Atal Bihari Vajpayee

Indian Institute of Information Technology &

Management, Gwalior

ASSIGNMENT-3  
Information Technology in Business (ITB) 

(IPG-MBA, SEMESTER VII)

Submitted to
Dr. Vinay Singh  

Submitted by
Chandan Kumar | 2017IMG-017
Chapter 1: Integrating suppliers in a demand-pull supply chain

Q1.1 Write Notes:

(a) E-Commerce
(b) Elements of Supply Chain
(c) Information Integration
(d) Business Processes
(e) Business Transactions through e-Commerce

Ans.

(a) ​E-Commerce​:
E-commerce, or electronic commerce, refers to transactions conducted via the internet. In
e-commerce, the parties are engaged in selling and buying products and services. The term
e-commerce encompasses other activities, including online auctions, internet banking, payment
gateways, and online ticketing.

Types of e-commerce businesses - We can categorize them according to the products or services
they sell, the parties they transact with, or even the platforms they operate.
Classifying e-commerce businesses according to what they sell:
1. Stores that sell physical goods​ - These are the online retailers. Once the shopper has made a
purchase, the store delivers the item(s) right at their doorstep. Ex - Warby Parker.
2. Service-based e-tailers​ - Aside from products, services can also be purchased online. Every
time you hire educators, freelancers, and consultants through online platforms, you’re doing
business with service-based e-tailers.
3. Digital products​ - Ecommerce transactions are conducted via the internet, which is why, in the
e-commerce realm, products are usually referred to as “e-goods.” Ex - ebooks.
Classifying e-commerce according to the parties involved
1. Business to consumer (B2C) - Transaction between businesses and individuals.
E.g., Netflix
2. Business to business (B2B) - In the B2B e-commerce model, both parties involved are
businesses.
3. Consumer to business (C2B) - The C2B business model represents a transaction in which
individuals create value for businesses.
E.g., Freelancer
4. Consumer to consumer (C2C) - C2C e-commerce happens when the two parties involved are
consumers that trade with one another.
E.g., eBay
5. Government to business (G2B) - The G2B e-commerce models happen when the government
provides companies with goods and services.
E.g., data centers
6. Business to government (B2G) - The B2G model refers to companies and businesses that
provide goods and services for the government.
E.g., Open Gov
7. Consumer to government (C2G) - Every time consumers pay taxes, health insurance,
electronic bills, or request information concerning the public sector, they’re engaging in C2G.

(b) ​Elements of Supply Chain​:

A properly designed supply chain strategy, with the core elements, will give a host of
benefits including support of the business strategy, improved customer relationships and
satisfaction, and efficiency, performance, response, and quality improvements. The elements of
the supply chain strategy are:

1. ​Integration​: Integration starts at the strategic planning phase and is critical throughout the
communications and information sharing and data analysis and storage. A single-view,
accurate, and reliable source of information on the supply chain activities and details
reduces human error, delays, shortages, and over/under-stocking, and allow to plan for
and mitigate supply issues or interruptions.
2. ​Operations​: The operations require an accurate, real-time representation of the inventory
and production schedules in order to monitor the output and forecast production and
distribution patterns. With the right software, one is able to align the operations with the rest
of the business, one should provide accurate and reliable information on the production and
current inventories for more efficient fulfillment processes. Improving the
profitability by predicting likely interruptions and challenging to reduce its impact on the
business, and streamlining the operational processes to facilitate a smoother, less
expensive path to fulfillment is vital.
3. ​Purchasing​: The right supply chain software does a great deal in terms of sourcing
products in the supply chain and ensuring that one is taking advantage of the most
competitive pricing and most reliable products. Demand forecasting gives one a solid
and practical method of ensuring that they have the right product, in the right quantity, at
the right time. Keeping track of suppliers, competing producers, and demand cycles, is
important so that one can reduce their operating costs across the sourcing and
purchasing process.
4. ​Distribution​: The transport, delivery, and return of goods is a component of the supply
chain that can always be simplified, optimized, and corrected for better client service and
reduced operating costs. With varying options of stock origin, the delivery and returns
process should be centralized for a real-time view of inventory, order status, and stock
location regardless of whether an order originated in-store or online.

(c) ​Information Integration​:

Information integration allows businesses to amalgamate data from different sources to provide users
with a single, real-time view of business processes and performance. As such, information
integration is the first step toward transforming data into meaningful, actionable and valuable
business insights.
The Benefits of Information Integration -
● Improved Customer Experience
● Increased Productivity
● Streamlined Processes and Operations
● Improved Decision Making
● Better Business Intelligence

(d) ​Business Processes​:

A business process is a series of steps performed by a group of stakeholders to achieve a
concrete goal. Each step in a business process denotes a task that is assigned to a participant.
It is the fundamental building block for several related ideas such as business process
management, process automation, etc. The need for and advantages of a business process are
quite apparent in large organizations. A process forms the lifeline for any business and helps it
streamline individual activities, making sure that resources are put to optimal use.

The 7 steps of the business process lifecycle are:

1. Define goals: What is the purpose of the process? Why was it created? How will you
know if it is successful?
2. Plan and map process: What are the strategies needed to achieve the goals? This is the
broad roadmap for the process.
3. Set actions and assign stakeholders: Identify the individual tasks the teams and
machines need to do in order to execute the plan.
4. Test the process: Run the process on a small scale to see how it performs. Observe any
gaps and make adjustments.
5. Implement the process: Start running the process in a live environment. Properly
communicate and train all stakeholders.
6. Monitor the results: Review the process and analyze its patterns. Document the process
history.
 7. Repeat: If the process is able to achieve the goals set for it, replicate it for future
processes.

(e) ​Business Transactions through e-Commerce​:

E-commerce (electronic commerce) is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet. These business
transactions occur either as business-to-business (B2B), business-to-consumer (B2C),
consumer-to-consumer or consumer-to-business.

Q1.2 Justify the statement that ‘Does E-Commerce adoption be well planned to get the
maximum benefit of it in the business?’

Ans. Planning is the first step of supply chain management. Before the beginning of the entire
supply chain, it is essential to finalise the strategies and put them into place. Checking the
demand for the product or service, checking the viability, costing, profit, and manpower etc., are
vital.
Around 80% all e-commerce businesses fail. And there are three common reasons why
customers are likely to leave you in the dust:
1. Customers don’t know how to use your site
2. Product value isn’t clear
3. Navigation is difficult
A well planned step can help to avoid these kinds of failures.

Q1.3. Does ‘Enterprise Integration through IT’ need to be value-oriented and

value-driven?
Ans. A value-driven approach to enterprise architecture plays a central role in all this. It supports
portfolio management with the analyses needed to determine the expected value, cost and risk
of various initiatives. It provides the necessary input for prioritizing and planning changes to your
business and IT landscape. It gives you program-level coordination across value streams to
realize these changes in a coherent manner, and it fosters reuse of valuable knowledge and
assets. Finally, it allows you to track the realization of the expected benefits across the business
and IT landscape, and hence to correct your course if necessary.
Next to this value orientation, the flow-based mindset outlined above should also be adopted by
architects. By delivering a steady stream of analyses and changes in a ‘think big, act small’ way,
they can help the organization realize a long-term vision one step at a time.
Enterprise architecture helps us ‘connect the dots’ between strategy and operation. In this way,
enterprise architecture truly becomes the bridge between the strategic direction of the
organization and its day-to-day operations and change processes.
Chapter 2: Predicting the global diffusion of internet usage-effect of the market
environment

Q2.1 Explain the understanding of ‘information diffusion processes’ in general.

Ans. Social networks are a prominent tool for the diffusion of information in society. Information
diffusion is the process by which a new idea or new product is accepted by the market using
varied data. The rate of diffusion is the speed with which the new idea spreads from one
consumer to the next. Adoption (the reciprocal process as viewed from a consumer perspective
rather than distributor) is similar to diffusion except that it deals with the psychological processes
an individual goes through, rather than an aggregate market process. The objective of a
diffusion model is to represent the level of spread of an innovation among a given set of
prospective adopters in terms of a simple mathematical function of time that has elapsed since
the introduction of the innovation. Innovation typically represents newness, it is not the same
thing as invention, it is both a process and an outcome, and it involves discontinuous change.
Those who adopt early are often too innovative to be influential in a local network. They
contaminate their contacts who in turn contaminate their contacts and so on. The more people a
person is linked to, the greater the chances that that person will adopt the innovation. At a larger
scale, and since communities are interlinked, it is very likely that an innovation jumps from one
community to another via boundary spanners (or bridges) and starts over diffusing again. It is a
characteristic of social networks.
However, any diffusion process can be expedited, delayed, or even stopped if it is discovered
that the product (e.g., a video, an audio, a book, etc.) is faulty, and it should be fixed and then
released again. This process is called an intervention. Intervention can be achieved via several
methods such as stopping the production of the product, limiting the distribution of the product,
restricting the exposure to the product, reducing the interest in the product, or reducing
interactions within the population. In any way, intervention processes can cause
damage to the work of small companies as many customers will no longer trust the products
that are produced by these companies.

Q2.2 Write your understanding about the base diffusion model

Ans. ​The Bass model or Bass diffusion model was developed by Frank Bass. It consists of a simple
differential equation that describes the process of how new products get adopted in a population.
The model presents a rationale of how current adopters and potential adopters of a new product
interact. The basic premise of the model is that adopters can be classified as innovators or as
imitators and the speed and timing of adoption depends on their degree of innovativeness and the
degree of imitation among adopters. The Bass model has been widely used in forecasting, especially
new products' sales forecasting and technology forecasting.
Bass (1969) concluded that an innovation diffuses because of spread of information between
adopters and from the mass media to adopters.Mathematically, the model is described by Eq -

The N(t) on the left-hand side measures the number of cumulative adopters, and ; on the right hand
side measures the point of time. Parameter m(t) gives the upper asymptote of the function, and thus
the final number of adopters. Bass sees the diffusion as a communication process, where the
adoption is due to innovativeness (measured by p)and imitation (measured by q). Both parameters p
and q have an effect on the shape of the diffusion curve.

The Bass model and its revised forms have been used for forecasting innovation diffusion in several
areas like retail service, industrial technology,agricultural, educational, pharmaceutical and consumer
durable goods markets.

Q2.3 Discuss the factors affecting the performance of the base diffusion model

Ans. As most of the previous applications of the Bass model have concentrated on one or just a
few successful innovations and market areas, and mostly on developed western economies,
there is a lack of understanding as to whether the diffusion model could be applied to less
developed countries. Heeler and Hustad (1980) provided one of the earliest international
diffusion analyses in marketing literature. Based on the Bass model, they found that the
parameters varied by country and forecasting error was higher with international than U.S. data,
and concluded that communication patterns and economic restraints may explain the
differences between countries.
The time dimension presents several limitations on the accuracy of the model
specifications. In order to yield robust and stable parameter estimates at least six to ten periods
of existing data are required for modeling, and the data should include the peak of the
non-cumulative adoption curve. Constraining the parameters to plausible ranges may allow for
improved estimates with fewer observations, but the literature provides insufficient evidence on
this subject (Parker, 1994). Bass (1969, p.266) noted "parameter estimates are very sensitive to
small variations in the observations when there are only a few observations". There is assumed
to be only one sales peak, which occurs no later than the penetration has reached 50% level,
and around which the diffusion curve is symmetric. Furthermore, the early years of product
diffusion often exhibit chaotic patterns, and the usefulness of these observations is questionable
to estimate parameters, which are responsible for longterm trends. Based on the discussion
above, it is assumed that the Bass model works better in countries, where the diffusion has
started earlier.
 The Bass model assumes a two step flow of communication, where the message of the
innovation is first picked up through mass media communication by a few innovators who then
pass the word to other members of the social system. This implies a complete social network,
where all adopters interact with all nonadopters, which is unrealistic given the segmented nature
of most markets. The Bass model is therefore supposed to work better in markets, where large
amount of social communication among the members helps to reduce the risks of adoption.
Social communication is likely to be enhanced by cultural homogeneity, equality and good
communication infrastructure. The use of the Bass model is inappropriate in international
settings where the supply of the product is restricted. Therefore the diffusion models for
predicting the Internet usage should perform better in wealthier countries with better availability
of telecommunications infrastructure and terminal devices.

Q2.4 Discuss the factors affecting the parameters of the base diffusion model

Ans. ​A synthesis of the factors that are assumed to affect the performance of the Bass diffusion
model, estimated market potential and rate of diffusion.

Chapter 3: Can Electronic Data Interchange (EDI) measure up to a collaborative

supply chain?

Q3.1 Write the summarized understanding of the following key concepts

(a) EDI to internet-based collaborative systems
(b) EDI evaluation
(c) The impact of EDI on the business
(d) What are the popular methods used in measuring EDI
Ans.

(a) ​EDI to internet-based collaborative systems​:

There are many definitions of EDI, such as, the "computer-to-computer transmissions of
standard business data" and "intercompany computer-to-computer communication of standard
business transactions in a standard format". However, this early e-Commerce system
necessitates a more detailed definition involving the transmission of standard business
documents in a standard format from one trading partner's computer application to another.
Distinguishing EDI as a standard trading partner interface highlights the limited transaction sets
of this type of system. In the last decade, Enterprise Resource Planning (ERP) has gained
momentum as an enterprise wide information system. Although until recently ERP systems were
predominately internally focused with only limited support for inter-organizational linkages. The
development of truly collaborative systems is only now beginning to evolve with the Internet as
an enabler. Collaboration is defined as a process of decision making among independent
organizations involving "joint ownership of decisions and collective responsibility for outcomes".
For collaborative relationships, this definition could be elaborated to include: a commitment to
working together; goal congruence and benefit sharing. Since the success of collaboration
depends upon the ability and willingness of managers to build meaningful relationships and
create trust. Internet-based collaborative systems can be defined as hubs for collaborative
commerce efforts, where companies can exchange proprietary data, jointly manage projects and
cooperate on the design of new products.

(b) ​EDI evaluation​:

The difficulties in evaluating the benefits are wide ranging, including the complexity and
dynamics of the supply chain, the socio-political dimensions of trading partner relationships, the
various organizational contingencies to the actual measurement of the performance outcomes.
The majority of the information systems literature on EDI is focused around five separate
perspectives:
(1) a 'technological' perspective based upon the technological obstacles as a barrier to
successful adoption.
(2) An 'impact on organizations' perspective where the potential of EDI for organizational and
strategic benefits are evaluated.
(3) An 'implementation' perspective which explores the role of planning or critical success factors
in adopting EDI.
(4) An 'inter-organizational structures' perspective which concentrates on the ability of EDI to
restructure an industry or transform individual partnerships.
(5) A 'business process reengineering' perspective emphasizing how EDI can enable business
processes and provide a platform for redesigning processes.
Strategic management literature often criticizes the transaction cost paradigm as it concentrates
on the extremes of markets and hierarchies while neglecting network forms. This network
concept considers EDI a structural enabler to improve flexibility, exchange and adaptation
processes. Thereby allowing individual firms to increase their resources and capabilities to
compete effectively against competitors by coordinating their strategies, resources and
competencies in these structures.
Many operations management authors argue that linking information systems allows more
supply chain integration and information sharing, which can substantially improve overall supply
chain performance. These systems can provide enablers for better coordination and planning of
the supply chain if organizations develop their capabilities for sharing information in an effective
manner. The complexities of supply chain interactions need to be considered when evaluating
the benefits of inter-organizational systems.
Another important consideration is the effect of socio-political factors, in particular
interdependency, power and trust. The resource dependency approach focuses on the
power/dependence relationship of organizations, since EDI is often regarded as a control
mechanism to expand influence and power. Various studies have indicated that these factors
have an impact on EDI use and its resulting benefits. However, a criticism of resource
dependency theory is the limited focus on dyadic relationships between trading partners. A
network perspective argues that in order to understand the dynamics of inter-organizational
coordination it is necessary to study 'several party' relationships.
The limited marketing research that exists on EDI is mainly concerned with the influence on
trading partner relationships. An alternative to the transaction cost approach, authors emphasize
the socio-political impact on the channel relationship or the innovation adoption theory. Williams
et al. (1998) investigated how organizational behavior affects the channel relationship through
innovation adoption theory. Indicating that the adoption of technologies is not only influenced by
internal factors but also the organization's external environment.

(c) ​The impact of EDI on the business​:

The majority of the empirical research indicated a positive impact between EDI adoption
and operational benefits in terms of reduced transaction costs, improved cash flow, higher
information quality, quality improvements. However, some studies could not substantiate a link
between EDI and inventory level reductions / cycle times, which was disputed by 20%. Another
contentious direct benefit is whether EDI contributes to quality improvements. However, the
limited number of studies precludes any firm conclusions. The paucity of studies examining EDI
impact on quality improvements and increased cash flow may stem from the difficulty in isolating
these variables in a fluid and multivariate environment. Although most of the studies
investigating the ability of EDI to increase operational efficiency in adopting organizations
supported this contention, 15% of the sample disputed this claim. Of the eighty-five empirical
studies reviewed, roughly two-thirds investigated some elements of indirect benefits often with
contradictory evidence. The three most contentious benefits are: competitive advantage,
improvement of buyer-seller relationships and improved customer service.
Competitive advantage is the most contentious with 52% of the pertinent studies unable to
substantiate the linkage with EDI. Benjamin, De Long et al. (1990) proposed that EDI can
provide competitive advantage over a limited period but eventually becomes a competitive
necessity when other competitors adopt the technology. Nishiguchi (1994) suggests that the
inability to provide long-term sustainable competitive advantage implies that "EDI is essentially a
cooperative phenomenon”. However, even the notion that EDI is a cooperative phenomenon has
been contested by 31% of the applicable studies in this survey. Some studies have observed the
forced adoption by their trading partners, e.g. Webster (1995), observed lower potential benefits
from the non initiator organization than the initiator. Several authors have suggested EDI
provides a more efficient and less costly method of communication with customers. However,
other studies indicate that EDI may hinder customer service due to a buyer being locked into a
limited number of suppliers which exerts pressure on the suppliers.

(d) ​What are the popular methods used in measuring EDI​:

One crucial element in determining the effectiveness of inter-organizational systems is measuring the
potential benefits from Internet-based collaborative systems. The difficulty lies in quantifying the
benefits given that traditional financial management techniques focus on conventional models such
as Return on Investment methods, Net Present Value, Activity-Based Costing and Cost Value
strategies to justify implementing information systems. While these methods are satisfactory for
measuring cost savings, many of the inter-organizational benefits are less tangible. Often the value
of IT initiatives is based upon contribution to a firm's competitiveness through information transfer
and value creation at a strategic level. Furthermore, the impacts of inter-organizational systems are
often indirect and/or unintended, requiring consideration of the contingencies in supply chain
interactions.
Diverse research methods have been employed to measure EDI benefits. Surveys and/or
questionnaires are utilized the most frequently. These techniques are often supported by statistical
analysis of the results. The substantial use of surveys and questionnaires may be due to the
problematic nature of measuring indirect benefits. Often the indirect benefits of organizations require
certain evaluation criteria that are difficult to quantify such as customer satisfaction, information flow,
supplier performance and flexibility. The primary purpose of these modeling techniques is to forecast
the effects of information sharing. However, difficulties in employing this methodology arise when
examining a network relationship (non-dyadic) or investigating multivariate environments.
Furthermore, the fluid environment of an Internet-based system is problematic when attempting to
examine multiple temporal variables. Alternatively, simulation models are used to replicate a realistic
trading environment to provide traceable results from EDI implementation. Simulation models can
provide a controlled environment in situations where it is problematic to isolate the desired variables
as in a network relationship. To assess the actual indirect benefits of Internet-based collaborative
systems, an in-depth qualitative-based approach is deemed most appropriate.

Q3.2 Through your thoughtful view on a collaborative system. How does a collaborative
supply chain system work? Justify your view using a simple example that can fit with the
explanation.

Ans. Proactive organizations are increasingly pursuing more collaborative opportunities with
their supply chain partners. Intensifying this interest is the accelerated pace of development of
Internet-based systems capable of bridging the organizational divide. Many organizations
perceive Internet-based systems as an 'enabling technology' in providing operational and
potentially strategic benefits to their supply chain activities. Although, in the past, some
organizations invested in Electronic Data Interchange (EDI) in order to obtain operational
improvement and strategic advantage in their industries, yet actual results are mixed when
compared to company expectations. The limited uptake of EDI as well as the uncertainty
surrounding the benefits of inter-organizational systems may hinder future investments in
information system linkages with supply chain partners. The existing EDI approaches for
assessing inter-organizational benefits can provide an initial platform for investigation, they are
insufficient as an archetype for Internet-based collaborative systems due to the complexities of
supply chain interactions, the difficulty in isolating collaborative benefits and the multiplicity of
business processes. Furthermore, there are a discernible lack of studies which evaluate EDI by
integrating the diverse perspectives of information systems, organization theory, operations
management and strategic management literatures. Hence, a multi-disciplined holistic approach
is required to fully evaluate the complexities and expanded potential of these new
Internet-based collaborative systems.
Supply chain collaboration happens when two or more discrete organisations work
closely together to meet shared objectives. These objectives are typically focused on cost
reduction, customer service improvement, or raising specific aspects of supply chain
performance. Any two or more companies dependent on one another to supply an
end-customer should be prepared to collaborate. For example:
● A retailer might collaborate with a wholesaler or manufacturer from which it purchases
goods.
● A manufacturer might collaborate with a raw materials supplier to add value for its
end-customers.
● A raw materials supplier might collaborate with one or more transport companies to
generate service and cost benefits for its largest manufacturing customers. In the case of
supply chain collaboration, sharing of information leads to enhanced knowledge across the
chain that allows you to achieve:
● Lower inventory levels and higher inventory turns
● Lower transportation and warehousing costs
● Lower out-of-stock levels
● Shorter lead times
● Improved customer service metrics
● Visibility into customer demand and supplier performance
● Earlier and quicker decision-making

Q3.3 On what parameters (Constructs) any COLLABORATIVE SYSTEMS using EDI are
evaluated?
Ans. The evaluation approaches of EDI can provide a rudimentary platform for the initial
assessment of Internet-based collaborative systems. However, there are several limitations
associated with using EDI as the benchmark for research into Internet- based collaborative
systems.
1. Traditional EDI systems are based around proprietary communication protocols limiting
the exchange potential of the system and often constrained by industry standards (Lee
and Whang, 2000). Open protocols (TCP/IP) and platform languages can provide more
sophisticated technological capability and capacity to share information across
 organizational boundaries more conveniently, more flexibly and at a lower cost. This
greater capacity increases the likelihood of greater potential benefits.
2. Generic EDI systems may fail to adequately represent the special requirements of a
particular supply chain, since EDI is designed for transaction processing with rigid text
formats, this severely limits higher level information sharing. The augmented scope of
transaction sets increases the diversity of potential benefits including indirect benefits.
3. A collaborative system based around an Internet network structure expands the
interaction variables from a typical dyadic focus of an EDI system towards multiple
relationships. This network of interactions among supply chain partners has to be
considered when assessing the benefits of IBCS.
4. With the situational factors much more complex, the multiple dimensions of variables
become more intensified and consequently, so does the evaluation methods required.

The preceding analysis points to the need for a combined perspective, employing a
holistic approach to the evaluation of IBCS in order to truly assess the potential of
collaborative supply chain initiatives. In addition to previously identified variables
from the EDI literature, the distinguishing characteristics of collaboration need to be
identified and evaluated, namely: power and trust; information sharing and knowledge
transfer; and management support (goal congruence).

1. Power and Trust

Both the development and operation of inter-organizational systems pose opportunity
shifts in the balance of power between companies. The interdependency of organizations,
particularly the pressure from trading partners, plays a central role in inter-organizational
systems adoption by firms. One of the biggest challenges in supply chain relationships is
cultivating mutual trust. However, participants may be reluctant to share information on costs
and processes, due to sensitive and confidential information, which inhibits the trust necessary
to harness collaborative inter-organizational efforts. The constructs of power and trust, often
omitted from EDI studies, are necessary for a truly IBCS to achieve collaborative benefits.

2. Information Sharing and Knowledge Transfer

A central premise of collaboration is to what extent companies are willing to share information
and give up their individualism in favor of more collaborative partnerships. Firms can form
information partnerships, by sharing information and linking their information systems to achieve
unique synergies. This willingness of organizations to transfer knowledge can create value
networks, which redistribute organizations' core competencies to supply chain linkages and
increase the value throughout the supply chain. The extent of information sharing and
collaborative work practices are vital constructs to evaluate collaborative performance.

3. Management Support (Goal Congruency)

Top management support is important in inter-organizational systems, requiring long term vision
and top level interaction among trading partners. The diverse nature of the buyer-supplier
relationships within one firm or a supplier network can have a substantial impact on the
attainment of the inter-organizational system. A collaborative system needs flexibility to pursue
the different organizational goals required when supporting relationships from strategic to
transaction-based suppliers. To fully achieve more information sharing, organizations need to
participate in goal congruency as well as being organizationally capable and prepared to
participate. The management support for the relationship and the extent of goal sharing are
important collaborative constructs.

A more comprehensive holistic model needs to incorporate the following three criteria:
(1) The differences between EDI and Internet-based technologies reveal the need to consider
each organizations' preparedness in terms of integrating these new systems within its supply
chain.
(2) The interaction contingencies that address the complexities of the supply chain dynamics
such as the multiplicity of relationships; and
(3) The perceptions of organizations adopting the system are considered to be a crucial
ingredient in the determination of benefits from collaborative systems. A higher recognition of the
benefits from the system increases the likelihood that resources will be allocated to implement
the system.

Chapter 4: The Integration of a private market place into your value chain: A
suggested practitioners framework

Q4.1 How internet contribute value-added integration of a private marketplace?

Ans. The Internet has allowed companies to set new benchmarks in performance and
expectations. Marketplaces, an electronic meeting place where commerce can be done, have
been a Utopia or a crippling asset. Marketplaces are internet connections between buyers and
suppliers. Marketplaces provide prompt visibility of inventory status, pricing, and capacity.
Marketplaces are yet another technology if exploited correctly can be a revolutionary innovation
for a company. There exist public and private marketplaces. Public marketplaces are
characterized by many buyers and several suppliers. In contrast, a private marketplace is
owned and governed by either one supplier with several buyers or one buyer with several
suppliers.
Many companies are starting with a private marketplace to lessen their risk in implementation
and guarantee returns. One of the main advantages of private exchanges can begin by working
with a single, long-standing partner. This narrows down any process gaps that may otherwise
exist between new partnerships. Private exchanges are attractive because they're efficient. The
private marketplace allows a firm to test or sample the technology. If the process work and
architecture is done systematically, the incremental cost to add other partners is nominal
 compared to the incremental productivity and efficiency gains. The base technology
should be flexible enough to connect to other marketplaces, both private and public, and provide
scalability.
Nokia is an example of a firm who has exploited private hubs to its advantage. Their
premise of sharing knowledge using Internet value chains between suppliers and customers has
provided a knowledge base of activities, velocity of products and customer intimacy. They
integrated their ERP (enterprise resource planning) and APS (advanced planning systems)
systems to the Internet providing clear communications between their suppliers and customers.
This superb application of technology provided them an opportunity to leapfrog into a leadership
position. Therefore, it is clear private marketplaces are a competitive advantage if applied,
managed and measured properly.

Q4.2 Describe the approaches of using the internet to the integrated marketplace?
Ans. In evaluating and implementing a private marketplace, one should break the project into
two major segments: planning and execution.
Planning should include your assessment and business case. Three levels of planning include
strategic, tactical and operational. On the strategic level, it is important to align the business and
the technology strategy. Therefore, before implementing any new technology into an
organization one must examine carefully the corporate strategy. Corporate strategy is an art to
itself and many frameworks can be utilized to solidify corporate position against market
opportunity. The importance of the strategic exercise is to insure the outputs from the strategic
plan align on how the private marketplace will be used to execute the plan. The tool is only an
instrument with no inherent ability to execute plans on its own. There are several methods that
have endured the test of time. No matter what combination of methods you use one must be
sure that the methods fit together tightly to provide uniformity and integrity.

Q4.3 Describe the strategy of using the internet to the integrated marketplace?

Ans. Hax presents an innovative model using a triad approach. Using three points of a triangle,
one can apply his method to private marketplaces. Hax presents three distinct strategies to
provide base objectives: Competition based on System Economics, Customer Solutions and
Best Product. Competition based on System Economics relies on setting de facto standards in
the industry. A Customer Solution is well represented by MCI WorldCom. They have expanded
"horizontally" across a range of related services for the targeted customer segment by bundling.
A single bill and one contact for all the services provide a one-stop shopping concept for those
of us inundated with the complexity of our phone services.
To meld in other forms of strategic analysis, one can incorporate Bruce Merrifield's strategic
priorities (Merrifield, 1991) and Michael Porter's Value Chain analysis and five-force diagram
(Porter, 1998). Bruce Merrifield recommends a sequenced step of priorities starting with
leadership and vision. Porter's value chain can help with data collection and analysis to bring
out points one must consider in moving forward. Porter's well recognized five-force diagram
and value chain analysis strengthens the strategy and provides a common language for
 corporate communication. A systematic approach to private marketplaces can expedite the
benefits and mitigate risks. Although not exclusive, three methods in the technology space
include ASSETS, technology road maps, and the Technology Audit Method. ASSETS is a
framework designed to integrate technology and business decisions regarding acquisition,
development and use of advanced technology like private marketplaces. ASSETS is
recommended to be implemented in a phased approach. The Technology Audit method can be
used as a precursor input to the ASSETS model. The Technology Audit Method was developed
by Javier Garcia-Arreola to determine current technological status, identify areas of opportunity
and leverage a company's technological strength. The model examines six major areas:
technological environment, technology categorization, markets and competitors, innovation
processes, value-added functions and acquisition & exploitation of technology. The ASSETS
and Technology Audit Method can help formulate success factors for a private marketplace. To
position the private marketplace for full exploitation a technology road map can be developed. A
technology roadmap was developed by Motorola as a corporate wide technology tool. It
provides an objective evaluation of Motorola's capability in the technology, a comparison of
Motorola's capabilities and those of its competitors, today and in the future, and a forecast of the
technology.

Q4.4 Describe the ‘tactical’ of using the internet to integrated marketplace?

Ans. An implementer of private marketplaces has five key domains to manage: engagement,
business processes, organizational change, application portfolio, and the technical architecture.
Each of these areas has to be subdivided into more manageable components. To illustrate, the
technical architecture has to be broken down to middleware, database, security, single sign on,
hardware, terminals, communication protocols, etc. These subcomponents are naturally
composed of a plethora of legacy and new technologies. The domains have to be connected
using dependency diagrams. If there is a major need in the business domain the technical
domain must adapt to accommodate the business requirement. This is a bilateral situation. If the
domain needs are not synchronized, the private marketplace will not be successful. Then add
constraints of time and resources. The timing of resource consumption is equally important
contributing to the success of a project. If the activities in a domain are not aligned to different
stages or phases in a project, less than spectacular results can be produced. Although popular
phased approaches can be derived from ERP (high level design, detail design, configuration,
and execution) experience or Six Sigma (plan, do, check, and act) initiatives, the detail behind
each phase must include specifics on activities and tasks associated with private marketplaces.
As, private marketplaces include trading partners outside of the immediate control of the firm
and a complex web of technologies. Therefore, project management techniques need to be
updated that consider the technical attributes of a private marketplace.

Q4.5 Summarize the business case presented in chapter 4 on the use of the internet to
integrate the marketplace that has been explained considering strategy, tactical, and
approach?
Ans. A business case is a document that begins with a purpose. The purpose is simply a short
and direct paragraph letting the audience know why the document was prepared. Relevant
information should be summarized in an introduction and include a strong correlation to the
strategic objectives of the business. There should be enough information in the purpose section
that the reader understands the project without reading the entire document. The business case
should provide a clear description of the private marketplace and discuss how the private hub
exploits an opportunity, solves a problem, or meets a business need. It should be descriptive
and concise enough to communicate what the problem or opportunity is, why is this a problem
or opportunity, and how the private marketplace is satisfying the problem or opportunity. The
case should explain information on the time required to be successful, resources, effort, and
budget.
The operating scenario provides a common body of knowledge for understanding the
project. It should describe the process and provide a foundation or framework for discussions
with all the project teams and evaluators for the impacted areas. It should describe down to the
task level what changes are to be prioritized, examined, or changed. If the implementation of a
private marketplace changes existing operations, a description of the current operating scenario
is needed as a starting point or base of knowledge for the proposed operating scenario. In
addition to the normal operating scenarios, governance is imperative when planning out a
private marketplace. Since you are dealing with systems, people, and processes outside your
company, you must consider how to handle any changes or modifications that could occur with
your trading partners. Row charts and diagrams are invaluable with the appropriate dependency
diagrams between processes, applications, and architectures.
In quantitative analysis, theories, including Information Economics, risk management, and EVA
(Economic Value Add - Stern, 1991), have initiated a formalized process to prioritize and
measure private marketplaces as it relates to capital expenditures and business strategies. In
many instances, productivity gains, financial impacts, customer service, and innovative metrics
are combined to target a specific objective. The modeling and personal productivity tools
available today enable firms to do very deep analyses in operations and finance. Excel, TORA,
OSL, CPLEX, SAS, Minitab, and other packaged software can do trend analysis, "what-if'
scenarios, stochastic processing, simplex algorithms, sensitivity reports, and very complex
financial analysis. Leveraging these tools into the business case analyses can be very helpful.
When a firm considers private marketplaces, it must consider the intangible and/or the soft
benefits marketplaces can bring. The use of the Supply Chain Operations Reference Model
(SCOR) or Collaborative Planning, Forecasting, and Replenishment (CPFR) guidelines can
provide direction depending on the firm and the industry. Most consulting firms and systems
integrators can provide base metrics to help drive financial models and discussions.
The financial section will act as a reference and monitoring device. It will serve the
project team as a quantifiable success rate factor that will bring favorable discussion during the
planning and execution phases. This section is where the cost/benefit analysis appears along
with sensitivity analyses of critical drivers. The development of a cost/benefit analysis begins
with a well-defined operating scenario. No work can begin without it. The cost/benefit analysis
helps determine if a project makes financial sense. Just because a project makes financial
sense does not mean that it should or should not be undertaken. The importance of financial
analysis is to establish facts and impacts to make the decision. Some projects are implemented
for strategic reasons and may be qualitative in nature. These qualitative elements should be
modeled based on documented assumptions. Sensitivity analyses
determining the most sensitive critical drivers in the cost/benefit analysis and financial risks
helps answer the question, " How much can key drivers change before a project is or isn't
financially viable?" Risks and alternatives should be documented including the recommended
solution as well as why this is the best solution.
Contingency plans should be mapped to each risk. Details in the planning phase are
essential before moving to the execution phase. Without proper planning, private marketplaces
find themselves doing the wrong things right or the right things wrong. The process is an
iterative closed-loop between planning and execution. If the plans were well integrated and
thought out with the appropriate project milestones and metrics, the execution should be fairly
straightforward. The ability to keep the project on track and moving forward are basic project
management attributes.