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Electronic Commerce

Electronic Commerce. Chapter 3 Business-to-Business Electronic Commerce. Contents. Electronic Commerce Tools – Electronic Data Interchange (EDI) – XML – Intranets and Extranets – Online Auctions and Exchanges Business Considerations – Supply Chain Issues

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Electronic Commerce

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  1. Electronic Commerce Chapter 3 Business-to-Business Electronic Commerce

  2. Contents • Electronic Commerce Tools • – Electronic Data Interchange (EDI) • – XML • – Intranets and Extranets • – Online Auctions and Exchanges • Business Considerations • – Supply Chain Issues • – The Business Case • – Project Management • – Legal and Security Issues

  3. It’s a Small World...

  4. Purchase Order Data Fields • Company A's address • Company B's address • A Purchase Order Number • A product type (Widget) • A product number • A quantity required • Price information • A total order price

  5. Invoice Data Fields • Company B's address • Company A's address • The Purchase Order Number • An Invoice Number • A tax point • A product type (Widget) • A product number • A quantity required • Price information • A total order price

  6. Definition of EDI “The transfer of structured data, by agreed message standards, from one computer to another, by electronic means”.

  7. Batch EDI

  8. Financial EDI Transactions

  9. Interactive EDI • When booking a holiday you may need to reserve: • – a flight • – hotel room • – car hire • each through a different service and without reference • to the availability of the other requirements • The idea of Interactive EDI is to link the various systems so • that all relevant details can be confirmed before an order is • placed for any of the individual requirements

  10. Kelebihan dan Kelemahan EDI • Efektif dan Efisien. • Mengurangi Pengeluaran • Mengurangi Human Error • Mengurangi Praktek KKN • implementasinya yang sangat spesifik dan tertutup sehingga membutuhkan biaya yang tidak sedikit

  11. BPR Pemikiran secara fundamental dan perancangan ulang proses-proses bisnis untuk mendapatkan perbaikan dramatis dalam hal ukuran kinerja yang penting/kritis seperti biaya kualitas, pelayanan dan kecepatan

  12. Business Process Redesign (BPR) Requires a company to : – look at the overall structure and organisation of a business – look at the actual information flow involved in each type of business transaction

  13. Why Do We Need an Invoice? Given that a purchaser knows : – that it wants the goods – that it has a record of what it has ordered – what price the goods were ordered at – that the company it has ordered the goods from is processing the order electronically (i.e. with the exact same information that it has provided)

  14. Using Technology Technology can help us to improve the way we do business but we need to improve the way we do business in order to make the most out of technology.

  15. The 80:20 Rule • You do EDI with the 20% of your trading partners • that represent 80% of your business • The 80% that represent 20% of your business are • not going to provide you with sufficient benefits to • warrant implementing EDI with them

  16. Components of a Message • Header Information • Data Segments and Separators • Data Elements and Separators

  17. Value Added Networks VANS are popular for EDI because they offer – guaranteed service level agreements to their customers – full audit trails on when messages were received and delivered

  18. EDI Software Functions • Data extraction • Data encoding • Data transmission • Data receipt • Data decoding • Data insertion

  19. XML Acronym for eXtensible Markup Language XML is designed to transport and store data. is a set of rules for encoding documents in machine-readable form is a general-purpose language recommended by W3C to create a markup document for data exchange between diverse systems.

  20. What is XML? • Mark-up language, derived from SGML • Used to separate style from content • Extensible style tag sets that are unlimited and self • defining • Becoming standard for exchange of business • information over the Internet

  21. Key Characteristics of XML • Uses schema to define tags • Modularity allows for definition of new document formats • License free and platform independent

  22. Database Publishing Ensures that commonly used company data, such as – product catalogue data – price data – background company information – sales figures and forecasts – supplier information, etc need only be updated once at source to update all published versions of the information

  23. What is an Intranet? • Private company network using • Internet protocols • Runs over private internal • network • Protected from external users • by a firewall • Enables users to search and • retrieve published information

  24. Intranet Applications • Administration (e.g. meeting dates, minutes staff, staff lists) • Corporate (e.g. business plans, customer list, newsletters) • External (e.g. news channels, research sites) • Financial (e.g. annual report, organisation performance) • IT (e.g. virus information, FAQs, support details) • Marketing (e.g. competitor information, press releases) • Personnel (e.g. policies, training, staff vacancies) • Project management (e.g. project details, staff members)

  25. Intranet Technologies • TCP/IP network • Web server • Browser/client software • Email server/software • FTP • Chat systems • Usenet

  26. What is an Extranet? • Extends the use of an Intranet • Makes it available to selected • external partners • Allows business partners to • access specific business • information • Access protected by security • features

  27. Extranets in eCommerce • Streamline processes and procedures • with business partners • Increase customer loyalty • Increase business partner interaction

  28. Content Management System • Set of procedures for adding, managing and • publishing content through an Intranet or website • Procedures are standardised through use of • templates • Metadata used to provide ‘tags’ or ‘descriptors’ • about the content

  29. Online Auctions • Reverse Auction • – buyer controlled • – lowest bid wins • – used to carry out large • corporate purchases • Forward Auction • – one seller accepts bids from • many buyers • – buyers view the offer and • submit bids • – commonly used to liquidate • merchandise

  30. B2B Exchanges • Bring together suppliers, • buyers and intermediaries • Third party usually operates • the exchange • Buyers and sellers interact • with bids and offers • Deal agreed on the basis of • variables such as price, • volume and delivery costs

  31. ePurchasing • eProcurement – use of the • Internet for authorisation, • ordering, receipting and • payment processes for • products or services • eSourcing – use of the • Internet to decide how and • where products or services • are to be obtained

  32. Companies in the Supply Chain • Suppliers of raw materials • Manufacturers • Wholesalers • Retails • Finally - the end consumer

  33. Supply Chain Model

  34. A Fixed Point in the Supply Chain

  35. Supply Chain Benefits • It improves the trading relationships between the various • companies in the supply chain • It enhances responsiveness • It minimises capital held in stock • It minimises the amount of warehousing needed (throughout • the supply chain) • It ensures JIT delivery • Ultimately it should also have helped rationalised the overall • business process (in terms of efficiency) which should have • knock on effect of bringing down the cost of the product for • the end consumer

  36. Expanding Your Business • Be aware of the opportunities. • Your competitors may: • – be manufacturing the goods where labour rates • or exchange rates are beneficial • – have better streamlined their manufacturing • processes through supply chain Electronic Commerce • – have minimised their costs by cutting out the • retail middle men and selling direct to the end consumer

  37. The Business Case • You have to justify any EC Implementation. • The business objectives could be: • – to be more cost efficient • – to be more profitable • – to expand into new business areas • – to expand globally • – to downsize and maintain the current level of business • – to sell direct • – etc, etc, etc… • They may well differ for every company

  38. Hub and Spoke The hub is guaranteed benefits from EDI because it is handling all its trading relationships in this way. The spokes may only be doing EDI with the hub, or at best with a few other companies. Spokes are likely to be running a paper-based trading system alongside their EDI implementation

  39. Factors Influencing Cost • Whether bespoke or off-the-shelf software is required • Whether proprietary or open standards are used • Whether new hardware is needed to support the project • What type of communications options are employed • How much work is done by internal staff as opposed to • consultants, contractors or project managers • How much training is required • Whether support materials need to be created • Whether the project is located at one or a number of locations

  40. Futureproofing • Even if a company doesn’t want, say, a website • immediately, it can plan for future requirements by • implementing an intranet. This might immediately allow • – departments to route their outgoing EDI messages to • (and receive messages from) a dedicated gateway; • – and useful company information, such as products and • prices, to be shared and updated; • But it would also provide for • – an online version of the company catalogue to be • published on the WWW when required.

  41. The Project Manager Should: – have overseen a number of IT projects – know how to organise the relevant staff effectively to manage the review process and the actual implementation – keep the project within budget and to strict timescales

  42. Co-operation Rolling out an Electronic Commerce project requires the dynamic involvement of – management – administration – IT personnel – marketing and sales

  43. Contractual Issues • Lack of human involvement in transactions is an issue • Some new legal processes have been adopted • ‘International’ aspect of the Internet can cause contractual problems

  44. Security Issues • Electronic signatures used to provide proof of • authenticity for eCommerce transactions • Cryptography ensures confidentiality by encoding • Messages • Framework of security principles provided by PKI

  45. Four Principle Security Function • Confidentiality – keeping information private • Integrity – proving that messages have not been altered • Authentication – proving the identity of the sender (whether an individual or a business process) • Non-repudiation – ensuring that people cannot disclaim generating or processing data

  46. Summary • Electronic Commerce Tools • – Electronic Data Interchange (EDI) • – XML • – Teleconferencing • – Integrated Systems • Business Considerations • – Supply Chain Issues • – The Business Case • – Project Management • – Legal and Security Issues

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