Y Narahari, Computer Science and Automation, Indian Institute of Science
B2B MARKETPLACES AND EPROCUREMENT
Y. NARAHARI
Computer Science and Automation
Indian Institute of Science
Bangalore - 560 012
hari@csa.iisc.ernet.in
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