In this chapter students will be able to: B2B e-commerce & supply chain management, the growth of B2B- industry forecasts, potential benefits of B2B e-commerce, types of procurement, the role of existing legacy computer systems,...
CSC 330 E-Commerce Teacher Ahmed Mumtaz Mustehsan GM-IT CIIT Islamabad Virtual Campus, CIIT COMSATS Institute of Information Technology T1-Lecture-16 T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-1 T1-Lecture-16 B2B E-commerce: Supply Chain Management and Collaborative Commerce Chapter-12 For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-2 B2B E-Commerce & supply Chain Management B2B Trade in 2010 is US only was $ 16 Trillions and with B2B e-commerce was $ 3.6 Trillions Some Basic Terminologies: Total Inter-firm Trade The total flow of value among firms B2B Commerce All types of computers enabled inter firm trade Internet-based B2B Commerce The portion of B2B commerce that is enabled by the internet Automated Order Entry systems Involved the use of telephone modems to send digital orders T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-3 B2B E-Commerce & supply Chain Management Some Basic Terminologies: (Continued) Selle- side Solutions Seller biased market that are owned by ; and show only goods from, a single seller EDI (Electronic Data Interchange) A communication standard for sharing business documents and settlement information among a small number of firms Buyer-side solutions: Buyer biased market that are owned by buyers and that aimed to reduce the procurement cost of supplies for buyers T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-4 B2B E-Commerce & supply Chain Management Some Basic Terminologies: (Continued) Vertical market One that provides expertise and products for specific industry Horizontal market Market that serve many different industries B2B Electronics Storefronts Online catalogue of products made available to the public marketplace by a single supplier Net Marketplace Brings hundreds to thousands of suppliers and buyers into a single internet-based environment to conduct trade T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-5 B2B E-Commerce & supply Chain Management Some Basic Terminologies: (Continued) Private Industrial Networks/ Private Trading Exchange (PTX) Internet based Communications environments that extend far beyond procurement to encompass truly collaborative commerce T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-6 The Growth of B2B- Industry Forecasts In the period 2010 to 2014 B2B E-Commerce projected growth was 30% to 35% of total inter firm trade Not all industries similarly affected by B2B e-commerce Not all industries would benefit equally Factors influencing move to e-commerce Significant utilization of EDI Large investments in IT and Internet infrastructure e.g., aerospace and defense, computer, and industrial equipment Market concentrated on purchasing and/or selling or both are ripe for B2B growth e.g., energy, chemical industries, Health Insurance (National Medical Record) T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-7 Potential Benefits of B2B E-commerce Lower administrative costs Lower search costs for buyers Reduced inventory costs ◦Increasing competition among suppliers (increasing price transparency) ◦Reducing inventory carried Lower transaction costs: ◦Eliminating paperwork ◦Automating parts of procurement process T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-8 Potential Benefits of B2B E-commerce Increased production flexibility by ensuring just-intime parts delivery Improved quality of products by increasing cooperation among buyers and sellers Decreased product cycle time by sharing of designs and production schedules Increased opportunities for collaborating with suppliers and distributors Greater T1-Lecture-16 price transparency Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-9 The Procurement Process and the Supply Chain Procurement process: The way firms purchase materials they need, to make products Supply chain: Firms that purchase goods, their suppliers, and their suppliers’ suppliers, and relationships and processes involved Steps in procurement process: Deciding who to buy from and what to pay Completing transaction T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 110 Two Main Types of Internet-Based B2B Commerce T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 126 Net Marketplaces Various ways to classify Net marketplaces: Pricing mechanism, nature of market served, ownership By business functionality ◦ What businesses buy? (Direct vs Indirect goods) ◦ How business buy? (Spot purchasing vs longterm sourcing) Four main types E-distributors E-procurement networks Exchanges Industry consortia T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 127 Pure Types of Net Marketplaces T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 128 Other Chacteristics of Net Marketplaces T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc Slid e 1129 E-distributors Most common type of Net marketplace Electronic catalogs representing products of thousands of direct manufacturers Typically independently owned intermediaries Offer industrial customers single source to purchase indirect goods on spot basis Typically horizontal; serve many different industries with products from many different suppliers Usually fixed price; discounts for large customers Example: W.W Grainger T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 130 E-distributors T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 131 E-procurement Net Marketplaces Independently owned intermediaries Connect hundreds of suppliers of indirect goods Firms pay fees to join market Typically for long-term contractual purchasing of indirect goods Revenues from transaction fees, licensing consultation services and software, network fees Offer value chain management (VCM) services VCM: Automation of entire procurement process on buyer side, automation of selling business processes on seller side Many-to-many market Example: Ariba T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 132 E-procurement Net Marketplaces T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 133 Exchanges Independently owned online marketplaces Connect hundreds to thousands of suppliers and buyers in dynamic, real-time environment Typically vertical markets; spot purchasing requirements of large firms in single industry Charge Variety commission fees on transaction of pricing models used ◦Online negotiation, auction, RFQs/RFPs, fixed Tend to be buyer-biased Suppliers Many T1-Lecture-16 disadvantaged by competition have failed due to low liquidity Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 134 Exchanges T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 135 Industry Consortia Industry-owned vertical markets Enable buyers to purchase direct inputs from limited set of invited participants Emphasize long-term contractual purchasing, stable relationships, creation of data standards Ultimate objective: ◦Unification of supply chains within entire industries through common network and computing platform Make money from transaction and subscription fees Offer many different pricing mechanisms ◦Auctions, fixed prices, RFQs, negotiated Can force suppliers to use consortia’s networks T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 136 Industry Consortia T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 137 The Long-Term Dynamics of Net Marketplaces Pure Net marketplaces moving from “electronic marketplace” vision toward more central role in changing procurement process Consortia and exchanges beginning to work together in selected markets E-distributors joining large e-procurement systems and industry consortia as suppliers Movement from simple transactions for spot purchasing to longer-term contractual relationships involving both direct and indirect goods T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 138 Net Marketplace Trends T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 139 End of: T1-Lecture-16 Chapter-12 B2B E-commerce: Supply Chain Management and Collaborative Commerce Thank You T1-Lecture-16 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 140 ...T1 -Lecture- 16 B2B E -commerce: Supply Chain Management and Collaborative Commerce Chapter- 12 For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc T1 -Lecture- 16 Ahmed... Education, Inc 1-2 B2B E -Commerce & supply Chain Management B2B Trade in 2010 is US only was $ 16 Trillions and with B2B e -commerce was $ 3.6 Trillions Some Basic Terminologies: Total Inter-firm Trade... supply chains Relationship-based Support many-to-one and many-to-few relationships Largest form of B2B e -commerce Generate 10 times the reveneue as that of Net marketplace T1 -Lecture- 16