Learning Objectives. Chapter 8 E-Supply Chains, Collaborative Commerce, and Intrabusiness EC. How General Motors Is Collaborating Online (cont.

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1 Chapter 8 E-Supply Chains, Collaborative Commerce, and Intrabusiness EC Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA USA chen@jepson.gonzaga.edu Prentice Hall & Dr. Chen, Electronic Commerce 1 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. 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. Prentice Hall & Dr. Chen, Electronic Commerce 2 OPENING VIGNETTE : 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 Communication and collaboration with the design engineers of the more than 1,000 key suppliers could mean 4 years to completion of a model 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 Prentice Hall & Dr. Chen, Electronic Commerce 3 Prentice Hall & Dr. Chen, Electronic Commerce 4 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 & Dr. Chen, Electronic Commerce 5 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 & Dr. Chen, Electronic Commerce 6 1

2 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 End of the Vignette Prentice Hall & Dr. Chen, Electronic Commerce 7 Prentice Hall & Dr. Chen, Electronic Commerce E-Supply Chains` The Product Life Cycle The success of organizations (private, public, and military) depends on their ability to manage the flow of materials, information, and money into, within, and out of the organization Such a flow is referred to as supply chain 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 Introductory Stage Growth Stage Time Maturity Stage Decline Stage Total Market Sales Total Market Profit Prentice Hall & Dr. Chen, Electronic Commerce 9 Prentice Hall & Dr. Chen, Electronic Commerce N10 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 Supply chain parts Upstream supply chain activities of a manufacturing company with its suppliers (1 st tiers) and their connections to their suppliers (2 nd tiers) procurement is the major activity Internal supply chain in-house processes for transforming the inputs from the suppliers into the outputs major concerns are production management, manufacturing, and inventory control Downstream supply chain activities involved in delivering the products to the final customers attention is directed at distribution, warehousing, transportation, and after-sale service Prentice Hall & Dr. Chen, Electronic Commerce N11 Prentice Hall & Dr. Chen, Electronic Commerce 12 2

3 (Suppliers) (Firms) (Distributors/ Customers) The Value System: Interconnecting relationships between organizations Upstream value Firm value Downstream value Prentice Hall & Dr. Chen, Electronic Commerce 13 N Prentice Hall & Dr. Chen, Electronic Commerce 14 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 The success of an e-supply chain depends on: 1. The ability of all supply chain partners to view partner collaboration as a strategic asset 2. Information visibility along the entire supply chain 3. Speed, cost, quality, and customer service 4. Integrating the supply chain segments more tightly Prentice Hall & Dr. Chen, Electronic Commerce N15 E-supply chain consists of six processes: 1. Supply chain replenishment 2. E- procurement 3. Collaborative planning 4. Collaborative design and product development 5. E- logistics 6. Use of B2B exchanges and supply webs Prentice Hall & Dr. Chen, Electronic Commerce N16 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 & Dr. Chen, Electronic Commerce N Supply Chain Problems and Solutions Typical problems along the supply chain 1. Slow and prone to errors because of the length of the chain involving many internal and external partners 2. Large inventories without the ability to meet demand Incorrect demand forecasting 3. Insufficient logistics infrastructure Vehicle failures to road conditions 4. Poor quality Prentice Hall & Dr. Chen, Electronic Commerce 18 3

4 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 (c-commerce) Supply Chain Solutions Major solutions provided by an EC approach and technologies 1. Order taking 2. Order fulfillment 3. Electronic payments 4. Inventories can be minimized 5. Collaborative commerce Prentice Hall & Dr. Chen, Electronic Commerce N19 Prentice Hall & Dr. Chen, Electronic Commerce 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 (e.g., GM opening case) Collaborative Commerce (cont.) Major benefits (on organizations performance) 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 & Dr. Chen, Electronic Commerce 21 Prentice Hall & Dr. Chen, Electronic Commerce 22 (Linear) (Inter-networked) Prentice Hall & Dr. Chen, Electronic Commerce 23 Prentice Hall & Dr. Chen, Electronic Commerce 24 4

5 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 How? Exhibit 8.3 Collaborative Commerce Example: Target s Extranet (an example, this model can be also employed to other apps) Connection Via Public Internet GE Private VAN VPN, encryption Private line Global reach Secure added Web Applications Customer service Portal services Inventory management Quality assurance Supply chain Process design New products Budget control E-procurement GE InterBusiness Partner extranet Legacy System EDI ERP Security Access control Registration Authentication Digital signature Certification Prentice Hall & Dr. Chen, Electronic Commerce 25 Prentice Hall & Dr. Chen, Electronic Commerce 26 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 C-commerce is essentially an integration of KM, EC and collaboration tools and methodologies that are designed to carry out transactions and other activities within and across organizations. 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 Organizational culture shock: trust Prentice Hall & Dr. Chen, Electronic Commerce 27 Prentice Hall & Dr. Chen, Electronic Commerce Collaborative Planning and CPFR In collaborative planning, business partners all have real-time access to pointof-sale order information manufacturers suppliers distribution partners other partners What is CPFR? Exhibit 8.5 The Collaborative Planning CPFR Process Company decides on participating suppliers Agreement on scope of collaboration Selection of Supporting software (e.g., JDA software) Determine Develop jointly the on specific Examine the forecasts, resolve project (e.g., demands value chain forecasts exceptions forecast logistics forecast) Use result to make inventory and scheduling decision Prentice Hall & Dr. Chen, Electronic Commerce 29 Prentice Hall & Dr. Chen, Electronic Commerce 30 5

6 8.5 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 Prentice Hall & Dr. Chen, Electronic Commerce 31 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 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 & Dr. Chen, Electronic Commerce Integration along the Supply Chain 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 (ease) integration 8.7 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 & Dr. Chen, Electronic Commerce 33 Prentice Hall & Dr. Chen, Electronic Commerce 34 Corporate (Enterprise) Portals (cont.) Corporate (Enterprise) Portals (cont.) Types of corporate portals 1. Generic portals portal for suppliers portal for customers portal for employees supervisor portals mobile portals accessible via mobile devices, especially cell phones and PDAs 2. 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 & Dr. Chen, Electronic Commerce 35 Prentice Hall & Dr. Chen, Electronic Commerce 36 6

7 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 access to common business applications from anywhere Offer the opportunity to use platform-independent software 8.8 Collaboration-Enabling Tools: From Workflow to Groupware 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 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 & Dr. Chen, Electronic Commerce 37 Prentice Hall & Dr. Chen, Electronic Commerce 38 Collaboration-Enabling Tools: Workflow (cont.) Three major categories of workflow applications: Collaborative workflow project-oriented and collaborative types of processes goal: to empower knowledge workers Production workflow mission-critical, transaction-oriented, high-volume processes goal: to improve productivity and quality of BP. Administrative workflow cross between collaborative and production goal: to reduce clerical costs in systems with a low volume of complex transactions. Prentice Hall & Dr. Chen, Electronic Commerce 39 Collaboration-Enabling Tools: Workflow (cont.) Benefits of workflow management systems Improved control of business processes Improved quality of services Lower staff training costs Lower management costs Improved user satisfaction Prentice Hall & Dr. Chen, Electronic Commerce 40 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 Groupware technology products are fairly inexpensive and can be easily incorporated into existing IS. Collaboration-Enabling Tools: Group Decision Support Systems (GDSS) Electronic (Virtual) meetings: Online (Web-based) 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 & Dr. Chen, Electronic Commerce 41 Prentice Hall & Dr. Chen, Electronic Commerce 42 7

8 Components of the DSS The DSS DBMS DGMS MBMS Software System DGMS: DialoGue Management Systems Electronic Commerce 44 Prentice Hall & Dr. Chen, Electronic Commerce 43 Prentice Hall & Dr. Chen, Task DBMS: DataBase Management Systems MBMS: ModelBase Management Systems User Environment Multiple participants (the legislators) Components of GDSS Burr-Brown GDSS session room HARDWARE PROCEDURES SOFTWARE PEOPLE Facilitator s station Participants stations Prentice Hall & Dr. Chen, Electronic Commerce 45 Prentice Hall & Dr. Chen, Electronic Commerce 46 Duration of Decision-Making Session Framework: Group Decision Support Topic commentor (examine each of the divisional 5- year plans) Figure: A Model of a GDSS Issue Analyzer (organize and sort the comments) #9 Voting Electronic Brainstorming (generate ideas) N Prentice Hall & Dr. Chen, Electronic Commerce 47 Prentice Hall & Dr. Chen, Electronic Commerce 48 8

9 Training room USAF Fusion center USAF Fusion center Teleconferencing Prentice Hall & Dr. Chen, Electronic Commerce 49 DSS Decision center Airline Institute USAF Air Staff Innovation center Teleconferencing Prentice Hall & Dr. Chen, Electronic Commerce 50 Collaboration-Enabling Tools: GDSS (cont.) 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, not merely a configuration of already-existing system components. It encourages generation of ideas, resolution of conflicts, and freedom of expression 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 & Dr. Chen, Electronic Commerce 51 Prentice Hall & Dr. Chen, Electronic Commerce 52 Decision Support and Intelligent Systems Collaboration-Enabling Tools (cont.) Same Place Different Place Same Time GSS in a Decision Room Web-based GSS Multimedia Presentation Systems Whiteboard Document sharing Web-based GSS Whiteboard Document sharing Videoconferencing Audioconferencing Computer conferencing , V-mail Different Time GSS in a Decision Room Web-based GSS Workflow management system Document sharing , V-mail Web-based GSS Whiteboard , V-mail Workflow management system Document sharing Computer conferencing with memory Decision Support Systems and Intelligent Systems, Efraim Turban and Jay E. Aronson, 6th edition. Prentice Hall & Dr. Chen, Electronic Commerce 53 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 text-based information Interactive white boards Screen sharing Virtual reality (VR): System that delivers interactive computer generated 3D graphics to a user through a head-mounted display Prentice Hall & Dr. Chen, Electronic Commerce 54 9

10 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 & Dr. Chen, Electronic Commerce 55 A model of of the decision making process. (Simon s 3+1 Phases) Intelligence Activities Design Activities Choice Activities Implementation Activities hsearch for and identify conditions requiring a decision hinformation systems should scan the internal organization and the external environment and help identify problems and opportunities. hdevelop and evaluate alternative courses of action hinformation systems should help generate and evaluate decision alternatives. hselect a course of action and monitor its implementation hinformation system should help emphasize and prioritize decision alternatives and provide feedback on the implemented decision himplement and monitor the success of the decision hinformation system should provide feedback on the implemented decision. Prentice Hall & Dr. Chen, Electronic Commerce 56 Managerial Issues 1. How difficult is it to introduce e- collaboration? 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? Prentice Hall & Dr. Chen, Electronic Commerce 57 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. 3. Solutions to supply chains problem provided by EC: automate/expedite order taking, speed order fulfillment, provide e-payments, control inventories, provide for correct forecasting and scheduling, and improve collaboration among partners Prentice Hall & Dr. Chen, Electronic Commerce 58 Summary (cont.) 4. C-commerce: Definitions and types: planned use of digital technology by business partners. 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. Summary (cont.) 7. Intrabusiness: all EC initiatives conducted within an organization. 8. Integration along the supply chain: critical to the success of companies. 9. Types and roles of corporate portals: for suppliers, customers, employees, and supervisors. 10. Collaborative tools: workflow, groupware, GDSS, devices that facilitate product design Prentice Hall & Dr. Chen, Electronic Commerce 59 Prentice Hall & Dr. Chen, Electronic Commerce 60 10