Antoine HARFOUCHE, PHD com icto.info e-marketing. webs.com Tel

The impact of SIS on firm’s Business Models

TOPICS 1. Business Model 2. The impact of SIS on the pillars of the BM 3. SIS impact on the management infrastructure - Crowdsourcing - Crowdfunding - Collaboration with suppliers - Collaboration with competitors

BUSINESS MODEL

A Business Model A business model can best be described through nine basic building blocks that show the logic of how a company intends to make money. The nine blocks of the following model cover the four main areas of a business : 1.Customers 2.Offer 3.Infrastructure 4.Financial viability The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems. Source: Business Model Generation, Osterwalder and Pigneur 2010

The Business Model Canvas

Pillars of Business Model

- WHAT ARE THE FOUR AREAS COVERED BY THE BMC? - WHAT IS THE MOST IMPORTANT BLOCK OF THE BMC? QUESTION

THE IMPACT OF SIS ON THE PILLARS OF THE BUSINESS MODEL SIS impact on the management infrastructure

Key Resources The most important assets required to deliver our value proposition, distribution channel, and customer relationships  Physical  Intellectual  Human  Financial  Production  Platform

Key Activities [Capabilities] The most important activities a company must do, in order to deliver its value proposition, and makes its business model work.  Marketing  Engineering  Managing  Selling  Logistics  Problem solving  Managing

Key Partners Partnerships can be motivated by needs to acquire knowledge, licenses, or access to customers. Example: Mobile phone companies that license Android, or insurance companies that rely on independent brokers. Partnerships can be motivated by needs to acquire knowledge, licenses, or access to customers. Example: Mobile phone companies that license Android, or insurance companies that rely on independent brokers. Who are key partners in terms of suppliers and intermediaries between the firm and its end-users? Which key resources are we acquiring from partners? Which key activities do partners perform?  Motivations for Partnerships  Optimization and economy  Reduction of risk and uncertainty  Acquisition of particular resources and activities

Crowdsourcing The recruitment and coordination of piece- meal work across the internet to achieve a goal. 1.Speeds up content creation 2.Gets clients and collaborators involved 3.Gets target audience involved 4.Offers diversity and creative choice 5.Drives development of scalable processes (Bratvold, 2012)

Wisdom of the Crowds Utility # of Contributors Expert $$$$ Masses $ ,000+ Equivalent, or greater, utility under the Curve

Crowdfunding

Ancient history…? Crowdfunding is nothing new…

Crowdfunding Crowdfunding is an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small donations Social Media Crowdfunding examples Kiva.org - $325m funding raised, >777,000 lenders, ~800,000 entrepreneurs Kickstarter.com – >24,000 projects funded, > $250m pledged to-date, 2m people have pledged

How does it work?

Different models £% Equity based: Enables the crowd to invest for equity, or profit/revenue sharing in businesses or projects. This form of the model has been the slowest to grow due to regulatory restrictions that relate to this type of activity. Lending based: Projects or businesses seeking debt apply through the platform uploading their pitch, with members of the crowd taking small chunks of the overall loan. Reward based: Enables people to contribute to projects and receive non–financial rewards in return, usually operating a tiered system where the more you donate the better the reward you receive. Donation based: Allows charities, or those who raise money for social or charitable projects, to gather a community online and to enable them to donate to a specific project.

22 Borrow Dairy farmer from Kenya takes a second loan from Kiva to support his business in Kenya. Click Funds for whistleblower site Wikileaks has been contributed through Flattr by 4217 people. Equity Bubble & Balm, a consumer product company into fair-trade handmade soaps raised £74K for 15% equity in the company. Donate Pebble E-Paper Watch, a customizable watch that can run apps for sports & fitness, received over $10mln, with donations linked to rewards. Category cases Examples of the Different models

Different sectors Business Community and voluntary sector Public services’ Education and research Arts

Some possible benefits More than money : time, assets? Crowds of support – network effect Innovative/high relevance ideas New types of audience reached Mainstream funders experiment could help us find out more…

platforms

26 The search for collaborative advantage Seek out opportunities for horizontal as well as vertical collaboration Co-operate to grow the cake, compete on how to slice it Leveraging capabilities and knowledge through collaboration Share assets in the supply chain where appropriate

Collaborative Relationships A company Customers Risk-sharing contracts Collaborative transactions Competitors Trade associations R&D Consortia Standard-setting bodies Industry lobbying co-epetition Suppliers Risk-sharing contracts Collaborative transactions Horizontal partners Benchmarking Collaborative logistics Joint MRO procurement

Collaboration with suppliers

Collaborative Supply Chain Use of digital technologies for organizations to collaboratively design, produce, and manage products through life cycles Moves focus from transactions to relationships among supply chain participants Use of EDI and Internet technologies for rich communications environment –Sharing designs, documents, messages, network meetings, videconferencing

Electronic data interchange (EDI) based collaboration –Buyer-side solution –Hub-and-spoke system –Serve vertical markets Internet based collaboration –Net marketplaces –Private industrial networks Collaborative Supply Chain

EDI based collaboration

Electronic Data Interchange (EDI) Broadly defined communications protocol for exchanging documents among computers –Stage 1: 1970s–1980s—Document automation –Stage 2: Early 1990s—Document elimination –Stage 3: Mid-1990s—Continuous replenishment/access model Today: –EDI provides for exchange of critical business information between computer applications supporting wide variety of business processes

Example of EDI

Vendor Management Inventory EDI based collaboration

Vendor Managed Inventory (VMI) is a procurement and planning practice in which a company delegate’s key inventory management functions to one or more of its suppliers. Under this arrangement the supplier determines the items, quantities, and delivery schedules on behalf of the customer based on information it receives from the customer’s inventory and procurement systems. Using VMI, manufacturers and distributors can anticipate customer needs and provide inventory more proactively than is possible using traditional procurement methods Vendor Management Inventory 35

Vendor Managment Inventory

VMI example: E.W.R.Plus ProducerDistributer

Collaboration in the Supply Chain Internet based collaboration

Topics 1.Net marketplaces: E-distributors E-procurement Exchanges Industry consortia 2.Private industrial networks:

Two Main Types of Internet-Based collaboration 1.Net marketplaces: –Bring together potentially thousands of sellers and buyers in single digital marketplace operated over Internet –Transaction-based –Support many-to-many as well as one-to-many relationships 2.Private industrial networks: –Bring together small number of strategic business partner firms that collaborate to develop highly efficient supply chains –Relationship-based –Support many-to-one and many-to-few relationships –Largest form of B2B e-commerce

Net Marketplaces Ways to classify Net marketplaces: –Pricing mechanism, nature of market served, ownership By business functionality –What businesses buy (direct vs. indirect goods) –How businesses buy (spot purchasing vs. long-term sourcing) –Four main types E-distributors E-procurement Exchanges Industry consortia

Pure Types of Net Marketplaces

E-distributors Most common type of Net marketplace Electronic catalogs representing products of thousands of direct manufacturers Typically, independently owned intermediaries Offer industrial customers single source to purchase indirect goods on spot basis Typically, horizontal Usually, fixed price—discounts for large customers Example: W.W. Grainger

E-distributors

E-procurement Net Marketplaces Independently owned intermediaries Connect hundreds of suppliers of indirect goods Firms pay fees to join market Long-term contractual purchasing of indirect goods Revenues from transaction fees, licensing consultation services and software, network fees Offer value chain management (VCM) services Many-to-many market Example: Ariba

E-procurement Net Marketplaces

Exchanges Independently owned online marketplaces Connect hundreds to thousands of suppliers and buyers in dynamic, real-time environment Vertical markets, spot purchasing in single industry Charge commission fees on transaction Variety of pricing models Tend to be buyer-biased Suppliers disadvantaged by competition Many have failed due to low liquidity

Exchanges

Industry Consortia Industry-owned vertical markets Purchase of direct inputs from set of invited participants Emphasize long-term contractual purchasing, stable relationships, creation of data standards Ultimate objective:  Unification of supply chains within entire industries through common network and computing platform Revenue from transaction and subscription fees  Many different pricing mechanisms Can force suppliers to use consortia’s networks

Industry Consortia

The Long-Term Dynamics of Net Marketplaces Pure Net marketplaces moving from “electronic marketplace” vision toward more central role in changing procurement process Consortia and exchanges beginning to work together in selected markets E-distributors joining large e-procurement systems and industry consortia as suppliers Movement from simple transactions for spot purchasing to longer-term contractual relationships involving both direct and indirect goods

Net Marketplace Trends

Private Industrial Networks Private trading exchanges (PTXs) Web-enabled networks for coordination of trans- organizational business processes (collaborative commerce) –Direct descendant of EDI; closely tied to ERP systems –Manufacturing and support industries –Single, large manufacturing firm sponsors network Range in scope from single firm to entire industry Example: Procter & Gamble

P&G’s Private Industrial Network

Characteristics of Private Industrial Networks Objectives include:  Efficient purchasing and selling industry-wide  Industry-wide resource planning to supplement enterprise-wide resource planning  Increasing supply chain visibility  Closer buyer–supplier relationships  Global scale operations  Reducing industry risk by preventing imbalances of supply and demand Focus on continuous business process coordination Typically, focus on single sponsoring company that “owns” the network

Private Industrial Networks and Collaborative Commerce Forms of collaboration: –Collaborative resource planning, forecasting, and replenishment (CPFR): Working with network members to forecast demand, develop production plans, and coordinate shipping, warehousing, and stocking activities to ensure that retail and wholesale shelf space is replenished with just the right amount of goods –Demand chain visibility –Marketing coordination and product design Can ensure products fulfill claims of marketing Feedback enables closed loop marketing

Pieces of the Collaborative Commerce Puzzle

Private Industrial Networks Collaborative Planning, Forecasting and Replenishment (CPFR)

Builds on “best-in-class” VMI implementations Principles: –Builds on the trading partners’ competencies (includes several “scenarios”) –Working off a single forecast which imbeds the retailer’s view (of multiple suppliers’ plans) and the supplier’s view (of multiple retailers’ actions) –Making the whole supply chain more efficient

Collaborative Planning, Forecasting and Replenishment (CPFR)

CPFR Process Model

Original plan is synchronized

Easily set up criteria, so that when exceptions arise …

Exceptions can be quickly spotted

Implementation Barriers Concerns about sharing of proprietary, sensitive data Integration of private industrial networks into existing ERP systems and EDI networks difficult, expensive Requires change in mindset and behavior of employees and suppliers –All participants lose some independence

- In which kind of SCMS the supplier tale the responsibility of proposing orders ? - How can a firm invest in Collaboration with supplyers while having thousands Question

Collaboration with competitors

Co-opetition: a definition 69 A business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together. A “non zero sum” scenario, in which the sum of what is gained by all players is greater than the combined sum of what the players entered the scenario with. Source: D. Meyer, 15 th March 2011 and istockphoto

Co-opetition 70 Source: D. Meyer, 15 th March 2011 Cooperative Competition Co-opetition occurs when companies work together in parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs. Basic premise: - Co-opetition strategy and value creation leverage the alliance - Partner with other shippers (even competitors) to control logistics and transport costs - Load consolidation

Co-opetition

Co-opetition Partners 72 Source: D. Meyer, 15 th March 2011 Producers, Customers, Consumers who drive producer demand and determine product eco-footprint Shippers and Terminal Operators who generate the freight flows and provide the critical infrastructure for product flow Logistic Service Partners (3PLs) who can design and implement optimised solutions and move the freight Fourth Party Providers who can facilitate partnerships, referee blockages, find common ground Governments who can assure that legal and regulatory arrangements are in place to support seamless collaboration

Co-opetition = Value Creation 73 Source: D. Meyer, 15 th March 2011, and reubenmiller.typepad.com Co-opetition does not simply emerge from coupling competition and cooperation issues Co-opetition implies that cooperation and competition merge together to form a new kind of strategic interdependence between firms, giving rise to a co-opetitive system of reciprocal value creation.

The Prisoner’s Dilemma – The Importance of Trust 74 Source: