Chapter 3: Inter-organizational applications of EC

1. Chapter 3:Inter-organizational applications of EC IT357 Electronic Commerce

2. Inter-organizational applications of EC • Inter organizational applications of EC • Business to Consumer EC IT 357 - Chapter 3

3. Introduction • Most of the inter organizational applications are based on Electronic Data Interchange (EDI). • EDI • The interprocess communication of business information... • ... pertinent for business transactions between computer systems ... • ...of companies, government organizations, small businesses and banks. • Financial Applications • Comprises of electronic transmission of payments and remittance information between a payer, payee and their respective banks. • Traditionally done by EFT or Automated Clearing House transfers (ACH) IT 357 - Chapter 3

4. Inter-organizational Applications of EDIFinancial Applications:EDI Vs. ACH Vs. EFT • EFT - credit transfers between banks where funds flow directly from the payer’s bank to the payee’s. • ACH - processes high volume small payments • EDI - Involves more than transfer of funds. • EFT- Instantaneous payments • ACH -Settlement in 1-2 business days • EDI - Instantaneous with buffering facilities. IT 357 - Chapter 3

5. Inter-organizational Applications of EDIManufacturing and Procurement • Manufacturing - EDI is used to support Just -in- Time delivery (JIT) • Retail - EDI supports Quick Response (QR) • Just - in - Time delivery • A manufacturing philosophy • Based on waste elimination and productivity improvement • No stocking of parts in advance. • Parts are ordered daily based on daily production schedules ….. • …..and delivered just in time for production. IT 357 - Chapter 3

6. Cont’d: Inter-organizational Applications of EDIManufacturing and Procurement: JIT • JIT aims: • Stock only the required inventory - when it is needed • Zero defects • Reduced lead times through: • reduced set up times • queue lengths • lot sizes • Minimize costs • JIT Benefit: Streamlined cash flow • When a company receives an invoice it pays for parts… • …. that are actually in use… • ….in products ready to be sold. IT 357 - Chapter 3

7. Cont’d: Inter-organizational Applications of EDIManufacturing and Procurement: Quick Response • Aims at reducing lead times.. • ...by using event driven EDI… • … to increase service levels and availability of products and services to customers. • Scenario • Inventory falls below the reorder level…. • …..a chain of events is triggered by the QR systems that…. • …..automatically orders from one company’s application directly into another’s. IT 357 - Chapter 3

8. Cont’d: Inter-organizational Applications of EDIManufacturing and Procurement: Quick Response • Benefits • Mutually beneficial relationship between the retailer and the supplier • Benefits for the retailer • Reduced inventory carrying costs • Increased in-stock position • Greater dependability and accuracy from the supplier. • Benefits for the supplier • Commitment from the retailer. • Access to information for better planning of operations. IT 357 - Chapter 3

9. Business to consumer EC • In the experimentation phase • The typical candidates for the mode include easily digitized products and services. • List five products that can be considered the dream products of E- entrepreneurs….. • ...Now list five that can be the worst nightmares. • B2C EC – Categories • Entertainment • Financial services • Essential services • Education and Training IT 357 - Chapter 3

10. Cont’d: Business to consumer EC • B2C: Entertainment • Movies on demand, Video cataloguing, Interactive ads, Multi-user games • The principle is customer control over programming • To give viewers total control over what when and where to watch. • B2C: Home Banking • EC technologies facilitate Home/PC/Internet banking and Investment banking (e.g. - on line trading) IT 357 - Chapter 3

11. Cont’d: Business to consumer EC • B2C: Home Banking • Aiding factors • The concept is valuable to bank customers and banks have realized it. • Increasing computer literacy and PC ownership • Strong marketing and increased customer awareness in the area • Modem installed computers critical mass enables business returns. • High costs of paper checks processing • Increased competition in the banking sector. • The two way communication channels offered by the internet technologies. IT 357 - Chapter 3

12. The three -tier banking services • Basic services • Account statement reporting. • Round the clock banking with ATMs • Funds transfer • Bills payment • Intermediate services • Household budgeting • Updating stock portfolios • Tax return preparation • Advanced services. • Insurance and mutual funds planning • Home financing • Real time execution of forex deals. IT 357 - Chapter 3

13. Home Shopping: Virtual Malls • One of the most popular and widely used EC application. • A substantial revenue generating opportunity. IT 357 - Chapter 3

14. Education and Training • Singapore Management University www.ivlu.com Advertising, Publishing , Travel • www.hotwired.com • www.hbsp.edu • www.travelocity.com IT 357 - Chapter 3

15. B2C sites - What makes them successful? • Critical mass of buyers and sellers. • Opportunity for independent evaluations and customer dialogue and discussion. • Negotiation and bargaining facilities. • Newness of products and services. • Seamless interface with standardization • Resources for disgruntled buyers. IT 357 - Chapter 3