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Seizing the Value of eMarkets Eric van Heck Bled 2003, Business Panel June 10, 2003 e.heck@fbk.eur.nl. Topics. Using B2B Markets in the Supply Chain Potentials of reverse auctions for sellers, auctioneer, buyers Using Markets Creatively Potentials of multidimensional reverse auctions

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  1. Seizing the Value of eMarketsEric van HeckBled 2003, Business Panel June 10, 2003e.heck@fbk.eur.nl

  2. Topics • Using B2B Markets in the Supply Chain • Potentials of reverse auctions for sellers, auctioneer, buyers • Using Markets Creatively • Potentials of multidimensional reverse auctions • Making Markets Work • A Framework for Action

  3. Using B2B Markets in the Supply Chain • How can companies use auctions and B2B markets to realize value in the supply chain?

  4. Auction evaluation • For the Host/Buyer • Operational: price savings, time savings • Tactical: risk management tool importance of exact specifications • Strategic: incentives for collaboration like joint process improvements

  5. Auction evaluation • For the Bidder/Seller • Operational: selling, time savings • Tactical: level playing field benchmarking tool • Strategic: business reorientation

  6. Auction evaluation • For the Intermediary/Auctioneer • Operational: host satisfaction bidder satisfaction • Tactical: number of sellers/buyers/auctions lowering transition risks • Strategic: long term revenue generation new sources of value creation

  7. Using Markets Creatively • How to avoid the fact that sellers will get frustrated by ‘price-only’ auctions? • How to negotiate about the value-added dimensions of products and services in reverse auctions?

  8. This is off course what makes sellers uncomfortable

  9. Using Markets Creatively • Example: Market Maker NegoMetrix – www.negometrix.com – in the Netherlands • Meticulously determine and quantify ALL non-price decision factors BEFORE the auction. • An intelligent internet-based multi-attribute decision support software analyses the competing offers. • Each tender procedure must outline exact and discriminative decision factors that must be weighted / prioritized. • Competitive offers are evaluated within this decision model.

  10. 77 (!) criteria in 10 dimensions

  11. Key for sellers and buyers • Combine the speed, transparency, and accuracy -introduced by means of internet auctions - with negotiations about the non-price dimensions of products or services. • Suppliers prefer a ‘fair’ auction; fairness in preparation, fairness in bidding, and fairness in evaluating the winner - the winning rules during the auction are the winning rules after the auction.

  12. Making Markets Work • How can managers systematically identify compelling opportunities for value creation? • How can they find winning strategies that drive to critical mass quickly and reduce transition risks? • We suggest the process/stakeholder benefit framework that managers can use to systematically evaluate market-making initiatives.

  13. A Framework for Action Processes Buyers Market Maker Sellers • Search • Pricing • Logistics • Payment & Settlement • Authentication • Product representation • Regulation • Risk management • Influence • Dispute resolution • Communications & Computing Net Benefits Positive or Positive or Positive or Negative ? Negative ? Negative ?

  14. For each process, conduct the five step analysis • Map the current structure of market processes • Identify how new technologies may be used to reengineer major market processes • Consider how required process changes will affect each stakeholder • Develop strategies for attracting important stakeholders • Develop an action plan for introducing new trading processes

  15. The Ultimate Market “One that captures the feel and trust of a physical community, but leverages the power and efficiency of new technologies for the benefit of sellers and buyers”

  16. More info: www.makingmarkets.org

  17. And more info: Otto Koppius, Information Architecture and Electronic Market Performance, PhD thesis, ERIM nr.13, May 2002. (www.erim.eur.nl) Best PhD Dissertation of 2002 at ICIS 2002 Barcelona

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