Adapted from E-Logistics

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Adapted from E-Logistics
H. Donald Ratliff don.ratliff_at_isye.gatech.edu Pin
ar Keskinocak pinar_at_isye.gatech.edu www.tli.gatec
h.edu
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E-business changes the way we think!!!

• Buying
• Selling
• Fulfillment
• Inventory
• Transportation
• Software
• Investment
• Outsourcing

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Internet

• The worldwide number of Internet users 196
  million in 1999 (International Data Corporation)
• The number of users is expected to reach one
  billion by 2008
• Users who have been online for more than three
  years spend an average of 10.5 hours per week
  online, compared with 6.6 hours a week for
  newcomers
• By 2002 there will be over 85 million smart
  hand-held devices in the world

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E-commerce growth

• E-commerce volumes double every 9-12 months
• B2B volumes are expected to exceed B2C by a
  factor of 6 to 12 by 2005
• By 2002, E-commerce revenues will exceed 1 of
  Global Economic Product

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On-line Retail

• founded 1873
• 1000 stores in the U.S.
• on-line presence May 1997

founded 1971 1100 stores in the U.S. on-line
presence late 1998
founded 1994 no physical stores on-line presence
July 1995
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Revenues
3.1 B (10)
2.7 B (17)
0.6 B (313)
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Profits
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Market Cap
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Amazon.com

• 300 million distribution-center initiative
• Books, music videos, toys and electronics
• New DCs in Nevada, Kentucky and Kansas
• Fastest expansion of distribution capacity in
  peacetime history Bezos

Ref Wall Street Journal Sept 8, 1999
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Challenges

• Dont outsource -- keep skills they develop
• Design flexible DCs -- dont know what will go
  in them
• Features
• Orders with many address and message on each
• Wish lists
• Tracking searches Pokedex?

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Package Delivery
Wall Street Journal Nov 4, 1999

• E-services
• Shipment rating
• Document preparation
• Tracking
• E-mail alerts
• Programmer APIs

• UPS
• 55 of online Christmas
• FedEx
• 1994 tracking web site
• Smarter companies
• Dismissed residential
• Dismissed mail order
• 10 of online Christmas
• USPS
• Cheap home delivery
• 34 of online Christmas

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Package Delivery Challenges

• 20 million customers expected to purchase over
  the Internet by 2007
• Home Deliveries
• Currently 10 of the package delivery volume
• Average revenues per delivery
• Commercial Areas 28.00
• Suburban Areas 10.40
• Core business
• Capacity
• Cost -USPS

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E-Grocery

• 450 billion brick-and-mortar industry
• E-grocery growth forecast
• 148 million
• 3.5 billion by 2002

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Webvan
Automation!

• Management
• Lewis Borders (Borders Books)
• George Shaheen (Andersen Consulting Chief Exec)
• Financial
• ½ year revenue 395,000
• ½ year net loss 33,500,000
• Market cap 4.9 billion
• Logistics
• 1 billion with Bechtel Group for 26 giant
  warehouses
• Focus on automation (carousels)

Ref Wall Street Journal Sept 22, 1999
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Delivery parameters

• WebVan
• Free for orders gt 50
• 3.95 for orders lt 50 or redeliver
• Scheduled 30 min window (2 pm to 10 pm)
• Streamline
• 30/mo
• Peapod
• 5-20 per delivery in Chicago
• HomeGrocer
• Free for orders gt 75
• 90 minute window
• Next day delivery

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Keys to home delivery

• Efficient customer receiving
• Routing efficiency
• Frequency
• Multi-product delivery
• Logistics expertise

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B2C Personalization

• Pink Dot
• Amazon.com
• CDNow
• Collaborative filtering technology
• Net Perceptions
• Andromedia
• LikeMinds server
• Vignette

Ref USA Today 11/15/99
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Top 10 online businesses

• Intel Corp. (10.5 billion)
• Cisco Systems Inc. (9.5 billion)
• IBM Corp. (8.8 billion)
• Dell Computer Corp. (6.1 billion)
• Federal Express Corp. (5.6 billion)
• United Parcel Service of America (5.4 billion)
• America Online Inc. (4.4 billion)
• Ingram Micro Inc. (3.0 billion)
• Nortel Networks Corp. (2.4 billion)
• Tech Data Corp.(1.7 billion)

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E-commerce revenues
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B2B vs B2C

• Smaller number of clients
• Larger volume per transaction/client
• Restricted sales to certain clients
• Interface with back-end systems
• Complex buy/make/sell decisions
• Computer to computer

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E-business transactions
Intra Company Rigid Interfaces
Inter Company Flexible Interfaces
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e-Procurement

• Advantages
• Broader base of suppliers
• Automatic billing
• Lower transaction cost
• Office Depot
• Processing purchase order and paying invoice
  gt100
• Using the Web 15 to 25
• Shorter cycle time

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e-Procurement

• GE TPNPost
• Pre-screened suppliers
• Requests for Quotes (RFQs)
• Multi-round bidding process
• Commerce One
• Electronic procurement
• Multiple languages/currencies
• International date
• Number and address formats
• International tax requirements

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E-Cars

• Ford
• Microsoft alliance
• Minority interest in CarPoint
• GM
• 42 days to fill a special order
• New initiative
• Toyota
• New system at a plant in Canada
• Production within 5 days of order
• Another 10 days to the dealer

Ref Wall Street Journal Aug 25, 1999, Sept 21
1999
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Integrated Business Communities (IBCs)

• Ford-Oracle (AutoXchange)
• Ford's extended supply chain online
• Ultimately 300 billion in annual transactions
• GM-Commerce One (GM MarketSite)
• Transactions between GM suppliers, dealers and
  other business partners

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Build to order

• Direct sales
• Virtually integrated with suppliers and service
  providers
• Daily production requirements to suppliers
• Inventory levels and replenishment needs
• Direct shipment from suppliers (e.g. Sony)
• Real time information on service measures
• High involvement in planning customers' PC needs
  (e.g. Boeing)
• Inventory turns 30 times per year
• Founded in 1984

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B2B Personalization

• Dell Computer
• gt 1,500 personalized Premier Pages for corporate
  customers, linked to the customers intranet.
• Configure PCs, direct access to
  corporate-specified personal computers,
  negotiated discounts, records of orders and
  payments, track delivery status, access to
  technical support.
• Staples
• Customized supply catalogs that can run on a
  companys intranet, containing only those items
  and prices negotiated in contracts with that
  company.
• Maintain lists of previously ordered items easy
  reordering
• Price discounts, recommending new items

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Collaboration

• Collaborative forecasting
• Wal-Mart Collaborative forecasting for a new
  test product (medicine for flu and allergies).
• Incorporate information about everything from
  planned changes in store layouts to precise
  meteorological data about pollen counts and when
  flu season will hit a certain region.
• Eliminated a full 2 weeks of inventory from the
  supply chain, halved order cycle times and
  eliminated stock-outs.
• Collaborative design
• Collaborative replenishment
• Vendor-managed inventory (VMI) programs

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CPFR

• CPFR.org
• Create collaborative relationships between buyers
  and sellers

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Electronic Business Integration (EBI)

• Traditional EDI
• 30 years
• Very rigid
• XML (eXtensible Markup Language)
• Pure Internet standard - Feb 1998
• Flexible tags
• Easy for humans to read
• Easy for machines to process
• Makes data portable
• Will rapidly replace EDI

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Can FedEx reinvent itself?

• Tracking shipments
• Discount air carriers
• Low cost truck lines
• Ocean carriers
• Deal with Cisco
• Merge-in-transit
• Up to 100 shippers/merge
• Plan shipments and coordinate customs
• Command and control center
• Tens of millions of dollars

Wall Street Journal Nov 4, 1999
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E-hubs

• Trading hubs
• Products
• Logistics services
• Transaction hubs
• Decision hubs

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Why use a hub?

• Volume efficiency (Do it cheaper!)
• Special knowledge or technology (Do it better!)
• Neutrality (Do it fairer!)
• Outsourcing (I dont want to do it!)

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Info hubs

• Trading hubs
• Products
• Logistics services
• Transaction hubs
• Decision hubs

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Truck Load-matching Hubs

• DAT Services - 1978
• Largest load-finding service
• Internet Truckstop - 1995
• 1st exclusively internet
• National Transportation Exchange
• 2,000-20,000 lb
• mySAP.com Marketplace portal
• 30 new load-matching sites last year

Source Heavy Duty Trucking, 1999
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Ocean Load-matching Hubs

• Raterequest
• Request best rate
• Specify bid to match
• Celarix

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Trading hub issues

• Catalog models
• Standards
• Updating
• Auction models
• Price uncertainty
• Service uncertainty
• Exchange models
• Price determination
• Service uncertainty

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Info hubs

• Trading hubs
• Products
• Logistics services
• Transaction hubs
• Decision hubs

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EDI hub

• EDI via the internet - ECnetTM
• Focus on Electronics Manufacturing

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Ship track hub

• Shipment planning booking
• Ship and delivery notices
• Electronic payment
• Tracking and tracing
• Celarix - iSuite
• UPS Worldwide - eLogistics.net

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Buy ship hub

• Procurement consolidation

National Golf Course Owners
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Info hubs

• Trading hubs
• Products
• Logistics services
• Transaction hubs
• Decision hubs

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Route planning hub

• Easyroute.com
• Descartes
• On-line routing
• Focus on small fleets

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Do everything hub
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E-commerce in Asia

• One in five CEOs of Asian companies expects to
  see a fifth of their revenue come from e-business
  in the next five years (Pricewaterhouse-Coopers
  and the World Economic Forum)
• The number of Internet users in Asia will triple
  to 60 million by 2003 (Goldman Sachs)
• E-commerce volume 35 billion by 2002
  (International Data Corp)

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E-business future

• Opportunities
• New transportation demand
• Capacity utilization
• Paperless transactions
• Visibility
• Connectivity technology
• Decision technology
• Outsourcing

• Concerns
• Speed of change
• Lack of expertise
• New technology
• Complexity
• Short lead-times

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E-logistics opportunities

• Collaboration
• Vendor managed replenishment
• Fulfillment
• Home delivery
• Personalization
• Collaborative filtering
• Build to order
• Electronic Business Integration (EBI)
• Tracking

• Disintermediation
• Merge in transit
• Sourcing
• Integrated Business Communities (IBCs)
• Trading exchanges
• Information exchanges
• E-hubs
• Collective buying
• Planning

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Questions
Comments