ect 481 session 1
DESCRIPTION
TRANSCRIPT
ECT 481 1
Lecturer: Ellis E. Confer E-mail: [email protected]
Office Hours: Monday 4:00 – 5:30 pm
Internet Supply Chain Management –
ECT 481 Spring 2006
ECT 481 2
Session Number: 1
Session Date: March 27, 2006 Session Objectives:
Introductions & Administrative Items Course Overview Initial Course Topics Assignments
Session Topics: Introduction to Supply Chain Management & B2B Systems
Course Administration & Overview Historical Perspective on Internet & Ecommerce Evolution B2B Ecommerce Overview Supply Chain Management Overview
ECT 481 3
ECT 481 Course Objectives
To examine the links between business strategy, information system technology architecture, and technical platform implementation as it relates to Supply Chain Management and Business-to-Business E-Commerce.
ECT 481 4
Course Description
ECT 481 - Internet Supply Chain Management
This course examines e-business strategies, architectures, technologies, approaches, and infrastructure requirements in the context of supply chain management (SCM). The focus is on the design, development, and implementation of e-business systems that facilitate the collaboration of an enterprise with its buyers and suppliers. Topics include SCM, global logistics management, messaging-based collaboration framework, extensible markup language (XML), extensible style sheet language (XSL), document type definition (DTD), and web services. This course also examines the integration of e-business systems and back-end systems such as enterprise resource planning (ERP) systems, virtual private networks (VPN), and internet security. Students will implement a collaborative extranet system component in team projects. Prerequisite: ECT 425. Programming knowledge of or experience with ASP, ASP.NET, Java, Visual Basic, or VB Script will be helpful and is highly recommended.
ECT 481 5
Prerequisites & Text and Supplementary Reading Materials
Prerequisites: ECT425, Technical Fundamentals of Distributed Information Systems, is a required prerequisite. Programming knowledge of or experience with ASP, ASP.NET, Java, Visual Basic, or VB Script will be helpful and is highly recommended.
1. Building B2B Applications with XML by Michael Fitzgerald published by John Wiley & Sons, Inc., Wiley Computer Publishing 2001, ISBN: 0-471-40401-2.
2. Introduction to Supply Chain Management, by Robert B. Handfield and Ernest L. Nichols, Jr., Prentice Hall, 1999, ISBN: 0-13-621616-1
3. Other books will be referred to and handouts and web-links will be given as appropriate.
ECT 481 6
Grading ProcedureThe student’s final grade will be based on a weighted average of the exam score, the
project report & deliverables, project presentation, and class participation. Weights are as follows:
Weight
HW Assignments 20%
Project 35%
Midterm Exam 20%
Final Exam 20%
Class Participation 5%
Grades will be determined as follows:
92% - 100% A;
90% - 91% A-;
87% - 89% B+;
80% - 86% B;
77% - 79% B-;
70% - 76% C;
67% - 69% C-;
60% - 66% D;
0% - 60% F
ECT 481 7
Procedures and policies:
1. No makeup exams will be given.
2. Homework assignments must be turned in on time.*
3. Late homework assignments will not be accepted.
*Turning in a hard copy version of an assignment is the most reliable way to ensure that assignments are received on time. When transmitting a soft copy of an assignment via email, make sure to give yourself adequate time for the mail to be delivered by no later than the day when the assignment is due. Email delivery problems do occur, please ask for a receipt of delivery.
ECT 481 8
ECT 481 Tentative Schedule of DiscussionsSession 1 Course Administration & Overview
Supply Chain Management Overview B2B Ecommerce Overview Business Trends: Opportunities & Challenges
Session 2 Supply-Chain Management & ERP
Supply Chain & Value Chain Considerations (continued) Enterprise Requirements Planning Technical and Process Architectural Considerations
Session 3 B2B Systems Architecture & Key Technology
Architectural Considerations (continued) Design & Development Processes Key Technology
XML Middleware VPNs
ECT 481 9
ECT 481 Tentative Schedule of Discussions (continued)
Session 4 ** 1st Homework Assignment Due **
XML XML as a Content Development Tool & Internet-based EDI Syntax & Document Structure
Session 5 ******** MIDTERM EXAM *********
XML (continued)
******** Project Abstracts Due *******
Session 6 XML (continued)Web Services
Session 7 Web Services (continued)
ECT 481 10
ECT 481 Tentative Schedule of Discussions (continued)
Session 8 MiddlewareSecurity ConsiderationsFuture Trends: Emerging Techniques and Technology
- Independent Supply Networks
- Collaborative Planning and Forecasting
- Collaborative Transportation Planning
- Impact of Radio Frequency Identification Devices
(RFID)
- Impact of Wireless Cellular Technology
Session 9 ******** FINAL EXAM *********
Session 10 No class
Session 11 ******** Project Presentations *******
ECT 481 11
Logistics
Class time – Monday evenings from 5:45 pm to 9:00 pm.
Class location – Downtown Campus, Room (TBD)
Rest periods (two options to choose from) Option 1: One thirty (30) minute break @ 7:30 pm Option 2: Two fifteen (15) minute breaks @ 7:15 pm &
8:30 pm
Office hours - Monday, 4:00 pm – 5:30 pm in room TBD
Email address: [email protected]
ECT 481 12
Instructor background – Who Am I?
Professional experience: 20+ years experience as consultant and entrepreneur Stints with Accenture, IBM, Sybase, Tandem, CNA Financial Presently senior executive with consultancy & software development
firms
Educational training BSEE from University of Michigan
Concentration in digital design and solid state physics MBA from Indiana University
Concentration in finance & operations research
Leisure interests/hobbies: gardening, music, fine dining, motorcycling, reading (non-fiction)
ECT 481 13
Introductions
Who are you? Please send me an email message with the following.
Your name? What is your profession (student or otherwise)? What is your major? Where are you in your graduate/undergraduate program? Why are you taking this course? What do you hope to learn from this course? Rated skill profile (project manager, process analyst, designer,
developer, etc.) from 1 (novice) to 5 (expert). Favorite websites (2 or more) and (briefly) reasons why. Anything else you feel is interesting and appropriate.
ECT 481 14
• Objectives
• Discussion Baseline
• Evolutionary Perspectives & Industry Comparisons
• Brief History of Ecommerce & B2B Systems
• The BIG Picture: B2B Market Perspective
Discussion Agenda
E-commerce & B2B Marketplaces: Origins and Evolution
ECT 481 15
There is no new thing under the sun
Ecclesiastes, Chapter 1, Verse 9
He who forgets the past is condemned to repeat it.
Jorge Santayana
E-commerce & B2B Marketplaces: Origins and Evolution
Evolutionary Perspectives & Industry Comparisons
But first…..Let’s put everything into perspective.
ECT 481 16
"Let us not forget that the value of this great system does not lie primarily in its extent or even in its efficiency. Its worth depends on the use that is made of it.…….For the first time in human history we have available to us the ability to communicate simultaneously with millions of our fellowmen, to furnish entertainment, instruction, widening vision of national problems and national events. An obligation rests on us to see that it is devoted to real service and to develop the material that is transmitted into that which is really worthwhile."
Who said this? Bill Gates? Newt Gingrich? Al Gore? Alvin Toffler?
An Interesting Quote
ECT 481 17
Perspective on the Internet, Ecommerce and Earlier Technology Innovations
Internet is a change agent in global commerce.
There have been comparable periods of industrial change.
Internet and Ecommerce evolution & expansion is similar when compared and contrasted with:
railroad, telegraph, telephone, and radio.
In all cases, early pioneers (practitioners, inventors, etc.) knew they were on to something.
ECT 481 18
E-commerce & B2B Marketplaces: Origins and Evolution
Parallels between the evolution of telegraph, radio, and the Internet.
• Each transmits intangible items (i.e., information).• Each shortened the time to transfer info.• Their utility (i.e., their ability to deliver products & services) is dependent on the efficacy and efficiency of their underlying network. • All had initial usability, training, & infrastructure problems.• All have or are experiencing the S-curve in lifecycle product development.
ECT 481 19
Discussion Objectives
• Establish a discussion context regarding Ecommerce & B2B marketplaces.
• Discuss historical and market perspective for the evolution of Ecommerce & B2B marketplaces.
E-commerce & B2B Marketplaces: Origins and Evolution
ECT 481 20
Mission Critical (Important) Terminology:
E-Commerce
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Supply Chain Management
Business Process Re-engineering (BPR)
Electronic Data Interchange (EDI)
Intranet
Extranet
Security
Firewall
Virtual Private Network
ECT 481 21
Discussion Baseline: Terminology Defined
• Electronic Commerce or E-commerce - the conduct of a financial transaction by electronic means; more recently, the purchase of goods and services over the Internet’s World Wide Web. Includes the following types:
• Business-to-Business or B2B E-commerce - inter-organizational E-commerce
• Business-to-Consumer or B2C E-commerce - electronic commercial interaction between the enterprise and the end consumer.
• Business-to-Employee or B2E E-commerce- intra-organizational E-commerce.
E-commerce & B2B Marketplaces: Origins and Evolution
ECT 481 22
Distinguishing B2B & B2C
B2B E-commerce is the exchange of products, services, or information between businesses rather than between businesses and consumers.
e-Business. Suppliers and ‘Big C’s’ - transactions between businesses. Focus on transaction efficiency.
B2C E-commerce the retailing of goods and services directly to end consumers via the Internet.
Suppliers & ‘little C’s – transactions between goods and service providers and end consumers.
Dis-intermediation. (theoretically) lowers inventory and distributions costs.
ECT 481 23
Electronic Data Interchange (EDI) defined:
EDI – Inter-company, computer-to-computer communication of data which permits the receiver to perform the function of a standard business transaction and is in a predefined standard format.
Enabled ‘Old-school’ B2B E-commerce. It still works.
Enables electronic intra-company exchange of purchase orders and other transaction documents.
EDI based on standards-based protocols.
ECT 481 24
Distinguishing Intranet & Extranet
Intranet defined An intranet is a corporate LAN or WAN that functions with Internet
technologies behind the company’s firewall.
Extranet defined An extranet is a network that links the intranets of business partners using
a virtually private network on the Internet. Designing extranets is difficult. Complexities of security, performance, management and policy.
Extranet and B2B are not synonymous. Extranets can apply to B2C as well.
ECT 481 25
Supply Chain Context of E-commerce
• Product design• Product
development• Vendor capacity• Quality• Sample
management• New product
introduction
• Invoice processing• Payment• RFI/RFP• Catalog development• Vendor certification• Item management• Product availability• Production planning• Technical
specifications• Second- and third-
tier suppliers
• Order management
• Product tracking• Capacity
management• consolidation• Replenishment• Reverse logistics
ProductDevelopmentManagement
E-ProcurementSoftware
Supply ChainManagement
• Goods-in scheduling
• New product introduction
• Planning for seasons and events
• Allocation
CategoryManagement
B-to-B B-to-C
ProductDevelopment
Supplier Management
TransportWarehouse and
Inventory Management
Category Management Store Management
Customer Relationship Management
E-commerce & B2B Marketplaces: Origins and Evolution
Supply Chain - all organizations and processes related to products and services sourced by buying organizations, typically from raw materials through consumption.
ECT 481 26
Brief History of E-commerce and B2B marketplaces.• E-commerce and B2B are not new concepts.
• Current systems emanated more directly from Electronic Data Interchange (EDI).
• EDI provides for the exchange transaction information over proprietary Value-Added Networks (VAN’s).
•EDI participants realized benefits such as:
• reduction in process costs, and
• enhanced profitability.
• EDI participants also incurred significant expenditure in
• EDI deployment costs, VAN charges.
• EDI limited to a few very large & wealthy organizations.
Enter the Internet, B2B Marketplaces & Internet-based EDI!
•B2B extranet system deployment on the rise.
• Third-party B2B Market Makers are key movers in evolution of internet-based ‘EDI’.
E-commerce & B2B Marketplaces: Origins and Evolution
ECT 481 27
.
How is B2B conducted?
B2B commerce can be conducted directly between a buyer and seller or via an online intermediary. The intermediary can be:
• a person or • an organization or • an electronic system
What are the types of transactions?
• Spot Buying • buying goods and services at market prices • often facilitated by a third party exchange
• Strategic Sourcing • long-term contracts that are usually negotiated to get a good cost advantage • often this is done by streamlining your supply chain
B2B Electronic Commerce Key Characteristics
ECT 481 28
The key B2B entities include:
• Selling Company
• Buying Company
• Electronic Intermediary
• Deliverer
• Network Platform
• Protocols and communication
• Back-end information system - including ERP (Enterprise Resource Planning)
B2B Electronic Commerce Key Characteristics
ECT 481 29
What is the essential information processed in B2B Ecommerce?(i.e., what should you to expect to be sent back and forth between the buyer, seller and the intermediary)
• product details • customer profile • supplier conditions • product process - capacities • transportation, times, costs
What are the primary B2B business models?
• Company Centric Models • which would include
• Supplier Oriented Marketplace• Buyer Oriented Marketplace• Intermediary Oriented Marketplace (the Market Makers)
•Many-to-many Marketplaces also known as •Trading Communities •Trading Exchanges or Exchanges
B2B Electronic Commerce Key Characteristics
ECT 481 30
B2B Business Cycle: Primary B2B Business Processes & Key Applications
B2B Business Processes
• Information Transfer
• Data Sharing
• Ordering
• Payment
• Customer Support & Service
Key Applications
• Distribution Control
• Inventory Management
• Supplier Relationships
• Payment Management
• Channel Management
ECT 481 31
The BIG Picture: B2B Current Market Perspective
• B2B E-commerce participants include:
• Existing prominent, well-established firms that sell directly to business customers.
• Emerging Market Makers – a new breed of intermediaries
Market Makers further segmented as:
• Vertical hubs – industry-specific focus.
• Functional hubs – business process focus.
• Catalog models – demand/supply aggregation.
• Auction & exchange models – engaging in matching buyers & sellers.
• Barter models – reciprocal value exchange.
E-commerce & B2B Marketplaces: Origins and Evolution
ECT 481 32
B2B Supplier Marketplace Model Characteristics
•Supplier offers an e-store to promote sales.
•Customers are both consumers and business buyers.
•Popular type of initial e-marketplace.
•Auctions are becoming popular; used to clear surplus inventories.
ordered information.
ECT 481 33
B2B Buyer Marketplace Model Characteristics
•Buying company opens a bidding site to enhance its purchasing procedure.
•Model is unique to B2B; not found in B2C.
•Online bidding can reduce the purchasing cost and cycle time.
ECT 481 34
B2B Intermediary-oriented Marketplace Model Characteristics
• This is the Market Maker segment
• Consists of 3rd party player that opens an intermediary e-store for
buyers and sellers.
• E-store may also be used for consumers and individual business
buyers.
• Auction and bidding market making sites are gaining in
popularity.
• Example might include an assembly company acting as an
intermediary between allied customers and suppliers.
35
Emergence of online exchanges - three forces shaping the B2B marketplace
Industry-Centric Exchanges
• Aerospace (Boeing)• Automotive (GM/Ford)• Agricultural (Cargill)• Chemical (DuPont)• Foods (GMA)• Retailing (Wal-Mart)• Utilities
AribaCommerce One
OracleSAP
I2Manugistics
EAI Software Manufacturers
AribaCommerce One
OracleSAP
I2Manugistics
EAI Software Manufacturers
Market Makers
Vertical• Foodbuy.com• First Index (custom
manufactured parts)Horizontal• Commerce One Market
Site• Ariba Network
Technology Providers and “Engines”
0
500
1000
1500
8000
1999 2002 2003 2004 2005
B2B Market Opportunity:$4.5 - 8 trillion by 2004
IDC & Gartner 2002
B2C (Business to Consumer)B2B (Business to Business)
E-commerce & B2B Marketplaces: Origins and Evolution
36
Ariba was First B2B Firm
to Profitability!
Wall Street Journal
Friday, January 12, 2001
ECT 481 37
E-commerce & B2B Marketplaces: Origins and Evolution
So what should we expect?
• Currently experiencing re-vitalization (post recession).• E-commerce has become mainstream and internalized by “old economy” firms.• B2B uptake will continue with improved economy, probably tied to supply chain management improvements.• A number of small technological, micro-improvements will impact the E- commerce and the internet over the short-term.• “Last-mile” infrastructure improvements (ubiquitous broadband) has had significant impact on level of internet usage.• Security will continue to be of paramount concern and will garner significant expenditure. An outstanding area of entrepreneurial opportunity.
ECT 481 38
B2B Critical Success Factors
• Plenty of buyers and sellers – you need both to make a market.
• Liquidity – value of a market make r is a multiple of the value of the transactions flowing through it; market makers (MM’s) must be focused on generating industry-leading liquidity.
• Fragmentation – MM’s add most value in highly fragmented markets.
• Inefficiency – MM’s must add value to both sides of the trade.
• Management with domain expertise – senior-level industry relationships and creditability facilitate industry ‘buy-in’.
• Early mover advantage – Ebay only had a year head start in the C2C auctions business, but that was enough.
• Partnerships for distribution and logistics – UPS doesn’t transport lumber, resin, or HCL acid.
• Neutrality – few business opt to do business with their competitors or with subsidiaries of competitors; do not sacrifice liquidity to gain neutrality.
• Public currency – with a billion dollar market cap, if you don’t yet have a real business, then go and buy one; in the end, real value/dollars count.
ECT 481 39
Key Technology
Key Ecommerce technology architecture components include the following: web browsers application servers secure file transfer servers customer account management systems remote administration tools directory servers authentication systems commerce systems distributed computing infrastructures and databases messaging systems & middleware firewalls and proxies security scanners
ECT 481 40
Remaining Mission Critical Terms
Business Process Re-engineering (BPR) - fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical performance measures such as cost, quality, service, speed.
Security – the combination of technology and policies designed to protect sensitive business information and to prevent fraud.
Firewall – a security screen placed between an organization’s internal network and the external Internet.
Virtual Private Network – a wide-area network (WAN) created to link a company with external users (including mobile users, field representatives, or strategic allies).
ECT 481 41
Evolving B2B Trends: XMLXML (Extensible Markup Language)
• enables sharing of interactive documents across the Internet.
• offers format for representing data, a schema for describing data, and means for extending HTML.
• Key to transition from traditional EDI to Internet-based EDI.
• Processes most affected have been order fulfillment, production, logistics, and inventory.
• Electronics industry has taken the lead in XML use in the supply chain.
• Toshiba, Solectron, Intel, Ingram Micro , American Express, Federal Express, and Cisco are key practitioners.
ECT 481 42
Supply Chain Considerations
What is the ‘Supply Chain’? All organizations and processes related to products and services sourced by
Buying Organizations, typically from raw materials through consumption.What is ‘Supply Chain Management’?
Supply Chain Management (SCM) is the management of all activities along the supply chain; from suppliers to internal logistics within a company and to distribution to customers.
Contrasted with the Value Chain Value chain is a series of activities a company performs to achieve its goal by
adding additional values as each activity proceeds to the next one. The value chain looks at every step in the supply chain management process -
from source materials to delivery of the final product to the customer. The objective of the value chain is maximum value (to the customer) at the least
possible cost (to the business). The supply chain focuses on getting source materials into manufacturing
operation smoothly and economically.
ECT 481 43
• Product design• Product
development• Vendor capacity• Quality• Sample
management• New product
introduction
• Invoice processing• Payment• RFI/RFP• Catalog development• Vendor certification• Item management• Product availability• Production planning• Technical
specifications• Second- and third-
tier suppliers
• Order management
• Product tracking• Capacity
management• consolidation• Replenishment• Reverse logistics
ProductDevelopmentManagement
E-ProcurementSoftware
Supply ChainManagement
• Goods-in scheduling
• New product introduction
• Planning for seasons and events
• Allocation
CategoryManagement
B-to-B B-to-C
ProductDevelopment
Supplier Management
TransportWarehouse and
Inventory Management
Category Management Store Management
Customer Relationship Management
Supply Chain Considerations
ECT 481 44
Key Components of SCM
Courtesy of Network Computing magazine December 8, 2005
ECT 481 45
SCM Objectives
Optimize the sharing of information across organizational boundaries
Focus on value of time, efficiency.
Attempt to gain time-based competitive advantage.
Potential linkage to greater customer satisfaction, increased sales, enhanced product quality, and profitability.
ECT 481 46
Supply Chain Performance Metrics
Products & services offeredSalesMarket shareCostQualityDeliveryCycle timesAssets utilizedResponsivenessCustomer service
ECT 481 47
New Imperatives of Supply Chain Management
Build flexibility.Plan and measure accurately.Develop logistically separate operations where appropriate.Get lean by emphasizing simplicity and speed.Optimize timely information transfer.Mass-customize, treat customers unequally; segment and stratify.Operate globally.Practice virtuality and collaborative management.Exploit electronic commerce.Leverage people,Operationalize new product introductions and phaseouts.
ECT 481 48
Supply Chain Example – Apparel Industry
Customer
Retailer
Apparel Manufacturer
Textile Producer
Yarn Maker
Information Product
ECT 481 49
Supply Chain Example – Health Care Products
Customers
Hospitals/Drug Stores
Distributors
End Product Manufacturer
Raw Material Supplier
Information Product
ECT 481 50
SCM Success Factor: Effective and Timely Information Management
Successful SCM often times tied to coherent information technology strategy and appropriate architecture. information systems that diffuse organizational boundaries.
Supply chain links suppliers, distributors, buyers, assemblers, etc. as virtual organization
Embraces concept of the Inter-organizational Information Systems (IOIS)
Systems that cross organizational boundaries. Requires technology that enables electronic link between organizations. Automates manual and paper-bound work. Earliest forms of these systems were time-sharing services, online
databases, EFT, EDI.
ECT 481 51
Technology-based Applications for SCM
Internet-based Ecommerce
EDI
Intranet/Extranet
Traditional EDI
Bar Coding and Scanning
Data Warehouse
Decision Support Systems
ECT 481 52
SCM Hype Cycle
ECT 481 53
Next Session Highlights:
Review of Supply Chain Concepts
Reading Assignment covering first 3 sessions: Introduction to Supply Chain Management; Handfield & Nichols;
Chapters 1 – 5; Building B2B Applications with XML; Fitzgerald; Chapters 1