InformationWeek
Defining The Business Value Of Technology
June 21, 1999
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Altered Relationships
E-business redefines customer-supplier relationships
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IT director, Fujitsu Microelectrics co-director, E-commerce program, Andersen Consulting VP of business development, E-Steel CIO, Barnesandnoble,com VP of strategic business planning, Toshiba America director of business development, Art.com |
During two weeks in May, InformationWeek asked electronic-business practitioners to participate in an online discussion about how E-business is changing the ways they deal with their customers, suppliers, and partners. The discussion branched off into topics that have tangential ties to the original theme. One string addresses the original theme. Another string has Chris Sorensen, director of business development at Art.com (an online seller of framed and unframed art), and Gary King, CIO at barnesandnoble.com (the online book merchant), discuss how existing businesses and Internet-only enterprises face different E-business challenges. In the third string, E-business practitioners exchange thoughts on the changing relationships between IT and users within a company.
What follows are edited transcripts of three strings of that discussion.
Curd: We (Fujitsu Microelectronics) recognized early on that customer-supplier integration could be a source of competitive advantage. A partnership of sales, operations, and IT helped us focus resources to implement solutions quickly and efficiently. As companies strive to improve their links with suppliers, the cost of supporting multiple suppliers is highlighted. As they work to reduce the number of suppliers, they stay with the ones who are easiest to work with.
King: We (barnesandnoble.com) have moved from the traditional retail-logistics model of buy-store-sell to the Internet model of sell-source-deliver. For our customers, this means we can put time and energy into product selection and navigation rather than inventory tracking and accounting.
InformationWeek: Please discuss critical success factors at barnesandnoble.com.
King: Virtual sourcing of inventory at the time of customer purchase drives the need to maintain inventory availability in real time from a number of discrete suppliers. The integration of supply chains occurs across multiple vendor warehouses.
We use a standards-based approach to physical and logical communication to achieve this. Both parties can share order and inventory information seamlessly across different hardware and software platforms.
For those orders that can be fulfilled at a supplier's site, we avoid duplicate handling by initiating a direct shipment from the warehouse to the end consumer using the agreed-to protocols.
Prior to moving to this architecture, all orders were handled via our pick, pack, and ship operation. This introduced double handling of the book; once to pick from inventory and once to pass through the central distribution facility.
The challenge to this approach is in finding the benefits that are mutually achievable by both parties. In our case this means helping to improve the customer responsiveness of traditionally wholesale or bulk-ship capable organizations.
Moses: E-Steel--the forthcoming Internet marketplace for steel--has developed an application designed specifically with the buyer-supplier relationships in mind. On the e-Steel site, buyers and sellers are accountable for transactions. Buyers know who is selling the material, so they can ensure quality and service standards are met; similarly, sellers know who is buying the material, so they can provide the service and pricing terms appropriate for that customer.
While businesses in general may realize the value of the Internet to increase their reach to new markets, developments in personalization technology will continue to reduce fear of "broadcast" information on the Web. Over time, the ability to provide better service to customers and suppliers will be the difference between winners and losers in evolving e-commerce markets.
continued...page 2, 3
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