Ryder's work in this area also provides interesting examples of new supply chain measurement strategies. Using data from a study by D.A. Aaker and Young & Rubicam, Ryder determined that every 1 percent increase in brand equity impacts market capitalization by 1 percent, the constraint being that brand equity must move by 10 percent or greater to realize full impact. Ryder also determined that an increase in its customer service index by one point decreases lost revenue by $8 million per quarter.
These measures make evaluating such projects as Web billing far easier. If, for example, improved billing leads to an overall increase in the Ryder Customer Satisfaction Index of 0.5 points, this would lead to a predictable number of fewer lost customers. Because each customer had an average revenue value, Ryder could determine a numerical benefit value in stemmed lost business for the qualitative benefit of increasing customer satisfaction. Ryder was also able to identify pure quantitative benefits, such as e-mail responses to billing inquires being 75 percent less expensive than using the phone, a savings of $43,000 a year.
"By establishing a common set of business assumptions, intangible Web-related business benefits can be evaluated in a consistent manner," Wormwood says. "This allows you to include impacts such as increased customer service, increased brand clarity and enhanced competitiveness, along with the traditional calculations of increased revenues and decreased costs in your financial analysis and subsequent decision-making process."
But Ryder's developmental efforts are in the minority. Those companies that are paying attention to e-metrics tend to rely on outside consultants. Indeed, developing new metrics for e-business is quickly becoming big business. Many of the international consultancies have developed business lines specifically geared to make these analyses. KPMG, for example, has launched a service called eValuation, which takes into account traditional ROI variables as well as Internet metrics, such as additional sales that can be reaped by participating in Net marketplaces and the benefits of supply chain management and CRM. PricewaterhouseCoopers has established an ROI consulting service called E-Business Investment Advisor. Gartner Group has developed its own version of eMetrics through a service offered with InfoRay Technologies, a supplier of monitoring technology. Some examples of these new metrics include average percentage of information shared from trading partners, average customer retention time and average new revenue per collaboration. For its part, Cap Gemini Ernst & Young created a CRM Index, a tool that assesses CRM effectiveness.
Other, smaller companies offer services and products along these lines as well. Gensym Corp.s' e-SCOR software models and simulates complex supply chain systems. Typically, a user will create a specific supply chain topology and enter the necessary information, such as product costs or shipping time into the system. e-SCOR then reports the appropriate service levels of that particular supply chain. The user also has the option, through what-if scenarios, to evaluate new supply chain models by entering new circumstances or possibilities.
In fact, many believe such modeling or simulation capabilities will be the next big thing in supply chain applications. More immediately, however, it's clear that providers of supply chain applications -- and their clients -- will focus more on ascertaining whether or not a proposed project will provide a clear payback. An illustration of that can be found with IPNet, a provider of B2B integration and supply chain collaboration that recently announced it was guaranteeing clients they will achieve a faster ROI using its B2B e-commerce solution compared with its competitors.