Y Narahari, Computer Science and Automation, Indian Institute of Science B2B MARKETPLACES AND E-PROCUREMENT Y. NARAHARI Computer Science and Automation Indian Institute of Science Bangalore

Y Narahari, Computer Science and Automation, Indian Institute of Science OBJECTIVES OF THE TALK  To bring out and understand the "important" role of electronic marketplaces in supply chain management  To understand "critical" design and implementation issues of E-marketplaces  To understand the issues in E- procurement

Y Narahari, Computer Science and Automation, Indian Institute of Science OUTLINE OF THE TALK  Introduction  How do they add value?  Design Issues  E-Procurement

Y Narahari, Computer Science and Automation, Indian Institute of Science ELECTRONIC MARKETS  E-marketplaces are emerging to serve each point of every industry's supply chain  E-markets are highly collaborative E- Business models that organize complex business processes between multiple participants into a virtual commerce community

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETPLACES : VALUE CREATION  efficient transactional processes  new business relationships  new business models  new businesses

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETPLACES: CATEGORIES  Horizontal  Vertical  Private (sell side, buy side)  Public

Y Narahari, Computer Science and Automation, Indian Institute of Science EMERGENCE OF E-MARKETS  Alliance of IBM - i2 - Ariba  Alliance of GM - Ford - Chrysler  Alliance of mySAP- Commerce One - Oracle  chemdex, plasticsnet, e-steel, paperexchange, metalsite, capacityweb, mro, bandx, logisticsweb, etc.  In India: Indiamarkets.com, eBizchem.com, Autoexchanges

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETPLACES: A TAXONOMY OperatingManufg Systematic sourcing MRO HUBSCATALOG HUBS Spot sourcingYIELD MANAGERS EXCHANGES What is Bought How it is bought

Y Narahari, Computer Science and Automation, Indian Institute of Science BENEFITS TO BUSINESSES  Extend the presence and reach of a company  Facilitate doing business with anyone, anytime, anywhere  Aggregation of content and facilitation of workflow lead to significant reduction in transaction costs  Cycle times are reduced and deliveries are quicker  Improves relationship with trading partners  market efficiencies Better inventory management Better visibility leading to predictability

Y Narahari, Computer Science and Automation, Indian Institute of Science BENEFITS TO BUYERS  Aggregation of multiple suppliers  Direct access to suppliers and through dynamic pricing  Location and tracking of new suppliers  Provides more negotiating power  Leads to quick response buyers

Y Narahari, Computer Science and Automation, Indian Institute of Science BENEFITS TO SUPPLIERS  Provides reach to vast, untapped global markets  True value of products can be realized through aggregation and participation of buyers  Enables to support JIT practices  Leads to quick response suppliers

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETS: DESIGN ISSUES  NEGOTIATIONS Distributed Negotiations Integrative Negotiations Auctions  DESIGN OF USER INTERFACES

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETS: DESIGN ISSUES ALGORITHMS  Buyer Aggregation  Supplier Aggregation  Demand Aggregation  Buyer-Seller Matching  Dynamic Pricing  Multi-Attribute Auctions  Combinatorial Auctions

Y Narahari, Computer Science and Automation, Indian Institute of Science EXAMPLE OF A MARKET ALGORITHM  3 BUYERS and 4 SUPPLIERS Buyer X : (50 A, 10 B) Buyer Y : (20 B, 30 C) Buyer Z : (40 A, 20 C, 10 D)  BUNDLING Bundle 1: (90 A)Negotiated contract Bundle 2: (30 B, 50 C)Sealed bid auction Bundle 3: (10 D) Dynamic auction

Y Narahari, Computer Science and Automation, Indian Institute of Science EXAMPLE OF A MARKET ALGORITHM  Sealed Bid Combinatorial Auction Supplier P : (10 B, 10 C, p) Supplier Q : (30 B, q) Supplier R : (50 C, r) Supplier S : (20 B, 50 C, s)  An optimization algorithm decides the best bids and handpicks the optimal subset of bids, based on cost, delivery times, etc.

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETS: DESIGN ISSUES TECHNOLOGY Authentication and security Electronic payment Software architecture Distributed objects Agents and mobility Scalability Interoperability

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETS: DESIGN ISSUES  INTEGRATION with existing best practices with existing business processes with existing catalogs with ERP software with the backend with other E-markets

Y Narahari, Computer Science and Automation, Indian Institute of Science E-MARKETS: SOFTWARE ARCHITECTURE

Y Narahari, Computer Science and Automation, Indian Institute of Science E-PROCUREMENT  All activities involved in obtaining materials and services and managing their inflow into an organization toward the enduser  Basic steps: Information Negotiation Settlement

Y Narahari, Computer Science and Automation, Indian Institute of Science EMERGENCE OF E-PROCUREMENT  Electronic catalogs  Internet search engines  Web-EDI  On-line auctions and bidding  Advances in E-commerce

Y Narahari, Computer Science and Automation, Indian Institute of Science E-PROCUREMENT PROCESS

Y Narahari, Computer Science and Automation, Indian Institute of Science BEST PRACTICE E-PROCUREMENT SYSTEMS  Dell online (Ariba Buyer)  Cisco  Enron corporation (mySAP and Commerce One)  Lockheed Martin (mySAP)  GE capital (i2 Buyside solution)  Defense Logistics Agency  Lawrence Livermore Laboratories

Y Narahari, Computer Science and Automation, Indian Institute of Science E-PROCUREMENT: VALUE ADDITIONS  Demand aggregation  Bundling and supplier aggregation  Optimal vendor selection  Innovative dynamic auctions  Multi-attribute decision support

Y Narahari, Computer Science and Automation, Indian Institute of Science CONCLUSIONS  E-markets are key to faster and more efficient trade  E-markets have a positive influence all through the supply chain  There are challenging technical and technological issues in setting up and operating E-markets  E-procurement has emerged in a big way