Session 6 Topics

1
Session 6 Topics

• Midterm Exam Review
• Project Info
• Web Site Marketing Promotion
• B2B
• Supply Chain Management

2
Tracking and Analyzing Customer Data

• Tracking devices User ID card (embedded URL),
  click-through banner advertisement, Web bugs
  (clear GIFs)
• Log-File Analysis WebTrends
• Data Mining Uncover patterns in customer data to
  improve CRM and marketing campaign
• Datadistilleries, appliedmetrix
• Customer Registration
• Cookies
• Drawback can be altered, browser specific, cant
  recognize multiple users

3
E-CRM

• Customer acquisition costs 34, online 70 (BCG)
• Repeat customers 57 more revenue longer
  lifetime value
• It takes 2.5 years for a regular amazon customer
  to yield a profit
• Call Handling
• Sales Tracking
• Transaction Support
• Personalization and customization of customers
  experience and interactions with a Web site, call
  center, and methods for customer contact

4
Using Push Technology
1. Initial permission-based Registration with Site
4. Customer Database Collection Segmentation
2. Web page request
Web Page Server
Web Browser Cookie 132896
3. Cookie Identification
5. Dynamic Data
6. Personalized Web Site
5
Personalization

• Uses information from tracking, mining and data
  analysis to customize a persons interactions
  with a companys products, services, Web site and
  employees
• Collaborative filtering (Recommender System)
• Compare a present users interests with those of
  past users to offer recommendations
• Example berkeley
• Rules-based personalization based on the
  subjection of a users profile to set rules or
  assumptions. Excite.com (My excite start page
• Intelligent Agents

6
Site Usage Analysis

• Site and page hits
• General site activity and growth
• Use statistics -- time of day, day of week, and
  month/season
• Caching--browser, proxy
• Users
• Domain and user spikes
• Single vs. Multi-Visit
• visit length
• Language and geography patterns
• Errors and Alerts
• Site Reliability

• Sessions
• Entry and exit points
• Common paths
• Date and Time Stamps
• Date and time patterns
• Site activity and responsiveness by hour, day,
  and week
• Other Access
• No. of search engines attempting to index the
  site
• Search engine keywords
• Referring sites
• Limitation of Log Analysis

7
Impact Measures

• Cost Reduction
• Printing and postage avoidance
• Communication Expense Avoidance
• Headcount Expense Avoidance
• Facilities and Capital Expense Avoidance
• Tax Avoidance or reduction

8
Impact Measures

• Revenue Growth
• Increased Sales of Existing Products or Services
• Increased Sales of New Internet-based Products or
  Services
• Improved Customer Satisfaction
• Improved Surveys or Customer Evaluations
• Changes in Complaint Levels
• Quality Improvements
• Addressing Other Business/Customer Needs

9
Cost, Costs, and More Costs

• Types of Costs
• Predictable
• Soft Costs/Savings
• Hidden Costs
• Generational Costs

• Cost Factors
• bandwidth options
• web server platform
• business publishing
• network security
• full annual cost for an intranet client
• building interactive applications
• content maintenance
• People
• Catalog/search engine software
• Payment software

10
Internet Service Providers

• Communication Services
• IP, DNS, e-mail
• Cost of the desire bandwidth.
• Outbound connections
• Reliability
• Extra Services

• Hosting services
• Server and staff support
• 24x7 support
• Bandwidth
• Scale
• security

11
ISP Selection Criteria

• Hardware and software requirement for your
  application
• Degree of control
• Commitment for reliability
• Performance for peak loads
• Update content
• Security measures
• Quality of staff support
• Costs
• Reports

12
B2B E-Commerce

• Business-to-Business or B2B E-commerce -
  inter-organizational E-commerce
• Contrasts with the following.
• Business-to-Consumer or B2C E-commerce -
  electronic commercial interaction between the
  enterprise and the end consumer.
• Business-to-Employee or B2E E-commerce-
  intra-organizational E-commerce.

13
Brief History of Ecommerce B2B Marketplaces

• E-commerce and B2B are not new concepts.
• Current systems emanated more directly from
  Electronic Data Interchange (EDI).
• EDI provides for the exchange transaction
  information over proprietary Value-Added Networks
  (VANs).
• EDI participants realized benefits such as
• reduction in process costs, and
• enhanced profitability.
• EDI participants also incurred significant
  expenditure in
• EDI deployment costs, VAN charges.
• EDI limited to a few very large wealthy
  organizations.
• Enter the Internet, B2B Marketplaces
  Internet-based EDI!
• B2B extranet system deployment on the rise.
• Third-party B2B Market Makers are key movers in
  evolution of internet-based EDI.

14
B2B E-Commerce Key Characteristics

• How is B2B conducted?
• B2B commerce can be conducted directly between a
  buyer and seller or via an online intermediary.
  The intermediary can be
• a person or
• an organization or
• an electronic system
• What are the types of transactions?
• Spot Buying
• buying goods and services at market prices
• often facilitated by a third party exchange
• Strategic Sourcing
• long-term contracts that are usually negotiated
  to get a good cost
• advantage
• often this is done by streamlining your supply
  chain

.
15
B2B E-Commerce Key Characteristics (continued)

• What is the essential information processed in
  B2B Ecommerce?(i.e., what should you to expect
  to be sent back and forth between the buyer,
  seller and the intermediary)
• product details
• customer profile
• supplier conditions
• product process - capacities
• transportation, times, costs
• What are the primary B2B business models?  
• Company Centric Models 
• which would include
• Supplier Oriented Marketplace
• Buyer Oriented Marketplace
• Intermediary Oriented Marketplace (the Market
  Makers)
• Many-to-many Marketplaces also known as
• Trading Communities
• Trading Exchanges or Exchanges

16
B2B E-Commerce Key Characteristics (continued)

• The key B2B entities include
• Selling Company
• Buying Company
• Electronic Intermediary
• Deliverer
• Network Platform
• Protocols and communication
• Back-end information system - including ERP
  (Enterprise Resource Planning)

17
B2B E-Commerce

• Project to grow in US from 450 billion in 2000
  to 3 trillion by 2004, 53 from e-market place
  global B2B 6.3 trillion in 2004 (Forrester
  Research)
• 16x growth than B2C
• Competitive Pressures lower costs, shorter
  cycle time, quicker response, and global markets

18
Emergence of online exchanges - three forces
shaping the B2B marketplace
B2C (Business to Consumer) B2B (Business to
Business)
Industry-Centric Exchanges
B2B Market Opportunity 4.5 - 8 trillion by
2004 IDC Gartner 2002
Market Makers

• Aerospace (Boeing)
• Automotive (GM/Ford)
• Agricultural (Cargill)
• Chemical (DuPont)
• Foods (GMA)
• Retailing (Wal-Mart)
• Utilities

• Vertical
• Foodbuy.com
• First Index (custom manufactured parts)
• Horizontal
• Commerce One Market Site
• Ariba Network

8000
1500
1000
500
0
1999
2002
2003
2004
2005
Technology Providers and Engines
Ariba Commerce One Oracle SAP I2 Manugistics EAI
Software Manufacturers
19
Distinguishing B2B B2C

• B2B E-commerce is the exchange of products,
  services, or information between businesses
  rather than between businesses and consumers.
• e-Business.
• Suppliers and Big Cs - transactions between
  businesses.
• Focus on transaction efficiency.
• B2C E-commerce the retailing of goods and
  services directly to end consumers via the
  Internet.
• Suppliers little Cs transactions between
  goods and service providers and end consumers.
• Dis-intermediation.
• (theoretically) lowers inventory and
  distributions costs.

20
What is a Supply Chain?

• All organizations and processes related to
  products and services sourced by buying
  organizations, typically from raw materials
  through consumption.
• The set of business processes that link material
  suppliers to manufacturers/assemblers to
  retailers to customers.
• One objective is to develop and deliver products
  as one "virtual" organization of pooled skills
  and resources.
• Another key objective is to obtain benefits by
  streamlining the movement of manufactured goods
  from the production line into the customers.

21
Supply Chain - all organizations and processes
related to products and services sourced by
buying organizations, typically from raw
materials through consumption.
B-to-B
B-to-C
Warehouse and Inventory Management
ProductDevelopment
Supplier Management
Transport
Category Management
Store Management
Customer Relationship Management
ProductDevelopmentManagement
E-ProcurementSoftware
Supply ChainManagement
CategoryManagement

• Product design
• Product development
• Vendor capacity
• Quality
• Sample management
• New product introduction

• Invoice processing
• Payment
• RFI/RFP
• Catalog development
• Vendor certification
• Item management
• Product availability
• Production planning
• Technical specifications
• Second- and third-tier suppliers

• Order management
• Product tracking
• Capacity management
• consolidation
• Replenishment
• Reverse logistics

• Goods-in scheduling
• New product introduction
• Planning for seasons and events
• Allocation

Supply Chain Context of E-commerce
22
Supply Chain Example Health Care Products
Customers
Hospitals/Drug Stores
Distributors
Information
Product
End Product Manufacturer
Raw Material Supplier
23
Supply Chain Generic Process
Downstream
Upstream
Internal
2nd tier supplier
1st tier supplier
Distribution Centers
2nd tier supplier
Retailers
Customers
Assembly/ Manufacturing/ Packaging
1st tier supplier
2nd tier supplier
Source Handfield and Nicholas, 1999
24
What is Causing the SCM Boom?
E-commerce Value Proposition
E-Business Structural Migration
Give customers what they want, when and how they
want it, at the lowest cost
Rapid demand fulfillment Internet-enabled
supply chain planning and execution
Managerial challenge? Achieve integration of
inter-enterprise processes while
simultaneously achieving flexibility and
responsiveness to changing market conditions and
customer demands
25
Supply Chain Management Sub-processes

• Procurement Management
• Supplier management
• Inventory Management
• Channel management
• Order Management
• Payment management
• Financial Management

26
Two Views of Supply Chain

• Push-based Model "build-to-stock"
• Traditional approach.
• The merchandise is pushed into the customer's
  hands.
• Pull-based Model "build-to-order"
• A demand-driven model -- the customer initiates
  the supply chain.
• More compelling and more suitable for Internet
  commerce.

27
Push-based Supply Chain

• Manufacturer --gt Retail Distribution Center --gt
  Retail Store --gt Consumers
• Manufacturer
• Financial and marketing-driven forecast
• Master scheduling
• Replenishment based on distribution center
  inventory
• Manual purse order and invoicing
• Retail Distribution Center
• Order point based on warehouse inventory and
  historical forecasts
• Deals, promotions, and forward buying
• Retail Stores
• Order point based on shelf inventory and
  forecasts
• Promotions and Manual entry of items to be
  reordered

28
Pull-based Supply Chain

• Consumers --gt Retail Stores --gt Retail
  Distribution Center --gt Manufacturer
• Retail Stores
• POS data collection
• Perpetual inventory checks
• Automatic replenishment using EDI services
• Retail Distribution Center
• Automatic replenishment
• Shipping container marking
• Cross-dock receiving
• EDI services

29
Different Supply Chain Strategies
Past Enterprise focus (Nabisco)
A
A
A
Store 1-800
Consumer
Retailer
Manufacturer
Supplier
Today Partner focus (PG)
A
Collaborative Systems
Store 1-800 Web
Manufacturer
Consumer
Supplier
Retailer
Emerging Direct focus (Dell)
A
Shared Market Data
Virtual Fulfillment
Web
Consumer
Supplier
Manufacturer
Successful SCM requires inter-enterprise
integration!
30
Supply Chain Investment Trends

• Worldwide dispersion of manufacturing and
  distribution facilities
• Channel unpredictability is the norm
• Responsiveness over efficiency
• Companies are willing to accept lower margins to
  maintain and increase market share

31
Value Propositions of Internet-Enabled SCM

• Reduce cost of selling
• Reduce order processing costs
• Improve service levels for low-volume customers
• Provide higher-quality information for customers
• More accurate information

32
Approaches to SCM

• EDI Relying on VAN (Value-Added Proprietary
  Network, e.g. GE, Wal-Mart)
• E-Commerce Relying on VAI (Value-Added Internet
  Service Providers, e.g., ATT, IBM, AOL)
• E-Commerce Relying on Public Internet

33
Typical Flow of EDI Messages
Buyer
Supplier
RFP
Response to RFP
Purchase Order
P.O. Acknowledgement
P. O. Change
P.O. Acknowledgement
Functional Acknowledgement (For each transaction)
34
Traditional versus Web-Based EDI
Traditional EDI
Translate
Translate
Store and Forward
Business Application
EDI Formatted Message
Value Added Network
EDI Formatted Message
Business Application
Orders
Web-based EDI
Web Server
Internet
Inventory
EDI Server
Legacy
Web Browser
35
Limitations of Traditional EDI

• Two Standards
• ANSI x.12 vs. EDIFACT
• EDI Architecture
• Costly Proprietary VANs
• Participation sometimes through Coercion and
  Pressure
• Limited impact on process change

36
Benefits of Internet-enabled EDI (VAI)

• Publicly accessible network
• Decrease in communication cost
• Common standards
• Security
• User-friendly infrastructure

37
Future for EDI-provided through VANs?

• Traditional VANS too expensive
• EDI -- application to application--limited impact
  on SCM
• VAIs have growth potential

38
Next Session Highlights

• Review reading assignments
• T S Ch 5, 13, 14, 15
• Supply Chain Management (continued)
• B2B Ecommerce Models