2. 2. Electronic Commerce

Business and government experience with online electronic commerce services (for example, the FAST system for electronic parts, a service used by Department of Defense laboratories for ordering components) has demonstrated rather convincingly that electronic commerce can be cost effective and can dramatically reduce the time to purchase items (even very large quantities). The popularity of cable services, such as home shopping channels, has prepared the Nation by providing a limited form of electronic commerce via television distribution, telephone "uplink," and credit cards. In the near future, every home and business could have an information appliance that combines the capabilities of telephone, television, newspaper, computer, and Internet services such as electronic mail.

To see some of the possibilities, consider the following two scenarios describing how consumers might use electronic commerce by the end of the century:

A couple realizes that their van has about 45,000 miles on it and it is time to replace the tires. Rather than scanning the ads in the Sunday morning sports page, they ask their computer to retrieve multimedia tire ads. These ads contain useful information about the companies' consumer services (hours, loaner cars, payment plans, etc. ). In this case, the consumer asks the computer to display on a map those companies that have 215X75R tires on sale with 60,000-mile warranties, are located within 5 miles of their home, have hours that extend to at least 8 p.m., and offer shuttle service to and from the Metro. These are displayed on a computer-generated map and the consumer selectively examines the electronic advertisement of each offering. The consumer then issues an electronic bid to one or more of these companies. This in turn would be automatically answered by the tire companies' electronic commerce service. The consumer then picks the best offer (based in part on third party "consumer reports" about tire quality and customer satisfaction), and upon acceptance, activates a process that would reserve (or order) the tire from inventory, schedule an appointment, and reserve other services requested (such as a shuttle to work). Payment could be arranged electronically as negotiated in the bid (for example, in advance, upon performance, or upon inspection by the consumer).

Electronic commerce is an excellent example of "dual-use" capabilities. A military logistics agency increases its performance and decreases its costs, while simplifying its inventory control, by exploiting the services of an electronically available inventory service. This service downloads daily logistics requirements (orders) and predicts demand based on consumer models to determine inventory on-hand requirements. Through electronic brokering capabilities, the inventory provider secures "just in time" inventory at the best cost and provides the material to the logistics agency.

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