Chapter 3 Inter-organizational applications of EC IT 357

Chapter 3: Inter-organizational applications of EC IT 357 Electronic Commerce 1

Inter-organizational applications of EC 1. Inter organizational applications of EC 2. Business to Consumer EC 9 June 2008 IT 357 - Chapter 3 2

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 3

Inter-organizational Applications of EDI Financial 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 4

Inter-organizational Applications of EDI Manufacturing 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 5

Cont’d: Inter-organizational Applications of EDI Manufacturing 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 6

Cont’d: Inter-organizational Applications of EDI Manufacturing 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 7

Cont’d: Inter-organizational Applications of EDI Manufacturing 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 8

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. • B 2 C EC – Categories – – 9 June 2008 Entertainment Financial services Essential services Education and Training IT 357 - Chapter 3 9

Cont’d: Business to consumer EC • B 2 C: 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. • B 2 C: Home Banking – EC technologies facilitate Home/PC/Internet banking and Investment banking (e. g. - on line trading) 9 June 2008 IT 357 - Chapter 3 10

Cont’d: Business to consumer EC • B 2 C: 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 11

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 12

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 13

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 14

B 2 C 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. 9 June 2008 IT 357 - Chapter 3 15