1. BBA (Hons) (B2B Business to Business EC) By: Farhan Mir
Electronic Commerce
BBA (Hons)
(B2B Business to Business EC)
By: Farhan Mir

2. Trading Process Network (TPN) Post in General Electric
General Electric (GE)
Its purchasing was inefficient, involved too many administrative transactions
For each requisition, the accompanying blueprints had to be requested from storage, retrieved from the vault, transported to the processing site, photocopied, folded, attached to paper requisition forms with quote sheets, stuffed into envelopes and mailed out.
Factories at GE Lighting division used to send hundreds of Requisitions For Quotations (RFQs) to the corporate sourcing department each day for low-value machine parts.
This process took at least 7 days and was so complex and time-consuming that the sourcing department normally sent out bid packages only to two or three suppliers at a time.
Using TPN GE is conducting electronic bids, no paperwork

3. Trading Process Network (TPN) Post in General Electric (cont.)
Benefits of using TPN
60%of the staff involved in procurement have been redeployed. The sourcing department has at least 6-8 free days a month to concentrate on strategic activities rather than on paperwork, photocopying and envelope stuffing it had to do when the process was manual.
Labor involved in procurement declined by 30%. At the same time, materials costs declined 5%-20% due to the ability to reach a wider base of suppliers online.
It used to take days to identify suppliers, prepare a request for bid, negotiate a price and award the contract to a supplier. It now takes 9-11 days.
With the transaction handled electronically from beginning to end, invoices are automatically reconciled with purchase orders, reflecting any modifications that happen along the way.
GE Procurement departments across the world now share information about their best suppliers.

4. Concepts, Characteristics, and Models of B2B EC
The Basic Types of B2B Transactions and Activities
Sell-side
Buy-side
Exchanges
Supply chain improvements and collaborative commerce

5. Concepts, Characteristics, and Models of B2B EC

6. Characteristics of B2B EC
Key Entities of B2B EC
Buying company with procurement management perspective
Selling company with marketing management perspective
Electronic Intermediary, an optional third party directory service provider (the scope of service may be extended to order fulfillment)
Deliverer who can fulfill a just-in-time delivery
Network platform such as the Internet, VAN, intranet and extranet
Protocol of communication such as EDI and comparison shopping possibly using software agents
Back-end information system possibly implemented using the intranet and Enterprise Resource Planning (ERP) systems

7. Characteristics of B2B EC
Majorly Supplier-oriented marketing
Used to sell the company’s products and services to business customers on the Internet
Electronic catalogs are basically the same as that for B2C EC, but they may be customized

8. Concepts, Characteristics, and Models of B2B EC
Types of transactions
spot buying
The purchase of goods and services as they are needed, usually at prevailing market prices
strategic (systematic) sourcing
Purchases involving long-term contracts that usually are based on private negotiations between sellers and buyers

9. Concepts, Characteristics, and Models of B2B EC
Types of materials traded
direct materials
Materials used in the production of a product (e.g., steel in a car or paper in a book)
indirect materials
Materials used to support production (e.g., office supplies or light bulbs)
MRO (maintenance, repair, and operation)
Indirect materials used in activities that support production

10. Concepts, Characteristics, and Models of B2B EC
Virtual Service Industries in B2B
Travel and hospitality services
Real estate
Financial services
Online stock trading
Online financing
Other online services

11. Supply Chain Definition Upstream Internal Downstream
All activities associated with the flow and transformation of goods from raw materials to end users
Upstream
Internal
Downstream
2nd Tier
Supplier
Distribution
Centers
Customers
1st Tier
Supplier
Assembly/
Manufacturing and
Packaging
2nd Tier
Supplier
1st Tier
Supplier
2nd Tier
Supplier
Retailers
Packaged Cereal
Cereal
Grain
Grain
Producer
Processing
Facility
Packaging
Distributor
Customers
Paperboard
Store
Labels
Label
Manufacturer

12. One-to-Many: Sell-Side E-Marketplaces
Supplier-Oriented Market Place – one to many
Individual consumers and business buyers use the same supplier-provided market place (May pay different prices due to quantity discount)

13. Case Study of Supplier-Oriented Market Place: CISCO Connection Online
Customer Service— Cisco Connection online
Online Ordering— Internet Product Center builds virtually all its products to order
Finding Order Status— gives the customers tools to find answers to order status inquiries by themselves
Benefits— save the company $363 million per year from technical support, human resources, software distribution and marketing material

16. Selling via Auctions Auctioning from the Company’s Own Site
Why should a company pay a commission to an intermediary if the intermediary cannot provide the company with added value
If a company decides to auction from its own site, it will have to pay for infrastructure and operate and maintain the auction site

17. Selling via Auctions Using Intermediaries in Auctions Benefits
No additional resources are required
No hiring costs or opportunity costs associated with the redeployment of corporate resources
Offer fast time-to-market
Billing and collection efforts, are handled by the intermediary rather than the company

18. Models of B2B EC Buyer-Oriented Market Place – many to one Business
Buyer opens a market on its own server and invites potential suppliers to bid on RFQs
Offer opportunity to committed suppliers
BUT as the number of such sites increase, only very big buyers can afford to fully utilize this approach
Business
Suppliers
Buyer’s
Products
Catalog, RFQ
Suppliers’
Bids, Information
Electronic Mall

19. One-from-Many: Buy-Side E-Marketplaces and E-Procurement – Time consumption and delays

20. Case Study of Customer-Oriented Market Place: GE’s TPN Post
Provides a chance for sellers to participate in the bidding process of GE using the following procedure:
Buyers prepare bidding project information
Buyers post the bidding projects on the Internet
Buyers identify potential suppliers
Buyers invite suppliers to bid on projects
Suppliers download the project information from the Internet
Suppliers electronically submit bids for projects
Buyers evaluate the suppliers’ bids and negotiate online to achieve the ‘best deal’
Buyers accept the bid that best meets their requirements

21. One-from-Many: Buy-Side E-Marketplaces and E-Procurement
Six Main Types of E-Procurement
e-sourcing
e-tendering
e-reverse auctioning
e-informing
Web-based ERP (electronic resource planning)
e-MRO (maintenance, repair and operating)

22. Buy-Side E-Marketplaces: Reverse Auctions

23. Models of B2B EC Intermediary-Oriented Market Place Business Customers
Establish an electronic intermediary company
Similar to an intermediary-based B2C mall; bring buyers and suppliers (bidders) to one place
The corporate information systems need tight coupling with the intermediary electronic mall
Business
Customers
Suppliers
Shared
Products Catalogs
Supplier’s
Product Information
Intermediary’s
Electronic Mall
Customer’s
Order Information

24. Case Study of Intermediary-Oriented Market Place: Boeing’s PART
Boeing’s PART Case
Acts as an intermediary between the airlines and parts’ suppliers
Provides a single point of online access through which airlines and parts providers can access the data needed
Goal: provide its customers with one-stop shopping with online parts and maintenance information and ordering capability

26. Boeing On Line Data (BOLD)
Case Study of Intermediary-Oriented Market Place: Boeing’s PART (cont.)
Boeing On Line Data (BOLD)
Incorporating not only engineering drawings but manuals, catalogs and other technical information that used to be available only in paper or in microfiche format
Portable Maintenance Aid (PMA)
Solves maintenance problems

27. Benefits to Boeing’s Customers
Case Study of Intermediary-Oriented Market Place: Boeing’s PART (cont.)
Benefits to Boeing’s Customers
Increased productivity
spending less time searching for information; frees up engineers and maintenance technicians to focus on more productive activities
Reduced costs
with information available online at the airports’ gates, through PMA, rather than back in the office, delays at the gate due to missing information are reduced
Increased revenue opportunity
through BOLD and PMA, a European airline estimates it will save 1-2 days/year of down time for each aircraft

28. B2B: the many-many exchanges
Many-to-many: exchanges
exchanges (trading communities or trading exchanges)
Many-to-many e-marketplaces, usually owned and run by a third party or a consortium, in which many buyers and many sellers meet electronically to trade with each other
public e-marketplaces
Third-party exchanges that are open to all interested parties (sellers and buyers

29. Procurement Management Using B2B EC Platform
Purchasing is now a strategic function, to increase profit margins
By automating and streamlining the laborious routine of the purchasing function, purchasing professionals can focus on more strategic purchases, achieving the following goals:
Reducing purchasing cycle time and cost
Enhancing budgetary control
Eliminating administrative errors
Lowering prices through product standardization and
consolidation of purchases
Better information management;
e.g. supplier’s information and pricing information
Improving the payment process

30. Infrastructure, Integration, and Software Agents In B2B EC
Infrastructure for B2B
electronic data interchange (EDI)
The electronic transfer of specially formatted standard business documents, such as bills, orders, and confirmations, sent between business partners
value-added networks (VANs)
Private, third-party managed networks that add communications services and security to existing common carriers; used to implement traditional EDI systems
Internet-based (Web) EDI
EDI that runs on the Internet and is widely accessible to most companies, including SMEs

31. B2B in the Web 2.0 Environment
Opportunities
Brand awareness, generate traffic, create social communities
Use of Web 2 tools in B2B
Blogs, Wikis and RSS Feeds
Social Networks in the B2B Marketplace
Examples of Other activities
American Express-sponsored Business Social network
Corporate Profiles on social networks

32. Managerial Issues Can we justify the cost of B2B?
Which vendor(s) should we select?
Which B2B model(s) should we use?
Should we restructure our procurement system?
What are the ethical issues in B2B?
Will there be massive disintermediation?
How can trust and loyalty be cultivated in B2B?
How is mobile B2B done?