THE INTERNET VALUE CHAIN

Prof. Rushen Chahal

Prof. Rushen Chahal

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FROM CHANNEL OF DISTRIBUTION TO VALUE CHAIN

Supply Chain Manufacturer Channel of Distribution

The Value Chain

Prof. Rushen Chahal

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SIMPLE, QUICK, AFFORDABLE

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BUILDING A VALUE CHAIN AT HERMAN MILLER

Logo used with permission

Prof. Rushen Chahal

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KEY CONCEPTS
The Supply Chain The Value Chain The Integrated Value Chain or Net

Prof. Rushen Chahal

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VALUE-CREATING ACTIVITIES

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Prof. Rushen Chahal

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SUPPLY CHAIN MANAGEMENT PROCESSES 2-6

1. 2. 3. 4. 5. 6. 7. Selecting/Qualifying Desired Suppliers Establishing/Managing Inbound Logistics Designing/Managing Internal Logistics Establishing/Managing Outbound Logistics Designing Work Flow in Product-Solution Assembly Running Batch Manufacturing Acquiring/Installing/Maintaining Process Technology 8. Order Processing/Pricing/Billing/Rebates/Terms 9. Managing (Multiple) Channels 10. Managing Customer Services
Prof. Rushen Chahal

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COST ELEMENTS OF A TRADE BOOK

Prof. Rushen Chahal

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FROM A TRADITIONAL CHANNEL OF DISTRIBUTION

Prof. Rushen Chahal

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TO A (VIRTUAL) VALUE CHAIN

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Prof. Rushen Chahal

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KEY ELEMENTS OF DELLS CHAIN Strong Customer Relationships

Information (Premier Pages) Customized Products/High Quality

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Speed
Manufacturing Bringing New Products to Market

Business Focus
Strong Financials Web Site For Cheaper/Faster Ordering, Improved Service
Prof. Rushen Chahal

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USEFUL METRICS

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Percentage of Orders Received On Net Conversion Rate For Inquiries Percentage of Tech Support Requests On Net Inventory Turns/Return on Working Capital Quality (Measured & Customer Perception) Length of Order Cycle Customer Satisfaction
Prof. Rushen Chahal

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3 STEPS TO VIRTUAL VALUE CHAIN

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Prof. Rushen Chahal

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Customer Perceived Value = Quality + Utility Price

Prof. Rushen Chahal

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THE CISCO VALUE NET

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Prof. Rushen Chahal

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KEY ELEMENTS OF CISCOS NET

Community of Suppliers/Partners
Massive Outsourcing

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Electronic Agents Support Network Configuration, Pricing Comprehensive Web Portal Employee Portal Customer Focus
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Prof. Rushen Chahal

INTEGRATION PROCESSES
Electronic Data Interchange (EDI) Enterprise Resource Planning (ERP) Web Services

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Prof. Rushen Chahal

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EDI
Pre-dates Internet

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Paperless Transaction Processing Requires Proprietary Systems and ValueAdded Networks Expensive, Difficult To Use Internet Has Made Somewhat Easier, Less Expensive To Use

Prof. Rushen Chahal

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ERP
Integrating Internal Systems

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Internal Business Process Integration Is Necessary To External Systems Like EDI Automation and Integration Of All Internal Systems
Order Processing, Production Planning & Scheduling, Inventory Control, Distribution, Customer Relationship Management

Prof. Rushen Chahal

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WEB SERVICES

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Communications Between Enterprises Using Standard Hardware and Software Enterprises Can Communicate With One Another Over The Common Platform of the Internet Independent of Systems Behind Enterprise Firewalls The Applications Interface, Not The Users (Webopedia)
Prof. Rushen Chahal

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4 Vs OF BUSINESS TRANSFORMATION
Velocity (speed) Visibility (transparency) Variability (choice) Volume (scale)

Prof. Rushen Chahal

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2-21 STRATEGIC SUMMARY

Speed, Price, Quality (not necessarily in that order) Are Key Customer Requirements Virtual Value Chains Provide Them By
Cutting Transaction Costs Reducing Error Rates Cutting Order Cycle Time

Set Objectives Based On Customer And Corporate Requirements Use Appropriate Metrics To Evaluate Integration Of Systems Inside The Enterprise And between Enterprises Is Key
Prof. Rushen Chahal

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