electronic commerce strategy technologies and applications

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The value chain

The production of goods and services is the result of the efforts of many organisations a complex web of contracts and co-operation known as the supply chain or the value system.

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Manufacturing Inputs:

The supply chain

Components (e.g. wheels, seats, etc.) Sub-assemblies (e.g. engine, gearbox, etc.)

Sales and Distribution:

Wholesale (e.g. import agent) Retail (e.g. local main dealer)

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Transport Storage Paperwork (Orders, Invoices, etc)

Logistics chains

Each supply chain transaction adds cost without adding intrinsic value. e-Commerce can be applied to the supply chain to reduce costs or improve service.

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Porters value chain model

support activities

Firm Infrastructure

Human Resource Management Technology Development Procurement Inbound Operations Outbound Marketing Logistics Logistics & Sales
primary activities Margin

Service

Primary Activities:
Inbound Logistics Operations (Production) Outbound Logistics Marketing and Sales Service

electronic commerce strategy technologies and applications

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Porters value chain model

support activities

Firm Infrastructure

Human Resource Management Technology Development Procurement Inbound Operations Outbound Marketing Logistics Logistics & Sales
primary activities Margin

Service

Support Activities:
Procurement Technology Development Human Resources Management Firm Infrastructure

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Generic value chain

Starting point to improve the efficiency and productivity of a company Help indentifying the component activities Help identifying the various linkages Performance deficits can be addressed

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e Use of value chain model c Analysis tool for defining a companys core o competencies and the activities in which it can pursue a competitive advantage m Cost advantage Differentiation m Steps in value chain analysis e Break down activities Assess the potential for adding value via cost r advantage or differentiation Determine strategies where competitive advantage c can be sustained e

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Key weaknesses of traditional value chain

Most applicable to manufacturing of physical products as compared to services One way chain involved with pushing products Does not emphasis on customer needs E-commerce has implication for whether activities are achieved internally or externally which is not covered in value chain

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Revised value chain

M R N P D M P P M P P M S F

MR: Market Research NPD: New product development MP: Market product PM: Procure material PP: Procure products MSF: Manage selling and fulfillment

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e e-Commerce in the value chain c Electronic Value Chain: o Reduced time frame Changed cost structures m Re-engineered Value Chain: m Just-in-time manufacture e Quick response supply Efficient document processing r Competitive advantage c e

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Linked value chains

Outbound Logistics Inbound Operations Outbound Logistics Logistics Inbound Logistics

Inbound Logistics

from Suppliers

Outbound Logistics from Customers

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(Inter-organisational value chain)

Porters value system

Firm Value Chains Channel Value Chains Buyers Value Chains

Supplier Value Chains

Overall organisational competitive advantage:

efficiency of the company quality of its products

plus
efficiency and quality of suppliers efficiency of wholesalers (Channel) efficiency of retailers

 Inbound Logistics: Large number of suppliers electronic Vast number of components commerce Process: strategy Just-in-time (JIT) manufacture technologies Outbound Logistics: and Limited number of Main Dealers applications

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Automotive assembly value system

Internal Supplies

Component

Suppliers

Vehicle Assembler

Dealer Network

Consumer

 Inbound Logistics: Large number of suppliers electronic Vast number of products commerce Process: strategy Retail technologies Outbound Logistics: and Vast number of Consumers applications

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Food supermarkets value system

Regional Whse

Food Processors

Supermarket

Consumer

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Insurance value system

Agents

Insurance Company

Consumer

Insurance Broker

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e Insurance value system c Inbound Logistics: o No significant suppliers (financial / re-insurance partners) m Process: m Administrative e Outbound Logistics: r Sales through agents Sales through brokers c Direct sales e