Introduction to Project Planning ...

© University of Glamorgan 1

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How (5) Supply Chains and Database connectivity

Some keys concepts of e-commerce


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Supply chains and databases

Some keys concepts of e-commerce In this lecture;

An overview of database connectivity Look at issues relating to supply chains


The Three Tier ModelModular design and platform independence

1. The first tier – web client 2. The second tier servers side application 3. Third tier database system

Bridge between second and third layers – Middleware

Databases - When ordering an item you may wish to see if it is in stock - need to connect the ordering system to the inventory system. For many businesses this means connecting legacy systems.

Internet

Database Integration Product

Middleware

Web-browser

Web-server/ application server

Database

[from Chan, electronic commerce]

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Integration & connectivityIf you are linking to a website chances are there will be a database behind it somewhere.

Many web based applications are covered by HTML files – flat file storage of data – This is likely to change as;

Complexity of websites continues to increase Volume of data need to be linked to the web increases, workflow

messaging, EDI etc…

Traditionally all data held in database. Examples being Oracle, Paradox, MySQL, Ingres. Other possibilities exist for the future (XML!)

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Accessing information Examples of systems required db connectivity varied

AltaVista, yahoo - maintain large databases of website content Amazon -products and orders, etc

There are many others Species data – web portal – aim to produce a catalogue of life online On-line reservations - have to place passengers from around the

world on numerous flights on different dates On line book store have to deal with title lists in the hundred

thousand, and stock information, in addition to order details Online libraries have to store millions of citations from hundreds of

publications held in back end databases Web search engines scan thousands of web pages to proved answers

to searches Web database content can vary from DNA sequences to archaeological

artefacts.

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Databases and the webWednesday 20 March 2002 Consignia (formerly the royal mail) is launching a service to enable Internet shoppers to save their delivery preferences to a central database. Consumers store their preferred address or drop-box location and preferred post office,when they reach the address request at the end of the shopping process they click on a button on the desktop which forwards all their details to the retailer in a secure manner. The information can be downloaded with a single click whenever they shop online.

Consignia is planning to increase the functionality of the database to cover the whole delivery process. Consignia is in talks with retailers across all sectors about supporting and promoting the database, which is based on software from supplier Kinek. The database forms part of Consignia's strategy to overcome fulfilment problems, identified as a major barrier to e-commerce success.

[Daniel Thomas, Computer Weekly]

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Data Mining and user profiling Users provide information by filling in registration form online – names, address,

telephone, email plus other self confessed information – including preferences Shopping cart database captures items selection and purchase Profile the customer – keeping records of what your preferences are and apply

special offers. Allows the system to identify exactly who the customer is and what they want and try to fulfil those needs exactly

Combine information together – log file holding page request Registration forms Shopping cart database

An example of data mining to collect the information required by the company for strategic reasons major patterns and purchases how can we maker it easier for people to access our site and find what they want

Data warehousing is adding all data to together to form warehouses containing sales payment information and any physical point of sales to provide terabyte of data on consumer behaviour on a web site. Data Mining is extracting new information / patterns from data held in the Data warehouse.

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Database Integration Kalakota (1996) suggested the following categories for products

designed to integrate databases and the web Gateways provided by the the DBMS vendors to link their DBS to

the web Third party gateways supporting multiple relational databases and

other legacy data sources Text and document databases enhanced to work over the web Front-end database application tools with web access Web servers and web browser with database aware features

CGI specification can be found at http://hoohoo.ncsa.uiuc.edu/cgi/interface.html

[Kalakota electronic commerce a managers guide]

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Database Connectivity Technology CGI – Common Gateway Interface - specification for communicating

data between a web browser and executable programs on the web server – negotiates the movement of data between the web server and outside application

JDBC – Java DataBase Connectivity – An API which provide a set of interfaces and classes for database –related operations

ODBC – Open DataBase connectivity –allows access to data in a variety of database management systems. Adding a different driver to the ODBC system allow you to access a different DBMS

ASP – The key concept use scripting language to access the methods and properties of objects. ASP provides core functions that can be used to build powerful e-commerce applications – ability to add custom objects in variety of languages depending on the platform ASP can connect to any ODBC compliant database. ASP uses ActiveX Data Objects (ADO) an API .

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THE BIG PICTURE: Supply chains

The concept of ‘value added’, a commodity is processed to create a product which is then processed further.

Mine extracts ore

Steelworks process ore

Steel used to fabricate components

Components used to create product

Sup-plier

Sup-plier

Sup-plier

Processing

Cust-omer

Cust-omer

Cust-omer

Cust-omer

Cust-omer

Remember this?

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Supply chain technologiesDuring the course we have looked at technologies which could be used to facilitate e-commerce and supply chain activities;

Electronic Data Interchange Fundamentals and standards e.g. EDIFACT Value Added Networks (VANS & VADS, Value Added Data

Services) eXtensible Mark-up Language (XML)

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Supply Chain Patterns & Trends

Supply chain management 4 main developments;1. Simplification - They may involved any number of suppliers and level in the

supply chain with varying degrees of complexity. Many manufacturers have aimed at reducing the supply chain e.g. US motor companies have reduce the number of supplier by over 50%

2. Use of EDI 3. Supply chain Management systems – flow of information to manage buying,

making selling products4. Collaborative commerce – expands picture to allow organisations to design

and build new products.


Application software can be; Horizontal – cross industry applications like financial management generic

across all of the industries (everyone has humans resources department) Logistics –Purchasing, order management, distribution, inventory,

warehousing Financial -General ledger, billing budget and asset management

Vertical – automate tasks to specific market segments. These automate tasks specific to one market segment e.g. Intel being able to track the production of a Pentium chip from order to delivery other segments include government, healthcare and education.

Both the vertical and horizontal markets are dominated by a small number of firms including

SAP – German firm Oracle (us) Peoplesoft (US) Baan (Dutch)

The platform of choice for these applications tends to be DEC, HP and IBM.

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Supply Chain Applications

The objective of using third party software is to avoid development costs and use the knowledge and experience of these companies


Supply Chain & Information One of the most essential items passed along a supply chain is information

‘’The bullwhip effect – erratic shifts in orders magnified up and down the supply chain ‘

[Lee et al 1997, quoted in Turban et al ]

This effect was observed by Proctor and Gamble with their disposable nappies – sales in stores were fairly constant, but distributors orders varied wildly. This caused inventory and production problems at P&G – was a result of bad forecasting by distributors, price fluctuations, order batching and rationing in the supply chain.

Slight demand uncertainties become magnified if managers at each level keep an eye to their own interest, the result is stock piling at numerous places in the chain

1998 – study in US $30 billion saving in the grocery industry if more information was shared between entities in the supply chain.

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Supply Chains and Technology

The following e-commerce approaches and technologies help solve some of issues associated with Supply Chains;

Order taking using EDI, EDI / Intranet Electronic payment can expedite the order fulfilment cycle

payment processing can be cheaper and fraud better controlled Inventories can be reduced (cash tied up in stock computing – stuff

devalues fast-) can use make to order (pull production process)) Order fulfilment can become instant for digital products (e.g.

software) interfacing with back office system saves time Collaborative commerce among the member of the supply chain

can include product demand to supply forecasting reduce supply times administrative delays and work interruptions and administrative costs

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Supply Chain and B2BRecent study Has shown that B2B transactions less than ideal; 51% companies surveyed B2B mostly or absolutely failed to

meet expectations. Expectations unrealistic? Expect to connect at one point and link to all partners? –

however B2B is not plug and play – partners need to be linked as well, need to understand benefits and technology

Absolutely not

mostly notpartially

mostlyabsolutely

[From B2B exchanges fail to deliver computer weekly 29th November 2001]

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Supply Chain - Advantages Most supply chains have some inefficient duplication of the processes of picking,

packing, storing, and shipping. By effectively removing duplication in the supply chain, a business can decrease costs, improve order turnaround and customer service levels. business may benefit in the following ways:

Reduction in inventory levels. Lower inventory costs. Faster order turnaround. Lower product prices. Integration.

In some cases Virtual Fulfilment is when your business reduces stocks completely, and enters an agreement for all orders to be shipped direct from a third party fulfilment house or from the manufacturer to the end customer. While this is possible in many industries, it requires the co-operation of the various channel players to work effectively and an integrated e-business platform.

[IBM (New Zealand) - website]

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Supply Chain Savings (1)Supply chain management has huge implications –

GlaxoSmithKline (pharmeuticals) has installed a new web based supply chain system to track supplies – generate forecasts and reduce errors

- communication with external suppliers something of a problem as there was no standard order form and some where hand written and illegible!

The system cost $500K, to handle 1M transactions per year. In one year this has saved $3M – enabled to reduce the stock levels by 1week!

[Maggie Holland, Computing 7th Feb. 2002]

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Supply Chain Savings (2)Littlewoods Stores introduced a web based linked to a data warehouse to improve it’s supply chain by allowing financial and stock information to be review on a daily basis; the following savings were made;Reduce inventory expenses £2.6mStrategically price merchandise in different stores £0.8mReduce the need for stock liquidation £0.9mMarketing distribution expenses £4.6mReduction in logistics staff £0.6mTotal saving £9.6m

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Supply Chain Savings (3)Clothing retailer New Look has implemented a merchandising management system for its 500 stores. The single, integrated system has reduced the supply chain length to six weeks - compared to the industry average of nine to 12 months – and has significantly reduced inventory levels.

"It made tremendous sense to merge the accessories and clothing businesses and we needed a single collaborative solution to support this transition," he said. "The new, improved supply chain has yielded substantial benefits. Primarily, even with increased volumes of product passing through the warehouse, we have reduced inventory. Total stock cover has been reduced and the distribution centre is now only holding one and a half week's stock cover.“ Alan Osborne, Logistics Director, New Look.

A rival store, Peacocks, is planning to implement both merchandising and customer relationship management software, the company has has 360 stores across the UK, and hopes the changes will help it determine which ranges of clothing should be stocked in various parts of the country, thus maximising profitability and reducing markdowns.

[from: Computer Weekly Article Thursday 6 February 2003 Clothing store slashes its supply chain length]

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Just in Time… JiT supply chain management – operated by large number’s EDI

companies, there are security issues / problems if the chain is disrupted. As the following examples show the effect of disrupting a supply chain;

Fuel blockade in September 2000 – people could not get to work distributors could not distribute shops run low bread milk etc panic buying – despite / because of media

9.30am 4th January 1991 an AT&T repair crew in Newark, New Jersey U.S.A. accidentally sever a fibre optic cable carrying 100,000 calls. The effects included;

Downtime of the New York Mercantile Exchange FAA control lost to New York Metropolitan Area resulting in lengthy

flight delays 60% calls to New York City blocked.

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Supply Chain and infrastructure

C2W, IWMilitary Forces

InfrastructureSupporting

Military Force

EnvironmentLaw Enforcement

Economy/Finance

PoliticalEducation/R & D

WeaponsHeavy Machinery

ElectronicComputers

InformationContentProvider

Water/SewageTelecom

TransportGovernment

Electrical Power

FoodstuffsChemicals

Raw MaterialsEconomy/Finance

Public ConfidenceThe Media

Legal FrameworksLegal Frameworks

Trust inInstitutions

MilitaryPolitical,

Economic,Social

Industry

Infrastructure Commodities IntangibleNetworks

Interdependencies and Synergy

Energy(Oil, Gas, Coal)

BB Slide

Infra structure – Blyth and Kovacich fig 3.1 p32


Supply Chains -VulnerabilityJan 17th 2002

FBI Issues warning concerning possible attack which may use to internet to target utility, municipal and state information systems, said Gordon Johndroe, spokesman for the White House office of homeland security.

FBI has infrastructure-protection arm concerned with protecting infrastructure.

[http://abcnews.go.com/sections/scitech/DailyNews/NetTerrorWarn020117_wire.html]

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And almost finally...And almost finally...

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Some thoughts for all that spare reading time…

Look at one piece of technology associated with linking Databases to the web.

Consider the issue of Security and Supply chains.

Firewalls next week…


BibliographyTurban, E et al (2004) Electronic Commerce – A managerial

perspective. International Edition, Prentice Hall. Timmers, P (2000) Electronic Commerce - Strategies and

models for business to business trading. John Wiley & Sons

Chan, H, (2001) E-Commerce – Strategy , Fundamentals and Applications. John Wiley & Sons

For more information on the technology look at; Nelson, A. & Nelson W.H.M. (2002) Building Electronic

Commerce with Web database constructions, Addison Wesley

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Retail exchangesThe World-Wide Retail Exchange has saved its members more than £425m since its launch in March 2000, the online business-to-business exchange for retailers and suppliers has revealed.

B2B exchanges were expected to revolutionise the way organisations bought goods from suppliers, offering substantial cost and time savings, but many have fallen by the wayside in the past two years The WWRE, which now has 62 members including Tesco, Kingfisher and Marks & Spencer, has survived because it has adapted to changing market conditions and listened to feedback from users.

"In the early days auctions were all about price. But buyers are becoming more sophisticated taking other factors into consideration, such as terms, quality and delivery timescales. Companies are still reaping the financial benefits though - every single member has achieved savings."

Initial auctions tended to be for goods not for resale - such as office supplies and sanitary products - but this has also changed. Now more than half of the goods that are purchased through WWRE auctions are for re-sale. This allows savings with supply chain rationalisation instead of buying the same goods from a number of different suppliers."

The WWRE recently upgraded its auction software to a multidimensional auction tool which allows buyers to focus on key purchasing factors other than price.

Joining WWRE does not represent a burden for the IT department from the retailer or manufacturer, Williams added. "We operate an ASP [application service provider] model, so there is no integration with other systems - all you need is a browser. There is nothing downloaded on to the client, all the information is stored on the server.“

[From Computer Weekly Friday 31 January 2003 Retail B2B exchange delivers £425m savings]

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Introduction to Project Planning ...

Technology

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