Less chain, more links: Business versus commerce

Norman Schofield, Chairman, UK Council for E-business

E-business can slash procurement, design and production costs, as well as cutting time to market. But confusion over where to start and lack of confidence has meant only an estimated 20% of UK companies are taking advantage of it.

There is enormous confusion between electronic business and electronic commerce – or what you could term e-trading. Most air time is given to e-commerce, whereas it is e-business that is going to transform the productivity and globalisation of UK industry at all levels in the supply chain.

However, this means getting geared up for the needs of e-business, which means enabling intra-and inter-enterprise collaboration and information sharing. This includes a whole litany of business improvements: it means better procurement and supply chain management; making sales teams in the field more effective; creating the ability to outsource functions such as accounting; remote access to mission-critical systems; linking management teams in different places; finding quickly low-cost suppliers; creating better customer services and more sophisticated collection of customer information.

Drawing out the differences between what we can define as e-commerce and what is implied by e-business helps to set out some of the issues that companies will encounter as they try to appraise their existing systems to work out where to go next.

E-commerce is mainly concerned with relatively simple trade transactions for order, delivery, invoice and payment. E-business focuses on two-way iterative data sharing primarily between manufacturing businesses througout the supply chain and across a long product life cycle. Systems are wide ranging and involve complex applications such as design and research, engineering, production, and support.

Data types in e-business are high in number, and are complex, with a large number of very large data transactions. This can make commonality and sharing between partners difficult – and a central issue companies have to address is how to improve the flow of information.

The life-cycle element is a further complexity: engineering project data needs to be transferred and converted at different stages in the project’s life – right through from the initial requirement, concept and detailed design, to manufacture, delivery, operation and maintenance. Legacy engineering data can have a life of 30-60 years for maintenance and operation of some investments.

However, commercial data within e-commerce usually has only one instance of validity, at the time of the transaction, and is recorded and maintained in this form. It also has a finite life, often defined by tax rules. Thus, for major capital investment projects, planning to manage that life-cycle data (as well as the commercial and business relationships that apply through the extended enterprise) is a key issue.

We have already gathered data on the business benefits of e-business initiatives from around 150 companies. Some have reduced build costs by up to 83%, while production engineering costs have been cut by 30%. Design costs have also fallen. Time to market in some cases has been reduced by 50%, with savings in design, production engineering and build time. Many firms have been able to link quality gains to investments in e-business systems.

These results will probably come as no surprise, and surveys show that the vast majority of British engineers believe e-business is necessary to help transform their performance. Unfortunately, less than 20% are really acting on this. Maybe this is explained by a lack of understanding about what is achievable – and a lack of confidence by senior managers on where to start.

The E-business for Industry conference and exhibition runs from 20-22 June at Olympia 2, London. For more information on the conference call 020 8893 3986. For information on the UKCEB call 01494 601066, or visit the website: www.ukceb.org

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