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ECommerce: efulfillment, eprocurement and elogistics

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Title: ECommerce: efulfillment, eprocurement and elogistics


1
E-Commercee-fulfillment, e-procurement and
e-logistics
2
What is e-commerce?
  • Commerce transacted over the Internet
  • Is product information displayed on the
    Internet?
  • Is negotiation over the Internet?
  • Is the order placed over the Internet?
  • Is the order tracked over the Internet?
  • Is the order fulfilled over the Internet?
  • Is payment transacted over the Internet?

3
Existing Channels for Commerce
  • Product information
  • Physical stores, EDI, catalogs, face to face,
  • Negotiation
  • Face to face, phone, fax, sealed bids,
  • Order placement
  • Physical store, EDI, phone, fax, face to face,
  • Order tracking
  • EDI, phone, fax,
  • Order fulfillment
  • Customer pick up, physical delivery

4
Revenue Impact of E-Commerce
  • Length of supply chain
  • Product information
  • Time to market
  • Negotiating prices and contract terms
  • Order placement and tracking
  • Order fulfillment
  • Payment

5
Cost Impact of E-Commerce
  • Facility costs
  • Site and processing cost
  • Inventory costs
  • Cycle, Safety, Seasonal inventory
  • Transportation costs
  • Inbound and outbound costs
  • Information sharing
  • Coordination

6
On-line Retailing 2002
  • Ernst Young studied 7222 consumers 74
    companies in 12 countries
  • Online purchases increasing in scale and scope
  • over 2/3 surveyed bought on line in past 12
    months
  • 96 shopped more often and purchased more
  • On-line shopping beginning to affect store
    traffic
  • Demographic profile of on-line shopper begin to
    resemble the typical middle-class on-land
    shopper
  • Over half of all shoppers say they visit stores
    less often
  • For high-cost, fragile, personal, perishable
    goods and low-cost commodity items, 38 consumers
    shop on-line but buy through another channel
  • Consumers price-sensitive
  • Different pricing structures exists for on-line
    and off-line operations on-line prices not
    necessarily lower
  • Customer expect same merchandise assortments
    online and in stores, but only 44 of companies
    interviewed offer same SKUs online and on-land
  • Customers most displeased with shipping costs
  • No. 1 reason for abandoning a shopping cart
  • 89 companies charge for delivery
  • 11 operate delivery service as profit centre

7
Challenges for Bricks--Mortar Stores
  • According to John Quelch, London Business School,
    the five key factors affecting consumers
    patronage of a store are
  • Product assortment (e.g. Amazon.com)
  • Price
  • Service (Touch and feel necessary?)
  • Convenience of the shopping experience
  • Ambience (Recommendations and reviews
    substitutes for browsing at Amazon.com.)
  • How will the Internet impact on these factors for
    your target market?
  • New ways to attract and engage customers
  • Traditional Stores, salespeople, brands, direct
    mail, advertising in mass media
  • New Web, touch-screen kiosks, electronic shelf
    displays, handheld shopping assistants,
    intelligent agents, etc. (Which will sustain?)
  • Past successes
  • 1936 shopping cart buy more than one can
    carry, shop less often
  • 1980s UPC scanner faster and more accurate
    checkout, rich source of market data
  • Past failures
  • Interactive TV, CheckoutChannel, VideOcart

8
Challenges for Bricks--Mortar Stores
  • Retailers by-passed manufacturers (e.g. PG)
    sell and deliver directly to consumers
  • Internet still a transaction-sales medium rather
    than a relationship-building medium
  • Neiman-Marcus use Internet to augment its
    formidable personalised communication and service
    capabilities
  • Customers want to transform simple needs into a
    new style, feeling, expression or lifestyle
  • Karstadt Department Stores, Germany multi-media
    theme house concept (a la IKEA) ? My-World
    online shopping mall (1.2 million products)
  • Are you capable of competing on the web?
  • Can you create a seamless customer experience?
  • e.g. Can customers return goods bought on-line to
    physical stores?
  • Can you deliver the goods?
  • Integrate IT systems for ordering, cash
    transactions, warehousing, shipping, etc.
  • Ship faster, cheaper over longer distances?
  • Karstadt uses its direct mail subsidiary for
    logistics
  • Partner/Out-source logistics function (e.g.
    Nike-UPS)
  • Ultimately, technology may change the outward
    appearance of the playing field, but the game
    remains the same.

9
Supply Chain Models
  • Supply management
  • Supplier management (finding new sources,
    maintaining current relationships)
  • Procurement (making purchase decisions)
  • Inventory management (receiving, storing,
    controlling inventory)
  • Order fulfilment
  • Order capture (process of taking customer from
    the buy decision point through to successful
    data capture and checkout)
  • Order processing (credit check, invoicing, pick
    list generation, etc.)
  • Pick and pack (physical selection and
    assembly/customisation of goods, inspection)
  • Ship (transporting goods from warehouse to
    customer)
  • After-sales service and returns handling
  • Level of outsourcing?
  • eToys all in-house
  • Calyx Corolla manages its supply
    relationships, outsource order fulfilment
  • Amazon manages order fulfilment supply processes
    outsourced to ToyRUs

10
Definitions and Measures of Key Supply Chain
Objectives
11
E-fulfilment
  • Dictionary satisfaction or happiness,
    achievement of that is desired
  • (No mention of deliveries in a van?)
  • Web pages of supply-chain related websites!
  • Findel the integration of people, products,
    systems and processes to meet customer
    requirements before, during and after online
    purchasing.
  • Traditional fulfilment houses
  • Marketing or customer relations initiative
  • Mass mailing of promotional materials or samples
  • Mail order logistics
  • E-commerce
  • Web design and hosting, catalogue/content
    management, call centre management, order
    processing, credit checking and payment
    processing, goods sourcing, assembly and
    packaging, picking, delivery and returns.

12
E-fulfilment challenges
  • Information technology became powerful sales
    tools in e-commerce for products such as toys,
    books, CDs, etc.
  • Enormous product selection
  • Ability to suggest products (data mining)
  • For products where touch and feel matter,
    e-tailing is more difficult
  • How to try out a bed? A sofa?
  • Virtual reality showrooms, interactive design,
    etc.
  • Order fulfilment critical for e-commerce
  • Late deliveries, damaged goods return, frustrated
    customers, etc.
  • Fulfilment cost spiralling upward, inventories
    explode.
  • Order fulfilment even more challenging for
    physically large consumer products that are bulky
    to ship, e.g. furniture, home appliances,
    bicycles, boats, etc.
  • Managing the virtual supply chain -- Fundamentals
    important!

13
Case Study Furniture
  • Traditional Retailer
  • Customer tries sofa in showroom, selects fabric
    from samples, places order.
  • Retailer takes a deposit, passes order to
    manufacturer.
  • Manufacturer orders fabric, schedule order into
    production cycle.
  • After production, manufacturer ships batch of
    orders to a region.
  • Retailer holds inventory local warehouse, does
    final assembly, touch-up, local shipment to
    customer.
  • Retailer responsible for design assistance,
    after-sales service, repair and returns.
  • Pure e-tailers
  • Website include many manufacturers (typically not
    name-brands).
  • Customer order by mouse-clicks.
  • Internet firm transmits order to Manufacturer.
  • Manufacturer schedules production.
  • Internet firm arranges for a third-party
    logistics firm to co-ordinate delivery.
  • Multiple handoff complicated if repairs needed.

  • Return rates of 30 can bankrupt an Internet
    firm.

14
Traditional Retailer vs. e-tailer
  • Delivery
  • Both limited by the manufacturer (e.g.
    custom-order fabric).
  • Cost
  • Sales
  • Traditional showroom inventories.
  • Web website design, advertising, IT assisted
    touchfeel, scalable?
  • Fulfilment
  • Transportation cost depends on volume and
    geographical density.
  • Variety
  • E-tailer has advantage, limited only by supplier
    relationships.
  • Quality
  • Traditional retailers repair goods locally before
    delivery to customers.
  • For e-tailers, handoffs and out-sourcing reduce
    control over quality.
  • If repairs out-sourced to third party, quality
    failures exposed to customer, and quality level
    lower? (since less concern for reputation for
    out-sourced repairer).
  • Unconditional guarantee return rate?

15
Other Supply Chain Structures
  • Pure e-tailers with warehouses
  • Typically stock fast-moving, smaller products,
    not customised.
  • Process identical to pure e-tailer for
    custom-ordered products (e.g. sofa)
  • Warehouse provide facility for
  • Repairs (thus reducing external quality
    failures),
  • Returns to be processed and re-sold,
  • Inventory (enabling shorter order delivery lead
    time, transportation cost consolidation).
  • Manufacturer Direct
  • Channel conflict for existing name brands with
    retail outlets?
  • Resistance from traditional retailers customer
    visit showroom, then order on-line.
  • Niche player? Market segmentation?
  • Cost and delivery issues similar to e-tailers.
  • Returns can be sent back to factory for repairs.
  • Product variety limited
  • Retailers on the Web
  • Ethan Allen Customer can visit the showroom (300
    in U.S.) and order on-line, manufactured sofa
    shipped to closest retail store, which handles
    repairs and local delivery (gets 10 commission).
    Showroom visited by customer gets 25
    commission.
  • Allows 24-hour shopping and local service.
  • Consortium Internet for ordering and answering
    customer inquiries, partnership with local
    retailers.

16
Comparison of Order Fulfilment Costs
17
Core Concepts for Efficient e-Fulfillment
  • Improving the use of information
  • Leveraging existing resources

18
Cutting-edge Companies Using Cutting-edge
Techniques
19
Using the Right Strategy
Suitable environment
Suitable products
Strategy
Information-based logistics-services provider and
timely order information are available
High-value, bulky items with uncertain demand
Logistics postponement
Information infrastructure has sufficient capacity
Information-content goods
Dematerialization
Distributed and substitutable stocks are
available for pooling
Low-value, high-shipping-cost item
Resource exchange
High delivery-value density (DVD) in an existing
delivery network is available
Non-bulky items with stable demand
Leverage shipments
High DVD to conveniently located physical outlets
is available
Easy-to-carry items with higher value
Clicks-and-mortar
20
The State of Retailing On-line
  • 2003 breaking even
  • operating margin of -16 in 2002
  • 79 of on-line retailers profitable in 2003
  • 2004
  • 6.5 of total retail sales
  • 24 growth outpaces the 7 in traditional retail
  • 2005 Major growth sectors
  • Travel (US60.9 billion, up 20)
  • Apparel (US12.2 billion, up 36)
  • Computer hardware and software (up 36)
  • Sources Forrester Research, ClickZ.com

21
Channel Integration
  • According to Forrester Research annual study of
    150 retailers (2003)
  • Retailers believe 24 of offline sales influenced
    by the Web.
  • 87 of retailers accept in-store returns of
    on-line purchases
  • One in 4 consumers also makes additional purchase
    in the store !
  • Cross-channel promotion
  • 77 of retailers collect e-mail address at their
    (bricksmortar) stores
  • 66 of retailers surveyed in 2004 provide
    printable coupons on websites that can be
    redeemed in stores
  • 53 of retailers enable sales staff to place
    online orders for customers

22
Lessons for E-tailing
  • R. Burke, Indiana University
  • Use technology to create an immediate, tangible
    benefit for the consumer
  • Camera to recognise customers (invasion of
    privacy) now used to recognise vegetables
  • Make the technology easy to use
  • Execution matters prototype, test, and refine.
  • Recognise that customers response to
    technologies vary.
  • Build systems that are compatible with the way
    customers make decisions.
  • Cereal grouped by ingredients customer only know
    brand names
  • Study the effects of technology on what people
    buy and on how they shop
  • Customer less price-sensitive when info on goods
    shown graphically than text-based
  • Co-ordinate all technologies that touch the
    customer.
  • Revisit technologies that failed in the past.
  • Use technology to tailor marketing programs to
    individual customers requirements.
  • Build systems that leverage existing competitive
    advantages.
  • Technology is just a platform for change. How we
    use it to create value for the customer is what
    determines the future.

23
Keys to Winning the Last Mile
  • Understand your product characteristics
  • Where are your customers, and what are the
    delivery-value densities?
  • What level of demand uncertainty exists for your
    product?
  • What fraction of your products can be
    dematerialized?
  • Understand your environment
  • What is the existing physical infrastructure in
    customer regions?
  • What information networks are available?
  • Are there available information-intensive
    logistics-service providers?
  • Formulate your options
  • Use as much as dematerialization as possible
  • Use information to coordinate your deliveries
    intelligently
  • Explore potential links to existing
    infrastructures and partnerships for leveraged
    resources
  • Assess you options
  • Consider costs, efficiency, reliability and
    risks
  • Identify additional values and services that can
    be offered to customers
  • Explore synergies between online and offline
    order fulfillment

24
(No Transcript)
25
E-procurement
26
B2B E-Business
B2C
Suppliers
Manufacturers
Distributors
Retailers
Consumers
B2B
B2B
B2B
B2C
  • Business Purchases/Procurement

Logistics Fulfillment Mechanism
Types of Purchases
Products
Suppliers
Maintenance, repair, operating
(MRO) goods (Office supplies,
spare parts, airline tickets)
1. Operating Inputs
Not industrial specific (horizontal)
General (UPS)
2. Manufacturing Inputs
Industrial specific (vertical)
Raw materials, components
Specialized
27
Traditional B2B Trading Exchanges
Industrial Buyer
Manufacture Rep.
Manufacture Rep.
Manufacture Rep.
Supplier 1
Supplier 2
Supplier 3
28
Internet Based B2B Trading Exchanges
Industrial Buyer
E-Marketplace
Supplier 1
Supplier 2
Supplier 3
29
Revenue/Cost Impact of B2B E-Business
  • Revenue impact

-- Suppliers can access more buyers result in
a larger customer base -- Better information shar
ing, less degree of bullwhip better customer
service -- Facilitate fast funds transfer -- Bu
yers can access more suppliers market becomes
more competitive, may lower purchasing price
  • Cost impact

-- Eliminate sales /purchasing reps, smaller
purchasing/sales department lower l
abor associated inventory cost
-- Require larger investment in IT
infrastructure -- Reduce transaction costs -- Pa
ying transaction fees for using E-marketplace
software provided by a third party (e.g. Free
Markets Online)
30
B2B E-Marketplace Transaction Models
Sellers
One
Many
AUCTION
EXCHANGES
Many
EBay
Exostar
Buyers
EDI
REVERSE AUCTION
One
WalMart/PG Dell/Suppliers
FreeMarkets Online (Ariba)
31
Types of (Single Item) Auctions
  • English auction
  • Open bidding
  • Ascending price
  • price raised successively until one bidder
    remains
  • Last bidder wins at final price
  • Dutch auction
  • Price lowered continuously
  • First bidder who calls out that accepts the price
    wins at that price
  • (First-price) sealed bid auction
  • Bidders submit bids without seeing others bids
  • Object sold to bidder with highest bid at her bid
    price
  • Vickrey auction
  • Bidders submit bids without seeing others bids
  • Object sold to bidder with highest bid
  • Winner pay second-highest bidders bid price

32
Combinatorial Auctions
  • Multi-items
  • Bidders may bid for a subset of the items
  • Value to bidder depends on the collection of
    items received (Synergistic effects)
  • Sequential or simultaneous auctions?
  • Bidding strategies?
  • Allocation of items to bidders?
  • Fairness?
  • Maximize revenue?

33
What is Reverse Auction?
  • One buyer many suppliers bidding using software
    distributed through the Internet
  • The bidders can see the low bid at all times (but
    not identity of low bidder)
  • Closed bidding period with conditional extension
  • Sellers and buyer observe outcome on-line real
    time
  • Third party supplier provides auction tool
    (software) and runs the auction.

Seller 1
Buyer
Seller 2
Seller 3
Seller 4
34
What is Exchange/Aggregator?
Seller 1
Buyer 1
  • Exchange
  • Online intermediary connecting
  • many buyers and many suppliers
  • with similar or complimentary needs
  • Exchanging information, buying and
  • selling products

Seller 2
Buyer 2
Exchange or Aggregator
Seller 3
Buyer 3
  • Aggregator
  • Similar to Exchange
  • Multiple buyers (sellers) bundle
  • together to increase buying
  • (selling) power

Seller 4
35
Example Exostar
  • Launched by BAE Systems, Boeing, Lockheed,
    Raytheon in 7/2000
  • Internet Trading Exchange for the aerospace and
    defense industry
  • Provides a long list of services. More than an
    auction or E-Procurement server

E X O S T A R
36
Exostar Member Benefits
  • Significant cost reductions. Streamlined
    transactions and simplified
  • internal processes accelerate buying and
    selling cycles and reduce
  • demand on internal resources
  • Stronger buyer-supplier relationships. As a
    member, you are invited
  • into an exclusive community of your peers,
    where relationships are
  • easier to develop, maintain and strengthen
  • Simpler, clearer communications. The Exostar
    networks standardizes
  • and streamlines communication between buyers
    and suppliers.
  • Forms, orders and management processes are
    consistent, ensuring
  • clearer communications and increased efficiency
    for your team
  • Priority access to new products and services now
    in development.
  • From engineering and design resources to
    production, logistics
  • and marketing applications and resources

Source www.exostar.com
37
Auction versus Exchange
Auction Reverse Auction
Mainly for driving down prices
One time deal
Mainly for reducing transaction costs improvin
g supply
chain coordination
Exchanges Aggregators
Long term collaboration
38
On-line Auction vs. Exchanges/Aggregators
  • On-line Auction Works Best When
  • Products are commodities or near commodities and
    can be traded sight unseen
  • Trading volumes are massive relative to
    transaction costs
  • Buyers and sellers are sophisticated enough to
    deal with dynamic pricing
  • Companies use spot purchasing to smooth the peak
    and valleys of supply and demand
  • Exchanges/Aggregators Works Best When
  • Products are specialized, not commodities
  • Purchasing is done through pre-negotiated
    contracts
  • Long-term relationships are important

39
B2B Software Vendors
  • Oracle
  • i2 Technologies
  • Manugistics (acquired by JDA Software in 2006)
  • Ariba
  • Commerce One (bankrupt in 2004, acquired by
    Perfect Commerce in 2006)
  • Agile (acquired by Oracle in May 2007)
  • VerticalNet/B2eMarkets

40
E-procurement Systems
  • Software applications to automate, streamline and
    support purchases
  • Used typically for non-production materials
    (office supplies, computer equipment, business
    travel) 35 to 60 of expenditures of a firm!
  • Benefits
  • Lower prices paid for goods and services
  • Reduce administrative costs
  • Shorten acquisition cycles
  • Reduce maverick (off-contract) spending
    increased use of preferred suppliers
  • Improve inventory management
  • Improved data gathering and reporting on
    expenditures
  • Enhanced negotiation leverage with suppliers
  • Growth in sale of such systems predicted in
    2001, only 10 of 5000 largest companies have
    bought e-procurement systems
  • Challenges and Areas of improvement needed
  • Streamlined catalogue management better supplier
    enablement
  • Lack of policies and controls to drive
    compliance
  • Integration with other systems (payment,
    logistics, other business applications, etc.)
  • Cost, maintenance and user-training for
    e-procurement systems

41
E-procurement The Reality 2004
  • Aberdeen E-procurement Benchmark Report,
  • study of 150 enterprises using e-procurement

Table 1 E-procurement Impact (Average
Performance)
Source Aberdeen Group, December 2004
42
Table 2 E-procurement Performance 2001 vs. 2004
(Average)
Table 3 E-procurement Costs 2001 vs. 2004
(Average)
Source Aberdeen Group, December 2004
43
E-procurement The future
  • Strategies of companies reaping the greatest
    benefit
  • Elevated e-procurement from a tactical
    transaction management activity to a strategic
    source-to-pay initiative for driving compliance
  • Secured senior executives support and policy
    changes to drive system adoption and compliance
  • Shifted supplier enablement and catalog
    management tasks to supplier networks or catalogs
    hubs managed by e-procurement vendors or another
    third party
  • Clearly defined reinforced cost, processes, and
    performance metrics for measuring e-procurement
    success
  • Other Strategies recommended
  • Extend process breath and category coverage
  • Leverage spend data for improved sourcing and
    compliance management

44
E-Logisticsinternet impact to logistics
management
45
Challenges in Logistics Management
  • Challenges
  • Poor information flow
  • Poor customer services
  • High paper intensity, low-tech interactions
  • Missing, inaccurate documentations
  • Lack of alternatives
  • Scheduling difficulties
  • High prices
  • Lack of qualified people

Source 2001 Mercer Management Consulting Survey,
in concert with Optimum Logistics and theJournal
of Commerce
46
Distribution Logistics
  • make the right quantities of the right product
    or services available at the right place at the
    right time.
  • Function of intermediaries in the distribution
    channel
  • Re-assortment/sorting (consolidation/breakbulk)
  • Routinize transactions (transport, lot-size,
    payment)
  • Facilitate searching (matching buyers and
    sellers)
  • Impact of Internet E-Commerce on the distribution
    channel?

47
Impact of Internet on Distribution Channel
  • The Death of Distance
  • Distance no impact on electronic communication
    and electronic delivery
  • The Homogenization of Time
  • Website open 24/7, no seasonality
  • Seller need not be awake or present to serve
    buyer
  • The Irrelevance of Location
  • Web accessible from any place on earth
  • Retail location not important or even necessary
  • From marketplace to marketspace
  • Content? Context? Infrastructure?

48
Marketplace vs. Marketspace
  • Conventional Bookstore
  • Content
  • Sell books
  • Context
  • Shop (physical space) with shelves and tables
    (and a café?)
  • Infrastructure
  • Retail space with display and large stock of
    books, helpful (human) staff
  • Convenient location, pleasant surroundings, high
    traffic
  • Amazon.com
  • Content
  • Provide information about books
  • Context
  • Interface via a screen
  • Infrastructure
  • Hugh database, fast (computer) server
  • Warehouse stocks no books yet stocks all books
    in print
  • Location immaterial

49
Long term effects of E-Commerce
  • Distribution media instead of distribution
    channel
  • No longer passive conduits for products but
    active element in the production and market
    transaction of goods
  • Rise in commoditization
  • Information availability minimizes price
    differentiation
  • Drives towards mass customisation
  • Disintermediation and Reintermediation
  • Insurance brokers and travel agents bypassed
  • New intermediary search engines, auction sites,
    call centres, etc.

50
Supply Chain Technology Evolution
Intra-Enterprise Transactional Integration
Intra-Enterprise Transactional Optimization
Inter-Enterprise Transactional Integration
Inter-Enterprise Supply Chain Execution
Real time Supply Chain Optimization
51
What is e-logistics?
E-Logistics Information Liquidity
The ability to acquire and use information when
it is needed, what is needed, and in an
appropriate context
52
The Grand Vision of Global E-Logistics
Suppliers, manufacturers, distributors, packaging
plant, etc.
Banks, credit authority Invoicing, funds transf
er
Carriers, ship, truck, etc. Transport manifests,

insurance contracts.
Freight forwarders, 3PL Import/export declaratio
n,
quota compliance, etc.
Customs Office, Inspection Authority, Certifica
te of Origin Issuer,
Customs brokers.
Source Stephens Inc.
53
E-Logistics Services
Marketplace, Execution and Collaboration
  • Freight exchange/auction
  • Purchasing portal
  • Automated billing and settlement
  • Lane optimization
  • Documentation
  • Automated booking
  • Service failure notification and resolution
  • Automated tracking and tracing
  • International trade compliance and landed costs
  • Product development collaboration
  • Pricing, revenue and profitability management
  • eMarketing
  • eFulfillment
  • Data mining (performance management)

54
E-Logistics Value Proposition
  • Logistics exchanges will bring price efficiency
    to the most segmented market
  • Load matching and other optimization tools will
    improve asset utilization
  • Integrated supply chain execution and
    collaboration tools will dramatically reduce
    business interaction costs and achieve a leaner,
    quicker and more reliable supply chain
  • Collaborative product development and revenue
    management tools will allow business to improve
    its return on investment
  • eLogistics will greatly improve the industrys
    information liquidity

55
E-Logistics PlayersSystem Providers Turned
e-Logistics Service Providers
  • Players in the space - examples
  • Manugistics, Manhattan Associates, EXE
    Technologies(SSA Global), Descartes, SAP, JD
    Edwards/PeopleSoft/Oracle, Siebel Systems,
  • Strengths
  • Domain knowledge, Proven solution components,
    Customer base, Critical mass, Existing
    partnership, Established
  • Weaknesses
  • Old tech infrastructure Have to teach an old
    dog new tricks?

56
E-Logistics Players DotComs
  • Players in the space abound
  • Aspen Associates, Capstan.com, Celerix.com,
    Clear Cross, DigiLogistics, Logistics.com,
    FreightWise, NTE, Global Freight Exchange, iShip,
    myCustoms, RightFreight, Savi Technologies,
    Nistevo, SameDay, Tradiant, Vestera, Retek, ,
    Ariba, FreeMarkets
    CommerceOne, PurchasePro,
  • Strengths
  • Tech savvy, Faster in product development,
  • Weaknesses
  • E-Logistics network takes time and money to
    build, Lack of funding, Challenge in building
    customer trust, Shifting from heavy
    transaction-fee-based business model to
    value-added model,

FreightWise/NTE,
OpenHarbor,
GT Nexus,
57
Freight Exchanges
after the dust settles
Dot.com vision perpetual on-line global
exchanges, carriers and shippers bid for
match-ups, the exchanges take a commission.
  • Reality Smaller in scope and more focussed
  • Long-term ( 1 yr) tenders rather than day-to-day
    match, (FreightTraders)
  • Private cooperative community of traders rather
    than open auctions and exchanges.
  • Membership fees and transaction (e.g. search)
    fees, not commissions (Teleroute)
  • Value-added service invoicing, POD processing
    and credit risk (X4freight)
  • Web-enabled software services, not exchange.
    (eLogistics)
  • Niche e.g. same-day courier-style deliveries,
    value-added service, e.g. mobile communications
    for proof of delivery and postcode lookup
    (Courier Exchange)

58
Driving Force for e-global logistics
  • Government regulatory pressure
  • Global customs modernization convention
  • International Trade Compliance U.S.
    Exporter/Importer of Record Rules, Ocean Shipping
    Reform Act
  • Security regulations C-TPAT (Customs Trade
    Partnership Against Terrorism), 24-hr advance
    manifest
  • Market pressure
  • Globalization of trade
  • E-Commerce
  • Internal operational pressure
  • Demand for better customer service
  • Demand to minimize duty and tax payments

59
Business Process of an International Trade
Source Stephens Inc.
60
Market Opportunities for e-global logistics
  • Global sourcing
  • Searching trade leads
  • Buyer/supplier screening and qualification
  • Contract negotiation
  • Global logistics
  • Arrange international shipping
  • Customs clearance
  • Document preparation
  • Shipment of goods
  • Global settlement
  • Credit management
  • Financing and settlement

(See handout from Stephens, Inc.)
61
Hong Kong
  • Electronic Transactions Ordinance (2000)
  • Give electronic records and digital signatures
    used in electronic transactions the same legal
    status as that of their paper-based counterparts
    and
  • Establish a framework to promote and facilitate
    the operation of Certification Authorities (CAs)
    so as to ensure trust and security in electronic
    transactions.
  • Public Key Infrastructure (PKI) Certification
    Authorities (CA)
  • HongKongPost, DigiSign (subsidiary of Tradelink),
    HiTrust.com
  • Tradelink
  • Joint venture of HKSAR Government and private
    firms
  • Facilitate electronic transactions between
    businesses and HKSAR government
  • Import/export declarations, certificate of
    origin
  • Automated manifest service for the 24-hr rule for
    U.S. Customs
  • Customer base of 53000 companies, 80000
    transactions per day

62
Hong Kong the future
  • Closer Economic Partnership Arrangement (CEPA)
  • Trade liberalisation, zero-tariff for 273
    categories of import to China
  • E-logistic services JingMaoLink, China-HongKong
    Cargo Manifest Interface, Road manifest (ROMAN)
  • Pan-Asian E-Commerce Alliance
  • Secure Cross Border Trade Transaction Service
  • pilot between Hong Kong, Japan, Korea, Singapore
    and Malaysia
  • Digital Trade and Transportation Network (DTTN)
  • Hong Kong Logistics Council initiative
  • neutral, open, non-exclusive, transparent
    electronic document exchange
  • 1) Standards and protocols
  • 2) Core message infrastructure
  • 3) Value-added service
  • Tradelink to be non-exclusive DTTN service
    provider
  • launched in 2006, 40 members so far

63
Integrated e-logistics service
  • Streamlined information flow for planning
  • Seamless integrated Logistics Management and
    Enterprise Resource Planning function
  • Real-time tracking and exception reporting

(From DigiLogistics.com Ltd.)
64
E-logistics systems
  • Business benefits
  • On-time delivery and fulfilment, lead-time
    reduction
  • Customer service improvements increased
    collaboration and co-ordination
  • Increased sales
  • IT benefits
  • Reduced time for data entry, management and
    integration
  • Plug Play, easy integration with existing and
    third-party systems
  • Transaction processing and monitoring
  • Network effect benefits
  • Lower transportation cost, improved capacity
    utilisation
  • Flexible and responsive supply chains
    (co-mingling, merge-in-transit)
  • Single point of connection for participants

65
  • References
  • H. Lee and S. Whang, Winning the Last Mile of
    E-Commerce, MIT Sloan Management Review, Summer
    2001, 54-62.
  • R. F. Maruca, Retailing Confronting the
    challenges that face bricks-and-mortar stores,
    Harvard Business Review, July-August, 1999.
  • Global Online Retailing Report, Ernst Young,
    2001.
  • e-procurement Finally ready for prime time,
    Aberdeen Group, Inc., Boston, MA, USA. (2001).
  • P. Rowlands, The art of getting it there Are
    fulfilment and e-fulfilment the same?
    (Editorial), e.logistics Magazine, March/April,
    2003.
  • D.F. Pyke, M.E. Johnson and P. Desmond,
    e-fulfillment Its harder than it looks,
    Supply Chain Management Review, October, 2003.
  • The E-procurement Benchmark Report Less Hype,
    more Results, Aberdeen Group, Inc., Boston, MA,
    USA. (2004).
  • e-Global Logistics The Engine Powering
    Globalization, R. Y. Roberts, Industry Report,
    Stephens, Inc., November, 2000.
  • Freight exchanges Finding their second wind?,
    e.logistics magazine, Spice Court Publications
    Ltd., January, 2003.
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