Y Narahari, Computer Science and Automation, Indian Institute of

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 [email protected] 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 How it is bought What is Bought Systematic sourcing Spot sourcing Operating Manufg MRO HUBS CATALOG 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) BUNDLING Bundle 1: (90 A) Negotiated contract Bundle 2: (30 B, 50 C) Sealed bid auction Bundle 3: (10 D) Dynamic auction

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