CHAPTER 5 B2B Strategies: From Electronic Data Interchange to Electronic Commerce Computer- enabled Inter-firm Commerce

B2B Business Model Net 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 Model Private 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 3 rd -Party Marketplace & Collaboration

Consortia-Sponsored Marketplaces Industry-Specific Integration & Collaboration

Private Company Marketplaces Gain Access to Established Retailers & Distributors