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Part Two
Design
E-business
E-commerce
Reach
Richness
E-business and m-business
The use of internet-based technology, either to support existing business processes or to
create entirely new business opportunities, has come to be known as e-business. The most
obvious impact has been on those operations and business processes that are concerned with
the buying and selling activity (e-commerce). The Internet provided a whole new channel for
communicating with customers. The advantage of Internet selling was that it increased both
reach (the number of customers who could be reached and the number of items they could
be presented with) and richness (the amount of detail which could be provided concerning
both the items on sale and customers’ behaviour in buying them). Traditionally, selling
involved a trade-off between reach and richness. The Internet effectively overcame this tradeoff.
However, the Internet had equally powerful implications for the ongoing provision of
services. Figure 8.3 illustrates the relative cost to a retail bank of providing its services using
different channels of communication. With cost savings of this magnitude, internet-based
services have become the preferred medium for many operations. 5 Table 8.1 illustrates just a
few of the applications of e-business to operations management.
Figure 8.3 Average transaction cost for bank ‘technologies’
Table 8.1 Some applications of e-business to operations management 6
Organizational tasks
Design
Purchasing
Supplier
development
Human resource
management
Production
Marketing/sales
and customer
service
Warehousing
E-business applications and/or contributions
Customer feedback, research on customer
requirements, product design, quality function
deployment, data mining and warehousing
Ordering, fund transfer, supplier selection
Partnership, supplier development
E-recruiting, benefit selection and management,
training and education using WWW
Production planning and control, scheduling,
inventory management, quality control
Product promotion, new sales channels,
direct savings, reduced cycle time, customer
services, Internet sales, selection of distribution
channels, transportation, scheduling,
third-party logistics
Inventory management, forecasting, scheduling
of work force
E-business tools and systems
WWW-integrated CAD, Hyperlinks, 3D navigation,
Internet for data and information exchange
EDI, Internet purchasing, EFT
WWW-assisted supplier selection, communication
using Internet (e-mails), research on suppliers and
products with WWW and intelligent agents
E-mails, interactive web sites, WWW-based
multimedia applications
B2B e-business, MRP, ERP, SAP, BAAN,
Peoplesoft, IBM e-business (web-integrated)
B2B e-business, Internet ordering, web site for
the company, electronic funds transfer, online
TPS, bar-coding system, ERP, WWW-integrated
inventory management, Internet delivery of
products and services
EDI, EFT, WWW-integrated inventory management