B2B eCommerce Transactions with suppliers, distributors, commerce services providers, infrastructure

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B2B eCommerceTransactions with suppliers,
distributors, commerce services providers,
infrastructure providers, and organizational
customers that occur online though the support of
the InternetJupiter Communications 11.5
trillion of B2B in 2000 of which 336 billion in
eB2B. By 2005, expect 6.3 trillion eB2B / 15.1
trillion.Goldman Sachs --- By 2005, eB2B of 4.5
trillionGartner Group 90 billion eB2B in 1999
vs. 16.7 billion eB2C.
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Six major B2B activities Six Ss

• Search
• Source
• Specify
• Submit Orders
• Settle/Negotiate/Bid
• Send/Receive
• goods and services that are needed in order
  to operate

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Legacy systems

• The term legacy systems refers to systems for
  automating b2b commerce pre-Internet.
• These systems facilitate communications about a
  firms input requirements.
• Useful for companies that do high volume of
  business with products that have unique parts,
  each with varying lead times (the duration parts
  are held in inventory).

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MRP Materials requirements planning

• A legacy system to automatically generate
  shopping lists
• Software application that enables companies track
  what they need to purchase based on production
  schedules
• Contains BOM (bill of materials) which and how
  parts are needed to make the product
• Integrates BOM with production schedule to
  generate shopping list as frequently as needed
• ERP (Enterprise Resource Planning) the next
  generation of MRP which integrates human resource
  administration and financial accounting
  components. E.g., when a purchase is made by an
  individual employee, the finance dept is notified
  immediately.
• Advantage Reduced lead time. Parts arrive in
  sufficient time to meet production schedules BUT
  in manner that minimizes inventory

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EDI Electronic Data Interchange

• Permits buyers to convey input needs directly to
  suppliers
• Advantage Considerable reduction in transaction
  costs
• Disadvantage Private networks are expensive

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The Internet

• Business with differing MRP and ERP systems can
  access a universal browser without complex
  installations
• Small businesses w/o e-commerce strategy could
  leverage a public infrastructure from someone
  else to achieve e-commerce goals
• Each transaction can be tracked in great detail.
  Participants in a B2B marketplace can know the
  identity of buyer and seller, quantity purchased,
  date and time, of times purchaser looked before
  making purchase decision

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B2B mechanisms for price

• Electronic Catalogs
• Auctions
• Exchanges
• Negotiations

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Catalogs

• 1. home page
• 2. product catalog, where buyer may search, for
  example, by manufacturers name, product
  category, or end-use category
• 3. Page showing results of search
• 4. A shopping cart
• 5. A price quote page, including prices and
  shipping charges
• 6. Confirmation of order

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Auctions

• Reverse English Auction
• Multiple Sellers Single Buyer
• Buyer does not have to select the Seller who won!

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Exchange

• Two-sided marketplace
• Anonymous real-time matching of orders and quotes
• Electronic stock exchanges
• Ideal for commodities or standardized products

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• What makes a good exchange?
• What makes a bad exchange?

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Negotiations

• Requests for Quotes (RFQ), followed by
  negotiations between potential transaction
  parties
• Seller posts a profile or proposal
• Buyer searches and is shown all profiles meeting
  search criteria
• Buyer chooses seller and makes contact
• Seller if interested responds
• The two parties negotiate

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How to choose Price Mechanism

• Homogeneous vs. differentiated goods
• Size and number of suppliers
• Size and number of buyers
• Flexibility and importance of specs.
• Lots of buyers and sellers and homogenous good
  Exchanges
• Many buyers few sellers Auctions
• Many sellers few buyers Reverse auctions
• Few buyers sellers flexible yet important
  specs Negotiations
• Wide assortment but non-flexible specs many
  buyers-- catalogs

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E-Sourcing

• E-sourcing encompasses a spectrum of IT
  resources, from Web, server, and storage
  infrastructure services to on-demand
  E-procurement and help-desk business-process
  services.
• Utility-based IT occurs at the business-process
  level. E.g., procurement, help desk, storage,
  and server services.
• Example for utility-based IT With IBM's
  E-procurement services, customers log on to a
  site with catalog information from vendors that
  IBM has preselected they pay a monthly fee based
  upon the volume of purchases they make and the
  number of catalogs they add to IBM's offerings.
• Usage-based pricing Customers pay for storage
  and server capacity by the gigabyte, managed
  services according to the volume of network
  traffic being monitored, and help desk by the
  number of seats eligible for support. Usage-based
  pricing is a key distinction between E-sourcing
  and conventional outsourcing, where IBM Global
  Services takes over all or a portion of IT
  operations for a flat monthly fee. Another
  difference Rather than customizing for a single
  customer, the utility model relies on mass
  customization to multiple customers on a shared
  infrastructure.