Ect 481 Session 1

Lecturer: Ellis E. Confer E-mail: econfer@cs.depaul.edu Office Hours: Monday 4:00 – 5:30 pm Internet Supply Chain Management – ECT 481 Spring 2006

Session Number: 1 Session Date: March 27, 2006 Session Objectives: Introductions & Administrative Items Course Overview Initial Course Topics Assignments Session Topics: Introduction to Supply Chain Management & B2B Systems Course Administration & Overview Historical Perspective on Internet & Ecommerce Evolution B2B Ecommerce Overview Supply Chain Management Overview

ECT 481 Course Objectives To examine the links between business strategy, information system technology architecture, and technical platform implementation as it relates to Supply Chain Management and Business-to-Business E-Commerce.

Course Description ECT 481 - Internet Supply Chain Management This course examines e-business strategies, architectures, technologies, approaches, and infrastructure requirements in the context of supply chain management (SCM). The focus is on the design, development, and implementation of e-business systems that facilitate the collaboration of an enterprise with its buyers and suppliers. Topics include SCM, global logistics management, messaging-based collaboration framework, extensible markup language (XML), extensible style sheet language (XSL), document type definition (DTD), and web services. This course also examines the integration of e-business systems and back-end systems such as enterprise resource planning (ERP) systems, virtual private networks (VPN), and internet security. Students will implement a collaborative extranet system component in team projects. Prerequisite: ECT 425. Programming knowledge of or experience with ASP, ASP.NET, Java, Visual Basic, or VB Script will be helpful and is highly recommended.

Prerequisites & Text and Supplementary Reading Materials Prerequisites: ECT425, Technical Fundamentals of Distributed Information Systems, is a required prerequisite. Programming knowledge of or experience with ASP, ASP.NET, Java, Visual Basic, or VB Script will be helpful and is highly recommended. 1. Building B2B Applications with XML by Michael Fitzgerald published by John Wiley & Sons, Inc., Wiley Computer Publishing 2001, ISBN: 0-471-40401-2. 2. Introduction to Supply Chain Management, by Robert B. Handfield and Ernest L. Nichols, Jr., Prentice Hall, 1999, ISBN: 0-13-621616-1 3. Other books will be referred to and handouts and web-links will be given as appropriate.

Grading Procedure The student’s final grade will be based on a weighted average of the exam score, the project report & deliverables, project presentation, and class participation. Weights are as follows: Weight HW Assignments 20% Project 35% Midterm Exam 20% Final Exam 20% Class Participation 5% Grades will be determined as follows: 77% - 79% B-; 70% - 76% C; 67% - 69% C-; 60% - 66% D; 0% - 60% F 92% - 100% A; 90% - 91% A-; 87% - 89% B+; 80% - 86% B;

Procedures and policies: 1. No makeup exams will be given. 2. Homework assignments must be turned in on time.* Late homework assignments will not be accepted. * Turning in a hard copy version of an assignment is the most reliable way to ensure that assignments are received on time. When transmitting a soft copy of an assignment via email, make sure to give yourself adequate time for the mail to be delivered by no later than the day when the assignment is due. Email delivery problems do occur, please ask for a receipt of delivery.

ECT 481 Tentative Schedule of Discussions Session 1 Course Administration & Overview  Supply Chain Management Overview  B2B Ecommerce Overview  Business Trends: Opportunities & Challenges Session 2 Supply-Chain Management & ERP  Supply Chain & Value Chain Considerations (continued)  Enterprise Requirements Planning  Technical and Process Architectural Considerations Session 3 B2B Systems Architecture & Key Technology  Architectural Considerations (continued)  Design & Development Processes  Key Technology  XML  Middleware  VPNs

ECT 481 Tentative Schedule of Discussions (continued) Session 4 ** 1 st Homework Assignment Due ** XML  XML as a Content Development Tool & Internet-based EDI  Syntax & Document Structure Session 5 ******** MIDTERM EXAM ********* XML (continued) ******** Project Abstracts Due ******* Session 6 XML (continued) Web Services Session 7 Web Services (continued)

ECT 481 Tentative Schedule of Discussions (continued) Session 8 Middleware Security Considerations Future Trends: Emerging Techniques and Technology - Independent Supply Networks - Collaborative Planning and Forecasting - Collaborative Transportation Planning - Impact of Radio Frequency Identification Devices (RFID) - Impact of Wireless Cellular Technology Session 9 ******** FINAL EXAM ********* Session 10 No class Session 11 ******** Project Presentations *******

Logistics Class time – Monday evenings from 5:45 pm to 9:00 pm. Class location – Downtown Campus, Room (TBD) Rest periods (two options to choose from) Option 1: One thirty (30) minute break @ 7:30 pm Option 2: Two fifteen (15) minute breaks @ 7:15 pm & 8:30 pm Office hours - Monday, 4:00 pm – 5:30 pm in room TBD Email address: econfer@cti.depaul.edu

Instructor background – Who Am I? Professional experience: 20+ years experience as consultant and entrepreneur Stints with Accenture, IBM, Sybase, Tandem, CNA Financial Presently senior executive with consultancy & software development firms Educational training BSEE from University of Michigan Concentration in digital design and solid state physics MBA from Indiana University Concentration in finance & operations research Leisure interests/hobbies: gardening, music, fine dining, motorcycling, reading (non-fiction)

Introductions Who are you? Please send me an email message with the following. Your name? What is your profession (student or otherwise)? What is your major? Where are you in your graduate/undergraduate program? Why are you taking this course? What do you hope to learn from this course? Rated skill profile (project manager, process analyst, designer, developer, etc.) from 1 (novice) to 5 (expert). Favorite websites (2 or more) and (briefly) reasons why. Anything else you feel is interesting and appropriate.

Objectives Discussion Baseline Evolutionary Perspectives & Industry Comparisons Brief History of Ecommerce & B2B Systems The BIG Picture: B2B Market Perspective Discussion Agenda E-commerce & B2B Marketplaces: Origins and Evolution

There is no new thing under the sun Ecclesiastes, Chapter 1, Verse 9 He who forgets the past is condemned to repeat it. Jorge Santayana E-commerce & B2B Marketplaces: Origins and Evolution Evolutionary Perspectives & Industry Comparisons But first…..Let’s put everything into perspective.

"Let us not forget that the value of this great system does not lie primarily in its extent or even in its efficiency. Its worth depends on the use that is made of it.……. For the first time in human history we have available to us the ability to communicate simultaneously with millions of our fellowmen, to furnish entertainment, instruction, widening vision of national problems and national events . An obligation rests on us to see that it is devoted to real service and to develop the material that is transmitted into that which is really worthwhile." Who said this? Bill Gates? Newt Gingrich? Al Gore? Alvin Toffler? An Interesting Quote

Perspective on the Internet, Ecommerce and Earlier Technology Innovations Internet is a change agent in global commerce. There have been comparable periods of industrial change. Internet and Ecommerce evolution & expansion is similar when compared and contrasted with: railroad, telegraph, telephone, and radio . In all cases, early pioneers (practitioners, inventors, etc.) knew they were on to something.

E-commerce & B2B Marketplaces: Origins and Evolution Parallels between the evolution of telegraph, radio, and the Internet. Each transmits intangible items (i.e., information). Each shortened the time to transfer info. Their utility (i.e., their ability to deliver products & services) is dependent on the efficacy and efficiency of their underlying network. All had initial usability, training, & infrastructure problems. All have or are experiencing the S-curve in lifecycle product development.

Discussion Objectives Establish a discussion context regarding Ecommerce & B2B marketplaces. Discuss historical and market perspective for the evolution of Ecommerce & B2B marketplaces. E-commerce & B2B Marketplaces: Origins and Evolution

Mission Critical (Important) Terminology : E-Commerce Business-to-Consumer (B2C) Business-to-Business (B2B) Supply Chain Management Business Process Re-engineering (BPR) Electronic Data Interchange (EDI) Intranet Extranet Security Firewall Virtual Private Network

Discussion Baseline: Terminology Defined Electronic Commerce or E-commerce - the conduct of a financial transaction by electronic means; more recently, the purchase of goods and services over the Internet’s World Wide Web. Includes the following types: Business-to-Business or B2B E-commerce - inter-organizational E-commerce Business-to-Consumer or B2C E-commerce - electronic commercial interaction between the enterprise and the end consumer . Business-to-Employee or B2E E-commerce - intra-organizational E-commerce. E-commerce & B2B Marketplaces: Origins and Evolution

Distinguishing B2B & B2C B2B E-commerce is the exchange of products, services, or information between businesses rather than between businesses and consumers. e-Business. Suppliers and ‘Big C’s’ - transactions between businesses. Focus on transaction efficiency. B2C E-commerce the retailing of goods and services directly to end consumers via the Internet. Suppliers & ‘little C’s – transactions between goods and service providers and end consumers. Dis-intermediation. (theoretically) lowers inventory and distributions costs.

Electronic Data Interchange (EDI) defined: EDI – Inter-company, computer-to-computer communication of data which permits the receiver to perform the function of a standard business transaction and is in a predefined standard format. Enabled ‘Old-school’ B2B E-commerce. It still works. Enables electronic intra-company exchange of purchase orders and other transaction documents. EDI based on standards-based protocols.

Distinguishing Intranet & Extranet Intranet defined An intranet is a corporate LAN or WAN that functions with Internet technologies behind the company’s firewall. Extranet defined An extranet is a network that links the intranets of business partners using a virtually private network on the Internet. Designing extranets is difficult. Complexities of security, performance, management and policy. Extranet and B2B are not synonymous . Extranets can apply to B2C as well.

Supply Chain Context of E-commerce Product design Product development Vendor capacity Quality Sample management New product introduction Invoice processing Payment RFI/RFP Catalog development Vendor certification Item management Product availability Production planning Technical specifications Second- and third-tier suppliers Order management Product tracking Capacity management consolidation Replenishment Reverse logistics Product Development Management E-Procurement Software Supply Chain Management Goods-in scheduling New product introduction Planning for seasons and events Allocation Category Management B-to-B B-to-C Product Development Supplier Management Transport Warehouse and Inventory Management Category Management Store Management Customer Relationship Management E-commerce & B2B Marketplaces: Origins and Evolution Supply Chain - all organizations and processes related to products and services sourced by buying organizations, typically from raw materials through consumption .

Brief History of E-commerce and B2B marketplaces. E-commerce and B2B are not new concepts. Current systems emanated more directly from Electronic Data Interchange (EDI). EDI provides for the exchange transaction information over proprietary Value-Added Networks (VAN’s). EDI participants realized benefits such as: reduction in process costs, and enhanced profitability. EDI participants also incurred significant expenditure in EDI deployment costs, VAN charges. EDI limited to a few very large & wealthy organizations. Enter the Internet, B2B Marketplaces & Internet-based EDI! B2B extranet system deployment on the rise. Third-party B2B Market Makers are key movers in evolution of internet-based ‘EDI’. E-commerce & B2B Marketplaces: Origins and Evolution

. How is B2B conducted? B2B commerce can be conducted directly between a buyer and seller or via an online intermediary. The intermediary can be: a person or an organization or an electronic system What are the types of transactions? Spot Buying buying goods and services at market prices often facilitated by a third party exchange Strategic Sourcing long-term contracts that are usually negotiated to get a good cost advantage often this is done by streamlining your supply chain B2B Electronic Commerce Key Characteristics

The key B2B entities include: Selling Company Buying Company Electronic Intermediary Deliverer Network Platform Protocols and communication Back-end information system - including ERP (Enterprise Resource Planning) B2B Electronic Commerce Key Characteristics

What is the essential information processed in B2B Ecommerce? (i.e., what should you to expect to be sent back and forth between the buyer, seller and the intermediary) product details customer profile supplier conditions product process - capacities transportation, times, costs What are the primary B2B business models? Company Centric Models which would include Supplier Oriented Marketplace Buyer Oriented Marketplace Intermediary Oriented Marketplace (the Market Makers ) Many-to-many Marketplaces also known as Trading Communities Trading Exchanges or Exchanges B2B Electronic Commerce Key Characteristics

B2B Business Cycle: Primary B2B Business Processes & Key Applications B2B Business Processes Information Transfer Data Sharing Ordering Payment Customer Support & Service Key Applications Distribution Control Inventory Management Supplier Relationships Payment Management Channel Management

The BIG Picture: B2B Current Market Perspective B2B E-commerce participants include: Existing prominent, well-established firms that sell directly to business customers. Emerging Market Makers – a new breed of intermediaries Market Makers further segmented as: Vertical hubs – industry-specific focus. Functional hubs – business process focus. Catalog models – demand/supply aggregation. Auction & exchange models – engaging in matching buyers & sellers. Barter models – reciprocal value exchange. E-commerce & B2B Marketplaces: Origins and Evolution

B2B Supplier Marketplace Model Characteristics Supplier offers an e-store to promote sales. Customers are both consumers and business buyers. Popular type of initial e-marketplace. Auctions are becoming popular; used to clear surplus inventories. ordered information.

B2B Buyer Marketplace Model Characteristics Buying company opens a bidding site to enhance its purchasing procedure. Model is unique to B2B; not found in B2C. Online bidding can reduce the purchasing cost and cycle time.

B2B Intermediary-oriented Marketplace Model Characteristics This is the Market Maker segment Consists of 3 rd party player that opens an intermediary e-store for buyers and sellers. E-store may also be used for consumers and individual business buyers. Auction and bidding market making sites are gaining in popularity. Example might include an assembly company acting as an intermediary between allied customers and suppliers.

Emergence of online exchanges - three forces shaping the B2B marketplace Industry-Centric Exchanges Aerospace (Boeing) Automotive (GM/Ford) Agricultural (Cargill) Chemical (DuPont) Foods (GMA) Retailing (Wal-Mart) Utilities Ariba Commerce One Oracle SAP I2 Manugistics EAI Software Manufacturers Market Makers Vertical Foodbuy.com First Index (custom manufactured parts) Horizontal Commerce One Market Site Ariba Network Technology Providers and “Engines” 0 500 1000 1500 8000 1999 2002 2003 2004 2005 B2B Market Opportunity: $4.5 - 8 trillion by 2004 IDC & Gartner 2002 B2C (Business to Consumer) B2B (Business to Business) E-commerce & B2B Marketplaces: Origins and Evolution

Ariba was First B2B Firm to Profitability! Wall Street Journal Friday, January 12, 2001

E-commerce & B2B Marketplaces: Origins and Evolution So what should we expect? Currently experiencing re-vitalization (post recession). E-commerce has become mainstream and internalized by “old economy” firms. B2B uptake will continue with improved economy, probably tied to supply chain management improvements. A number of small technological, micro-improvements will impact the E- commerce and the internet over the short-term. “ Last-mile” infrastructure improvements (ubiquitous broadband) has had significant impact on level of internet usage. Security will continue to be of paramount concern and will garner significant expenditure. An outstanding area of entrepreneurial opportunity.

B2B Critical Success Factors Plenty of buyers and sellers – you need both to make a market. Liquidity – value of a market make r is a multiple of the value of the transactions flowing through it; market makers (MM’s) must be focused on generating industry-leading liquidity. Fragmentation – MM’s add most value in highly fragmented markets. Inefficiency – MM’s must add value to both sides of the trade. Management with domain expertise – senior-level industry relationships and creditability facilitate industry ‘buy-in’. Early mover advantage – Ebay only had a year head start in the C2C auctions business, but that was enough. Partnerships for distribution and logistics – UPS doesn’t transport lumber, resin, or HCL acid. Neutrality – few business opt to do business with their competitors or with subsidiaries of competitors; do not sacrifice liquidity to gain neutrality. Public currency – with a billion dollar market cap, if you don’t yet have a real business, then go and buy one; in the end, real value/dollars count.

Key Technology Key Ecommerce technology architecture components include the following: web browsers application servers secure file transfer servers customer account management systems remote administration tools directory servers authentication systems commerce systems distributed computing infrastructures and databases messaging systems & middleware firewalls and proxies security scanners

Remaining Mission Critical Terms Business Process Re-engineering (BPR) - fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical performance measures such as cost, quality, service, speed. Security – the combination of technology and policies designed to protect sensitive business information and to prevent fraud. Firewall – a security screen placed between an organization’s internal network and the external Internet. Virtual Private Network – a wide-area network (WAN) created to link a company with external users (including mobile users, field representatives, or strategic allies).

Evolving B2B Trends: XML XML (Extensible Markup Language) enables sharing of interactive documents across the Internet. offers format for representing data, a schema for describing data, and means for extending HTML. Key to transition from traditional EDI to Internet-based EDI. Processes most affected have been order fulfillment, production, logistics, and inventory. Electronics industry has taken the lead in XML use in the supply chain. Toshiba, Solectron, Intel, Ingram Micro , American Express, Federal Express, and Cisco are key practitioners.

Supply Chain Considerations What is the ‘Supply Chain’? All organizations and processes related to products and services sourced by Buying Organizations, typically from raw materials through consumption. What is ‘Supply Chain Management’? Supply Chain Management (SCM) is the management of all activities along the supply chain; from suppliers to internal logistics within a company and to distribution to customers. Contrasted with the Value Chain Value chain is a series of activities a company performs to achieve its goal by adding additional values as each activity proceeds to the next one. The value chain looks at every step in the supply chain management process - from source materials to delivery of the final product to the customer. The objective of the value chain is maximum value (to the customer) at the least possible cost (to the business). The supply chain focuses on getting source materials into manufacturing operation smoothly and economically.

Product design Product development Vendor capacity Quality Sample management New product introduction Invoice processing Payment RFI/RFP Catalog development Vendor certification Item management Product availability Production planning Technical specifications Second- and third-tier suppliers Order management Product tracking Capacity management consolidation Replenishment Reverse logistics Product Development Management E-Procurement Software Supply Chain Management Goods-in scheduling New product introduction Planning for seasons and events Allocation Category Management B-to-B B-to-C Product Development Supplier Management Transport Warehouse and Inventory Management Category Management Store Management Customer Relationship Management Supply Chain Considerations

Key Components of SCM Courtesy of Network Computing magazine December 8, 2005

SCM Objectives Optimize the sharing of information across organizational boundaries Focus on value of time, efficiency. Attempt to gain time-based competitive advantage. Potential linkage to greater customer satisfaction, increased sales, enhanced product quality, and profitability.

Supply Chain Performance Metrics Products & services offered Sales Market share Cost Quality Delivery Cycle times Assets utilized Responsiveness Customer service

New Imperatives of Supply Chain Management Build flexibility. Plan and measure accurately. Develop logistically separate operations where appropriate. Get lean by emphasizing simplicity and speed. Optimize timely information transfer. Mass-customize, treat customers unequally; segment and stratify. Operate globally. Practice virtuality and collaborative management. Exploit electronic commerce. Leverage people, Operationalize new product introductions and phaseouts.

Supply Chain Example – Apparel Industry Customer Retailer Apparel Manufacturer Textile Producer Yarn Maker Information Product

Supply Chain Example – Health Care Products Customers Hospitals/Drug Stores Distributors End Product Manufacturer Raw Material Supplier Information Product

SCM Success Factor: Effective and Timely Information Management Successful SCM often times tied to coherent information technology strategy and appropriate architecture. information systems that diffuse organizational boundaries. Supply chain links suppliers, distributors, buyers, assemblers, etc. as virtual organization Embraces concept of the Inter-organizational Information Systems (IOIS) Systems that cross organizational boundaries. Requires technology that enables electronic link between organizations. Automates manual and paper-bound work. Earliest forms of these systems were time-sharing services, online databases, EFT, EDI.

Technology-based Applications for SCM Internet-based Ecommerce EDI Intranet/Extranet Traditional EDI Bar Coding and Scanning Data Warehouse Decision Support Systems

Next Session Highlights: Review of Supply Chain Concepts Reading Assignment covering first 3 sessions: Introduction to Supply Chain Management; Handfield & Nichols; Chapters 1 – 5; Building B2B Applications with XML; Fitzgerald; Chapters 1

Ect 481 Session 1

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