Case studies reflect real-life scenarios. Analyzing case studies will help you to get a feel for what happens in real life business scenarios and how you, as an information systems manager, can handle real-life business situations.
For this Assignment, read the assigned book chapter from this week's resources to analyze IT strategies for e-commerce. Then review the case study assigned to you.
As you read the case study, consider the key issues related to IT strategies applied in e-commerce in the case. You may consider the following questions to guide your analysis of the IT business strategies.
What happened in the case?
What was/were the cause(s)?
What was the impact?
What was the outcome?
What concepts and theories did you notice in your review of the case that worked? Why did they work?
What concepts and theories did not work or were ineffective? Why?
Submit a 1,000- to 1,200-word report based on your analysis of the assigned case study. In your report, address the following:
Write a thorough analysis of the key issues related to the IT strategies applied in e-commerce in the case.
Make sure to employ the key concepts reviewed in the text and in this week's Discussion in the case study analysis.
The report should be double-spaced, and follow APA style and formatting.
Case Study
When You're Big, You Can Be Your Own B2B E-Marketplace Business to Business (B2B) e-marketplaces are the growing trend in the B2B e-commerce business model. Businesses from all industries and countries can gather, perform commerce functions, share mission-critical information, and deploy infrastructure applications that allow those organizations to tie their internal systems to each other.
But some companies-the largest ones-don't have to play in the generic B2B e-marketplaces. Instead, they can build their own and literally require that their sup- pliers participate. Once such company is Volkswagen AG. Its B2B e-marketplace is called VWgroupsupply.com
Volkswagen AG offers eight brands of automobiles- Volkswagen (passenger), Volkswagen Commercial Vehicles, Audi, Bentley, Bugatti, Lamborghini, Seat, and Skoda. In 2003, Volkswagen spent almost 60 billion euros, or approximately $77 billion, on components, automotive parts, and MRO materials for its manufacturing operations. When you spend that much money with your suppliers, you can open and run your own B2B e-marketplace.
VWgroupsupply.com handles 90 percent of Volkswagen global purchases. Almost all requests for quotes, contract negotiations, catalog updating and buying, purchase-order management, vehicle program management, and payments are handled electronically and online through VWgroupsupply.com.
Gains in efficiency and productivity coupled with material costs reductions have been tremendous. The cost savings alone generated over the last three years were more than 100 million euros, or approximately $127 million.
Volkswagen requires that each of its 5,500 suppliers use VWgroupsupply.com for any interactions. Suppliers place product and pricing catalogs on the system, respond to requests for quotes, and collaborate with Volkswagen engineers on new product designs, all in the safe and secure environment of Volkswagen's proprietary B2B e-marketplace.
By requiring its suppliers to interact with Volkswagen in the e-marketplace, purchasing agents no longer have to spend valuable time searching for information and pricing. Volkswagen has, in essence, created a system that brings the necessary information to the purchasing agents. This new system within VWgroupsupply.com is called iPAD, or Internal Purchasing Agent Desk.
Prior to the implementation of iPAD, purchasing agents entering a purchase order for a vehicle front module had to use numerous separate systems to complete the process. They had to retrieve information from a supplier system and its database, query information in Volkswagen's internal parts information system, obtain information from a request-for-quotes data- base, enter information into a contract-negotiation transcript system, and interact with several other sys- tems and databases.
In all, the purchasing agent had to log into and use seven separate systems. Analysis revealed that Volkswagen purchasing agents were spending 70 percent of their time finding, retrieving, analyzing, validating, and moving information. This took away valuable time from such tasks as negotiating better prices with suppliers.
Using a form of an integrated collaboration environment, purchasing agents now participate in a simple three-step process. First, iPAD captures and sends a business event to the purchasing agent, such as the need to order vehicle front modules.
Second, iPAD attaches to that communication other necessary information such as information about potential suppliers, their costs, and other forms of analysis and descriptive information. Finally, iPAD sends the corresponding business processes and work flows to be completed electronically.
It works much like a digital dashboard, which we introduced you to in Chapter 3. When purchasing agents log onto the iPAD portal in the morning, they receive a customized Web page with announcements, business alerts, analyses, and digital workflows to be completed.
The purchasing agents can set out immediately to complete the tasks for the day, without having to spend 70 percent of their time finding, retrieving, and analyzing information. iPAD even customizes the Web page according to the purchasing agent's native language, something very necessary for a global manufacturer of automobiles with more than 2,000 purchasing agents worldwide.17,18
Questions
1. Volkswagen operates its own proprietary B2B e-marketplace in which its suppliers participate. What are the disadvantages to Volkswagen of not using a generic B2B e-marketplace with even more suppliers? What are the advantages to Volkswagen of developing and using its own proprietary B2B e-marketplace?
2. When Volkswagen needs a new part design, it uses VWsupplygroup.com to get its suppliers involved in the design process early. This creates a tremendous amount of interorganizational collaboration. What are the advantages to the suppliers and to Volkswagen in doing so?
3. How is Volkswagen's VWgroupsupply.com B2B e-marketplace an example of a vertical e-marketplace implementation? How is it an example of a horizontal e-marketplace implementation? Why is it necessary that Volkswagen combine both of these e-marketplaces into one e-marketplace? What would be the drawbacks to creating two different e-marketplaces-one for suppliers of direct materials and one for suppliers of MRO materials?