Unit 5 E-BUSINESS OPERATIONS AND PROCESSES

1. E-Business Operations and Processes
Competitiveness, Profitability and productivity
 The recent studies on competitiveness revealed the importance of the
process that leads to a firm to make a superior performance rather than just
taking the performance measure as an indicator of competitiveness .
 There are many factors affecting upon this process; some are called as assets
and resources like plant and capital, some are called as capability such as
human skills and quality, and some are called as knowledge like
innovativeness and organizational learning
 All assets, capabilities, organizational processes, firm attributes,
information, knowledge, etc. controlled by a firm that enable the firm to
conceive of and implement strategies improve its efficiency and
effectiveness”. Thus, competitiveness as a multidimensional concept should
be considered as a process of generating competitive advantages and be
evaluated as the main indicator of a firm’s performance. It includes hard
figures and numbers and tangible parts, like productivity, return, and
profit, as well as soft, intangible components such as education, reputation,
human skills or knowledge

2. 1 Keep an Eye on the Bottom line
 Most companies today work on the premise that profits will become
important only after a certain scale is achieved. While this is an
unconventional method of doing business, it is not exactly a sustainable one.
 The topline might be important in order to raise money from investors, but
the bottom line is more important if the business wants to become self
sustainable. While its counterparts in India are struggling, Alibaba in China
has been able to consistently make profits.
 The basic reason is simple. Alibaba understood its customers from the get go
and created a business model that was profit driven instead of revenue driven.
Profitability

3. 2 Focus on the Profits
Simply put, a company is said to be making profits when it is earning more money
than it is spending. At a transactional level, you could say your products are selling
at a profit, if your product’s selling price is more than the cost price.
In an e-commerce business, the cost per transaction is twofold. It includes:
The cost of the product (manufacturing/procuring)
Operational costs in delivering the product to the customer.
The operational costs in ecommerce include at least the following:
Real estate costs – Rent for warehouse, office/shop, electricity, water, etc.
Human resources – Employee salary, CA/lawyer charges
Logistics – Courier charges, packaging charges, etc.
Marketing – The heaviest spend of the lot, in order to get the attention of your
customers.

4. 3 Take Advantage of Multi Marketplace Customers
While selling on multiple marketplaces exposes you to multiple customers, it also
requires work. According to expert sellers, a loss leader strategy works best for the
short run.
Pick out 10-15% of your catalog where you feel the demand is high, and keep your
prices super competitive. While you might make very small profits at a
transactional level, your reputation and star rating as a marketplace seller will
increase and lead to further sales of other products.

5. In a formal sense, productivity refers to how well an organization converts input
(such as labour, materials, machines and capital) into goods and services or
output.
1. Use technology to improve your operations
Web-based technologies enable you to dramatically improve how you run your
business. You're a good candidate if you're looking to increase market share,
aggressively pursue cost reduction or greater efficiency, or prevent customer-
service problems. Production management tools range from spreadsheets to off-
the-shelf software solutions or business-specific, custom-developed
applications.
2. Review your existing setup
Look at your processes from the point of view of a potential investor. Keep in
mind the overall objective and vision of the business, and ensure the processes
meet those goals and add value. Draw an accurate map of each process in your
material and information flow. By doing this, you can better understand the
links between various elements of your production, and you will be better
equipped to identify and eliminate waste throughout your company
Productivity

6. 3. Implement a continuous improvement approach
Improving productivity is an ongoing activity. Here are some suggestions for
setting up a continuous improvement plan:
Start by assessing the competition and the best practices in your industry, also
known as benchmarking. But don't copy plans of other businesses—develop
one that works for your company.
Get external help to assess your business weaknesses and strengths. This gives
you an objective viewpoint from which you can improve productivity and
redesign processes.
Take a step-by-step approach rather than tackling everything at once.
Focusing on a few priorities will enable you to see results faster.
Assign specific teams to specific problems or processes for redesign.
Put a formal suggestion system in place for employees.
Look for breakthrough accomplishments. Small improvements can
transform into major increases in productivity.
Measure your results. Ideally, this should be done by an objective outside
party.
Outsourcing can be a cost-effective way to focus your efforts on what you do
best as a business and make productivity gains

7. Operations success- Competing through effective operations, Processes-
Products and services to match customers needs
There are five operations performance objectives:
1 Cost: The ability to produce at low cost.
2 Quality: The ability to produce in accordance with specification and
without error.
3 Speed: The ability to do things quickly in response to customer demands
and thereby offer short lead times between when a customer orders a
product or service and when they receive it.
4 Dependability: The ability to deliver products and services in accordance
with promises made to customers (e.g. in a quotation or other published
information).
5 Flexibility: The ability to change operations. Flexibility can comprise up to
four aspects:
i. The ability to change the volume of production.
ii. The ability to change the time taken to produce.
iii. The ability to change the mix of different products or services produced.
iv. The ability to innovate and introduce new products and services.