Chapter 8 ESupply Chains Collaborative Commerce and Intrabusiness

Chapter 8 E-Supply Chains, Collaborative Commerce, and Intrabusiness EC © Prentice Hall 2004

Learning Objectives 1. 2. 3. 4. 5. Define the e-supply chain and describe its characteristics and components. List supply chain problems and their causes. List solutions to supply chain problems provided by EC. Define c-commerce and list its major types. Describe collaborative planning and Collaboration, Planning, Forecasting, and Replenishing (CPFR), and list their benefits. © Prentice Hall 2004 2

Learning Objectives (cont. ) 6. 7. 8. 9. Define intrabusiness EC and describe its major activities. Discuss integration along the supply chain. Understand corporate portals and their types and roles. Describe e-collaboration tools such as workflow and groupware. © Prentice Hall 2004 3

How General Motors Is Collaborating Online The Problem Information regarding a new car design has to be shared among a pool of approximately 20, 000 designers and engineers in hundreds of divisions and departments at 14 GM design labs, some of which are located in different countries © Prentice Hall 2004 4

How General Motors Is Collaborating Online (cont. ) Communication and collaboration with the design engineers of the more than 1, 000 key suppliers could mean 4 years to completion of a model © Prentice Hall 2004 5

How General Motors Is Collaborating Online (cont. ) The Solution GM began by examining over 7, 000 existing legacy IT systems, reducing that number to about 3, 000 and making them Web enabled A computer-aided design (CAD) program that allows 3 D design documents to be shared online by both the designers (internal and external) and engineers © Prentice Hall 2004 6

How General Motors Is Collaborating Online (cont. ) Collaborative and Web conferencing software tools have radically changed the vehicle review process GM electronically sends its specifications for the seat to the vendor’s product data system allowing: Searching Designing Tooling Testing in real time This expedites the process and cuts costs by more than 10% © Prentice Hall 2004 7

How General Motors Is Collaborating Online (cont. ) The Results It now takes less than 18 months to bring a new car to market The change has produced enormous savings Shorter cycle time enables GM to bring out more new car models more quickly, providing the company with a competitive edge © Prentice Hall 2004 8

How General Motors Is Collaborating Online (cont. ) What we can learn… Applications of EC that help reduce costs and increase profits collaborative commerce improvements along the supply chain B 2 E © Prentice Hall 2004 9

E-Supply Chains The success of organizations depends on their ability to manage the flow of materials, information, and money into, within, and out of the organization Supply chain involves activities that take place during the entire product life cycle including the movement of information, money and individuals involved in the movement of a product or a service © Prentice Hall 2004 10

E-Supply Chains (cont. ) Supply chain: The flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers E-supply chain: A supply chain that is managed electronically, usually with Web technologies © Prentice Hall 2004 11

E-Supply Chains (cont. ) © Prentice Hall 2004 12

E-Supply Chains (cont. ) Supply chain parts Upstream supply chain activities of a manufacturing company with its suppliers Internal supply chain in-house processes for transforming the inputs from the suppliers into the outputs Downstream supply chain activities involved in delivering the products to the final customers © Prentice Hall 2004 13

E-Supply Chains (cont. ) Managing supply chains E-supply chain management (e-SCM): The collaborative use of technology to improve the operations of supply chain activities as well as the management of supply chains © Prentice Hall 2004 14

E-Supply Chains (cont. ) The success of an e-supply chain depends on: The ability of all supply chain partners to view partner collaboration as a strategic asset Information visibility along the entire supply chain Speed, cost, quality, and customer service Integrating the supply chain segments more tightly © Prentice Hall 2004 15

E-Supply Chains (cont. ) E-supply chain consists of six processes: 1. 2. 3. 4. Supply chain replenishment E-procurement Collaborative planning Collaborative design and product development 5. E-logistics 6. Use of B 2 B exchanges and supply webs © Prentice Hall 2004 16

E-Supply Chains (cont. ) Major infrastructure elements and tools of e-supply chains are: Extranets Intranets Corporate portals Workflow systems and tools Groupware and other collaborative tools EDI and EDI/Internet © Prentice Hall 2004 17

Supply Chain Problems and Solutions Typical problems along the supply chain Slow and prone to errors because of the length of the chain involving many internal and external partners Large inventories without the ability to meet demand Insufficient logistics infrastructure Poor quality © Prentice Hall 2004 18

Supply Chain Problems (cont. ) Bullwhip effect: Erratic shifts in orders up and down supply chains Creates production and inventory problems Stockpiling can lead to large inventories Effect is handled by information sharing—collaborative commerce © Prentice Hall 2004 19

Supply Chain Problems (cont. ) Need for information sharing along the supply chain including issues on: product pricing inventory shipping status credit and financial information technology news © Prentice Hall 2004 20

Supply Chain Problems (cont. ) Information systems are the links that enable communication and collaboration along the supply chain Information and information technology are one of the keys to the success, and even the survival in today’s economy © Prentice Hall 2004 21

Supply Chain Problems (cont. ) Major solutions provided by an EC approach and technologies Order taking Order fulfillment Electronic payments Inventories can be minimized Collaborative commerce © Prentice Hall 2004 22

Collaborative Commerce Collaborative commerce (c-commerce): The use of digital technologies that enable companies to collaboratively plan, design, develop, manage, and research products, services, and innovative EC applications © Prentice Hall 2004 23

Collaborative Commerce (cont. ) Major benefits are: cost reduction, increased revenue, better customer retention As a result of: fewer stock outs less exception processing reduced inventory throughout the supply chain lower materials costs increased sales volume increased competitive advantage © Prentice Hall 2004 24

Collaborative Commerce (cont. ) Collaboration can be done both between and within organizations. Collaborative platform can help in communication and collaboration between headquarters and subsidiaries franchisers and franchisees The platform provides around the globe e-mail message boards and chat rooms online corporate data access © Prentice Hall 2004 25

Collaborative Commerce (cont. ) © Prentice Hall 2004 26

Collaborative Commerce (cont. ) © Prentice Hall 2004 27

Collaborative Commerce (cont. ) Information sharing between retailers and suppliers: P&G and Wal-Mart provides P&G access to sales information on every item P&G makes for Wal-Mart Accomplished done electronically P&G has accurate demand information Wal-Mart has adequate inventory © Prentice Hall 2004 28

Collaborative Commerce Example: Target Retailer–supplier collaboration: Target Corporation Conducts EC activities with 20, 000 trading partners Extranet enables Target to reach many more partners, and to use applications not available on the traditional EDI Business customers create personalized Web pages © Prentice Hall 2004 29

Collaborative Commerce Example: Target (cont. ) © Prentice Hall 2004 30

Collaborative Commerce Example: Adaptec Reduction of design cycle time: Adaptec, Inc. Adaptec outsources manufacturing tasks, concentrating on product research and development An extranet-based collaboration and enterprise-level supply chain integration software incorporates automated workflow and EC tools A reduction in its order-to-product-delivery time from 15 weeks to between 10 and 12 weeks © Prentice Hall 2004 31

Collaborative Commerce Example: Caterpillar Reduction of product development time: Caterpillar, Inc. Cycle time along the supply chain was long because the process involved the transfer of paper documents among managers, salespeople, and technical staff Implemented an extranet-based global collaboration system © Prentice Hall 2004 32

Collaborative Commerce Example: Caterpillar (cont. ) Remote collaboration capabilities between the customer and product developers have decreased cycle time delays caused by rework time Suppliers are connected to the system so that they can deliver materials or parts directly to Caterpillar’s shops or directly to the customer if appropriate The system also is used for expediting maintenance and repairs © Prentice Hall 2004 33

Collaborative Commerce (cont. ) Collaborative commerce and knowledge management Knowledge management : the process of capturing or creating knowledge Gathering and making available experts’ opinions, as well as providing them to partners Learning is also facilitated by KM © Prentice Hall 2004 34

Collaborative Commerce (cont. ) Barriers to c-commerce—lack of defined and c-commerce— universally agreed-on standards technical reasons involving integration, standards, and networks security and privacy concerns over who has access to and control of information stored in a partner’s database internal resistance to information sharing and to new approaches lack of internal skills to conduct collaborative commerce © Prentice Hall 2004 35

Collaborative Planning and CPFR In collaborative planning, business partners—all have real-time access to point-of-sale order information manufacturers suppliers distribution partners other partners © Prentice Hall 2004 36

Collaborative Planning and CPFR (cont. ) Collaborative planning, forecasting, and replenishment (CPFR): Project in which suppliers and retailers collaborate in their planning and demand forecasting to optimize flow of materials along the supply chain © Prentice Hall 2004 37

Collaborative Planning and CPFR (cont. ) CPFR provides a standard framework for collaborative planning Improve demand forecasting for all of the partners in the supply chain and then communicate forecasts using informationsharing applications Suppliers and retailers also coordinate the related logistics activities © Prentice Hall 2004 38

Collaborative Planning and CPFR (cont. ) © Prentice Hall 2004 39

Collaborative Planning and CPFR (cont. ) © Prentice Hall 2004 40

Collaborative Planning: APS Advanced planning and scheduling (APS) systems: Programs that use algorithms to identify optimal solutions to complex planning problems that are bound by constraints © Prentice Hall 2004 41

Collaborative Planning: PLM Product lifecycle management (PLM): Business strategy that enables manufacturers to control and share product-related data as part of product design and development efforts © Prentice Hall 2004 42

Collaborative Planning and Fulfillment © Prentice Hall 2004 43

Internal Supply Solutions, Intrabusiness, and B 2 E Intrabusiness EC: E-commerce activities conducted within an organization Business-to-employee (B 2 E): Intrabusiness EC in which an organization delivers products or services to its employees © Prentice Hall 2004 44

Internal Supply Solutions, Intrabusiness, and B 2 E (cont. ) Representative applications of B 2 E include: 1. Providing field representatives with electronic communication tools 2. Training and education provided over intranets 3. Employee use of electronic catalogs and ordering forms © Prentice Hall 2004 45

Internal Supply Solutions, Intrabusiness, and B 2 E (cont. ) 4. Electronic tools for communication, collaboration, and information discovery 5. Offering corporate stores on the intranet that sell the companies’ products to employees, usually at a discount 6. Systems that disseminate information or allow employees to manage their fringe benefits via the intranet © Prentice Hall 2004 46

Internal Supply Solutions, Intrabusiness, and B 2 E (cont. ) Activities between business units Large corporations consist of independent units, called strategic business units (SBUs)—transactions can be easily automated and performed over the organization’s intranet Special network may be constructed to support communication, collaboration, and execution of transactions © Prentice Hall 2004 47

Internal Supply Solutions, Intrabusiness, and B 2 E (cont. ) Activities among corporate employees A system by which employees can collaborate on an individual (sometimes nonbusiness) level Via classified ads, corporate equipment may be sold to employees for private use © Prentice Hall 2004 48

Integration along the Supply Chain Example: Toshiba USA Toshiba created a Web-based order entry system for product parts using an extranet and intranets Dealers can place orders for parts until 5: 00 P. M. for next-day delivery without extra charge Dealers can check accounts receivable balances and pricing arrangements and read service bulletins, press releases, and so on Sales reps can interact more effectively with dealers © Prentice Hall 2004 49

Integration along the Supply Chain Example: Toshiba USA (cont. ) © Prentice Hall 2004 50

Integration along the Supply Chain (cont. ) Enabling integration and the role of standards and Web services Integration involves connectivity, compatibility, security, and scalability Applications, data, processes, and interfaces must be integrated Middleware, standards and protocols have been developed to facilitate integration © Prentice Hall 2004 51

Corporate (Enterprise) Portals Corporate (enterprise) portal: A gateway for entering a corporate Web site, enabling communication, collaboration, and access to company information Corporate portals offer employees, business partners, and customers an organized focal point for their interactions with the firm © Prentice Hall 2004 52

Corporate (Enterprise) Portals (cont. ) Types of corporate portals Generic portals portal for suppliers portal for customers portal for employees supervisor portals mobile portals—accessible via mobile devices, especially cell phones and PDAs © Prentice Hall 2004 53

Corporate (Enterprise) Portals (cont. ) Functional portals Information portals: Portals that store data and enable users to navigate and query these data Collaborative portals: Portals that allow collaboration © Prentice Hall 2004 54

Corporate (Enterprise) Portals (cont. ) Corporate portal applications knowledge bases and learning tools business process support customer-facing (frontline) sales, marketing, and services collaboration and project support access to data from disparate corporate systems © Prentice Hall 2004 personalized pages for various users effective search and indexing tools security applications best practices and lessons learned directories and bulletin boards identification of experts news Internet access 55

Corporate (Enterprise) Portals (cont. ) © Prentice Hall 2004 56

Corporate (Enterprise) Portals (cont. ) Justifying portals Offer a simple user interface for finding and navigating content via a browser Improve access to business content and increase the number of business users who can access information, applications, and people Offer the opportunity to use platformindependent software © Prentice Hall 2004 57

Collaboration-Enabling Tools: Workflow: The movement of information as it flows through the sequence of steps that make up an organization’s work procedures Workflow systems: Business process automation tools that place system controls in the hands of user departments to automate information processing tasks © Prentice Hall 2004 58

Collaboration-Enabling Tools: Workflow (cont. ) Workflow management: The automation of workflows, so that documents, information, and tasks are passed from one participant to the next in the steps of an organization’s business process © Prentice Hall 2004 59

Collaboration-Enabling Tools: Workflow (cont. ) Three major categories of workflow applications: Collaborative workflow project-oriented and collaborative types of processes Production workflow mission-critical, transaction-oriented, high-volume processes Administrative workflow cross between collaborative and © Prentice Hall 2004 production 60

Collaboration-Enabling Tools: Workflow (cont. ) Benefits of workflow management systems Improved control of business processes Improved quality of services Lower staff training costs Improved user satisfaction © Prentice Hall 2004 61

Collaboration-Enabling Tools: Groupware: Software products that support collaboration, over networks, among groups of people who share a common task or goal Provide a way for groups to share resources and opinions © Prentice Hall 2004 62

Collaboration-Enabling Tools: Group Decision Support Systems (GDSS) Virtual meetings: Online meetings whose members are in different locations, frequently in different countries Group decision support system (GDSS): An interactive computer-based system that facilitates the solution of semistructured and unstructured problems by a group of decision makers © Prentice Hall 2004 63

Collaboration-Enabling Tools: GDSS (cont. ) Major characteristics of a GDSS Its goal is to support the process of group decision makers by providing automation of subprocesses using information technology tools It is a specially designed information system It encourages generation of ideas, resolution of conflicts, and freedom of expression © Prentice Hall 2004 64

Collaboration-Enabling Tools: GDSS (cont. ) GDSSs improve the decision-making process by: providing structure to the planning process support parallel processing of information and idea generation make larger meetings possible © Prentice Hall 2004 65

Collaboration-Enabling Tools: Teleconferencing: The use of electronic communication that allows two or more people at different locations to have a simultaneous conference Video teleconference: Virtual meeting in which participants in one location can see participants at other locations on a large screen or a desktop computer © Prentice Hall 2004 66

Collaboration-Enabling Tools: Teleconferencing (cont. ) Data conferencing: Virtual meeting in which geographically dispersed groups work on documents together and to exchange computer files during videoconferences Web conferencing is conducted on the Internet few as two and as many as thousands of people allows users to simultaneously view something interaction takes place via messaging or a simultaneous phone teleconference is much cheaper than videoconferencing because it runs on the Internet © Prentice Hall 2004 67

Collaboration-Enabling Tools (cont. ) Real-time collaboration (RTC) tools help companies bridge time and space to make decisions and collaborate on projects by supporting synchronous communication of graphical and textbased information © Prentice Hall 2004 68

Collaboration-Enabling Tools (cont. ) Interactive white boards Another type of groupware where all participants join in the use Users can view and draw on a single document “pasted” onto the electronic whiteboard on a computer screen Users can save digital whiteboarding sessions for future use © Prentice Hall 2004 69

Collaboration-Enabling Tools (cont. ) Screen sharing: Software that enables group members, even in different locations, to work on the same document, which is shown on the PC screen of each participant © Prentice Hall 2004 70

Collaboration-Enabling Tools (cont. ) © Prentice Hall 2004 71

Collaboration-Enabling Tools (cont. ) Instant video—a video chat room that allows users to chat in real time, seeing the person they are communicating with Integration and groupware suites Lotus Notes/Domino Microsoft Net. Meeting Novell Group. Wise © Prentice Hall 2004 72

Collaboration-Enabling Tools (cont. ) Virtual reality (VR): System that delivers interactive computer generated 3 D graphics to a user through a head-mounted display © Prentice Hall 2004 73

Collaboration-Enabling Tools (cont. ) Implementation issues An effective collaborative environment is necessary Connecting collaborative tools with file management products on an organization’s intranet is necessary Protocols to change the read-only Web to a truly collaborative environment © Prentice Hall 2004 74

Managerial Issues 1. 2. 3. 4. 5. How difficult is it to introduce ecollaboration? How much can be shared with business partners? Can they be trusted? Who is in charge of our portal and intranet content? Who will design the corporate portal? Should we conduct virtual meetings? © Prentice Hall 2004 75

Summary 1. 2. The e-supply chain, its characteristics, and components: Digitized and automated flow of information throughout the supply chain and managing it via the Web Supply chain problems and their causes: access to inventories, lack of supplies when needed, need for rush orders, deliveries of wrong materials or to wrong locations, and poor customer service. © Prentice Hall 2004 76

Summary (cont. ) 3. 4. Solutions to supply chains problem provided by EC: automate/expedite order taking, speed order fulfillment, provide epayments, control inventories, provide for correct forecasting and scheduling, and improve collaboration among partners C-commerce: Definitions and types: planned use of digital technology by business partners. © Prentice Hall 2004 77

Summary (cont. ) 5. 6. Collaborative planning: concentrates on demand forecasting and on resource and activity planning along the supply chain. CPFR: business strategy that develops standard protocols and procedures for collaboration. Intrabusiness: all EC initiatives conducted within an organization. © Prentice Hall 2004 78

Summary (cont. ) 7. 8. 9. Integration along the supply chain: critical to the success of companies. Types and roles of corporate portals: for suppliers, customers, employees, and supervisors. Collaborative tools: workflow, groupware, GDSS, devices that facilitate product design © Prentice Hall 2004 79