September 2001Chapter 10: B2B Grows Up Key questions answered in this chapter: What are the four stages to the evolution of B2B capabilities? What are

September 2001 Chapter 10: B2B Grows Up

Chapter 10: B2B Grows Up

Key questions answered in this chapter:

• What are the four stages to the evolution of B2B capabilities?

• What are the three categories of B2B?

• Describe the four major steps of the B2B sell-side evolution.

• Describe the major challenges to implementing systems for indirect e-procurement.

• Describe the major challenges to implementing systems for Net marketplaces or Net exchanges.


The Four Stages to the Evolution of B2B Capabilities

1. Broadcast- A business creates a Web page to provide fundamental information to the customer (how to contact the company, company financial information, and product and services offered by the company)

2. Interact- The company enables information to flow in both directions (from the organization to the customer and back), Examples: Having the technology to allow a customer to email the company, establishing a web-based customer service system


The Four Stages to the Evolution of B2B Capabilities (cont’d)

3. Transact- Take, manage, and support commerce transactions with customers using the Internet

4. Collaborate- The Web-based gathering of information to generate forecasts to be utilized by the company and its trading partners


Three Categories of B2B

1. B2B Sell-side Solution- Selling products to other businesses via the Internet

2. Indirect E-Procurement- The Web-based purchase of non-strategic products and services

3. Net Marketplaces and Net Exchanges- Created to provide Web-based capabilities that facilitate the interaction and exchange of commerce transactions between buyers, sellers, and other trading partners


Exhibit 10-1: The B2B Sell-Side Solutions Activities


Exhibit 10-2: Indirect e-Procurement Activities


Exhibit 10-3: Net Marketplace and Net Exchange Activities


Technology Components of B2B Sell-Side

• Content Management- Allows the organization to create, aggregate, store, maintain, and present the content contained and presented on its website (text, pictures, graphics, and sound)

• Catalog Management- Enables an organization to load and manage a Web-based catalog

• Order Processing and Fulfillment- Allows users to place online orders and the capability for the company to accurately provide the product/service

• Customer Relationship Management- Support online customers


Exhibit 10-4: The Evolved Sell-Side Solutions Activities


Challenges of B2B Sell-Side

• Content Ownership- Identifying the source of different content and creating a single point of contact and responsibility for the site content

• Customer Data Access and Visibility- Utilizing internal applications to present accurate information to support the Web-based interface

• Channel Integration- Organizations must integrate the sales channel with other channels in order to provide adequate customer service

• Systems Integration- Integrate the Web-based system with the back-office systems in real time


Technology Components of Indirect E-Procurement

• Requisitioning- Allows a buyer to create a purchase request for products/services

• Control and Approval- After the purchase, the system allows the organization to define and configure spending limits for individual buyers or companies and approve purchases based on those pre-determined monetary parameters

• Transaction Processing- Creates purchase orders to be sent to the suppliers


Technology Components of Indirect E-Procurement (cont’d)

• Receiving and Exception Processing- Allows the buying organization to record receipt of goods/services

• Financial and Payment Processing- Applications that facilitate the payment process, allow the buyer to purchase merchandise using a credit card or corporate purchasing card


Exhibit 10-5: Indirect or MRO e-Procurement


Challenges of E-Procurement

• Strategic Sourcing- Determining where e-procurement is most needed within an organization, in order to maximize the initial benefits of the implementation (prioritize)

• Adoption and Compliance- Ensuring that purchasing agents and employees are utilizing the new technology

• Catalog Content Management- The process of making sure that the catalog is properly maintained in a timely manner


Challenges of E-Procurement (cont’d)

• Supplier Integration- The buying organization and supplier must determine the business process for business document exchange (purchase orders, advanced shipping notices, and invoices)

• Back-Office Integration- The E-procurement system needs to integrate with purchasing, inventory and warehousing, invoicing, and the planning requirements departments


Net Marketplaces and Net Exchanges

• Organizations realized point-to-point interaction with trading partners was not cost effective in all relationships, such as non-strategic partnering

• E-procurement vendors created an online marketplace where existing buyers and suppliers could exchange catalog information and transact commerce without the time, effort, and money required in point-to-point interaction

• Net marketplaces and Net exchanges enabled a many-to-many (buyers-to-suppliers) model


Exhibit 10-6: Net Marketplaces and Net Exchanges


Three Capabilities of Net Marketplaces

1. Commerce Capabilities- Provide the ability for products and services to be purchased and sold in the Net marketplace

Catalog Management- Allows the operator to define, populate, and maintain a marketplace catalog with all the products and services availablePrice Discovery- Determine the buying or selling

price of a product/service. There are two categories ofprice discovery:


Three Capabilities of Net Marketplaces (cont’d)

– Fixed: Allows the supplier to assign a set price for a particular item

– Dynamic: The buyer and supplier negotiate a price where a fixed price may not exist, Examples: negotiated exchanges, auction/reverse auction, bid/ask exchange

2. Content Management Capabilities- The storage, management, and presentation of non-catalog content for users of the Net marketplace– Types of content include: documents, text, pictures,

sound, and video


Three Capabilities of Net Marketplaces (cont’d)

3. Community Capabilities- Provides discussion forums, online chat, and instant messaging, which can be utilized to enhance customer support and/or to develop third-party services for various critical processes, such as converting currency transactions in real time


Challenges of the Net Marketplace

• Catalog Content Management- Acquiring and maintaining all aspects of catalog content

• Internationalization- The capability for a user to facilitate commerce across geographical boundaries from anywhere in the world

• Business Model- Develop a business model that provides enough value to the trading partners to justify the effort and costs associated with participation

• Adoption and Liquidity- Attracting and retaining buyers and sellers

Documents

September 2001Chapter 10: B2B Grows Up Key questions answered in this chapter: What are the four stages to the evolution of B2B capabilities? What are