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Suppliers Connected to MarketPlace via Web or ERP Buyers Buyers connected to marketplace via EProcurement App B2B MarketPlace Profit Other Costs Purchases 100 100 45 50 45 5 5% A 5% reduction in purchase cost can result in a 50% increase in profit margin. +50% PricewaterhouseCoopers 22 The Costs Associated With Procuring Production Inputs Lower transaction costs coupled with the ability to enforce purchasing policy across the enterprise have been instrumental in driving Webbased MRO procurement. Two additional factors have accelerated the trend. The first factor is a defensive reaction by firms that note the cost savings being enjoyed by rivals switching to an ebusiness procurement mode. The second, and possibly more important factor is the insistence by large firms such as Ford, that their suppliers link into their Webbased procurement systems as a condition of doing business with them. Source: RB Weber COST PER PO POTENTIAL COST PER PO CURRENT COST PER PO PricewaterhouseCoopers 23 The Cost of eBusiness Supply Chain Management Even the scope of MRO procurement pales beside the possibilities for reanizing supply chains around ebusiness. Rather than increasing production and inventory in advance of actual customer demand, ebusinesses are looking to make both their own supply chains and those of their customers and suppliers respond in real time to actual sales. Supplier Manufacturer Distribution Retailer Consumer CREDIT CARD1234 5678 9012VALID FROM GOOD THRUX/X/X X/X/XPAUL FISCHERInformation PricewaterhouseCoopers 24 The Cost of eBusiness Supply Chain Management Visibility of the entire supply chain is necessary so a business can analyse the interplay between interactions such as procuring materials, ponents, and subassemblies from various suppliers。 shifting production between installations or business partners。PwC Supply Chain Management Accelerating Cost Effectiveness PricewaterhouseCoopers 2 Supply Chain Management ? The supply chain used to be a simple serial process with raw materials slowly moving in one direction through manufacturing production and onward via a distribution system to retailers and customers. ? Today, the talk is of supply works, parallel chains, enhanced concurrent activities, and “customer centric” with new information platforms and technology set to cut both inventory and leadtimes throughout the delivery pipeline further. PricewaterhouseCoopers 3 Top Issues Facing SCM Professionals In a recent quantitative survey, SCM professionals were asked a openended subjective question, “What are the three biggest issues facing you personally in developing your logisti