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Chapter 2: Intra-organizational applications of EC

IT357 Electronic Commerce

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Intra-organizational applications of EC

1. Introduction

2. Workflow Management

3. Customization

4. Business Process Management

5. Business Process Re-engineering

6. Supply Chain Management

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Introduction

• “EC can only be used for activities outside the organization.”……..– …………….The most common misconception about EC

• Companies cannot maximize their potential if EC is treated as a stand alone concept focusing only on inter organizational transactions.

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Cont’d: Introduction

• EC technologies can be used to streamline disconnected internal processes and activities.

• Done through – enterprise integration– process control systems– BPR– workflow management

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Cont’d: Introduction

• Called “Internal Commerce” or the use of technologies to support internal processes between – individuals,– departments and – collaborating organizations

• The aim is to deliver superior value to customers through – better coordination and workflow management– customization– supply chain management

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Workflow Management

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Workflow Automation

• Automation of knowledge based business processes….

….using network based technologies

………….to manage complex interlocking tasks and the data they utilize and generate.

• The objective - to offer:– timely – cost effective– integrated ways of making decisions.

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Cont’d: Workflow Automation

• Portrays the movement of a business process and its associated tasks among workers and…...

...the operations required to process relevant information….

……...as it moves from start to completion.• The movement of information from one user’s

desktop to another.

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Workflow vs. Process

• All workflows taken together constitute a process.

Knowledge based process

• A set of rules and milestones that define and control the flow of information.

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“Infrastructure” of a company

• A combination of all the business processes• Not documented• Ingrained in the way people work• New people are trained by the older ones• Less desirable way

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Organization Integration - need of the day

• Compelled by the market forces………..……companies are forced to manage the entire operational flow from start to finish.

• Step 1– Improving existing processes wherever possible

• Step 2– Integrating across business processes after identifying the

information needs of each process

• Step 3– Integrating business functions, application program

interfaces and databases across departments and groups.

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Workflow Implementation Steps

• Analyse business processes• Examine workflow technology products• Choose appropriate solutions

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Business Process Analysis

• Identify and name current business processes• Identify processes that are not performing using

some criteria • Prioritize the processes

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Business Process Component Model

• Draft the BPCM

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Workflow TechnologiesElements

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Workflow TechnologiesProduct Categories

• Messaging-based• Web-based• Production-based

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Criteria for Selecting Workflow Software

• Suitability• Pricing• Support of open standards• Distribution channels• Ease of administration• Training needs• Extent of change to participants• Graphical tools

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Business Process Management

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Business Process Management

• Business Process Management (BPM) is a method of efficiently aligning an organization with the wants and needs of clients. It is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. As organizations strive for attainment of their objectives, BPM attempts to continuously improve processes - the process to define, measure and improve your processes – a ‘process optimization' process.

http://en.wikipedia.org/wiki/Business_Process_Management

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Cont’d: Business Process Management

• BPM– BPM, or business process management, is a term that has

been used to describe everything from software tools to technology suite to management system.

– BPM not only improves profitability, but it actually helps create competitive advantage for companies.

http://www.bpmbasics.com/literature/literature.html

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Cont’d: Business Process Management

• The above is the ultimate in BPM capability and is still away from full availability in the market.

• BPM is finally well understood as business process management and not business performance management.

http://www.bpminaction.com/blog/2008/06/xxx.php

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Business Process Reengineering

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Business Process Re-engineering

• Business Process Reengineering (BPR) is a management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes that exist within and across organizations. The key to BPR is for organizations to look at their business processes from a "clean slate" perspective and determine how they can best construct these processes to improve how they conduct business.

• Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management.

http://en.wikipedia.org/wiki/Business_process_reengineering

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Cont’d: Business Process Re-engineering• Hammer and Champy suggested seven principles of reengineering to

streamline the work process and thereby achieve significant levels of improvement in quality, time management, and cost: 1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritize them in order of redesign urgency.

3. Integrate information processing work into the real work that produces the information.

4. Treat geographically dispersed resources as though they were centralized.

5. Link parallel activities in the workflow instead of just integrating their results.

6. Put the decision point where the work is performed, and build control into the process.

7. Capture information once and at the source.

http://searchcio.techtarget.com/sDefinition/0,,sid182_gci536451,00.html

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Customization and Internal Commerce

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Customization

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Customization of Products

• Demand for customization calls for flexibility and radical responsiveness on the part of businesses

• The Levi’s example• The customization facility suspended due to costs

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Customization of Services

• High levels of customization needed for product differentiation

• Often difficult because the production and consumption of services occur simultaneously

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Supply Chain Management

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Supply Chain Management

• Definition– Push Vs. Pull based models

• Elements of SCM• SCM in an EC environment

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Supply Chain Management

• A collection of interdependent steps that when followed accomplish certain objective such as meeting customer requirements.

• A generic term that encompasses the coordination of order generation, order taking and order fulfillment/distribution of products services or information.

• The interdependencies reach far beyond the manufacturing facility.

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Cont’d: Supply Chain Management

• Key Players:– Material suppliers– Channel supply partners (wholesalers, retailers and

distributors)– Customers

• Models

– The consumer need based business model is forcing a fundamental change from the “Push- based” SCM model to a “Pull based” one.

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Cont’d: Supply Chain Management

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Cont’d: Supply Chain Management

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Features of pull-based SCM

• POS data collection• Perpetual inventory• Automatic replenishment using EDI services • UPC - Universal Product Code

– A twelve-digit ID Number used by companies in North America to uniquely identify themselves and their products world wide.

– The last digit is a Check digit.

• The ID Number also identifies special applications such as random weight marking, coupon code marking, or in-store identification.

• Latest in bar coding (refer to the following URL: http://www.cio.com/archive/010103/12.html

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Elements of SCM

• Three key processes/systems:– Planning

• Facilitates order taking• Facilitates Information gathering from the customer• Facilitates Flow of information from initial order to procurement to consumption.

– Execution• Facilitates physical movement of goods and services through the supply chain.• Include applications such as order fulfillment, inventory control and

manufacturing and logistics.• Focus on operational efficiencies.• Hence it is important to streamline day to day operations.• And upgrade key business applications to a single integrated system.

– Performance measurement• Keep track of the health of the supply chain.• Accounting and financial systems are the focal points.• Data warehouses and web based software agents are useful tools.

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Supply Chain Software

• Horizontal and vertical categories • Horizontal - cross industry applications that include

Financial, Manufacturing , Accounting, HR ,Logistics and Marketing systems.

• Vertical - Automate tasks that are specific to individual market segments.

• Major players– SAP– Oracle– Baan– PeopleSoft

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SCM in an EC environmentCharacteristics

• Total supply chain information visibility.• Information management across industries and

enterprises.• Seamless integration of all supply chain processes• Use of accounting models that link cost to

performance.• A supply chain organization into high performance

teams going from the shop floor to senior management.

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Traditional SCM vs. E-business SCM

• Infrastructure– Dedicated private networks vs. shared global network.

• Information– Shared within the company vs. worldwide access to authorized

personnel.• Team

– Intra company teams and difficult administration vs. inter company teams in a easy to administer environment.

• Control– Physical control and use of ids and passwords vs. sophisticated

authentication and authorization.• Process

– Physical models and face to face meetings vs. Virtual modeling and video conferencing and internet links.