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Introduction to ERP Systems

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Title: Introduction to ERP Systems


1
Introduction to ERP Systems
  • Chapter 14 ERP and eCommerce

2
Chapter 14 Objectives
  • Types of EC
  • B2C EC - opportunities
  • B2B EC whats required, opportunities

3
Electronic Commerce
Business to Business
B2B
Business to consumer
B2C
Consumer to consumer
C2C
4
B to C Electronic Commerce Opportunities
  • Internet allows firms to get closer to customers,
    cheaply
  • Direct sales over the Web
  • Interactive Marketing and Personalization
  • M-Commerce and Next Generation Marketing
  • Customer Self-Service
  • Issues
  • Cannibalization
  • Existing channel partners
  • New management practices
  • Apple Store

5
Direct Sales Over the Web
  • Sell directly to consumers
  • Eliminate the middleman
  • Disintermediation
  • Example of disintermediation selling a sweater

Cost
Manufacturer
Distributor
Retailer
Customer
48.50
40.34
20.45
6
Reintermediation
Reintermediation The shifting of the
intermediary role in a value chain to a new
source ( e.g. Information Brokers)
Auto Dealer
Consumer
Info Broker (edmonds)
Auto Dealer
Consumer
7
Interactive Marketing/Personalization
  • eCommerce gives firms huge advantage over brick
    and morter firms regarding understanding
    behavior of customers.
  • Understand user tastes
  • Based on what they have viewed (or not viewed)
  • How they behave on the site (e.g., abandoned
    shopping cart analysis)
  • Based on what they have bought
  • Pages then can be tailored (generally) and
    personalized to user interests

8
Interactive Marketing/Personalization
How do web sites know its you?
9
M-Commerce and Next Generation Marketing
  • M stands for mobile
  • Internet is moving into the wireless world on
    private and public networks (cell phones a good
    example)
  • Firms can and will communicate with customers
    through
  • Cell phones (you can surf the web on a phone
    today)
  • PDAs
  • Interactive TV
  • Cars
  • Virtually anywhere

10
Mobile Customer personalization
11
Self Service
  • Big use of the web answer customer questions,
    let them help themselves
  • Substitute the web for human contact
  • Needs to be combined with human contact to be
    effective

Examples of web based self service? Whats the
value proposition of web based self service?
12
B2B Business to Business
  • Automation of transactions between businesses
  • Fastest growing eCommerce
  • Current estimate 80 of all eCommerce
    transactions are B2B
  • 2004 revenue estimated to be 2.8 trillion WW
  • Provides purchasers with
  • More information (products, pricing)
  • More options in terms of suppliers
  • Convenience
  • Reduced transaction costs

13
B2B eCommerce
  • EC has emerged as a critical aspect of doing
    business. For many firms there is no separating
    EC from regular commerce the two have become
    increasingly intertwined.
  • For Cisco, orders over the web have increased
    from less than 10 in 1996 to roughly 85 in
    1999. As a result of these dramatic shifts, there
    has been an equally dramatic set of changes in
    the way business is done using EC.
  • Increasingly, firms such as Cisco are using EC to
    simplify their business processes and improve
    customer relationships.

14
Building blocks for EC
  • What are some of the building blocks for EC?
  • ERP provides a repository for the information.
  • Communication networks facilitate access to the
    information.
  • Wide availability and easy-to-use access make it
    possible to get ERP information over the Internet.

15
ERP is a building block of EC
  • ERP back room EC front room
  • ERP system provides the central clearing house of
    real-time information.
  • For example, at Compaq, virtually the entire base
    of global daily transactions are available in
    their ERP system.
  • ERP provides the current inventory and pricing
    information, so that firms know what they have
    available to sell.
  • The ERP provides much of the infrastructure of EC
    by providing basic information of this nature. As
    a result, the ERP systems can be at the center of
    the EC world.
  • Danke
  • What infrastructure did Danke need to put in
    place in order to get into eCommerce?

16
Communication between enterprises for EC
  • ERP is the backbone of EC.
  • In the B to B world, there needs to be an
    exchange of information documents need to flow
    electronically its more complicated than B2C.
  • Historically, EDI (electronic data interchange)
    has been used.
  • EDI defines standard documents and attributes of
    documents and defines how/when documents can be
    sent and received (PO, Invoice)

17
Communication between enterprises for EC
  • Issues with EDI
  • Expensive
  • Complex
  • Inflexible
  • Today
  • XML (not web forms)
  • Syntax is similar to that of HTML
  • Designed to complement HTML, not replace it by
    enabling exchange of different types of data over
    the web.
  • Not just for text used for
  • Audio, Images, Mathematical, chemical
    expressions, Applications (like EDI)

18
XML - Example
19
Widely available and easy-to-use user access
  • All ERP systems today permit a wide range of
    activities to be done over the internet
  • MYSAP from SAP
  • All that is needed is
  • Access to the web
  • A browser
  • High speed internet connectivity

20
ERP and customer orders of goods
  • Most benefit of B2B EC derive from allowing
    customers to place orders electronically, track
    orders to delivery
  • Cisco
  • Before EC 25 to 33 of the orders made by faxes
    had errors in them causing delayed shipments,
    change in the price.
  • Issues forced customers to contact Cisco
    inconvenient AND requests in turn required
    increases in Ciscos personnel for responding to
    customer inquiries, raising cost and slowing down
    the process of delivering goods to the customer.
  • As a result, Cisco turned to EC in order to
    facilitate the ordering processes.

21
Beyond customer entering own orders
  • System to system integration
  • Cisco
  • In 1998, Cisco began working with their biggest
    customers to integrate order information into
    those customers purchasing system.
  • New configuration, order, and pricing information
    was made available once a day to those customers.
  • Allowed customers can place orders from their own
    purchasing systems
  • Eliminated need to duplicate the process by also
    entering the order at Ciscos website.
  • Order data passed from client systems to Cisco
  • Issues?

22
Downside to direct customer order entry?
  • Security concern that include protection of the
    ERP, the information, and transmission of data
    over the Internet.
  • Firms may be concerned that customers have access
    to a window on the firms processes.
  • Can see how responsive the company is
  • Access to ERP would need to be accounted for in
    the capabilities of the hardware and software.
  • Need bigger computers, lots of network bandwidth

23
Why is direct customer access to ERP important?
  • Improves order accuracy.
  • Improved business relationships
  • Makes the customer more reliant on supplier
  • Why?
  • Reduces the cost of customer inquiries and
    support.

24
Other EC applications
  • Vendor Managed Inventories
  • Build to Order
  • Links with Resellers
  • Merge in Transit

25
Vendor Managed Inventories
  • Shift order process to the vendor
  • Vendor responsible for managing inventory levels
    within customer locations
  • Most famous example?
  • Advantages to vendor and customer
  • What are these?
  • Approaches
  • Provide the vendor with necessary data (e.g.
    sales information)
  • Directly integrate at system level
  • More complex sharing of MAPs requires
    significant systems integration

26
Build to Order
  • In industries with products that become obsolete
    quickly, build to forecast (BTF) can mean
    inventory that cant be sold
  • BTO Build products only as you need them
  • Substitute IT for Inventory
  • What does this mean?
  • Effective BTO systems need to leverage system to
    system links between customers, the manufacturer
    and suppliers

27
Other Applications
  • Supply Chain Linkage
  • EC can facilitate linking partners in supply
    chain
  • Ciscos ERP system links resellers of Cisco
    products and their distributors electronically
    for managing orders
  • Many partners use the same information technology
    platform ERP/EC
  • Referred to as a value web
  • Merge in Transit
  • A service that collects shipments from multiple
    suppliers and delivers to customer in a single
    shipment
  • Dell arranges for monitors to be shipped from
    their suppliers to UPS destinations where they
    are merged with rest of delivery to customer
    single shipment sent to customers.
  • Process involves merging and synchronization
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