Business to BusinessBusiness to BusinessElectronic commerce Electronic commerce

Chapter 6Chapter 6

Business processes

Relative Sizes of E-Relative Sizes of E-commerce Categoriescommerce Categories

B2C

B2B

Procurement Procurement Revolution at GE Revolution at GE General electric has taken many steps General electric has taken many steps

to improve its purchasing process to improve its purchasing process including involving internet.including involving internet.

Online Procurement System ( TPN )Online Procurement System ( TPN ) Benefits Benefits

– Labour involved declined 30 %Labour involved declined 30 %– Staff involved redeployed 60%Staff involved redeployed 60%– Time reduced 18-23 days to 9-11 daysTime reduced 18-23 days to 9-11 days– Found several new supplier even got 20% Found several new supplier even got 20%

discount discount

Characteristics of B2B Characteristics of B2B ECEC Business-to-business e-commerce (B2B Business-to-business e-commerce (B2B

EC): Transactions between businesses EC): Transactions between businesses conducted electronically over the conducted electronically over the Internet, extranets, intranets, or private Internet, extranets, intranets, or private networks; also known as networks; also known as eB2B eB2B ((electronic B2Belectronic B2B) or just ) or just B2B, both buyers B2B, both buyers and sellers are business corporations.and sellers are business corporations.

B2B EC covers broad spectrum of B2B EC covers broad spectrum of applications, the relationship best applications, the relationship best understood in supply chain context.understood in supply chain context.

Characteristics of B2B Characteristics of B2B ECEC Supply chain: All the activities associated Supply chain: All the activities associated

with the flow and transformation of with the flow and transformation of finished goods from the raw materials finished goods from the raw materials stage, all the way to the end user. stage, all the way to the end user. – up stream activitiesup stream activities– Internal activities Internal activities – down stream activitiesdown stream activities

Key entities in B2B ECKey entities in B2B EC– Selling company, buying company, brokers, Selling company, buying company, brokers,

delivery company, network platform, delivery company, network platform, communication, back-end IScommunication, back-end IS

Supply ChainSupply Chain

Models of B2B ECModels of B2B EC

Procurement Procurement Management: Management:

Procurement, as strategic approach Procurement, as strategic approach to increase profit marginsto increase profit margins

Almost 80% time spent is non Almost 80% time spent is non productiveproductive

Goals of procurement re-Goals of procurement re-engineeringengineering

(page 242)(page 242)

Supplier-Oriented Supplier-Oriented marketplacesmarketplaces Sell-side marketplacesSell-side marketplaces are are

where organizations attempt to sell where organizations attempt to sell their products or services to other their products or services to other organizations electronically from organizations electronically from their own private e-marketplace.their own private e-marketplace.– Most commonMost common– Manufacturer drivenManufacturer driven– Example CISCOExample CISCO

Buyer-Oriented Buyer-Oriented marketplacesmarketplaces Buy-side marketplacesBuy-side marketplaces are are

where organizations attempt to where organizations attempt to buy needed products or services buy needed products or services from other organizations from other organizations electronically.electronically.– Only powerful buyers can do thisOnly powerful buyers can do this– Benefits to buyer and seller (page Benefits to buyer and seller (page

245-46)245-46)

Intermediary- Oriented Intermediary- Oriented Marketplaces Marketplaces (exchanges)(exchanges) Third-party marketplace where Third-party marketplace where

business buyer and seller can meet.business buyer and seller can meet. Functions of ExchangesFunctions of Exchanges

– Matching buyers and sellersMatching buyers and sellers– Facilitating transactionsFacilitating transactions– Maintaining exchange policies and Maintaining exchange policies and

infrastructureinfrastructure Most common : stock exchangesMost common : stock exchanges

Just in Time DeliveryJust in Time Delivery The manufacturing system have The manufacturing system have

to accommodate make to order to accommodate make to order and mass customization, because and mass customization, because customer can order directly to customer can order directly to manufacturer.manufacturer.

Other ModelsOther Models Barter ,auctions and servicesBarter ,auctions and services

EDI (Traditional To EDI (Traditional To Internet Based)Internet Based) It is a system that standardizes the process of It is a system that standardizes the process of

trading and tracking routine business documents.trading and tracking routine business documents. the standards based (ASC X12 and UN/EDIFACT) the standards based (ASC X12 and UN/EDIFACT)

application to application transfer of business application to application transfer of business documents between computers and business documents between computers and business partners.partners.

The standard formats used in EDI contain the The standard formats used in EDI contain the same information that businesses have same information that businesses have always included in their standard paper always included in their standard paper invoices, purchase orders, and shipping invoices, purchase orders, and shipping documents.documents.

Limitation of traditional EDI(256 page)Limitation of traditional EDI(256 page) Benefits of internet EDI (page 257)Benefits of internet EDI (page 257)

The role of software The role of software agentsagents Aiding comparison shoppingAiding comparison shopping Software agents provide an efficient Software agents provide an efficient

infrastructure to provide real-time, infrastructure to provide real-time, tighter integration between buyers tighter integration between buyers and sellers and to facilitate and sellers and to facilitate management of multiple trading management of multiple trading partners and their transactions across partners and their transactions across multiple virtual industry exchangesmultiple virtual industry exchanges

Marketing in B2BMarketing in B2B Direct marketing Direct marketing Relationship marketingRelationship marketing

– PRMPRM– SRMSRM– CRMCRM