Electronic Commerce

1. Electronic Commerce Signifies material that will be on the next MIS204 test Penn State Erie – Frank DeWolf

2. Electronic Commerce Definitions E-Commerce – The process of buying and selling goods and services electronically involving transactions using the internet, networks, and other digital technologies. E-Business – The use of the internet and other digital technology for organizational communication and coodination and the management of the firm. B2B – Business to business electronic commerce. B2C – Business to consumer electronic commerce. C2C – Consumer to consumer electronic commerce. Intranet – An internal network based on internet and WWW technology and standards. Available only to employees. Extranet – Private (secure) internet connection which allows an enterprise to communicate electronically to outside trading partners (customers and suppliers). Penn State Erie – Frank DeWolf

3. Internet Commerce Forrester Research % of total Sales in 2004 2000 2001 2002 2003 2004 Worldwide Net commerce -- both B2B and B2C -- will hit $6.8 trillion in 2004. Penn State Erie – Frank DeWolf

4. Manufacturers’ Objectives for E-Commerce Initiatives • New business opportunities and broader customer reach: 62.2 percent • Cost savings reasons: 45 percent • To reach a wider group of suppliers: 26.1 percent • E-Commerce: Barriers to Entry • Companies with no e-commerce initiatives: 17 percent • Lack of human resource capabilities: 51.9 percent • Lack of technical knowledge inside the company: 43.6 percent • One third identify concern over security issues on the Internet. The index shows that 24 percent of respondents have no security efforts in place, with five percent reporting security breaches within the past six months. NAM/Ernst & Young E-Commerce Trends Penn State Erie – Frank DeWolf

5. Employees and the Internet • Companies where most office employees have Web access: 72.7 percent • Manufacturers that have an intranet: 39 percent • Companies where most office employees have e-mail: 83.2 percent • Respondents that feel e-mail is a vital management tool: 65.3 percent • Nearly 18 percent of companies are already using the Internet to provide on-line education and training for employees. • Interacting with Suppliers • Respondents connecting electronically with a majority of their suppliers: 8.6 percent • Manufacturers who use a Web-based marketplace to locate suppliers: 26 percent • Companies that share product designs and specifications with suppliers through the Web: 22.9 percent • Less that 3 percent of sales and goods are transacted over the Internet NAM/Ernst & Young E-Commerce Trends Penn State Erie – Frank DeWolf

6. Role of Electronic Commerce Reaching new customers or suppliers Creating new ways of selling / supporting existing products Reducing costs Improving product quality Increase Sales & Reduce Costs!! Penn State Erie – Frank DeWolf

7. Automation of purchase, sale transactions from business to business Electronic Data Interchange (EDI) Exchanges: Commercial on-line market, many buyers, sellers Forward auctions – disposition of excess inventory Reverse auctions - purchases B2B E-COMMERCE Penn State Erie – Frank DeWolf

8. Value Chains in Electronic Commerce Defined as the way of organizing the activities undertaken to design, produce, promote, market, deliver, and support the products or services a business sells. Penn State Erie – Frank DeWolf

9. Value Chain Primary Activities Identify customers Market research, customer satisfaction surveys Design Concept research, engineering, test marketing Purchase materials and supplies Vendor selection, quality and timeliness of delivery Manufacture Fabrication, assembly, testing, packaging Where are YOUR biggest e-commerce opportunities? Penn State Erie – Frank DeWolf

10. Value Chain Primary Activities Market and sell Advertising, promotion, pricing, monitoring sales and distribution channels Deliver Warehousing, materials handling, monitoring timeliness of delivery Provide after-sale service and support Installation, testing, maintenance, repair, warranty replacement, replacement parts Internal Support Activities Where are YOUR biggest e-commerce opportunities? Penn State Erie – Frank DeWolf

11. B2B E-Commerce Strategy Suppliers Customers e-Business • e-Sourcing • Indirect Procurement • Reverse Auctions • Customer service • Product catalogs • Electronic orders • E-Order status • Customer collaboration • Intranet • Paper elimination • Data Warehouse • Productivity apps Employees Strategy Must Cover All Fronts Penn State Erie – Frank DeWolf

12. GE - e-Procurement Business Example Order Management Quality / Productivity Production / Inventory Vendor Selection Settlement Ship & Receive Payment Status & Tracking Collaboration & Admin Receive Req. & Identify Suppliers Prepare & Dist. RFQ's P.O. Placement & Admin Supplier Quality Auction • Electronic Invoicing • A/P Access* • Evaluated Reciepts (ERS) • RFQ’s • Drawings • Specifications • Qty & Schedules • Document Management • Supplier auctions • Purchase Orders • Schedules / Reschedules - Demand Forecasting • T&C’s • Drawing Distribution • Scorecards • Report Cards • Deviation Requests • Productivity Ideas • CTQ Capture • Discrepant material info • Field Failure • Remote Diagnostics • Kanbans • LOB Tracking • Bailment • E&ZD • Shipment Authorization • Carrier Selection • Customs Information • Bar Code Labels • Supplier Shipment Notification • Carrier Tracking • Quality process • CTQ Identification • & Tracking Web Enabled Applications Sametime Meeting*, E-mail, FAQ’s, Newsletters, Manuals, Contacts, T&C’s, Holiday Schedules, Profiles, Etc. Penn State Erie – Frank DeWolf

13. E-Commerce Auction Basics • Forward Auctions • Used to sell something that you own • One seller, many potential buyers • Bidders bid UP; high bidder(s) win • Consumer: eBay, Yahoo!, Amazon • B2B: Many surplus asset selling sites • Reverse Auctions • Used to buy something you will need • One buyer, many potential sellers • Bidders bid DOWN; low bidder(s) win • Replaces traditional “Price Negotation” process • B2B: FreeMarkets, CommerceOne, GE Sourcebid, • GXS Selection Reverse Auctions Obtain the Lowest Market Price Penn State Erie – Frank DeWolf

14. Supplier Review GE Reverse Auctions Review Stage: Accept the Invitation Penn State Erie – Frank DeWolf

15. View Parts GE Reverse Auctions Penn State Erie – Frank DeWolf

16. Bidding GE Reverse Auctions Auction Updates Place Bids Over 10,000 SourceBid Events To Date Penn State Erie – Frank DeWolf

17. Monitor Auction GE Reverse Auctions Penn State Erie – Frank DeWolf

18. Lessons Learned Reverse Auctions • “Rack and Stack”: categorize and prioritize the buy • Run some Pilot events, and adapt your plans • Develop a strong planning process • Supplier relationships are still important! • Build a good quotation package • Some events will go nowhere…others will amaze you • The goal is NOT to drive your suppliers out of business • Consistent, timely feedback after the event is crucial • Deliver the results…measure implementation speed • Implement an auction results tracking system This Changes the Sourcing Game Penn State Erie – Frank DeWolf

19. Selling via Auction Reverse Auctions • Get a good PC and Internet Connection • Gain some bidding experience • Seek out online selling opportunities • Know your true costs • Know your competition • Act on opportunities: Excess capacity, inventory • Develop a “rapid response” selling team • Do your homework before the bidding begins • Differentiate your product – features, services, IP, etc. Get Ready for Real Time Selling Penn State Erie – Frank DeWolf