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E-BUSINESS TRANSFORMATION AT
ME-ONLINE
GROUP 09
TEAM MEMBERS
AMAR PRATAP (2014PGP030)
ARUN N (2014PGP061)
MILAN BHATI(2014PGP081)
DIVYA MATHUR (IPM2011026)
RAJ THILAK RA (2014PGP286)
RASHI GEHLOT (IPM2011081)
SAWAN KUMAR (IPM2011095)
PROBLEMS FACED BY SHMEC WITH OLD MODEL
• Under ‘first buy and sell later” arrangement, company has to bear inventory accumulation, Inventory loss and depreciation because of disequilibrium between demand and supply
• In absence of effective management measure high account receivable leads to high bad debts
• Due to lack of information technology application tool, company relied on manual book keeping for record of procurement, sale and inventory. Business staff has monopoly over such crucial information which slowed information processing and delayed response to customers and suppliers
• SHMEC’s slow processing of capital , logistic and information could not keep pace with rapid changes in market
PROBLEMS FACED BY SHMEC WITH OLD MODEL (CONT.)
• Fluctuating prices had lowered profit
• Company’s limited liquid capital made it impossible to significantly change its financial status
• Business staff did SHMEC procurement, and there was less transparency in the process • Buyers settled issues such as choice of supplier, quantities of products to be procured and time of payment. It was often contrary to company’s interest
INVENTORY HOLDING COST
Before
• Before e-business model company had to bear high inventory holding cost, which was blocking its liquid assets
• By the year end 2000, company had an inventory pileup worth over Rmb 10 million After
• After e-business model, SHMEC pay only 30% down payment to supplier after receiving order and before delivering it to the customer. It makes remaining payment after the order is received by the customer. In that way SHMEC is able to save several millions of inventory holding cost in each transaction
REDUCTION IN BAD DEBT WITH IMPLEMENTATION
ME-ONLINE
GROUP 09
TEAM MEMBERS
AMAR PRATAP (2014PGP030)
ARUN N (2014PGP061)
MILAN BHATI(2014PGP081)
DIVYA MATHUR (IPM2011026)
RAJ THILAK RA (2014PGP286)
RASHI GEHLOT (IPM2011081)
SAWAN KUMAR (IPM2011095)
PROBLEMS FACED BY SHMEC WITH OLD MODEL
• Under ‘first buy and sell later” arrangement, company has to bear inventory accumulation, Inventory loss and depreciation because of disequilibrium between demand and supply
• In absence of effective management measure high account receivable leads to high bad debts
• Due to lack of information technology application tool, company relied on manual book keeping for record of procurement, sale and inventory. Business staff has monopoly over such crucial information which slowed information processing and delayed response to customers and suppliers
• SHMEC’s slow processing of capital , logistic and information could not keep pace with rapid changes in market
PROBLEMS FACED BY SHMEC WITH OLD MODEL (CONT.)
• Fluctuating prices had lowered profit
• Company’s limited liquid capital made it impossible to significantly change its financial status
• Business staff did SHMEC procurement, and there was less transparency in the process • Buyers settled issues such as choice of supplier, quantities of products to be procured and time of payment. It was often contrary to company’s interest
INVENTORY HOLDING COST
Before
• Before e-business model company had to bear high inventory holding cost, which was blocking its liquid assets
• By the year end 2000, company had an inventory pileup worth over Rmb 10 million After
• After e-business model, SHMEC pay only 30% down payment to supplier after receiving order and before delivering it to the customer. It makes remaining payment after the order is received by the customer. In that way SHMEC is able to save several millions of inventory holding cost in each transaction
REDUCTION IN BAD DEBT WITH IMPLEMENTATION