AN

E-BUSINESS REPORT
ON
B2B ELECTRONIC PROCUREMENT OF

PREPARED BY
AUGUSTINE PETER
REG. NO: MGT0905256

UNDER THE GUIDANCE OF

MS. SUMINA HANEEPH
(FACULTY- IMK, ALAPPUZHA)

INSTITUTE OF MANAGEMENT IN KERALA,

UNIVERSITY OF KERALA,
ALAPPUZHA CENTER
2009-2011
 IBM is a multinational computer technology and IT consulting corporation
headquartered in Armonk, New York, United States.

 IBM is the world’s 4th largest technology company and the second most valuable global
brand (after Coca-Cola).

 IBM is one of the few IT companies with a continuous history dating back to the 19th
century.

 IBM manufactures and sells computer hardware and software (with a focus on the
latter), and offers infrastructure services, hosting services, and consulting services in
areas ranging from mainframe computers to nanotechnology.

 At the end of May 2010, IBM bought the Sterling Commerce Unit from AT&T for about
$1.4 billion. This is the second largest acquisition by IBM.

 IBM has been well known through most of its recent history as the world's largest
computer company and system integrator.
 With almost 400,000 employees worldwide, IBM is second largest (by market
capitalization) and the second most profitable information technology and
services employer in the world according to the Forbes 2000 list with sales of
greater than 100 billion US dollars.

 IBM holds more patents than any other U.S. based technology company and
has eight research laboratories worldwide.

 The company has scientists, engineers, consultants, and sales professionals in

over 200 countries.

 IBM employees have earned five Nobel Prizes, four Turning Awards, nine
National Medals of Technology, and five National Medals of Science.

 As a chip maker, IBM has been among the Worldwide Top 20 Semiconductor
Sales Leader in past years.
 CONTENTS
 INTRODUCTION
 E-COMMERCE: THEORETICAL PERSPECTIVE
 ELECTRONIC PROCUREMENT IN THE
INDUSTRY
 IBM’S B2B E- PROCUREMENT
 FINDINGS, SUGGESTIONS AND CONCLUSION
 INTRODUCTION 1
E-commerce is the use of the internet and the web to transact business. More formally,
digitally enabled commercial transactions between and among organizations and individuals.

OBJECTIVE OF THE STUDY

 The main objective of the study is to analyze how supply chain management activities are
integrated over the internet and also to know how the IBM is utilizing these technologies for
their efficient functioning.
 The study is intended to deal with the emerging trend in the field of e-commerce.

SCOPE OF THE STUDY

The core area of study is the electronic supply chain management.
METHODOLOGY OF THE STUDY
SECONDARY DATA
 Direct website, Journals,
 Other sites, and
 Other magazines relating to IBM Supply Chain details.
LIMITATIONS OF THE STUDY
 An extensive study could not be undertaken due to lack of time and cost.
 The data analyzed were of secondary nature.
 E-COMMERCE 2
 From an on-line perspective, e-commerce provides the capacity of buying and selling
products and information on the internet and other online services.

TYPES OF E-COMMERCE
 Business-to-Consumer (B2C) E-commerce
 Consumer-to-Consumer (C2C) E-commerce
 Government-to-Consumer (G2C) E-commerce
 Business-to-Government (B2G) E-commerce
 Peer-to-Peer (P2P) E-commerce
 Mobile commerce (m-commerce)
 Business-to-Business (B2B) E-commerce
It is the largest form of e-commerce in which business focus on selling to other businesses.
Example: 
A wholesaler places an order through places and order through the company’s website for fresh stock
and receives process to order in the form of shipped supplies. The wholesaler then sells supplies to the
final consumer.
WE
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EB ITE
SITE

simple model:

BUSINESS
BUSINESS BUSINESS
BUSINESS
ORGANIZATION
ORGANIZATION ORGANIZATION
ORGANIZATION
 B2B E-COMMERCE IN THE INDUSTRY 3
The trade between business firms represents a huge marketplace; in 2001, B2B trade amounted to about
$12 trillion in the United States, and by 2006, it exceed $16 trillion. Some firms estimate that the
average cost of each corporate purchase order for support products costs them $100 in administrative
overhead. The challenge of B2B e-commerce is changing existing patterns and systems of procurement,
and designing and implementing new internet-based B2B solutions.
THE EVOLUTION OF B2B E-COMMERCE
B2B commerce has evolved over a 35-year period through several technologies driven stages
 AUTOMATED ORDER ENTRY SYSTEM- mid 1970s involved the use of telephone modems to send
digital orders
 ELECTRONIC DATA INTERCHANGE- late 1970s- sharing business documents and settlement
information among a small number of firms.
 B2B ELECTRONIC STOREFRONTS- mid 1990s along with commercialization of internet
 NET MARKETPLACE- the late 1990s as a natural extension and scaling-up of the electronic
storefronts.
 PRIVATE INDUSTRIAL NETWORKS- late 1990s as natural extension of EDI systems and the
existing close relationships that developed between large industrial firms and their suppliers

TYPES OF B2B E-COMMERCE

 NET MARKETPLACES- (exchanges or hubs) bring together potentially thousands of sellers and
buyers into a single digital market place operated over the internet.
 PRIVATE INDUSTRIAL NETWORKS- are web-enabled networks of the coordination of trans-
organizational business processes (sometimes also called collaborative commerce)
 THE PROCUREMENT PROCESS AND THE SUPPLY
 CHAIN
Firms purchase from a set of suppliers, and they in turn purchase their inputs from a set of suppliers.
This set of firms is linked through a series of transactions referred to as supply chain. The supply chain
includes not just the firms themselves, but also the relationships among them and the process that
connects them.

SEARCH QUALIFY NEGOTIATE PURCHASE ORDER

REMITTANCE PAYMENT SHIPPING INVOICING

(procurement process)
History of e-procurement
The most basic methods included placing order via telephone, fax or mail. The three major
developments of B2B E-procurement are as follows:
ELECTRONIC DATA INTERCHANGE-
 Since the 1960s, many large IT companies have relied on EDI for the procurement of goods and
services.
 In the early 2000s although many companies still relied on VANs, the internet was playing a larger role
in EDI.
 In March 2000, an e-marketplace called Worldwide Retail Exchange (WWRE) was established.
 At that time it possessed 53 retail members with combined annual turnover of $722 billion.
ONLINE MARKETPLACES-
 In the early 2000s, third party companies like Commerce One Inc. and Ariba Inc. offered high-end e-
procurement software and services that were used to operate different online marketplaces.
OTHER DEVELOPMENTS
 Software applications that allow purchasing agents to establish systems for managing things like
invoices, purchase orders, receipts and request for quotations (RFQs).
 Some companies relied on third party organizations to use these systems via the Web.
 Online auctions were another tool companies used to procure goods and services for both contract and
spot buys.
No matter what method is emerged, there are many advantages they are providing and one of them is
increased efficiency and cost savings.
IBM’S DEFINITION OF E-PROCUREMENT 4
 E-procurement is the acquisition of direct and indirect product and services using the internet and new
technologies to facilitate a seamless, end-to-end stream of strategic procurement activities by connecting
buyers with suppliers.
 The inclusion of tools and business intelligence systems that enable improved responsiveness and
analysis with in the procurement organization.
 The linkages between suppliers and internal systems across the supply chain.
STRATEGIC INTENT
 VISION STATEMENT
The vision of IBM is “To acquire goods and services efficiently and effectively for internal and
external customers with the most competitive supply chain cost”. This is done with an eye toward
flexibility to reach changing marketing demands.
MISSION OF THE COMPANY
 Grow e-procurement leadership
 Attract, motivate and retain the best talent within their profession.

IBM PROCUREMENT OBJECTIVES

IBM procurement aims to:
 Drive quality improvements from their suppliers of goods and services.
 Deliver lowest overall cost and greatest competitive advantage.
 Improve client perception of their values through increased influence and exemplary customer service
and support.
 Establish relationships that give IBM:
 Access to the latest technologies
 Supply continuity
 Speed to market
 Growth in e-procurement leadership
 Retention of the best talent with in the profession

PLANNING AND NET MARKETPLACE

ANALYSIS CONTENT
MODEL CREATION

SOURCING

ORDER
MANAGEMENT
CONTRACT
MANAGEMENT

ORDER
ARIBA’s FULFILLMENT
REQUISITION
COMMERCE
BUYER
SERVICES SUPPLIER
NETWORK
PURCHASE
ORDER INVOICING

INTERACT AND
RECEIVE SETTLEMENT

INVOICE CONTENT
MANAGEMENT
IBM’S E-PROCUREMENT MODEL
PAYMENT
IBM’S GLOBAL PROCUREMENT
IBM’s global procurement is guided by its core values, principles and practices.

IBM PROCUREMENT CORE VALUES

 UNDERSTANDING
 INTEGRITY AND TEAMWORK
 INITIATIVE AND URGENCY

IBM PROCUREMENT PRINCIPLES AND PRACTICES

 INTEGRITY AND ETHICAL STANDARDS
 RECIPROCITY
 CONFIDENTIALITY
 PATENTS
 SUPPLIER DIVERSITY PROGRAMS
 GIFTS AND GRATUITIES
 BUSINESS MEALS AND ENTERTAINMENTS
 APPROPRIATE CONDUCT ON IBM PREMISES
FUNCTIONING OF IBM PROCUREMENT
IBM’s procurement is segmented into Commodity Councils or teams who are responsible for
purchasing specific items. The commodity councils are engaged in the procurement process of
purchasing goods and services through three major areas:
1. GENERAL PROCUREMENT
 BUSINESS SERVICES
 COMPLEMENTARY WORKFORCE SERVICES
 CONNECTIVITY
 FACILITIES MAINTENANCE, DESIGN AND CONSTRUCTION
 FACILITIES SERVICES AND OPERATING SUPPLIES
 TRAVEL
 U.S. TECHNICAL SERVICES
2. SYSTEM PRODUCTION PROCUREMENT
 ACTIVITIES/OPTICS/PASSIVES (AOP)
 INTERCONNECT
 ELECTRONIC CARD ASSEMBLY AND TEST (ECAT)
 KEYBOARDS/MICE
 LIQUID CRYSTAL DISPLAYS (LCDs)
 LOGIC-CPU, CORE LODIC DHIPSETS AND GRAPHICS
 LOGIC- STANDARD AND CUSTOM
 MECHANICAL: FABRICATED AND METAL
 MEMORY
 MONITORS
 PACKAGING
 THERMAL
 PRINTED CIRCUIT BOARDS
 STORAGE
 TAPES/MEDIA
3. TECHNOLOGY GROUP PROCUREMENT
  CHEMICALS, GAS AND RAW MATERIALS
 MANUFACTURING EQUIPMENT BUILD TO SPECIFICATION
 MICROELECTRONICS DIVISION TECHNOLOGY
 SILICON WAFERS
IBM PROCUREMENT CAPABILITIES
 Tailored product catalog, with multi-currency support.
 Online product customization. It allows the customers get the options they need with their IBM product.
 Preconfigured technology solutions that adhere to the client’s company standards.
 Automated order entry system that speeds up the order process and reduces errors.
 Electronic order status and advance notification that provides customers the important information they
need in real time.
 Powerful electronic integration that can include electronic invoicing and electronic payments.
 Support for multiple payment options including purchase orders, leasing and procurement cards.
 Coverage in more than 160 countries.
 Connectivity with leading e-procurement solution providers and proprietary systems.
BENEFITS OF IBM E-PROCUREMENT
 FASTER CYCLE TIMES

 CONVENTIONAL E-ORDERING

 CENTRALISED SPENDING CONTROLS

 LOWER COST AND IMPROVED EFFICIENCY

FINDINGS 5
 IBM’s global e-procurement is guided by its core values, principles and practices.
 IBM considers its business relationship with each of its suppliers and potential buyers to be a private
matter between the two parties.
 IBM does not knowingly infringe the patent rights to others.
 The e-procurement in IBM is played by Endicott Interconnect Technologies, INC. which is located in
more than 10 diverse locations with over 1600 employees’ on site.
 The electronic procurement and supplier network used by IBM is Ariba which is a leading platform and
service provider.
 The strategic intent of IBM’s e-procurement is fulfilled by its Commodity Councils or teams who
strategically source all goods and services through the use of common process across the global network.
 The process of buying and selling online by IBM is done through Ariba’s Commerce Services Network.
 The Commodity Councils engaged in procurement process of purchasing through the teams engaged in
General Procurement, Systems Production Procurement, and technology Group Procurement.
 IBM spends nearly $2 billion a year with diverse suppliers, greater than any other technology company
for e-procurement.
  IBM has the right to take actions with suppliers that fail to comply with its principles, including
terminating their relationship with them.
 IBM measures performance and provide feedback to core and strategic suppliers on a regular basis.
 IBM provides tailored product catalog, with multi-currency support.
 Online product customization allows the customers get the options they need with their IBM product.
 It has preconfigured technology solutions that adhere to the client’s company standards.
 The service provides automated order entry system that speeds up the order process and reduces errors.
 Customers can check electronic order status and advance notification that provides customers the
important information they need in real time.
 Powerful electronic integration that can include electronic invoicing and electronic payments.
 The system support for multiple payment options including purchase orders, leasing and procurement
cards.
 The IBM e-procurement has Coverage in more than 160 countries.
 The IBM e-procurement system has the capability of connectivity with leading e-procurement solution
providers and proprietary systems.

SUGGESTIONS
 The organization should try to reveal its supplier and buyer details to make them aware to the external
parties.
 IBM should give freedom to their suppliers in making their own views in the process of e-procurement.
 The websites of IBM should provide more detail of their online trading process.
CONCLUSION
More and more IBM clients are making advantage of IBM’s ability to integrate with their e-procurement
system. When a client adds IBM as an IT supplier in their system, they can extend all the benefits of
your e-procurement efforts to the information technology category:

 Convenient and efficient electronic ordering.

 Shorter acquisition and fulfillment cycles.
 Centralized spending controls.
 Standardized global information technology catalog.

By establishing a B2B e-procurement connection with IBM, customers can research products and
services, view entitled pricing and make purchases through a secure web connection.IBM is compatible
with leading E-procurement solutions and supplier networks such as Ariba, SAP, and Orack, or its
specialists help create customized solutions as per the clients needs.
BIBLIOGRAPHY
 KENNETH C. LAUDON
CAROL GUERCIO TRAVER : E-COMMERCE
BUSINESS. TECHNOLOGY. SOCIETY.
4TH IMPRESSION
WEBSITES:
 www.ibm.com
 kuharsha@in.ibm.com
THANK YOU
?