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Online Auto Industry B2B Electronic Commerce

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  1. Online Auto IndustryB2B Electronic Commerce Nadia-Shazrin Asari Christopher Butsko Joseph Carlen Ljubomir Cvetkovic Kevin Daily

  2. Overview of Auto Industry • The traditional supply chain of business-to-business transactions in the auto industry is costly • Dealer commissions • Other intermediary costs • By automating supplier order-entry processes, a $71/vehicle supply change can be removed • This can result in a $1.0 billion savings opportunity per year! (Source: AutoChain Online)

  3. Customers • Dealerships • Dealers can trade among themselves to get rid of large inventory and increase other items low in inventory • OEM’s (Original Equipment Manufacturer) • E.g. Ford, GM, Chrysler-Daimler • Suppliers

  4. Value – Added (Suppliers & OEM’s) • Auctions • Get the best price for both selling and buying • Introduction to new partnerships • Streamline inventory and transaction process “there … exists an opportunity to remove $71 of supply chain waste per vehicle by automating supplier order-entry processes…This waste represents over $1.0 Billion savings…”

  5. Value Added - Dealerships • Dealer – to – Dealer Trading • Overstocked dealers can trade with under stocked dealers • Both parties benefit by having better inventory turn-around

  6. Major Players • Auto Exchange – • “e-business for the auto business” • Besides being an online exchange between auto manufacturers and suppliers, the site facilitates collaboration on supply chain management, product design, and international marketing. • General Motors – • This automotive giant’s online procurement facility is still under construction. However, analysts expect it to be the largest player • Moving towards becoming a portal for online automotive procurement

  7. Major Players (cont’d) • Ford – • The pioneer of automobiles has already developed an online interface between the company and its suppliers. • Proprietary application for Ford • BBCN – • Although its e-procurement functionality is not restricted to the automotive industry, it has demonstrated significant utility for online automotive procurement: • “A dealer can go on-line for supplies and receive bids from suppliers all over the country. It really makes the entire process so much easier!" John Anderson - Owner of the #1 Chevrolet Dealer in California

  8. Reasons for current dominance • General Motors and Ford – Due to their tremendous purchasing power, technological prowess, high profile, experience, extensive supplier relationships, speed, and global presence, they have an obvious advantage over newer and less established online initiatives. • BBCN – As a large “hub” for e-procurement activity, BBCN is able to leverage the e-commerce expertise of partnered firms such as Cisco with the industry-specific strengths of large automotive manufacturers and suppliers.

  9. Business Processes • General Process (summarized from all 4 websites, since registration required us to take legal responsibility): • A buyer must be registered with the website • A supplier is usually considered a partner of the website • A buyer searches for an auto part or vehicle that he needs • Query results will display the information of the product • If the site is an auction site, the suppliers will send their bid to the buyer, and the buyer will choose the winner. • If the site is a regular trading site, buyer chooses the supplier to purchase from, and an order will be fulfilled. • The buyer will be allowed to view his order history at the website

  10. Business Processes (cont’d) • Registration process at • User must go through 5 steps before they are allowed to use the website (trade, search, manage account) • e-Procurement process in • Buyer submits a procurement inquiry (PI) • Product available is listed, by Supplier • Supplier sends a bid to Buyer • Buyer chooses which Supplier to purchase from • All other Suppliers are notified that the purchase is complete

  11. Business Processes (cont’d) • Requisition management at Search options (sort/filter) Requisition Listing Line item count & Total • Most sites require the buyers/suppliers to be registered first before • allowing them to use the website

  12. From One-time to Repeat Customer • Offer personalized features such Auto-xchange’s “MyExchange” • Maintain a to-do list • Check order and auction activity • Edit personal profile • Maintain address book • Offer customized purchasing capabilities for each user (TradeXchange) • Enforce buyer’s procurement rules and pricing • Broadcast email (Autochain Online) • Suppliers and customers communicate directly regarding news • Is plant closing for holiday? • Is supplier hosting a supplier conference?

  13. Improving Online Strategies • Sites such as Autochain must provide more information available before registration • How many suppliers? • Who are suppliers? • What are benefits to suppliers and buyers? • Search feature to assure specific item is available • Include demo of how auction works • Provide online community • Chat rooms to discuss products, hot items • Online support and feedback sections

  14. Improving Online Strategies (cont’d) • Send email to buyers about upcoming items to be auctioned off • Based on buyer’s preferences • Buyer no longer goes through time-consuming searches • Include industry news, events, and statistics • Become one-stop shop for buyers and suppliers

  15. Final Comparison of Sites • The Good • GM’s TradeXchange • Has more personalized/customized sections regarding account information, items you have bid on, etc. • Ford’s Direct Data Link • Nice organization of products, lots of online support • • Breaks auction down into categories, then into further sub-categories, making products easy to find • The Bad • Auto-xchange • Must be a member to get even background information about what the site offers; user-friendly interface though • The Ugly • Autochain Online • Must be a member to get even background information about what the site offers; user-interface poor