(Buying) Selling to B2B

6. E-Business
Businesses Online
SCM
Volume Vs Variety B2B
Transaction amount (Single transaction)
Delivery Complexity
Interaction- EDI B2C
Order, delivery, payment ...

PranF Agora
Pran
Agora Agora
NSU
GP
International
Orders/Complex
- Quantity
- Quality
- Time
- Payment- L/C
- Shipping Wheat
Brazil Spice Co.
- Monitoring
Shaan

Solution Radhuni spices

- Info. System
- SCM SriLanka Spice Co.
Burgers
- eBusiness Process
Farmer
Meat Farm C
Dealer House

Aus. Kangaroo
& Cattle Co.

BenglMeat Potatoes
Compare to a paper-based purchasing process
 Supply chain management
Job of managing
integration of company supply management and
logistics activities across multiple participants in a
particular product’s supply chain

-- GOAL --
Achieve
higher-quality,
on-time and
lower-cost product
at the end of the
chain
Typical business purchasing process ...

Complex?
 Purchasing, Logistics, and ...
Purchasing ...
• Direct materials (part of finished product)
– Contract purchasing, Spot purchasing
• Indirect materials (MRO)
– Standard items- Engine oil, parts, ...

● SCM
○ Procurement
■ Purchasing
■ Supplier Mgt
○ Logistics

Purchasing cards (p-cards)

 SCM

Why? e-Purchasing ...

• E-business for
– Cost reductions
– Process improvements Intelligent
– Flexibility Agents
– Synergy

• Consider suppliers
– Cost? Quality? Delivery time ……
– Monitoring, relationship
– Manage a complex process
Grainger.com Web store (B2B)

MRO
Hundreds of thousands of product
EDI
Maintenance, repair and operation supplies
https://www.youtube.com/watch?v=iALiS4FBB6E
Logistics- movement
• Both sales and purchasing
– Outbound, Inbound
• Goal
– right goods, right quantities
– right place, right time, cost …

• Web, Internet, GPS … technologies

– Opportunities to better manage activities
• Integrate Third-party logistics (3PL) provider
• Location tracking with GPS
EDI
• Notification
 CRM

SCM
Support Activities
ERP

• Training
– Distribute using company intranet
• Knowledge management
– Collection, classification, dissemination
E-Government
G2C- Government to Citizen
 EDI
Electronic Data Interchange Protocol

• Standard format & Compatibility/translators

• Most B2B e-commerce has adapted EDI
• EDI Payments
– Clearing House
– EFT
 Direct

Indirect
VAN-Value Added Network
 Value Added Networks ...

• Receives, stores, (translates), forwards electronic

messages containing EDI transaction sets
• Support a variety of protocols, fast setup, support
• Transaction cost!
• Companies providing VAN services
– Advanced Data Exchange, Behr Technologies …

• Nonrepudiation
– Establish that a particular transaction occurred
– VAN’s audit logs
– Vs. Comparison of trading partners’ message logs
23
(direct connection EDI)
 Network Model of Supply Chain

• Other firms perform various support activities

• Supply Web: term replacing “supply chain”
– Due to an interconnected network configuration

• Trend in SCM
– Shift from hierarchical structures to network structures
– To negotiate with suppliers and form strategic alliances

Non-Value Added
Intermediaries!
Economic Organization in Purchasing Vs. Marketspace
 Value Creation in a Supply Web

• A network form of organization within a supply chain

– A holistic view of the entire supply chain
• Reaching Beyond The Organization

Concerns- Trust, Information sharing

Advantage- Competitive
– Increase process speed,
reduce costs, increase
manufacturing flexibility,
response to market change
– Ultimately value added to end consumer
Advantages of using technologies
in supply chain management
I don’t want to Classmates Friend BFF Life Partner
know you
 Building and Maintaining Trust

• Leveraging Internet and the Web

– Provide excellent ways to communicate and share
– Offer new avenues for building trust
• Stay in contact with their customers
• Buyers get instant access to their sales representatives
• Can provide comprehensive information quickly

Continual communication
and information sharing Service
 Materials Tracking Technologies

• Tracking materials as they move is a challenge

– Expensive, time consuming, customer waiting
– Integration of bar coding and EDI: prevalent
• Second wave of electronic commerce
– Integration of new types of tracking into
Internet-based materials-tracking systems
• Radio Frequency Identification Devices (RFIDs)
• Optical scanners, QR Codes and bar codes
• GPS?
 B2B Marketplaces
1 3 5

Walton
Chaldal Pran
 B2B marketplaces ...

• Private Stores and Customer Portals

– Large sellers have customer portal B2B sites
• Independent Industry Marketplaces
– Industry marketplaces: Single industry
• Chemdex- Trade in bulk chemicals
– Independent exchanges: not controlled by
established buyer or seller in the industry
– Public marketplaces: open to new buyers and
sellers just entering the industry

Power?
 B2B marketplaces ...

• Private Company Marketplaces

– Large companies vs. small vendors
– Exert power in purchasing negotiations
• Using e-procurement software:
– Allows companies to manage purchasing
function through Web interface
– Includes marketplace functions

• Industry Consortia-Sponsored Marketplaces

– Buyer controlled- Covisint (2000) Consortium of
DaimlerChrysler, Ford, General Motors
• Seller Controlled Customer Portals
???
Segment Limited Large

Lead time Long Short

Interaction Electronic TX 1 to 1 preferred

Delivery Coordinated- Both organization Business managed

 Learning Objectives

• How businesses use the Internet to improve

purchasing, logistics, and other support activities
• Electronic data interchange and how it works
• How businesses have moved some of their
electronic data interchange operations to the
Internet
• Supply chain management and how businesses are
using Internet technologies to improve it
• Electronic marketplaces and portals that make
purchase-sale negotiations easier and more efficient
E- Business, Ninth Edition
 Summary

• Using Internet and Web technologies

– Improves purchasing and logistics primary activities
– Improves support activities
• Governments extending reach of enterprise planning
and control activities
– Beyond organization’s legal definitions
• Emerging network model of organization
– Describes growth in interorganizational
communications and coordination

E- Business, Ninth Edition

 Summary (cont’d.)

• History of EDI and how it works

– Freight companies first introduced e-commerce
– Spread of EDI to virtually all large companies
• Requires smaller businesses to seek an affordable way
to participate in EDI
– Internet providing inexpensive communications
channel EDI lacked
• Important force driving supply chain management
technique adoption

E- Business, Ninth Edition 38

 Summary (cont’d.)

• Supply chain management

– Incorporates several elements
• Implemented, enhanced through Internet and Web use
• Industry electronic marketplaces led to B2B
electronic commerce models
– Private stores
– Customer portals
– Private marketplaces
– Industry consortia-sponsored marketplace
• Models coexist with industry marketplace model
E- Business, Ninth Edition
 FIGURE 6-5 Commonly used ASC X12 transaction sets
E- Business, Ninth Edition
 Emergence of Broader EDI Standards

• American National Standards Institute (ANSI)

– United States coordinating body for standards
– Accredited Standards Committee X12 (ASC X12)
• Develops and maintains EDI standards
– Data Interchange Standards Association (DISA)
• Administrative body coordinating ASC X12 activities
– Transaction sets: names of the formats for specific
business data interchanges
• EDI for Administration, Commerce, and
Transport (EDIFACT, or UN/EDIFACT)

E- Business, Ninth Edition

 Using Materials-Tracking Technologies
with EDI and Electronic Commerce
(cont’d.)
• Example: 2003 (Wal-Mart)
– Tested RFID tag use on merchandise for inventory
tracking and control
– Initiated plan to have all suppliers install RFID tags in
goods they shipped
– Reduced incidence of stockouts
• Retailer loses sales because it does not have specific
goods on its shelves
• General acceptance of RFID tagging will not occur in
most industries until 20XX

E- Business, Ninth Edition

 Creating an Ultimate Consumer
Orientation in the Supply Chain
• Ultimate consumer orientation
– Customer focus difficult to maintain
• Michelin North America
– Pioneered use of Internet technology
• To go beyond next step in its value chain
– 1995: launched electronic commerce initiative
• BIB NET extranet
– Allowed dealer access to tire specifications, inventory
status, and promotional information
• Through simple-to-use Web browser interface

E- Business, Ninth Edition