(1) VENDOR RELATIONSHIP MANAGEMENT: Re-engineering the Business Process Through B2B Infrastructure to Accelerate the Growth of Small Businesses in Geographically Isolated Areas William McDaniel Albritton Collaborative Software Development Lab University of Hawaii

(2) Participation Co-authored by Joy M. Agustin Funding by City Bank UH New Economy Research Grant Program Participants Dr. Philip Johnson City Bank FedEx Hilo Hattie United States Postal Service (USPS) University of Hawai’i 10 Local Businesses

(3) Geographically Isolated Businesses Issue Small businesses limited to local market Solution Global marketplace of the Internet Example: Village near Chincheros, Peru 1995 – village’s income = $300 US per month 1996 – Internet connection Online partnership with export company Sell produce in New York 1998 – village’s income = $1500 US per month “Wiring the Pueblo”, Business 2.0 David Batstone, 1998

(4) Expanding Local Hawai’i Businesses Virtual Merchant (+) Ideal in early 90’s (+) Direct control of inventory and information (-) Overhead of sales, marketing, and web site (-) Problem of being noticed on the Internet Metamediary/Virtual Mall (+) Larger well-established company (+) Has brand name recognition (+) Takes care of sales, marketing, and web site (-) Maintaining inventory and information

(5) Vendor Relationship Management (VRM) Partners Metamediary (Host) Sales, marketing, and website Virtual Merchant (Vendor) Maintain inventory and information Financial Institution Transaction processing and loans Shipping Provider Order tracking

(6) Partner Services Metamediary Virtual Merchant Financial Institution Shipping Provider Product Shipping Order Tracking Product Information Order Information Transaction Processing Transaction Processing and Loans

(7) Virtual Merchant/Metamediary Metamediary Virtual Merchant Financial Institution Shipping Provider Product Information Order Information VRM System Order Information Product Information

(8) Shipping Provider Metamediary Virtual Merchant Financial Institution Shipping Provider Product Shipping Order Tracking VRM System Order Tracking

(9) Financial Institution Metamediary Virtual Merchant Financial Institution Shipping Provider Transaction Processing Transaction Processing and Loans VRM System Merchant Sales

(10) VRM Prototype Web-based application Designed with Microsoft Components Microsoft Windows 2000 Active Server Pages (ASP) Internet Information Server (IIS) Open Database Connectivity (ODBC) Microsoft Access 4 main interfaces Metamediary (Host) Virtual Merchant (Vendor) Financial Institution Shipping Provider

(11) VRM Prototype Metamediary Interface Maintain contact info. Create vendor accounts Send orders to vendors View status of orders

(12) VRM Prototype Vendor Interface Maintain contact info. Maintain product info. View customer info. Receive orders View status of orders

(13) VRM Prototype Financial Institution Interface Maintain contact info. View vendor and host contact info. View vendor sales

(14) VRM Prototype Shipping Provider Interface - pending Provide.gif shipping labels

(15) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System

(16) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order

(17) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order

(18) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order Notification and Shipping Label

(19) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order Notification and Shipping Label Product

(20) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order Notification and Shipping Label Product Shipping Information

(21) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order Notification and Shipping Label Product Shipping Information Confirmation Number

(22) Ordering a Product Virtual Merchant Customer MetamediaryShipping Provider VRM System Order Notification and Shipping Label Product Shipping Information Confirmation Number

(23) Ordering a Product Benefits of VRM BPM Customer - only sees metamediary Metamediary - no product inventory - no shipping Virtual Merchants - no advertising - no web maintenance

(24) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System

(25) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request

(26) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request Shipping Label

(27) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request Shipping Label Product

(28) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request Shipping Label Product Shipping Information Return Notification

(29) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request Shipping Label Product Shipping Information Return Notification Received Notification

(30) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request Shipping Label Product Shipping Information Return Notification Received Notification

(31) Returning a product Virtual Merchant Customer MetamediaryShipping Provider VRM System Return Request Shipping Label Product Shipping Information Return Notification Received Notification Refund

(32) Returning a product Benefits of VRM BPM Customer - only sees metamediary Metamediary - no product inventory - no shipping Virtual Merchants - no advertising - no web maintenance

(33) VRM Prototype Portability Windows NT/2000 Reliability Microsoft products seem to attract viruses Access database - Typically 10 to 20 users - One megabyte of data Scalability Need to change to SQL Server Security Secure Socket Layer (SSL) Cannot load pages unless go through Login page Other general security concerns

(34) Survey of 10 Local Businesses Vendor interviews E-commerce issues and solutions minutes interview Topics Degree of technological sophistication Use of Internet for sales and marketing Desires for and barriers to growth Present and future financial services

(35) Survey Results Business Size Staff of 1-2 (7 businesses) Staff of 5-25 (3 businesses) E-commerce 9 businesses on the Internet 8 individual websites - Trouble getting site noticed (4) - Product not easily sold online (2) - No problems (2) Percent of business from Internet - 95%+ (3) %(0) %(2) - <10%(3)

(36) Survey Results Future Business Direction Keep growing (3) Eventually sell business (3) Have brick & mortar store (1) Outsource web site (1) Survive/continue at same pace (2) Advantages of Using a Metamediary/Virtual Mall 9 companies gave positive comments - High visibility - Wider customer base - Increase traffic - Less hassles - No maintenance of websites

(37) Survey Results Disadvantages of Using a Metamediary/Virtual Mall 7 companies gave negative comments - Concerns over setup with metamediary - Insufficient time to keep up with production - Possible competition with other products - Loss of control over advertising - Slower payment process - Increase number of small orders 3 companies currently use a metamediary Metamediary/Virtual Mall Product Preferences Wholesale (6) Drop-ship (2) Commission (1)

(38) Survey Results Financial Services Present - Credit card transactions (8) - Merchant account (3) Future - Loans (2) - Other banking services (2) - No loans (2) - Not interested in additional services (4)

(39) Expert Critiques Participants Business Owners (2) Bank Employees (3) Topics Advantages Disadvantages Suggested Improvements

(40) Expert Critiques Advantages Easy for inexperienced small vendors - Banking - Advertising - Ordering - Shipping details Eliminate paper traveling between partners Vendors can get paid immediately by metamediary Metamediary does not need to store inventory

(41) Expert Critiques Disadvantages Vendor packs orders themselves Not geared toward vendors that do not “produce” their own product Metamediary immediately pays vendors Competition between metamediary and vendor Competition between vendors on web site

(42) Expert Critiques Suggested Improvements Include contract negotiations in business process - Metamediary and shipping company - Metamediary and vendors - Financial institution and other 3 partners Add information on individual product sales Add user log Investigate third party shipping software Add fulfillment center as a fifth partner

(43) What’s Next? 1.Is this a viable approach? 2.Under what conditions? 3.When should we think about proceeding?