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Chapter 3: Inter-organizational applications of EC
IT357 Electronic Commerce
9 June 2008 IT 357 - Chapter 3 2
Inter-organizational applications of EC
1. Inter organizational applications of EC
2. Business to Consumer EC
9 June 2008 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)
9 June 2008 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.
9 June 2008 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.
9 June 2008 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.
9 June 2008 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.
9 June 2008 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.
9 June 2008 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
9 June 2008 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)
9 June 2008 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.
9 June 2008 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.
9 June 2008 IT 357 - Chapter 3 13
Home Shopping: Virtual Malls
• One of the most popular and widely used EC application.
• A substantial revenue generating opportunity.
9 June 2008 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
9 June 2008 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.