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Ec elim purch

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  • 1. Will eCommerce EliminatePurchasing? R=IQi
  • 2. Agenda Purchasing today, Sourcing tomorrow eCommerce to Business eBenefits eCosts and eRisks eNext steps Purchasing, eliminated or revolutionized? Copyright The ProAction Group 2001
  • 3. 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
  • 4. 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
  • 5. 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
  • 6. The Plan Must Tie to theOrganization’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
  • 7. Strategic Sourcing (Eyes / Senses) (Brain) (Muscles) (Skeleton) (Skin) Copyright The ProAction Group 2001
  • 8. Paradigm Shifts eBusiness supply chain demand visibility - End User POS to mother earth Supplier Pull - Customer from Supplier Push - Supplier to Customer Utility Time Copyright The ProAction Group 2001
  • 9. A Paradigm Shift Copyright The ProAction Group 2001
  • 10. 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
  • 11. The Role of the Web 1,000’s of Suppliers - each with their own system VERY COMPLEX 1,000’s of Buyers - each with their own system Copyright The ProAction Group 2001
  • 12. The Role of the Web 1,000’s of Suppliers - each with their own system The WEB 1,000’s of Buyers - each with their own system Copyright The ProAction Group 2001
  • 13. eCommerce to Business Web storefront  Unassisted selling (VMI) Web marketing  Personalized marketing Integrated selling  ERP / Legacy integrated Catalog searching  Web configurator Individual to supplier  Community to many suppliers V=C^i ™ Copyright The ProAction Group 2001
  • 14. 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
  • 15. The Purchasing Community Depth of boxes determined by time factorDept Dept Dept Dept Dept Dept Dept Dept Dept Dept Dept Dept Dept Dept negotiated (zero depth for spot buying) Loca Loca Loca Loca Loca Loca Loca Loca Loca Loca tion tion tion tion tion tion tion tion tion tion Division Division Division Division Division Division Sister Company Sister Company Sister Company Time Multi-Company Purchasing Volume Volume - units Copyright The ProAction Group 2001
  • 16. 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
  • 17. 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
  • 18. The Ink is InDellible“In the future, it will be possible forcomponent suppliers to have a directwindow into factory workflow via theInternet. This will enable them to useinformation to deliver parts in real time,essentially eliminating inventory andfurther accelerating the pace ofcommerce.” Michael Dell, Chairman of the Board and CEO, Dell Computer Corp. Copyright The ProAction Group 2001
  • 19. 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
  • 20. 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
  • 21. eBenefits (con’t.) Orders placed can be verified for accuracy (algorithms) Confirm order placement / shipment system to system Use systems to audit and process payments Copyright The ProAction Group 2001
  • 22. 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
  • 23. 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
  • 24. 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
  • 25. 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
  • 26. 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
  • 27. Sourcing Approach • Supplier Alliance • Strategic SupplierHigh • Community Alliance SupportedDollar Purchasing by eBusinessVolume • Integrated Supplier • Community • Supplier Alliance Purchasing • Approved SupplierLow • Outsource to ListsDollar Primary SupplierVolume • Integrated Supplier Non-Critical Critical Product Family Product Family Copyright The ProAction Group 2001
  • 28. 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
  • 29. ―The Web is an insidious process-reengineering tool‖Graeber Jordan, Boeing Copyright The ProAction Group 2001
  • 30. Eliminate or Revolutionize? Eliminate  Revolutionize – Purchase orders – Inventory management – Invoices – Product evolution – Checks – Distribution options – Order tracking phone – Expanded community calls – Internal controls – Order taking – Order process Copyright The ProAction Group 2001
  • 31. One machine can do the work of fiftyordinary men. No machine can dothe work of one extraordinary man. — Elbert Hubbard
  • 32. From Thanks! Do not hesitate to call us with any questions Timothy Van Mieghem tvanmieghem@proactiongroup.com www.proactiongroup.com Copyright The ProAction Group 2001
  • 33. 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 Copyright The ProAction Group 2001