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E-Business Enablers.

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A WHITE-HEAT PACE

There is no doubt that the computing and electronics industries have entered an environment of exponential growth. Companies that are leaders in the online race, like Cisco, IBM, AT&T, Dell, Microsoft, Amazon.com, Verisign, Excite, Yahoo!, and Lycos, continue to set a white-heat pace for their competitors. Other competitors like Microsoft, Intel, and Sun have quickly adopted e-commerce channels-to-market, as well as using e-commerce in their own logistics and supply chains. Other industries have entered the race and are now picking up speed as they begin to integrate online Internet technologies with their core business processes. Some key industry sectors that appear to be making significant progress in the adoption of e-commerce are telecommunications, computers and peripherals, networks, software services, and multimedia. Each of these sectors shares common but unique interests in e-commerce.

The aerospace industry is beginning to use extranets in its supply chains. An example of this is Boeing's sale of commercial aircraft spares, using e-commerce applications linked to its back-end systems. The utilities industry is being compelled by federal order to begin retooling. This forced innovation by the utilities industry is heavily influenced by significant wholesale trading of electricity and gas over the Internet. Pressures to reduce information technology costs while embracing new supply chain requirements are driving the automobile industry to leverage e-commerce and the Internet. For example, large automobile auctioneers are using the Internet to generate billions of dollars of sales. At the same time, the automobile industry supply chain is leveraging extranets to realize additional revenues from their production supplies.

In the strategic horizon years (beginning in the year 2001), cost pressures will drive most industries to leverage e-commerce applications and the Internet. The petrochemical industry trade will shift from traditional EDI and fax to extranets, and the shipping and warehousing industries will use the Internet for shipping, billing, and responding to requests for proposals from other enterprises that are interested in the competitive bid market. The consumables industry (paper and office products suppliers) will move distribution channels online to drive down costs; other online communities in the pharmaceutical and medical supplies industry will use e-commerce to move hospital requirements for new supplies to the Internet.

There will also be an impact on many supply chains as they go through a metamorphosis, reacting to the turbulence caused by the dynamic growth in Internet use by most industries. This will be most notable in the beginning years of the 21st century. This will affect supply chains from commodity supplies, production capabilities, and distribution services.

Another major industry affected will be the commodities markets. Linking the commodity exchanges (for instance, corn, pork bellies, and soybeans) to the Internet will enable buyers and sellers to price products-based on real-time supply and demand. Furthermore, these buyers and sellers are now able to operate from their own homes, using home computing devices to assist in their decision processes. This encourages market-clearing prices to avoid artificial price supports. The utilities industries will experience lower prices and new online trading services from new and emerging energy intermediaries that will, in-turn, have significant effects on the commodity supply chain.

Even raw materials businesses-for example, steel, mining, and minerals-will be realizing the effect of e-commerce as new online exchanges emerge. As the gap between the early contenders and the new beginners continues to grow, this progress will lead to significant shifts in market power and positioning across all competitive environments. Supply chains will also strive to become more efficient by working with partners in demand-driven production environments, for instance, in banking and financial markets. There will also be a drive by some industries (for instance, consumer products) to leverage the use of e-commerce solutions to reduce development cycles; this too will render some realizable competitive advantages.

What does all this mean? It means that industrial supply chains will potentially streamline themselves, causing the elimination of traditional approaches of suppliers. Conversely, this yields an increase in suppliers' revenues, which in turn provides improved services, simply by designing and integrating e-commerce solutions into core business competencies. Following the realization of this, managing inventories online and better controlling their own costs and efficiencies will become the next challenge.

Perhaps the most dramatic e-commerce changes will be realized in the distribution areas of many supply chains. Companies competing in this market space will strive to differentiate themselves by providing value-added services. These firms recognize that leveraging e-commerce solutions will be needed to stay competitive. Buyers will be better positioned to dictate, or perhaps they will be able to screen out (even programmatically) the suppliers that make their supplier short-list. This will encourage suppliers to leverage e-commerce procurement applications. Intermediaries in most industries will be forced to make investments to scale or to pursue other niche markets. Spare parts will be auctioned online as industries begin to leverage the Internet and take advantage of the convenience of online purchasing to sell spare parts. Major automobile suppliers will disintermediate traditional middlemen, just in order to sell direct to dealers.

The United States is anticipating market share representation of approximately 45 percent of worldwide e-commerce by 2003. This rate is influenced by the rest of the world's pursuit of aggressive entries into e-commerce areas.

In summary, e-commerce will absolutely change the ways that many company decision makers and business leaders think, as their companies compete in an online virtual world of business: a real-time, highly competitive marketplace. Companies will be required to rethink their core business processes and then create new strategies for performing e-businesses. Supply chain businesses that play in multiple industries will gain significant and substantial competitive advantages. Distributors that do not quickly adopt e-commerce solutions and leverage their own online e-business capabilities may face the volatility of disintermediation.

Enterprises are currently investing aggressively in Year 2000 correction initiatives while, at the same time, recognizing the importance of investing in e-commerce solutions to resolve and offset the (known) Y2K problems. Competitive advantage is the primary intent in the "offset." They recognize that e-commerce is clearly the future and that they must find ways to finance e-commerce initiatives, strategic to their visions.

These aggressive businesses may choose to seek assistance from integrators, services providers, and hardware and software providers-with in-depth industry knowledge to apply in a short time. This is essential because their customers are linking e-commerce applications to the back-end systems; at the same time, they are reengineering their core business processes.

Finally, enterprises will gradually move from simple online services to e-commerce-based e-business distribution relationships. Support of customers across the value chain will drive collaboration with suppliers and their partners.

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