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Business-to-Business Electronic Commerce

( B2B-EC )

BusinessBusiness--toto--Business Business Electronic CommerceElectronic Commerce

( B2B( B2B--EC )EC )Sistem eSistem e--BusinessBusiness

(MG(MG--652)652)Jurusan ManajemenJurusan Manajemen

05 September 2002 Chandra Wibowo W. 2

Agenda• Characteristics of B2B EC• Models of B2B EC• From Traditional to Internet-based EDI• Integration with Back-End Information

Systems• Managerial Issues• Summary


Charecteristicsof B2B EC

Models ofB2B EC

ProcurementManagementCase Studies

ElectronicData Interchange

Electronic Marketingin B2B

Business-to-BusinessElectronic Commerce

Supply Chain

Entities ofB2B EC

Electronic MarketingProcurement ManagementElectronic IntermediariesJust-In-Time DeliveryElectronic Data InterchangeIntranetExtranetIntegration with Back-EndInformation Systems

Online Service to Business

Supplier-Oriented MarketplaceBuyer-Oriented Marketplace

Intermediary-Oriented MarketplaceVirtual Corporation

Networking between Headquarters and Subsidiaries

Online Services to Business

Buyer's Internal MarketplaceIssues in Procurement ManagementInefficiency in Procurement ManagementGoals of Procurement Reengineering

Supplier-Oriented Marketplace :Cisco Connection Online

Buyer-Oriented Marketplace :GE's TPN

Intermediary-Oriented Marketplace :Boeing's PART

Just-In-Time Delivery :FedEx InterNetShop

Traditional EDIEDI and standardsApplications of EDILimitation of traditional EDI

Internet-Based EDI

Reasons to createintenet-based EDI

Types of internet-based EDIProspect of internet-based EDI

Direct MarketingRelationship Marketing

Audience Strategyand Mailing Lists

Electronic / Interactive Media


Characteristics of B2B EC• B2B EC implies that both the sellers and buyers are

business corporations, while B2B EC implies that the buyers are individual consumers.

• B2B EC covers a broad spectrum of applications that enable an enterprise or business to form electronic relationships with their distributors, resellers, suppliers, and other partners.

• B2B applications will offer enterprises access to the following sorts of information: product, customer, supplier, product process, transportation, inventory, supply chain alliance, competitor, sales & marketing, supply chain process & performance.


Supply Chain• The supply chain encompasses all the

activities associated with the flow and transformation of goods from the raw materials stage all the way to the end user. Taken together these processes and roles are called a supply chain.

• Historically, many of the process in the supply chain, have been managed with paper transactions. this is where B2B EC applications come into play.


Entities of B2B EC• The Internet can provide the most economical B2B EC platform for linking

companies without additional network implementation.• B2B EC can contribute to lower purchase costs, reduced inventory,

enhanced efficiency of logistics, as well as to increased sales and lowered sales costs and marketing costs.

• The key entities in B2B EC are the following:– Selling company – with marketing management perspective.– Buying company – with procurement management perspective.– Electronic intermediary – a third party intermediating service provider (the

scope of service may be extended to include the order fulfillment).– Deliverer – who should fulfill the JIT delivery.– Network platform – such as the Internet, intranet, and extranet.– Protocols and 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).


Models of B2B EC• The business models of B2B, the first

three models are classified depending upon who controls the marketplace: the supplier, customer, or intermediary.

• Other important business models are: virtual corporation, networking between headquarter and subsidiaries, and online services to business.


Supplier-Oriented Marketplace

• The most common B2B model is the Supplier-oriented marketplace. Most of the manufacturer-driven electronic stores belong this category.

• In this model, both individual consumers and business buyers use the same supplier-provided marketplace (see figure 6.2).

• The architecture for this B2B model is basically the same as that for B2C EC, and the purchasing process is similar.


Supplier-Oriented B2B Marketplace Architecture

Consumer

Consumer

Supplier'sElectronic Store

Supplier'sProductsCatalog

Customer'sOrder

Information

Business Customer

Business Customer

B2B ECB2B EC


Buyer-Oriented Marketplace

• Under the platform of supplier-oriented marketplace, the buyer’s acquisition department has to manually enter the order information into its own corporate information system.

• Searching e-stores and e-malls to find and compare suppliers and products. can be very costly for companies who purchase thousands of items on the Internet.

• Under this model, a buyer opens an electronic market on its own server and invites potential suppliers to bid. (see figure 6.3).


Buyer-Oriented B2B Marketplace Architecture

Buyer'sElectronic Store

Buyer's RequestingProducts Catalog

Supplier's BidInformation

Business supplier

Business Supplier


Intermediary-Oriented Marketplace

• The third business model is establishing an electronic intermediary company, which runs a marketplace where business buyers and sellers can meet. (see figure 6.4).

• This concept is similar to intermediary-based e-malls or e-stores developed for B2B EC.


Intermediary-Oriented B2B Marketplace Model

Business Supplier

Business Supplier

Intermediary'sElectronic Store

SharedProductsCatalog

Supplier'sProduct

Information

Business Customer

Business Customer

Customer'sO rder

Inform ation


Virtual Corporation: Networking between Business

Partners• A VC is an organization composed of several

business partners sharing costs and resources for the purpose of producing a product or service.

• Permanent VC are designed to create or assemble productive resources rapidly, frequently, concurrently, or to create or assemble a broad range of productive resources.

• This creation, operation, and management of a VC are heavily dependent on the B2B EC platform (Internet and extranet).


Networking between Headquarter and

Subsidiaries• The B2B EC platform can help the

communication and collaboration between headquarters and subsidiaries or franchiser and franchisee by providing e-mail, message boards and chat rooms, and online corporate date access around the globe no matter what time zone is.


From Traditional to Internet-based EDI

The majority of B2B transactions are conducted by EDI and/or extranets (see figure 6.5).

• Traditional EDI: EDI and Standards– It is a system that standardizes the process of trading and tracking

routine business documents, such as purchase orders, invoices, payments, shipping manifests, and delivery schedules.

– EDI translates these documents into a globally understood business language and transmits them between trading partners using secure telecommunications links. (see figure 6.6).

– Also see the limitations of traditional EDI.• Internet-based EDI

– The appears to be the most feasible alternative for putting online B2B trading within the reach of virtually any organization, large or small.

– Internet e-mail can be used as the EDI message transport in place of VAN. The Internet Engineering Task Force (IETF) is considering standards for encapsulating the messaging within Secure Internet Mail Extension (S/MIME).


Typical Flow of EDI Messages

Purchase Order Change

RFQ

PO Change Acknowledgement

PO Acknowledgement

Purchase Order

Response to RFQ

FunctionalAcknowledgement

(for each transaction)

Buyer Supplier


Traditional EDI

BusinessApplication

EDIFormattedMessage

Value-AddedNetwork

EDIFormattedMessage

BusinessApplication

Translate TranslateStore and Forward


Web-based EDI

W eb Browser

Internet

W eb Server

EDI Server Inventory

LegacyApplications

O rders


Integration with Back-End Information Systems

• The typical back-end information systems tend to be developed on the intranet (with e-mail, workflow, and groupware capabilities), DBMS, legacy systems, and ERP.

• Integration of EC with the intranet is relatively simple as far as the firewall can control the unauthorized access to the internal network.

• Enterprise Resource Planning (ERP) is an enterprise-wide application software that can provide a centralized repository of information for the massive amount of transactional detail generated daily. (See figure 6.7).


Managerial Issues• Focus of EC Management• Sales promotion• Purchase process reengineering• JIT delivery• New electronic intermediary business• Provision of solutions• Business ethics


Summary1. Applications of B2B EC2. Key technologies for B2B EC3. Architectural Models for B2B EC4. Characteristics of supplier-oriented marketplace5. Characteristics of buyer-oriented marketplace6. Characteristics of intermediary-oriented marketplace7. Benefits of B2B EC to procurement reengineering8. Importance of JIT delivery in B2B EC9. Characteristics of Internet-based EDI10. Method of integrating EC with back-end information

systems

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