CHAPTER 5

B2BStrategies: From Electronic Data

Interchange to Electronic Commerce

Computer- enabled Inter-firm Commerce

B2B Business ModelNet Marketplace (also called a Hub)

Value Proposition - Electronic marketplace where suppliers and commercial purchasers can conduct transactions.

Revenue Models – Transaction Fees, Subscription Fees, Service Fees, Licensing, Advertising, Sale of Data and Information.

May be a general (horizontal marketplace) or specialized (vertical marketplace)

B2B Business ModelPrivate Industrial Network (PIN)

An extension of a Net Marketplace where suppliers become exclusive vendors.

Benefits of B2B Commerce• Lower administrative costs

• Lower search costs for buyers

• Reduced inventory costs by increasing competition among suppliers and reducing inventory carried

• Lower transaction costs by eliminating paperwork, automation

• Increased production flexibility by ensuring Just-In-Time (JIT) 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

• Supply Chain - The series of transactions that links sets of firms that do business with each other. It includes not only the firms themselves but the relationship among them.

• Supply Chain Management - Refers to the activities that firms and industries use to coordinate the key players in their procurement process.

• Supply Chain Management Systems - Applications used to coordinate and link the activities of all the players in the procurement process. (Web based = e-procurement)

• Logistics – The control and management of material from source to destination.

Supply Chain Management (SCM)

Procurement Process

Electronic Data Interchange (EDI)

• EDI is the computer-to-computer transfer of business information between two businesses.

• Most B2B electronic commerce is an adaptation of EDI or based on EDI principles.

• Traditional EDI used costly Private Networks.

• Web-based EDI is made possible by XML.

Private Stores

Company Owned B2B Website

Customer Portals

Company Owned B2B Website/Portal

Independent Industry Marketplaces

Independent 3rd-Party Marketplace & Collaboration

Consortia-Sponsored Marketplaces

Industry-Specific Integration & Collaboration

Private Company Marketplaces

Gain Access to Established Retailers & Distributors