E business Transformation at ME-Online

Group 1 Abhishek Singh(PGP/16/003) Anshuman Tigga(PGP/16/005) Sudhanshu Shukla(PGP/16/052) Babita Pegu(PGP/16/136) Harsh Bajpai(PGP/16/197)

Shanghai Mechanical & Electrical Equipment Co. Ltd.Introduction

Established in 1955 as a mechanical & electrical equipment distribution company Sales & performance were deteriorating by 1990 In Oct. 1998 changes in ownership structure was made by parent company Shanghai Material & Equipment Co Rich in fixed assets & poor in liquidity Business practice of Buy first & sell later By 2000, bad debts due to selling on credit & inventory piling up started to meet fluctuating customer demand

Changes in Business Environment

Entry of private companies as competitors

Decreasing response time for customers

Opening up of Chinese economy

Low profit margins

Strengths of Traditional Business model

Large customer Base

Experienced logistics staff

No stock outs

Sales through multi channel system & franchise

Credit Availability in seller driven market

Disadvantages of traditional business model

Losses due to inventory pile up
Restructuring of sector lead to supply greater than demand due to traditional management style

Ineffective monitoring & Bad debts

Salesperson had unlimited rights to grant credit

No information & poor information flow

Information available only to business staff Client related information was inefficiently managed

Slow Market responsiveness

Slow processing of capital , logistics & information as compared to market

IT Application by SHMEC
1988 1991 1996
Setting up LAN Started IT application planning

Built company Area Network Realized computerized management

Sharing information using Company Area network Built infrastructure of IT application with specific channels Approved the setting of E Business platform

1998
2000 2001

Launched E business system

ME -Online
A internet based B2B business platform was launched to enable centralize information on a open platform & sharing of information & regulation of processes

It established a supply chain of suppliers , logistic providers and end user

SHMECs experience as a trading company provided advantages

Top management commitment -Pledging their own money as security

ME -Online
E business as a strategic Initiative
Bottom up Approach as existing employees were familiar with IT applications Change in mindset of employees to ensure smooth implementation

Differentiation
From a traditional distributor to a third party provider of trading platform & information

Core competency
Large customer base & stable syndicate with enterprises in the upper & lower chain

Operating model of ME-Online

A : Resource Provider B : Distributor members C : Direct User members D : Logistic provider members

E : Enjoyed online product resources F : Chose online distribution services

Value proposition

Resource provider member

Increase sales by speeding up payment receivables

Agents

Online inventory of products worth thousands with a guaranteed quality

User

Reduce procurement costs through sunny procurement online

Characteristics of ME-Online
High efficiency
Members can manage their inventory scientifically, regulate their distribution management and procure products at low cost

Specialty
Easy usage Extension

Designed for commonly used standard mechanical & electrical equipment & hardware
Computer with an internet connection was only needed Applicable to material & equipment companies of similar nature

Originality

Value added tax invoices & employed digital certificates for secure & irrevocable transactions

BPR for E-transformation

Check ups by product resource department for eligible suppliers ,thereby guarantying the quality of products and preventing the procurement of imitation & poor quality products Strict assessment policy for sales people was established

Setting up its own fleet to cater to varied logistic requirements

Removed Outdated information processing system which required maintaining regular high inventory to meet customer demands
Order driven approach through ME-Online

Lowered its operation costs by accelerating the circulation of its products

Improvements in Procuring & Distribution Management

Scalability & Sustainability

Scaling to new geographic locations Large number of staff are required in product resource department for validating suppliers Large number of logistic providers are required Scaling the model to material & equipment companies of similar nature requires initial large customer base so as to have network advantage Low barrier to entry but large customer base & stable syndicate with enterprises in the present sector

Model is not scalable but sustainable

Thank You