1. B2B eCommerce Transactions with suppliers, distributors, commerce services providers, infrastructure providers, and organizational customers that occur online though the support of the Internet Jupiter Communications – $11.5 trillion of B2B in 2000 of which $336 billion in eB2B. By 2005, expect 6.3 trillion eB2B / 15.1 trillion. Goldman Sachs --- By 2005, eB2B of 4.5 trillion Gartner Group – 90 billion eB2B in 1999 vs. $16.7 billion eB2C.

2. Six major B2B activities: Six S’s Search Source Specify Submit Orders Settle/Negotiate/Bid Send/Receive … goods and services that are needed in order to operate

3. Legacy systems The term “legacy systems” refers to systems for automating b2b commerce pre-Internet. These systems facilitate communications about a firm’s input requirements. Useful for companies that do high volume of business with products that have unique parts, each with varying lead times (the duration parts are held in inventory).

4. MRP: Materials requirements planning A legacy system to automatically generate shopping lists Software application that enables companies track what they need to purchase based on production schedules Contains BOM (bill of materials)– which and how parts are needed to make the product Integrates BOM with production schedule to generate shopping list as frequently as needed ERP (Enterprise Resource Planning)– the next generation of MRP which integrates human resource administration and financial accounting components. E.g., when a purchase is made by an individual employee, the finance dept is notified immediately. Advantage: Reduced lead time. Parts arrive in sufficient time to meet production schedules BUT in manner that minimizes inventory

5. EDI: Electronic Data Interchange Permits buyers to convey input needs directly to suppliers Advantage: Considerable reduction in transaction costs Disadvantage: Private networks are expensive

6. The Internet Business with differing MRP and ERP systems can access a universal browser without complex installations Small businesses w/o e-commerce strategy could leverage a public infrastructure from someone else to achieve e-commerce goals Each transaction can be tracked in great detail. Participants in a B2B marketplace can know the identity of buyer and seller, quantity purchased, date and time, # of times purchaser looked before making purchase decision

7. B2B mechanisms for price Electronic Catalogs Auctions Exchanges Negotiations

8. Catalogs 1. home page 2. product catalog, where buyer may search, for example, by manufacturer’s name, product category, or end-use category 3. Page showing results of search 4. A shopping cart 5. A price quote page, including prices and shipping charges 6. Confirmation of order

9. Auctions Reverse English Auction Multiple Sellers; Single Buyer Buyer does not have to select the Seller who won!

10. Exchange Two-sided marketplace Anonymous real-time matching of orders and quotes Electronic stock exchanges Ideal for commodities or standardized products

11. What makes a good exchange? What makes a bad exchange?

12. Negotiations Requests for Quotes (RFQ), followed by negotiations between potential transaction parties 1.Seller posts a profile or proposal 2.Buyer searches and is shown all profiles meeting search criteria 3.Buyer chooses seller and makes contact 4.Seller if interested responds 5.The two parties negotiate

13. How to choose Price Mechanism Homogeneous vs. differentiated goods Size and number of suppliers Size and number of buyers Flexibility and importance of specs. Lots of buyers and sellers and homogenous good – Exchanges Many buyers; few sellers – Auctions Many sellers; few buyers – Reverse auctions Few buyers & sellers; flexible yet important specs – Negotiations Wide assortment but non-flexible specs; many buyers-- catalogs

16. E-Sourcing E-sourcing encompasses a spectrum of IT resources, from Web, server, and storage infrastructure services to on-demand E-procurement and help-desk business- process services. Utility-based IT occurs at the business-process level.“ E.g., procurement, help desk, storage, and server services. Example for utility-based IT: With IBM's E-procurement services, customers log on to a site with catalog information from vendors that IBM has preselected; they pay a monthly fee based upon the volume of purchases they make and the number of catalogs they add to IBM's offerings. Usage-based pricing: Customers pay for storage and server capacity by the gigabyte, managed services according to the volume of network traffic being monitored, and help desk by the number of seats eligible for support. Usage-based pricing is a key distinction between E-sourcing and conventional outsourcing, where IBM Global Services takes over all or a portion of IT operations for a flat monthly fee. Another difference: Rather than customizing for a single customer, the utility model relies on mass customization to multiple customers on a shared infrastructure.