Multi-partner integration Supply chain management Information sharing Process consortia Common standards (taxonomy, end-user platforms...) Electronic business interfaces

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida 92000/11/04Economic Impact of the Internet Revolution: Manufacturing Levels of transformation (III) Market E-marketplaces Growth projections (Forrester Research study) 53% of all online business trade in 5 years ¼ of respondents anticipate majority of own trade through e- marketplaces Current state Mainly lists of firms and (sometimes) their products Mostly supported by manual backoffice

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing Future developments (I) Two salient trends in opposition: Realization of value from IT investments Consensus about benefits of IT to business Sustained high levels of investment in IT must be explained by their perceived value to business managers Great heterogenity in IT investments High variance in rate of trade conducted via the Internet (within each industry and across different industries) Some traditional firms may not be able to successfully adopt new business models In some industries Internet adoption is proving to be miscarrying in the long run

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing Future developments (II) Consolidation: What will happen to slow learners and unsuccessful adopters? IT may induce other benefits besides productivity: Customer service Product & service quality Support for reengineering efforts Better flexibility Outsourcing Emergence of ASPs

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing Data needs Measurement of B2B e-commerce Ongoing censuses on: IT endowments of manufacturers Yearly investments to increase, enhance and/or replace existing endowments Standardized method for measuring purchasing vs. leasing

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing Questions In a customized world, can we really automate e-markets? Is that really desirable? Standardization Vs. Customization Can a firm conduct e-business without IT capabilities? (Can a person drive a car witout mechanical capabilities?)

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing Comments (I) The examples used are Cisco and Oracle, companies whose core business is IT technology(ies). Intranet and Internet – Perhaps the same technology, but surely not the same philosophy

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing Comments (II) IT is NOT Internet – expenses with computers may be or may be not expenses with Internet Internet means connectivity – wich includes connection between different EIT

MSc Engineering Policy and Management of Technology Alexandra Campino, Jorge Monteiro, Pedro Borges de Almeida /11/04Economic Impact of the Internet Revolution: Manufacturing