1 The Impact of E-Business Dr. Simon Croom March 2003

2 Some objectives for this session: To provide an insight into the nature of ‘E- Business’ implementation across Supply Chains To examine some of the main implications for your business & your chains To provide an opportunity to benefit from our research study To engage in dialogue, debate and disagreement!

3 Some definitions ‘E-Business’ - the conduct of business transactions, business planning and control, communications and information sharing over a common I.S. platform such as the web. ‘E-Commerce’ The conduct of business transactions and trading over a common I.S. platform such as the web.

4 Why focus on Supply Chains? Because the Internet is an Inter- Organisational Communication Channel Because E-Business systems are both intra- and inter-organisational Because organisations are adopting E- Business to manage within and across supply chains

5 Three Main areas of E- Business Activity Marketplaces - for trading Knowledge sharing e.g. product development, customer strategies Supply Chain Collaboration/ synchronisation

6 selectrequisitionapprovestatusreceive The objective is to automate the ENTIRE supply chain from product and service selection through receipt. Using solutions that offer real-time interactivity with trading partners and customers worldwide Starting with the Customer’s Requirement

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8 Hottest Segment of B-to-B eCommerce? Indirect 36% Direct 28% Taxes 13% Taxes 13% HR 17% Profit 6% CEO View Over 1/3 of cost to business 60% for service business Clear Target! Source: CAPS (Center for Advanced Purchasing Studies) Tempe, AZ, USA Division of Corporate Dollar Typical Manufacturer Internal E-Business

9 Translate Costs into Profits ! 3% reduction in indirect cost equals 50% increase in Profit Indirect 33% Direct 28% Taxes 13% Taxes 13% HR 17% Profit 9% Typical Manufacturer Source: CAPS (Center for Advanced Purchasing Studies) Tempe, AZ, USA CEO View Division of Corporate Dollars Internal E-Business

10 Indirect Cost Reduction Targets Source: National Association of Purchasing Managers. Cost of Goods Processing Employee Touch Inventory Inter-Business Communication & Document Exchange What You Pay for Goods & Services Carrying Costs Internal procedures Division of Corporate Pounds Internal E-Business

11 The Impact and Evolution of E- Business Across Supply Chains

E-Business In the Supply Chain - Five Phases of Evolution

13 Cooksons.com

14 Supply Chain eBusiness models EDI High speed complex data transmission to core customers & suppliers Static publishing, Catalogues & information to users EDI High speed complex data transmission to core customers & suppliers Static publishing, Catalogues & information to users Wave 1 - Emphasis on Promoting to Customers

E-Business In the Supply Chain - Five Phases of Evolution

16 Seller-side or buyer-side system connects with existing transaction systems Sales Order Systems - Web-based order taking Electronic Funds Transfer via BACS system Seller-side or buyer-side system connects with existing transaction systems Sales Order Systems - Web-based order taking Electronic Funds Transfer via BACS system Wave 2 - Emphasis on Transaction Systems Supply Chain eBusiness models

17 Public Web Each Seller offers products at list price Exchange Commodity Trading Venue (Auction) Market Place Independent Org provides access to many suppliers Company Hub Individual Companies manage multiple supplier Contracts Ad hoc Negotiated Buyer Supplier Buyer Exchange Venue Commodity Market Suppliers Seller Extranet Seller access to pre- neg products and services Supplier Suppliers How transactions may be executed

E-Business In the Supply Chain - Five Phases of Evolution

19 E-Procurement system integrates with enterprise control systems CRM system integrating across the organisation ERP system implementation E-Procurement system integrates with enterprise control systems CRM system integrating across the organisation ERP system implementation 2002/5 Wave 3 - Emphasis on Interfacing with Supply Chain Supply Chain eBusiness models

20 Reverse Auctions for Buyers Auctions for Suppliers A major phenomenon: electronic auctions Streamlines strategic and off—contract buying Leverages dynamic, Internet-based pricing Dramatically lowers Cost of Goods A large channel to new buyers Cost effective method to liquidate inventory More revenue from existing customers Auctions May Benefit Buyers and Suppliers

E-Business In the Supply Chain - Five Phases of Evolution

22 Extended enterprise solution - integrating marketplaces, portals and auctions Procurement and Sales via an E-Portfolio ‘Middleware’ adoption to integrate legacy systems Extended enterprise solution - integrating marketplaces, portals and auctions Procurement and Sales via an E-Portfolio ‘Middleware’ adoption to integrate legacy systems 2003/12 Wave 4 - Emphasis on Coordination across the Supply Chain Supply Chain eBusiness models

23 Emerging industry portals = many examples $200bn Global Supply Chain worth $178000bn Auto Industry Example Covisint

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E-Business In the Supply Chain - Five Phases of Evolution

26 Integrated CAD/CAM/CSCM Tracking, Global Positioning as integral part of E- Fulfilment systems Supply chain positioning a key strategic issue Integrated CAD/CAM/CSCM Tracking, Global Positioning as integral part of E- Fulfilment systems Supply chain positioning a key strategic issue 2002/10 Wave 5 - Emphasis on Integrating the Supply Chain Supply Chain eBusiness models

27 Electronic commerce redefines supplying roles: E*Trade - Centre Player RS- Parallel channel Autobytel - Aggregator FedEx - Functional Outsourcer Amazon - Edge Player

E-Business In the Supply Chain - Five Phases of Evolution

29 E-Business project Critical Success Factors € If you can’t support the business case, then start again E-strategy must be seen as Cross-functional Based on Business first, ‘e’ second Clear E-Strategy project structure Technology experts in a key project role E-strategies identify new channels to customers - do you want them?

30 E-Business project Critical Success Factors - 2 What have customers said about CRM and E- Business? What are the implications of CRM for existing processes, strategies and organisation? What are the skills needed? Where are the development needs? Be prepared to spend 75% of time presenting internally to CRM teams,sales and others.

31 E-Business project Critical Success Factors - 3 Integration with operations and logistics Logistics channel design MUST be an integral element of CRM strategy implementation Understand the impact of E-Business on demand profiles What are the implications for relationships with existing channels. Identify the portfolio: Which products/services/customers via which channel?

32 Technology Policy & Processes People Program Manage- ment Critical Elements of E-Business Strategies

33 What can YOU do? Understand the stresses in your operations & supply chains Be aware of the impact of ‘E’ on those stress points Participate (FREE!) in our benchmarking study at

34 To AUDIT your Business Logon to Click on the SPA Methodology link Login to the ht2 site using: Username SPA** Password SPA** (Same as your username) I will allocate your number Complete the survey Your results will be ed to you in early April as a benchmark report

35 It’s not about technology...

36 ….but new ways of doing business