ECOMMERCE

• Electronic commerce


  Potential to reduce cost and improve the business
• Recurring basis


  Maintenance, repair and operating (MRO) supplies
• Direct materials


  Part of finished product
• Indirect materials


  Materials that company purchase
• Support Activities


  • Finance and administration
  • Human resources
  • Technology development
• Trend in purchasing logistics and support activities


  Move from hierarchinal structures towards network structures — a feature of the Web reduce paper
• Electronic Data Interchange (EDI)


  Transfer information between businesses that uses standard format
• EDI


  • Reduce paper flow
  • Streamlines between companies
• Trading partners


  Two business that exchanging info
• EDI-compatible


  Firms that exchange data in specific standard
• Information transfer between buyer and vendor is paper based
• Nonrepudiation


  Ability to establista a particular transaction actually occurred
• Direct connection EDI


  Each business operates its owh on-site
• EDI translation computer


  Connected directly modems and dial up phone
• Indirect connection


  A company night use the service of value-added network (VAN)
• Value-added network (VAN)


  Company that provider the communications equipment and skills needed to receive messages that contain EDI transaction sets
• Financial EDI


  Instructions to trading partner's bank
• Automated clearing House (ACH) system


  Service that banks use to manage accounts with each other
• EDI-capable banks


  Equipped to exchange payment through VAN
• Value-added banks (WABs)


  Banks that offer for nonfinancial transaction
• Financial VANS (FVANS)


  Nonbank VANS can translate financial transaction into ACH format
• Cost of VAN


  • Require enrollment fee
  • Cumberwome and expensive for companies
• Supply Chain Management (SCM)


  An active role with suppliers to improve products
• SCM


  • Reduce production costs of supply chain and increase the value of product to the ultimate customer
  • Clear communications and quick responses
• 1997 - scheduling errors costing Boeing over $1.5 billion, using EDI
• Boeing is working with suppliers SD they provide the right part at the right time
• Web


  Companies use it to establish information for major industry: offer news
• Hubs


  Offer doorway to internet for industry member and would be vertically integrated (Covertical portals or vortals)
• Industry marketplaces


  Focused on single industry
• Independent exchanges


  Not controlled by company
• Public marketplaces


  Open to new buyers and sellers
• Ventro


  • Opened first industry marketplace chemicals chemdex, in 1997 to trade bulk chemicals
  • Opened promedix for specialty medicals supplies
• CheMatch.com


  • Competed directly with ventro in bulk chemicals market