Documentos de Académico
Documentos de Profesional
Documentos de Cultura
(3rd Edition)
Chapter 1
Understanding the Supply Chain
Prof N. Balasubramanian
Sources:
plants
vendors
ports
Regional
Warehouses:
stocking
points
Field
Warehouses:
stocking
points
Customers,
demand
centers
sinks
Supply
Inventory &
warehousing
costs
Production/
purchase
costs
Transportation
costs
Inventory &
Prof N.warehousing
Balasubramanian
costs
Transportation
costs
MMM II SEM III - 2014
Inventory
Where do we hold inventory?
Types of Inventory
WIP
raw materials
finished goods
Prof N. Balasubramanian
Goals:
Reduce Cost, Improve Service
By effectively managing inventory:
Xerox eliminated $700 million inventory from its supply chain
Wal-Mart became the largest retail company utilizing efficient inventory
management
GM has reduced parts inventory and transportation costs by 26% annually
Prof N. Balasubramanian
Goals:
Reduce Cost, Improve Service
By not managing inventory successfully
In 1994, IBM continues to struggle with shortages in
their ThinkPad line (WSJ, Oct 7, 1994)
In 1993, Liz Claiborne said its unexpected earning decline
is the consequence of higher than anticipated excess
inventory (WSJ, July 15, 1993)
In 1993, Dell Computers predicts a loss; Stock plunges.
Dell acknowledged that the company was sharply off in its
forecast of demand, resulting in inventory write downs
(WSJ, August 1993)
Prof N. Balasubramanian
Understanding Inventory
The inventory policy is affected by:
Demand Characteristics
Lead Time
Number of Products
Objectives
Service level
Minimize costs
Cost Structure
Prof N. Balasubramanian
Cost Structure
Order costs
Fixed
Variable
Holding Costs
Insurance
Maintenance and Handling
Taxes
Opportunity Costs
Obsolescence
Prof N. Balasubramanian
Types of Inventory
Prof N. Balasubramanian
Independent
Demand for items used by external customers
Cars, appliances, computers, and houses are
examples of independent demand inventory
Prof N. Balasubramanian
Prof N. Balasubramanian
Minimum inventory
investments:
Inventory turnover
Weeks, days, or hours of
supply
MMM II SEM III - 2014
Inventory Turnover:
Turnover
26 inventory turns
average inventory value
$384,615
Weeks/Days of Supply:
Weeks of Supply
2weeks
average weekly usage in dollars
$10,000,000/52
$384,615
Days of Supply
10 days
$10,000,000/260
Prof N. Balasubramanian
Inventory Costs
Carrying cost
cost of holding an item in inventory
Ordering cost
cost of replenishing inventory
Shortage cost
temporary or permanent loss of sales when demand
cannot be met
Prof N. Balasubramanian
Prof N. Balasubramanian
ABC Classification
Class A
5 15 % of units
70 80 % of value
Class B
30 % of units
15 % of value
Class C
50 60 % of units
5 10 % of value
Prof N. Balasubramanian
ABC Classification
PART
UNIT COST
ANNUAL USAGE
1
2
3
4
5
6
7
8
9
10
$ 60
350
30
80
30
20
10
320
510
20
90
40
130
60
100
180
170
50
60
120
Prof N. Balasubramanian
ABC Classification
PART
9
8
2
1
4
3
6
5
10
7
TOTAL
VALUE
$30,600
16,000
14,000
5,400
4,800
3,900
3,600
3,000
2,400
1,700
% OF TOTAL
VALUE
% OF TOTAL
QUANTITY
35.9
18.7
16.4
6.3
5.6
4.6
4.2
3.5
2.8
2.0
6.0
5.0
4.0
9.0
6.0
10.0
18.0
13.0
12.0
17.0
% CUMMULATIVE
A
B
6.0
11.0
15.0
24.0
30.0
40.0
58.0
71.0
83.0
100.0
$85,400
CLASS
A
B
C
ITEMS
% OF TOTAL
VALUE
9, 8, 2
1, 4, 3
6, 5, 10, 7
Prof N. Balasubramanian
71.0
16.5
12.5
% OF TOTAL
QUANTITY
15.0
25.0
60.0
MMM II SEM III - 2014
5
55
0
55
6
85
0
85
7
75
0
75
8
85
5
55
110
6
85
25
7
75
150
200
8
85
65
4
60
125
5
55
70
6
85
165
180
7
75
90
8
85
165
160
4
60
140
200
5
55
85
6
85
0
7
75
85
160
8
85
0
Requirements
Projected-on-Hand (30)
Order Placement
1
70
0
40
2
70
0
70
2
70
65
3
65
0
65
3
65
0
Prof N. Balasubramanian
85
EOQ -optimal order quantity that will minimize total inventory costs
EOQ Assumptions:
Demand is known & constant - no
safety stock is required
Lead time is known & constant
No quantity discounts are available
Ordering (or setup) costs are
constant
All demand is satisfied (no
shortages)
The order quantity arrives in a
single shipment
Prof N. Balasubramanian
Inventory Level
Order quantity, Q
Demand
rate
Average
inventory
Q
2
Reorder point, R
Lead
time
Order Order
placed receipt
Prof N. Balasubramanian
Lead
time
Order Order
placed receipt
Time
D - annual demand
Q - order quantity
Co D
Q
CcQ
2
Prof N. Balasubramanian
CcQ
2
Deriving Qopt
CoD
TC =
Q
CoD
TC
= Q2
Q
C0D
0 = Q2
Qopt =
CcQ
+
2
Cc
+
2
Cc
+
2
2CoD
Cc
Prof N. Balasubramanian
CoD
CcQ
=
Q
2
Q2
2CoD
=
Cc
Qopt =
2CoD
Cc
Annual
cost ($)
Total Cost
Slope = 0
CcQ
Carrying Cost =
2
Minimum
total cost
CoD
Ordering Cost = Q
Optimal order
Qopt
Prof N. Balasubramanian
Order Quantity, Q
EOQ Example
Cc = $0.75 per gallon
Qopt =
2CoD
Cc
Qopt =
2(150)(10,000)
(0.75)
Co = $150
D = 10,000 gallons
CoD
TCmin =
Q
TCmin
CcQ
2
(0.75)(2,000)
(150)(10,000)
=
+
2
2,000
Prof N. Balasubramanian
Reorder Point
Inventory level at which a new order is placed
R = dL
where
d = demand rate per period
L = lead time
Demand = 10,000 gallons/year
Store open 311 days/year
Daily demand = 10,000 / 311 = 32.154 gallons/day
Lead time = L = 10 days
R = dL = (32.154)(10) = 321.54 gallons
Prof N. Balasubramanian
Safety Stock
Safety stock
buffer added to on hand inventory during lead time
Stock out
an inventory shortage
Service level
probability that the inventory available during lead time
will meet demand
P(Demand during lead time <= Reorder Point)
Prof N. Balasubramanian
Inventory level
Reorder
point, R
0
LT
LT
Time
Prof N. Balasubramanian
Inventory level
Reorder
point, R
Safety Stock
0
LT
Prof N. Balasubramanian
Time
LT
R = dL + zd L
where
d = average daily demand
L = lead time
d = the standard deviation of daily demand
z = number of standard deviations
corresponding to the service level
probability
zd L = safety stock
Prof N. Balasubramanian
Risk Pooling
Consider these two systems:
Warehouse One
Market One
Warehouse Two
Market Two
Supplier
Market One
Supplier
Warehouse
Market Two
Prof N. Balasubramanian
Risk Pooling
For the same service level, which system will require more inventory?
Why?
For the same total inventory level, which system will have better
service? Why?
What are the factors that affect these answers?
Prof N. Balasubramanian
Prof N. Balasubramanian
Week
Prod A,
Market 1
Prod A,
Market 2
Prod B,
Market 1
Product B,
Market 2
33
45
37
38
55
30
18
58
46
35
41
40
26
48
18
55
Prof N. Balasubramanian
STD
CV
Market 1
39.3
13.2
.34
Market 2
38.6
12.0
.31
Market 1
1.125
1.36
1.21
Market 2
1.25
1.58
1.26
Prof N. Balasubramanian
STD CV
Market 1
39.3
13.2 .34
65
197
Avg.
%
Inven. Dec.
91
Market 2
38.6
12.0 .31
62
193
88
Market 1
Market 2
B
B
29
29
14
15
Cent.
Cent
A
B
Prof N. Balasubramanian
118 304
6
39
132
20
36%
43%
Prof N. Balasubramanian
LTAVG + z AVG LT
Orders
10
Prof N. Balasubramanian
11
12
13
14
Demands
MMM II SEM III - 2014
15
Safety stock?
Service level?
Overhead?
Lead time?
Transportation Costs?
Prof N. Balasubramanian
Centralized Systems*
Supplier
Warehouse
Centralized Decision
Retailers
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Industry
Median
Dairy Products
Upper
Quartile
34.4
19.3
Lower
Quartile
9.2
Electronic Component
9.8
5.7
3.7
Electronic Computers
9.4
5.3
3.5
Books: publishing
9.8
2.4
1.3
6.2
3.4
2.3
8.0
5.0
3.8
10.3
6.6
4.4
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Learning Objectives
1. Describe supply chain coordination and the
bullwhip effect, and their impact on supply chain
performance.
2. Identify obstacles to coordination in a supply
chain.
3. Discuss managerial levers that help achieve
coordination in a supply chain.
4. Understand the different forms of collaborative
planning, forecasting, and replenishment possible
in a supply chain.
Prof N. Balasubramanian
Prof N. Balasubramanian
Bullwhip Effect
Fluctuations in orders increase as they move up the supply chain
from retailers to wholesalers to manufacturers to suppliers
Distorts demand information within the supply chain
Results from a loss of supply chain coordination
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Performance Measure
Manufacturing cost
Increases
Inventory cost
Increases
Increases
Transportation cost
Increases
Increases
Decreases
Profitability
Decreases
Table 10-1
Prof N. Balasubramanian
Obstacles to Coordination
in a Supply Chain
Incentive Obstacles
Information Processing Obstacles
Operational Obstacles
Pricing Obstacles
Behavioral Obstacles
Prof N. Balasubramanian
Incentive Obstacles
Occur when incentives offered to different stages or participants in
a supply chain lead to actions that increase variability and reduce
total supply chain profits
Local optimization within functions or stages of a supply chain
Sales force incentives
Prof N. Balasubramanian
Prof N. Balasubramanian
Operational Obstacles
Occur when placing and filling orders lead to an increase in
variability
Ordering in large lots
Large replenishment lead times
Rationing and shortage gaming
Prof N. Balasubramanian
Operational Obstacles
Figure 10-2
Prof N. Balasubramanian
Pricing Obstacles
When pricing policies for a product lead to an increase in variability
of orders placed
Lot-size based quantity decisions
Price fluctuations
Prof N. Balasubramanian
Pricing Obstacles
Figure 10-3
Prof N. Balasubramanian
Behavioral Obstacles
Problems in learning within organizations that contribute to
information distortion
1.
2.
3.
4.
5.
Each stage of the supply chain views its actions locally and is unable
to see the impact of its actions on other stages
Different stages of the supply chain react to the current local
situation rather than trying to identify the root causes
Different stages of the supply chain blame one another for the
fluctuations
No stage of the supply chain learns from its actions over time
A lack of trust among supply chain partners causes them to be
opportunistic at the expense of overall supply chain performance
Prof N. Balasubramanian
Managerial Levers to
Achieve Coordination
Aligning goals and incentives
Improving information accuracy
Improving operational performance
Designing pricing strategies to stabilize orders
Building strategic partnerships and trust
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
1.
2.
3.
4.
Prof N. Balasubramanian
CPFR Scenario
DC replenishment
collaboration
Retail DC or distributor DC
Drugstores, hardware,
grocery
Store replenishment
collaboration
Collaborative assortment
planning
Department stores,
specialty retail
Table 10-2
Prof N. Balasubramanian
Prof N. Balasubramanian
Figure 10-4
Prof N. Balasubramanian
Strategic Alliances
Advanced Supply Chain Management
Prof N. Balasubramanian
Introduction
Complexity in business environments increasing
Resources required to manage are becoming increasingly scarce
Many functions need to be outsourced
Firms need to ensure that functions are performed by the other firms
Prof N. Balasubramanian
Prof N. Balasubramanian
Downsides
Core competencies should not be compromised
Competitive advantages should not be compromised
Prof N. Balasubramanian
Internal Activities
Firm A
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Acquisitions
Internal Activities
Firm A
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Firm B
Firm A
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Firm B
Firm A
Prof N. Balasubramanian
Firm B
Firm A
Prof N. Balasubramanian
Strategic Alliances
Order
Firm B
Firm A
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Packaging.
Parts and service
support.
Plant and warehouse site
selection.
Procurement.
Reverse logistics.
Traffic, transportation
Warehousing, storage.
MMM II SEM III - 2014
Supply Chain
Management:
Organization
Suppliers
Customers
Supply Chain
Management:
Organization
Suppliers
Customers
Procurement.
Parts and service
Support. Traffic.
Transportation.
Customer service
Parts and service support
Reverse logistics
Traffic, transportation
Prof N. Balasubramanian
. .
MMM II SEM III - 2014
Prof N. Balasubramanian
Non-asset based
Trucks
Warehouses
Information systems
Prof N. Balasubramanian
Primarily are
coordinators.
Prof N. Balasubramanian
What Is 3PL?
Strategic partnership
Long term commitment
Multi-function arrangement
Process integration
Large range of 3PL companies
Non-asset owning 3PL companies called 4PL
Provide services but not trucks, warehouses
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3PL Advantages
Focus on Core Strengths
Allows a company to focus on its core competencies
Logistics expertise left to the logistics experts
Prof N. Balasubramanian
3PL Advantages
Provides Technological Flexibility
Technology advances adopted by better 3PL providers
Adoption possible by 3PLs in a quicker, more cost-effective way
3PLs may have the capability to meet the needs of a firms potential customers
Prof N. Balasubramanian
3PL Advantages
Provides Other Flexibilities
Flexibility in geographic locations.
Flexibility in service offerings
Flexibility in resource and workforce size
Prof N. Balasubramanian
3PL Disadvantages
Loss of control inherent in outsourcing a particular
function.
Prof N. Balasubramanian
3PL Issues
Costs and Customer Orientation
Know your own costs
Compare with the cost of using an outsourcing firm.
Use activity-based costing techniques
Prof N. Balasubramanian
E-Supply Chains
Definitions and Concepts
supply chain
The flow of materials, information, money, and services from raw material
suppliers through factories and warehouses to the end customers
e-supply chain
A supply chain that is managed electronically, usually with Web technologies
Prof N. Balasubramanian
7-97
E-Supply Chains
Prof N. Balasubramanian
7-98
E-Supply Chains
Supply Chain Parts
Upstream supply chain
procurement
The process made up of a range of activities by which an organization obtains or gains
access to the resources (materials, skills, capabilities, facilities) they require to
undertake their core business activities
Prof N. Balasubramanian
7-99
E-Supply Chains
supply chain management (SCM)
A complex process that requires the coordination of
many activities so that the shipment of goods and
services from supplier right through to customer is
done efficiently and effectively for all parties
concerned. SCM aims to minimize inventory levels,
optimize production and increase throughput,
decrease manufacturing time, optimize logistics and
distribution, streamline order fulfillment, and
overall reduce the costs associated with these
activities
Prof N. Balasubramanian
7-100
E-Supply Chains
e-supply chain management (e-SCM)
The collaborative use of technology to improve the
operations of supply chain activities as well as the
management of supply chains
The success of an e-supply chain depends on:
The ability of all supply chain partners to view partner
collaboration as a strategic asset
A well-defined supply chain strategy
Information visibility along the entire supply chain
Speed, cost, quality, and customer service
Integrating the supply chain more tightly
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7-101
E-Supply Chains
Activities and infrastructure of E-SCM
Supply chain replenishment
E-procurement
Supply chain monitoring and control using RFID
Inventory management using wireless devices
Collaborative planning
Collaborative design and product development
E-logistics
Use of B2B exchanges and supply webs
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7-102
E-Supply Chains
e-procurement
The use of Web-based technology to support the key
procurement processes, including requisitioning, sourcing,
contracting, ordering, and payment. E-procurement
supports the purchase of both direct and indirect materials
and employs several Web-based functions such as online
catalogs, contracts, purchase orders, and shipping notices
collaborative planning
A business practice that combines the business knowledge
and forecasts of multiple players along a supply chain to
improve the planning and fulfillment of customer demand
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7-103
E-Supply Chains
Infrastructure for e-SCM
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7-104
E-Supply Chains
Determining the Right Supply Chain Strategy
Functional products are staple products that have stable
and predictable demand and call for a simple, efficient,
low-cost supply chain
Innovative products tend to have higher profit margins,
volatile demand, and short product life cycles. These
products require a supply chain that emphasizes speed,
responsiveness, and flexibility rather than low costs
Prof N. Balasubramanian
7-105
Supply Chain
Problems and Solutions
Typical Problems along the Supply Chain
With increasing globalization and offshoring, supply
chains can be very long and involve many internal and
external partners located in different places
A lack of logistics infrastructure might prevent the right
goods from reaching their destinations on time
Quality problems with materials and parts also can
contribute to deficiencies in the supply chain
bullwhip effect
Erratic shifts in orders up and down supply chains
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7-106
Supply Chain
Problems and Solutions
The Need for Information Sharing along the Supply Chain
EC Solutions along the Supply Chain
Order taking
Order fulfillment
Electronic payments
Managing risk
Inventories can be minimized
Collaborative commerce
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7-107
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7-109
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7-110
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7-111
LIMITATIONS OF RFID
For small companies, the cost of the system may be too
high
The restriction of the environments in which RFID tags are
easily read
Different levels of read accuracy at different points along
the supply chain
Concerns over customer privacy
Agreeing on universal standards
Connecting the RFIDs with existing IT systems
Prof N. Balasubramanian
7-112
RuBee
Bidirectional, on-demand, peer-to-peer radiating transceiver protocol
under development by the Institute of Electrical and Electronics
Engineers
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7-113
Prof N. Balasubramanian
7-114
Collaborative Commerce
collaborative commerce (c-commerce)
The use of digital technologies that enable
companies to collaboratively plan, design, develop,
manage, and research products, services, and
innovative EC applications
collaboration hub
The central point of control for an e-market. A
single c-hub, representing one e-market owner, can
host multiple collaboration spaces (c-spaces) in
which trading partners use
c-enablers to exchange data with the c-hub
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7-115
Collaborative Commerce
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7-116
Collaborative Commerce
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7-117
Collaborative Commerce
grid computing
A form of distributed computing that involves coordinating
and sharing computing, application, data, storage, or
network resources across dynamic and geographically
dispersed organizations
service-oriented architecture (SOA)
An architectural concept that defines the use of services to
support a variety of business needs. In SOA, existing IT assets
(called services) are reused and reconnected rather than the
more time consuming and costly reinvention of new systems
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7-118
Collaborative Commerce
Representative Examples of
E-Collaboration
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7-119
Collaborative Commerce
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7-120
Collaborative Commerce
Barriers to C-Commerce
Most organizations have achieved only moderate levels of collaboration
because of:
A lack of internal integration, standards, and networks
Security and privacy concerns, and distrust over who has access to and control of
information stored in a partners database
Internal resistance to information sharing and to new approaches
A lack of internal skills to conduct c-commerce
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7-122
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7-123
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7-124
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7-125
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7-133
Developing Portals
Many vendors offer tools for building corporate portals as well as hosting
services
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7-134
Collaboration-Enabling Tools:
From Workflow to Groupware
Workflow Technologies and Applications
workflow
The movement of information as it flows through the
sequence of steps that make up an organizations work
procedures
workflow systems
Business process automation tools that place system
controls in the hands of user departments to automate
information processing tasks
workflow management
The automation of workflows, so that documents,
information, and tasks are passed from one participant to
the next in the steps of an organizations business process
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7-135
Collaboration-Enabling Tools:
From Workflow to Groupware
Types of Workflow Applications
Collaborative workflow
Production workflow
Administrative workflow
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7-136
Collaboration-Enabling Tools:
From Workflow to Groupware
groupware
Software products that use networks to support collaboration among
groups of people who share a common task or goal
Synchronous versus Asynchronous Products
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7-137
Collaboration-Enabling Tools:
From Workflow to Groupware
Electronic Meeting Systems
virtual meetings
Online meetings whose members are in different locations, even in different
countries
group decision support system (GDSS)
An interactive computer-based system that facilitates the solution of
semistructured and unstructured problems by a group of decision makers
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7-138
Collaboration-Enabling Tools:
From Workflow to Groupware
Electronic Teleconferencing
teleconferencing
The use of electronic communication that allows two or more people
at different locations to have a simultaneous conference
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7-139
Collaboration-Enabling Tools:
From Workflow to Groupware
video teleconference
Virtual meeting in which participants in one
location can see participants at other locations on a
large screen or a desktop computer
data conferencing
Virtual meeting in which geographically-dispersed
groups work on documents together and exchange
computer files during videoconferences
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7-140
Collaboration-Enabling Tools:
From Workflow to Groupware
Voice-over-IP (VoIP)
Communication systems that transmit voice calls
over Internet Protocolbased networks
Interactive whiteboards
screen-sharing software
Software that enables group members, even in
different locations, to work on the same document,
which is shown on the PC screen of each participant
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7-141
Collaboration-Enabling Tools:
From Workflow to Groupware
Instant video
Integration and groupware suites
Lotus Notes/Domino
Microsoft NetMeeting
Novell GroupWise
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7-142
Managerial Issues
1. How difficult is it to introduce e-collaboration?
2. How much can be shared with business
partners? Can they be trusted?
3. Who is in charge of our portal and intranet
content?
4. Who will design the corporate portal?
5. Should we conduct virtual meetings?
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7-143
E-procurement
Prof N. Balasubramanian
Learning objectives
Identify the benefits and risks of e-procurement
Analyse procurement methods to evaluate cost savings
Assess different options for integration of organisations information
systems with e-procurement suppliers
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Prof N. Balasubramanian
Electronic procurement
system
Prof N. Balasubramanian
Figure 7.3 Use of different information systems for different aspects of the
fulfilment cycle
Prof N. Balasubramanian
MMM II SEM III - 2014
E-mail notification of
requisition approval
Prof N. Balasubramanian
Figure 7.5 Document management software for reconciling supplier invoice with
purchase order data
Source: Tranmit plc
Prof N. Balasubramanian
Figure 7.6 The three main e-procurement model alternatives for buyers
Prof N. Balasubramanian
Prof N. Balasubramanian
Implementation risks
Authentication fraud
Maverick purchasing
Lock-in to suppliers
Cost-savings not realized
Cost and difficulty of implementing systems
Prof N. Balasubramanian
B2B Marketplaces
International benchmarking study:
UK, 11% of businesses provide the opportunity for
customers to purchase from e-marketplaces, 9% in
Sweden and Italy, 8% in Australia and Germany, 7% in
France and 6% in Japan.
Prof N. Balasubramanian
How businesses
buy?
Operating resources
Systematic sourcing
MRO Hubs
Catalogue Hubs
www.barclaysb2b.com www.sciquest.com
Spot sourcing
Yield Managers
www.elance.com
Prof N. Balasubramanian
Manufacturing
resources
Exchanges
www.e-steel.com
www.plasticsnet.com
Prof N. Balasubramanian