Copyright © 2002 Pearson Education, Inc. Slide 12-1 PERTEMUAN 11.

Copyright © 2002 Pearson Education, Inc. Slide 12-1

PERTEMUAN 11


CHAPTER 12

Created by, David Zolzer, Northwestern State University—Louisiana

B2B E-commerce: Supply Chain Management and Collaborative

Commerce


Defining the Growth of B2B Commerce

Total inter-firm trade is the total flow of value among firms

B2B commerce describes all types of computer-enabled inter-firm trade

Internet-based B2B commerce is that portion of B2B commerce that is enabled by the Internet


The Evolution of B2B Commerce

Automated order entry systems involve the use of telephone modems to send digital orders

Seller-side solutions are seller-biased markets that are owned by, and show only goods from, a single seller



Page 655, Figure 12.1



Electronic Data Interchange (EDI) is a communications standard for sharing business documents and settlement information among a small number of firms

Buyer-side solutions are buyer-biased markets that are owned by buyers and aim to reduce the procurement costs of supplies for buyers


Evolution of B2B Commerce

Hub-and-spoke system refers to systems like EDI with the buyers in the center and the suppliers connected to the central hub via private dedicated networks

A vertical market is one that provides expertise and products for a specific industry

Horizontal markets refer to markets that serve many different industries


Evolution of B2B Commerce

B2B electronic storefronts are simply online catalogs of products made available to the public marketplace by a single supplier

Net marketplaces bring hundreds of suppliers into a single Internet-based environment to conduct trade

Private industrial networks are Internet-based communication environments that extend far beyond procurement to encompass truly collaborative commerce


The Growth of B2B CommercePage 657, Figure 12.2


Industry Forecasts for Internet-Based B2B Commerce



Potential Benefits of B2B E-Commerce

Lower administration costs Lower search costs for buyers Reduce inventory costs by increasing

competition among suppliers and reducing inventory to the bare minimum

Lower transaction costs by eliminating paperwork and automating parts of the procurement process



Increase production flexibility by ensuring delivery of parts “just in time”

Improve quality of products by increasing cooperation among buyers and sellers and reducing quality issues

Decrease product cycle time by sharing designs and production schedules with suppliers



Increase opportunities for collaborating with suppliers and distributors

Create greater price transparency -- the ability to see the actual buy and sell prices in a market


Procurement Process

The way business firms purchase the goods they need in order to produce the goods they will ultimately sell consumers

Firms purchase goods from a set of suppliers who in turn purchase their inputs from a set of suppliers

These firms are linked in a series of connected transactions


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 also the relationship between them and the processes that connect them


Procurement Process: Seven Steps

Searching for suppliers for specific products

Qualifying the sellers and the products they sell

negotiating prices, credit terms, escrow requirements, and quality requirements


Procurement Process: Seven Steps

Scheduling delivery Issuing purchase orders Sending invoices Shipping the product


The Procurement ProcessPage 660, Figure 12.4


Types of Procurement

Purchases of direct goods -- goods that are directly involved in the production process

Purchases of indirect goods -- goods needed to carry out the production process but that are not directly involved in creating the end product. Often called MRO goods -- maintenance, repair, and operations


Types of Procurement

Contract purchases -- long-term agreements to buy a specified amount of a product. There are pre-specified quality requirements and pre-specified terms

Spot purchases -- for goods that meet the immediate needs of a firm. Indirect purchases are most often made on a spot purchase basis in a large marketplace that includes many suppliers


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Direct Labor Involvement in the Procurement Process

Page 662, Table 12.1


Multi-tier Supply Chains

The complex series of transaction that exists between a single firm with multiple primary suppliers, the secondary suppliers who do business with those primary suppliers, and the tertiary suppliers who do business with the secondary suppliers


The Multi-tier Supply ChainPage 663, Figure 12.5


Roles of Existing Legacy Computer Systems

Legacy computer systems refer to generally older mainframe and minicomputer systems used to manage key business processes within a firm in a variety of functional areas


Typical Legacy Systems

Materials Requirements Planning (MRP) systems enable companies to predict, track, and manage all the constituent parts of complex manufactured goods

Enterprise Resource Planning (ERP) systems are more sophisticated MRP systems that include human resource and financial components


Trends in Supply Chain Management

Supply chain management (SCM) refers to a wide variety of activities that firms and industries use to coordinate the key players in their procurement process


Trends in Supply Chain Management

Four major developments is supply chain management set the ground rules for understanding B2B e-commerce Supply Chain Simplification Electronic Data Interchange (EDI) Supply Chain Management Systems Collaborative commerce


Supply Chain Simplification

The reduction of the size of a firm’s supply chain Firms work closely with a strategic group of

suppliers to reduce product costs and administrative costs

Long term contract purchases containing pre-specified product quality requirements and pre-specified timing goals

Shown to improve end product quality and ensure uninterrupted production


Electronic Data Interchange

Developed to reduce cost, delays, and errors inherent in the manual exchanges of documents such as purchase orders, shipping documents, price lists, payments, and customer data

EDI differs from unstructured message because its messages are organized with distinct field for each of the important pieces of information

EDI industry committees define the structure and information fields of electronic documents for that industry


The Evolution of EDI as a B2B Medium

Page 666,

Figure 12.6


Supply Chain Management Systems

Coordinate and link the activities of suppliers, shippers, and order entry systems to automate the order entry process from start to finish, including the purchase, production, and moving of a product from a supplier to a purchasing firm


Supply Management SystemsPage 668, Figure 12.7


Collaborative Commerce

The use of digital technologies to permit organizations to collaboratively design, develop, build, and manage products through their life cycles


Elements of a Collaborative Commerce System



Main Types of Internet-based B2B Commerce

Net Marketplaces (also referred to as exchanges or hubs) assemble thousand of sellers and buyers in a single digital marketplace on the Internet

They can be owned be either the buyer or the seller

They can operate as independent intermediaries between the buyer and seller


Main Types of Internet-based B2B Commerce

Private industrial networks bring together a small number of strategic business partners who collaborate with one another to develop highly efficient supply chains and to satisfy customer demand for product

They are by far the largest form of B2B commerce, presently comprising 93% of the total computer-assisted inter-firm trade


Two Main Type of Internet-based B2B Commerce



Projected Relative Size of Net Marketplaces and Private Industrial Networks



Other Characteristics of Net Marketplaces



Pure Types of Net MarketplacesPage 676, Figure 12.11


Net Marketplaces: E-distributors

Independently owned intermediaries that offer individual customers a single source from which to make spot purchases of indirect or MRO goods

Operate in a horizontal market that serves many different industries with products from many different suppliers


E-DistributorsPage 677, Figure 12.12


Net Marketplaces: E-procurement

Independently owned intermediaries connecting hundreds of online suppliers offering millions of MRO goods to business firms who pay a fee to join the market

Operate in a horizontal market in which long-term contractual purchasing agreements are used to buy indirect goods

Provide value chain management services -- include the automation of a firm’s entire procurement process on the buyer side and the automation of the selling business processes on the seller side


E-procurement MarketsPage 679, Figure 12.13


E-commerce in Action: Ariba

Ariba provides and excellent example of an e-procurement Net marketplace

Ariba is a leading B2B software platform and software provider


E-commerce in Action: Ariba Platform has four components:

Ariba Buyer automates the procurement business process within single firms

Ariba Marketplace and Ariba Dynamic Trade are software tools that permit users to establish B2B marketplaces internally on their corporate intranets, or externally on the public Internet

Ariba Commerce Services Network is an Internet-based e-procurement Net marketplace that aggregates catalogs of hundreds of suppliers and provides corporate buyers with a Web interface to Ariba procurement, payment, and shipping support services


Ariba’s E-distribution & Procurement Net Marketplace

Page 680, 12.14


Ariba’s Balance Sheet



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Net Marketplaces: Exchanges

Independently owned online marketplaces that connect hundreds of suppliers to potentially thousands of buyers in a dynamic real-time environment

Typically vertical markets in which spot purchases can be made for direct inputs (both goods and services)

Make money by charging a commission on each transaction


ExchangesPage 688, Figure 12.15


Some ExchangesPage 689, Table 12.4


E-commerce in Action: FreeMarket Inc.

One of the leading B2B exchanges, generating revenues of $83 million in 2000

Market-making services enable industrial buyers of direct goods to find, screen, and qualify suppliers, and then to negotiate prices and term through a dynamic, real-time, comprehensive bidding and auction process

Offers proprietary technology, technical support facilities, market-making services, and access to a global database of suppliers


FreeMarkets’ Balance Sheet



Net Marketplaces: Industry Consortia

Industry-owned vertical markets where long-term contractual purchases of direct inputs can be made from a limited set of invited participants

Serve to reduce supply chain inefficiencies by unifying the supply chain for an industry through a common network and computing platform


Industry ConsortiaPage 697, Figure 12.16


Industry Consortia by Industry



Market Mechanisms Used by Industry Consortia



Long-term Dynamics of Net Marketplaces

Independent exchanges were the prototype Internet-based marketplace

Several thousand created; however, most of them did not succeed

Main reason for failure is that they did not attract enough players to achieve liquidity



Industry consortia sprang up in 1999 and 200 in reaction to earlier development of independently owned exchanges that were viewed by large industries as interlopers who would not directly serve their needs

Industry consortia are profitable because they charge the large buyer firms transaction and subscription fees, but rationalization of the procurement process, the competition among vendors, and the closer relationship with the vendors are benefits that more than offset the cost of membership



The failure of early exchanges is one Net marketplaces are changing so rapidly

Participants have come to realize the real value of B2B commerce will only be realized when it succeeds in changing the entire procurement system, supply chain, and the process of collaboration among firms


Net Marketplace TrendPage 700, Figure 12.18


Private Industrial Networks

Dominate B2B commerce Web-enabled networks for coordinating trans-

organizational business processes (collaborative commerce)

Range in scope from a single firm to an entire industry

Central purpose is to provide industry-wide global solutions to achieve the highest levels of efficiency

Generally start with a single sponsoring company that “owns” the network


Private Industrial Networks

Differentiates private industrial networks from consortia that are usually owned collectively by major firms through equity participation

Transforming the supply chain by focusing on continuous business process coordination between companies

Coordination includes product design, demand forecasting, asset management, and sales and marketing plans


Proctor & Gamble’s Private Industrial Network



Characteristics of Private Industrial Networks

Developing efficient purchase and selling business processes industry-wide

Developing industry-wide resource planning to supplement enterprise-wide resource planning

Creating increasing supply chain visibility -- knowing the inventory levels of buyers and sellers


Characteristics of Private Industrial Networks

Achieving closer buyer-supplier relationships, including demand forecasting, communications, and conflict resolution

Operating on a global scale -- globalization

Reducing industry risk by preventing imbalances of supply and demand, including developing financial derivatives, insurance, and futures markets


Private Industrial Networks & Collaborative Commerce

CPFR or industry collaborative resource planning, forecasting, and replenishment involves working with network members to forecast demand, develop production plans, and coordinate shipping, warehousing, and stocking activities.

Goal is to ensure that retail and wholesale shelf space is precisely maintained



Supply chain and distribution chain visibility refers to the fact that in the past it was impossible to know where excess capacity existed in a supply or distribution chain

Eliminating excess inventories by halting production of overstocked goods can raise the profit margins for all network members because products will no longer need to be discounted in order to move them off the shelves



Marketing and product design collaboration can be used to involve a firm’s suppliers in product design and marketing activities as well as the related activities of their supply and distribution chain partners

This can ensure that the parts used to build a product live up to the claims of the marketers

Collaborative commerce application used in a private industrial network can also make possible closed loop marketing in which customer feedback will directly impact product design


Pieces of the Collaborative Commerce Puzzle



An Industry-wide Private Industrial Network



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