Managing e-Business & High Technology (7) l Last week – Supply Chain Management » Chaffey Chapter 5 » Introduction to flows from initial supplier to finished product l This Week – Purchasing and inbound logistics » The rôle of Procurement » e-Procurement » Assignment workshop – some specific guidance l References » Chaffey, D (2007) e-Business & e-Commerce Chapter 7 » Benyon-Davies, P (2004) e-Business Chapter 22 BS 3912 Week 7 1
The Lost Week l We’ll almost certainly lose Week 8 (29 April) » In which case, there’s only one more session before Assignment 1 deadline l I can reorganize course to cover materials in weeks 9 -12 » There’s some blue-sky stuff I could omit without great loss l . . . or fit in an extra session » Possible dates for me are: – Tues 26, Wed 27, Thurs 28 April – Mon 1, Tues 2, Wed 3 May BUT: past experience suggests attendance might be poor » I need your commitment to come on a day we agree l Which way should we go? REORGANIZE COURSE BS 3912 Week 7 2
What is Procurement? l l Everything needed to acquire inputs for our business Includes » Things that go into our products (components) » MRO goods (Maintenance, Repairs & Operation of processes) – without them we can’t carry on producing » Everything else we consume: stationery, copiers, parking barriers… l Consists of » Searching for sources of these inputs » “Purchasing” – doing a deal to buy the goods » Inbound logistics – potentially involving warehousing and everything we do until the goods are actually used BS 3912 Week 7 3
Goals of Procurement l Get inputs: » » » l At the right price Delivered at the right time To the right quality In the right quantity From the right source (what is “right” in this context? ) It isn’t sufficient just to get them to Goods Inwards – process must also include » Timely delivery to point of use (often a weak point) » Protection of goods in storage and en route BS 3912 Week 7 4
Why so Expensive? l Procurement is typically very costly » Chaffey p. 313 quotes £ 80 average per order p. 314 Case Study shows reduction from £ 60 to £ 10 » Local govt experience of £ 45 per order » Borrowing a disc from the BBC library costs more than buying one in a shop! » Procurement costs can exceed value added l Processes are needed to » Prevent unauthorized expenditure and corruption (“here’s a brown envelope to buy xxx from me”) » Get the best deal from suppliers » Control quality – if department X has problems with a product, you don’t want department Y ordering in ignorance » Ensure we pay for goods supplied and only those BS 3912 Week 7 5
Costs – Avoidable or Inherent? l Someone has to search for suitable supply » Simple if it’s a commodity (or if it’s unique) » Can be very complex if we’re having it built specially and have to negotiate with suppliers l l l Authorized order must be routed to supplier Supplier ships goods and sends invoice Goods arrive and must be » Checked against order » Routed to user l l Invoice paid, provided goods have been checked in Paperwork typically adds cost and delay – often exceeds cost of goods – let’s see how much we can avoid BS 3912 Week 7 6
Key procurement activities in organization BS 3912 Week 7 Chaffey (2007) fig 7. 1 7
from Chaffey BS 3912 Week 7 8
E-mail notification of requisition approval BS 3912 Week 7 Chaffey (2007) fig 7. 4 9
What is “ordering online”? l If you already have a supplier/purchaser relationship » Orders can be pretty informal (e. g. e-mail), or » Use web-based form-filling, still by humans » Invoices can follow by conventional routes l Relationship can be automated » Purchaser’s system orders from suppliers’ systems » Requires secure systems to ensure transactions cannot be repudiated and that supplier will be paid l Or we can build relationships on the fly » Using B 2 B exchanges » Or, given standards, we can shop around directly BS 3912 Week 7 10
How Online Ordering Develops c. f. figure from previous weeks from Chaffey (2002) BS 3912 Week 7 11
Goals of e-Procurement l Reduce delays » Minimize time from perceiving need to obtaining supply l Cut Costs » Procurement costs exceeded value added for Consumer and Automotive industries in 1997 (Chaffey 2002 p. 264) » Ford employed 500 in Accounts Payable in 1993 – most of their work can be integrated into e-procurement » Minimize effort involved by user of supplies l Goal is to minimize total cost of procurement » Usually by cutting cost of each requisition, by speeding process of turning request into order » BUT: don’t forget that easier processing may split orders over more requisitions » Cambridge consultants cut costs from £ 90 to £ 10 for 1300 BS 3912 Week 7 12
e-Procurement Savings PAPER PROCESS l Search for product 1 hr l Complete requisition 10 m l Send requisition 24 hr l Receive requisition 12 hr l Authorize & Complete 24 hr l Send order 24 hr l Delivery from Supplier 24 hr l Receive Goods 24 hr l Check Goods 24 hr l Authorize payment 10 m TOTAL 6 days 80 mins (Benyon-Davies, p. 364) BS 3912 Week 7 E-PROCUREMENT l Search for product online 20 m l Authorize & Complete Order (what about queuing? ) 10 m l Delivery from Supplier 24 hr l Receive & Check Goods 10 m l Issue payment 10 m TOTAL 1 day 50 mins l Of course you still have to worry about: » Internal delivery » Getting quotations for complex requirements » Negotiating deals 13
Nature of Savings IMPROVED EFFICIENCY IMPROVED EFFICACY l Time savings shown on l Flexibility previous slide » May simplify changing suppliers » New supplier accessible to all l Reduced error rates l Greater control l Staff savings » Limits misjudged purchasing l Lower knock-on costs such » Avoids proliferation of standards as holding inventory (“JIT”) l Direct delivery to user when l Better quality – Purchasers can focus on monitoring quality and quantities merit service from suppliers l Electronic tendering l More effective negotiation – l Resource savings e. g. paper buyers have better information on purchases to strengthen their hand BS 3912 Week 7 14
Risks l Savings may be at expense of jobs in Purchasing » Can you redeploy the people? » Are you correctly costing the work that’s been devolved? l l l Need to avoid risk of “maverick purchasing” by those newly empowered – requires careful monitoring Moves against maverick purchasing can make it hard to innovate – “sorry, our preferred supplier doesn’t do that” Good general source of information at http: //logistics. about. com/od/ BS 3912 Week 7 15
e-Procurement alternatives l Catalogue-based suppliers » Easy to search and order » Supplier maintains data » But must use different interface for each supplier l Buy-side integrated solutions » Single interface for end-user » Good control by Purchasing » But Purchasing must maintain the data l Marketplace » Single interface for end-user » Wide choice of suppliers » But systems must include interface to marketplace BS 3912 Week 7 from Chaffey 16
Technologies for e-Procurement l l l E-mail – minimal change to processes; cuts transfer time Workflow systems – ensures fast following of processes for authorization and ordering Electronic document transfer – valuable for » Transfer of orders EDI & XML standards allow automation » Exchange of specifications and tendering information l l Integrated back-end systems – coordinate with other parts of the business, often through ERP systems Electronic payment systems – such as BACS Extranets – technology to secure the flows above Electronic marketplaces – effectively outsourcing some of the supplier-selection aspects of Purchasing BS 3912 Week 7 17
Integrating e-procurement and catalogue BS 3912 Week 7 Chaffey (2007) fig 7. 7 18
Assignment Workshop Your Business Case! Week 7 BS 3912 Week 7 19
Assignment Brief ( Part 1: by 9 May) l An Initial Business Proposal (~2000 words) for a Suitable Innovation such as: » A new e. Business, or » Introduction of a High Technology Product or technique, or an e. Business Process, into to an existing business, or » A new way to market, sell or manufacture a current product or range BS 3912 Week 7 20
Assignment – Goals of Part 1 1. Explain your idea clearly and precisely 2. Analyse the » Business Opportunity » Risks » Capital Requirements (to nearest £ 3 k) Note: Quality of actual business idea is of Priority is secondary importance » Your ability to analyse & make Your Business Case – Have you analysed the key costs and benefits? – Does your business case say how much capital you want, what it is needed for, and how you’ll control spending it? – Do you understand the potential market implications? – How well have you analysed income and expenditure? BS 3912 Week 7 21
Potential Approach Purpose is to get decision-maker to invest l What is proposed – describe what you plan to change » Should make clear what kind of innovation you propose l Analysis of Opportunity » What is the environment? How will you exploit it? » Market evaluation (some but not too much Porter) » SWOT analysis only if appropriate l l Revenue estimates Cost estimates: » Capital requirement, including working capital » Running costs (including servicing capital) » Risk evaluation l Conclusions and Recommendations BS 3912 Week 7 22
Executive Summary l Must be at the front » Can’t rely on executive reading more than one page » Your goal is to get executive to pass it on as a recommended proposal » Same applies to request for bank or VC investment » Detailed analysis will be coloured by executive’s views l But you can’t write it yet! » Be thankful for word-processing » Write it after your conclusions, then insert it up front BS 3912 Week 7 23
What is proposed l Classify your proposal a) Start up e-business company b) Introduction of high-technology product c) Introduction of e-business or high-technology activities to an existing company l Describe what you plan to do » Brief description of product or service or process l Summarize expected benefits » New markets, increased revenues, reduced costs, improved service BS 3912 Week 7 24
Analysis of Opportunity l Environment » » l Describe current expectations and players in your field Are there areas that haven’t already been addressed? Review any relevant successes and failures Summarize the opportunity Market evaluation » Estimate market for new product or service, or » Forecast impact of new channel or lower price-point l Show you will exploit the identified opportunity » Possibly with SWOT analysis » Your strengths will help you run with the proposal, or the proposal will counter weaknesses and threats BS 3912 Week 7 25
Revenue estimates l How much do you expect to make from the proposal? » » l l New business Improved sales through new channels Increased market share through lower price Better margins through lower costs Involves comparing Business as Usual (Ba. U) with what you expect to happen if you go ahead Only INCREASES in earnings can cover extra costs » All the old earnings are spoken for already (interest, dividends…) though they can establish your viability l May need spreadsheet showing assumptions: » Overheads, costs, capital for Ba. U and doing proposal » Expected revenues for Ba. U and doing proposal BS 3912 Week 7 26
Cost estimates l Capital requirement » Direct investment in new plant and equipment » Up-front costs such as programming, marketing » Working capital to cover lag between output and payment l Running costs (including servicing capital) » Additional staff and labour costs » Cost of other inputs » Interest, repayment and depreciation of capital l Risk evaluation » What could go wrong? » Estimate revenues and costs in event of contingency » Is the proposal still valid if this should happen? BS 3912 Week 7 27
Business Case Analysis l Produce a cash-flow projection for two or three years » Identify sources of funding » Use most likely estimates of income and expenditure » Show break-even points in terms of – Recovering extra expenses (remember that some of your up-front costs can’t be treated as capital) – Repaying capital as well (Excel PMT function is useful) » Some points to remember – Long-life assets don’t need to be paid off in the period provided their residual value isn’t lower than book value – Ba. U revenue should be subtracted from expected revenue l A graph of cumulative cash-flow is useful BS 3912 Week 7 28
Conclusions and Recommendations l Summary of proposal » What you want to do » What you’ve considered in evaluating it l … and how it’s improving revenue » Cash-flow information » Statement of break-even and additional profit estimates l What you want the company or investor to agree to The next stage if given the go-ahead l Now you can write the Executive Summary l BS 3912 Week 7 29
Executive Summary Mainly taken from the Business-case and Conclusions l Summary of proposal – What you want to do l What you need from the investor to be able to do it » Money and other resources l Expected improvement in revenue » When it will pay for itself (revenue/expense break even) » Cash-flow graph » Extra profit in period studied l l Risk analysis summary – just enough to demonstrate you’ve thought about SWOT and contingencies Next stage if company or investor agrees » Gives confidence that progress is measurable BS 3912 Week 7 30
Possible Title Page Initial Business Proposal for the Manufacture of IT Widgets Mary Jo Bloggs May 2011 BS 3912 Week 7 31
Content Guidelines * l l Executive Summary – write it last, position it first Introduction to the idea Description of what/how it will improve the business Findings, possibly including: » Environmental Audit » Porter’s Five Forces (perhaps) » SWOT Analysis l l Analysis of the Business Case Conclusions & Capital Requirements Recommendations Bibliography (usually vital) and appendices (optional) * Health Warning: this is a guideline only; not a directive! BS 3912 Week 7 32
National Student Survey Now would be a good time to fill it in If you haven’t done so already Last chance BS 3912 Week 7 33
Скачать презентацию Managing e-Business High Technology 7 l Last
14f50163647fc6e51036e2518a548421.ppt