E-commerce focuses on solutions that enable enterprises to reengineer their structures and become flexible organizations that are able to corporate with their clients, suppliers, and partners. These solutions help in creating value by improving collaboration, work specialization information sharing and responsiveness. There is a two dimensional classification scheme of interfirm relation.
In each of these four typologies interfirm relations are identified: 1. Many to many (E-marketplace)- many buyers and sellers are able to transact, buying and selling of goods and services, asking for cost estimates, offering and stipulating commercial relationships. 2. Many to few (E-procurement)- many suppliers are involved in the procurement process of one or few enterprises. There are two forms of e-procurement: the web based- it allows many suppliers to participate and the other is closed one allows only few selected suppliers. 3.
Few to few (E-sell) – a sales channel through which few big suppliers put their products and catalogues at many buyers disposal. There are two forms of e-sell: web based one allows many suppliers to participate and other being the closed one allows only selected buyers. 4. Few to few (supply chain management system) – internet based applications supporting close and strategic relationships between small number of firms. COMPANY INTRODUCTION The case study presents an overview of e-business activities within the European B2B office furniture segment, analyzing the scenarios faced by one of the top companies in this segment, known as “Cadiac. Cadiac began its activities in U. S at the beginning of 20th century and became a publicly held company in the late 20s. It has become the world’s leading designer manufacturer of office furniture for the last 25 years. It has manufacturing facilities in over 35 locations and an extensive distribution system that enables them to serve market locally. Its products and services are available in over 800 locations around the world. It employs more than 14000 people. The global headquarters is located in United States and the international division is headquartered in Europe.
In Europe they have their corporate resources held like marketing and communication, research and development, finance and human resources. In the office industry they are a large number of players participating but a very high number of them are participating at a local level, and most of these are small companies. The large companies have an international reach and only have are present at a global scale. Small companies segment the low and the middle market segments. They base their strategy on low price and sell products to meet the basic needs of their potential customers. hey provide an acceptable level of perceived quality, variety of offers in order to attract new customers and satisfy the old ones and also focus on pre and after-sales service. They offer limited number of products in few options. Example: a table can be either rectangular or waved and only available in two colors. But the advantage that client faces is that the price is fixed and the delivery time is narrowed. Large companies focus is on image and product appearance. They form the product strategy on principles by leveraging space as an asset.
They target the top segment with a high positioning of their product, with a highest price and highest value added for the clients. Differentiation is based on consulting services and on the pre and after sales service rather than on price. Cadiac’s adopts the strategy by using workspace as its asset that will ultimately help employees to perform efficiently and effectively. Through research and development they gain a thorough knowledge about the people at work and translate this knowledge into products and services that will add value to their work.
Cadiac’s main idea is to innovate by identifying unmet needs, making user-friendly products and make continuous improvement by way of research and development. At the same time they also want to achieve lower costs, quality and speed in delivering through manufacturing and distribution. PORTFOLIO They offer a wide range of product portfolio which includes desks, furniture’s, tables, seating’s, storage, textiles, interior architecture products, lightning, technology appliances and a range of services as well from consulting services to furniture, asset management services, financial services and e-business.
Because of globalization, today where clients are looking up for partners rather than suppliers so that they can help them to become more competitive and win more business, e-business is becoming an important issue. E-business will help them in decrease in transaction costs as there will be efficiency in the approval process. Even the purchasing department will become more effective and at the same time it will help in strengthening the partnerships.
Cardiac’s portfolio is around 50 different products ranges each of them in several typologies like rectangular tables, waved tables, square etc. and this can be further configured upto nine options Like colors, type of legs, seats, back rest etc. besides this they have customized ones as well to meet the customer’s specific needs. For such companies with such a huge product offering, e-procurement becomes a real challenge. During the many to few scenario buyers were managing relationship with all the suppliers through one e-procurement system.
Now as Cadiac had to shift from many to many to few to few, so they started to provide with e-catalogues. As they wanted to increase customer loyalty and also gain the added value through e-transaction. So they started their own e-business solutions in 2001 offering local personalization in terms of product range, pricing, services, currencies and languages. They started providing e-solutions with an objective of leveraging e-business in order to provide e-solutions and tools everywhere and to strengthen the partnership with customers and dealers.
Cadiac’s sales reps and the dealer is responsible for the relationship with the client, whereas e-business project manager guides them through the implementation and maintenance of e-business project. Orders done through e-procurement are primarily used for fill-in orders while large projects still require face-to-face approach. They do not want to substitute their current business model with an electronic one. This is done as it will help them to better meet the customer’s needs, provide clients with effective e-solutions and also to strengthen their relationship with clients and dealers.
ONLINE INFORMATION As e-business should cover information regarding informing employees regarding furniture standards, contract terms, showing products, promoting contacts through e-mails and sharing knowledge on issues of importance to both the parties, so Cadiac decided to create an design an information website for the clients in which the products and services that they offer can be provided. This requires information updating from the suppliers side. But they not only have to provide the information to the clients but also manage the information and keep updating it from time to time.
This effective informative website will promote the company’s image by showing its dynamism and innovative spirit and also create brand loyalty. They believed that this will not only represent a step towards efficient relationship but also a way to increase loyalty and show customers that how they can add value. This will also act as differentiation strategy and at the same time reduce the on-site assistance and its related costs. ONLINE PROCUREMENT Through the company’s e-procurement system buyers are able to access a customized catalog of products and services as well as buy products that are not included in the catalog.
So only providing information is not enough, the clients should also be able to pay online. Consequently, its necessary that to implement procedures that guarantee secure economic transaction, so as to manage online payments. There is a greater effort required when it comes to online procurement. E-procurement is where the client buys an e-procurement software that enables online purchasing and asks them to provide with an e-catalog. The benefit deriving from the e-procurement systems are mainly related to the costs control, as the e-procurement systems allow automatically transmission of orders collected and process them quickly.
Whereas from the suppliers point of view, e-procurement will provide them an competitive advantage and increase customer satisfaction without adding any additional costs. E-PROCUREMENT SENARIOS There are different technical solutions suggested by Cadiac and adopted through real client case studies, depending upon their future challenges and opportunities. There were four e-procurement scenarios that they had to focus. 1. Integrated technology: This local catalog is the most common one. The client sends order to the dealership through the e-procurement software application and receives back order confirmations.
The dealer could also send invoices and receive back invoices payments. The advantage is that errors in codes and prices are minimized and that client’s loyalty is increased. 2. Marketplaces As some of the companies believe in e-procurement but do not have the resources or the internal commitment to adopt an integrated solution. An MP manages transactions on behalf of the company by hosting the transactions on their behalf. It receives orders from the client and transmits them to the dealer and receives invoices from the dealership and finally transmits it to the client.
The main benefit is that no technology is required, fewer implementation and management resources are needed. But the MP charges both the client and the supplier for the structure. They generate its own profit by offerings, on one side, a panel of potential customers to suppliers and, on the other side, a panel of potential suppliers to customers. the larger these panels are the more both clients and suppliers will be asked to pay in order to be a part of MP and to access online offer competition within the MP is based on pricing and delivery times. 3. Extranet
In this they believe in creation of value through implementation of e-procurement solution. Cadiac creates and hosts a private e-catalog for specific clients on its servers. The client connects through username and password to the supplier’s server and accesses its own site, creates its shopping basket and sends orders to the dealer. They provide clients with real benefit that other suppliers might not offer. They not only provide information but also the possibility to order online and a local catalog because the clients need not have any specific e-procurement software.
Before an extranet is offered an agreement has to be signed and the product range and prices have to be identified. Once the product range that suits the customer needs is identified, Cadiac evaluates the best way for them to purchase their products. 4. Punch out/Round trips If a client has purchased a specific technology to manage it e-procurement activities, the added value that Cadiac provides is an industry standard technology that allow users to purchase products easily in any language or currency.
When selecting Cadiac’s catalog, the user is automatically punched out to the website hosted on Cadiac’s servers. There the clients accesses a customized catalog showing product ranges, pictures, prices, dealers contact information. It controls all the product options and pricing rules. Clients always have a choice within a wider product range and it also manages the various options. They can also see pictures, layout, navigation as well as agreements conditions, standard workstations and electronic links with Cadiac’s representatives.
Furthermore, Cadiac can have an eye on how products are presented which does not happen with marketplaces or e-catalogs, where loses some control over this area. Cadiac chooses to work with its client through different e-business scenarios, deciding with them what the best e-solution would be for their relationship. PROBLEMS FACED Focus is on challenges and issues faced by this company in the last five years within the client-supplier e-relation-ship management: from the use of Internet-based technology to improve the information exchange with clients and dealers to the development of customer relationship management applications.
Initially only face to face approach was used so as to make orders and invoices irrespective of big or small orders. But now the e-business channel is leveraged by Cadiac as an additional channel to the traditional face-to-face negotiation, and in any case is replacing it. The purpose, on the contrary, is to reinforce the business model (sales are driven through a dealer network) by offering a way to reduce complexity and facilitate order management. In addition to this the time taken for the processing of the transaction is long.
In other words a client would generally have a detailed study of the products mentioned in the e-catalog before placing an order. After they get the quotation from the dealer, the client will go in for the transaction and then receive the invoices from the dealer. Now this transaction will take in 3-10 days or more. Cadiac had to understand the current needs and trends connected to the different scenarios in order to integrate it well with the company’s strategy.
Cadiac offered a lot of flexibility in terms of the solutions that could be implemented, focusing on the customers and their needs. They also allowed access to its product offerings inspite of the complexity and wide range of product offering. It also had to create a unique product database which could be accessible through a product configuration and make it available by means of solution that could connect to the e-procurement platforms. Another challenge that is faced by Cadiac is the streamlining of the process of e-catalogs production and to encourage new clients to join in.
Many e-catalogs are requested but they are currently in the creation and the maintenance phase. So instead this process should be automated in order to make it more efficient. Lastly the problem is that e-business requires a specific knowledge that has to be constantly cultivated. A cultural change in the organization is to be required. In addition to this there is also a high turnover of sales force and a big investment is needed from e-business leaders in Europe to train all sales representatives and make them sensitive to e-business and its benefits.