1. Copyright © 2002 Pearson Education, Inc. Slide 12-1 PERTEMUAN 11

2. Copyright © 2002 Pearson Education, Inc. Slide 12-2 CHAPTER 12 Created by, David Zolzer, Northwestern State University—Louisiana B2B E-commerce: Supply Chain Management and Collaborative Commerce

3. Copyright © 2002 Pearson Education, Inc. Slide 12-3 Defining the Growth of B2B Commerce Total inter-firm trade is the total flow of value among firms B2B commerce describes all types of computer-enabled inter-firm trade Internet-based B2B commerce is that portion of B2B commerce that is enabled by the Internet

4. Copyright © 2002 Pearson Education, Inc. Slide 12-4 The Evolution of B2B Commerce Automated order entry systems involve the use of telephone modems to send digital orders Seller-side solutions are seller-biased markets that are owned by, and show only goods from, a single seller

5. Copyright © 2002 Pearson Education, Inc. Slide 12-5 The Evolution of B2B Commerce Page 655, Figure 12.1

6. Copyright © 2002 Pearson Education, Inc. Slide 12-6 The Evolution of B2B Commerce Electronic Data Interchange (EDI) is a communications standard for sharing business documents and settlement information among a small number of firms Buyer-side solutions are buyer-biased markets that are owned by buyers and aim to reduce the procurement costs of supplies for buyers

7. Copyright © 2002 Pearson Education, Inc. Slide 12-7 Evolution of B2B Commerce Hub-and-spoke system refers to systems like EDI with the buyers in the center and the suppliers connected to the central hub via private dedicated networks A vertical market is one that provides expertise and products for a specific industry Horizontal markets refer to markets that serve many different industries

8. Copyright © 2002 Pearson Education, Inc. Slide 12-8 Evolution of B2B Commerce B2B electronic storefronts are simply online catalogs of products made available to the public marketplace by a single supplier Net marketplaces bring hundreds of suppliers into a single Internet-based environment to conduct trade Private industrial networks are Internet-based communication environments that extend far beyond procurement to encompass truly collaborative commerce

9. Copyright © 2002 Pearson Education, Inc. Slide 12-9 The Growth of B2B Commerce Page 657, Figure 12.2

10. Copyright © 2002 Pearson Education, Inc. Slide 12-10 Industry Forecasts for Internet-Based B2B Commerce Page 659, Figure 12.3

11. Copyright © 2002 Pearson Education, Inc. Slide 12-11 Potential Benefits of B2B E- Commerce Lower administration costs Lower search costs for buyers Reduce inventory costs by increasing competition among suppliers and reducing inventory to the bare minimum Lower transaction costs by eliminating paperwork and automating parts of the procurement process

12. Copyright © 2002 Pearson Education, Inc. Slide 12-12 Potential Benefits of B2B E- Commerce Increase production flexibility by ensuring delivery of parts “just in time” Improve quality of products by increasing cooperation among buyers and sellers and reducing quality issues Decrease product cycle time by sharing designs and production schedules with suppliers

13. Copyright © 2002 Pearson Education, Inc. Slide 12-13 Potential Benefits of B2B E- Commerce Increase opportunities for collaborating with suppliers and distributors Create greater price transparency -- the ability to see the actual buy and sell prices in a market

14. Copyright © 2002 Pearson Education, Inc. Slide 12-14 Procurement Process The way business firms purchase the goods they need in order to produce the goods they will ultimately sell consumers Firms purchase goods from a set of suppliers who in turn purchase their inputs from a set of suppliers These firms are linked in a series of connected transactions

15. Copyright © 2002 Pearson Education, Inc. Slide 12-15 Supply Chain The series of transactions that links sets of firms that do business with each other It includes not only the firms themselves but also the relationship between them and the processes that connect them

16. Copyright © 2002 Pearson Education, Inc. Slide 12-16 Procurement Process: Seven Steps Searching for suppliers for specific products Qualifying the sellers and the products they sell negotiating prices, credit terms, escrow requirements, and quality requirements

17. Copyright © 2002 Pearson Education, Inc. Slide 12-17 Procurement Process: Seven Steps Scheduling delivery Issuing purchase orders Sending invoices Shipping the product

18. Copyright © 2002 Pearson Education, Inc. Slide 12-18 The Procurement Process Page 660, Figure 12.4

19. Copyright © 2002 Pearson Education, Inc. Slide 12-19 Types of Procurement Purchases of direct goods -- goods that are directly involved in the production process Purchases of indirect goods -- goods needed to carry out the production process but that are not directly involved in creating the end product. Often called MRO goods -- maintenance, repair, and operations

20. Copyright © 2002 Pearson Education, Inc. Slide 12-20 Types of Procurement Contract purchases -- long-term agreements to buy a specified amount of a product. There are pre-specified quality requirements and pre-specified terms Spot purchases -- for goods that meet the immediate needs of a firm. Indirect purchases are most often made on a spot purchase basis in a large marketplace that includes many suppliers

21. Copyright © 2002 Pearson Education, Inc. Slide 12-21 AKHIR PERTEMUAN 11

22. Copyright © 2002 Pearson Education, Inc. Slide 12-22 PERTEMUAN 12

23. Copyright © 2002 Pearson Education, Inc. Slide 12-23 Direct Labor Involvement in the Procurement Process Page 662, Table 12.1

24. Copyright © 2002 Pearson Education, Inc. Slide 12-24 Multi-tier Supply Chains The complex series of transaction that exists between a single firm with multiple primary suppliers, the secondary suppliers who do business with those primary suppliers, and the tertiary suppliers who do business with the secondary suppliers

25. Copyright © 2002 Pearson Education, Inc. Slide 12-25 The Multi-tier Supply Chain Page 663, Figure 12.5

26. Copyright © 2002 Pearson Education, Inc. Slide 12-26 Roles of Existing Legacy Computer Systems Legacy computer systems refer to generally older mainframe and minicomputer systems used to manage key business processes within a firm in a variety of functional areas

27. Copyright © 2002 Pearson Education, Inc. Slide 12-27 Typical Legacy Systems Materials Requirements Planning (MRP) systems enable companies to predict, track, and manage all the constituent parts of complex manufactured goods Enterprise Resource Planning (ERP) systems are more sophisticated MRP systems that include human resource and financial components

28. Copyright © 2002 Pearson Education, Inc. Slide 12-28 Trends in Supply Chain Management Supply chain management (SCM) refers to a wide variety of activities that firms and industries use to coordinate the key players in their procurement process

29. Copyright © 2002 Pearson Education, Inc. Slide 12-29 Trends in Supply Chain Management Four major developments is supply chain management set the ground rules for understanding B2B e-commerce Supply Chain Simplification Electronic Data Interchange (EDI) Supply Chain Management Systems Collaborative commerce

30. Copyright © 2002 Pearson Education, Inc. Slide 12-30 Supply Chain Simplification The reduction of the size of a firm’s supply chain Firms work closely with a strategic group of suppliers to reduce product costs and administrative costs Long term contract purchases containing pre- specified product quality requirements and pre- specified timing goals Shown to improve end product quality and ensure uninterrupted production

31. Copyright © 2002 Pearson Education, Inc. Slide 12-31 Electronic Data Interchange Developed to reduce cost, delays, and errors inherent in the manual exchanges of documents such as purchase orders, shipping documents, price lists, payments, and customer data EDI differs from unstructured message because its messages are organized with distinct field for each of the important pieces of information EDI industry committees define the structure and information fields of electronic documents for that industry

32. Copyright © 2002 Pearson Education, Inc. Slide 12-32 The Evolution of EDI as a B2B Medium Page 666, Figure 12.6

33. Copyright © 2002 Pearson Education, Inc. Slide 12-33 Supply Chain Management Systems Coordinate and link the activities of suppliers, shippers, and order entry systems to automate the order entry process from start to finish, including the purchase, production, and moving of a product from a supplier to a purchasing firm

34. Copyright © 2002 Pearson Education, Inc. Slide 12-34 Supply Management Systems Page 668, Figure 12.7

35. Copyright © 2002 Pearson Education, Inc. Slide 12-35 Collaborative Commerce The use of digital technologies to permit organizations to collaboratively design, develop, build, and manage products through their life cycles

36. Copyright © 2002 Pearson Education, Inc. Slide 12-36 Elements of a Collaborative Commerce System Page 672, Figure 12.8

37. Copyright © 2002 Pearson Education, Inc. Slide 12-37 Main Types of Internet-based B2B Commerce Net Marketplaces (also referred to as exchanges or hubs) assemble thousand of sellers and buyers in a single digital marketplace on the Internet They can be owned be either the buyer or the seller They can operate as independent intermediaries between the buyer and seller

38. Copyright © 2002 Pearson Education, Inc. Slide 12-38 Main Types of Internet-based B2B Commerce Private industrial networks bring together a small number of strategic business partners who collaborate with one another to develop highly efficient supply chains and to satisfy customer demand for product They are by far the largest form of B2B commerce, presently comprising 93% of the total computer-assisted inter-firm trade

39. Copyright © 2002 Pearson Education, Inc. Slide 12-39 Two Main Type of Internet- based B2B Commerce Page 673, Figure 12.9

40. Copyright © 2002 Pearson Education, Inc. Slide 12-40 Projected Relative Size of Net Marketplaces and Private Industrial Networks Page 675, Figure 12.10

41. Copyright © 2002 Pearson Education, Inc. Slide 12-41 Other Characteristics of Net Marketplaces Page 675, Table 12.2

42. Copyright © 2002 Pearson Education, Inc. Slide 12-42 Pure Types of Net Marketplaces Page 676, Figure 12.11

43. Copyright © 2002 Pearson Education, Inc. Slide 12-43 Net Marketplaces: E-distributors Independently owned intermediaries that offer individual customers a single source from which to make spot purchases of indirect or MRO goods Operate in a horizontal market that serves many different industries with products from many different suppliers

44. Copyright © 2002 Pearson Education, Inc. Slide 12-44 E-Distributors Page 677, Figure 12.12

45. Copyright © 2002 Pearson Education, Inc. Slide 12-45 Net Marketplaces: E-procurement Independently owned intermediaries connecting hundreds of online suppliers offering millions of MRO goods to business firms who pay a fee to join the market Operate in a horizontal market in which long-term contractual purchasing agreements are used to buy indirect goods Provide value chain management services -- include the automation of a firm’s entire procurement process on the buyer side and the automation of the selling business processes on the seller side

46. Copyright © 2002 Pearson Education, Inc. Slide 12-46 E-procurement Markets Page 679, Figure 12.13

47. Copyright © 2002 Pearson Education, Inc. Slide 12-47 E-commerce in Action: Ariba Ariba provides and excellent example of an e-procurement Net marketplace Ariba is a leading B2B software platform and software provider

48. Copyright © 2002 Pearson Education, Inc. Slide 12-48 E-commerce in Action: Ariba Platform has four components: Ariba Buyer automates the procurement business process within single firms Ariba Marketplace and Ariba Dynamic Trade are software tools that permit users to establish B2B marketplaces internally on their corporate intranets, or externally on the public Internet Ariba Commerce Services Network is an Internet-based e-procurement Net marketplace that aggregates catalogs of hundreds of suppliers and provides corporate buyers with a Web interface to Ariba procurement, payment, and shipping support services

49. Copyright © 2002 Pearson Education, Inc. Slide 12-49 Ariba’s E-distribution & Procurement Net Marketplace Page 680, 12.14

50. Copyright © 2002 Pearson Education, Inc. Slide 12-50 Ariba’s Balance Sheet Page 684, Table 12.3

51. Copyright © 2002 Pearson Education, Inc. Slide 12-51 AKHIR PERTEMUAN 12

52. Copyright © 2002 Pearson Education, Inc. Slide 12-52 PERTEMUAN 13

53. Copyright © 2002 Pearson Education, Inc. Slide 12-53 Net Marketplaces: Exchanges Independently owned online marketplaces that connect hundreds of suppliers to potentially thousands of buyers in a dynamic real-time environment Typically vertical markets in which spot purchases can be made for direct inputs (both goods and services) Make money by charging a commission on each transaction

54. Copyright © 2002 Pearson Education, Inc. Slide 12-54 Exchanges Page 688, Figure 12.15

55. Copyright © 2002 Pearson Education, Inc. Slide 12-55 Some Exchanges Page 689, Table 12.4

56. Copyright © 2002 Pearson Education, Inc. Slide 12-56 E-commerce in Action: FreeMarket Inc. One of the leading B2B exchanges, generating revenues of $83 million in 2000 Market-making services enable industrial buyers of direct goods to find, screen, and qualify suppliers, and then to negotiate prices and term through a dynamic, real-time, comprehensive bidding and auction process Offers proprietary technology, technical support facilities, market-making services, and access to a global database of suppliers

57. Copyright © 2002 Pearson Education, Inc. Slide 12-57 FreeMarkets’ Balance Sheet Page 693, Table 12.5

58. Copyright © 2002 Pearson Education, Inc. Slide 12-58 Net Marketplaces: Industry Consortia Industry-owned vertical markets where long-term contractual purchases of direct inputs can be made from a limited set of invited participants Serve to reduce supply chain inefficiencies by unifying the supply chain for an industry through a common network and computing platform

59. Copyright © 2002 Pearson Education, Inc. Slide 12-59 Industry Consortia Page 697, Figure 12.16

60. Copyright © 2002 Pearson Education, Inc. Slide 12-60 Industry Consortia by Industry Page 698, Table 12.6

61. Copyright © 2002 Pearson Education, Inc. Slide 12-61 Market Mechanisms Used by Industry Consortia Page 699, Figure 12.17

62. Copyright © 2002 Pearson Education, Inc. Slide 12-62 Long-term Dynamics of Net Marketplaces Independent exchanges were the prototype Internet-based marketplace Several thousand created; however, most of them did not succeed Main reason for failure is that they did not attract enough players to achieve liquidity

63. Copyright © 2002 Pearson Education, Inc. Slide 12-63 Long-term Dynamics of Net Marketplaces Industry consortia sprang up in 1999 and 200 in reaction to earlier development of independently owned exchanges that were viewed by large industries as interlopers who would not directly serve their needs Industry consortia are profitable because they charge the large buyer firms transaction and subscription fees, but rationalization of the procurement process, the competition among vendors, and the closer relationship with the vendors are benefits that more than offset the cost of membership

64. Copyright © 2002 Pearson Education, Inc. Slide 12-64 Long-term Dynamics of Net Marketplaces The failure of early exchanges is one Net marketplaces are changing so rapidly Participants have come to realize the real value of B2B commerce will only be realized when it succeeds in changing the entire procurement system, supply chain, and the process of collaboration among firms

65. Copyright © 2002 Pearson Education, Inc. Slide 12-65 Net Marketplace Trend Page 700, Figure 12.18

66. Copyright © 2002 Pearson Education, Inc. Slide 12-66 Private Industrial Networks Dominate B2B commerce Web-enabled networks for coordinating trans- organizational business processes (collaborative commerce) Range in scope from a single firm to an entire industry Central purpose is to provide industry-wide global solutions to achieve the highest levels of efficiency Generally start with a single sponsoring company that “owns” the network

67. Copyright © 2002 Pearson Education, Inc. Slide 12-67 Private Industrial Networks Differentiates private industrial networks from consortia that are usually owned collectively by major firms through equity participation Transforming the supply chain by focusing on continuous business process coordination between companies Coordination includes product design, demand forecasting, asset management, and sales and marketing plans

68. Copyright © 2002 Pearson Education, Inc. Slide 12-68 Proctor & Gamble’s Private Industrial Network Page 703, Figure 12.19

69. Copyright © 2002 Pearson Education, Inc. Slide 12-69 Characteristics of Private Industrial Networks Developing efficient purchase and selling business processes industry-wide Developing industry-wide resource planning to supplement enterprise-wide resource planning Creating increasing supply chain visibility -- knowing the inventory levels of buyers and sellers

70. Copyright © 2002 Pearson Education, Inc. Slide 12-70 Characteristics of Private Industrial Networks Achieving closer buyer-supplier relationships, including demand forecasting, communications, and conflict resolution Operating on a global scale -- globalization Reducing industry risk by preventing imbalances of supply and demand, including developing financial derivatives, insurance, and futures markets

71. Copyright © 2002 Pearson Education, Inc. Slide 12-71 Private Industrial Networks & Collaborative Commerce CPFR or industry collaborative resource planning, forecasting, and replenishment involves working with network members to forecast demand, develop production plans, and coordinate shipping, warehousing, and stocking activities. Goal is to ensure that retail and wholesale shelf space is precisely maintained

72. Copyright © 2002 Pearson Education, Inc. Slide 12-72 Private Industrial Networks & Collaborative Commerce Supply chain and distribution chain visibility refers to the fact that in the past it was impossible to know where excess capacity existed in a supply or distribution chain Eliminating excess inventories by halting production of overstocked goods can raise the profit margins for all network members because products will no longer need to be discounted in order to move them off the shelves

73. Copyright © 2002 Pearson Education, Inc. Slide 12-73 Private Industrial Networks & Collaborative Commerce Marketing and product design collaboration can be used to involve a firm’s suppliers in product design and marketing activities as well as the related activities of their supply and distribution chain partners This can ensure that the parts used to build a product live up to the claims of the marketers Collaborative commerce application used in a private industrial network can also make possible closed loop marketing in which customer feedback will directly impact product design

74. Copyright © 2002 Pearson Education, Inc. Slide 12-74 Pieces of the Collaborative Commerce Puzzle Page 705, Figure 12.20

75. Copyright © 2002 Pearson Education, Inc. Slide 12-75 An Industry-wide Private Industrial Network Page 709, Figure 12.21

76. Copyright © 2002 Pearson Education, Inc. Slide 12-76 AKHIR PERTEMUAN 13