1 © Prentice Hall, 2000 Chapter 6 Business-to-Business Electronic Commerce 2 © Prentice Hall, 2000 Learning Objectives  Distinguish between B2B and B2C  Identify the relationship between B2B and supply chain management  Classify the categories of B2B models and architectures according to the nature of the electronic stores and malls  Describe typical cases of Supplier, Buyers, and Intermediary-Oriented Market Places  Outline the current and next-generation characteristics of B2B Electronic Commerce 3 © Prentice Hall, 2000  Distinguish between VAN-based an Internet- base EDI  Describe the role of Just-In-Time in B2B Electronic Commerce  Describe how software agents can facilitate communication between sellers and buyers  Describe how marketing is done in B2B Learning Objectives (cont.) 4 © Prentice Hall, 2000 Trading Process Network (TPN) Post in General Electric  General Electric (GE) Factories at GE Lighting division used to send hundreds of Requisitions For Quotations (RFQs) to the corporate sourcing department each day for low- value machine parts. For each requisition, the accompanying blueprints had to be requested from storage, retrieved from the vault, transported to the processing site, photocopied, folded, attached to paper requisition forms with quote sheets, stuffed into envelopes and mailed out. This process took at least 7 days and was so complex and time- consuming that the sourcing department normally sent out bid packages only to two or three suppliers at a time.  Its purchasing was inefficient, involved too many administrative transactions  GE is conducting electronic bids, no paperwork 5 © Prentice Hall, 2000  60%of the staff involved in procurement have been redeployed. The sourcing department has at least 6-8 free days a month to concentrate on strategic activities rather than on paperwork, photocopying and envelope stuffing it had to do when the process was manual.  Labor involved in procurement declined by 30%. At the same time, materials costs declined 5%-20% due to the ability to reach a wider base of suppliers online.  It used to take 18-23 days to identify suppliers, prepare a request for bid, negotiate a price and award the contract to a supplier. It now takes 9-11 days.  With the transaction handled electronically from beginning to end, invoices are automatically reconciled with purchase orders, reflecting any modifications that happen along the way.  GE Procurement departments across the world now share information about their best suppliers.  Benefits of using TPN Trading Process Network (TPN) Post in General Electric ( cont.) 6 © Prentice Hall, 2000 Supply Chain  Definition  All activities associated with the flow and transformation of goods from raw materials to end users 2 nd Tier Supplier Upstream Internal Downstream 2 nd Tier Supplier 2 nd Tier Supplier 1 st Tier Supplier 1 st Tier Supplier Assembly/ Manufacturing and Packaging Distribution Centers Retailers Customers Grain Producer Processing Facility Packaging Distributor Store Customers Corrugate Manufacturer Lumber Company Label Manufacturer Grain Cereal Packaged Cereal Labels Word Paperboard 7 © Prentice Hall, 2000 Characteristics of B2B EC  Key Entities of B2B EC  Buying company with procurement management perspective  Selling company with marketing management perspective  Electronic Intermediary, an optional third party directory service provider (the scope of service may be extended to order fulfillment)  Deliverer who can fulfill a just-in-time delivery  Network platform such as the Internet, VAN, intranet and extranet  Protocol of communication such as EDI and comparison shopping possibly using software agents  Back-end information system possibly implemented using the intranet and Enterprise Resource Planning (ERP) systems 8 © Prentice Hall, 2000  Relationship with Electronic Marketing  Supplier-oriented marketing  Used to sell the company’s products and services to business customers on the Internet  Electronic catalogs are basically the same as that for B2C EC, but they may be customized  Using electronic auctions to liquidate surpluses Characteristics of B2B EC (cont.)  Relationship with Procurement Management  Purchasing company’s point of view : a medium of achieving the goals of procurement management  Procurement management’s point of view : the buyer-oriented market can be effective  Using a RFQ-bidding mechanism 9 © Prentice Hall, 2000  Relationship with Electronic Intermediaries  Similar to the B2B electronic intermediaries, but the customers are businesses  Also, special intermediaries for matching buyers and sellers, bartering etc.  Relationship with intranet are very important  Relationship with extranets  A dedicated network between business partners or a secured public network like the Internet  Implementing a virtually private network (VPN) to improve internet security Characteristics of B2B EC (cont.) 10 © Prentice Hall, 2000 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) B2C E-commerce Consumers B2B E-Commerce Business Customers Supplier’s Products Catalog Customer’s Order Information Supplier’s Electronic Mall [...]... Suppliers Buyer’s Electronic Mall Buyer’s Products Catalog, RFQ © Prentice Hall, 2000 Suppliers’ Bids, Information 11 Models of B2B EC (cont.) 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... Incoming Msg Message Manager Message Base Directory Consulting Directory Individual Manager Data Base Knowledge Base Message Queue Mgt Order Agent Message Gate An Architecture of Intelligent Agents for Electronic Commerce: UNIK-AGENT Approach © Prentice Hall, 2000 32 The Role of Agents in B2B EC (cont.) Management of Buyer Information at Buyer Sites to Integrate with Corporate Information Systems Current... information Buyers post the bidding projects on the Internet Buyers identify potential suppliers Buyers invite suppliers to bid on projects Suppliers download the project information from the Internet Suppliers electronically submit bids for projects Buyers evaluate the suppliers’ bids and negotiate online to achieve the ‘best deal’ Buyers accept the bid that best meets their requirements © Prentice Hall, 2000... partnerships with new suppliers worldwide Strengthen relationships and streamline sourcing processes with current business partners Rapidly distribute information and specifications to business partners Transmit electronic drawings to multiple suppliers simultaneously Cut sourcing cycle times and reduce costs for sourced goods Quickly receive and compare bids from large number of suppliers to negotiate better... in high telephone and labor expenses Better Customer Service Customers still have a choice for how they interact with the company, whether by e-mail, phone, fax or other means © Prentice Hall, 2000 22 Business-to-Business Auctions Benefits New sales channel New venue for disposing excess, obsolete products Increase page views; viewers like to watch auctions Acquire and retain members Types Independent... Independent auctions: using 3rd party auction site Community auctions: many sellers and buyers simultaneously (Electricity, Flowers) Private auctions: large distributor (Ingrain Micro) © Prentice Hall, 2000 23 Business-to-Business Auctions (cont.) What Auction Intermediary Provides? All necessary infrastructure Company controls all auction information (software provided) All procedures for auctions Fast deployment... cut communication cost by over 50% Using the Internet to exchange EDI transactions is consistent with the growing interest of business in delivering an ever-increasing variety of products and services electronically, particularly through the Web Internet-based EDI can compliment or replace current EDI systems Internet tools such as browsers and search engines are very user friendly and most users today... mall; bring buyers and suppliers (bidders) to one place The corporate information systems need tight coupling with the intermediary electronic mall Business Suppliers Business Customers Intermediary’s Electronic Mall Customer’s Order Information Shared Products Catalogs © Prentice Hall, 2000 Supplier’s Product Information 12 Procurement Management Using B2B EC Platform Purchasing is now a strategic... External helper Program at client PC are necessary Buyer’s information stored in the seller’s server © Prentice Hall, 2000 33 The Role of Agents in B2B EC (cont.) Comparison Shopping with Buyer’s Own Electronic Bag Current B-to-C Platform Prospective B-to-B Platform Customers need to visit many malls Meta-Mall architecture is need for the customers to reduce the effort of visiting many sites Every . 1 © Prentice Hall, 2000 Chapter 6 Business-to-Business Electronic Commerce 2 © Prentice Hall, 2000 Learning Objectives  Distinguish between. characteristics of B2B Electronic Commerce 3 © Prentice Hall, 2000  Distinguish between VAN-based an Internet- base EDI  Describe the role of Just-In-Time in B2B Electronic Commerce  Describe how. prices due to quantity discount) B2C E -commerce Consumers B2B E -Commerce Business Customers Supplier’s Products Catalog Customer’s Order Information Supplier’s Electronic Mall 11 © Prentice Hall,