E COMMERCE

ASSESSMENT

Executive Summary:-

Internet has evidently become a vital tool and medium for performing the global business banked on the state of an art technology. Electronic Commerce (E Commerce) is mostly evolved around the two main aspects i.e. Economical and Technological aspects.

In this comprehensive report we will write a proposal for an eCommerce development in Weather Seal Holdings Plc, UK (Weather Seal) - www.weatherseal.co.uk. We will try to explain the key aspects such as:[1]

1. Suitability of Weather Seal to get itself engaged in eCommerce activity within its sector.

2. Research and propose a suitable technological infrastructure for the company's eCommerce website.

3. Critical reflections on the social, legal, privacy and ethical issues at stake.

Introduction of Company in Focus:-

Weather Seal Holdings (Weather Seal) has been the Britain's largest privately owned manufacturer installer of PVC-u replacement windows, doors, rooflines, conservatoires and garage doors. The company was founded in 1968 under the prestigious mono of “The Pride of the Nation”.

Since its foundation, huge commercial and public projects has tested company's technology from time to time and more than a million domestic customers are witness to weather Seal's craftsmanship. The company continues to grow and in a period of 14 years i-e. From 1995 to 2009, Weather Seal has become a £75.0 Million company. The company is now renowned as an award winning service provider to its customers. The product qualities are of highest possible standards and second to none. The head office of the company is located at the heart of the country on the M6 motorway network at Winsford - Cheshire (UK). The company has 21 local branches servicing the UK and 07 Installation Depots all around the country. Weather Seal has got over 1000 trained personnel nationwide and 24 hour customer service response. Local staff includes:

Ø Designers

Ø Surveyors

Ø Fitters

Ø Service and Installation Engineers

Ø Administrators

The company rightly claims that with Weather Seal the customers are dealing with the industry No. 1 as it has achieved every industry standard.[2] After more than 40 years of success in the current business line, among the strong and competitive presence of its competitors like Euro Glazing, Everest Group, Everseal etc, it has become of vital importance that the Weather Seal Holdings (Weather Seal) must transfer from Brick-and-mortar organization to Click-and-mortar organization in terms of eCommerce activities.

The emphasis of the report will be made on enhancement of company's sales and marketing eCommerce activities and this diversification should enable the company to utilize its website as an additional electronic sales and marketing channel for its product line. The eCommerce activities of the company will be based on Business to Consumer (B2C) / E-Tailing activities only as all the said product range are directly sold to the residential customers.

Electronic Commerce (EC):-

Chaffey, D (2006) defines EC as follows:

“All electronically mediated information being exchanged between an organization and its external stakeholders”. [3]

Efraim Turban and David King define EC:

“The process of buying, selling or exchanging products, services, and information via computer networks”.[4]

In the light of above definitions, Electronic-Commerce could be simply defined as:

“The buying and selling of information, products, and services via computer networks and distributed media, usually the World Wide Web”.

Examples for EC could be:

* Buying books online (transactional)

* Selecting a car online (informational)

* Interacting with brand online (relationship building / experiential, e.g. www.tango.com)

* Asking a customer service query, e.g. www.easyjet.com

Categories of Electronic Commerce (EC):- [5]

Before proceeding towards proposing an appropriate EC model for Weather Seal Holdings, we should avail this opportunity to mention the differences between these models in order to establish better understandability. We could distinguish the categories of EC as follows:

* Business to Consumer (B2C) or E-Tailing:

As a major retailer of its product lines, Weather Seal Holdings should follow the EC model. This classification of EC is popular among most of the retailers in UK. In E-Tailing, businesses sell the products and services directly to the relevant consumer range, e.g. Amazon (www.amazon.com), Dell (www.dell.com) etc.

With the passage of time and technological improvements, it has been observed that some traditional businesses have also penetrated the world of virtual market place by establishing their powerful presence through well elaborated and massive websites and virtual storefronts, e.g. Gap, Staples etc. This indicates the signs of healthy competition for Weather Seal Holdings prior to its entry into this category. However, company should be able to utilize this facility as an additional channel for online sales and marketing of its products or services.

* Business to Business (B2B):

B2B involves electronic transactions among and between businesses. Here, business uses the following additional technologies such as:

Ø Internet

Ø Intranets

Ø Extranets

Ø EDI

Ø EFT

One of the major examples could be Auto exchange formed by Ford, Damien Chrysler and General Motors known as covisint (http://www.covisint.com). This model offers services in the areas such as procurement, supply chain management and collaborative product manufacturing and development. It would not be unfair to mention that dependence of all sorts of businesses upon other entities for services, utilities and supplies has also enhanced B2B eCommerce.

* Consumer to Consumer (C2C):

This category involves business transactions among individuals using internet and web technologies. By using C2C, consumers are able to sell products and services directly to other consumers, e.g. Gumtree (www.gumtree.com), UBid (www.ubid.com), EBay (www.ebay.com) etc.

* Consumer to Business (C2B):

C2B e-commerce provides an opportunity to individuals to sell to businesses. This may include a product or service that a consumer is willing to sell. In other scenarios, an individual may seek sellers of a product or service. However, it may be noted that individuals are able to offer certain prices to certain products, e.g. www.priceline.com, www.travlebid.com, www.mobshop.com etc.

Why B2C E-Commerce for Weather Seal Holdings:-

Internet has become revolutionary driving force for individuals and businesses. We take this opportunity to present the latest International and Europe internet statistics in front of Weather Seal in order to encourage the company to utilize this channel for online sales and marketing activities directly benefiting the existing and new customer range.

WORLD INTERNET USAGE AND POPULATION STATISTICS (Till 30/09/2009)

World Regions

Population
( 2009 Est.)

Internet Users
Dec. 31, 2000

Internet Users
Latest Data

Penetration
(% Population)

Growth
2000-2009

Users %
of Table

Africa

991,002,342

4,514,400

67,371,700

6.8 %

1,392.4 %

3.9 %

Asia

3,808,070,503

114,304,000

738,257,230

19.4 %

545.9 %

42.6 %

Europe

803,850,858

105,096,093

418,029,796

52.0 %

297.8 %

24.1 %

Middle East

202,687,005

3,284,800

57,425,046

28.3 %

1,648.2 %

3.3 %

North America

340,831,831

108,096,800

252,908,000

74.2 %

134.0 %

14.6 %

Latin America/Caribbean

586,662,468

18,068,919

179,031,479

30.5 %

890.8 %

10.3 %

Oceania / Australia

34,700,201

7,620,480

20,970,490

60.4 %

175.2 %

1.2 %

WORLD TOTAL

6,767,805,208

360,985,492

1,733,993,741

25.6 %

380.3 %

100.0 %

[8]

world internet users

[9]

world internet penetration

[10]

world internet stats

[11]

Internet Usage in Europe (30/09/2009)
Internet User Statistics & Population for
53 European countries and regions

Internet Usage in Europe

EUROPE

Population
( 2009 Est. )

% Pop.
of World

Internet Users,
Latest Data

Penetration
(% Population)

User Growth
( 2000-2009 )

Users
% Table

Europe

803,850,858

11.9 %

418,029,796

52.0 %

297.8 %

24.1 %

Rest of World

5,963,954,350

88.1 %

1,315,963,945

22.1 %

414.3 %

75.9 %

TOTAL WORLD

6,767,805,208

100.0 %

1,733,993,741

25.6 %

380.3 %

100.0 %

[12]

Europe Internet Penetration

[13]

Europe Top Internet countries

[14]

Europe Internet users

The above mentioned statistics have clearly revealed that users of internet all around the world including UK are increasing year after the year. Hence, it has become a need of time for companies like Weather Seal to offer the relevant product range to the customers by using the channel of e-Commerce through internet. This could provide certain advantages to the company such as: [15]

* To adds an important new distribution channel

* Can become an important technological tool for performing some of the key value chain activities better and for bypassing others

* Internet usage can alter the strength of competitive forces

* Can affects a company's competitiveness vis-à-vis rivals

Benefits of B2C E-Commerce for Company and Customers:-

AMAZON.COM: AN E-BUSINESS:

Amazon.com sells books, music, and other items over the Internet and is one of the pioneers of consumer e-business. Amazon, based in Seattle, started by filling all orders using books purchased from a distributor in response to customer orders. This practice differs from that of a traditional bookstore, which usually purchases directly from pub­lishers and stocks books in anticipation of customer orders. Today. Amazon has six warehouses where it holds inventory. Amazon stocks best-selling books, though it still gets other titles from distributors or publishers. It uses the U.S. Postal Service and other package carriers such as UPS and FedEx to send books to customers.

Amazon has continued to expand the set of products that it sells online. Besides books and music. Amazon has added many product categories such as toys, apparel, electronics, jewellery, and shoes. After several years of losses, Amazon has been prof­itable since 2003.

Several brick-and-mortar players including traditional booksellers such as Borders and Barnes & Noble have also started selling using the Internet channel. Barnes & Noble has set up Barnes & Noole.com as a separate company, whereas Borders uses Amazon to fulfil its online orders after initially trying to operate an online business. In the case of Barnes & Noble, the retail store and the online supply chains share ware­housing and transportation to some extent. This is a departure from the company's original strategy, when Barnes&Noble.com was not visible in any Barnes & Noble bookstore.

(Main Theme fromhttp://www.mmv.vic.gov.au/Assets/262/1/SupplyChainManagement.pdf, Course Work & Sunil Chopra & Peter Meindl, Supply Chain Management Strategy, Planning & Operation - Third Edition)

2. Evaluate 2 supply chain strategies & assess the contribution they make to the achievement of key business objectives.

Reply:

Supply Chain Management Strategies:-

There are number of SCM strategies. However, the main strategies are:

· Lean Strategy

· Agile Strategy

· Integration Strategy

I would like to discuss two supply chain strategies here:

1. Lean Strategy:-

The aim of a lean strategy is to do every operation less of each resource i.e. People, Space, Stock, Equipment, Time & so on. It organizes the efficient flow of materials to eliminate waste, give the shortest lead time, minimum stocks & minimum total cost. For example, Easy Jet competes by cost leadership, offering the cheapest fares.

Features of an enterprise uses lean strategy are:

Value: Designing a product that has value from customer's perspective.

Value Stream: Designing the best process to make the product.

Value Flow: Managing the flow of materials through the supply chain.

Pull: Only making products when there is customer demand.

Aim of Perfection: Looking for continuous improvements to get closer to the aim of perfect operations i.e. by using the techniques such as Total Quality Management, Business Process Re-engineering etc.

Let's take an example of Toyota. During their development work, Toyota identified the following areas of the supply chain where waste is more likely to occur:

* Quality: Too poor to satisfy customers.

* Wrong Production Level: Capacity at surplus levels.

* Poor Process: Time consuming operations.

* Waiting: Lots of work in progress.

* Movement: Slow movement of materials forward.

* Stock: Excess stock holding.

Objectives of Lean Strategy:-

The objectives of lean strategy are:

· Removes operations that add no value.

· Eliminates delays.

· Simplifies movements.

· Reduces complexity.

· Uses sophisticated technology to aid operations.

· Looks for economies of scale (Where to save cost)

· Locates facilities near to customers.

Limitations of Lean Strategy:-

The main limitations of this type of strategy are:

* The warning signals are always blinking for organizations as low costs do not automatically mean lean operations. Lean operations maintain customer service while using lower resources - they don't just minimize costs. For example, a greengrocer could minimize its inventory cost by having no stock, but it would not generate much customer satisfaction.

* Lean operations might not work when there are variable & uncertain conditions (changing demand, increased competition, demanding customers)

* An alternative is a more flexible strategy based on agility.

Agile Strategy:-

The aim of agile strategy is to give a high customer service by responding quickly to different or changing circumstances. Agile organizations keep a close check on customer demands & react quickly to changes. Secondly, is the ability to tailor logistics to demands from individual customers.

Features of an enterprise uses agile strategy are:

* Aim for complete customer satisfaction.

* Allows customers easy access to the organization.

* Find exactly what they want.

* Design logistics to meet, or exceed these demands.

* Be flexible & respond quickly to changing customer demands.

* Get a reputation for outstanding quality & value.

* Do after sales checks to make sure the customers remain satisfied.

* Look outwards so that they are always in touch with customers, potential customers, competitors & so on.

Organizations with satisfied customers have the obvious benefit of bringing them back with repeat business - remembering the rule of thumb that it costs five times as much to attract a new customer as it does to retain an existing one.

Satisfied customers also attract new business, as they recommend a good service to four or five other people - compared with dissatisfied customers who warn a dozen potential customers about a bad experience.

Lean Strategy Vs Agile Strategy:-

· At first sight the aims of lean & agile operations seem contradictory.

· In practice off course, there is not such a clear divide between the two strategies.

· If a supplier improves EDI links with its customers, it can both reduce costs & increase customer service - becoming leaner & more agile.

· Similarly, a manufacturer selling materials through a website & a wholesaler introducing cross docking become both leaner & more agile.

· Organizations need not to choose one strategy at the expense of the other.

(Sunil Chopra & Peter Meindl, Supply Chain Management Strategy, Planning & Operation - Third Edition)

3. Describe & analyze the stages in the evolution of supply chain management.

Reply:

Resource Requirement Planning:-

The traditional approach for planning logistics is based on Resource Requirement Planning. This takes the logistic strategy & continually adds more details to get capacity plans, aggregate plans, master schedules & short term schedules. The result is a set of timetables showing what all the facilities, equipment, people & resources should do anytime.

The conventional approach to planning assumes that overall demand for a product is made up of individual demands from many separate customers. These demands are independent of each other, so the demand from one customer is not related to the demand from another customer. For example, if you are selling Nike shoes, the overall demand comes from hundreds of separate customers, all independently asking for a pair of shoes. This gives an Independent Demand. Here, planning is done using Resource Requirement Planning (standard approach).

In some situations, demands are not independent. One demand for product is not independent of a second demand for the product. When a manufacturer uses a number of components to make a product, the demands for all components are clearly related, since they all depend on the production plan for the final product. This gives Dependent Demand. Here, we use Material Requirement Planning.

Material Requirement Planning (MRP):-

“Material Requirement Planning uses the master schedule, along with other relevant information, to plan the supply of materials. The master schedule gives a time table for activities, typically for each week”.

(Walters, 2003).

An important difference between the Resource Requirement Planning & Material Requirement Planning (MRP) approaches is the pattern of material stocks. With independent demand systems, stocks are not related to productions plans so they must be high enough to cover any likely demand. These stocks decline during operations, but are soon replaced.

Advantages of MRP:-

· Lower stock levels, with savings in capital, space, warehousing, and so on.

· Higher stock turnover.

· Better customer service - with no delays caused by shortages of materials.

· More reliable & faster delivery times.

· Less time spent on expediting & emergency orders.

· MRP schedules can be used for planning other logistic activities.

· MRP can also give early warning of potential problems & shortages. If MRP schedules show that some materials will arrive too late, the organization can speed up deliveries or change the production plans.

· MRP improves the wider performance of the organization - measured in terms of equipment, utilization, productivity, customer service, response to market conditions & so on.

Disadvantages of MRP:-

· The order size suggested by MRP can be inefficient.

· MRP may not recognize capacity & other constraints.

· MRP can be expensive & time consuming to implement.

· MRP gives reduced flexibility to deal with changes. Materials are procured according to the specified master schedule & hence can't be altered.

· It needs a lot of detailed & reliable information. Many organizations simply do not record this information or the information is not accurate enough.

· Systems can become very complex. Accuracy is particularly important, as large number of small stock transactions can introduce errors anytime.

MRP 2:-

Capacity requirement planning extends the MRP approach further into organization. We started by using MRP to schedule the delivery of materials & can now use it in capacity planning. Materials are only one resource & organizations have to schedule others, including people, equipment, facilities, finances, transport & so on. Surely, we can use the same MRP approach to consider these other resources. This thinking has led to major extension of MRP into MRP 2.

“MRP 2 gives an integrated system for synchronizing all functions within an organization. It connects schedules for all functions & resources back to the master schedule”.

(Walters, 2003)

Enterprise Resource Planning (ERP):-

“Following the trend for integrating the supply chain, we can extend the planning to other organizations. This gives the basis of ERP”. (Walters, 2003)

Suppose a manufacturer's MRP system finds that it needs delivery of 100 units of some materials at the beginning of June. Manufacturer uses this information to schedule its purchases. Electronic Data Integration (EDI) is communication software that can be used to link the MRP systems to the supplier system, so the supplier knows in advance when it has to deliver this material, and it can start scheduling operations to make sure that it is ready in time. If second tier suppliers are linked to the MRP system of first tier supplier, they can also start their operations. In this way, the message moves backward through the supply chain, giving integrated planning. (Walters, 2003)

For ERP to be a success there needs to be unrestricted flow of information between all members of supply chain. To facilitate this process, several E-Business tools such as EDI, EFT (Electronic Funds Transfer) & Internet can be used. However situations might arise where it would be difficult ensure full trust between organizations, even when they are prepared to form alliances. These systems also require complex systems & this leads to other practical issues.

Nevertheless, this approach has considerable potential, & this is leading to the next stage of the ‘Virtual Enterprise Resource Allocation'.

Just In Time (JIT):-

“Just In Time systems organize materials to arrive just as they are needed. By coordinating supply & demand, they eliminate stocks of raw materials & work in progress”. (Walters, 2003)

Just in Time (JIT) offers another way of planning activities & resources in an organization. It's based around organization activities such that they occur at exactly the time they are needed. The more closely we can match the supply of materials to demand, the less stock we need to carry. If we can completely eliminate any mismatch, we need no stock at all. This is the basis of JIT systems. JIT aims at delivering materials directly to operations & virtually eliminate stock. (Walters, 2003)

Examples of JIT Systems:-

* Replacing a lawnmower running on fuel with electronic one.

* Supermarkets owing a bakery in store to produce a loaf of bread.

Key Elements in JIT:-

· By now, it can be understood that JIT is not just a way of minimizing stocks. By considering all activities, it increases efficiency & eliminates waste.

· One of the problems with JIT is that it only works well in certain types of organizations. The most successful users of JIT are large scale assembly plants, which make virtually identical products in a continuous process.

· In other words, JIT needs a stable environment where process makes a large number of standard products, at a fixed rate for a long time.

· This stable environment can reduce costs by using specialized automation. Hence JIT works best with high volume, mass production.

JIT Operation - Push & Pull Systems:-

How does JIT organize activities so that they occur at just the time they are needed? It works by ‘Pulling' materials through process.

JIT uses another approach to ‘Pull' work through the process. When one operation finishes work on a unit, it passes message back to the preceding operation to say that it needs another unit to work on.

Extending JIT Along the Supply Chain:-

* JIT forces supplier to change the way they work, with fast deliveries, perfect quality, small batches & complete reliability.

* Hence to facilitate this, organizations must adopt JIT process themselves. This leads to the idea of an Integrated Supply Chain.

* The second tier suppliers adopt JIT to support first tier suppliers & so on. This practice ensures that the whole supply chain is working together with the same aims & principles.

* This extension of JIT along the supply chain is know by a variety of names, including Quick Response (QR), Continuous Replenishment Planning (CRP), & more commonly Efficient Consumer Response (ECR). (Walters, 2003)

Efficient Consumer Response ECR:-

“ECR pulls materials through tiers of organization in the supply chain”. With ECR a message passes backwards through the supply chain & each organization co-operates in moving materials forward. It uses JIT operations & link information systems so that they can ‘Pull' materials through the supply chain.

ECR extends the benefit of JIT to the whole supply chain. So it brings lower stocks, better customer service, lower costs, more responsive operations, improved space utilization, less paperwork & so on.

(Walters, 2003)

Enabler of ECR:-

* It needs a practical method of control. With JIT, this came with Kanbans. With ECR, it came with EDI.

* ECR only really works when organizations & their suppliers are working together in partnerships.

* Each organization's control system sends a message to suppliers & signals the need for more materials using an ‘Electronic Kanban'. Some systems go further & hand over more responsibility to the supplier in Vendor Managed Inventory.

* Having a sophisticated signaling system is good. However, there should be a smooth, continuous & uninterrupted flow of materials.

The rapid changes in customer demands & service expectation levels necessitates that the marketer must carefully study every aspect of internal operations from product conceptualization through to customer post purchase consumption.

Firms are adopting the vision of zero-based time, which has the ultimate goal of never keeping the customer waiting. All this demands that JIT should be extended across the whole supply chain from procurement, production, distribution & delivery cycle.

With this view in mind, firms are focusing attention on developing a fully integrated computer based information system as a solution to achieving time & process management efficiency.

(Main Theme from Course Notes)

B: Strategies for Maintaining Effective Supplier Relationship

1. Critically discuss three types of relationships that exist between an organization & its suppliers.

Reply:

Supply Chain Macro Processes:-

Supply chain processes can be classified into three categories:

Ø Customer Relationship Management (CRM): The processes that take place between an enterprise & its customers downstream in the supply chain.

Ø Internal Supply Chain Management (ISCM): ISCM includes all processes involved in planning for & fulfilling a customer order.

Ø Supplier Relationship Management (SRM): Those processes focused on the interaction between the enterprise & the suppliers that are upstream in the supply chain.

Key Characteristics of Relationships:-

Before managers can properly evaluate their companies' supplier-customer relationships or select a security protocol for the relationship, they must be able to identify the elements that differentiate one relationship from another. The three most critical elements are:

* The perceived level of trust between the parties.

* The level of interaction between them.

* Their commitment to the relationship.

The key for supply chain professionals is to think about the specific questions that will help to classify each relationship. All of the relationship elements work on two different levels. One level comprises the personal connections between the individuals who interact and manage the relationship (such connections surface in both business and social settings). The second includes organizational influences, which may or may not be aligned with the personal connections. These organizational influences are dictated by the strategies created at the corporate level. For example, corporate policy may lean toward limited credit availability, which can strain relationships between the supplier and customer. However, the personal relationship between the supplier's salesperson and the customer's purchasing manager can improve the relationship beyond the constraints of the organizational influences.

Types of Supplier Relationships:-

We can identify seven types of supplier/organization relationships that have unique characteristics. At one extreme are interactions where neither side places much trust in the other, where they have infrequent contact, and where the parties perceive that they do not have much commitment to the relationship. By contrast, there are relationships where the parties feel that they trust one another, where there is abundant interaction between them, and substantial commitment. These types of relationships are:

· Non-Strategic Transactions

· Administered Relationships

· Contractual Relationships

· Joint Ventures

· Specialty Contract Relationships

· Partnerships

* Alliances

Non-Strategic Transactions:-

These relationships are not necessarily one-time transactions, but they do typically involve many commodity exchanges and first-time transactions between suppliers and customers. In these situations, it's common for the parties to feel little obligation to each other as alternative sources of supply or market access is readily available. For this reason, discussion has focused on using electronic exchanges, typically Web-based, to drive out transaction costs in such relationships.

At the personal level, there is little on which to base a relationship—no doubt due in part to the limited communication between the parties. Indeed, there is little reason for a relationship to evolve, and an arms-length approach may dominate negotiations. Organizationally, a non-strategic relationship may form simply because there are few transactions between customer and supplier; that's the case with purchases of high-value capital equipment, for example. Alternatively, the relationship might involve multiple transactions but in a highly competitive market, creating substantial revenues and volumes.

So what does this mean for supply chain or logistics managers? From a security standpoint, it is highly advisable to maintain control of all logistics aspects of nonstrategic relationships whenever possible. For example, if material is being sourced from Malaysia from a supplier that the customer does not know well, the contract terms should stipulate "free on board (FOB) origin-freight collect," which allows the customer to control all aspects of logistics activity after the shipment leaves the supplier's dock. Additionally, less familiar shipments can be routed through specific ports that are better able to accommodate more detailed customs inspections. For example, the Port of Rotterdam can X-ray complete containers, which may expedite security clearances when the contents of containers are not known to the shipper. By pegging the relationship with the supplier as a nonstrategic transaction, supply chain managers can help flag the cargoes that will call for greater levels of scrutiny.

Administered Relationships:-

These are also fairly casual arrangements, but in this case one party does more with using informal influence strategies to try to manage the relationship. Relative to the six other types of relationships, Administered relationships exhibit the lowest concern for the personal character and capability of the other party. At the organizational level, they do not reflect significant business volume or investment. However, the dimensions of communication frequency and the individual's perception of dependence on the other party are greater than is typical of the other forms of relationship. An example of this would be when firms use procurement cards to expedite the buying process and encourage a more "automatic" transaction process, similar to when consumers make decisions about airline reservations based on frequent flier programs. The practice increases the number of transactions, even though each transaction may be for limited volumes of business, and there is a very limited personal relationship between the supplier and organization.

While these relationships have something in common with nonstrategic transactions, they do require some modest investments, such as in suppliers' online catalogs. Some companies will use supplier development meetings or distributor councils as mechanisms to influence the other party's actions. In administered relationships, one party can offer the other levels of merchandising support, for instance, or business process consulting. A good example would be a company that helps to facilitate improved operations for the supplier or customer through supplier development programs, or in distributor-retailer relationships requiring assistance with product merchandising.

Compared to nonstrategic transactions, administered relationships can help the customer predict more effectively the level of security risk in goods movements. For example, although each party may have relatively limited knowledge of the other, they may be able to allow lower levels of inspection at hand-off locations as long as they can be sure about the freight's point of origin. A logistics manager who knows that his or her company is in an administered relationship could, for instance, decide to route freights automatically through Rotterdam because that port is set up for streamlined container security checks. In other words, instead of being so sensitive to security assessment issues, supply chain managers could route shipments based on location and distance factors.

Contractual Relationships:-

Contractual relationships reflect the need for formal control over business activity between suppliers and organizations. Relative to the other relationship types, contractual relationships are characterized by modest levels of communication frequency and perceived dependence. At the organizational level, then, managers recognize a strong supply- or market-based need for the relationship because of the volume of business conducted with the other side. But they do not desire to raise the level of required investment in the relationship. While there's some call to forge and maintain personal relationships — perhaps as an outcome of the contract negotiation process — it is not a major feature of contractual relationships. In fact, a formal contract reduces the need for direct communication between boundary-spanning personnel and, therefore, reduces interaction frequency. In other words, the contract terms, if written clearly, can substitute for multiple direct interactions. (An important point to note: Not all contract-bound relationships fall into this category. Formal contractual characteristics show up in all seven of the relationship types.)

In contractual relationships, there is a higher level of trust in the supplier than is typical of nonstrategic transactions and administered relationships. The contract terms can specify broad areas of responsibility for the supplier, which allows greater flexibility to negotiate shipping terms that can take advantage of the supplier's logistics capabilities rather than depending solely on the customer's capabilities. For example, the supplier may have access to deadhead freight lanes between the consignor's dock and the port at the country of origin and can significantly reduce total freight costs for an international movement. However, this opportunity may not have been available if the consignee handled the responsibility for freight. Greater trust and commitment can create opportunities not available in more transactional situations. In short, the contractual classification gives suppliers greater control over shipment characteristics that can minimize security breaches as the freight moves through hand-off points around the world

2. Evaluate three strategies for developing & maintaining effective supplier relationships.

Reply:

The modern economical environment is gaining far-reaching complexity and competition. Companies of all sectors are facing continuous changes in the market forces due to the liberalization of trade and the impact of new communication means, improved logistics services and electronic banking systems, and other factors, that have lead to a clear increase in global competition. This new economical environment and the globalization process are changing the competition behavior across industries. These changes are leading to a revolution in business strategy that has been postulated by numerous strategy researchers. Organizations had to rethink their way of doing business, based solely on their internal resources toward a more dynamic strategy, benefiting from their internal improved operations and closer communication with their business partners to overcome those challenges. In resume, as Ohmae (1994) has predicted, the modern information technology is making traditional borders obsolete. Not only between nations, but especially between organizations, creating a “global village”. This phenomenon has created a new business environment in which companies compete no longer as a single legal entity, but as supply chains and information has become the most valuable asset for companies, which has to be managed and distributed to their stakeholders.

Hence, the application of information technology and the formation of electronic networks have become an important part of corporate strategy. This statement is especially true in the management of company's relationship with their suppliers. Our focus analysis will be on the market and functions of the information systems that support the business processes between organizations and their supplier's i.e. Supplier Relationship Management (SRM).

Supplier Relationship Management:-

The concentration strategy on key functions and expertise, which has been adopted by many leading industries, has forced the evolution of company's procurement from an administrative and short-term driving function to a strategic activity in which firms turn their business in search for performance improvements. Consequently, supply chain management and purchasing performance are increasingly recognized as an important determinant of a firm's competitiveness. Therefore, in order to support the great variety of product and services purchasing processes and to integrate different business partners in an electronic network. The Strategies for Supplier Relationship Management Systems were developed & maintained to coordinate and automate the process concerned with the Supplier integration & communication.

SRM is the part of the supply chain management, which deals with all aspects of the business relationship between companies and their suppliers. SRM, on the other side, describes the business structures and processes required by companies to communicate with their suppliers, while providing methods, processes and tools to support the different phases of a direct supplier relationship, e.g. identification, evaluation, qualification, and if necessary termination .

Although a number of software vendors state to possess a single SRM solution the work will treat SRM as a combination of stand-alone modules/suites specialized in part of the procurement process, building a set of Strategic Partnership Strategies / functionalities using Internet that enable the communication and integration of multiple channels and the automation of the purchasing and sourcing process between two or more independent organizations e.g. Electronic sourcing, Electronic procurement and Supplier Enablement.

Electronic Sourcing (E-Sourcing):-

The sourcing activities take place at the beginning of the purchasing process prior to any transaction. It has its main focus on the negotiation process of direct goods and it is a critical element of the strategic purchasing. In addition, sourcing is a process to develop supplier strategy and subsequently support its execution.

The main goal of these systems is to support buyers to find the most appropriate supplier for a good, and the foreground is the negotiation phase of the purchase process in which professional buyers search for the most appropriate product source for a company based on price or any other established criterion. Electronic auctions and electronic request for quotation (RFQ) are the two most know negotiation form applied in e-Sourcing and are often used in the practices as a synonym of these terms. Auction is a form of bid that has been used since the antiquity to establish the sell price through a transparent selling process of goods. At the beginning, e-auction systems had their focus exclusively on price negotiation, leaving out of their scope all other relevant negotiation factors e.g. quantity, quality, delivery time. Nowadays, a new generation of auctions systems based on business intelligence technology allows the negotiation of multi-attribute criteria during the online auction and the continuous control of supplier performance.

The RFQ process is in some extend similar to the auction process. Thus, what is true for e auctions can be applied also for e-RFQ. The main difference between RFQs and auctions is the lack of standardization in terms of explicit, formal rules and regulations in RFQs. E-RFQ can be applied during the negotiation process of complex products and services in which extensive technical description and complex calculation are required e.g. construction project, facility management services. On the other hand, e-auctions are appropriate for products which have a well defined demand in a high volatile market with a large number of suppliers e.g. commodity. In addition to negotiation and supplier evaluation functionalities, e-Sourcing solutions should include contract management tools to provide companies with a precise overview of their contracts and commercial agreements. The main function of these tools is the centralization of contractual content and the compliance of established commercial arrangements.

Electronic Procurement (E-Procurement):-

The definition of e-procurement is a reason for evident confusion in the literature and in the practices. A number of definitions describe e-procurement as a general technology that allows the purchase of supplies using the Internet. E-procurement software enables organizations to purchase indirect and MRO goods online, automates the buying processes and centralizes all spending data. The technology has progressed from enabling simple transactions to cover broader categories such as services procurement, as well as the post-procurement stages, such as invoicing, reconciliation and settlement.

This solution has its focus on the reduction of the purchase department's administrative costs, by the electronic support and automation of the operative purchasing processes. Desktop Purchasing System has enabled companies to change their traditional centralized structures to a more decentralized one, allowing employees to realize their requisitions directly from their workplaces applying web applications, whereas companies could establish specific rights and budgets to their internal customers to place orders, their supervisors to authorize the requisition, the warehouse to acknowledge the delivery and the finance department to emit and pay the invoice. E-Procurement solutions are adequate to support the purchase of indirect, low value and standard products. These products represent around 5% of the purchasing volume, but generate up to 80% of the total purchasing process costs of a company, 60% of the orders and 70% of the suppliers.

Services and complex products are currently not appropriately supported by those systems, or the electronic purchase of the former products is possible just with a high level of system customization. The core component of a desktop purchasing system is the catalogue engine to search and select goods online, and in case the organization applies a multi supplier catalogue approach, the content management system to create and maintain the catalogue data. Furthermore, the system relies on business rules and authorization mechanisms to support organizations directives and specific purchase processes. The integration of those systems is supported by the application of standards as the Extensible Markup Language (XML). Currently, there are several data exchange formats based on XML e.g. XCBL, CXML, BMEcat . On the other hand, to facilitate the electronic product information transfer, companies rely on material classification standards as eCl@ss and UNSPSC to increase transparence and reduce communication costs.

Supplier Enablement:-

Enterprise integration is undeniably a critical issue for companies in all business sectors striving to maintain a competitive edge. Most of the key business players have realized that their success in their e-business activities depends on their business processes synchronization with their trade partners, by connecting their organizations directly or indirectly with the back- and front-end systems of both organizations, using an appropriate gateway to exchange commercial and marketing.

Supplier enablement is the channel that enterprises use to integrate with their trade partners and realize their e-sourcing and e-procurement activities. The two main forms in that supplier enablement takes place in companies are through the application of supplier portals and/or e-marketplaces.

A company's portal is defined as a web based application that makes available personalized content as well as the rights to operate specific collaboration processes between heterogeneous groups. In the case of supplier portals, they create the basis to connect suppliers with their buyers, with the focus on purchasing processes and the exchange of transactions data. They offer a structured and customized gateway to improve the business relations between two or more business partners. On the other side, e-marketplace is described as a virtual online market where buyers, suppliers, distributors and sellers find and exchange information, conduct trade, and collaborate with each other via an aggregation of information portals, trading exchanges and collaboration tools.

It is crucial for an efficient procurement strategy that these channels are not isolated in the enterprise's intranet, but rather they should be integrated with companies' front-end and back- end systems in order to integrate their inter-processes and automate the data exchange. At the same time, it is recommend that their users have the possibility to access them anywhere, at any time, regardless of the distance and the sort of device there are using e.g. computer, laptop, Personal Digital Assistant (PDA).

In addition, supplier portals and e-marketplaces should include in their functionality spectrum, a number of features to facilitate and secure their use by company's employees e.g. Navigation and search tools, reporting and notification functions. Since the acceptance and success of those channels depend on the willingness of these employees to use these channels in their daily procurement activities

The SRM market is in constant growth, most of the market researches in this area. The main vendors of this sector can be divided into two distinct classes:

• The ERP vendors: who offer their SRM system as a module of their product portfolio, which has as the main advantage the high integration capacity with the other modules of the same vendor, reducing the implementation cost and time.

• The best-of-breed providers: who are specialists on SRM systems or part of the system e.g. e-Procurement, e-Sourcing, supplier Enablement, who offers their products to the market as an alternative to the ERP providers or concentrate their efforts in niche markets.

The market is going through a consolidation process, which will continue during the next years. This is characterized by the numerous merger and acquisition activities that have been occurring e.g. Ariba-FreeMarkets (2004), Oracle-PeopleSoft (2005), SAP-Fricionless (2006).

On the other side, a detailed analyses of the SRM functionalities shows that the market has different maturity grades and potential growth rates while comparing different features i.e. e-Procurement functions are in average much more mature than the e-Sourcing functions.

E-Procurement Functionalities:-

The e-procurement applications of the main providers have achieved already their technical maturity and their functions can be hardly differentiated from their competitors in the market. Forrester research (2005) found that the average scores for goods procurement, settlement, and process configuration are consistently strong across all vendors, averaging close to 4 (on scale of 1 to 5) with a standard deviation of less than 1. The same research institutes found that the most competitive e-procurement providers are SAP, Oracle and Arriba, although none of them reached the highest technological level/rate, suggesting that there are still areas, which require further developments.

One of those areas is the support of more complex material groups and services, as the current protocols and standard formats e.g. BMEcat provide a solution just for a limited number of material groups, and in the case of services, because of its variety and differentiated data model, a new protocol based on configuration rules has to be developed to allow the description and price formation of the service purchased.

Furthermore, the compliance management is an issue that has not been properly addressed by the e-procurement vendors, and it is a top theme on the procurement executive agenda. Therefore, a higher integration level has to be achieved with other systems of the organization in order to converge the procurement data and even to eliminate redundant systems across the enterprise.

E-Sourcing Functionalities:-

In contrast to the e-procurement functionalities, most of the e-sourcing functionalities have still not achieved its maturity, and there is not a single provider that can be classified as a leader. The market is characterized by the presence of a number of best-of-breed vendors that are rated by the research institutes as specialist in their area e.g. FreeMarktes (auctions), Emptoris (complex bid processes), I2 (Spend Management), Contracto (Contract management).

It is in this area of the supplier relationship management that most investments in research and development have been done in the last years and the consolidation process is more present. For the next couple of years, it is expected that the new developments will still concentrate on this area, improving the current functionalities as spend and contract management. At the same time, a higher integration between the current technologies available is foreseen, especially as a result of the consolidation process through merger and acquisition as well as strategic partnerships.

At the moment, the e-Sourcing market has a huge growth potential, which can be explained by the high company's expectations on these solutions. A study from the BME & Siemens showed that the majority of the enterprises expect a 10-25% process costs reduction and a 5-10% material costs reduction through the application of SRM solutions. And according to ARM Research (2005) and IDC Research (2005) there is an evidence to suggest that this growth of the SRM market is leaded by the e-Sourcing applications rather than the relative mature e-Procurement solutions.

The universal trend in the area of supplier relationship management goes towards the process cost reduction and compliance. Nowadays, the interest of the organizations is to build flexible electronic processes that support and customize their business processes, at the same time that they are able to adapt the enterprise to the constant market changes. Therefore, for the next couple of years it is unlikely that SRM moves outside its current basis: e-Procurement, e-Sourcing and supplier Enablement. Instead, what is expected is the consolidation of the current functionalities and practices, especially the ones that have still not achieved its maturity: Business process outsourcing, Contract management, Service procurement, Spends and Supplier intelligence, Process integration, among others.

(Main Theme from Course Notes / www.waset.org)

3. Explain how a Vendor Managed Inventory System will tighten the linkage between customer & suppliers.

Reply:

Continuous Replenishment & Vendor Managed Inventories:-

The bullwhip effect can he dampened by practices that assign replenishment responsi­bility across the supply chain to a single entity. A single point of replenishment deci­sions ensures visibility and a common forecast that drives orders across the supply chain. Two common industry practices that assign a single point of responsibility are continuous replenishment programs and vendor-managed inventories.

In continuous replenishment programs (CRP), the wholesaler or manufacturer replenishes a retailer regularly based on POS data. CRP may be supplier, distributor, or third-party managed. In most instances CRP systems are driven by actual with­drawals of inventory from retailer warehouses rather than POS data at the retailer level. Tying CRP systems to warehouse withdrawals is easier to implement and retail­ers are often more comfortable sharing data at this level. IT systems that are linked across the supply chain provide a good information infrastructure on which a continu­ous replenishment program may be based. In CRP, inventory at the retailer is owned by the retailer.

With vendor-managed inventory (VMI), the manufacturer or supplier is responsi­ble for all decisions regarding product inventories at the retailer. As a result, the con­trol of the replenishment decision moves to the manufacturer instead of the retailer. In many instances of VMI, the inventory is owned by the supplier until it is sold by the retailer. VMI requires the retailer to share demand information with the manufacturer to allow it to make inventory replenishment decisions. VMI can allow a manufacturer to increase its profits as well as profits for the entire supply chain if both retailer and manufacturer margins are considered when making inventory decisions. VMI also helps by conveying customer demand data to the manufacturer, which can then plan production accordingly. This helps improve manufacturer forecasts and better match manufacturer production with customer demand.

VMI has been implemented with significant success by, among others, K-Mart (with about 50 suppliers) and Fred Meyer. K-Mart has seen inventory turns on sea­sonal items increase from 3 to between 9 and 11, and for non-seasonal items from 12-15 to 17-20. Fred Meyer has seen inventories drop by 30 to 40 percent while fill rates have increased to 98 percent. Other firms with successful implementations include Campbell Soup. Frito-Lay and Proctor & Gamble.

One drawback of VMI arises because retailers often sell products from competing manufacturers that are substitutes in the customer's mind. For example, a customer may substitute detergent manufactured by Proctor & Gamble with detergent manufactured by Lever Brothers. If the retailer has a VMI agreement with both manufacturers, each manufacturer will ignore the impact of substitution when making their inventory deci­sions. As a result, inventories at the retailer will be higher than optimal. In such a setting, the retailer may be belter positioned to decide on the replenishment policy. Another possibility is for the retailer to define a category leader from among the sup­plier and have the category leader manage replenishment decisions for all suppliers in the category. Wal-Mart follows such a practice and assigns a category leader for most of its products. For example, HP was its category leader for printers and managed all printer replenishment.

(Sunil Chopra & Peter Meindl, Supply Chain Management Strategy, Planning & Operation - Third Edition)

C: Supply Chain Integration using Web bases Applications

1. Explain how the following web based technologies support integration & optimize supply chain performance.

· Internet

· Intranet & Extranet

Reply:

Internet Strategies:-

The Internet: A Revolutionary Driving Force:-

The internet has become a revolutionary driving force in all aspects of organizational functions which off course includes supply chain operations. Internet has revolutionized in following ways:

* Internet adds an important distribution channel

* It is an important technological tool for performing some value chain activities better & for by passing others.

* Internet has altered the strength of competitive forces.

* It spawns entirely a new industry.

* Internet also affects a company's competitiveness vis-à-vis rivals.

Internet Technology:-

Internet technology consists of:

* Integrated network of users connected computers.

* Banks of servers & high speed computers.

* Digital switches & routers.

* Telecommunications equipment & lines.

Suppliers of Internet Technology & Services:-

The suppliers can be categorized as follows:

Ø Makers of specialized communications, components & equipment.

Ø Providers of Internet communications services.

Ø Suppliers of computer components & hardware.

Ø Developers of specialized software.

Ø E-commerce enterprises

* Business-to-business merchants

* Business-to-consumer merchants

* Media companies

* Content providers

The Impact of Vigorous Competition Among Alternative Internet Technologies:-

Often, competing technologies have materially different pluses & minutes. Competing technologies may well be incompatible, preventing users of one from interfacing with users of another - and costs of parallel systems may be prohibitive.

Strategic options for technology rivals:

* Invest aggressively in R & D to win technology race.

* Form strategic alliances to build consensus for the favored technological approach.

* Acquire other companies with complementary technological expertise.

* Hedge the company's bets by investing resources in more than one of the competing technologies.

How Internet Technology Impacts Company Value Chain Efficiency:-

Companies can use the internet & internet technologies to improve the efficiency & effectiveness of particular value chain activities as follows:

* Powerful tool for better supply chain management.

* Internal operations - Just in time inventory, Gear production schedules & production quantities to buyer orders, more accurate monitoring of buyer preferences & shifts in demand.

* Collaborative data sharing with distribution channel partners - online systems reduce transaction costs.

How Internet Technology can Revamp Company Value Chains:-

Internet technologies allow some value chain activities to be bypassed entirely such as:

* Some manufacturers can build-to-order & sell direct (thus eliminating traditional wholesalers & brick-&-mortar retailers).

* Online systems facilitate build-to-order instead build-to-dealer inventory.

The benefits of internet technology are pervasive, spawning fundamental changes in the ways business is conducted internally & with suppliers, wholesalers, retailers & end-users.

Technologies Supporting Business Integration:-

Intranet:-

Intranet is an internal corporate network built using internet & web technologies that allows employees of an organization to gain access to corporate information.

Information systems have improved the efficiency & effectiveness of decision makers. Since the computer's inception in 1946, medium & large sized companies have used these machines to access timely, accurate & meaningful information to gain a competitive advantage. Intranets & Extranets are implemented using a client-server model. Using this model, client software runs on the local computer & communicates with the remote server, requesting information.

Benefits & Uses of Intranet:-

* It provides users with easy-to-use access that can operate on any PC regardless of the operating system.

* Intranet helps companies disseminate information faster & more easily to both vendors & customers.

* It benefits the internal operations of the organization.

* An intranet is an application or service using the computer networks (the LANs & WANs) of an organization.

* It helps in the usage of web technologies such as: TCP/IP, HTML, FTP, HTTP, XML, SMTP etc.

* A firewall surrounding an intranet fends off unauthorized access. Firewall - A device that sits between your internal network & the outside internet & limits access into & out of your network based on your organization's access policy.

* Intranet supports E-Commerce activities such as sales, customer service, marketing & so forth.

* Employee can find internal information & they can bookmark important sights by using an intranet facility.

* Individual departments can create their own websites to inform employees about departmental events.

* Marketing can present the latest product information, while manufacturing can post shipping schedules & new product designs.

* The human resources department can post new jobs, benefit information & recent promotions.

* The finance & accounting departments can post cost information & other financial reports on their sites.

Extranet:-

Extranet is a network based on web technologies that links selected resources of the intranet of a company with its customers, suppliers, or other business partners.

Interorganizational Systems (IOSs) facilitate information exchange among business partners. For example: e-mail, electronics funds transfer (EFT), electronic data interchange (EDI). Both EDI & extranets provide a secure connection among business partners. Their role is B2B e-commerce is on the rise. These systems create a seamless environment that expedites the transfer of information in a timely manner.

Benefits & Uses of Extranet:-

* Organizations allow customers & business partners to access their intranets for specific business purposes. For example: Supplier might want to check inventory status or account balances. These networks are referred as Extranets.

* Organizations can limit the amount of information i.e. access granted to external parties to only what they require. Also comprehensive security measures must ensure that access is given only to authorize users & trusted business partners.

* Extranet is a secure network that uses internet & web technology to connect two or more intranets of business partners, thus enabling B2B communications.

* It is a network service that allows trusted business partners to have secure access to information assets on another organization's intranet.

* Extranet provide highly secure temporary connections over public & private networks between an organization & a diverse group of business partners outside of the organization. For example: customers, vendors, suppliers, consultants, distributors, resellers, outsourcers.

* An extranet enables organization to receive instant feedback from its customers & other business partners. It gives the customer an opportunity to express their views about products or services before those are even introduced to the market.

* It can reduce inventory costs by providing timely information to the participants of supply chain program. Manufacturers can start production as soon as the customer places the order with the distributor. This in return increases the efficiency of operation significantly & reduces the delivery time of final product.

* An extranet allows for improved coordination among participating partners. Critical information from one partner can be made available so that another partner can make a decision without delay. For example: a manufacturer can coordinate its production by checking the inventory status of the customer.

* Extranet links the customer to an organization. This provides the customer with more information about products & services & the organization in general. This also makes ordering products or services as easy as the click of the mouse.

* Extranets increase the efficiency & effectiveness of communication among business partners by linking intranets for immediate access to critical information. A travelling sales person can receive the latest product information from his or her hotel room before going to a sales meeting.

Case Study Examples for Intranet & Extranet:-

1. Toshiba:-

Toshiba has designed an extranet for timely order entry processing. Using this extranet facility, more than 300 dealers can place orders for parts until 17:00pm for next day delivery. Dealers can also check accounts receivable balances & pricing arrangements, read press releases & much more. This secure system has resulted in significant cost savings & improved customer service.

2. FedEx Tracking System:-

Federal Express uses its intranet to collect information & make it available to customers over the internet. The FedEx website is one of the earliest & best known examples of an extranet - an intranet that is open to external users. The customers can access FedEx's public site & enter a tracking number to locate any package still in the system. Using this system, a customer can enter all the information needed to prepare a shipping form, obtain a tracking number, print the form & schedule a pick up.

3. Tesco:-

Giant retailer, Tesco is using an extranet to link with its suppliers to share point of sales data. At the same time, the company is successfully running a home shopping & delivery system for consumers over the internet. Within the business premises, the intranets are in place that enables information to be shared between stores & to facilitate communications among the business.

D: Systems, Policies & Processes for Web Based Transactions:-

1. Discuss three main concerns regarding data transfer on the web & how some of these concerns be resolved?

Reply:-

Impact of Information Technology (IT):-

The major impacts made by IT can be outlined as follows:

* New jobs have been created such as Web developers, Java programmers.

* Manual repetitive jobs have been replaced.

* Production costs have been lowered.

* Staff can carry out work related tasks at home, while travelling & at client sites.

* It can alter the organizational structure. Pyramid to star (only decision makers).

* Virtual organizations have been created. Virtual organizations are the network of independent companies, suppliers, customers & manufacturers linked by IT systems to share skills, costs & access to one another's market.

Benefits of a virtual organization concept are as follows:

v Greater customer focus.

v Higher customer responsiveness.

v Reduced cycle time for new product introduction.

v Lower costs.

v Customization of mass-market products for every customer.

v Financial flexibility

v Members can be changed i.e. operational flexibility.

However, inspite of all those impact & data transfer facilities, the three main concerns regarding data transfer through web can be identified as:

* Privacy Issues

* Crime & Fraud

* Health Issues

1. Privacy Issues:-

Managers of organizations are allowed to monitor employee's performance, number of errors, speed of work & time away from the desk by using computerized systems.

Several organizations are holding vital personal customer information these days such as personal email, bank account balances, telephone conversations etc in their databases. Typical organizations are medical surgery, law firms, financial institutions, e-commerce websites, call centers etc. Misuse & abuse of this information or database can have serious consequences. Important issues which are needed to be resolved are:

Ø Who should have access to such sort of information?

Ø To what extent?

Ø How should it be used?

Here I must include that the use of electronic databases by federal & state governments, credit agencies & marketing companies represents an invasion of our privacy.

Privacy Issues - Databases:-

Unfortunately, ITs & e-commerce have been at the center of all these important issues. The number of computerized databases is increasing at a rapid pace. Information in many databases can be cross matched to create “profiles” of individuals & to even predict this behavior.

Major uses of this information include direct marketing & credit check services for potential borrowers or renters. Say, you might have requested some information from an online car dealer & then you receive email from car insurance & other mortgage companies. Some advantages of linking databases include combating benefit fraud, sharing credit ratings etc.

Privacy Issues - Regulations:-

There are several federal laws that regulate the collection and more specifically the use of information on individuals & corporations. However, these laws are very narrow in scope & full of loopholes. For example: The 1970 Fair Credit Reporting Act bars credit agencies from sharing credit information with anyone but “authorized customers”. An “authorized customer” is anyone with a “legitimate need”.

Many Internet users are concerned that their privacy is in jeopardy when they go online. Programs such as cookies, Java & Java Script may record the user's journey through the web.

Privacy Issues - Guidelines:-

· Individuals must have access & right to correct inaccuracies.

· Time limit should be set for data storage.

· Only relevant data needs to be collected.

· Existence of a well defined purpose for collecting & storing internet user data.

2. Crime & Fraud:-

Computer fraud is the unauthorized use of computer data for personal gain. This includes transferring money from one account to another or charging expenses to an account that did not use the service or product. Computer sabotage can involve destruction or disruption & disclosure of computer services.

Computer criminals are those who modify, change, eliminate, hide or use computer files for personal gain. They include insiders, extremists & hackers. Insiders commit more than 70% of internet or cyber crimes.

3. Health Issues:-

Many health related issues of computers particularly video display terminals (VDTs) have been reported in the recent years. Some of the major health problems reported are:

§ Eye & vision problems

§ Musculoskeletal problems

§ Stress related problems.

Psychological problems related with IT & e-commerce are primarily related to “resistance to change” attitude. A sound ergonomics program can solve the majority of health issues of information systems. Ergonomics refers to the implementation of safe work practice between humans & machines.

Another health related issue in recent years is the amount of time that some individual spend on the web. The web should be used for noble applications & causes such as education etc. Too much time on the web can create psychological, social & health problems. This is especially important for young people.

Data Collection (Web):-

Online shopping is increasing at a rapid rate. The main benefits of this practice are convenience, number of choices offered & cheaper prices etc.

Many customers are reluctant to use their credit card number to make purchases because they fear that a computer hacker may get access to their number & charge purchases to their account. To make customer feel at ease, many credit card companies reimburse fraudulent charges.

More advance electronic payment systems are being developed e.g. e-wallets, smart cards etc. Some websites on the internet require users to enter their name, address & employment information in order to get registered before they are allowed to use the website.

A major privacy concern will be the possibility of these details being sold to telemarketing firms for a profit. This will result in excessive junk mail for the consumer. Also some consumers fear that their entire hard derive could become accessible without their knowledge whilst connected to the web.

A major privacy concern will be the unauthorized use of the personal data stored in the computer for solicitation & other purposes.

Two commonly uses technologies to collect information are:

Ø Log Files: Which are generated by the web server software to record a user's journey around a website.

Ø Cookies: Use software that is embedded in the web browser. They provide information about the user's location & equipment.

Naturally these gathered information can be used for unauthorized purposes. Cookies can be disabled. This can be done by installing a cookie manager. A cookie manager is a software program that enables users to eliminate the cookies that a website tries to attach to the user computer or those that have already been stored.

On the positive side, these tools give companies the ability to assist the prospective customer in his or her next purchase. By identifying users, cookies can prepare & deliver customized web pages. However, many users view them as an invasion of their privacy.

Some people advocate that websites should be designed with functionality which requests user permission on providing information.

2. Discuss five guidelines that could be followed for minimizing privacy issues.

Privacy Issues Guidelines:-

Guidelines for minimizing privacy issues can be classified as follows:

· Individuals should have proper authorization to access personal data. This includes that individuals must have access & right to correct inaccuracies. By utilizing this option individuals can have a close eye on their details at all times and chances of misuse always remain low.

· Careful steps must be taken to ensure accuracy of data. Care must always be given during collection & inputting of all important data. Periodic checks should be taken to ensure the correction at all times. From time to time, it is also important to carry on the verification checks to ensure the safety of the system.

· User permission must always be obtained for any activity beyond intended use. Time limit can be assigned to the user to fulfill the required task within the available session such as modern online banking facilities etc.

· Only relevant data needs to be collected. This requires existence of a well defined purpose for collecting & strong internet user data.

· Erroneous data must be amended accordingly.

(Main Theme from Course Notes)

3. “The adoption of information systems to manage the supply chain is a differentiate strategy adopted by organizations to achieve a competitive advantage”. Discuss this statement in about 300 words.

Reply:

How the Internet Reshapes the Competitive Environment:-

The impact on Competitive Rivalry:

v Use of an internet widens a firm's geographic market reach.

v Rivalry is often increased by freshly launched e-commerce initiatives of existing rivals.

v Rivalry is often increased by entry of enterprising dot.com rivals with sell-direct strategies.

v Rivalry is often increased when an industry consists of online sellers against pure brick-and-mortar sellers against combination brick-and-click sellers.

The Impact on Barriers to Entry:

v Entry barriers into e-commerce are often relatively low :

Ø can be easy for new dotcoms to gain entry into some businesses

Ø Can be easy for many existing firms to extend into new geographic markets via online sales.

When the Internet lowers & industry's barrier to entry, the outcome is nearly always heightened competition & stronger competitive pressures for industry participants to contend with.

The Impact on Buyer Bargaining Power:

v Use of internet allows buyers to gather extensive information about competing products & brands.

v Buyers can readily use the internet to “shop the market” for the best deal.

v Buyer efforts to seek out the best deal spur competition among rival sellers to provide the best deal.

v Internet makes it easier for buyers to join buying groups & pool their purchases to negotiate better terms & conditions.

Overall impact of the internet is to increase buyer bargaining power (or at least to make buyers wiser & more informed).

Impact on Supplier Bargaining Power & Supplier-Seller Collaboration:

Ø Help companies extend geographic reach for the best suppliers. Sometimes via online market places or “e-markets”.

Ø Helps companies collaborate closely with suppliers across a wide front - fosters long term partnerships with key suppliers.

Impact on bargaining power is unclear - can enhance or diminish bargaining power depending on specific circumstances - have to assess case-by-case.

Other Strategy Shaping Features of Internet Technology:

v Internet is a force for globalizing competition.

v Internet & PC technologies are advancing at uncertain speeds & in sometimes unexpected directions.

v Internet technologies tend to reduce variable / incremental costs & tilt the cost structure more towards fixed costs. Some internet related businesses have high fixed cost/low variable cost structure, which accounts for heavy losses until sales volume builds significantly.

v Internet results in much faster diffusion of new technology & new ideas across the world.

v Widespread adoption of internet technology puts companies under the gun to move swiftly - “at internet speed”.

v The internet can be an economical means of delivering customer service.

v The capital for funding new e-business is available for ventures with solidly attractive business models & has dried up for ventures with dubious prospects.

(Main Theme from Course Notes)

Bibliography:-

1. http://www.mmv.vic.gov.au/Assets/262/1/SupplyChainManagement.pdf

2. Sunil Chopra & Peter Meindl, Supply Chain Management Strategy, Planning & Operation - Third Edition

3. http://www.scmr.com/article/CA477304.html?q=Types+of+Supplier+Relationship

4. www.waset.org

5. Ed Rhodes, James P. Warren & Ruth Carter, Supply Chains & Total Product Systems: A Reader, The Open University & Blackwell Publishing - First Edition (2006), ISBN: 1-4051-2409-1

6. Harvard Business Review on Supply Chain Management, Harvard Business School Press (2006), ISBN: 1-4221-0279-3

7. Course Notes

[1] Learning outcomes for Assessment as elaborated by module tutor Mr. Alex Bell, 19th January 2010

[2] Information obtained from data provided by Weather Seal Romford Branch, Essex - UK & www.weatherseal.co.uk, 14th January 2010

[3] Chaffey, D. E-Business and Ecommerce Management, New York: FT/Prentice Hall, 2006 - Cited on Google Books, 21st January 2010 and from Course Notes, 21st January 2010

[4] Efraim Turban and David King, Introduction to Ecommerce, New Jersey: Pearson Education, 2003 - Cited on 21st January 2010, pp 3

[5] Main theme from Efraim Turban and David King, Introduction to Ecommerce, New Jersey: Pearson Education, 2003 - Cited on 21st January 2010, pp 7-8 & my course notes from APDMS - Cited on 21st January 2010

[6] 1: Source = E-Business Models www.soc.napier.ac.uk/module - Cited on http://www.coursework.info/University/Business_and_Administrative_studies/Marketing/www_eBay_com_Case_Study__E-Business_mode_L833718.html, 22nd January 2010

[7] Source: www.internetworldstats..com/stats.htm, Copyright 2009 Miniwatts Marketing Group - Cited on 03 February 2010

[8] Source: www.internetworldstats..com/stats.htm, Copyright 2009 Miniwatts Marketing Group - Cited on 03 February 2010

[9] Source: www.internetworldstats.com/stats.htm, Copyright 2009, Miniwatts Marketing Group - Cited on 03 February 2010

[10] Source: www.internetworldstats..com/stats.htm, Copyright 2009 Miniwatts Marketing Group - Cited on 03 February 2010

[11] Source: www.internetworldstats.com, Copyright 2009, Miniwatts Marketing Group - Cited on 03 February 2010

[12] Source: www.internetworldstats.com, Copyright 2009, Miniwatts Marketing Group - Cited on 03 February 2010

[13] Source: www.internetworldstats.com, Copyright 2009, Miniwatts Marketing Group - Cited on 03 February 2010

[14] Source: www.internetworldstats.com, Copyright 2009, Miniwatts Marketing Group - Cited on 03 February 2010

[15] Jeffery F. Rayport and Bernard J. Jaworski Introduction to e-Commerce, McGraw-Hill/Irwin, 2003 - The McGraw-Hill Companies Inc. - Cited in APDMS Course Notes, dated Oct/2008