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B2B - Barry Lerner
(VP, Exostar)
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| Manufacturers Lead eB2B Adoption |
| by Richard rown, Line 56 |
| Wednesday, April 11, 2001 |
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| Manufacturers are the most enthusiastic adopters of B2B e-commerce,
eclipsing the retail, finance and |
| distribution sectors, a worldwide study has discovered. |
| IT research consultant Vanson Bourne found that 66% of all manufacturing
companies surveyed had |
| implemented or were deploying B2B initiatives. And e-procurement
tops their list of priorities with 25 |
| percent of manufacturers automating their buying functions first.
Retail and finance consider e-procurement |
| less pressing with 13% and 22% respectively putting it at the top
of their agenda/ |
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| Falling Like a Lead Pipe |
| By Leslie Walker, Washington Post, Thursday, April
12, 2001; Page E01 |
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| The internet retailing wipeout, as spectacular as it
seemed last year, looks like a fender-bender next to the |
| 800-car pileup in business-to-business e-commerce. |
| Analysts say Web trading hubs, designed to let companies buy and
sell among themselves while sharing |
| Internet development cost, are largely empty storefronts,
attracting far fewer participants then projected. |
| Debate whirls around their mission and ownership, even as one or
two die each week and a few more are |
| born. |
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| Trading and Collaboration Tools |
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| The trading and Collaboration Tools nowadays are Inadequate and/or
Antiquated. This is due to: |
| -an extremely fragmented supply chain |
| -too many intermediaries providing no added-value |
| -poor inventory management |
| -manual processes |
| -non-reusable, and often paper-based information exchange |
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| All of these causes of inefficiency can be limited or overcome by
the new features B2B ecommerce offers. |
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| EXOSTAR: an industry initiative |
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| BAE Systems, BOEING, Lockneed Martin and Raytheon have come together
to form this industry initiative. |
| 70% of the end products are made by BAE Systems, BOEING and Lockneed
Martin. But even a small |
| company like Raytheon is worth 9-10 Billion. |
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| The competitors have come together to: |
| -collaborate |
| -common supply base |
| -leverage technology |
| -embrace ASP mentality |
| -unify vision |
| -spread the risk |
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| Governing principles and independence have been established between
the companies. Furthermore, |
| qualified, permanent and experienced staff was hired. |
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| EXAR: an indPrinciples of B2B E-Markets |
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| Direct Material Purchasing Online |
"Through what mechanism do you purchase your direct materials
today? In 2001?"
| eMarketplaces 1% |
| Extranets 5% |
| Email 7% |
| EDI 28% |
| Phone and fax 28% |
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| eMarketplaces 17% |
| Extranets 28% |
| Email 6% |
| EDI 21% |
| Phone and fac 28% |
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| Expected Sources of B2B eBusiness Growth |
The global B2B eCommerce in 2003 is going to be $4 Trillion.
1.3 Trillion Dollar is through
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| multicompany consortia. 1.4 Trillion Dollar comes through
Private exchanges (Electronic Procurement |
| Engines) and 1.3 Trillion Dollar come through trade independents.
These results are achieved by the |
| growth in the following areas. |
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| B2B Growth |
| Over the next three years... |
-over 65% of all B@B transactions will come through electrronic
procurement engines and eMarketplace
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-eProcurement transaction volume is expected to
grow thirty-fold
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-Transaction volume through eMarketplaces is expected
to grow by 150% annualy
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| eBusiness 2001 - The Reality |
|
| -B2B 2000 |
- Explosion of marketplace of various types
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- Land grab not enough
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| -The Dot Com shakeout and market downturn |
- This gives an opportunity for new companies as well
as a challenge
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| -Constantly evolving eBusiness environment |
- independents are being driven out of business
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- consortia progress is slower than planned
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- Private exchanges confuse the picture
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According to an expert, more than half of all exchanges, consortia,
and net market makers will not be around anymore in 2002 -the ones
that will remain will be a lot more focused. Enterprises will pursue
a combination of B2B strategies and models - selecting the processes
to e-enable and the right approach for each process will be key.
B2B wil be driven by creating value for enterprises Winners will
focus on win-win value creation, which will require different types
of collaboration, depending on wether the focus is inventory, forecasting,
purcasing....
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| Considerations and Failures |
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Failures and considerations have already begun. As of mid-May 2000,
Credit Suisse First Boston counted more than 60 announced coalitions
marketplaces involving over 278 companies and $3 trillionin annual
purchasing. In October 2000, the number of existing exchanges was
between 800 and 1000. Since January 2000 270 dot com businesses
have closed down and in the year 2001 49 have closed.
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| However, while the B2B Market Consolidates the volume
of it will still grow. |
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| Open Connectivity Evolution |
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The B2B eMarket Evolution will consist of the
following three points:
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| Buyer-Seller Matcing |
| -eProcurement focused |
| -emergence of .com exchanges |
| -core set of business models emerge |
| -limited liquidity exists |
| -basic functionalities/capabilities |
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| Full Purchase to Deliver Functionality |
| -formation of industry consortiums |
| -proliferation of .com exchanges |
| -industry anchors create trading hubs |
| -core functionality/capabilities |
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| Value Chain Collaboration |
| -industry standard solutions |
| -consolidation of .com Exchanges |
| -integrated trading hubs |
| -horizontally shared accross industries |
| -robust capabilities |
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| The business models are going to change from the traditional models
(single enterprise ePocurement solutions) to buyer and supplier -centric
markets. If these converge B2B Marketplaces are created and if these
converge we will end up with a network of linked exchanges. This network
will have a single portal strategy, vertical and horizontal marketplaces
and collaborative planning and design. |
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| -face to face negotiations |
| -private exchanges |
| -industry marketplaces |
| -third party exchanges |
| -private rooms within industry marketplaces |
| -XML/EDI transaction support |
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| Instead of each company working on the design of a product by themselves
they can combine forces and save money by collaborating. Furthermore,
Demand Forcasting, Supply Chain Planning and Sourcing & Supplier
Management can all be intergrated in the Enterprise Application Integration
(EAI) Layer. |
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| Exostar: Core Community |
| Exostars core community is first of all Boeing, BAE Systems, Lockheed
Martin, and Raytheon. With these four industry leaders they are going
to build a global electronic exchange. Then Exostar is going to sign-up
additional trading partners which it is going to connect too then. |
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| Exostar is made out of many building blocks. First, there is the
core functionality, which is the backbone of Exostar. Then there is
datamining, which is another component making a company like this
possible. Third, is the Engineering Collaboration which was mentioned
above. Fourth, the Supply Chain Integration. Then the Regulations
and the Logistics Management.. All of these parts make up Exostar. |
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| Real World Technical and Business Issues |
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| Behaviors |
We are big supporters of progress ....
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| ...it's CHANGE that we can't stand!
Mark Twain |
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Three major aspects of behavior is will, speed and fear. These
three factors mostly control the speed of change. Another issue
is that if we would constantly change we could not develop standards.
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| Core Exchange Functionality |
The current functionalities include indirect procurements,
electronic catalogts, direct procurement, back-end system integration,
forward and reverse auctions and collaboration services. The collaboration
can reduce design time, a virtual global team could work on the
project around the clock, the supply chain and life-cycle management
can be improved and it can accelerate re-designs and upgrades.
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| Security Framework |
-Keeping our worls seperate
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| >Technical scrutiny |
-Industry standard technology
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| >Founding partners scrutiny |
-Exostar Governances
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| >Government scrutiny |
-FTC, DOD, EEC
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| Standards Framework |
For connectivity Exostar uses XCBL 3.0, Spec2000 EDI/XML,
Open Catalog Interface and Native SAP. To insure security 128-bit
Encryption is used.
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