| Focus on Procurement | | Focus on Customer Relationships | | Within procurement we differentiate five main stages of a transaction: initiation, selection (of product, supplier), contracting, inbound logistics and payment. For each stage, the framework offers a network of refinement options. The options are either aimed at the primary goal 'cost reduction' or supplementary goals such as 'improve quality' or 'create entry barriers for potential rivals'. (View strategy network.) | | Among other things, E-Commerce is affecting communication with customers. On the one hand, this will often mean that communication gets poorer. On the other hand, however, Internet based communication media offer the chance to gather data about customers that allow for individualized communication and services, hence, for an effective customer relationship management. (View strategy network.) | | Focus on Revenues | | Focus on Sales | | Increasing revenues can directly contribute to growing margins, if costs do not grow too progressively. Increasing revenues can also indirectly contribute to growing margins by taking advantage of economies of scale, which result in diminishing costs per unit - both in operations and procurement. (View strategy network.) | | Analogous to procurement, we differentiate five main stages of a sales transaction: initiation, selection of customer (identification, evaluation, and authentication), contracting, outbound logistics and financial transaction. For each stage, the framework offers a network of refinement options. The options are either aimed at the primary goal 'cost reduction' or supplementary goals such as 'create customer benefit', 'increase revenues' or 'create entry barriers for potential rivals'. In addition to these generic aspects, each stage is assigned specific aspects, such as security or creditworthiness with financial transaction. (View strategy network.) | | Focus on Integration of the Internal Value Chain | | It is evident that an isolated optimization of sales and procurement will hardly result in an overall optimum. Instead, it is more promising to integrate these to value chain activities in order to avoid friction and redundancy. For the same reason, operations should be integrated with sales and procurement, too. However, in ECOMOD we do not take into account the peculiarities of operations (see limited scope). Instead, we regard operations as a black box. Nevertheless, it is possible to analyse integration issues by focussing on generic interfaces only. Process integration of this kind is not restricted to E-Commerce. It will, however, often be necessary for making E-Commerce strategies successful. (View strategy network.) |
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