How much e-biz does your biz really need?

Many companies in the rubber industry are rushing to move their business onto the Internet in the hope of cutting costs, improving productivity and expanding their customer base. In their haste, they ignore a basic concept: When you introduce new technology, take time to think about what your business needs really are and how that technology can help meet them.

A company's business needs are defined by:

* Its core business processes: Which one or two processes are most important to the continued success of its business?

* Its structure: Centralized or dispersed?

* What it sells to whom: Specialty goods to a few customers or mass-market items to consumers?

* Its relationships with its customers and suppliers: How much information does it have to share and how quickly?

When we talk about the Internet, we often treat it as if it is a single thing: what we see when we surf the net through the worldwide web via our browsers. The Internet, however, is a multifaceted communications tool that can be used for many different purposes.

Just as every company needs a telephone and business cards to do business, today every company needs a presence on the worldwide web, if only to provide basic information to stakeholders, i.e., employees, vendors, customers, investors. But not every company needs to conduct a buyer's auction, process credit card payments or enable live chats with customer service representatives through its web site.

Understand your business processes

Before a company jumps onto the Internet, it should make sure it understands its business processes. Traditionally, organizations have been divided into departments that perform specific functions. Most of the important activity in a business, however, occurs in processes that spill over functional boundaries. For example, filling an order can entail actions by sales, customer service, warehousing, traffic and manufacturing. Once you understand the processes that define your business, you can determine which can be performed more efficiently via the Internet.

An essential step in understanding business processes is evaluating the systems that support those processes, e.g., back office systems that handle order management, production scheduling, inventory control, purchasing, logistics and accounting. Whether you call your back office system MRP, ERP or something else, if you can't efficiently fill orders, send accurate invoices and quickly process payments, the Internet won't help you. It will only aggravate your problems.

There are four approaches a company can take to using the Internet, depending on its structure, products and partners. We'll call these approaches: B2U; Extended B2U; B2B; and B2C. Let's look at what's behind these acronyms.

B2U

B2U stands for "business to yourself" - providing your employees with tools to perform processes needed to run your business, e.g., taking orders, buying materials, performing quality control. These days most companies do B2U at its most basic level on a client/server system with graphical user interfaces (GUIs) that run on desktop PCs. A company centralized at a single site, buying from a relatively small number of suppliers and selling a specialized product to a relatively small number of customers can benefit most from a B2U approach. A company can request proposals or submit bids on an online trade exchange with just B2U and access to the Internet.

Extended B2U

Companies with more complex and geographically dispersed organizational structures can gain efficiency by moving to an extended B2U, i.e., an intranet, an in-house web site that only employees can access. Although parts of your intranet may link to the Internet, it is not accessible to the public. Using an intranet, employees at any location can connect to the system through an Internet service provider and interact with it not via GUIs, but through a web browser. It doesn't matter where they are: Cairo, IL or Cairo, Egypt; Paris, TX or Paris, France. Local and remote employees, production planners and CFOs on vacation can access the same functions and perform the same processes as if they were on site (if they have authority to do so), but what they see on their screens looks a little different.

GUI versus browser (intranet) interface

B2B

The B2B (business to business) approach makes some of your business processes available to chosen partners over an extranet - a web site that your employees and partners, but not the public, can access. An extranet uses the public Internet as its transmission system, but requires passwords. It works well for companies buying (or selling) commodity-like products sourced on the basis of price or delivery time.

B2B is particularly effective when supply chain integration is vital, i.e., when a company shares information with partners to expedite the exchange of goods and money. An extranet can provide partners with any information you let them access, e.g., current inventories, pricing information. Vendors can submit quotes through an extranet. A distributor can link his web site directly to a manufacturer's online product catalog. Customers can track their own shipments, reducing call traffic to a vendor's customer service center.

Who is in control of the relationship governs how an extranet is used. If a small company mixes rubber exclusively for Goodyear, it's probably going to have to connect to Goodyear's extranet instead of operating its own. If a company buys large quantities of additives strictly on the basis of price and delivery time from a variety of small suppliers, or if it supplies auto parts to thousands of auto supply stores nationwide, it makes sense to let its partners connect to its extranet and treat them like branch offices.

B2C

Companies that sell rubber products primarily to the consumer are candidates for a B2C Internet presence. A B2C company makes certain pages of its web site available to the public via the Internet so that they can learn about products and place orders, ask questions and learn the status of their purchases. Buying something on a B2C Internet site should be as close to a real bricks-and-mortar experience as possible. A customer should be able to find quick answers to questions such as "Is it in stock?" and "When is it going to be delivered and by whom?"

Analyze your back office needs

What all these approaches have in common is the need for a back office "e-backbone" to automate all the action from recording a sale to processing payments. One reason why electronic data interchange (EDI) did not fulfill its promise as a business enabler was that many companies accepted orders via EDI and then had to re-key them into their back office systems because those systems could not accept EDI input. The same bottleneck can develop in a B2B environment unless a company's back office systems can receive orders directly from the Internet and process them in the same way that they would an order entered manually. These systems should be able to take an Internet order and automatically trigger actions to determine, among other vital information:

* Does the order pass the credit limit check?

* Is there enough inventory to automatically allocate to this order?

* If there is, is it necessary to automatically generate a picking document in the warehouse so that the order can be shipped immediately?

* If there isn't, is it necessary to automatically generate a production order in the plant to manufacture the items?

Not all back office systems that claim to be e-business-enabled offer the same flexibility when it comes to extending your business processes to the Internet. Successfully moving your business processes to the Internet requires systems that are inherently:

* Web native; and

* Open.

A Web native system has these attributes:

* Its core architecture is designed to be deployed on the worldwide web;

* Any part of the system can run in web browser mode, i.e., on Internet Explorer or Netscape; and

* The system supports internal communications in some standard fashion, most typically using XML (extensible markup language).

Table 1 - using the internet

              B2U             Extended B2U   B2B        B2C

Via           Local network   Intranet       Extranet   Internet
Connects      Local           Remote         Business   The world
                employees       employees    partners
Interface     GUI             Browser        Browser    Browser
Accessible    All             Most           Some       Few
  functions
Products      Specialized     Commodity      ?          Consumer
Partners      Few             ?                         Many

If a system is web native, a company can easily run its business on both an intranet and extranet. There may be little more to do than to set some display and security parameters and push a button to generate a web version of essential business information such as a stock status inquiry. A web native back office system eliminates development and implementation delays and substantially lowers maintenance and operating costs compared to one that is not.

"Web native" also means that a company can outsource some business processes, perhaps logistics or customer service, to a strategic partner or application service provider (ASP), which will significantly reduce its IT investment.

A system is open if its developer has published its application programming interface (API), the method to be used to interact with that system. Using an API, a programmer can write short programs that can enable the system to readily share information and functions with other systems.

In an open system:

* Business partners can more easily connect their web sites and systems.

* Companies can quickly exchange information.

* A company can link to a B2C web site and do much more than just take orders, i.e., it can show accurate stocking information, delivery times and carrier tracking information.

With a closed system, these capabilities are much more difficult to provide in any reasonable, cost-effective and timely way.

The next step after analyzing your business processes and needs and evaluating your back office systems is to develop a plan to move to the web. It might start with an intranet B2U connection for company personnel and move outward to provide some of those capabilities to business partners (B2B). Eventually, if a company sells to consumers, it can move to a full-service, public B2C site.

To do this well means selecting a system that is web-capable at its core, inherently built that way from the ground up, so that you have a choice of GUI or browser as you see fit. It needs to be open to link to other web sites and systems and fully exploit the potential inherent in the worldwide web to handle business more efficiently and increase revenues and profits.

E-sites offer many amenities

Most suppliers to the rubber industry and many of the rubber product manufacturers have a presence on the world wide web. Whether it be individually or as part of a group, considerable time and effort are being spent by the information technologists on developing and maintaining a web presence. The involvement can be as minimal as just containing a home page with point and click information capabilities to highly sophisticated systems in which buyer and seller interact at several levels.

With increased sales as the main goal, the path taken varies somewhat, depending on the commitment made by the provider. We talked with Hugh Vanderbilt, Jr. of R.T. Vanderbilt; Damien Marshall of the C.P. Hall Co.; and Scott Fallon of GE Silicones to get their perspectives on the set-up and operation of their companies' sites.

Hugh Vanderbilt said creating their web presence was a natural evolution for his company after they found the savings realized by their implementation of an intranet system within R.T. Vanderbilt. "We improved our own purchasing practices and realized the same could be true for our customers," the company chairman said. Vanderbilt said the web site keeps evolving to include features to aid the customers. Along with the technical data sheets and material safety data sheets, the Vanderbilt site offers calculation of foreign currency and special pricing.

The Vanderbilt web site is also changing to XML, extensible markup language, which is an advanced set of specifications for designing and formatting Web documents that permits greater customization than the older hypertext markup language (HTML). "This basically allows us to reach more customers. XML eliminates many of the hardware and software problems that may be encountered," Vanderbilt said.

Fallon of GE Silicones said because of the broad range of industries the company serves, site designers had to find a way to offer easy, quick access to specific data. "We determined that our customers most often inquire about silicone in three ways - identifying with an industry; comparing an application; or researching a material," GE's global e-business leader said. Those three avenues are the main access paths on the GE Silicones website.

"We believe the way to keep our customers interested and coming back is to focus on continuous upgrades and new customizable features," Fallon said. He said GE recently launched a site focused entirely on custom elastomers. It offers comprehensive, on-line services for materials research and product design.

Fallon attributes the company's adherence to the Six Sigma methodology used consistently across all of GE for getting the site up and running in a short period of time.

Providing technical assistance is the primary driving force behind C.P. Hall's website, according to Marshall. Like the other sites, it provides MSDSs, data sheets and bulletins. The site also offers interactive technical forums and access to the company's library of research data. "We also have the opportunity to promptly notify specific customers about products and innovations they might be interested in," Marshall said.

All three companies, being well established as suppliers to the industry, faced the challenge of designing a site that can attract new business while providing better amenities than the competition. "It was difficult to convey 80 years of experience into a single monitor screen," Marshall said. "We had to create a viable, easy to use, multi-purpose tool that could demonstrate all the knowledge and information the company offers without overcomplicating the site and overwhelming the user," he added which was the consensus of the three.

Dr. Allen Pinkus is vice president of Adonix (www.adonix.com), a developer of enterprise applications for midsize companies, and a former professor of industrial management at Carnegie Mellon University.