Transcript Adapted from E-Logistics H. Donald Ratliff Pinar Keskinocak

Adapted from
E-Logistics
H. Donald Ratliff
[email protected]
Pinar Keskinocak
[email protected]
www.tli.gatech.edu
E-business: changes the
way we think!!!
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Buying
Selling
Fulfillment
Inventory
Transportation
Software
Investment
Outsourcing
Internet
 The worldwide number of Internet users: 196
million in 1999 (International Data Corporation)
 The number of users is expected to reach one
billion by 2008
 Users who have been online for more than three
years spend an average of 10.5 hours per week
online, compared with 6.6 hours a week for
newcomers
 By 2002 there will be over 85 million smart
hand-held devices in the world
E-commerce growth
 E-commerce volumes double every 9-12
months
 B2B volumes are expected to exceed B2C
by a factor of 6 to 12 by 2005
 By 2002, E-commerce revenues will
exceed 1% of Global Economic Product
On-line Retail
founded 1873
1000 stores in the U.S.
on-line presence: May 1997
founded 1971
1100 stores in the U.S.
on-line presence: late 1998
founded 1994
no physical stores
on-line presence: July 1995
Revenues
1998 sales (mil. $)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
$3.1 B
(+10%)
$2.7 B
(+17%)
$0.6 B
(+313%)
Barnes &
Noble
Borders
Amazon.com
Store sales
On-Line sales
Profits
1998 A/T income (mil. $)
150
100
92.4
92.1
50
0
-50
Barnes & Noble
Borders
Amazon.com
-100
-150
-124.5
Market Cap
40
30
$2.2 B
40
30
20
$1.3 B
200
150
100
50
$19.2 B
Amazon.com
 $300 million distribution-center initiative
 Books, music videos, toys and electronics
 New DCs in Nevada, Kentucky and Kansas
 “Fastest expansion of distribution capacity
in peacetime history” Bezos
Ref: Wall Street Journal Sept 8, 1999
Challenges
 Don’t outsource -- keep skills they develop
 Design flexible DC’s -- don’t know what
will go in them
 Features:
 Orders with many address and message on
each
 Wish lists
 Tracking searches: Pokedex?
Package Delivery
Wall Street Journal Nov 4, 1999
E-services
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Shipment rating
Document preparation
Tracking
E-mail alerts
Programmer APIs
 UPS
 55% of online Christmas
 FedEx
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1994 tracking web site
“Smarter companies”
Dismissed residential
Dismissed mail order
10% of online Christmas
 USPS
 Cheap home delivery
 34% of online Christmas
Package Delivery Challenges
 20 million customers expected to purchase over
the Internet by 2007
 Home Deliveries
 Currently 10% of the package delivery volume
 Average revenues per delivery
 Commercial Areas:
 Suburban Areas:
 Core business
 Capacity
 Cost -USPS
$28.00
$10.40
E-Grocery
 $450 billion brick-and-mortar industry
 E-grocery growth forecast
 $148 million
 $3.5 billion by 2002
Webvan
 Management
Automation!
 Lewis Borders (Borders Books)
 George Shaheen (Andersen Consulting Chief Exec)
 Financial
 ½ year revenue = $395,000
 ½ year net loss = $33,500,000
 Market cap = $4.9 billion
 Logistics
 $1 billion with Bechtel Group for 26 giant warehouses
 Focus on automation (carousels)
Ref: Wall Street Journal Sept 22, 1999
Delivery parameters
 WebVan
 Free for orders > $50
 $3.95 for orders < $50 or redeliver
 Scheduled 30 min window (2 pm to 10 pm)
 Streamline
 $30/mo
 Peapod
 $5-$20 per delivery in Chicago
 HomeGrocer
 Free for orders > $75
 90 minute window
 Next day delivery
Keys to home delivery
 Efficient customer receiving
 Routing efficiency
 Frequency
 Multi-product delivery
 Logistics expertise
B2C Personalization
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Pink Dot
Amazon.com
CDNow
Collaborative filtering technology
 Net Perceptions
 Andromedia
 LikeMinds server
 Vignette
Ref: USA Today 11/15/99
Top 10 online businesses
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Intel Corp. ($10.5 billion)
Cisco Systems Inc. ($9.5 billion)
IBM Corp. ($8.8 billion)
Dell Computer Corp. ($6.1 billion)
Federal Express Corp. ($5.6 billion)
United Parcel Service of America ($5.4 billion)
America Online Inc. ($4.4 billion)
Ingram Micro Inc. ($3.0 billion)
Nortel Networks Corp. ($2.4 billion)
Tech Data Corp.($1.7 billion)
E-commerce revenues
B2B vs B2C
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Smaller number of clients
Larger volume per transaction/client
Restricted sales to certain clients
Interface with back-end systems
Complex buy/make/sell decisions
Computer to computer
E-business transactions
Enterprise Resource
Planning (ERP)
Intra Company
Rigid Interfaces
Electronic Business
Integration (EBI)
Inter Company
Flexible Interfaces
e-Procurement
 Advantages
 Broader base of suppliers
 Automatic billing
 Lower transaction cost
 Office Depot
 Processing purchase order and paying invoice
>$100
 Using the Web $15 to $25
 Shorter cycle time
e-Procurement
 GE TPNPost
 Pre-screened suppliers
 Requests for Quotes (RFQs)
 Multi-round bidding process
 Commerce One
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Electronic procurement
Multiple languages/currencies
International date
Number and address formats
International tax requirements
E-Cars
 Ford
 Microsoft alliance
 Minority interest in CarPoint
 GM
 42 days to fill a special order
 New initiative
 Toyota
 New system at a plant in Canada
 Production within 5 days of order
 Another 10 days to the dealer
Ref: Wall Street Journal Aug 25, 1999, Sept 21 1999
Integrated Business
Communities (IBCs)
 Ford-Oracle (AutoXchange)
 Ford's extended supply chain online
 Ultimately $300 billion in annual transactions
 GM-Commerce One (GM MarketSite)
 Transactions between GM suppliers, dealers
and other business partners
Build to order
 Direct sales
 Virtually integrated with suppliers and service
providers
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Daily production requirements to suppliers
Inventory levels and replenishment needs
Direct shipment from suppliers (e.g. Sony)
Real time information on service measures
High involvement in planning customers' PC needs
(e.g. Boeing)
 Inventory turns 30 times per year
 Founded in 1984
B2B Personalization
 Dell Computer
 > 1,500 personalized Premier Pages for corporate
customers, linked to the customer’s intranet.
 Configure PCs, direct access to corporate-specified
personal computers, negotiated discounts, records of
orders and payments, track delivery status, access to
technical support.
 Staples
 Customized supply catalogs that can run on a company’s
intranet, containing only those items and prices
negotiated in contracts with that company.
 Maintain lists of previously ordered items: easy reordering
 Price discounts, recommending new items
Collaboration
 Collaborative forecasting
 Wal-Mart: Collaborative forecasting for a new test
product (medicine for flu and allergies).
 Incorporate information about everything from planned
changes in store layouts to precise meteorological data
about pollen counts and when flu season will hit a certain
region.
 Eliminated a full 2 weeks of inventory from the supply chain,
halved order cycle times and eliminated stock-outs.
 Collaborative design
 Collaborative replenishment
 Vendor-managed inventory (VMI) programs
CPFR
 CPFR.org
 Create collaborative relationships between
buyers and sellers
Electronic Business
Integration (EBI)
 “Traditional” EDI
 30 years
 Very rigid
 XML (eXtensible Markup Language)
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Pure Internet standard - Feb 1998
Flexible “tags”
Easy for humans to read
Easy for machines to process
Makes data portable
Will rapidly replace EDI
Can FedEx reinvent itself?
 Tracking shipments
Wall Street Journal Nov 4, 1999
 Discount air carriers
 Low cost truck lines
 Ocean carriers
 Deal with Cisco
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Merge-in-transit
Up to 100 shippers/merge
Plan shipments and coordinate customs
Command and control center
Tens of millions of dollars
E-hubs
 Trading hubs
 Products
 Logistics services
 Transaction hubs
 Decision hubs
Why use a hub?
 Volume efficiency (Do it
cheaper!)
 Special knowledge or
technology (Do it better!)
 Neutrality (Do it fairer!)
 Outsourcing (I don’t want to
do it!)
Info hubs
 Trading hubs
 Products
 Logistics services
 Transaction hubs
 Decision hubs
Truck Load-matching
“Hubs”
 DAT Services - 1978
 Largest load-finding service
 Internet Truckstop - 1995
 1st exclusively internet
 National Transportation Exchange
 2,000-20,000 lb
 mySAP.com Marketplace portal
 30 new load-matching sites last year
Source: Heavy Duty Trucking, 1999
Ocean Load-matching
“Hubs”
 Raterequest
 Request best rate
 Specify bid to match
 Celarix
Trading hub issues
 Catalog models
 Standards
 Updating
 Auction models
 Price uncertainty
 Service uncertainty
 Exchange models
 Price determination
 Service uncertainty
Info hubs
 Trading hubs
 Products
 Logistics services
 Transaction hubs
 Decision hubs
EDI hub
 EDI via the internet - ECnetTM
 Focus on Electronics Manufacturing
Ship &
track hub
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Shipment planning & booking
Ship and delivery notices
Electronic payment
Tracking and tracing
 Celarix - iSuite
 UPS Worldwide - eLogistics.net
Buy & ship
hub
 Procurement consolidation
National Golf Course Owners
Info hubs
 Trading hubs
 Products
 Logistics services
 Transaction hubs
 Decision hubs
Route planning hub
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Easyroute.com
Descartes
On-line routing
Focus on small fleets
“Do everything”
hub
E-commerce in Asia
 One in five CEOs of Asian companies expects to
see a fifth of their revenue come from ebusiness in the next five years (PricewaterhouseCoopers and the World Economic Forum)
 The number of Internet users in Asia will triple
to 60 million by 2003 (Goldman Sachs)
 E-commerce volume $35 billion by 2002
(International Data Corp)
E-business future
 Opportunities
 New transportation
demand
 Capacity utilization
 Paperless transactions
 Visibility
 Connectivity technology
 Decision technology
 Outsourcing
 Concerns
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Speed of change
Lack of expertise
New technology
Complexity
Short lead-times
E-logistics opportunities
 Collaboration
 Disintermediation
 Fulfillment
 Integrated Business
Communities (IBCs)
 Vendor managed
replenishment
 Home delivery
 Personalization
 Collaborative filtering
 Build to order
 Electronic Business
Integration (EBI)
 Tracking
 Merge in transit
 Sourcing
 Trading exchanges
 Information exchanges
 E-hubs
 Collective buying
 Planning
Questions
Comments