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Transcript of Ec elim purch
R=IQi
Will eCommerce Eliminate Purchasing?
Copyright The ProAction Group 2001
Agenda
Purchasing today, Sourcing tomorrow eCommerce to Business eBenefits eCosts and eRisks eNext steps Purchasing, eliminated or revolutionized?
Copyright The ProAction Group 2001
Purchasing Today
75% of time spent on transactional tasks– Order placement– Order tracking– Expediting orders– Claims processing– Invoice payment and audit– Validating perpetual inventory– Bill of material creation / re-creation– Inspection
Copyright The ProAction Group 2001
Sourcing Today and Tomorrow
Select capable suppliers & build relationship Lay foundation of information exchange
– Trust & connectivity Provide suppliers what they need to leverage
their infrastructure for you:– Commitment of supply– Demand visibility– Strategic plans– Customer needs
Copyright The ProAction Group 2001
Sourcing Today and Tomorrow
Align processes to take advantage of tools and technology
Measure and reward– The supplier– Your organization– The supply chain (or the supply grid!)
Prepare and support change– Leverage supplier expertise
Copyright The ProAction Group 2001
The Plan Must Tie to the Organization’s Interests
Customer AND Shareholder
“Nothing is worse than doing efficiently what should not be done at all”
Peter Drucker
Copyright The ProAction Group 2001
Strategic Sourcing C r a n i u m
F a c e
M a n d i b l e
C l a v i c l e
S te r n u m
S c a p u l a
H u m e r u s
R a d i u s
U l n a
I l i u m
S a c r u m
P u b i s
I s c h i u m
V e r te b r aD i s k
C o c c yx
C a r p a l s
M e ta c a r p a l s
P h a l a n g e s
F e m u r
P a te l l a
F i b u l a
T i b i a
Ta r s a l s
M e ta ta r s a l s
P h a l a n g e s
C a l c a n e u s
C e r v i c a l ve r te b r a e
R i b
S k u l l
S h o u ld e r g i r d le
U p p e r l im b
Th o r a x
S p in a l c o lu m n
P e lvi s
L o w e r l im b
F o o t
H a n d
SKELETON, ANTERIOR VIEW
(Skeleton)
(Muscles)
(Eyes / Senses)
(Skin)
(Brain)
Copyright The ProAction Group 2001
Paradigm Shifts
Utility
Time
Push - Supplier to Customer
Pull - Customer from Supplier
eBusiness supply chain demand visibility - End User POS to mother earth Supplier
Copyright The ProAction Group 2001
A Paradigm Shift
Copyright The ProAction Group 2001
CAPS - Future of Purchasing & Supply - 5 & 10 Year Forecast
The Internet will become the backbone of electronic order communication and metrics publishing.
Systems for low strategic value purchases will emphasize electronic efficiency
Tactical purchasing will become more automated and consortia and third-party purchasing will become more prevalent– head counts will be reduced
The Internet will be the front end for proprietary information systems, combining databases accessible by suppliers, purchasing, and customers, to create a seamless link
Internet commerce will be commonplace and businesses that do not adopt the world of e-commerce will be faced with extinction
Copyright The ProAction Group 2001
The Role of the Web
1,000’s of Buyers - each with their own system
1,000’s of Suppliers - each with their own system
VERY COMPLEX
Copyright The ProAction Group 2001
The Role of the Web
1,000’s of Buyers - each with their own system
1,000’s of Suppliers - each with their own system
The WEB
Copyright The ProAction Group 2001
eCommerce to Business
Web storefront Web marketing Integrated selling
Catalog searching Individual to
supplier
Unassisted selling (VMI)
Personalized marketing
ERP / Legacy integrated
Web configurator Community to many
suppliers
V=C^i ™
Copyright The ProAction Group 2001
Companies Address Business
Enterprise procurement– Ariba, Commerce1– Suitable for large companies
Vertical marketplaces– Independent Funeral Director’s Cooperative, Chemdex,
PlasticsNet, Vertical Net Community Sourcing
– 3PLEX (Sourcing capacity / shipments)– Creates a “virtual Fortune 100” company
Research and Sourcing– Find– Qualify– Obtain quotes
Copyright The ProAction Group 2001
The Purchasing Community
Multi-Company Purchasing Volume
Sister Company Sister Company Sister Company
Division Division Division Division Division Division
Location
Location
Location
Location
Location
Location
Location
Location
Location
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Location
Depth of boxes determined by time factor negotiated (zero depth for spot buying)
Volume - units
Time
Copyright The ProAction Group 2001
eStatistics
1997: B to B: $8B 1999: B to B: $137B (Yankee) 2002: B to B: $327B (Forrester) 5% savings increases profits 28%
(Killan)
Copyright The ProAction Group 2001
eBenefits
eBusiness saves money eBusiness reduces inventory eBusiness provides good service eBusiness provides good information quickly eBusiness makes other systems more effective eBusiness provides a new set of internal controls eBusiness simplifies administration
Copyright The ProAction Group 2001
The Ink is InDellible
“In the future, it will be possible for component suppliers to have a direct window into factory workflow via the Internet. This will enable them to use information to deliver parts in real time, essentially eliminating inventory and further accelerating the pace of commerce.”
Michael Dell, Chairman of the Board and CEO, Dell Computer Corp.
Copyright The ProAction Group 2001
eBenefits
Global 24 x 7 Incremental revenues w/o incremental costs Personalized Customers receive information when it’s
convenient for them Reduced in-house customer service
requirements Provides backbone for multi-link demand
visibility
Copyright The ProAction Group 2001
eBenefits (con’t.)
Up-to-minute information 70% of calls placed to companies are:
– What is the price of the product?– Is the product in stock?– What’s the status of my order?
(source: Open Market)
All can be answered with no marginal cost via the internet
Copyright The ProAction Group 2001
eBenefits (con’t.)
Orders placed can be verified for accuracy (algorithms)
Confirm order placement / shipment system to system
Use systems to audit andprocess payments
Copyright The ProAction Group 2001
eBenefits (con’t.)
Reduce #, frequency, size of physical catalogs
Internet catalogs can be:– Searched – Views analyzed– Secured– Personalized by individual / dept /
company / group– Updated with not printing or postage costs
Copyright The ProAction Group 2001
eBenefits (con’t.) Web sites tracking
– Where views come from– Path traverse through the site– Where they leave from– How long they stay– Page views
Integrate with existing systems– Inventory control– Order processing– Fulfillment– Customer service– Accounts payable– Cash forecasting
Copyright The ProAction Group 2001
eCosts
System integration System development (primarily borne by
suppliers) Re-engineering process to enable company
to take advantage of e-business Change management
Copyright The ProAction Group 2001
eRisks
Faster communication reduces option to rethink decisions
Internet security If implemented without holistic approach,
benefits may not materialize Requires specific set of internal controls Requires acceptance of paperless
purchasing
Copyright The ProAction Group 2001
eNext
Understand the capabilities of eBusiness Select an approach to eBusiness (enterprise,
vertical, community) Review sourcing tasks and company needs Select capable suppliers and applications Reengineer processes to capitalize on new
tools and suppliers Test, implement, and monitor
Copyright The ProAction Group 2001
Sourcing Approach
Critical Product FamilyNon-Critical Product Family
Low Dollar Volume
High Dollar Volume
• Community Purchasing
• Outsource to Primary Supplier
• Integrated Supplier
• Supplier Alliance• Community
Purchasing• Integrated Supplier
• Strategic Supplier Alliance Supported by eBusiness
• Supplier Alliance• Approved Supplier
Lists
Copyright The ProAction Group 2001
eNext
Understand the capabilities of eBusiness Select an approach to eBusiness (enterprise,
vertical, community) Review sourcing tasks and company needs Select capable suppliers and applications Reengineer processes to capitalize on new
tools and suppliers Test, implement, and monitor
Copyright The ProAction Group 2001
“The Web is an insidious process-reengineering tool” Graeber Jordan, Boeing
Copyright The ProAction Group 2001
Eliminate or Revolutionize?
Eliminate– Purchase orders– Invoices– Checks– Order tracking phone calls– Order taking
Revolutionize– Inventory management– Product evolution– Distribution options– Expanded community– Internal controls– Order process
One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.
— Elbert Hubbard
Copyright The ProAction Group 2001
From
Thanks! Do not hesitate to call us with any questions
Timothy Van [email protected]
www.proactiongroup.com
Copyright The ProAction Group 2001
References
VanMieghem, Timothy, Implementing Supplier Partnerships. New York. Prentice Hall, 1995.
Anthony J. Bingham, director of operations, Apartments.com. Interview conducted in September, 1998.
CNEC; “CNEC – Insights into Electronic Commerce.” www.cnec.org/ecinsight/insight.html. June 17, 1997.
Bronwin Fryer “Straight from the screen. Newfangled software may revolutionize procurement, but not without some old-fashioned reengineering.” CFO Magazine, November, 1998
V=C^i™ developed by Dan Tiernan of Aatlas Commerce, additional information available at www.aatlas.com
“The Beer Game.” Published by Harvard Business School February 24, 1997, Boston, MA