Operations Management Supplement 11 – E-Commerce and Operations Management PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e © 2006 Prentice Hall, Inc Hall, Inc © 2006 Prentice S11 – Outline The Internet Electronic Commerce E-Commerce Definitions Economics Of E-Commerce Product Design Collaborative Project Management © 2006 Prentice Hall, Inc S11 – Outline – Continued E-Procurement Online Catalogs RFQs and Bid Packaging Internet Outsourcing Online Auctions Inventory Tracking © 2006 Prentice Hall, Inc S11 – Outline – Continued Inventory Reduction Warehousing for E-Commerce Just-in-Time Delivery for ECommerce Scheduling And Logistics Improvement Coordinated Pickup and Delivery Logistics Cost Reduction © 2006 Prentice Hall, Inc S11 – Learning Objectives When you complete this supplement, you should be able to: Identify or Define: E-commerce B2B, B2C, C2C, C2B Online catalogs Outsourcing E-procurement © 2006 Prentice Hall, Inc S11 – Learning Objectives When you complete this supplement, you should be able to: Describe or Explain: How E-commerce is changing the supply chain Online auctions Internet trading exchanges Inventory tracking Pass-through warehouses © 2006 Prentice Hall, Inc S11 – The Internet International computer network Connects companies and people around the world Enables the integration of internal information systems and enhanced communications between organizations Ties together global design, manufacturing, delivery, sales, and after-service © 2006 Prentice Hall, Inc S11 – The Internet Reshaping how businesses think about delivering value to customers Prime benefits are speed and access Important vehicle for change in Operations Management Intranets are internal networks not available to external users Growing daily with over 300 million domains registered worldwide © 2006 Prentice Hall, Inc S11 – Electronic Commerce E-commerce (or e-business) – the use of the internet to buy and sell products and services and exchange information Low cost rapid exchanges A whole new way of doing business “… all about cycle time, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage.” Louis Gerstner Former Chairman, IBM © 2006 Prentice Hall, Inc S11 – E-Commerce Definitions Business-to-business (B2B) – Both sides of the transaction are businesses, nonprofit organizations, or governments Business-to-consumer (B2C) – Transactions in which buyers are individual consumers Consumer-to-consumer (C2C) – Consumers sell directly to each other Consumer-to-business (C2B) – Individuals sell services or goods to businesses © 2006 Prentice Hall, Inc S11 – 10 Collaborative Project Management Project management software allows for establishing intranet sites for sharing documents and maintaining status reports Intranets can also be used for document libraries © 2006 Prentice Hall, Inc S11 – 22 E-Procurement Purchasing or order release communicated over the Internet Online catalogs allow quicker cost comparisons and bidding processes Catalogs can be provided by Vendors Intermediaries Buyers © 2006 Prentice Hall, Inc S11 – 23 Online Catalogs Vendor catalogs provide quick and easy access to the entire product line Available to anyone with Internet access Quick and easy to customize and adjust Reduced paper trails reduce purchasing costs © 2006 Prentice Hall, Inc S11 – 24 Online Catalogs Intermediary catalogs facilitate buyers and sellers meeting Buyers can find multiple sellers on one site Buyer-focused exchanges allow groups of generally similar firms to join together to buy in larger quantities and more efficiently than if they worked independently © 2006 Prentice Hall, Inc S11 – 25 Internet Trading Exchanges Retail goods — setup by Sears and France’s Carrefour; called GlobalNetXchange for retailers (gnx.com) Health care products — set up by Johnson & Johnson, GE Medical systems, Baxter International, Abbott Laboratories, and Medtronic Inc; called the Global Heath Care Exchange (ghx.com) Table S11.3 © 2006 Prentice Hall, Inc S11 – 26 Internet Trading Exchanges Defense and aerospace products — created by Boeing, Raytheon, Lockheed-Martin, and Britain’s BAE Systems; called the Aerospace and Defense Industry Trading Exchange (exostar.com) Food, beverage, consumer products — set up by 49 leading food and beverage firms; called Transora (transora.com) Table S11.3 © 2006 Prentice Hall, Inc S11 – 27 Internet Trading Exchanges Steel and metal products — such as New View Technologies (exchange.e-steel.com); and Metal-Site (metalsite.com) Hotels — created by Marriott and Hyatt, and later joined by Fairmont, Six Continents, and Club Corp: called Aventra (aventra.com) buys for 2,800 hotels Table S11.3 © 2006 Prentice Hall, Inc S11 – 28 Medical Supply Chain Current Supply Chain Suppliers Customers H H H H H H H H Manual processes, including paper, phone, and fax – Manufacturer H © 2006 Prentice Hall, Inc – Hospital Figure S11.2 – Distributor H H H – Group Purchasing Organizations S11 – 29 Medical Supply Chain New Supply Chain Suppliers Customers H Online Global Health Care Exchange H H H H H H H Automated Web-based processes – Manufacturer H © 2006 Prentice Hall, Inc – Hospital Figure S11.2 – Distributor H H H – Group Purchasing Organizations S11 – 30 E-Procurement RFQs and Bid Packaging Database of history improves vendor selection Electronic files speed decisions System is faster and less expensive Internet Outsourcing Outsourcing support systems like payroll, accounting, human resources, and travel © 2006 Prentice Hall, Inc S11 – 31 E-Procurement Online Auctions Maintained by buyers, sellers, or intermediaries May be used to sell excess raw material or discontinued or excess inventory Low cost and increased access to buyers © 2006 Prentice Hall, Inc S11 – 32 Inventory Tracking Technologies like bar code scanners, radio frequency, electronic communications can be used by almost any firm to track inventory in transit, on the shop floor, or in a warehouse © 2006 Prentice Hall, Inc S11 – 33 Inventory Reduction Warehousing for E-Commerce Managed by a logistics vendor Pass-through facility rather than storage Just-in-Time Delivery for ECommerce E-commerce can improve communication and coordination E-commerce service companies manage complex transactions © 2006 Prentice Hall, Inc S11 – 34 Scheduling and Logistics Improvements Coordinated Pickup and Delivery Unified view of data Shipments can be merged in transit Reduced inventory and delays mean lower costs © 2006 Prentice Hall, Inc S11 – 35 Scheduling and Logistics Improvements Logistics Cost Reduction Carriers with unused capacity can find loads through Internet sites Logistics efficiency improves and costs are reduced © 2006 Prentice Hall, Inc S11 – 36 ... Engineering changes and configuration management can be extended along the supply chain © 2006 Prentice Hall, Inc S11 – 21 Collaborative Project Management Project management software allows for establishing... value to customers Prime benefits are speed and access Important vehicle for change in Operations Management Intranets are internal networks not available to external users Growing daily... Commerce E-Commerce Definitions Economics Of E-Commerce Product Design Collaborative Project Management © 2006 Prentice Hall, Inc S11 – Outline – Continued E-Procurement Online Catalogs