E-business ModelBy Assoc. Prof. Dr. Siriluck Rotchanakitumnuai Department of Management pot

E-business Model By Assoc Prof Dr Siriluck Rotchanakitumnuai Department of Management Information Systems Faculty of Commerce and Accountancy Thammasat University 9/18/2012 B2B Models  Company-centric models     Sell-side marketplace (one-to-many) Buy-side marketplace (many-to-one) Many-to-many marketplaces—the exchange Collaborative commerce 9/18/2012 Models of B2B E-Commerce 9/18/2012 B2B Models (cont.)  Virtual service industries in B2B       9/18/2012 Travel and tourism services Real estate Electronic payments Online stock trading Online financing Other online services Sell-Side Marketplace Architecture 9/18/2012 Selling Side: Auctions and Other Models  Forward auctions—quick disposal of items    9/18/2012 Revenue generation Increased page views Member acquisition and retention—bidding transactions result in additional registered members Selling Side: Auctions and Other Models (cont.)  Using intermediaries when:     Searching and reporting    9/18/2012 No resources required Own and control auction information Fast time to market Search and report all auction activities Standard reports available Additional analysis of complex information Buy Side: One-from-Many, E-Procurement  Purchasing agents (buyers)  Direct purchasing    Indirect purchasing    Use of material is scheduled Not a shelf item MROs Nonproduction materials Inefficiencies in procurement management of indirect materials 9/18/2012 A Traditional Purchasing Process Flow Source: ariba.com, February 2001 9/18/2012 Buy Side: One-from-Many, E-Procurement (cont.)  Innovative procurement management   Innovative purchasing as strategic approach to increase profit margins Web facilitation includes:      9/18/2012 Electronic tendering Volume purchasing Aggregating supplier catalogs at buyer’s site Group purchasing Others 10 Buy Side: One-from-Many, E-Procurement (cont.)  Goals of procurement reengineering       Increase purchasing agent productivity Lower purchasing prices of items Improve information flow and management Minimize maverick (unplanned) buying Improve payment process Streamline purchasing process to make it:   9/18/2012 Simple Fast 11 Buy Side: One-from-Many, E-Procurement (cont.)  Goals of procurement reengineering (cont.)     9/18/2012 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 12 Buy-Side B2BMarketplace Architecture 9/18/2012 13 Buy Side: One-from-Many, E-Procurement (cont.)  Direct vs indirect sourcing  Tools to automate purchasing goods   9/18/2012 Direct or mission critical  80% of manufacturer’s expenditure  Long-term relationship with vendor of known quality goods  Tight integration with suppliers along supply chain Indirect—use of public exchanges for indirect sourcing 14 Buy 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:    9/18/2012 Laws Expensive Errors 15 Buy Side: Reverse Auctions (cont.)  Web-based reverse auction process         9/18/2012 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 16 Buy Side: Reverse Auctions (cont.)  Web-based reverse auction process  Benefits:    9/18/2012 Electronic process is faster Administratively much less expensive Enables location of cheapest possible products 17 Group Purchasing  Group purchasing—orders from several buyers are aggregated  Internal aggregation    External aggregation   9/18/2012 Economy of scale Reduced transaction processing cost Aggregating demand online Putting together orders from multiple buyers to make large volumes/lower costs 18 Collaborative Commerce (CCommerce)  Web-based systems used between and among suppliers for:      9/18/2012 Communication Design Planning Information sharing Information discovery 19 Collaborative Commerce (C-Commerce) (cont.)  Reduce design cycle time by connecting suppliers: Adaptec, Inc  Microchip manufacturer supplying electronic equipment makers    Solution to the problem   9/18/2012 Outsources manufacturing tasks Delivery times exceeded their competitors Extranet and enterprise-level supply chain integrated software Significantly reduced order-to-product delivery time 20 Collaborative 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   9/18/2012  Suppliers Distributors Overseas   Factories Customers 21 Practical categories of E-business  Brokerage model   Merchant model   It is predicated on the power of the web to allow a manufacturer (suppliers/service providers) to reach buyers directly and thereby compress the distribution/service delivery channel) Affiliate model   Wholesalers of goods and services Sales may be made based on list prices or through auction Manufacturing (Direct model)   Are market-makers: they bring buyers and sellers together and facilitate transaction e.g auction broker, marketplace exchange The affiliates provide purchase/service-point-click through to the merchant e.g banner exchange, revenue sharing Community model  9/18/2012 The Internet is inherently suited to community business models and today this is one of the more fertile areas of delvelopment 22 Managerial Issues    B2B marketing—sell-side marketplaces require advertisement and incentives Which models to use and when—need 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 9/18/2012 23 Managerial Issues (cont.)  Business ethics    Accessing unauthorized areas in the tracing system should not be allowed Privacy of partners should be protected technically and legally Auctions—both forward and reverse    9/18/2012 Benefits are substantial Implementation is relatively simple Considerable flexibility in implementation 24 ... E-Procurement (cont.)  Goals of procurement reengineering       Increase purchasing agent productivity Lower purchasing prices of items Improve information flow and management Minimize maverick... mission critical  80% of manufacturer’s expenditure  Long-term relationship with vendor of known quality goods  Tight integration with suppliers along supply chain Indirect—use of public exchanges... Overseas   Factories Customers 21 Practical categories of E-business  Brokerage model   Merchant model   It is predicated on the power of the web to allow a manufacturer (suppliers/service