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Chapter 8
E-Supply Chains,
Collaborative Commerce,
and Intrabusiness EC
Learning Objectives
1. Define the e-supply chain and describe its
characteristics and components.
2. List supply chain problems and their
causes.
3. List solutions to supply chain problems
provided by EC.
4. Define c-commerce and list its major types.
5. Describe collaborative planning and
Collaboration, Planning, Forecasting, and
Replenishing (CPFR), and list their benefits.
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Learning Objectives (cont.)
6. Define intrabusiness EC and describe
its major activities.
7. Discuss integration along the supply
chain.
8. Understand corporate portals and
their types and roles.
9. Describe e-collaboration tools such
as workflow and groupware.
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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
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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
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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 3D design documents to be
shared online by both the designers
(internal and external) and engineers
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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%
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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
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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
B2E
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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
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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
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E-Supply Chains (cont.)
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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
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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
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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
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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 B2B exchanges and supply webs
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Collaborative Commerce (cont.)
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Collaborative Commerce (cont.)
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Collaborative Commerce (cont.)
Information sharing between retailers
and suppliers: P&G and Wal-Mart
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
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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
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Collaborative Commerce
Example: Target (cont.)
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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-productdelivery time from 15 weeks to between
10 and 12 weeks
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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
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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
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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
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Collaborative Commerce (cont.)
Barriers to c-commerce—lack of defined and
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
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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
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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
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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
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Collaborative Planning
and CPFR (cont.)
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Collaborative Planning
and CPFR (cont.)
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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
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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
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Collaborative Planning
and Fulfillment
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Internal Supply Solutions,
Intrabusiness, and B2E
Intrabusiness EC: E-commerce
activities conducted within an
organization
Business-to-employee (B2E):
Intrabusiness EC in which an
organization delivers products or
services to its employees
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Internal Supply Solutions,
Intrabusiness, and B2E (cont.)
Representative applications of B2E
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
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Internal Supply Solutions,
Intrabusiness, and B2E (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
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Internal Supply Solutions,
Intrabusiness, and B2E (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
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Internal Supply Solutions,
Intrabusiness, and B2E (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
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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
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Integration along the Supply Chain
Example: Toshiba USA (cont.)
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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
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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
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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
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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
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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
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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
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Corporate (Enterprise) Portals (cont.)
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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
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Collaboration-Enabling Tools:
Workflow
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
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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
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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
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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
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Collaboration-Enabling Tools:
Groupware
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
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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
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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
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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
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Collaboration-Enabling Tools:
Teleconferencing
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
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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
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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
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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
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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
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Collaboration-Enabling Tools (cont.)
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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 NetMeeting
Novell GroupWise
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Collaboration-Enabling Tools
(cont.)
Virtual reality (VR): System that
delivers interactive computer
generated 3D graphics to a user
through a head-mounted display
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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
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Managerial Issues
1. How difficult is it to introduce ecollaboration?
2. How much can be shared with business
partners? Can they be trusted?
3. Who is in charge of our portal and intranet
content?
4. Who will design the corporate portal?
5. Should we conduct virtual meetings?
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Summary
1. The e-supply chain, its characteristics, and
components: Digitized and automated flow
of information throughout the supply chain
and managing it via the Web
2. 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.
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Summary (cont.)
3. 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
4. C-commerce: Definitions and types:
planned use of digital technology by
business partners.
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Summary (cont.)
5. 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.
6. Intrabusiness: all EC initiatives conducted
within an organization.
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Summary (cont.)
7. Integration along the supply chain: critical
to the success of companies.
8. Types and roles of corporate portals: for
suppliers, customers, employees, and
supervisors.
9. Collaborative tools: workflow, groupware,
GDSS, devices that facilitate product
design
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