4. E-PROCUREMENT
• Key technology – EDI
• Speed up the procurement operations by
using Internet
• Changes in relations -- provide visibility
4
5. E-PROCUREMENT
• Effects：
Shorten order cycle (order to delivery)
Increase visibility, reduce uncertainty and increase
the order fill rate
Improve inventory turnover
Reduce errors and sluggish materials
Reduce the bullwhip effect
Reduce lead time
Forecast
5
6. THE POTENTIAL BENEFITS OF B2B E-COMMERCE
• Reduce management costs
• Reduce the buyers’ search costs
• Reduce inventory costs and inventory
minimum standards
→ By increasing competition among suppliers,
enhancing price transparency
6
7. THE POTENTIAL BENEFITS OF B2B E-COMMERCE
• Reduce transaction costs
→ Eliminate paperwork and automate some parts of
the procurement process
• Just in time (JIT)
• Reducing the time of product life-cycle
→ Sharing the designing and producing schedule
with suppliers
7
8. CHANGES IN RELATIONSHIPS
• Problems：
Is your customer really a longstanding customer?
Will you own his next order?
• How to build a close relationship with
your customers?
8
10. FIXED RELATIONSHIP BETWEEN THE STRUCTURE OF B2
• Services provided by focal firm
Services integrated with ERP
Independent SCM E-C server
• Bilateral relations between focal firm and
peripheral manufacturers
Web-based
Information Exchange
Process integration
10
11. ELECTRONIC POLARIZATION
• Changes in relations
Changes the traditional relations between
upstream and downstream
General goods
Net marketplace
11
12. ELECTRONIC POLARIZATION
• Value chain and value network
More close relationship between upstream
and downstream
Components with specific usage
Private industrial networks
12
14. NET MARKETPLACES
• A net marketplace will lead to thousands of
distributed suppliers get in contact with
many main buyers of industrial goods
→ A「 frictionless 」 commerce
14
15. PURE TYPES OF NET MARKETPLACES
• Three ways to decide
the four types of net
marketplace
1. What businesses buy
(direct vs. indirect
goods)
2. How businesses buy
(spot purchasing vs.
long-term sourcing)
3. Horizontal market vs.
Vertical market 15
16. • Electronic catalogs
representing products of
thousands of direct
manufacturers
• Most common type of
Net marketplace
• Offer industrial
customers single source
to purchase indirect
goods on spot basis
E-DISTRIBUTORS
16
17. E-PROCUREMENT NET MARKETPLACES
• Connect hundreds of
suppliers of indirect
goods
• Many-to-many
market
• Revenues from
transaction fees,
licensing consultation
services and software,
network fees
17
18. • Connect hundreds to
thousands of
suppliers and buyers
in dynamic, real-time
environment
• Vertical markets—
spot purchasing
requirements of large
firms in single
industry
• Many have failed due
EXCHANGES
18
19. INDUSTRY CONSORTIA
• Industry-owned
vertical markets
• Enable buyers to
purchase direct
inputs from limited
set of invited
participants
• Emphasize long-
term contractual
purchasing, stable
relationships, 19
20. PRIVATE INDUSTRIAL NETWORKS
• Web-enabled networks for coordination of
trans-organizational business processes
(collaborative commerce)
• Private trading exchanges (PTXs)
• Range in scope from single firm to entire
industry
20
22. CHARACTERISTICS OF PRIVATE INDUSTRIAL NETWORK
• Objectives：
Efficient purchasing and selling industry-wide
Industry-wide resource planning to supplement
enterprise-wide resource planning
Increasing supply chain visibility
Closer buyer-supplier relationships
Global scale operations
Reducing industry risk by preventing imbalances of supply
and demand 22
23. CHARACTERISTICS OF PRIVATE INDUSTRIAL NETWORK
• Focus on continuous business process
coordination
(While net marketplace focus on single transaction)
• Focus on single sponsoring company that
“owns” the network
23
24. PRIVATE INDUSTRIAL NETWORKS AND
COLLABORATIVE COMMERCE
• Forms of collaboration：
1. Collaborative resource planning, forecasting, and
replenishment (CPFR)
2. Demand chain visibility
3. Marketing coordination and product design
24
26. IMPLEMENTATION BARRIERS
• Concerns about sharing of proprietary,
sensitive data
• Integration of private industrial networks
into existing ERP systems and EDI networks
difficult, expensive
• Requires change in mindset and behavior of
employees and suppliers -- All participants
lose some independence 26
28. INTRODUCTION
Founded Berlin, Germany (28 May 1937)
Headquarters Wolfsburg, Germany
Number of locations 100 production facilities across 27 countries
Employees 572,800 (2013)
Divisions
Automotive Division
Financial Services Division
Total assets €323.4 billion (2013)
28
29. SALES AND MARKET SHARE
Top 3 Automakers EU27, 2013
Group Units share
Volkswagen 2,957,653 25.0
PSA 1,311,406 11.1
RENAULT 1,076,367 10.4
Top 3 automakers 2013 by EU27
new passenger car volume, based on
ACEA data
Top 3 Automakers Global, 2012
Group Units
Toyota 10,104,424
G.M. 9,285,425
Volkswagen 9,254,742
Top 3 automakers 2012 by global
volume, based on OICA data.
29
32. VOLKSWAGEN AND ITS B2B MODEL
Instead of participate in Covisint (giant
automotive industry consortium back by most
of the major car makers) , Volkswagen build its
own B2B Network,
VWGroupSupply.com.
32
33. VWGROUPSUPPLY.COM
• Started in 2000.
• Handling over 90% of all global purchasing for
Volkswagen Group. (automotive and parts
components)
33
34. VWGROUPSUPPLY.COM
• Initial seven applications, offers over 30 different
online applications ( RFQ, Contract negotiations., Catalog
purchases etc.)
• Online catalog contains about 2.1 million items
from over 530 suppliers , value totaling $320
million.
34
37. ECAP - ELECTRONIC CAPACITY MANAGEMENT
• An application that alerts VW and its suppliers to
changes in production trends in order to maintain
production at desired levels.
• Allows suppliers to track VW production plans
and material requirements in real time online.
• Maintains information on over 400 suppliers and
4,000 critical parts.
37
38. ECAP - ADVANTAGES
• VW is able to meet any sudden increase in
demand and avoid production bottlenecks
• Suppliers can avoid overproduction of supplies
by reducing their output and avoid over
supplying VW with parts
38
39. CURRENT SITUATION
• Over 35,000 registered suppliers, with over
110,000 users.
• Limited to suppliers who've done business with
companies in the Volkswagen Group and
authorized potential new suppliers
• Maintains a common data repository with details on
each supplier concerning procurement, logistics,
production, quality, technical design, and finance.39
40. QUESTIONS FOR YOU
• Why don’t Volkswagen join Covisint as Fords
and other car makers do?
• What kind of services do you think
VWGroupSupply.com will offer?
• What kind of B2B is VWGroupSupply.com? And
what kind is Covisint? (Net Market/ Private
Industrial Networks)
40
