Real World Case Studies

Real-World Case Studies

#1 The MarketSite and BuySite applications represent a collaborative online commerce environment from Commerce One for buying and selling. MarketSite is a portal for exchanging goods and services on the Commerce One Global. MarketSite lets buyers, suppliers and net market makers conduct business, source new products and services, create new sales channels and access industry-specific information. BuySite is an electronic procurement application that automates the goods and services procurement process.

#2 Buying power vs. selling power most likely motivated Eastman to start with purchasing. Eastman Chemical manufactures and markets more than 1,200 chemicals, fibers and plastics products, meaning that its selling power is highly distributed. Thus, a sell-side effort in electronic commerce would be more complex, requiring the ability to attract world-wide customers from many industries. But, with 2002 revenues of $5.3 billion the company has extraordinary buying power, meaning that sellers are more than happy to cater to the needs of the company.

#3 Traditionally, sales representatives conduct excess inventory sales over the phone, calling customers and offering products at a certain price. If no customer accepted the offer, the representative lowered the price and began calling customers all over again. This process is labor intensive, costly and makes it difficult to assess the market value of inventory. Moai's LiveExchange Enterprise solution provided online capabilities and features to facilitate dynamic commerce, the buying and selling of information, goods and services through flexible pricing models that change as market dynamics change, allowing for real-time market pricing. LiveExchange capabilities include auctions, reverse auctions and online negotiations.

#4 Eastman Chemical could benefit from at least two other Commerce One products. The first would be the Commerce One Collaborative Platform that facilitates higher degrees of business process automation through work flow and application links. This product offers business process management, buyer-and-supplier transaction management, enterprise application integration and B2B integration. The second would be Commerce One's XML Common Business Library, an industry-standard set of XML building blocks and a document framework that provides open integration with buying and selling applications. Although not clear, Eastman may have also benefited from Commerce One's payment solutions and could have gone with Commerce One Source instead of Moai's LiveExchange. Commerce One Source offers reverse auctions; requests for information, proposal, and quote; bid packaging; negotiating; quotation analysis; scenario tools; software for evaluating supplier performance; and reporting on spending and performance by individual goods and suppliers.

#1 The two major critical success factors are that the exchange deliver superior customer service and lower transactions costs for both shippers and carriers. Given that participants, carriers and customers, are competitors, Global Transportation Network required a trusted, third party to maintain neutrality and security. And, the network's effectiveness hinged on agreement of the shippers on standards. Finally, significant participation by carriers and shippers was essential to the success of the network.

#2 A consortium is definitely the best type of ownership for this kind of exchange. While it is certainly possible to gain efficiencies with the use of a well-designed carrier website, most shippers use the services of more than one carrier. Therefore, it would be difficult for shippers to achieve efficiency within their organizations when they have to rely on shippers from multiple Web sites to enter similar transactions. With the consortium, shippers can pool the cost of the Web site, meaning they can offer their customers more functional for less money.

#3 A shipper's exchange is more problematic than the consortium of ocean carriers because of the large ratio of shippers (thousands) to carriers (13 ocean carriers represent more than forty percent of worldwide capacity). Shippers would have great difficulty in participating in thousands of exchanges. Only the top gigantic shippers such as Wal-Mart could leverage their buying power to force participation. Further, both the carriers and shippers participate in a very competitive environment. However, as stated in the case, shippers have some history of cooperation such as vessel sharing and have formed a small number of alliances.

#4 A carrier is motivated to participate in the exchange for a variety of reasons. The major appeal is lost business that will occur if the carrier does not participate in the exchange, particularly as the exchange grows in size there will be little incentive for a shipper to go to an individual carrier. Secondly, exchanges help carriers to automate manual, paper-based processes just as much as it does customers. And, a consortium provides greater access to electronic commerce applications than a single carrier might be able to afford.