B2B eCommerce Models

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B2B e-Commerce Models Internet Hardware,
Software, Communications
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Market Size

• B2C by 2002 (Anders, 1998)
• Travel 11.6 Billion
• PC Hardware 6.4 Billion
• Books 3.7 Billion
• Apparel Accessories 2.8 Billion
• B2B by 2003 (Freeman, 1998)
• 1,331 Billion

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B2B E-commerce and EDI

• B2B e-business
• The electronic business relationship between two
  or more companies
• Traditional EDI uses a value-added network or VAN
• A closed network that includes all members of a
  production process

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B2B E-commerce and EDI

• B2B e-commerce and the use of exchange sites
  allow businesses to reach their markets faster
  and more efficiently
• Lead time
• The time it takes to receive a product from a
  supplier after an order has been placed
• Long lead times increase inventory costs,
  increase worker stress levels and strain
  relationships between the manufacturer and the
  supplier

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EDI - The Infrastructure for B2B

• A network for transmitting standard transactions
• A paperless TPS environment
• Routine documents purchase order, billings,
  shipping manifests
• Documents translated into standard business
  language
• In use since the 1970s on private VANs. Save
  time, reduce errors in data entry, save money,
  consistent information flow
• Provide strategic advantages

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Models of B2B EC

• Supplier-Oriented Market Place
• Individual consumers and business buyers use the
  same supplier-provided market place (May pay
  different prices due to quantity discount)

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• Buyer-Oriented Market Place

• 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
• OVERCOME with the aid of software agents

8
Intermediary-Oriented Market Place

• 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

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Procurement Management Using B2B EC Platform

• Purchasing is now a strategic function, to
  increase profit margins
• Strategic purchases goals
• Reducing purchasing cycle time and cost
• Enhancing budgetary control
• Eliminating administrative errors
• Increasing buyers productivity
• Lowering prices through product standardization
  and
• consolidation of purchases
• Better information management
• e.g. suppliers information and pricing
  information
• Improving the payment process

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EDI - The Infrastructure for B2B

• Typical Flow of EDI Messages
• one order - seven messages!!

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Typical Value Chain
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Activities in B2B Relationships

• Gathering Market Intelligence
• Purchasing
• Shipping Receipt of Goods
• Paying Vendors

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Supply Chain

• Definition
• All activities associated with the flow and
  transformation of goods from raw materials to end
  users

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2.6 B2B E-commerce and EDI

• JIT (just-in-time) inventory management
• Supplies arrive at the exact time they are
  needed, thereby limiting any unnecessary
  inventory expense
• Enterprise Application Integration (EAI)
• The process of integrating traditional EDI
  systems with the Web
• Business-to-business integrators (B2Bi)
• Companies that use XML and similar technologies
  to help other companies integrate their current
  systems with the Web

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Internet Based Models
Source e-Business e-Commerce Infrastructure
by Chaudhury Kuilboer (2002)
Electronic Markets
iMark.com
Freemarket.com
Business To Business
Web Malls
www2.mallpark.com
Web Hosting
Mindspring.com
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Primary Brick Mortar
Source e-Business e-Commerce Infrastructure
by Chaudhury Kuilboer (2002)
Suppliers Web
Covisint.com
Business to Business
Promotion
Mysap.com
Reinforce Existing Channels
Order-Processing Logistics
Ec.ups.com
After sales Customer Support
Cisco.com