The
MBA program in Supply Chain Management
at NC State University is unique among business schools.
With the support of the Supply Chain Resource Consortium,
an industry/university partnership, the program brings
the industry into the classroom, involving students,
faculty and supply chain professionals in finding
solutions to the real industry problems. This project-based
approach to education reflects the new model for business
schools described by Peter Drucker.
For
more information...
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Peter
Drucker...
"Management is a practice, like medicine;
and the model should have been the medical school,
where the bulk of the teaching, especially the most
important teaching of the M.D. in his or her residency,
is performed by practitioners. Unlike medicine, where
you can bring sick patients into the classroom, business
education does not allow you to bring an organization
into the classroom. You can, however, bring experience
in through your faculty and students. Business educators
should be out as practitioners where the problems
and results are." |
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10/30/02
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The
Electronic Marketplace
by
Kelly Wright, SCRC
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Trade
through e-marketplaces is expected to grow
from 7.8% of e-commerce activity in 2002 to
48% of online trade by 2006. |
| • |
So
far, 15 percent of all Fortune 2000 companies
have set up private exchanges, and an additional
28% plan to have one by the end of 2003. |
| • |
Researchers
predict that private exchanges will garner
up to 90% of the investment in new e-marketplace
infrastructure over the next three years. |
With this kind of seemingly contradictory research,
how does one determine an electronic marketplace
strategy?
Electronic Data Interchange (EDI) networks have
grown to be key players in business to business
communication by introducing the transfer of data
electronically between companies using networks,
instead of using the old paper pushing method. Early
computers assisted businesses in storing and computing
data, but communicating the data to other companies
was challenging. In the 1960’s, telecommunications
technology allowed companies to transmit their data
over regular telephone lines. This was helpful in
decreasing transmission times and reducing paperwork,
but each communication was created for a specific
purpose or company – so no standard existed
to disseminate the valuable information to many
customers or partners.
Finally in the 1980’s, standards were introduced
which allowed the ubiquitous use of EDI. The Accredited
Standards Committee (ASC) developed ANSI X12 as
a national standard used by over 300,000 companies.
The only worldwide standard is known as UN/EDIFACT,
and there are also standards adopted by companies
in specific countries like the UK.
Value-Added Networks (VANs) and Electronic Trading
Networks (ETNs) are two types of EDI which allow
companies to communicate over private or semi-private
networks. EDI is now accessible to even the smallest
of companies due to lower fees and increased efficiency.
Many vendors are willing to customize a trading
network to their customer using capabilities of
EDI, XML, and the internet.
Public Business to Business (B2B) exchanges resemble
EDI but use different technology. Web-based public
trading networks allow users to send and receive
larger files, graphics, and databases using XML
(Extensible Markup Language). These exchanges assist
in increasing operational efficiencies, expanding
the customer base, exposure to new market segments,
and increased customer satisfaction. However, common
standards do not yet exist for XML causing some
confusion among users. Currently there are far fewer
public trading exchanges than private. This translates
to fewer potential customers. Security is an acknowledged
challenge… public networks do not have the
controls in place that more established private
vendors do. Finally, public trading places are just
that – public. They do not offer the privacy
and confidentiality of private e-markets.
Newer invitation-only private networks combine functionality
of EDI and XML to introduce closed trading networks
for multiple buyers and sellers. These marketplaces
have the benefits of online trading with the security
of closed networks.
Extracting cost from supply chains is a goal of
many SC managers. EDI is still the giant standard
in certain industries like retail, manufacturing,
and energy, and most companies plan to continue
their use of the mature technology. "We have
a full XML capability, and of all our clients, there's
been only one that's asked for XML," says Steve
Rabin, chief technology officer at transaction management
services provider eB2B Commerce. "Of 750,000
transactions per quarter we process, less than 1
percent is something other than EDI."
Forrester
Research estimates that private exchanges will
continue to carry most business transactions through
2003. But public e-networks are predicted to grow
quickly to conduct almost half of all transactions
by 2006. Hybrid systems which use both the EDI
standard as well as XML capabilities are also
gaining popularity.
Customers and suppliers should carefully consider
their competencies before committing to a long
term electronic marketplace strategy. Influence
in the supply chain as well as capabilities for
online interaction should be considered. Careful
analysis will help to identify whether it makes
more sense to build or join an exchange, launch
a portal, or simply use an intermediary.
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