E-BUSINESS ENABLEMENT EXAMPLES (STUDY OBJECTIVE 7)
There is much more to e-business than just B2B transactions. The Internet can be used in many different ways to streamline business processes, reduce operational costs, and enhance efficiency that it is difficult to describe the entire range of e-business possibilities. The summaries that follow are real business examples of the ways in which businesses adopt e-business strategies.
These examples illustrate the broad nature of e-business, even though they do not encompass all the ways that e-business is used to streamline processes, reduce costs, and improve relationships with suppliers, distributors, wholesalers, retailers, and customers. To gain the advantages available in e-business, organizations must utilize various levels of networks within and attached to the Internet. Companies must use the Internet network to interact electronically with the entities in the supply chain. The levels of the Internet network structure that enable e-business are the Internet, extranets, and intranets. These levels of the network serve as the platform to connect parties throughout the supply chain.
THE REAL WORLD
General Electric Company (GE)
On April 26, 2000, Jack Welch, the well-known CEO of General Electric Company, spoke at the GE annual meeting of shareholders and described how e-business affects four aspects of business at GE. He called these four areas “buy, make, sell, and strategic.” Regarding these four areas, he said the following:4
On our “buy” side, we now measure the number of auctions on line, the percentage of the total buy on line and the dollars saved.
On the “make” portion, the Internet is all about getting information from its source to the user without intermediaries. The new measurement is how fast information gets from its origin to users and how much unproductive data gathering, expediting, tracking orders and the like can be eliminated. This tedious work in a typical big company is the last bastion—the Alamo—of functionalism and bureaucracy. Taking it out improves both productivity and employee morale.
On the “sell” side, the new measurements are number of visitors, sales on line, percentage of sales on line, new customers, share, span and the like.
Strategically, the breadth of our business portfolio exposes us to a very wide range of emerging companies, many of them Internet based. This intimate knowledge has enabled us to make successful strategic investments in over 250 companies.
Mr. Welch was indicating that GE uses e-business to improve how it buys, makes, sells, and strategically positions the company. The buy and sell concepts of e-business are somewhat evident and have been described here. However, notice that Mr. Welch indicates that e-business can be used within the company in internal processes such as manufacturing. GE uses Internet communication within the company to expedite and track orders, reducing manual processes.
General Motors Corporation (GM)
Ecommerce indicated the following about a new GM e-business initiative called eGM.5
eGM has been charged with the task of transitioning GM's traditional automotive operations into a global e-business enterprise. Under the plan, GM expects to improve upon customer service, efficiency and slash costs via eGM's integration of business development, strategic e-marketing, e-sales, e-product management and technology and operations units to one central unit.
Again, notice that GM's e-business strategy included much more than sales. GM expected to apply Internet and IT systems to reduce costs through e-business based marketing and e-business management of products and parts. Mark Hogan, the division president in charge of eGM, expected that this e-business initiative would reduce internal costs by 10 percent.6 To achieve this goal, GM planned to “webify”7 the design, engineering, and manufacture of vehicles. The internal processes of tracking parts and the manufacture of cars was to be enhanced by the use of internal websites to reduce or eliminate the manual processes and paper processing the company previously used to track and order parts, to move those parts between warehouses to plants, and to more efficiently track the manufacturing process. In addition, GM intended to use e-business to reduce the cost and improve the effectiveness of marketing efforts. Two examples of this were e-mail newsletters sent to customers and Web-based advertisements that potential buyers could click on as they surfed the Internet.
Komatsu LTD.
Komatsu is one of the world's largest manufacturers of construction, mining, and utility equipment such as dump trucks, bulldozers, skid loaders, and backhoe loaders. Komatsu sells this equipment through distributors. To assist distributors, Komatsu uses an e-business application that allows distributors online access to price quotations for warranties. This enables distributors to quickly answer customer inquiries.
Kenworth Truck Company
Kenworth Truck Company is a leading manufacturer of heavy- and medium-duty trucks. Kenworth has established an e-business application, which they named PremierCare® Connect, that allows Kenworth dealers to provide better service to customers who buy Kenworth trucks. This Internet link between the customer, dealer, and Kenworth enables the customer to generate part inventory orders automatically when the parts need to be reordered.
3M
In addition to enhancing existing business, e-business can help build entirely new product or service lines. Using advanced software and cloud computing, 3M developed a revenue-generating service called Visual Attention Service (VAS). 3M allows it customers to scientifically analyze how humans react to visual designs such as banner ads, print ads, signage, and retail space. The customer uploads to a cloud-based storage a visual design, such as a print ad for a magazine. 3M's VAS scientifically analyzes the visual design to determine the likely eye path when a human sees the ad and highlights the areas that will most likely draw attention. This allows 3M customers to design more effective visual advertising or retail space.