WWWWWW
ELC 200
DAY 19
2WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Agenda
• Assignment #6 Due
• Quiz 3 will be on April 6– Chap 8-12 – 15 M/C (60 Points), 4 Short Essay (40 Points)– Extra credit --- What is the derivation of the
name “cookie” used by Internet Browsers?
• Start discussion on B2B eCommerce
WWWWWW
Chapter 11
Business-to-Business E-Commerce
4WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
OBJECTIVES
• What is B2B E-Commerce?
• B2B Models
• B2B Building Blocks
• B2B Integration Challenges
• B2B Tools –EDI
• Beyond B2B
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WHAT’S B2B E-COMMERCE?
• B2B– Both sellers and buyers are business
organizations– Involves complex procurement, manufacturing,
planning collaboration, payment terms and performance agreements
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B2B ENTITIES
Selling Company
ERP
Buying Company
Order Fulfillment
Deliverer
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B2B ENTITIES (cont.)
• Purchasing Company– Focus on procurement in terms of reduced purchase
prices and cycle time
• Selling Company– Focus on marketing and sales
• Intermediating Service Provider– Focus on ensuring order fulfillment
• JIT Deliverer– Focus on just-in-time delivery
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B2B ENTITIES (cont.)
• Web-based Platform– Focus on Internet, intranet, and extranet
• Tools of B2B– Focus on Electronic Data Interchange and
software agents
• Back-End Technical Support– Focus on Enterprise Resource Planning
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B2B VS. B2C
B2C B2B
How connection is set up
Consumer-to-system Business-to-business
Types of relationship
•Placing orders
•Executing payments
•Fulfilling orders
•Browsing of merchant’s catalog
•Sending feedback
•Online procurement
•Tracking order status
•Executing payments
•Managing promotions, returns, and catalog info
•Fulfilling orders
10WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
B2B VS. B2C (Cont’d)
B2C B2B
Nature of control Unidirectional Unidirectional to peer-to-peer
Level of needs-based segmentation
Moderate to low Sharper than B2C
Sales complexity Moderate Complex
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ADVANTAGES
• Save money on purchases that are negotiated instantly
• Replacing earlier purchasing bureaucracy with online links improves efficiency
• Just-in-time environment minimizes inventory sitting in the warehouse
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DRAWBACKS
• Suppliers have to work with big technology integration issues with the rest of suppliers in the exchange
• Antitrust violations may result
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SUPPLY CHAIN
• Process of moving goods from customer order through the raw materials, supply, production, and the distribution of products to the customer
• Benefits– Reduced inventory, higher sales, improved
ability to customize products for different business buyers, and reduced production cost
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B2B MODELS
• Buyer-oriented B2B– A buyer uses the internet by opening a
marketplace on its own server and opening the window for suppliers to do the bidding
• Supplier-oriented B2B– A supplier invites customers to order product
via its electronic market store
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ELECTRONIC AUCTIONS
• Reduce procurement costs
• Maximize return on excess merchandise
• Types– Forward auction– Reverse auction– Internet exchange
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FORWARD AUCTION
• One seller entertains bids from many buyers• Allows the seller to post products or services they
want to sell via its auction website• Payment and fulfillment is handled through
normal electronic channels• Ideal where demand and supply are unpredictable,
and there is a timing factor to unload the merchandise
17WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
REVERSE AUCTION
• Used to solicit bids where lowest bidder wins
• Typical of large corporate buying
• Tends to drive down prices and expand buyer’s zone of choice among suppliers
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INTERNET EXCHANGE AUCTION
• Involves many buyers and sellers who trade bids and offers until there is an agreement to exchange product for payment
• A third party operates the exchange– Responsible for quality assurance and prompt
delivery of the goods
19WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
INTERNET EXCHANGE AUCTION (Cont’d)
• Revolves around an electronic intermediary company that establishes an exchange market where buyers and sellers can make deals
20WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
B2B BUILDING BLOCKS
• Application Server
• B2B Integration Server
• Personalization Software
• Content Management Facility
• E-Commerce Package
• Security
• Quality of Service
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B2B INTEGRATION CHALLENGE
• B2B Integration– Deals with spanning independent businesses, each
with its own set of applications and users– Interoperates with heterogeneous systems without
being tied to one specific system technology
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B2B INTEGRATION
• Solutions– Via a Web site as a front-end for information
sharing among partners– Extract information from one partner’s
application convert it into a format amenable for transmission via EDI
– For two companies to use common technology to coordinate data exchange
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Agenda
• Assignment #6 Corrected– 3 A’s, 3 B’s & 3 C’s
• Quiz 3 will be on April 6– Chap 8-12– 15 M/C (60 Points), 4 Short Essay (40 Points)
• Extra credit --- What is the derivation of the name “cookie” used by Internet Browsers?
• Finish Discussion on EDI
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B2B TOOLS – EDI
• Allows one computer system to communicate business information with another computer system in a standardized electronic form
• Computer-to-computer transfer of business information
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COMPONENTS OF EDI
• Interbusiness– Transmission of data between businesses
• Computer-to-computer– Data communication from one computer to
another
• Standard transactions– Replace standard business forms
• Standard format
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ADVANTAGES
• Cost reduction and time-saving
• Improved B2B problem resolution
• Accuracy with integrity
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DRAWBACKS
• Unpopular
• Expensive
• Point-to-point
• Requires expensive VAN networking
• Not easy to use, learn, or implement
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EDI JUSTIFICATION
• Volume of data
• Frequency of document transmission and reception
• Content sensitivity
• Time sensitivity
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FINANCIAL EDI
• Electronic transmission of payments between a payee and a payer via their respective banks
• Allows businesses to replace labor-intensive activities of collecting, disbursing and processing payments
• Improves certainty of payment flows• Examples
– EFT• Electronic Funds Transfer
– ACH • Automated Clearing House
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BEYOND B2B
• A2Z Approach– Connect all the links of value chain via
partnership– The link would be turned from physical
connections to digital ones– Clear visibility of each stage of business
process
WWWWWW
Chapter 11
Business-to-Business E-Commerce