Chapter 4B2B 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

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B2B

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

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Concepts, Characteristics, and Models of B2B E-Commerce• THE BASIC TYPES OF B2B TRANSACTIONS AND ACTIVITIES

1. Sell-side2. Buy-side- Procurement3. Exchanges4. Collaborative commerce

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Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 6

Logistics

Sell-side Requirements

Sales

Legal

Engineering

Manufacturing

Management

Finance Info

Services

Buy-side Requirements

Procurement

Finance

Logistics

Manufacturing

Engineering

Management

Legal Info

Services

Business RulesInter-enterprise Data

International

Trade Practicesand System

Requirements

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

Complexity of Contract eCommerce

ContractDocument

ContractDocument

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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

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CharacteristicsB2B E-Commerce

• The Direction of the Trades• vertical marketplaces

Markets that deal with one industry or industry segment (e.g., steel, chemicals)

• horizontal marketplacesMarkets that concentrate on a service, material, across industry

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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.

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4-10

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)

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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

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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 managementThe planning, organizing, and coordinating of all the activities relating to purchasing goods and services needed to accomplish the organization’s mission

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E-Procurement Process

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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

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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-ProcurementE-sourcing- identifying new suppliers

E-tendering- receiving supplier bids

E-informing- gathering and distributing purchasing information

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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 Exchanges1. Matching buyers and sellers2. Facilitating transactions3. Maintaining exchange policies and infrastructure

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4-21

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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

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B2B Exchanges:

• Revenue Models• Transaction fees• Membership fees• Service fees \ Advertising fees• Auction fees

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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