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y. As a result, eBusiness pels existing businesses to reexamine how they interact with customers, even as new entrants exploit eBusinesses to reach customer bases previously thought unreachable. Low High Cost of Sale “ OfftheRack” Customised Value Added of Sale Direct Sales ?Facetoface sales ?$500/sales contact ?Distributors/VARs ?$2300/sales contact ?Telephone sales and service ?$25 per sales contact ?No human contact ?$1 per sales contact Resellers Tele channel Electronic Channels Source: Dr. Rowland Moriarty, Cubex Corp. PricewaterhouseCoopers 21 The Costs Associated With Procuring Production Inputs Webbased procurement of maintenance, repair, and operations (MRO) supplies is expected to reach more than $100 billion worldwide by the year 2022. MRO prises those goods required to run a pany that are not raw materials used in the direct manufacture of a product or the provision of a service. Suppliers 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 A1234 567890VALID FROMGTHUX/PAUL 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 interact