Title: Chapter 6 Company-Centric B2B
1Chapter 6Company-Centric B2B
2Learning Objectives
- B2B e-commerce (involves networks)
- Types of B2B models
- The sell-side marketplace and intermediaries
models - The buy-side marketplace and e-procurement
3Learning Objectives (cont.)
- Forward and backward auctions work in B2B
- B2B aggregation and group purchasing models
- Collaborative e-commerce
- Issues with implementation of company-centric B2B
- Integration systems with partner systems and
Implementation
4General Motors B2B Initiatives
- Selling capital assets
- TradeXchange online auctions of items like used
machines for manufacturing - The On-line exchange Significantly decreases time
for sales - The On-line exchange Increases dollar amount of
the sales - They get many bidders
- They use reverse auctions
5Concepts and Characteristicsof B2B EC (cont.)
- Market size and content
- Expected to grow from 1.1 trillion in 2003 to
10 trillion by 2005 - Percentage of Internet-based B2B from 2.1 in
2000 to 10 in 2005 - Private and public e-marketplace
- Privateone-to-many mode
- Publicmany-to-many mode
6Concepts and Characteristicsof B2B EC (cont.)
- How is B2B conducted?
- Directly between buyer and seller
- Via an online intermediary
- Along the supply chain
- With or without intermediaries
- Types of transactions
- Spot buying determined by dynamic supply and
demand - Strategic sourcing long term contracts
7Figure 6-1B2B Supply Chain
8Concepts and Characteristicsof B2B EC (cont.)
- Supply chain relationships (sharing materials,
process information and knowledge worker assets) - Interrelated subprocesses and roles
- Acquisition of materials
- Processing products and services
- Moving to distributors
- Purchase by consumer
- Traditional process managed through paper
transactions - B2B applications offer competitive advantages for
supply chain management (SCM)
9Concepts and Characteristicsof B2B EC (cont.)
- Entities of B2B EC
- Selling company marketing management perspective
- Buying company procurement management
perspective - Electronic intermediaries optional third party
directory service provider (scope of service may
be extended to order fulfillment) - Trading platforms pricing and negotiation
protocol (auctions, reverse auctions)
10Concepts and Characteristicsof B2B EC (cont.)
- Entities of B2B EC (What are they sharing?)
- Payment services mechanism for transferring
money to sellers - Logistics providers logistics to complete
transaction (packaging, storage, delivery) - Network platforms Internet, VAN, intranet,
extranet - Protocols of communication EDI or XML
- Back-end integration connecting to ERP systems,
databases, functional applications
11Concepts and Characteristicsof B2B EC (cont.)
Information processed in B2B
- Product
- Customer
- Supplier
- Product process
- Transportation
- Inventory
- Supply chain
- Competitor
- Sales and marketing
- Supply chain process and performance
12Concepts and Characteristicsof B2B EC (cont.)
- Electronic intermediaries in B2B
- Consumers and business may share intermediaries
- Businesses may use different intermediaries with
different suppliers - Benefits of B2B models
- Eliminate paper-based systems
- Expedite cycle time
- Reduce errors
- Increase employee productivity
- Reduce costs
- Increase customer service and partnership
management
13B2B Models
- Company-centric models
- Sell-side marketplace (one-to-many)
- Buy-side marketplace (many-to-one)
- Many-to-many marketplacesthe exchange
- Buyers and sellers meet to trade
- Trading communities
- Trading exchanges
- Exchanges
14B2B Models (cont.)
- Other B2B models and services (show examples)
- For the purpose of selling
- For the purpose of buying
- Value chain integrators
- Value chain service providers
- Information brokers
- Vertical vs. horizontal marketplaces
- Verticalone industry or industry section
- Horizontalservice or product used in several
types of industries
15B2B Models (cont.)
- Virtual service industries in B2B
- Travel and tourism services
- Real estate
- Electronic payments
- Online stock trading
- Online financing
- Other online services
16Figure 6-2Sell-Side Marketplace Architecture
17Sell-Side MarketplacesOne-to-Many
- Virtual sellersBigboxx.com.hk of Hong Kong
- B2B office supply retailer services (corporate
clients) - Goalsell products in various SE Asian countries
(many products 10,000 items, many suppliers -300) - Company portal
- Browse online catalogs
- Use search engines
- Payments (many types available)
- Delivery
- Owns trucks and warehouses
- Delivery scheduled online
- Same day (within an hour)
- Specifically scheduled time
- Ordering system integrated with SAP-based
back-office system
18Sell-Side MarketplacesOne-to-Many (cont.)
- Virtual sellersBigboxx.com.hk of Hong Kong
(cont.) - Value-added services
- Track status of order
- Check stock availability
- Promotions
- Customized prices
- Group accounts and central approvalfor
businesses with multiple branches - Standing orders automatically activated
- Large number of reports and data available
19Sell-Side MarketplacesOne-to-Many (cont.)
- Customer service
- General Electric
- 20 million calls/year about appliances
- Reduced cost of each call from 5 to 0.20
- Milacron, Inc.
- Site contains 55,000 products
- Easy to use
- Securely handles selection, purchase, application
- Technical serviceexpanded to provide a higher
level of service than previously available at the
site
20Sell-Side MarketplacesOne-to-Many (cont.)
- Direct sales from catalogs
- Configuration and customization
- Efficient customization for direct sales
- Business customers
- Customize products
- Receive price quote
- Submit order
- Successful cases
21Sell-Side MarketplacesOne-to-Many (cont.)
- Direct sales from catalogs
- Benefits
- Reduces costs (to buyers and sellers) and errors
during the process - Speeds up order cycle
- Ability to customize products
- Offer different prices to different customers
- Limitations
- Channel conflicts with distribution systems
- High cost when traditional EDI used
- Large number of business partners is needed to
justify system
22Selling Side Auctions and Other Models
- Forward auctionsquick disposal of items
- Revenue generation
- Member acquisition and retentionbidding
transactions result in additional registered
members - Selling from own site when
- Large companies that conduct auctions frequently
dont benefit from using intermediaries - E-marketplace already in use, cost of adding
auction not too high - Using intermediaries when
- No resources required, control auction
information - Service researching, searching and reporting on
auction activities
23Selling SideAuctions and Other Models (cont.)
- Billing and collection
- Automatic calculation of shipping weights and
charges - Paymentencrypted credit card data
- Billing informationeasily downloaded into
existing systems - Successful if
- Sufficient number of loyal customers
- Products well known
- Price not major purchasing criteria
24Sell-Side CaseCISCO Connection Online (CCO)
- Benefitssaves the company 363 million per year
in - Technical support
- Human resources
- Software distribution
- Marketing material
- Customer serviceCisco Connection online
- Online orderingInternet Product Center builds
virtually all products to order - Order statuscustomer tools for finding answers
to order status inquiries
25Cisco Connection Online (CCO) (cont.)
- Benefits to Cisco
- Reduced operating costs for order taking
- Enhanced technical support and customer service
- Reduced technical support staff cost
- Reduced software distribution costs
- Lead times reduced fro 4-10 days to 2-3 days
- Benefits to customers
- Quick order configuration
- Immediate cost determination
- Collaboration with Cisco staff
26Sell-Side Intermediaries
- Marshall Industries - multinational distributor
of electronic components - Products and services
- MarshallNet, portal, PartnerNet, NetSeminar, etc
- Strategy
- Continuous improvement, Team-based organization,
flat hierarchy, decentralized decision making,
Profit sharing w/employees. - CRM highly promoted, Web-based services
- EC initiatives supported by
- Changing internal organization
- Changing internal procedures
27Sell-Side Intermediaries (cont.)
- Boeings PART
- 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 for online parts and maintenance
information and ordering capability
28Sell-Side Intermediaries (cont.)
- Boeings PART
- Spare parts business using traditional EDI
- Mechanic tells purchasing department parts are
needed, purchase is approved, purchase is made - Large airlines connect to Boeing's VAN
- Boeing finds part and delivers
- Debut of PART on the Internet
- Encourages customers to order parts
electronicallycheap, easy, fast - 50 of customers using Internet within first year
29Sell-Side Intermediaries (cont.)
- Benefits of Boeing PART online
- New sales opportunities
- Benefits to Boeings customers
- Increased productivityless time searching for
information - Reduced costsdelays at gate reduced because all
information is available - Increased revenuesfaster service provides time
savings - Customer service online reduces (calls on orders,
data entry) - Portable access to technical drawings/support
- Boeing On Line Data (BOLD) provides availability
to - Engineering drawings
- Manuals
- Catalogs
- Other technical information
- Portable Maintenance Aid (PMA)solves maintenance
problems
30Buy Side One-from-Many,E-Procurement
- Purchasing agents (buyers)
- Direct (materials) purchasing
- Use of material is scheduled
- Not a shelf item
- Indirect (materials) purchasing
- MROs (Maintenance,Repair,Operations)
- Nonproduction materials
- Inefficiencies in procurement management of
indirect materials
31Figure 6-3A Traditional Purchasing Process Flow
Source ariba.com, February 2001.
32Buy Side One-from-Many,E-Procurement (cont.)
- Innovative procurement management
- Innovative purchasing as strategic approach to
increase profit margins - Web facilitation includes
- Electronic tendering
- Volume purchasing
- Aggregating supplier catalogs at buyers site
- Group purchasing
- Others
33Buy Side One-from-Many,E-Procurement (cont.)
- Goals of procurement reengineering
- Increase purchasing agent productivity
- Lower purchasing prices of items (through
standardization, and consolidation of buys) - Improve information flow and management
- Minimize maverick (unplanned) buying from
non-contract vendors - Improve payment process
- Streamline purchasing process to make it
- Simple
- Fast
34Buy Side One-from-Many,E-Procurement (cont.)
- Goals of procurement reengineering (cont.)
- Reduce administrative processing cost per order
- Find new suppliers and vendors to provide
faster/cheaper goods and services - Integrate procurement process with budgetary
control in an efficient and effective way - Minimize human errors in buying or shipping
process
35Figure 6-4Buy-Side B2BMarketplace Architecture
36Buy Side One-from-Many,E-Procurement (cont.)
- Direct vs. indirect sourcing
- Tools to automate purchasing goods
- Direct or mission critical
- 80 of manufacturers expenditure
- Long-term relationship with vendor of known
quality goods - Tight integration with suppliers along supply
chain - Indirectuse of public exchanges for indirect
sourcing
37Topics in the 2nd half.
- Reverse Auctions
- Procurement (Revolution)
- Aggregating orders, group purchasing
- C-Commerce (Collaborative)
- Integration
- Implementation
38Gruppe 6
- Internet exercise 4, chapter 4, page 165
- 08.02.2002
- John Bjerkvik
- Trond Hoddevik
- Stig Arild L. Reksnes
39Kundeservice - online
- Sears.com
- JCPenney.com
- På hvilke måter tilbyr disse to kundeservice
online
40(No Transcript)
41(No Transcript)
42(No Transcript)
43Design
- Kategorisering av menyer
- Gjør det enkelt for kunden å finne frem
- Spesialtilbud
- Salg
44Personalisering
- Cookies
- Lagres på kundens datamaskin
- For å kunne kjenne igjen kunden sine interesser
- Lagrer ikke personlige opplysninger
45Personalisering (forts)
- Registrering
- Medlemmer
- Ikke-medlemmer
- E-mail
- Påmelding på lister med info/reklame om salg,
tilbud osv.
46(No Transcript)
47(No Transcript)
48Support
- Informasjon
- Varer
- Kjøpsinfo
- Levering
- Betingelser
- Betaling
- Kontakt
49Support (forts)
- Personalisering
- Reparasjon(Sears.com)
- Hjemme
- I butikk
- Gjør-det-selv
- Prisgaranti (Sears.com)
50End Group Presentation
51GRUPPE 7A LO 205
Margrete Hafsås, Irene Naustdal, Synnøve
Angvik Tor Christian Holmestrand This group
presentation was moved to a separate file to
reduce the size of this ppt set.
52Resume Lecture, 2nd half.
53Buy Side Reverse Auctions
- Pre-Internet Reverse auction process
- Prepare description of product to be produced
- Announce project via ads, mail, telephone
- Send detailed information to interested vendors
- Vendors prepare proposals
- Bidders submit document proposals
- Proposals evaluated
- Problems
- Laws
- Expensive
- Errors
54Buy Side Reverse Auctions (cont.)
- Web-based reverse auction process
- Buyers prepare bidding project information
- Buyers post project on portal
- Identify potential suppliers
- Invite suppliers to bid
- Suppliers download project information
- Suppliers submit electronic bid
- Reverse auction in real-time, or it can take a
few days - Buyers evaluate and award contract
55Buy Side Reverse Auctions (cont.)
- Web-based reverse auction process
- Benefits
- Electronic process is faster
- Administratively much less expensive
- Enables location of cheapest possible products
56Procurement Revolution at GE
- TPN at GE Lighting Division
- Purchasing was inefficienttoo many transactions
(requisitions 7 days, send bids to 2 or 3
suppliers) - Trading Process Network (TPN)electronic bids
(2hours to send bids to suppliers, award bid same
day) - Procurement Labor declined 30
- Material costs declined 5-20--wider base of
suppliers online - Re-position 60 of the staff
- Sourcing department focus on strategic activities
instead of paperwork, etc.
57Procurement Revolution at GE (cont.)
- Benefits to buyers
- Worldwide supplier partnerships helps partners
- Strengthen relationships
- Streamline sourcing process
- Rapid distribution of information, drawings
- Decrease sourcing cycle time
- Quick receipt and comparison of pricing bids
- Benefits to suppliers
- Increased sales volume
- Expanded market reach, finding new buyers
- Lowered administration costs for Marketing
activities - Shortened requisition cycle time
- Improved sales staff productivity
- Simple bidding process
58Procurement Revolution at GE (cont.)
- Benefits to GE
- Time reduced to id suppliers, prepare request
for bid, negotiate price, and award contract - Invoices automatically reconciled reflecting
modifications - Deployment strategies
- Start EC in one division and slowly go to all
divisions - Use the site as public bidding marketplace to
generate commission income to GE
59Aggregating Catalogs
- Aggregating suppliers catalogs an internal
marketplace - Maverick buying to save time leads to high prices
- Aggregating all approved suppliers catalogs in
one place - Reduced number of suppliers
- Buyers at multiple corporate locations
- Fewer and remote suppliers
- Larger quantity/lower costs
60Group Purchasing
- Group purchasingorders from several buyers are
aggregated - Internal aggregation
- Economy of scale
- Reduced transaction processing cost
- External aggregation
- Aggregating demand online
- Putting together orders from multiple buyers to
make large volumes/lower costs
61Electronic Bartering
- Electronic bartering
- Exchange of goods or services without the use of
money - Exchange a surplus for other need
- Bartering exchange
- Submit surplus to exchange for points
- Points used to buy what company needs
- Benefits
- Faster than manually
- Easier to match
62Collaborative Commerce (C-Commerce)
- Web-based systems used between and among
suppliers for - Communication
- Design
- Planning
- Information sharing
- Information discovery
63Figure 6-6Suppliers Extranet Hudson Dayton Case
64Collaborative Commerce(C-Commerce) (cont.)
- Reduce design cycle time by connecting suppliers
Adaptec, Inc. - Microchip manufacturer supplying electronic
equipment makers - Outsources manufacturing tasks
- Delivery times exceeded their competitors
- Solution to the problem
- Extranet and enterprise-level supply chain
integrated software - Significantly reduced order-to-product delivery
time
65Collaborative Commerce(C-Commerce) (cont.)
- Reduce product development time by connecting
suppliers Caterpillar, Inc. - Heavy machinery manufacturer uses extranet
- Request for customized component directly to
designers and suppliers ship to buyers - Connect engineering and manufacturing division
with worldwide
- Suppliers
- Distributors
- Overseas
66Collaborative Commerce(C-Commerce) (cont.)
- Other examples of c-commerce
- Tricon Restaurant Internationalglobal brand
marketing management - RE/MAXreal estate franchiser improved
communication and collaboration between
independent owners - Marriott Internationallinks corporations,
franchising partners, suppliers, customers - Nygard of Canadainterorganizational collaboration
67Integration
- ERP software
- Customer, supplier, and other databases
- Legacy systems
- Catalog (product) information
- Inventory systems
- Sales statistics
- Decision support systems (DSS) and SCM
applications
68Integration (cont.)
- Integration with existing information systems
- Issues in integrating with back-end information
systems - Intranet-based work flow
- Database management systems (DMBS)
- Application packages
- ERP
- Back-end sell-side integration works for sellers
but not buyers and vice versa
69Integration (cont.)
- Integration with business partners
- Easy integration with one company-centric side
- Not easy to integrate for many buyers or sellers
- Need buyer owned shopping cart that can interface
with back-end information systems
70Figure 6-7 Intelligent Agent-Based Commerce
B2B Agents
Source J. K. Lee and W. Lee (1997).
71Implementation Issues
- Justification and prioritization
- Must conduct cost benefit analysis of proposed
projects - Include organizational impacts
- Possible channel conflicts
- Dealing with resistance to change due to
processes reengineering - Cost-benefit analysis related to
- Finding B2B opportunities
- Prioritizing potential initiatives
72Implementation Issues (cont.)
- Vendor selection
- Primary vendor uses its software and procedures,
adds partners as needed - Integrator mixes and matches existing products
and vendors to create best of the breed - Affiliate programs (referral program or
intermediaries) - Implementing e-procurement
- Fit e-procurement into EC strategy
- Review and change procurement process itself
- If ERP or SCM is in placeintegrate
e-procurement, If not in placeBPR before
implementation - Coordinate buyers information system with
sellers
73Managerial Issues
- B2B marketingsell-side marketplaces require
advertisement and incentives - Which models to use and whenneed for
implementation strategies and prioritization - Purchase process reengineering (BPR)
- Establish buy-side marketplace on its server if
volume is big enough to attract major vendors - Join third-party intermediary-oriented
marketplace if volume is small
74Managerial Issues (cont.)
- Integrationtrading in e-marketplaces is
interrelated with logistics - Particularly true in many-to-many exchanges
- Company-centric marketplaces must integrate
- Logistics
- Other support services
75Managerial Issues (cont.)
- Business ethics
- Accessing unauthorized areas in the tracing
system should not be allowed - Privacy of partners should be protected
technically and legally - Auctionsboth forward and reverse
- Benefits are substantial
- Implementation is relatively simple
- Considerable flexibility in implementation
76Managerial Issues (cont.)
- E-procurementcritical success factors
- Need to cut down number of routine tasks
- Reduce overall procurement cycle using
appropriate information technologies - Workflow
- Groupware
- ERP software
- B2B models