Chapter 4 B2B E-Commerce

B2B E-Commerce Characteristics Companies attempt to electronically automate trading transactions, communication and collaboration processes in order to improve them. Manufacturing Procurement Raw material shipments Logistics Copyright © 2012 Pearson Education, Inc. Publishing as rentice Hall

B2B Market forecasters estimate that 2012 global B2B market could reach $15 Trillion

Concepts, Characteristics, and Models of B2B E-Commerce THE BASIC TYPES OF B2B TRANSACTIONS AND ACTIVITIES Sell-side Buy-side- Procurement Exchanges Collaborative commerce Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Complexity of Contract eCommerce Buy-side Requirements Procurement Finance Logistics Manufacturing Engineering Management Legal Info Services Inter-enterprise Requirements Banking Contract negotiations and transactions Financing Escrow Factoring Schedule, Delivery Terms, Returns Form, Fit, Function, Quality Credit, Payment Terms Warranties, Schedule, Quality Service Level Agreements Logistics Sell-side Requirements Sales Legal Engineering Manufacturing Management Finance Info Services Business Rules Inter-enterprise Data International Trade Practices and System Requirements Contract Document TradeAccess, Inc. ©2000 — Confidential

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

B2B Characteristics Types of B2B Transactions: How Do Firms Buy? strategic sourcing- Purchases involving long-term contracts that usually are based on private negotiations spot buying- The purchase of goods and services as they are needed, usually at prevailing market prices Types of Materials Traded Direct- materials used to make the product- scheduled purchased in large quantities Indirect- nonproduction materials MRO- Maintenance, repair, and operation activities Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Characteristics B2B E-Commerce The Direction of the Trades vertical marketplaces Markets that deal with one industry or industry segment (e.g., steel, chemicals) horizontal marketplaces Markets that concentrate on a service, material, across industry Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Relationship Management Customer relationship management- CRM- integrated online environment for engaging e-business customers and partners Partner relationship management (PRM)- Corporate customers need to have access to the supplier’s inventory status reports. Supplier relationship management (SRM)- A comprehensive approach to managing an enterprise’s interactions with the organizations that supply the goods and services it uses. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

B2B types of transactions Sell Side Buy Side

Whirlpool -Sell Side Systems Whirlpool is a $20 billion global manufacturing corporation. The want to accomplish Operate efficiently Great customer service for their business partners Partners are located in 170 countries Middle-tier partners- submitting their orders by phone or fax because they were not large enough to have a (EDI) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Whirlpool -Sell Side Systems Whirlpool Web World- - B2B trading partner portal Fast web self-service ordering processes Saved 80% transaction costs Reduced operation costs Improved efficiencies Launched a B2C portal and realized a 100% ROI in 5 months Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Best Buy- Sell Side System Customers include educational institutions, government entities and SME’s sell-side systems provided Search capabilities by key word search Side-side, feature-by-feature product comparisons Suggestions for additional items such as accessories and warranties Up-to-date inventories

Buy Side

E-Procurement -Buy-Side procurement management The planning, organizing, and coordinating of all the activities relating to purchasing goods and services needed to accomplish the organization’s mission

E-Procurement Process

Inefficiencies Procurement There is inefficiency in all the major procurement activities. Qualifying suppliers Negotiating prices and terms Building rapport with strategic suppliers. (High value items vs. MRO- wasting valuable time. Maverick buying- Unplanned purchases of items needed quickly, often at non-pre-negotiated higher prices

Benefits of E-Procurement Lowering purchase prices through standardization Improving information flow Improving the payment process High transparency and information sharing

Buy-Side E-Marketplaces Types of E-Procurement E-sourcing- identifying new suppliers E-tendering- receiving supplier bids E-informing- gathering and distributing purchasing information Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

B2B Exchanges: Electronic trading community meeting places for many sellers and many buyers, and possibly for other business partners. Market Maker- operates the exchange and in some cases may also own it. Functions of Exchanges Matching buyers and sellers Facilitating transactions Maintaining exchange policies and infrastructure Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

B2B Exchanges: Benefits Making markets more efficient Providing opportunities for sellers and buyers to find new business partners Cutting the administration costs of ordering MROs Expediting trading processes Facilitate global trade

B2B Exchanges: Revenue Models Transaction fees Membership fees Service fees \ Advertising fees Auction fees

Portals and Directories Internal and External Portals Business Intelligence portals -business analysis decision support activities

Portals and Directories Corporate portal is a gateway to a corporate website and other information sources that enables communication and access to company information Provides a focal point for interactions with the firm. Internal and External Portals Business Intelligence portals -business analysis decision support activities