e-business transformation at me-online
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Transcript of e-business transformation at me-online
E-BUSINESS TRANSFORMATION AT ME-ONLINE
Group 6 | Section D
“Feng Huang Nie Pan”
Introduction
Shanghai Me Mechanical and Electrical Equipment Chain Co. Ltd. – SHMEC (Est. 1955) Mechanical & Electrical equipment distribution
company
Faced problem during China’s socio economic transformation process Opening up of the economy to the foreign companies Private companies emerged with the ability to
speedily distribute large quantities
Company established Me-online as a trading platform, using e-business to transform its business model
Strengths of the TBM of SHMEC
Group of 16 corporations - State owned Focused – Distribution of mechanical and
electrical equipments, machines, tools, etc.
Buy first – Sell later approach Rich fixed assets Rich supplier base Large distribution network – Chain Stores Diverse customer base Inventory – different product portfolio
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Environmental Factors Necessary for Success in TBM
• Remain a Seller driven market• No economic liberalization• More demand than supply – less inventory
management cost• Less fluctuation in prices• Efficient and effective sales force – less sale
on credit; Less bad debt• Proper book-keeping and lack of monopoly
of business staffs• Efficient order processing, logistics and
information flow
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Value of Service Provided in TBM
Cater to different product specifications Large distribution network Chain stores – Easily accessible to
customers Products sold on credit Good business relationship
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Vulnerability due to Changes in Business Environment
• Competition becoming stiff – Private players entering the market
• Competitor’s ability to speedily deliver large orders
• Fluctuating Market Prices – Inventory piling up – Incurring huge losses
• Bad debts – Ineffective monitoring of credits• Manual book keeping – Improper supplier and
user database – Monopoly of business staffs• Slow information flow• Slow response to market – Couldn’t keep
pace with changing market dynamics
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Causes of piling up of
Inventory
Buy first & sell later business practice
Need to build a large inventory of products with different specifications
Commitment to procure products worth Rmb 1million after acquiring an agency of a reputed manufacturer
Supply of M&E equipment was greater than demand
Inefficient management of client requirements
5Bad Debts
Many products were sold on credit
Absence of effective management measures
Unlimited rights for the sales staff
High accounts receivables
Diverse customer base was built on a complex network of relationships
Strengths of the NBM of Me-online Entire trading process was conducted fairly, equitably and
properly High efficiency: Users could manage their inventory scientifically,
regulate their distribution management & procure products easily with no inventory
Specialty: Information & Trading section Easy usage: Only a computer with internet connection Extension: It was applicable to material & equipment companies
of similar nature Originality: 1st company to issue value-added tax invoices directly
online Me-online e-business platform was of international standard with
sophisticated technology Obtained a patent certificate issued by National Copyright
Administration of the People’s Republic of China Contained a huge amount of information about capital & logistics Employed the digital certificate to ensure that the transactions
were done by real parties, and were secure and irrevocable
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Environmental factors necessary for success of NBM
Competition doesn’t have a better trading platform and information
Expansion of franchise to ensure stability during transformation
Attention to opportunities offered by the new model Ex: Logistics & transportation services
Increase in internet awareness and penetration Enterprises in the upper & lower chain should cooperate more
closely Proper integration between internal information system of Me-
online & its suppliers Dealing with emergencies by having internet exchange
platform for backups Development of appropriate human resources Innovation and system improvement by establishing future
cooperation with large international manufacturers
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Value of the services provided by Me-Online to its Customer
All the information about the products available at one site
Improved cooperation along the supply chain
Distribution done in real time so quick response time for customers
24 hour business conduct Integrated services
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Key success factors of the Me-online business model
Streamlining the business processes -Regulation ensured greater transparency
Order driven approach - Reduction in the inventory
Integration of all the functions Improved customer relationship
management Procurement done in real time
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Sustainability in the Me-online business model
This business model is sustainable and difficult to replicate because : Large customer base in the sector Stable syndicate with enterprise in lower
and upper chain Continuous expansion of the franchise This model was built on the core
competencies of the company
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