Y Narahari, Computer Science and Automation, Indian Institute of Science

B2B MARKETPLACES AND E-PROCUREMENT

Y. NARAHARI Computer Science and Automation Indian Institute of Science Bangalore - 560 012 hari@csa.iisc.ernet.in http://www.csa.iisc.ernet.in

Y Narahari, Computer Science and Automation, Indian Institute of Science

OBJECTIVES OF THE TALK

 To bring out and understand the "important" role of electronic marketplaces in supply chain management  To understand "critical" design and implementation issues of E-marketplaces  To understand the issues in Eprocurement

Y Narahari, Computer Science and Automation, Indian Institute of Science

OUTLINE OF THE TALK

 Introduction  How do they add value?  Design Issues  E-Procurement

Y Narahari, Computer Science and Automation, Indian Institute of Science

ELECTRONIC MARKETS
 E-marketplaces are emerging to serve each point of every industry's supply chain  E-markets are highly collaborative EBusiness models that organize complex business processes between multiple participants into a virtual commerce community

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETPLACES : VALUE CREATION

 efficient transactional processes  new business relationships  new business models  new businesses

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETPLACES: CATEGORIES

 Horizontal  Vertical  Private (sell side, buy side)  Public

Y Narahari, Computer Science and Automation, Indian Institute of Science

EMERGENCE OF E-MARKETS
Alliance of IBM - i2 - Ariba Alliance of GM - Ford - Chrysler Alliance of mySAP- Commerce One - Oracle chemdex, plasticsnet, e-steel, paperexchange, metalsite, capacityweb, mro, bandx, logisticsweb, etc.  In India: Indiamarkets.com, eBizchem.com, Autoexchanges    

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETPLACES: A TAXONOMY
What is Bought

Operating
How it is bought

Manufg CATALOG HUBS

Systematic sourcing Spot sourcing

MRO HUBS

YIELD EXCHANGES MANAGERS

Y Narahari, Computer Science and Automation, Indian Institute of Science

BENEFITS TO BUSINESSES
 Extend the presence and reach of a company  Facilitate doing business with anyone, anytime, anywhere  Aggregation of content and facilitation of workflow lead to significant reduction in transaction costs  Cycle times are reduced and deliveries are quicker  Improves relationship with trading partners  market efficiencies
 

Better inventory management Better visibility leading to predictability

Y Narahari, Computer Science and Automation, Indian Institute of Science

BENEFITS TO BUYERS
 Aggregation of multiple suppliers  Direct access to suppliers and through dynamic pricing  Location and tracking of new suppliers  Provides more negotiating power  Leads to quick response buyers

Y Narahari, Computer Science and Automation, Indian Institute of Science

BENEFITS TO SUPPLIERS
 Provides reach to vast, untapped global markets  True value of products can be realized through aggregation and participation of buyers  Enables to support JIT practices  Leads to quick response suppliers

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETS: DESIGN ISSUES

 NEGOTIATIONS
  

Distributed Negotiations Integrative Negotiations Auctions

 DESIGN OF USER INTERFACES

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETS: DESIGN ISSUES

ALGORITHMS  Buyer Aggregation  Supplier Aggregation  Demand Aggregation  Buyer-Seller Matching  Dynamic Pricing  Multi-Attribute Auctions  Combinatorial Auctions

Y Narahari, Computer Science and Automation, Indian Institute of Science

EXAMPLE OF A MARKET ALGORITHM

 3 BUYERS and 4 SUPPLIERS
  

Buyer X : (50 A, 10 B) Buyer Y : (20 B, 30 C) Buyer Z : (40 A, 20 C, 10 D) Bundle 1: (90 A) Negotiated contract Bundle 2: (30 B, 50 C) Sealed bid auction Bundle 3: (10 D) Dynamic auction

 BUNDLING
  

Y Narahari, Computer Science and Automation, Indian Institute of Science

EXAMPLE OF A MARKET ALGORITHM

 Sealed Bid Combinatorial Auction
   

Supplier P : (10 B, 10 C, p) Supplier Q : (30 B, q) Supplier R : (50 C, r) Supplier S : (20 B, 50 C, s)

 An optimization algorithm decides the best bids and handpicks the optimal subset of bids, based on cost, delivery times, etc.

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETS: DESIGN ISSUES



TECHNOLOGY
Authentication and security  Electronic payment  Software architecture  Distributed objects  Agents and mobility  Scalability  Interoperability


Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETS: DESIGN ISSUES

 INTEGRATION
     

with existing best practices with existing business processes with existing catalogs with ERP software with the backend with other E-markets

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-MARKETS: SOFTWARE ARCHITECTURE

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-PROCUREMENT
 All activities involved in obtaining materials and services and managing their inflow into an organization toward the enduser  Basic steps:
  

Information Negotiation Settlement

Y Narahari, Computer Science and Automation, Indian Institute of Science

EMERGENCE OF E-PROCUREMENT
 Electronic catalogs  Internet search engines  Web-EDI  On-line auctions and bidding  Advances in E-commerce

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-PROCUREMENT PROCESS

Y Narahari, Computer Science and Automation, Indian Institute of Science

BEST PRACTICE E-PROCUREMENT SYSTEMS

 Dell online (Ariba Buyer)  Cisco  Enron corporation (mySAP and Commerce One)  Lockheed Martin (mySAP)  GE capital (i2 Buyside solution)  Defense Logistics Agency  Lawrence Livermore Laboratories

Y Narahari, Computer Science and Automation, Indian Institute of Science

E-PROCUREMENT: VALUE ADDITIONS

 Demand aggregation  Bundling and supplier aggregation  Optimal vendor selection  Innovative dynamic auctions  Multi-attribute decision support

Y Narahari, Computer Science and Automation, Indian Institute of Science

CONCLUSIONS
 E-markets are key to faster and more efficient trade  E-markets have a positive influence all through the supply chain  There are challenging technical and technological issues in setting up and operating E-markets  E-procurement has emerged in a big way